Document:

Exhibit 10.2

 

SCHOLAR ROCK HOLDING
CORPORATION

 

2022 INDUCEMENT EQUITY
PLAN

 

SECTION 1.  GENERAL
PURPOSE OF THE PLAN; DEFINITIONS

 

The name of the plan is
the Scholar Rock Holding Corporation 2022 Inducement Equity Plan (the “Plan”).  The purpose of the Plan is to
enable Scholar Rock Holding Corporation (the “Company”) to grant equity awards to induce highly-qualified prospective
officers and employees to accept employment and provide them with a proprietary interest in the Company.  It is anticipated that
providing such persons with a direct stake in the Company’s welfare will assure a closer identification of their interests with
those of the Company and its stockholders, thereby stimulating their efforts on the Company’s behalf and strengthening their desire
to remain with the Company. The Company intends that the Plan be reserved for persons to whom the Company can issue securities without
stockholder approval as an inducement pursuant to Rule 5635(c)(4) of the Marketplace Rules of the NASDAQ Stock Market, Inc.

 

The following terms shall
be defined as set forth below:

 

“Act” means
the Securities Act of 1933, as amended, and the rules and regulations thereunder.

 

“Administrator”
means either the Board or the compensation committee of the Board or a similar committee performing the functions of the compensation
committee and which is comprised of not less than two Non-Employee Directors who are independent.

 

“Award” or
 “Awards” except where referring to a particular category of grant under the Plan, shall include Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Units, Restricted Stock Awards, Unrestricted Stock Awards, and Dividend Equivalent
Rights.

 

“Award Certificate”
means a written or electronic document setting forth the terms and provisions applicable to an Award granted under the Plan.  Each
Award Certificate is subject to the terms and conditions of the Plan.

 

“Board” means
the Board of Directors of the Company.

 

“Code” means
the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.

 

“Dividend Equivalent
Right” means an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the
shares of Stock specified in the Dividend Equivalent Right (or other award to which it relates) if such shares had been issued to and
held by the grantee.

 

“Effective Date” means
the date on which the Plan is approved by the Board as set forth in Section 18.

 

“Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

 

“Fair Market
Value” of the Stock on any given date means the fair market value of the Stock determined in good faith by the Administrator;
provided, however, that if the Stock is admitted to quotation on the Nasdaq Global Select Market, The New York Stock Exchange or another
national securities exchange, the determination shall be made by reference to market quotations.  If there are no market quotations
for such date, the determination shall be made by reference to the last date preceding such date for which there are market quotations.

 

“NASDAQ Inducement
Exception” means Rule 5635(c)(4) of the Marketplace Rules of the NASDAQ Stock Market, Inc., or any successor rule, and related
guidance thereunder.

 

     

     

    

 

“Non-Employee
Director” means a member of the Board who is not also an employee of the Company or any Subsidiary.

 

“Non-Qualified
Stock Option” means any Stock Option that is not an “incentive stock option” under Section 422 of the Code.

 

“Option” or
 “Stock Option” means any option to purchase shares of Stock granted pursuant to Section 5.

 

“Restricted Shares”
means the shares of Stock underlying a Restricted Stock Award that remain subject to a risk of forfeiture or the Company’s right
of repurchase.

 

“Restricted Stock
Award” means an Award of Restricted Shares subject to such restrictions and conditions as the Administrator may determine
at the time of grant.

 

“Restricted Stock
Units” means an Award of stock units subject to such restrictions and conditions as the Administrator may determine at
the time of grant.

 

“Sale Event”
shall mean (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or
entity, (ii) a merger, reorganization or consolidation pursuant to which the holders of the Company’s outstanding voting power
and outstanding stock immediately prior to such transaction do not own a majority of the outstanding voting power and outstanding stock
or other equity interests of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of
such transaction, (iii) the sale of all of the Stock of the Company to an unrelated person, entity or group thereof acting in concert,
or (iv) any other transaction in which the owners of the Company’s outstanding voting power immediately prior to such transaction
do not own at least a majority of the outstanding voting power of the Company or any successor entity immediately upon completion of the
transaction other than as a result of the acquisition of securities directly from the Company.

 

“Sale Price”
means the value as determined by the Administrator of the consideration payable, or otherwise to be received by stockholders, per share
of Stock pursuant to a Sale Event.

 

“Section 409A”
means Section 409A of the Code and the regulations and other guidance promulgated thereunder.

 

“Service Relationship”
means any relationship as a full-time employee, part-time employee, director or other key person (including consultants) of the Company
or any Subsidiary or any successor entity (e.g., a Service Relationship shall be deemed to continue without interruption in the event
an individual’s status changes from full-time employee to part-time employee or consultant).

 

“Stock” means
the Common Stock, par value $0.001 per share, of the Company, subject to adjustments pursuant to Section 3.

 

“Stock Appreciation
Right” means an Award entitling the recipient to receive shares of Stock (or cash, to the extent explicitly provided for
in the applicable Award Certificate) having a value equal to the excess of the Fair Market Value of the Stock on the date of exercise
over the exercise price of the Stock Appreciation Right multiplied by the number of shares of Stock with respect to which the Stock Appreciation
Right shall have been exercised.

 

“Subsidiary” means
any corporation or other entity (other than the Company) in which the Company has at least a fifty percent (50%) interest, either directly
or indirectly.

 

“Unrestricted
Stock Award” means an Award of shares of Stock free of any restrictions.

