Document:

sfbc10q093013ex1013.htm

  

  

  

SOUND FINANCIAL BANCORP, INC.

2013 EQUITY INCENTIVE PLAN

 

 

 

  

  

  

 

TABLE OF CONTENTS

 

	 	 Page
	 	 
	
ARTICLE I PURPOSE

	
1

	  	  	  
	
SECTION 1.1

	
GENERAL PURPOSE OF THE PLAN

	
1

	  	  	  
	
ARTICLE II DEFINITIONS

	
1

	  	  	  
	
ARTICLE III AVAILABLE SHARES

	
4

	  	  	  
	
SECTION 3.1

	
SHARES AVAILABLE UNDER THE PLAN

	
4

	
SECTION 3.2

	
SHARES AVAILABLE FOR OPTIONS AND STOCK APPRECIATION AWARDS

	
4

	
SECTION 3.3

	
SHARES AVAILABLE FOR RESTRICTED STOCK AWARDS

	
5

	
SECTION 3.4

	
COMPURATION OF SHARES ISSUED

	
5

	  	  	  
	
ARTICLE IV ADMINISTRATION

	
5

	  	  	  
	
SECTION 4.1

	
COMMITTEE

	
5

	
SECTION 4.2

	
COMMITTEE POWERS

	
6

	  	  	  
	
ARTICLE V STOCK OPTIONS

	
6

	  	  	  
	
SECTION 5.1

	
GRANT OF OPTIONS

	
6

	
SECTION 5.2

	
SIZE OF OPTION

	
7

	
SECTION 5.3

	
EXERCISE PRICE

	
7

	
SECTION 5.4

	
EXERCISE PERIOD

	
7

	
SECTION 5.5

	
VESTING DATE

	
7

	
SECTION 5.6

	
ADDITIONAL RESTRICTIONS ON INCENTIVE STOCK OPTIONS

	
8

	
SECTION 5.7

	
METHOD OF EXERCISE

	
8

	
SECTION 5.8

	
LIMITATIONS ON OPTIONS

	
9

	
SECTION 5.9

	
PROHIBITION AGAINST OPTION REPRICING

	
10

	  	  	  
	
ARTICLE VI STOCK APPRECIATION RIGHTS

	
11

	  	  	  
	
SECTION 6.1

	
GRANT OF STOCK APPRECIATION RIGHTS

	
11

	
SECTION 6.2

	
SIZE OF STOCK APPRECIATION RIGHT

	
11

	
SECTION 6.3

	
EXERCISE PRICE

	
11

	
SECTION 6.4

	
EXERCISE PERIOD

	
11

	
SECTION 6.5

	
VESTING DATE

	
12

	
SECTION 6.6

	
METHOD OF EXERCISE

	
12

	
SECTION 6.7

	
LIMITATIONS ON STOCK APPRECIATION RIGHTS

	
13

	
SECTION 6.8

	
PROHIBITION AGAINST STOCK APPRECIATION RIGHT REPRICING

	
14

	  	  	  
	
ARTICLE VII RESTICTED STOCK AWARDS

	
14

	  	  	  
	
SECTION 7.1

	
IN GENERAL

	
14

	
SECTION 7.2

	
VESTING DATE

	
15

	
SECTION 7.3

	
DIVIDEND RIGHTS

	
16

	
SECTION 7.4

	
VOTING RIGHTS

	
16

	
SECTION 7.5

	
DESIGNATION OF BENEFICIARY

	
16

	
SECTION 7.6

	
MANNER OF DISTRIBUTION OF AWARDS

	
16

	  	  	  
	
ARTICLE VIII SPECIAL TAX PROVISION

	
17

	  	  	  
	
SECTION 8.1

	
TAX WITHHOLDING RIGHTS

	
17

	  	  	  
	
ARTICLE IX AMENDMENT AND TERMINATION

	
17

	  	  	  
	
SECTION 9.1

	
TERMINATION

	
17

	
SECTION 9.2

	
AMENDMENT

	
17

	
SECTION 9.3

	
ADJUSTMENTS IN THE EVENT OF BUSINESS REORGANIZATION

	
17

  

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ARTICLE X MISCELLANEOUS

	
18

	  	  	  
	
SECTION 10.1

	
STATUS AS AN EMPLOYEE BENEFIT PLAN

	
18

	
SECTION 10.2

	
NO RIGHT TO CONTINUED SERVICE

	
18

	
SECTION 10.3

	
CONSTRUCTION OF LANGUAGE

	
18

	
SECTION 10.4

	
SEVERABILITY

	
18

	
SECTION 10.5

	
GOVERNING LAW

	
19

	
SECTION 10.6

	
HEADINGS

	
19

	
SECTION 10.7

	
NON-ALIENATION OF BENEFITS

	
19

	
SECTION 10.8

	
NOTICES

	
19

	
SECTION 10.9

	
APPROVAL OF SHAREHOLDERS

	
19

	
SECTION 10.10

	
CLAWBACK

	
19

	
SECTION 10.11

	
COMPLIANCE WITH SECTION 409A

	
20

  

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Sound Financial Bancorp, Inc.

 

2013 Equity Incentive Plan

 

ARTICLE I

 

PURPOSE

 

Section 1.1General Purpose of the Plan.

 

The purpose of the Plan is to promote the long-term growth and profitability of Sound Financial Bancorp, Inc., to provide directors, advisory or emeritus directors, officers and employees of Sound Financial Bancorp, Inc. and its affiliates with an incentive to achieve corporate objectives, to attract and retain individuals of outstanding competence and to provide such individuals with an equity interest in Sound Financial Bancorp, Inc. in order to provide Plan Participants with incentives that are closely linked to the interests of all stockholders of Sound Financial Bancorp, Inc.  The Plan is not intended to expose Sound Financial Bancorp, Inc. to imprudent risks.

 

ARTICLE II

 

DEFINITIONS

 

The following definitions shall apply for the purposes of this Plan, unless a different meaning is plainly indicated by the context:

 

Affiliate means any “parent corporation” or “subsidiary corporation” of the Company, as those terms are defined in Section 424(e) and (f) respectively, of the Code.

 

Award means the grant by the Committee of an Incentive Stock Option, a Non-Qualified Stock Option, a Stock Appreciation Right, a Restricted Stock Award or any other benefit under this Plan.

 

Award Agreement means a written instrument evidencing an Award under the Plan and establishing the terms and conditions thereof.

 

Beneficiary means the Person designated by a Participant to receive any Shares subject to a Restricted Stock Award made to such Participant that become distributable, or to have the right to exercise any Options or Stock Appreciation Rights granted to such Participant that are exercisable, following the Participant’s death.

 

Board means the Board of Directors of Sound Financial Bancorp, Inc. and any successor thereto.

 

Change in Control means any of the following events:

 

(a) any third Person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner of Shares with respect to which 25% or more of the total number of votes that may be cast for the election of the Board (other than a tax-qualified plan of the Company or its Affiliate);

 

(b) as a result of, or in connection with, any cash tender offer, merger or other business combination, sale of assets or contested election(s), or combination of the foregoing, the individuals who were members of the Board of Directors on the date of adoption of this Plan (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date of adoption of this Plan whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company’s stockholders was approved by the nominating committee serving under an Incumbent Board, shall be considered a member of the Incumbent Board; or

 

 

  

  

  

 

(c) a tender offer or exchange offer for 25% or more of the total outstanding Shares is completed (other than such an offer by the Company); or

 

(d) the stockholders of the Company approve an agreement providing either for a transaction in which the Company will cease to be an independent publicly owned corporation or for a sale or other disposition of all or substantially all the assets of the Company.

