Exhibit 10.4
SFSB, INC.
DIRECTOR STOCK OPTION AGREEMENT
     This Stock Option Agreement is entered into as of the ___day of ___2005 by
and between SFSB, Inc. (the “Company”), a Maryland corporation, and
                                        (“Grantee”).
ARTICLE 1
DEFINITIONS
     Definitions. As used in this Agreement, in addition to the terms defined
elsewhere herein, the following terms have the following meanings when used
herein with initial capital letters:
     (a) “Agreement” shall mean this Stock Option Agreement and shall include
the applicable provisions of any Plan which are hereby incorporated into and
made a part of the Agreement.
     (b) “Common Stock” shall mean shares of common stock of the Company, par
value $.01 per share, or any security into which such Common Stock may be
changed by reason of any transaction or event of the type referred to in
Section 17 of the Plan.
     (c) “Grant Date” shall mean the date on which the Committee formally acts
to grant an Option to Grantee.
     (d) “Option” shall mean an option to acquire Common Stock that is granted
pursuant to, as contemplated by or is evidenced by this Agreement.
     (e) “Option Price” shall mean the price per share of Common Stock at which
the Option may be exercised.
     (f) “Plan” shall mean the SFSB, Inc. 2005 Stock Option Plan (the “2005
Option Plan”), a copy of which is attached hereto as Exhibit C.
     In addition, other capitalized terms used but not defined herein shall have
the meaning ascribed to such terms in the Plan.

 

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ARTICLE 2
GRANT OF OPTION
     Section 2.1 Grant of Nonqualified Stock Options.
     The Company, pursuant to the 2005 Stock Option Plan, hereby grants to
Grantee, as of the date hereof, the following Options:

             
Grant Date
  Number of Options   Option Price
 
           
_________
    _________     $                                        

     Section 2.2 Term of Option. The Option granted pursuant to Sections 2.1
shall expire on the tenth anniversary of its grant date, unless the Option
terminates earlier pursuant to other provisions of this Agreement or the Plan.
     Section 2.3 Vesting. Subject to the terms of the Plan with respect to
vesting, the Options granted pursuant to Section 2.1 shall vest and become
exercisable in accordance with the vesting schedule set forth on Exhibit A,
attached hereto and incorporated by reference herein. The extent to which the
Options are vested and exercisable as of a particular vesting date shall be
rounded down to the nearest whole share. However, vesting is rounded up to the
nearest whole share on the last vesting date. Notwithstanding the foregoing, in
no event may a vested Option be exercised until at least one year after the
Grant Date.
     Section 2.4 Compliance with Regulations of the OTS; Forfeiture. Subject to
the terms of the Plan, the grant of Options made hereby are subject to the
provision of the regulation promulgated by the Office of Thrift Supervision (the
“OTS”). In addition, in accordance with the rules and regulation of the OTS
applicable to the Company, the Options granted herby must be exercised or
forfeited in the event the Company, or its affiliates, including Slavie Federal
Savings Bank, becomes critically undercapitalized (as defined in 12 C.F.R. §
65.4, or any successor law or regulation), is subject to OTS enforcement action,
or receives a capital directive under 12 C.F.R § 565.7 or any successor law or
regulation.
ARTICLE 3
EXERCISE OF OPTION
     Section 3.1 Manner of Exercise. The Option may be exercised, in whole or in
part, by delivering written notice to the Secretary of the Company in such form
as the Board of Directors may require from time to time. Such notice shall
specify the number of shares of Common Stock subject to the Option as to which
the Option is being exercised, and shall be accompanied by full payment of the
Option Price of the shares of Common Stock as to which the Option is being
exercised. In addition, if the shares subject to the Plan are not registered
under the Securities Act of 1933, as amended, or are not otherwise exempt from
such registration, such notice shall be accompanied by a written statement that
the shares are purchased for investment and not with a view to distribution and
acknowledgment of restrictions on the transferability of the shares. Payment of
the Option Price shall be made as provided in the Plan. The Option may be
exercised only in multiples of whole shares and no partial shares shall be
issued. A form of notice is attached hereto as Exhibit B.