 

     

     

    

 

SECTION 2.   ADMINISTRATION
OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS

 

(a)           Administration
of Plan.  The Plan shall be administered by the Administrator.

 

(b)           Powers
of Administrator.  The Administrator shall have the power and authority to grant Awards consistent with the terms of the Plan,
including the power and authority:

 

(i)             to
select the individuals to whom Awards may from time to time be granted;

 

(ii)            to
determine the time or times of grant, and the extent, if any, of Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock
Awards, Restricted Stock Units, Unrestricted Stock Awards, and Dividend Equivalent Rights, or any combination of the foregoing, granted
to any one or more grantees;

 

(iii)           to
determine the number of shares of Stock to be covered by any Award;

 

(iv)           to
determine and modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan,
of any Award, which terms and conditions may differ among individual Awards and grantees, and to approve the forms of Award Certificates;

 

(v)            to
accelerate at any time the exercisability or vesting of all or any portion of any Award;

 

(vi)          subject
to the provisions of Section 5(c), to extend at any time the period in which Stock Options may be exercised; and

 

(vii)         at
any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings
as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to
make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan;
and to otherwise supervise the administration of the Plan.

 

All decisions and interpretations
of the Administrator shall be binding on all persons, including the Company and Plan grantees.

 

(c)            Delegation
of Authority to Grant Awards.  Subject to applicable law and the NASDAQ Inducement Exception, in its discretion, may delegate
to a committee consisting of one or more officers of the Company including the Chief Executive Officer of the Company all or part of the
Administrator’s authority and duties with respect to the granting of Awards to individuals who are (i) not subject to the reporting
and other provisions of Section 16 of the Exchange Act and (ii) members of the delegated committee.  Any such delegation
by the Administrator shall include a limitation as to the amount of Stock underlying Awards that may be granted during the period of the
delegation and shall contain guidelines as to the determination of the exercise price and the vesting criteria.  The Administrator
may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Administrator’s
delegate or delegates that were consistent with the terms of the Plan.

 

(d)           Award
Certificate.  Awards under the Plan shall be evidenced by Award Certificates that set forth the terms, conditions and limitations
for each Award which may include, without limitation, the term of an Award and the provisions applicable in the event employment or service
terminates.

 

(e)            Indemnification. 
Neither the Board nor the Administrator, nor any member of either or any delegate thereof, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with the Plan, and the members of the Board and the Administrator (and
any delegate thereof) shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss,
damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent
permitted by law and/or under the Company’s articles or bylaws or any directors’ and officers’ liability insurance coverage
which may be in effect from time to time and/or any indemnification agreement between such individual and the Company.

 

(f)             Foreign
Award Recipients.  Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other
countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the
Administrator, in its sole discretion, shall have the power and authority to:  (i) determine which Subsidiaries shall be
covered by the Plan; (ii) determine which individuals outside the United States are eligible to participate in the Plan;
(iii) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable
foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the
Administrator determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this
Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in
Section 3(a) hereof; and (v) take any action, before or after an Award is made, that the Administrator determines to
be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. 
Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would
violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States
governing statute or law.

 

     

     

    

 

SECTION 3.  STOCK ISSUABLE
UNDER THE PLAN; MERGERS; SUBSTITUTION

 

(a)           Stock
Issuable.  The maximum number of shares of Stock reserved and available for issuance under the Plan shall be 1,000,000 shares,
subject to adjustment as provided in Section 3(c).  For purposes of this limitation, the shares of Stock underlying any Awards
under the Plan that are forfeited, canceled, held back upon exercise of an Option or settlement of an Award to cover the exercise price
or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other
than by exercise) shall be added back to the shares of Stock available for issuance under the Plan. In the event the Company repurchases
shares of Stock on the open market, such shares shall not be added to the shares of Stock available for issuance under the Plan. 
Subject to such overall limitations, shares of Stock may be issued up to such maximum number pursuant to any type or types of Award. 
The shares available for issuance under the Plan may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company.

 

(b)           Reserved.

 

(c)            Changes
in Stock.  Subject to Section 3(d) hereof, if, as a result of any reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other similar change in the Company’s capital stock, the outstanding shares
of Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional
shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares
of Stock or other securities, or, if, as a result of any merger or consolidation, sale of all or substantially all of the assets of the
Company, the outstanding shares of Stock are converted into or exchanged for securities of the Company or any successor entity (or a parent
or subsidiary thereof), the Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number of shares
reserved for issuance under the Plan, (ii) the number and kind of shares or other securities subject to any then outstanding Awards
under the Plan, (iii) the repurchase price, if any, per share subject to each outstanding Restricted Stock Award, and (iv) the
exercise price for each share subject to any then outstanding Stock Options and Stock Appreciation Rights under the Plan, without changing
the aggregate exercise price (i.e., the exercise price multiplied by the number of Stock Options and Stock Appreciation Rights) as to
which such Stock Options and Stock Appreciation Rights remain exercisable.  The Administrator shall also make equitable or proportionate
adjustments in the number of shares subject to outstanding Awards and the exercise price and the terms of outstanding Awards to take into
consideration cash dividends paid other than in the ordinary course or any other extraordinary corporate event.  The adjustment by
the Administrator shall be final, binding and conclusive.  No fractional shares of Stock shall be issued under the Plan resulting
from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional shares.