 

Code means the Internal Revenue Code of 1986, as amended from time to time.

 

Committee means the Committee described in Article IV.

 

Company means Sound Financial Bancorp, Inc., a Maryland corporation, and any successor thereto.

 

Disability means a total and permanent disability, within the meaning of Code Section 22(e)(3), as determined by the Committee in good faith, upon receipt of sufficient competent medical advice from one or more individuals, selected by the Committee, who are qualified to give professional medical advice.

 

Domestic Relations Order means a domestic relations order that satisfies the requirements of Section 414(p)(1)(B) of the Code, or any successor provision, as if such section applied to the applicable Award.

 

Effective Date means the date on which the Plan is approved by the stockholders of Sound Financial Bancorp, Inc.

 

Exchange Act means the Securities Exchange Act of 1934, as amended.

 

Exercise Period means the period during which an Option or Stock Appreciation Right may be exercised.

 

Exercise Price means the price per Share at which Shares subject to an Option may be purchased upon exercise of the Option and on the basis of which the Shares due upon exercise of a Stock Appreciation Right is computed.

 

 

 

  

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Fair Market Value means, with respect to a Share on a specified date:

 

(a) If the Shares are listed on any U.S. national securities exchange registered under the Securities Exchange Act of 1934 (“National Exchange”), the closing sales price for such stock (or the closing bid, if no sales were reported) as reported on that exchange on the applicable date, or if the applicable date is not a trading day, on the trading day immediately preceding the applicable date;

 

(b) If the Shares are not listed on a National Exchange but are traded on the over-the-counter market or other similar system, the mean between the closing bid and the asked price for the Shares at the close of trading in the over-the-counter market or other similar system on the applicable date, or if the applicable date is not a trading day, on the trading day immediately preceding the applicable date; and

 

(c) In the absence of such markets for the Shares, the Fair Market Value shall be determined in good faith by the Committee.

 

Family Member means with respect to any Participant, any 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 Participant’s household (other than a tenant or employee), a trust in which these persons have more than fifty percent of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty percent of the voting interests.

 

Incentive Stock Option means a right to purchase Shares that is granted to an employee of the Company or any Affiliate that is designated by the Committee to be an Incentive Stock Option and that is intended to satisfy the requirements of Section 422 of the Code.

 

Non-Qualified Stock Option means a right to purchase Shares that is not intended to qualify as an Incentive Stock Option or does not satisfy the requirements of Section 422 of the Code.

 

Option means either an Incentive Stock Option or a Non-Qualified Stock Option.

 

Option Holder means, at any relevant time with respect to an Option, the person having the right to exercise the Option.

 

Participant means any director, advisory or emeritus director, officer or employee of the Company or any Affiliate who is selected by the Committee to receive an Award.

 

Permitted Transferee means, with respect to any Participant, a Family Member of the Participant to whom an Award has been transferred as permitted hereunder.

 

Person means an individual, a corporation, a partnership, a limited liability company, an association, a joint-stock company, a trust, an estate, an unincorporated organization and any other business organization or institution.

 

Plan means the Sound Financial Bancorp, Inc. 2013 Equity Incentive Plan, as amended from time to time.

 

 

  

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Restricted Stock Award means an award of Shares or Share Units pursuant to Article VII.

 

Service means, unless the Committee provides otherwise in an Award Agreement, service in any capacity as a director, advisory or emeritus director, officer or employee of the Company or any Affiliate.

 

Share means a share of common stock, par value $.01 per share, of Sound Financial Bancorp, Inc.

 

Share Unit means the right to receive a Share at a specified future date.

 

Stock Appreciation Right means the right to receive a payment in Shares or cash measured by the increase in the Fair Market Value of a Share over the Exercise Price of that Stock Appreciation Right.

 

Stock Appreciation Right Holder means, at any relevant time with respect to a Stock Appreciation Right, the person having the right to exercise the Stock Appreciation Right.

 

Termination for Cause means termination upon an intentional failure to perform stated duties, a breach of a fiduciary duty involving personal dishonesty which results in material loss to the Company or one of its Affiliates or a willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or a final cease-and-desist order which results in material loss to the Company or one of its Affiliates.  No act or failure to act on Participant’s part shall be considered willful unless done, or omitted to be done, not in good faith and without reasonable belief that the action or omission was in the best interest of the Company.  Notwithstanding the above, if a Participant is subject to a different definition of termination for cause in an employment or severance or similar agreement with the Company or any Affiliate, such other definition shall control.

 

Vesting Date means the date or dates on which the grant of an Option or Stock Appreciation Right is eligible to be exercised or the date or dates on which a Restricted Stock Award ceases to be forfeitable.

 

ARTICLE III

 

AVAILABLE SHARES

 

Section 3.1Shares Available Under the Plan.

 

Subject to adjustment under Article IX, the maximum aggregate number of Shares representing Awards shall not exceed 198,450 Shares.  Shares representing tandem Stock Appreciation Rights shall for such purpose only be counted as either Shares representing Options outstanding or Stock Appreciation Rights outstanding, but not as both.

 

Section 3.2Shares Available for Options and Stock Appreciation Rights.

 

Subject to adjustment under Article IX, the maximum aggregate number of Shares which may be issued upon exercise of Options and Stock Appreciation Rights shall be 141,750 Shares, and the maximum aggregate number of Shares which respect to which Options and Stock Appreciation Rights may be granted to any one individual in any calendar year shall be 35,400 Shares.  The maximum aggregate number of Shares which may be issued upon exercise of Incentive Stock Options shall be 141,750.

 

 

  

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Section 3.3Shares Available for Restricted Stock Awards.

 

Subject to adjustment under Article IX, the maximum aggregate number of Shares with respect to which Restricted Stock Awards may be issued under the Plan shall be 56,700 Shares and the maximum number of Shares with respect to which Restricted Stock Awards may be granted under the Plan to any one individual in any calendar year shall be 14,175.

 

Section 3.4Computation of Shares Issued.

 

For purposes of this Article III, Shares shall be considered issued pursuant to the Plan only if actually issued upon the exercise of an Option or Stock Appreciation Right or in connection with a Restricted Stock Award.  Any Award subsequently forfeited, in whole or in part, shall not be considered issued. If any Award granted under the Plan terminates, expires, or lapses for any reason, any Shares subject to such Award again shall be available for the grant of an Award under the Plan.  Shares used to pay the Exercise Price of an Option and Shares used to satisfy tax withholding obligations shall not be available for future Awards under the Plan.  To the extent that Shares are delivered pursuant to the exercise of an Option or a Stock Appreciation Right, the number of underlying Shares as to which the exercise related shall be counted against the number of Shares available for Awards, as opposed to only counting the Shares issued.

 

ARTICLE IV

 

ADMINISTRATION

 

Section 4.1Committee.

 

(a)           The Plan shall be administered by a Committee appointed by the Board for that purpose and consisting of not less than two (2) members of the Board.  Each member of the Committee shall be an “Outside Director” within the meaning of Section 162(m) of the Code or a successor rule or regulation, a “Non-Employee Director” within the meaning of Rule 16b-3(b)(3)(i) under the Exchange Act or a successor rule or regulation and an “Independent Director,” and shall satisfy any other membership requirements, under the corporate governance rules and regulations imposing independence and other membership standards on committees performing similar functions promulgated by any national securities exchange or quotation system on which Shares are listed.