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     Section 3.2 Issuance of Shares and Payment of Option Price Upon Exercise.
Upon exercise of the Option, in whole or in part, in accordance with the terms
of this Agreement and upon payment of the Option Price for the shares of Common
Stock as provided in the Plan, the Company shall issue to Grantee the number of
shares of Common Stock paid for, in the form of fully paid and non-assessable
Common Stock.
ARTICLE 4
TERMINATION OF OPTION
     Unless the Option has been terminated earlier pursuant to the provisions of
this Agreement, the Option granted to Grantee hereunder shall terminate as
provided in the Plan.
ARTICLE 5
MISCELLANEOUS
     Section 5.1 Non-Guarantee of Employment. Nothing in the Plan or this
Agreement shall be construed as a contract of employment between the Company or
any affiliate and Grantee, or as a contractual right of Grantee to continue in
the employ or as a director of the Company or any affiliate, or as a limitation
of the right of the Company or an affiliate to remove Grantee at any time.
     Section 5.2 No Rights of Stockholder. Grantee shall not have any of the
rights of a stockholder with respect to the shares of Common Stock that may be
issued upon the exercise of the Option until such shares of Common Stock have
been issued to him or her upon the due exercise of the Option.
     Section 5.3 Agreement Subject to Charter and By-Laws. This Agreement is
subject to the Charter and By-Laws of the Company, and any applicable federal or
state laws, rules or regulations.
     Section 5.4 Gender. As used herein the masculine shall include the feminine
as the circumstances may require.
     Section 5.5 Headings. The headings in the Agreement are for reference
purposes only and shall not affect the meaning or interpretation of the
Agreement.
     Section 5.6 Notices. All notices and other communications made or given
pursuant to the Agreement shall be in writing and shall be sufficiently made or
given if hand delivered or mailed by certified mail, addressed to Grantee at the
address contained in the records of the Company or an affiliate, and to the
Company for the attention of its Secretary at its principal office.

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     Section 5.7 Tax Withholding. The Company shall have the right to deduct
from all Options granted any federal, state, local or employment taxes which it
deems are required by law to be withheld with respect to such grants. In
addition, the Company shall have the right to require a Grantee, upon grant or
exercise of an option, to pay to the Company the minimum amount of any federal
or state taxes, including payroll taxes, if any, that the Company is required to
withhold.
ARTICLE 6
SCOPE OF AGREEMENT
     Section 6.1 Entire Agreement; Modification. The Agreement, along with the
Plan, contains the entire agreement between the parties with respect to the
subject matter contained herein and supersedes all prior agreements or
understandings between the parties with respect to Options described in this
Agreement. This Agreement may not be modified or amended except as provided in
the Plan or in a written document signed by each of the parties hereto.
     Section 6.2 Conformity with Plan. This Agreement is intended to conform in
all respects with, and is subject to all applicable provisions of, the Plan,
which is incorporated herein by reference. In the event of any inconsistencies
between this Agreement and the Plan, the Plan shall control.
     Section 6.3 Counterparts. The Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed to be an original and
all of which together shall constitute one and the same instrument.
     Section 6.4 Acknowledgment. BEFORE SIGNING HEREUNDER, THE GRANTEE SHOULD
READ AND THOROUGHLY REVIEW THE PLAN ATTACHED HERETO AS EXHIBIT C. BY SIGNING
HEREUNDER, THE GRANTEE ACKNOWLEDGES RECEIPT OF THE PLAN AND REPRESENTS THAT
GRANTEE HAS READ AND THOROUGHLY REVIEWED THE PLAN.
[Remainder of page left blank intentionally]

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     IN WITNESS WHEREOF, the parties have executed the Agreement as of the date
first above written.

              ATTEST:   SFSB, INC.    
 
           
 
  By:        
 
     
 
   
 
            WITNESS:   GRANTEE    
 
           
 
 
 
   

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EXHIBIT A
VESTING SCHEDULE
1/5 — _________, 20___;
1/5 — _________, 20___;
1/5 — _________, 20___;
1/5 — _________, 20___; and
1/5 — _________, 20___.

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EXHIBIT B
SFSB, Inc.
1614 Churchville Road
Bel Air, Maryland 21015
Attn: Secretary
Dear Secretary:
     I hereby exercise the Option granted to me on _______________ by SFSB, Inc.
(the “Company”), subject to all the terms and provisions of that certain Stock
Option Agreement between me and the SFSB, Inc. 2005 Stock Option Plan (the
“Plan”), and notify you of my desire to purchase ___shares of Common Stock of
the Company at a price of $_________per share pursuant to the exercise of said
Option.
Total Amount Enclosed: $                    

                             
Date:
                      (Optionee)        
 
     
 
       
 
                                        Received by SFSB, Inc. on            
 
                 
 
       
 
                           
 
          By:                                
 
   

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EXHIBIT C
SFSB, INC
2005 STOCK OPTION PLAN

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