 

(d)           Mergers
and Other Transactions.  In the case of and subject to the consummation of a Sale Event, the parties thereto may cause the
assumption or continuation of Awards theretofore granted by the successor entity, or the substitution of such Awards with new Awards
of the successor entity or parent thereof, with appropriate adjustment as to the number and kind of shares and, if appropriate, the
per share exercise prices, as such parties shall agree.  To the extent the parties to such Sale Event do not provide for the
assumption, continuation or substitution of Awards, upon the effective time of the Sale Event, the Plan and all outstanding Awards
granted hereunder shall terminate.  In such case, except as may be otherwise provided in the relevant Award Certificate, all
Options and Stock Appreciation Rights that are not exercisable immediately prior to the effective time of the Sale Event shall
become fully exercisable as of the effective time of the Sale Event, all other Awards with time-based vesting, conditions or
restrictions shall become fully vested and nonforfeitable as of the effective time of the Sale Event, and all Awards with conditions
and restrictions relating to the attainment of performance goals may become vested and nonforfeitable in connection with a Sale
Event in the Administrator’s discretion or to the extent specified in the relevant Award Certificate.  In the event of
such termination, (i) the Company shall have the option (in its sole discretion) to make or provide for a payment, in cash or
in kind, to the grantees holding Options and Stock Appreciation Rights, in exchange for the cancellation thereof, in an amount equal
to the difference between (A) the Sale Price multiplied by the number of shares of Stock subject to outstanding Options and
Stock Appreciation Rights (to the extent then exercisable at prices not in excess of the Sale Price) and (B) the aggregate
exercise price of all such outstanding Options and Stock Appreciation Rights (provided that, in the case of an Option or Stock
Appreciation Right with an exercise price equal to or greater than the Sale Price, such Option or Stock Appreciation Right shall be
cancelled for no consideration); or (ii) each grantee shall be permitted, within a specified period of time prior to the
consummation of the Sale Event as determined by the Administrator, to exercise all outstanding Options and Stock Appreciation Rights
(to the extent then exercisable) held by such grantee.  The Company shall also have the option (in its sole discretion) to make
or provide for a payment, in cash or in kind, to the grantees holding other Awards in an amount equal to the Sale Price multiplied
by the number of vested shares of Stock under such Awards.

 

     

     

    

 

SECTION 4.  ELIGIBILITY

 

Grantees under the Plan
will be such individuals to whom the Company may issue securities without stockholder approval in accordance with the NASDAQ Inducement
Exception, as are selected from time to time by the Administrator in its sole discretion.

 

SECTION 5.  STOCK OPTIONS

 

(a)           Award
of Stock Options.  The Administrator may grant Stock Options under the Plan.  Any Stock Option granted under the Plan shall
be a Non-Qualified Stock Option and shall be in such form as the Administrator may from time to time approve.

 

Stock Options granted
pursuant to this Section 5 shall be subject to the following terms and conditions and shall contain such additional terms and conditions,
not inconsistent with the terms of the Plan, as the Administrator shall deem desirable.

 

(b)           Exercise
Price.  The exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5 shall be
determined by the Administrator at the time of grant but shall not be less than one hundred percent (100%) of the Fair Market Value on
the date of grant. 

 

(c)            Option
Term.  The term of each Stock Option shall be fixed by the Administrator, but no Stock Option shall be exercisable more than
ten years after the date the Stock Option is granted. 

 

(d)           Exercisability;
Rights of a Stockholder.  Stock Options shall become exercisable at such time or times, whether or not in installments, as shall
be determined by the Administrator at or after the grant date.  The Administrator may at any time accelerate the exercisability of
all or any portion of any Stock Option.  An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise
of a Stock Option and not as to unexercised Stock Options.

 

(e)            Method
of Exercise.  Stock Options may be exercised in whole or in part, by giving written or electronic notice of exercise to the Company,
specifying the number of shares to be purchased.  Payment of the purchase price may be made by one or more of the following methods
except to the extent otherwise provided in the Option Award Certificate:

 

(i)               In
cash, by certified or bank check or other instrument acceptable to the Administrator;

 

     

     

    

 

(ii)            Through
the delivery (or attestation to the ownership following such procedures as the Company may prescribe) of shares of Stock that are not
then subject to restrictions under any Company plan.  Such surrendered shares shall be valued at Fair Market Value on the exercise
date;

 

(iii)            By
the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the optionee
chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements
of indemnity and other agreements as the Company shall prescribe as a condition of such payment procedure; or

 

(iv)             By
a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Stock issuable upon exercise
by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price. Payment instruments
will be received subject to collection.  The transfer to the optionee on the records of the Company or of the transfer agent of the
shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the optionee (or a purchaser
acting in his stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and
the fulfillment of any other requirements contained in the Option Award Certificate or applicable provisions of laws (including the satisfaction
of any withholding taxes that the Company is obligated to withhold with respect to the optionee).  In the event an optionee chooses
to pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred
to the optionee upon the exercise of the Stock Option shall be net of the number of attested shares.  In the event that the Company
establishes, for itself or using the services of a third party, an automated system for the exercise of Stock Options, such as a system
using an internet website or interactive voice response, then the paperless exercise of Stock Options may be permitted through the use
of such an automated system.

 

SECTION 6.  STOCK APPRECIATION
RIGHTS

 

(a)           Award
of Stock Appreciation Rights.  The Administrator may grant Stock Appreciation Rights under the Plan.  A Stock Appreciation
Right is an Award entitling the recipient to receive shares of Stock (or cash, to the extent explicitly provided for in the applicable
Award Certificate) having a value equal to the excess of the Fair Market Value of a share of Stock on the date of exercise over the exercise
price of the Stock Appreciation Right multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall
have been exercised.