 

(b)           The act of a majority of the members present at a meeting duly called and held shall be the act of the Committee.  Any decision or determination reduced to writing and signed by all members shall be as fully effective as if made by unanimous vote at a meeting duly called and held.

 

(c)           The Committee’s decisions and determinations under the Plan need not be uniform and may be made selectively among Participants, whether or not such Participants are similarly situated.

 

 

  

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Section 4.2Committee Powers.

 

Subject to the terms and conditions of the Plan and such limitations as may be imposed by the Board, the Committee shall be responsible for the overall management and administration of the Plan and shall have such authority as shall be necessary or appropriate in order to carry out its responsibilities, including, without limitation, the authority:

 

(a) to interpret and construe the Plan, and to determine all questions that may arise under the Plan as to eligibility for participation in the Plan, the number of Shares subject to Awards to be issued or granted, and the terms and conditions thereof;

 

(b) with the consent of the Participant, to the extent deemed necessary by the Committee, to amend or modify the terms of any outstanding Award or accelerate or defer the Vesting Date thereof;

 

(c) to adopt rules and regulations and to prescribe forms for the operation and administration of the Plan; and

 

(d) to take any other action not inconsistent with the provisions of the Plan that it may deem necessary or appropriate.

 

All decisions, determinations and other actions of the Committee made or taken in accordance with the terms of the Plan shall be final and conclusive and binding upon all parties having an interest therein.

 

ARTICLE V

 

STOCK OPTIONS

 

Section 5.1Grant of Options.

 

(a)           Subject to the limitations of the Plan, the Committee may, in its discretion, grant to a Participant an Option to purchase Shares.  An Option must be designated as either an Incentive Stock Option or a Non-Qualified Stock Option and, if not designated as either, shall be a Non-Qualified Stock Option.  Only employees of the Company or its Affiliates may receive Incentive Stock Options.

 

(b)           Any Option granted shall be evidenced by an Award Agreement which shall:

 

(i) specify the number of Shares covered by the Option;

 

(ii) specify the Exercise Price;

 

(iii) specify the Exercise Period;

 

(iv) specify the Vesting Date; and

 

(v) contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe.

 

 

  

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Section 5.2Size of Option.

 

Subject to the restrictions of the Plan, the number of Shares as to which a Participant may be granted Options shall be determined by the Committee, in its discretion.

 

Section 5.3Exercise Price.

 

The price per Share at which an Option may be exercised shall be determined by the Committee, in its discretion, provided, however, that the Exercise Price shall not be less than the Fair Market Value of a Share on the date on which the Option is granted.

 

Section 5.4Exercise Period.

 

The Exercise Period during which an Option may be exercised shall commence on the Vesting Date.  It shall expire on the earliest of:

 

(a) the date specified by the Committee in the Award Agreement;

 

(b) unless otherwise determined by the Committee and set forth in the Award Agreement, the last day of the three-month period commencing on the date of the Participant’s termination of Service, other than on account of death, Disability or a Termination for Cause;

 

(c) unless otherwise determined by the Committee and set forth in the Award Agreement, the last day of the one-year period commencing on the date of the Participant’s termination of Service due to death or Disability;

 

(d) as of the time and on the date of the Participant’s termination of Service due to a Termination for Cause; or

 

(e) the last day of the ten-year period commencing on the date on which the Option was granted.

 

An Option that remains unexercised at the close of business on the last day of the Exercise Period shall be canceled without consideration at the close of business on that date.

 

Section 5.5Vesting Date.

 

(a)           The Vesting Date for each Option Award shall be determined by the Committee and specified in the Award Agreement.

 

(b)           Unless otherwise determined by the Committee and specified in the Award Agreement:

 

(i) if the Participant of an Option Award terminates Service prior to the Vesting Date for any reason other than death, Disability or a Change in Control, any unvested Option shall be forfeited without consideration;

 

 

  

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(ii) if the Participant of an Option Award terminates Service prior to the Vesting Date on account of death or Disability, the Vesting Date shall be accelerated to the date of the Participant’s termination of Service; and

 

(iii) if a Change in Control occurs prior to the Vesting Date of an Option Award that is outstanding on the date of the Change in Control, the Vesting Date shall be accelerated to the earliest date of the Change in Control.

 

Section 5.6Additional Restrictions on Incentive Stock Options.

 

An Option designated by the Committee to be an Incentive Stock Option shall be subject to the following provisions:

 

(a) An Incentive Stock Option must be granted within ten (10) years from the Effective Date of the Plan.

 

(b) Notwithstanding any other provision of this Plan to the contrary, no Participant may receive an Incentive Stock Option under the Plan if such Participant, at the time the award is granted, owns (after application of the rules contained in Section 424(d) of the Code) stock possessing more than ten (10) percent of the total combined voting power of all classes of stock of the Company or its Affiliates, unless (i) the option price for such Incentive Stock Option is at least 110 percent of the Fair Market Value of the Shares subject to such Incentive Stock Option on the date of grant and (ii) such Option is not exercisable after the date five (5) years from the date such Incentive Stock Option is granted.

 

(c) Each Participant who receives Shares upon exercise of an Option that is an Incentive Stock Option shall give the Company prompt notice of any sale of Shares prior to a date which is two (2) years from the date the Option was granted or one year from the date the Option was exercised.  Such sale shall disqualify the Option as an Incentive Stock Option.

 

(d) The aggregate Fair Market Value (determined with respect to each Incentive Stock Option at the time such Incentive Stock Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under this Plan or any other plan of the Company or an Affiliate) shall not exceed $100,000 and the term of the Incentive Stock Option shall not be more than ten (10) years.

 

(e) Any Option under this Plan which is designated by the Committee as an Incentive Stock Option but fails, for any reason, to meet the foregoing requirements shall be treated as a Non-Qualified Stock Option.

 

Section 5.7Method of Exercise.

 

(a)           Subject to the limitations of the Plan and the Award Agreement, an Option Holder may, at any time on or after the Vesting Date and during the Exercise Period, exercise his or her right to purchase all or any part of the Shares to which the Option relates; provided, however, that the minimum number of Shares which may be purchased at any time shall be 100, or, if less, the total number of Shares relating to the Option which remain un-purchased.  An Option Holder shall exercise an Option to purchase Shares by:

 

 

  

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(i) giving written notice to the Committee, in such form and manner as the Committee may prescribe, of his or her intent to exercise the Option;

 

(ii) delivering to the Committee full payment for the Shares as to which the Option is to be exercised; and

 

(iii) satisfying such other conditions as may be prescribed in the Award Agreement.

 

(b)           The Exercise Price of Shares to be purchased upon exercise of any Option shall be paid in full:

 

(i) in cash (by certified or bank check or such other instrument as the Company may accept); or

 

(ii) if and to the extent permitted by the Committee, in the form of Shares already owned by the Option Holder as of the exercise date and having an aggregate Fair Market Value on the date the Option is exercised equal to the aggregate Exercise Price to be paid;

 

(iii) if and to the extent permitted by the Committee, by the Company withholding Shares otherwise issuable upon the exercise having an aggregate Fair Market Value on the date the Option is exercised equal to the aggregate Exercise Price to be paid; or

 

(iv) by a combination thereof.

 

Payment for any Shares to be purchased upon exercise of an Option may also be made by delivering a properly executed exercise notice to the Company, together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the purchase price and applicable tax withholding amounts (if any), in which event the Shares acquired shall be delivered to the broker promptly following receipt of payment.

