NON-QUALIFIED STOCK OPTION AWARD AGREEMENT
2008
EQUITY INCENTIVE PLAN
NQSO No.
_______________ Grant
Date: _______________
This
Non-Qualified Stock Option Award (“NQSO”) is granted by Sound Financial, Inc.
(“Company”) to [Name]
(“Option Holder”) in accordance with the terms of this Non-Qualified Stock
Option Award Agreement (“Agreement”) and subject to the provisions of the Sound
Financial, Inc. 2008 Equity Incentive Plan, as amended from time to time
(“Plan”). The Plan is incorporated herein by reference.
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1.
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NQSO
Award. The Company grants to Option Holder NQSOs to
purchase [Number] Shares at an
Exercise Price of $[Number] per
Share. These NQSOs are subject to forfeiture and to limits on
transferability until they vest, as provided in Sections 5 and 6 of this
Agreement and in Article V of the
Plan.
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2.
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Vesting
Dates: The NQSOs shall vest as follows, subject to
earlier vesting in the event of a termination of Service as provided in
Section 6:
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Vesting Date
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NQSOs
for
Number of Shares Vesting
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[Over
at least 5 years beginning
one
year from the Grant Date.]
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[20%
or less in each annual
installment]
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3.
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Exercise: The
Option Holder (or in the case of the death of the Option Holder, the
designated legal representative or heir of the Option Holder) may exercise
the NQSOs during the Exercise Period by giving written notice to the
Secretary of the Company in the form required by the Committee (“Exercise
Notice”). The Exercise Notice must specify the number of Shares
to be purchased, which shall be at least 100 unless fewer shares remain
unexercised. The exercise date is the date the Exercise Notice
is received by the Company. The Exercise Period commences on
the Vesting Date and expires at 5:00 p.m., Seattle, Washington time, on
the date 10 years after the Grant Date, subject to earlier expiration in
the event of a termination of Service as provided in Section
6. Any NQSOs not exercised as of the close of business on the
last day of the Exercise Period shall be cancelled without consideration
at that time.
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The
Exercise Notice shall be accompanied by payment in full of the Exercise Price
for the Shares being purchased. Payment shall be made: (a) in cash,
which may be in the form of a check, money order, cashier's check or certified
check, payable to the Company, or (b) by delivering Shares of the Company
already owned by the Option Holder having a Fair Market Value on the exercise
date equal to the aggregate Exercise Price to be paid, or (c) a combination of
cash and such Shares.
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4.
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Related
Awards: These NQSOs [are
not related to
any other Award under the Plan.] or [are
related to stock appreciation rights granted on the Grant Date and
designated SAR Nos. ___. To the extent any of the related stock
appreciation rights is exercised, the NQSOs shall terminate with respect
to the same number of
Shares.]
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5.
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Transferability. The
Option Holder may not sell, assign, transfer, pledge or otherwise encumber
any NQSOs, except in the event of the Option Holder’s death, by will or by
the laws of descent and distribution or pursuant to a Qualified Domestic
Relations Order. The Committee, in its sole and absolute
discretion, may allow the Option Holder to transfer one or more NQSOs to
the Option Holder’s Family Members, as provided in the
Plan.
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6.
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Termination of
Service. If the Option Holder terminates Service for any
reason other than in connection with a Change in Control or the death or
Disability of the Option Holder, any NQSOs that have not vested as of the
date of that termination shall be forfeited to the Company, and the
Exercise Period shall expire three months after that termination of
Service, except in the case of a Termination for Cause, when it shall
expire immediately. If the Option Holder’s Service terminates
on account of the Option Holder’s death or Disability, the Vesting Date
for all NQSOs that have not vested or been forfeited shall be accelerated
to the date of that termination of Service, and the Exercise Period shall
expire one year after that termination of
Service.
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7.
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Effect
of Change in Control. Upon a Change in Control, the
Vesting Date for all NQSOs that have not vested or been forfeited shall be
accelerated to the date of the earliest event constituting a Change in
Control. [May
be modified at Committee’s election for 280G planning purposes for
executive officers or directors holding 1% or more of the Company’s
outstanding stock.]
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8.
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Option
Holder’s Rights. The NQSOs awarded hereby do not entitle
the Option Holder to any rights of a shareholder of the
Company.