 

(b)          Exercise
Price of Stock Appreciation Rights.  The exercise price of a Stock Appreciation Right shall not be less than one hundred percent
(100%) of the Fair Market Value of the Stock on the date of grant.

 

(c)          Grant
and Exercise of Stock Appreciation Rights.  Stock Appreciation Rights may be granted by the Administrator independently of any
Stock Option granted pursuant to Section 5 of the Plan.

 

(d)          Terms
and Conditions of Stock Appreciation Rights.  Stock Appreciation Rights shall be subject to such terms and conditions as shall
be determined on the date of grant by the Administrator.  The term of a Stock Appreciation Right may not exceed ten years. 
The terms and conditions of each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual
Awards and grantees.

 

SECTION 7.  RESTRICTED STOCK
AWARDS

 

(a)          Nature
of Restricted Stock Awards.  The Administrator may grant Restricted Stock Awards under the Plan.  A Restricted Stock Award
is any Award of Restricted Shares subject to such restrictions and conditions as the Administrator may determine at the time of grant. 
Conditions may be based on continuing employment (or other Service Relationship) and/or achievement of pre-established performance goals
and objectives.

 

     

     

    

 

(b)           Rights
as a Stockholder.  Upon the grant of the Restricted Stock Award and payment of any applicable purchase price, a grantee
shall have the rights of a stockholder with respect to the voting of the Restricted Shares and receipt of dividends; provided that
if the lapse of restrictions with respect to the Restricted Stock Award is tied to the attainment of performance goals, any
dividends paid by the Company during the performance period shall accrue and shall not be paid to the grantee until and to the
extent the performance goals are met with respect to the Restricted Stock Award.  Unless the Administrator shall otherwise
determine, (i) uncertificated Restricted Shares shall be accompanied by a notation on the records of the Company or the
transfer agent to the effect that they are subject to forfeiture until such Restricted Shares are vested as provided in
Section 7(d) below, and (ii) certificated Restricted Shares shall remain in the possession of the Company until such
Restricted Shares are vested as provided in Section 7(d) below, and the grantee shall be required, as a condition of the
grant, to deliver to the Company such instruments of transfer as the Administrator may prescribe.

 

(c)            Restrictions. 
Restricted Shares may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the Restricted Stock Award Certificate.  Except as may otherwise be provided by the Administrator either in the Award
Certificate or, subject to Section 15 below, in writing after the Award is issued, if a grantee’s employment (or other service
relationship) with the Company and its Subsidiaries terminates for any reason, any Restricted Shares that have not vested at the time
of termination shall automatically and without any requirement of notice to such grantee from or other action by or on behalf of, the
Company be deemed to have been reacquired by the Company at its original purchase price (if any) from such grantee or such grantee’s
legal representative simultaneously with such termination of employment (or other service relationship), and thereafter shall cease to
represent any ownership of the Company by the grantee or rights of the grantee as a stockholder.  Following such deemed reacquisition
of Restricted Shares that are represented by physical certificates, a grantee shall surrender such certificates to the Company upon request
without consideration.

 

(d)           Vesting
of Restricted Shares.  The Administrator at the time of grant shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the non-transferability of the Restricted Shares and the Company’s right
of repurchase or forfeiture shall lapse.  Subsequent to such date or dates and/or the attainment of such pre-established performance
goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Shares and shall
be deemed “vested.”

 

SECTION 8.  RESTRICTED STOCK
UNITS

 

(a)           Nature
of Restricted Stock Units.  The Administrator may grant Restricted Stock Units under the Plan.  A Restricted Stock Unit
is an Award of stock units that may be settled in shares of Stock (or cash, to the extent explicitly provided for in the Award Certificate)
upon the satisfaction of such restrictions and conditions at the time of grant.  Conditions may be based on continuing employment
(or other service relationship) and/or achievement of pre-established performance goals and objectives.  The terms and conditions
of each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees. 
Except in the case of Restricted Stock Units with a deferred settlement date that complies with Section 409A, at the end of the vesting
period, the Restricted Stock Units, to the extent vested, shall be settled in the form of shares of Stock.  Restricted Stock Units
with deferred settlement dates are subject to Section 409A and shall contain such additional terms and conditions as the Administrator
shall determine in its sole discretion in order to comply with the requirements of Section 409A.

 

(b)            Rights
as a Stockholder.  A grantee shall have the rights as a stockholder only as to shares of Stock acquired by the grantee upon settlement
of Restricted Stock Units; provided, however, that the grantee may be credited with Dividend Equivalent Rights with respect to the stock
units underlying his Restricted Stock Units, subject to the provisions of Section 10 and such terms and conditions as the Administrator
may determine.

 

(c)           Termination. 
Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 15 below, in writing
after the Award is issued, a grantee’s right in all Restricted Stock Units that have not vested shall automatically terminate upon
the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.

 

     

     

    

 

SECTION 9.  UNRESTRICTED
STOCK AWARDS

 

Grant or Sale of
Unrestricted Stock.  The Administrator may grant (or sell at par value or such higher purchase price determined by the
Administrator) an Unrestricted Stock Award under the Plan.  An Unrestricted Stock Award is an Award pursuant to which the
grantee may receive shares of Stock free of any restrictions under the Plan.  Unrestricted Stock Awards may be granted in
respect of past services or other valid consideration, or in lieu of cash compensation due to such grantee.