 

(c)           When the requirements of this Section have been satisfied, the Committee shall take such action as is necessary to cause the issuance of a stock certificate or cause Shares to be issued by book-entry procedures, in either event evidencing the Option Holder's ownership of such Shares. The Person exercising the Option shall have no right to vote or to receive dividends, nor have any other rights with respect to the Shares, prior to the date the Shares are transferred to such Person on the stock transfer records of the Company, and no adjustments shall be made for any dividends or other rights for which the record date is prior to the date as of which the transfer is effected.

 

Section 5.8Limitations on Options.

 

(a)           An Option by its terms shall not be transferable by the Option Holder other than by will or the laws of descent and distribution, or pursuant to the terms of a Domestic Relations Order, and shall be exercisable, during the life of the Option Holder, only by the Option Holder or an alternate payee designated pursuant to such a Domestic Relations Order; provided, however, that a Participant may, at any time at or after the grant of a Non-Qualified Stock Option under the Plan, apply to the Committee for approval to transfer all or any portion of such Non-Qualified Stock Option which is then unexercised to such Participant’s Family Member. The Committee may approve or withhold approval of such transfer in its sole and absolute discretion. If such transfer is approved, it shall be effected by written notice to the Company given in such form and manner as the Committee may prescribe and actually received by the Company prior to the death of the person giving it. Thereafter, the transferee shall have, with respect to such Non-Qualified Stock Option, all of the rights, privileges and obligations which would attach thereunder to the Participant. If a privilege of the Option depends on the life, Service or other status of the Participant, such privilege of the Option for the transferee shall continue to depend upon the life, Service or other status of the Participant. The Committee shall have full and exclusive authority to interpret and apply the provisions of the Plan to transferees to the extent not specifically addressed herein.

 

 

  

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(b)           The Company's obligation to deliver Shares with respect to an Option shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Option Holder to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of applicable federal, state or local law. It may be provided that any such representation shall become inoperative upon a registration of the Shares or upon the occurrence of any other event eliminating the necessity of such representation. The Company shall not be required to deliver any Shares under the Plan prior to:

 

(i) the admission of such Shares to listing on any stock exchange or trading on any automated quotation system on which Shares may then be listed or traded; or

 

(ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.

 

(c)           An Option Holder may designate a Beneficiary to receive any Options that may be exercised after his death. Such designation and any change or revocation of such designation shall be made in writing in the form and manner prescribed by the Committee. In the event that the designated Beneficiary dies prior to the Option Holder, or in the event that no Beneficiary has been designated, any Options that may be exercised following the Option Holder's death shall be transferred to the Option Holder's estate. If the Option Holder and his or her Beneficiary shall die in circumstances that cause the Committee, in its discretion, to be uncertain which shall have been the first to die, the Option Holder shall be deemed to have survived the Beneficiary.

 

Section 5.9Prohibition Against Option Repricing.

 

Except as provided in Section 9.3 and notwithstanding any other provision of this Plan, neither the Committee nor the Board shall have the right or authority following the grant of an Option pursuant to the Plan to amend or modify the Exercise Price of any such Option, or to cancel the Option at a time when the Exercise Price is greater than the Fair Market Value of the Shares, in exchange for another Option or Award.

 

  

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ARTICLE VI

 

STOCK APPRECIATION RIGHTS

 

Section 6.1Grant of Stock Appreciation Rights.

 

(a)           Subject to the limitations of the Plan, the Committee may, in its discretion, grant to a Participant a Stock Appreciation Right.  A Stock Appreciation Right must be designated as either a tandem Stock Appreciation Right or a stand-alone Stock Appreciation Right and, if not so designated, shall be deemed to be a stand-alone Stock Appreciation Right.  A tandem Stock Appreciation Right may only be granted at the same time as the Option to which it relates.  The exercise of a tandem Stock Appreciation Right shall cancel the related Option for a like number of Shares and the exercise of a related Option shall cancel a tandem Stock Appreciation Right for a like number of Shares.

 

(b)           Any Stock Appreciation Right granted shall be evidenced by an Award Agreement which shall:

 

(i) specify the number of Shares covered by the Stock Appreciation Right;

 

(ii) specify the Exercise Price;

 

(iii) specify the Exercise Period;

 

(iv) specify the Vesting Date;

 

(v) specify that the Stock Appreciation Right shall be settled in cash or Shares, or a combination of cash and Shares; and

 

(vi) contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe.

 

Section 6.2Size of Stock Appreciation Right.

 

Subject to the restrictions of the Plan, the number of Shares as to which a Participant may be granted Stock Appreciation Rights shall be determined by the Committee, in its discretion.

 

Section 6.3Exercise Price.

 

The price per Share at which a Stock Appreciation Right may be exercised shall be determined by the Committee, in its discretion, provided, however, that the Exercise Price shall not be less than the Fair Market Value of a Share on the date on which the Stock Appreciation Right is granted.

 

Section 6.4Exercise Period.

 

The Exercise Period during which a Stock Appreciation Right may be exercised shall commence on the Vesting Date.  It shall expire on the earliest of:

 

(a) the date specified by the Committee in the Award Agreement;

 

 

  

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(b) unless otherwise determined by the Committee and set forth in the Award Agreement, the last day of the three-month period commencing on the date of the Participant’s termination of Service, other than on account of death, Disability or a Termination for Cause;

 

(c) unless otherwise determined by the Committee and set forth in the Award Agreement, the last day of the one-year period commencing on the date of the Participant’s termination of Service due to death or Disability;

 

(d) as of the time and on the date of the Participant’s termination of Service due to a Termination for Cause; or

 

(e) the last day of the ten-year period commencing on the date on which the Stock Appreciation Right was granted.

 

A Stock Appreciation Right that remains unexercised at the close of business on the last day of the Exercise Period shall be canceled without consideration at the close of business on that date.

 

Section 6.5Vesting Date.

 

(a)           The Vesting Date for each Stock Appreciation Right Award shall be determined by the Committee and specified in the Award Agreement.

 

(b)           Unless otherwise determined by the Committee and specified in the Award Agreement:

 

(i) if the Participant of a Stock Appreciation Right Award terminates Service prior to the Vesting Date for any reason other than death, Disability or a Change in Control, any unvested Award shall be forfeited without consideration;

 

(ii) if the Participant of a Stock Appreciation Right Award terminates Service prior to the Vesting Date on account of death or Disability, the Vesting Date shall be accelerated to the date of the Participant’s termination of Service; and

 

(iii) if a Change in Control occurs prior to the Vesting Date of a Stock Appreciation Right Award that is outstanding on the date of the Change in Control, the Vesting Date shall be accelerated to the earliest date of the Change in Control.

 

Section 6.6Method of Exercise.

 

(a)           Subject to the limitations of the Plan and the Award Agreement, a Participant may, at any time on or after the Vesting Date and during the Exercise Period, exercise his or her Stock Appreciation Right as to all or any part of the Shares to which the Stock Appreciation Right relates; provided, however, that the minimum number of Shares as to which a Stock Appreciation Right may be exercised shall be 100, or, if less, the total number of Shares relating to the Stock Appreciation Right which remain unexercised. A Stock Appreciation Right Holder shall exercise a Stock Appreciation Right by:

 

 

  

12

  

 

(i) giving written notice to the Committee, in such form and manner as the Committee may prescribe, of his or her intent to exercise the Stock Appreciation Right; and

 

(ii) satisfying such other conditions as may be prescribed in the Award Agreement.