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9.
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Delivery
of Shares to Option Holder. Promptly after receipt of an
Exercise Notice and full payment of the Exercise Price for the Shares
being acquired, the Company shall issue and deliver to the Option Holder
(or other person validly exercising the NQSO) a certificate or
certificates representing the Shares of Common Stock being purchased,
registered in the name of the Option Holder (or such other person), or,
upon request, in the name of the Option Holder (or such other person) and
in the name of another person in such form of joint ownership as requested
by the Option Holder (or such other person) pursuant to applicable state
law. The Company’s obligation to deliver a stock certificate
for Shares purchased in the exercise of an NQSO can be conditioned upon
the receipt of a representation of investment intent from the Option
Holder (or the Option Holder’s Beneficiary) in such form as the Committee
requires. The Company shall not be required to deliver stock
certificates for Shares purchased prior to: (a) the listing of those
Shares on the Nasdaq; or (b) the completion of any registration or
qualification of those Shares required under applicable
law.
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NQSO-2
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10.
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Adjustments
in Shares. In the event of any recapitalization, stock
split, reorganization, merger, consolidation, spin-off, combination,
exchange of securities, stock dividend, special or recurring dividend or
distribution, liquidation, dissolution or other similar corporate
transaction or event, the Committee, in its sole discretion, may adjust
the number of Shares or class of securities of the Company covered by the
NQSOs or the Exercise Price of the NQSOs. The Option Xxxxxx
agrees to execute any documents required by the Committee in connection
with an adjustment under this Section
10.
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11.
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Tax
Withholding. The Company shall have the right to require
the Option Holder to pay to the Company the amount of any tax that the
Company is required to withhold with respect to such Shares, or in lieu
thereof, to retain or sell without notice, a sufficient number of Shares
to cover the minimum amount required to be withheld. The
Company shall have the right to deduct from all dividends paid with
respect to the Shares the amount of any taxes that the Company is required
to withhold with respect to such dividend
payments.
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12.
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Plan
and Committee Decisions are Controlling. This Agreement,
the award of NQSOs to the Option Holder and the issuance of Shares upon
the exercise of the NQSOs are subject in all respects to the provisions of
the Plan, which are controlling. Capitalized terms herein not
defined in this Agreement shall have the meaning ascribed to them in the
Plan. All decisions, determinations and interpretations by
Committee respecting the Plan, this Agreement, the award of NQSOs or the
issuance of Shares upon the exercise of the NQSOs shall be binding and
conclusive upon the Option Holder, any Beneficiary of the Option Holder or
the legal representative thereof.
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13.
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Option
Holder’s Employment. Nothing in this Agreement shall
limit the right of the Company or any of its Affiliates to terminate the
Option Holder’s service or employment as a director, officer or employee,
or otherwise impose upon the Company or any of its Affiliates any
obligation to employ or accept the services or employment of the Option
Holder.
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14.
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Amendment. The
Committee may waive any conditions of or rights of the Company or modify
or amend the terms of this Agreement; provided, however, that the
Committee may not amend, alter, suspend, discontinue or terminate any
provision of this Agreement if such action may adversely affect the Option
Holder without the Option Holder’s written consent. To the
extent permitted by applicable laws and regulations, the Committee shall
have the authority, in its sole discretion, to accelerate the vesting of
the Shares or remove any other restrictions imposed on the Option Holder
with respect to the Shares, whenever the Committee may determine that such
action is appropriate by reason of any unusual or nonrecurring events
affecting the Company, any Affiliate or their financial statements or any
changes in applicable laws, regulations or accounting
principles.
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15.
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Option
Holder Acceptance. The Option Holder shall signify
acceptance of the terms and conditions of this Agreement and acknowledge
receipt of a copy of the Plan by signing in the space provided below and
returning the signed copy to the
Company.
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NQSO-3
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as
of the date first above written.
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By
________________________________
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Its ________________________________
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ACCEPTED
BY OPTION HOLDER
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___________________________________
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(Signature)
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___________________________________
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(Print
Name)
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___________________________________
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(Street
Address)
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___________________________________
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(City,
State & Zip Code)
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Beneficiary
Designation:
The
Option Holder designates the following Beneficiary to receive the Shares upon
Option Holder’s death:
NQSO-4