 

SECTION 10.  DIVIDEND EQUIVALENT
RIGHTS

 

(a)           Dividend
Equivalent Rights.  The Administrator may grant Dividend Equivalent Rights under the Plan.  A Dividend Equivalent Right
is an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the shares of Stock specified
in the Dividend Equivalent Right (or other Award to which it relates) if such shares had been issued to the grantee.  A Dividend
Equivalent Right may be granted hereunder to any grantee as a component of an award of Restricted Stock Units or as a freestanding award. 
The terms and conditions of Dividend Equivalent Rights shall be specified in the Award Certificate.  Dividend equivalents credited
to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of Stock, which
may thereafter accrue additional equivalents.  Any such reinvestment shall be at Fair Market Value on the date of reinvestment or
such other price as may then apply under a dividend reinvestment plan sponsored by the Company, if any.  Dividend Equivalent Rights
may be settled in cash or shares of Stock or a combination thereof, in a single installment or installments.  A Dividend Equivalent
Right granted as a component of an Award of Restricted Stock Units shall provide that such Dividend Equivalent Right shall be settled
only upon settlement or payment of, or lapse of restrictions on, such other Award, and that such Dividend Equivalent Right shall expire
or be forfeited or annulled under the same conditions as such other Award.

 

(b)           Termination. 
Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 15 below, in writing
after the Award is issued, a grantee’s rights in all Dividend Equivalent Rights shall automatically terminate upon the grantee’s
termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.

 

SECTION 11.  TRANSFERABILITY
OF AWARDS

 

(a)           Transferability. 
Except as provided in Section 11(b) below, during a grantee’s lifetime, his or her Awards shall be exercisable only by
the grantee, or by the grantee’s legal representative or guardian in the event of the grantee’s incapacity.  No Awards
shall be sold, assigned, transferred or otherwise encumbered or disposed of by a grantee other than by will or by the laws of descent
and distribution or pursuant to a domestic relations order.  No Awards shall be subject, in whole or in part, to attachment, execution,
or levy of any kind, and any purported transfer in violation hereof shall be null and void.

 

(b)           Administrator
Action.  Notwithstanding Section 11(a), the Administrator, in its discretion, may provide either in the Award Certificate
regarding a given Award or by subsequent written approval that the grantee (who is an employee or director) may transfer his or her Non-Qualified
Stock Options to his or her immediate family members, to trusts for the benefit of such family members, or to partnerships in which such
family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of the terms
and conditions of this Plan and the applicable Award.  In no event may an Award be transferred by a grantee for value.

 

(c)            Family
Member.  For purposes of Section 11(b), “family member” shall mean a grantee’s child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee’s household (other than a tenant
of the grantee), a trust in which these persons (or the grantee) have more than fifty percent (50%) of the beneficial interest, a foundation
in which these persons (or the grantee) control the management of assets, and any other entity in which these persons (or the grantee)
own more than fifty percent (50%) of the voting interests.

 

(d)           Designation
of Beneficiary.  To the extent permitted by the Company, each grantee to whom an Award has been made under the Plan may designate
a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award payable on or after the grantee’s death. 
Any such designation shall be on a form provided for that purpose by the Administrator and shall not be effective until received by the
Administrator.  If no beneficiary has been designated by a deceased grantee, or if the designated beneficiaries have predeceased
the grantee, the beneficiary shall be the grantee’s estate.

 

     

     

    

 

SECTION 12.  TAX WITHHOLDING

 

(a)           Payment
by Grantee.  Each grantee shall, no later than the date as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the grantee for Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld
by the Company with respect to such income.  The Company and its Subsidiaries shall, to the extent permitted by law, have the right
to deduct any such taxes from any payment of any kind otherwise due to the grantee.  The Company’s obligation to deliver evidence
of book entry (or stock certificates) to any grantee is subject to and conditioned on tax withholding obligations being satisfied by the
grantee.

 

(b)           Payment
in Stock.  Subject to approval by the Administrator, a grantee may elect to have the Company’s required tax withholding
obligation satisfied, in whole or in part, by authorizing the Company to withhold from shares of Stock to be issued pursuant to any Award
a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding
amount due; provided, however, that the amount withheld does not exceed the maximum statutory tax rate or such lesser amount as is necessary
to avoid liability accounting treatment.  The Administrator may also require Awards to be subject to mandatory share withholding
up to the required withholding amount.  For purposes of share withholding, the Fair Market Value of withheld shares shall be determined
in the same manner as the value of Stock includible in income of the Participants.  The required tax withholding obligation may also
be satisfied, in whole or in part, by an arrangement whereby a certain number of shares of Stock issued pursuant to any Award are immediately
sold and proceeds from such sale are remitted to the Company in an amount that would satisfy the withholding amount due.

 

SECTION 13.  SECTION 409A
AWARDS

 

To the extent that any
Award is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A (a “409A
Award”), the Award shall be subject to such additional rules and requirements as specified by the Administrator from time
to time in order to comply with Section 409A.  In this regard, if any amount under a 409A Award is payable upon a “separation
from service” (within the meaning of Section 409A) to a grantee who is then considered a “specified employee” (within
the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and
one day after the grantee’s separation from service, or (ii) the grantee’s death, but only to the extent such delay is
necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. 
Further, the settlement of any 409A Award may not be accelerated except to the extent permitted by Section 409A.