 

(b)           When the requirements of this Section have been satisfied, the Committee shall take such action as is necessary to cause the remittance to the Stock Appreciation Right Holder (or, in the event of his or her death, his or her Beneficiary) of cash or a number of Shares with an aggregate Fair Market Value equal to the excess (if any) of (i) the Fair Market Value of a Share on the date of exercise over (ii) the Exercise Price per Share, times the number of Stock Appreciation Rights exercised.  The Person exercising the Stock Appreciation Right shall have no right to vote or to receive dividends, nor have any other rights with respect to the Shares, prior to the date the Shares are transferred to such Person on the stock transfer records of the Company, and no adjustments shall be made for any dividends or other rights for which the record date is prior to the date as of which the transfer is effected.

 

Section 6.7Limitations on Stock Appreciation Rights.

 

(a)           A Stock Appreciation Right by its terms shall not be transferable by the Stock Appreciation Right Holder other than by will or the laws of descent and distribution, or pursuant to the terms of a Domestic Relations Order, and shall be exercisable, during the life of the Stock Appreciation Right Holder, only by the Stock Appreciation Right Holder or an alternate payee designated pursuant to such a Domestic Relations Order; provided, however, that a Participant may, at any time at or after the grant of a Stock Appreciation Right under the Plan, apply to the Committee for approval to transfer all or any portion of such Stock Appreciation Right which is then unexercised to such Participant’s Family Member. The Committee may approve or withhold approval of such transfer in its sole and absolute discretion. If such transfer is approved, it shall be effected by written notice to the Company given in such form and manner as the Committee may prescribe and actually received by the Company prior to the death of the person giving it. Thereafter, the transferee shall have, with respect to such Stock Appreciation Right, all of the rights, privileges and obligations which would attach thereunder to the Participant. If a privilege of the Stock Appreciation Right depends on the life, Service or other status of the Participant, such privilege of the Stock Appreciation Right for the transferee shall continue to depend upon the life, Service or other status of the Participant. The Committee shall have full and exclusive authority to interpret and apply the provisions of the Plan to transferees to the extent not specifically addressed herein.

 

(b)           The Company's obligation to deliver Shares with respect to a Stock Appreciation Right shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Stock Appreciation Right Holder to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of applicable federal, state or local law. It may be provided that any such representation shall become inoperative upon a registration of the Shares or upon the occurrence of any other event eliminating the necessity of such representation. The Company shall not be required to deliver any Shares under the Plan prior to:

 

(i) the admission of such Shares to listing on any stock exchange or trading on any automated quotation system on which Shares may then be listed or traded; or

 

 

  

13

  

 

(ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.

 

(c)           A Stock Appreciation Right Holder may designate a Beneficiary to receive any Stock Appreciation Right that may be exercised after his death. Such designation and any change or revocation of such designation shall be made in writing in the form and manner prescribed by the Committee. In the event that the designated Beneficiary dies prior to the Stock Appreciation Right Holder, or in the event that no Beneficiary has been designated, any Stock Appreciation Rights that may be exercised following the Stock Appreciation Right Holder's death shall be transferred to the Stock Appreciation Right Holder's estate. If the Stock Appreciation Right Holder and his or her Beneficiary shall die in circumstances that cause the Committee, in its discretion, to be uncertain which shall have been the first to die, the Stock Appreciation Right Holder shall be deemed to have survived the Beneficiary.

 

Section 6.8Prohibition Against Stock Appreciation Right Repricing.

 

Except as provided in Section 9.3 and notwithstanding any other provision of this Plan, neither the Committee nor the Board shall have the right or authority following the grant of a Stock Appreciation Right pursuant to the Plan to amend or modify the Exercise Price of any such Stock Appreciation Right or to cancel the Stock Appreciation Right at a time when the Exercise Price is greater than the Fair Market Value of the Shares, in exchange for another Stock Appreciation Right or Award.

 

ARTICLE VII

 

RESTRICTED STOCK AWARDS

 

Section 7.1In General. 

 

(a)           Each Restricted Stock Award shall be evidenced by an Award Agreement which shall specify:

 

(i) the number of Shares or Share Units covered by the Restricted Stock Award;

 

(ii) the amount, if any, which the Participant shall be required to pay to the Company in consideration for the issuance of such Shares or Share Units;

 

(iii) the date of grant of the Restricted Stock Award;

 

(iv) the Vesting Date for the Restricted Stock Award;

 

(v) as to Restricted Stock Awards awarding Shares, the rights of the Participant with respect to dividends, voting rights and other rights and preferences associated with such Shares; and

 

(vi) as to Restricted Stock Awards awarding Share Units, the rights of the Participant with respect to attributes of the Share Units which are the equivalent of dividends and other rights and preferences associated with Shares and the circumstances pursuant to which Share Units shall be converted to Shares;

 

 

  

14

  

 

and contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe.

 

(b)           All Restricted Stock Awards consisting of Shares shall be in the form of issued and outstanding Shares that shall be registered in the name of the Participant, subject to written transfer restriction instructions issued to the Company’s stock transfer agent, together with an irrevocable stock power executed by the Participant in favor of and held by the Committee or its designee, pending the vesting or forfeiture of the Restricted Stock Award.  The Shares shall at all times prior to the applicable Vesting Date be subject to the following restriction, communicated in writing to the Company’s stock transfer agent:

 

These shares of common stock are subject to the terms of an Award Agreement between Sound Financial Bancorp, Inc. and [Name of Participant] dated [Award Date] made pursuant to the terms of the Sound Financial Bancorp, Inc. 2013 Equity Incentive Plan, copies of which are on file at the executive offices of Sound Financial Bancorp, Inc. and may not be sold, encumbered, hypothecated or otherwise transferred, except in accordance with the terms of such Plan and Award Agreement.

 

or such other restrictive communication or legend as the Committee, in its discretion, may specify.

 

(c)           Unless otherwise set forth in the Award Agreement, a Restricted Stock Award by its terms shall not be transferable by the Participant other than by will or by the laws of descent and distribution, or pursuant to the terms of a Domestic Relations Order, provided, however, that a Participant may, at any time at or after the grant of a Restricted Stock Award under the Plan, apply to the Committee for approval to transfer all or any portion of such Restricted Stock Award which is then unvested to such Participant’s Family Member. The Committee may approve or withhold approval of such transfer in its sole and absolute discretion. If such transfer is approved, it shall be effected by written notice to the Company given in such form and manner as the Committee may prescribe and actually received by the Company prior to the death of the person giving it. Thereafter, the transferee shall have, with respect to such Restricted Stock Award, all of the rights, privileges and obligations which would attach thereunder to the Participant. If a privilege of the Restricted Stock Award depends on the life, Service or other status of the Participant, such privilege of the Restricted Stock Award for the transferee shall continue to depend upon the life, Service or other status of the Participant. The Committee shall have full and exclusive authority to interpret and apply the provisions of the Plan to transferees to the extent not specifically addressed herein.

 

Section 7.2 Vesting Date.

 

(a)           The Vesting Date for each Restricted Stock Award shall be determined by the Committee and specified in the Award Agreement.

 

(b)           Unless otherwise determined by the Committee and specified in the Award Agreement:

 

 

  

15

  

 

(i) if the Participant of a Restricted Stock Award terminates Service prior to the Vesting Date for any reason other than death, Disability or a Change in Control, any unvested Shares or Share Units shall be forfeited without consideration;

 

(ii) if the Participant of a Restricted Stock Award terminates Service prior to the Vesting Date on account of death or Disability, the Vesting Date shall be accelerated to the date of termination of the Participant’s Service with the Company; and

 

(iii) if a Change in Control occurs prior to the Vesting Date of a Restricted Stock Award that is outstanding on the date of the Change in Control, the Vesting Date shall be accelerated to the earliest date of the Change in Control.

 

Section 7.3Dividend Rights.

 

Unless otherwise specified in the Award Agreement, any dividends or distributions declared and paid with respect to Shares subject to a Restricted Stock Award, whether or not in cash, or an equivalent amount in the case of a Restricted Stock Award awarding Share Units, shall be paid to the Participant at the same time they are paid to all other shareholders of the Company.

 

Section 7.4Voting Rights.

 

Unless otherwise specified in the Award Agreement, voting rights appurtenant to the Shares subject to the Restricted Stock Award shall be exercised by the Participant.

 

Section 7.5Designation of Beneficiary.

 

A Participant who has received a Restricted Stock Award may designate a Beneficiary to receive any unvested Shares or Shares distributed in satisfaction of any unvested Share Units that become vested on the date of the Participant’s death.  Such designation (and any change or revocation of such designation) shall be made in writing in the form and manner prescribed by the Committee.  In the event that the Beneficiary designated by a Participant dies prior to the Participant, or in the event that no Beneficiary has been designated, any vested Shares that become available for distribution on the Participant’s death shall be paid to the executor or administrator of the Participant’s estate.

 

Section 7.6Manner of Distribution of Awards.

 

The Company's obligation to deliver Shares with respect to a Restricted Stock Award shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Participant or Beneficiary to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of applicable federal, state or local law. It may be provided that any such representation shall become inoperative upon a registration of the Shares or upon the occurrence of any other event eliminating the necessity of such representation. The Company shall not be required to deliver any Shares under the Plan prior to (i) the admission of such Shares to listing on any stock exchange or trading on any automated quotation system on which Shares may then be listed or traded, or (ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.

 

ARTICLE VIII

 

SPECIAL TAX PROVISION

 

Section 8.1Tax Withholding Rights.

 

The Company shall have the power and the right to deduct or withhold, or require a Person to remit to the Company, an amount sufficient to satisfy Federal, state and local taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any grant, exercise or payment made under or as a result of the Plan.  In this regard, where any Person is entitled to receive Shares, the Company shall have the right to require such Person to pay to the Company the amount of any tax which the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of Shares to cover the minimum amount required to be withheld.

 

 

  

16

  

 

ARTICLE IX

 

AMENDMENT AND TERMINATION

 

Section 9.1Termination

 

The Board may suspend or terminate the Plan in whole or in part at any time prior to the tenth anniversary of the Effective Date by giving written notice of such suspension or termination to the Committee.  Unless sooner terminated, the Plan shall terminate automatically on the tenth anniversary of the Effective Date.  In the event of any suspension or termination of the Plan, all Awards previously granted under the Plan that are outstanding on the date of such suspension or termination of the Plan shall remain outstanding and exercisable for the period and on the terms and conditions set forth in the Award Agreements evidencing such Awards.

 

Section 9.2Amendment.

 

The Board may amend or revise the Plan in whole or in part at any time; provided, however, that to the extent required to comply with Section 162(m) of the Code or the corporate governance standards imposed under the listing or trading requirements imposed by any national securities exchange or automated quotation system on which the Company lists or seeks to list or trade Shares, no such amendment or revision shall be effective if it amends a material term of the Plan unless approved by the holders of a majority of the votes cast on a proposal to approve such amendment or revision.

 

Section 9.3Adjustments in the Event of Business Reorganization.

 

In the event any recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, exchange of Shares or other securities, stock dividend or other special and nonrecurring dividend or distribution (whether in the form of cash, securities or other property), liquidation, dissolution, or other similar corporate transaction or event, affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of:

 

  

17

  

 

(i) the number and kind of securities deemed to be available thereafter for grants of Awards in the aggregate to all Participants;

 

(ii) the number and kind of securities that may be delivered or deliverable in respect of outstanding Awards; and

 

(iii) the Exercise Price of Options and Stock Appreciation Rights.

 

In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including, without limitation, cancellation of Awards in exchange for the in-the-money value, if any, of the vested portion thereof, or substitution of Awards using stock of a successor or other entity) in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any Affiliate or the financial statements of the Company or any Affiliate, or in response to changes in applicable laws, regulations, or accounting principles.

 

ARTICLE X

 

MISCELLANEOUS

 

Section 10.1Status as an Employee Benefit Plan.

 

This Plan is not intended to satisfy the requirements for qualification under Section 401(a) of the Code or to satisfy the definitional requirements for an "employee benefit plan" under Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended. It is intended to be a non-qualified incentive compensation program that is exempt from the regulatory requirements of the Employee Retirement Income Security Act of 1974, as amended. The Plan shall be construed and administered so as to effectuate this intent.

 

Section 10.2No Right to Continued Service.

 

Neither the establishment of the Plan nor any provisions of the Plan nor any action of the Board or Committee with respect to the Plan shall be held or construed to confer upon any Participant any right to a continuation of his or her position as a director, advisory or emeritus director, officer or employee of the Company or any Affiliate.  The Company reserves the right to remove any participating member of the Board or dismiss any Participant or otherwise deal with any Participant to the same extent as though the Plan had not been adopted.

 

Section 10.3Construction of Language.

 

Whenever appropriate in the Plan, words used in the singular may be read in the plural, words used in the plural may be read in the singular, and words importing the masculine gender may be read as referring equally to the feminine or the neuter. Any reference to an Article or Section number shall refer to an Article or Section of this Plan unless otherwise indicated.

Section 10.4Severability.

 

In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

  

18

  

 

Section 10.5Governing Law.

 

The Plan shall be construed, administered and enforced according to the laws of the State of Washington without giving effect to the conflict of laws principles thereof.  The federal and state courts located in the County or contiguous counties in which the Company’s headquarters are located shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan. By accepting any Award granted under this Plan, the Participant, and any other person claiming any rights under the Plan, agrees to submit himself, and any such legal action as he shall bring under the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.

 

Section 10.6Headings.

 

The headings of Articles and Sections are included solely for convenience of reference.  If there is any conflict between such headings and the text of the Plan, the text shall control.

 

Section 10.7Non-Alienation of Benefits.

 

The right to receive a benefit under the Plan shall not be subject in any manner to anticipation, alienation or assignment, nor shall such right be liable for or subject to debts, contracts, liabilities, engagements or torts.

 

Section 10.8Notices.

 

Any communication required or permitted to be given under the Plan, including any notice, direction, designation, comment, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally or three (3) days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below, or at such other address as one such party may by written notice specify to the other party:

 

(a)           If to the Committee:

 

Sound Financial Bancorp, Inc.

 

2005 5th Avenue, Suite 200

 

Seattle, Washington 98121

 

Attention:  Corporate Secretary

 

(b)           If to a Participant, to such person’s address as shown in the Company’s records.

 

Section 10.9Approval of Shareholders.

 

The Plan shall be subject to approval by the Company’s shareholders within twelve (12) months before or after the date the Board adopts the Plan.

 

Section 10.10Clawback.

 

All Awards (whether vested or unvested) shall be subject to such clawback (recovery) as may be required to be made pursuant to law, rule, regulation or stock exchange listing requirement or any policy of the Company adopted pursuant to any such law, rule, regulation or stock exchange listing requirement.

 

 

  

19

  

 

Section 10.11Compliance with Section 409A.