 

SECTION 14.  TERMINATION
OF EMPLOYMENT, TRANSFER, LEAVE OF ABSENCE, ETC.

 

(a)           Termination
of Employment.  If the grantee’s Service Relationship is with a Subsidiary and such Subsidiary ceases to be a Subsidiary,
the grantee shall be deemed to have terminated his or her Service Relationship for purposes of the Plan.

 

(b)           For
purposes of the Plan, the following events shall not be deemed a termination of employment:

 

(i)               a
transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or

 

(ii)            an
approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee’s
right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was
granted or if the Administrator otherwise so provides in writing.

 

     

     

    

 

SECTION 15.  AMENDMENTS
AND TERMINATION

 

The Board may, at
any time, amend or discontinue the Plan and the Administrator may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any
outstanding Award without the holder’s consent.  Except as provided in Section 3(c) or 3(d), without prior
stockholder approval, in no event may the Administrator exercise its discretion to reduce the exercise price of outstanding Stock
Options or Stock Appreciation Rights or effect repricing through cancellation and re-grants or cancellation of Stock Options or
Stock Appreciation Rights in exchange for cash or other Awards.  Nothing in this Section 15 shall limit the
Administrator’s authority to take any action permitted pursuant to Section 3(c) or 3(d).

 

SECTION 16.  STATUS OF PLAN

 

With respect to the portion
of any Award that has not been exercised and any payments in cash, Stock or other consideration not received by a grantee, a grantee shall
have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards.  In its sole discretion, the Administrator may authorize the creation of trusts or other arrangements
to meet the Company’s obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence
of such trusts or other arrangements is consistent with the foregoing sentence.

 

SECTION 17.  GENERAL PROVISIONS

 

(a)           No
Distribution.  The Administrator may require each person acquiring Stock pursuant to an Award to represent to and agree with
the Company in writing that such person is acquiring the shares without a view to distribution thereof.

 

(b)           Issuance
of Stock.  To the extent certificated, stock certificates to grantees under this Plan shall be deemed delivered for all purposes
when the Company or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to
the grantee, at the grantee’s last known address on file with the Company.  Uncertificated Stock shall be deemed delivered
for all purposes when the Company or a Stock transfer agent of the Company shall have given to the grantee by electronic mail (with proof
of receipt) or by United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company, notice
of issuance and recorded the issuance in its records (which may include electronic “book entry” records).  Notwithstanding
anything herein to the contrary, the Company shall not be required to issue or deliver any evidence of book entry or certificates evidencing
shares of Stock pursuant to the exercise or settlement of any Award, unless and until the Administrator has determined, with advice of
counsel (to the extent the Administrator deems such advice necessary or advisable), that the issuance and delivery is in compliance with
all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the shares
of Stock are listed, quoted or traded.  Any Stock issued pursuant to the Plan shall be subject to any stop-transfer orders and other
restrictions as the Administrator deems necessary or advisable to comply with federal, state or foreign jurisdiction, securities or other
laws, rules and quotation system on which the Stock is listed, quoted or traded.  The Administrator may place legends on any
Stock certificate or notations on any book entry to reference restrictions applicable to the Stock.  In addition to the terms and
conditions provided herein, the Administrator may require that an individual make such reasonable covenants, agreements, and representations
as the Administrator, in its discretion, deems necessary or advisable in order to comply with any such laws, regulations, or requirements. 
The Administrator shall have the right to require any individual to comply with any timing or other restrictions with respect to the settlement
or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Administrator.

 

(c)            Stockholder
Rights.  Until Stock is deemed delivered in accordance with Section 18(b), no right to vote or receive dividends or any
other rights of a stockholder will exist with respect to shares of Stock to be issued in connection with an Award, notwithstanding the
exercise of a Stock Option or any other action by the grantee with respect to an Award.

 

(d)           Other
Compensation Arrangements; No Employment Rights.  Nothing contained in this Plan shall prevent the Board from adopting other
or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only
in specific cases.  The adoption of this Plan and the grant of Awards do not confer upon any employee any right to continued employment
with the Company or any Subsidiary.

 

     

     

    

 

(e)            Trading
Policy Restrictions.  Option exercises and other Awards under the Plan shall be subject to the Company’s insider trading
policies and procedures, as in effect from time to time.

 

(f)             Clawback
Policy.  Awards under the Plan shall be subject to the Company’s clawback policy, as in effect from time to time.

 

SECTION 18.  EFFECTIVE DATE
OF PLAN

 

This Plan shall become
effective upon approval by the Board.

 

SECTION 19.  GOVERNING LAW

 

This Plan and all Awards
and actions taken thereunder shall be governed by, and construed in accordance with the General Corporation Law of the State of Delaware
as to matters within the scope thereof, and as to all other matters shall be governed by and construed in accordance with the internal
laws of the Commonwealth of Massachusetts, applied without regard to conflict of law principles.

 

DATE APPROVED BY BOARD OF DIRECTORS:Exhibit 10.2

          

     

      

    

      	
              FS Bancorp, Inc. (the “Company”)

              Nonqualified 2022 Stock Purchase Plan (“NSPP”)

               

              Capitalized terms used but not otherwise defined herein shall

              have the meaning given to them in the NSPP.