 

The Plan is intended to comply and shall be administered in a manner that is intended to comply with Section 409A of the Code, to the extent applicable, and the Plan shall be construed and interpreted in accordance with such intent. To the extent that an Award or the payment, settlement or deferral thereunder is subject to Section 409A, the Award shall be granted, paid, settled or deferred in a manner that will comply with Section 409A, except as otherwise determined by the Committee.  In the case of amounts not intended to be deferrals of compensation subject to Section 409A, such as, but not limited to, annual incentive Awards, payment or settlement of amounts under such Awards shall occur not later than March 15 of the year following the year in which the Participant has a legally-binding right to payment or settlement (or such later time as permitted under the Section 409A regulations that does not cause the amount to be considered a deferral of compensation for purposes of Section 409A). In the case of amounts intended to be deferrals of compensation subject to Section 409A, the initial deferral election shall be made and become irrevocable no later than December 31 of the year immediately preceding the year in which the Participant first performs services related to such compensation, provided that the timing of such initial deferral election may be later as provided in Section 409A with respect to initial participation in the Plan and for “performance-based compensation” as defined under Section 409A.  If an amount that is subject to Section 409A becomes payable under an Award as a result of the Participant's separation from service (other than due to death), and the Participant is a “specified employee” (as defined under Section 409A), then payment of such amount shall not occur until six (6) months and a day after the date of Participant’s “separation from service” (as defined under Section 409A) except as permitted under Section 409A.

 

  

2020131114 8-K Officers Series D Units EX 101

		
			AMENDED AND RESTATED SERIES D UNIT AGREEMENT
		

		
			This AMENDED AND RESTATED SERIES D UNIT AGREEMENT (this “Agreement”) is executed and agreed to as of November 8, 2013 (the “Execution Date”), but made effective as of February 21, 2012 (the “Effective Date”), between U.S. Well Services, LLC, a Delaware limited liability company (the “Company”) and Jeff McPherson (the “Employee”).  
		

		
			Capitalized terms used in this Agreement but not defined in the body hereof are defined in Exhibit A.  
		

		
			WHEREAS, the Limited Liability Company Agreement of the Company (as amended, supplemented and restated from time to time, the “LLC Agreement”) authorizes the issuance by the Company of Series D Units;
		

		
			WHEREAS, the Company and the Employee entered into that certain Series D Unit Agreement as of February 21, 2012 (the “Original Agreement”), under the terms of which the Company issued Series D Units to the Employee and the parties agreed to certain forfeiture restrictions applicable to such Series D Units;
		

		
			WHEREAS, pursuant to and in accordance with Section 8(d) of the Original Agreement, the parties have determined it is in their mutual best interests to amend and restate the Original Agreement in its entirety as set forth herein so the terms and conditions of this Agreement supersede the terms and conditions of the Original Agreement; 
		

		
			WHEREAS, the Original Agreement is hereby amended and restated in its entirety as set forth in this Agreement, is hereby superceded in its entirety by this Agreement and is of no further force or effect from and after the Effective Date; and 
		

		
			WHEREAS, the Company and the Employee have dealt with and otherwise conducted their affairs with respect to the Employee’s Series D Units in accordance with the foregoing Recitals and the terms and conditions reflected in this Agreement at all times from and after the Effective Date, and desire to memorialize their agreements in such regard by the execution and delivery of this Agreement; and
		

		
			WHEREAS, the Company desires to issue to the Employee on the terms and conditions hereinafter set forth, and the Employee desires to accept on such terms and conditions, the number of Series D Units specified herein.
		

		
			NOW, THEREFORE, in consideration of the mutual promises, covenants and obligations contained herein and other good and valuable consideration, the Company and the Employee agree as follows:
		

			
			
				 1.
			Issuance of Series D Units.  The Company hereby issues the following Units to the Employee on the Effective Date, 84,493 Series D-1 Units.  Each Series D-1 Unit has a Threshold Value of $0.00.  The Series D-1 Units are intended to constitute “profits interests” within the meaning of Revenue Procedures 93-27 and 2001-43 (or the corresponding requirements of any subsequent guidance promulgated by the United States Internal Revenue 
		

		 

		

			3437015v2

		

 

		Service or other applicable law), and thus the capital account associated with each such Series D-1 Unit at the time of its issuance shall be equal to zero dollars ($0.00).  The Series D-1 Units issued by the Company to the Employee pursuant to this Agreement are referred to herein as the “Granted Series D-1 Units.”

			
			
				 2.
			Terms of Issuance of Series D Units.

			
			
				 (a)
			As an inducement to Company to enter into this Agreement, the Employee has entered into an employment agreement with the Company dated as of the date hereof (the (“Employment Agreement”)

			
			
				 (b)
			The Employee agrees that no provision contained in this Agreement shall entitle the Employee to remain in the employment of the Company or any Affiliate Controlled by the Company that may from time to time employ the Employee (any such entity that from time to time employs the Employee, an “Employer”) or any Affiliate of any such entity or affect in any way the right of any such entity to terminate any such employment at any time. 

			
			
				 (c)
			The Employee agrees that the Employee’s execution of this Agreement evidences the Employee’s intention to be bound by the terms of the LLC Agreement, in addition to the terms of this Agreement, and acknowledges and agrees that the Granted Series D-1 Units are subject to all of the terms and restrictions applicable to Series D Units as set forth in the LLC Agreement and in this Agreement.  On or prior to the Effective Date, the Employee has executed a counterpart signature page to the LLC Agreement or to an Addendum Agreement thereto.

			
			
				 (d)
			The Employee agrees to make an election under Section 83(b) of the Code with respect to the Granted Series D-1 Units and to consult with the Employee’s tax advisor to determine the tax consequences of filing such an election under Section 83(b) of the Code.  The Employee acknowledges that it is the Employee’s sole responsibility, and not the responsibility of the Company, to file the election under Section 83(b) of the Code even if the Employee requests the Company or its managers, directors, officers, employees and authorized representatives (including attorneys, accountants, consultants, bankers, lenders, prospective lenders and financial representatives) to assist in making such filing.

			
			
				 (e)
			The Granted Series D-1 Units issued pursuant to this Agreement represented as of the Effective Date the right to receive Four and One-Half of One Percent (4.5%) of all distributions on the Series B Units, Series C Units and Series D Units in accordance with Section 6.1(c) of the LLC Agreement.  The number of Granted Series D-1 Units issued pursuant to this Agreement shall be adjusted (either up or down) as reasonably determined by the Board so that such Units, assuming they were to become fully vested in accordance with Section 4 of this Agreement, represent the right to receive Four and One-Half of One Percent (4.5%) of all distributions on the Series B Units, Series C Units and Series D Units in accordance with Section 6.1(c) of the LLC Agreement.

			
			
				 3.
			Unvested Series D Units.  The Granted Series D-1 Units issued pursuant to this Agreement, as adjusted pursuant to Section 2(e) above, shall initially be deemed Unvested Units (“Unvested Series D Units”) under the LLC Agreement, shall be subject to all of the restrictions 
		

		 

		

			3437015v2

		

 

		on Unvested Units (as well as on Series D Units, in general) under the LLC Agreement and shall carry only such rights as are conferred on Unvested Units under the LLC Agreement.  The Unvested Series D Units will become Vested Units (the “Vested Series D Units”) under the LLC Agreement in accordance with the provisions of Sections 4 and 5 of this Agreement.

			
			
				 4.
			Vesting of Granted Series D-1 Units.  The Unvested Series D Units will become Vested Series D Units in accordance with the vesting schedule set forth in the following table; provided, however, that the Employee remains continuously employed by an Employer from the Effective Date through each vesting event set forth below, unless otherwise provided for in this Agreement. 