               

               

            	
               

            	
              Enrollment / Change Form

            

    

    Section 1:            ACTIONS

    Check Desired Action Complete Sections

    ☐   Enroll in the NSPP 2 + 3 + 4 + 16

    ☐   Elect / Change Contribution Percentage                      2
        + 4 + 16

    ☐   Withdraw from NSPP                                                 2 + 5 + 16

    Section 2:              PERSONAL DATA

    Name: __________________________________________

    Home Address:                          __________________________________________

               __________________________________________

    SSN or Employee ID:            __________________________________________

    Section 3:              ENROLL

    ☐ I hereby elect to participate in the FS Bancorp, Inc. Nonqualified 2022 Stock Purchase Plan (the “NSPP”), effective at the beginning of the next Offering Period. I elect to purchase shares of Common Stock of the Company pursuant to the terms and conditions of the NSPP and this Enrollment/Change
        Form. I understand that the shares purchased on my behalf will be issued in street name and deposited directly into my brokerage account. I hereby agree to take all steps, and sign all forms, required to establish an account with the Company’s
        broker for this purpose. My participation will continue as long as I remain eligible, unless I withdraw from the NSPP by filing a new Enrollment/Change Form with the Company or any third party designated by the Company.

    

    

    Section 4:              CONTRIBUTION ELECTION PERCENTAGE OR DOLLAR AMOUNT

    I hereby authorize the Company to withhold from my Compensation such amount as is necessary to equal at the end of the applicable Offering Period (not to exceed $28,000 worth of Company Stock in any calendar year):

    

    

    ☐ ____ % of my Compensation paid during such Purchase Period, as long as I continue to participate in the NSPP. (The percentage must be a whole number.)

    

    

    ☐ $ ________    (withheld or paid over the Offering Period), as long as I continue to
        participate in the NSPP.

    

    

    

    

    
      
        

    

    

    

    “Compensation” has the meaning provided for in the NSPP, and generally means: (1) for Employees, base compensation, commissions and bonuses, (2) for
      Directors, directors fees, and (3) for independent contractors, amounts actually paid in cash by the Company or a Designated Subsidiary for the performance of Services.

    

    

    My contributions will be applied to the purchase of shares of Common Stock pursuant to the NSPP. 

     

    Note: You may not change your
      contributions during an ongoing Offering Period. A change in your contribution percentage or dollar amount can only take effect with the next Offering Period.

    Section 5:    WITHDRAWAL FROM NSPP / DISCONTINUE CONTRIBUTIONS

    ☐ I hereby elect to withdraw from the NSPP and stop my contributions under the NSPP, effective as soon as reasonably practicable after this form is received by the Company.
        Accumulated contributions will be returned to me without interest, pursuant to Section 10 of the NSPP.

     

    Note: No future contributions
      will be made if you elect to withdraw from the NSPP.  By making this election, you acknowledge and understand that you may not resume participation in
        the NSPP until the start of the next Offering Period and must timely file a new enrollment form to do so.

    Section 6:    NO ADVICE REGARDING PARTICIPATION

    The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding my
      participation in the NSPP or my acquisition or sale of Common Stock. I acknowledge, understand and agree that I should consult with my own personal tax, legal and financial advisors regarding my participation in the NSPP before taking any action
      related to the NSPP.

    Section 7:    NATURE OF GRANT

    By enrolling and participating in the NSPP, I acknowledge, understand and agree that:

     

    
      	
              a.

            	
              The NSPP is established voluntarily by the Company and it is discretionary in nature;

            

    

    

    

    
      	
              b.

            	
              The NSPP is not a tax-qualified employee stock purchase plan within the meaning of Code Section 423, and as such the tax and
                other benefits accorded to tax-qualified employee stock purchase plans are not available under this Plan;

            

    

     

    
      	
              c.

            	
              All decisions with respect to future offers to participate in the NSPP, if any, will be at the sole discretion of the Committee;

            

    

     

    
      	
              d.

            	
              I am voluntarily participating in the NSPP;

            

    

    

    

    
      	
              e.

            	
              The purchase price of the Common Stock is 100% of the fair market value of the Common Stock on the Exercise Date, as defined in the NSPP (i.e.,
                there is no discounted purchase price);

            

    

    

    

    

    

    

    

    
      
        

    

    

    

    
      	
              f.

            	
              By participating in the Plan, I am entitled to a matching contribution of Common Stock, subject in all respects to the terms and limits of the
                NSPP;

            

    

     

    
      	
              g.

            	
              The purchase rights and Common Stock subject to the purchase rights, and the income from and value of same, are not intended
                to replace any pension rights or compensation; and

            

    

    
      	
              h.

            	
               The purchase rights and the Common Stock subject to the purchase rights, and the income from and value of same, are not part
                of normal or expected compensation for any purpose, including, but not limited to calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or
                welfare benefits or similar payments.

            

    

    Section 8:                RESPONSIBILITY FOR TAXES

    I acknowledge that, regardless of any action taken by the Company or a Designated Subsidiary, the ultimate liability for all income tax or other tax
      related items related to my participation in the NSPP and legally applicable to me (“Tax-Related Items”) is and remains my
      responsibility and may exceed the amount withheld (if any) by the Company or a Designated Subsidiary. I further acknowledge that the Company and all Designated Subsidiaries: (i) make no representations or undertakings regarding the treatment of
      any Tax-Related Items in connection with any aspect of the purchase rights granted pursuant to the NSPP, including, but not limited to, the purchase of Common Stock, the subsequent sale of Common Stock acquired pursuant to such purchase and the
      receipt of any dividends (if any); and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of my participation to reduce or eliminate my liability for Tax-Related Items or achieve any particular tax
      result.

     

    Prior to any relevant taxable or tax withholding event, as applicable, I agree to make arrangements satisfactory to the Company or a Designated Subsidiary
      to fulfill all Tax-Related Items. In this regard, I authorize the Company or a Designated Subsidiary, or their agents, at their discretion, to satisfy any withholding obligations for Tax-Related Items by one or a combination of the following:

     

    a.   withholding from my wages or other cash compensation paid to me by the Company or a Designated Subsidiary;

     

    b.  withholding from proceeds of the sale of Common Stock acquired upon purchase either through a voluntary sale or
      through a mandatory sale arranged by the Company or a Designated Subsidiary (on my behalf pursuant to this authorization and without further consent);

     

    c.   my payment of a cash amount (including by check representing readily available funds or a wire transfer) to the
      Company or a Designated Subsidiary; or

     

    d.  any other arrangement approved by the Committee and permitted under applicable law.

     

    Depending on the withholding method, the Company or a Designated Subsidiary may withhold or account for Tax-Related Items by considering applicable
      statutory withholding rates or other applicable withholding rates, including up to the maximum permissible statutory rate for my tax 

     

    

     

    

    
      
        

    

     

    

     

    

    jurisdiction(s) in which case I will have no entitlement to the equivalent amount in Common Stock and may receive a refund of any over-withheld amount in
      cash in accordance with applicable law.

     

    Finally, I agree to pay to the Company or a Designated Subsidiary any amount of Tax-Related Items that the Company or a Designated
      Subsidiary may be required to withhold or account for as a result of my participation in the NSPP that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Common Stock or the proceeds of the sale of
      Common Stock, if I fail to comply with my obligations in connection with the Tax-Related Items.

    Section 9:    ELECTRONIC DELIVERY AND ACCEPTANCE

    The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the NSPP by
      electronic means. I hereby consent to receive such documents by electronic delivery and agree to participate in the NSPP through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

    Section 10:   COMPLIANCE WITH LAW

    Unless there is an available exemption from any registration, qualification or other legal requirement applicable to the shares of
      Common Stock the Company shall not be required to deliver any shares under the NSPP prior to the completion of any registration or qualification of the shares under any applicable law, or prior to obtaining any approval or other clearance from any
      local, state, federal or foreign governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable. I agree that the Company shall have unilateral authority to amend the NSPP
      and this Agreement without my consent to the extent necessary to comply with securities or other laws applicable to the issuance of shares.

    Section 11:   TERMINATION, MODIFICATION, AND IMPOSITION OF OTHER REQUIREMENTS

    The Company, at its option, may elect to terminate, suspend or modify the terms of the NSPP at any time, to the extent permitted by the
      NSPP. I agree to be bound by such termination, suspension or modification regardless of whether notice is given to me of such event, subject in any case to my right to timely withdraw from the NSPP in accordance with the NSPP withdrawal procedures
      then in effect. The Company reserves the right to impose other requirements on my participation in the NSPP, to the extent the Company determines it is necessary or advisable for legal or administrative reasons and to require me to sign any
      additional agreements or undertakings that may be necessary to accomplish the foregoing.

    Section 12:   SEVERABILITY

    If one or more provisions of this Agreement are held to be unenforceable under applicable law, then such provision will be enforced to
      the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced, then (i) such provision will be excluded from the Agreement, (ii) the balance of the Agreement will be interpreted as if such
      provision were so excluded and (iii) the balance of the Agreement will be enforceable in accordance with its terms.

    

    

    
      
        

    

    

    

    Section 13:   WAIVER

    I acknowledge that a waiver by the Company of breach of any provision of the Agreement shall not operate or be construed as a waiver of
      any other provision of the Agreement, or any subsequent breach by any Participant.

    Section 14:   GOVERNING LAW AND VENUE

    The Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto will be governed,
      construed and interpreted in accordance with the substantive laws of the State of Washington, without giving effect to such state’s conflict of laws rules.

    Section 15:   INSIDER TRADING RESTRICTION AND MARKET ABUSE RULES

    I acknowledge that I may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, which may
      affect my ability to directly or indirectly, accept, acquire, sell or attempt to sell or otherwise dispose of Common Stock, or rights to Common Stock (e.g., purchase
      rights), or rights linked to the value of Common Stock, during such times as I am considered to have “inside information” regarding the Company (as defined by the laws or regulations in the applicable jurisdiction). Local insider trading laws and
      regulations may prohibit the cancellation or amendment of orders I placed before possessing the inside information. Furthermore, I may be prohibited from (i) disclosing the inside information to any third party, including fellow employees (other than
      on a “need to know” basis) and (ii) “tipping” third parties or causing them to otherwise buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any
      applicable Company insider trading policy. I acknowledge that it is my responsibility to comply with any applicable restrictions and understand that I should consult my personal legal advisor on such matters. In addition, I acknowledge having read
      the Company’s insider trading policy, and agree to comply with such policy, as it may be amended from time to time, whenever I acquire or dispose of the Company’s securities.

    Section 16:  ACKNOWLEDGEMENT AND
        SIGNATURE

    I acknowledge that I have received a copy of the NSPP. I have read the NSPP and my signature below indicates that I hereby agree to be bound by the terms
      of the NSPP.

    

    

     

    Signature:                                          
                                                                                          

    Date:

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