			
					
						Vesting Event

					
					
						Portion of Unvested Series D Units 
that become Vested Series D Units

				
	
					
						On the Execution Date 

					
					
						Two Thirds (66.66%)

				
	
					
						On any Exit Event or Liquidation Event

					
					
						 

					
						One Third (33.34%)

				

		
			 
		

		
			Upon vesting in accordance with this Section 4, such Units shall no longer be subject to the restrictions on Unvested Series D Units (but shall remain subject to the restrictions on the Series D Units, in general) under the LLC Agreement and shall become Vested Series D Units.
		

			
			
				 5.
			Forfeitures in Connection with the Employee’s Termination of Employment.

			
			
				 (a)
			If the Employee’s employment with Employer is terminated for any reason, then on the date of such termination, the Employee shall forfeit to the Company all of the Employee’s Unvested Series D Units and all rights arising from such Unvested Series D Units and from being a holder thereof.

			
			
				 (b)
			If there occurs any breach by the Employee of the Employee’s covenants contained in Section 7, then the Employee shall forfeit to the Company all of the Employee’s Vested Series D Units and all rights arising from such Vested Series D Units and from being a holder thereof.

			
			
				 (c)
			The forfeitures of Series D Units subject to the terms and conditions of this Section 5 shall occur immediately and without further action of the Company, the Employee or any other Person upon the termination giving rise to such forfeitures.

			
			
				 6.
			Representations and Warranties of the Employee and the Company.

			
			
				 (a)
			The Employee represents and warrants to the Company as follows:

			
			
				 (i)
			that this Agreement constitutes the legal, valid and binding obligation of the Employee, enforceable in accordance with its terms, and that the execution, delivery and performance of this Agreement by the Employee does not and will not conflict with, 
		

		 

		

			3437015v2

		

 

		violate or cause a breach of any agreement, contract or instrument to which the Employee is a party or any judgment, order or decree to which the Employee is subject;

			
			
				 (ii)
			that the Employee believes that the Employee has received all the information the Employee considers necessary in connection with his execution of this Agreement, that the Employee has had an opportunity to ask questions and receive answers from the Company and the Employee’s independent counsel regarding the terms, conditions and limitations set forth in this Agreement and the business, properties, prospects and financial condition of the Company and its Subsidiaries and to obtain additional information (to the extent the Company possesses such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information furnished to the Employee or to which the Employee had access; and

			
			
				 (iii)
			that the Employee understands that the Series D Units are not registered under the Securities Act on the ground that the grant provided for in this Agreement and the issuance of securities hereunder is exempt from registration under the Securities Act pursuant to Section 4(2) thereof or pursuant to Rule 701 promulgated thereunder. 

			
			
				 (b)
			The Company represents and warrants to the Employee that this Agreement constitutes the legal, valid and binding obligation of the Company, enforceable in accordance with its terms, and that the execution, delivery and performance of this Agreement by the Company does not and will not conflict with, violate or cause a breach of any agreement, contract or instrument to which the Company is a party or any judgment, order or decree to which the Company is subject.

			
			
				 7.
			Employee Covenants.

			
			
				 (a)
			Competition/Solicitation. (a) During the term of the Employee’s employment with the Company and for a period of twenty-four (24) months beginning on the date of the termination of Employee’s employment with the Company (the “Termination Date”), regardless of the reason, Employee hereby covenants and agrees that he shall not, directly or indirectly, except in connection with his duties hereunder or otherwise for the sole account and benefit of the Company, whether as a sole proprietor, investor, partner, member, shareholder, employee, director, officer, guarantor, consultant, independent contractor, or in any other capacity as principal or agent, or through any person, subsidiary, affiliate, or employee acting as nominee or agent, except with the consent of the Company: 

			
			
				 (i)
			Conduct or engage in, or be interested in or associated with, any person or entity anywhere in North America (plus any such additional geographical markets to which the Company may have expanded during the course of Employee’s employment) other than the Company and its affiliates which conducts or engages in the shale fracturing business of the Company;

			
			
				 (ii)
			Solicit, attempt to solicit, or accept business from, or cause to be solicited or have business accepted from, any then-current customers of Company, any persons or entities who were customers of the Company within the 180 days preceding the Termination 
		

		 

		

			3437015v2

		

 

		Date, or any prospective customers of the Company for whom bids were being prepared or had been submitted as of the Termination Date; or

			
			
				 (iii)
			Induce, or attempt to induce, hire or attempt to hire, or cause to be induced or hired, any employee of the Company, or persons who were employees of the Company within the 180 days preceding the Termination Date, to leave or terminate his or her employment with the Company, or hire or engage as an independent contractor any such employee of the Company.

		
			Notwithstanding the foregoing, the Employee shall not be prevented from (A) investing in or owning up to two percent (2%) of the outstanding stock of any corporation engaged in any business provided that such shares are regularly traded on a national securities exchange or in any over-the-counter market or (B) retaining any shares of stock in any corporation which Employee owned before the date of his employment with the Company.
		

			
			
				 (b)
			Remedies. The Employee acknowledges that any breach by him of the provisions of this Section 7 of this Agreement shall cause irreparable harm to the Company and that a remedy at law for any breach or attempted breach of Section 7 of this Agreement will be inadequate, and agrees that the Company shall be entitled to exercise all remedies available to it, including specific performance and injunctive and other equitable relief, without the necessity of posting any bond, in the case of any such breach or attempted breach.

			
			
				 8.
			General Provisions.

			
			
				 (a)
			Notices.  For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when personally delivered, or mailed by certified mail, return receipt requested by nationally recognized overnight or second-day delivery service with proof of receipt maintained, at the following addresses (or any other address that any party may designate by written notice to the other party, in accordance herewith, except that such notice shall be effective only upon receipt):

			
					
						If to the Company to:

					
					
						U.S. Well Services, LLC

					
						770 South Post Oak Lane

					
						Suite 405 

					
						Houston, Texas 77056

					
						Attention: Chief Financial Officer

				
	
					
						 

					
					
						 

				

		
			 
		

			
					
						If to the Employee to:

					
					
						Jeff McPherson

				
	
					
						 

					
					
						_____________________

				
	
					
						 

					
					
						_____________________

				

		
			Any such notice shall, if delivered personally, be deemed received upon delivery; shall, if delivered by certified mail, be deemed received upon the earlier of actual receipt thereof or five Business Days after the date of deposit in the United States mail, as the case may be; and shall, if 
		

		 

		

			3437015v2

		

 

		delivered by nationally recognized overnight or second-day delivery service, be deemed received on the second Business Day after the date of deposit with the delivery service.
		

			
			
				 (b)
			Governing Law.  THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.

			
			
				 (c)
			Administration.  The Board shall supervise the administration and enforcement of this Agreement according to the terms and provisions hereof and within the LLC Agreement.  The members of the Board shall not be liable for any decision, determination or action taken or omitted to be taken in connection with the administration of this Agreement.

			
			
				 (d)
			Amendment and Waiver.  The provisions of this Agreement may be amended, modified or waived only with the prior written consent of the Company and the Employee, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

			
			
				 (e)
			Severability.  Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction by reason of applicable law shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  Furthermore, in lieu of each such prohibited or unenforceable provision, there shall be added automatically as a part of this Agreement a provision similar in terms to such prohibited or unenforceable provision as may be possible and be legal, valid and enforceable.

			
			
				 (f)
			Entire Agreement.  This Agreement and the LLC Agreement embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

			
			
				 (g)
			Counterparts.  This Agreement may be executed in one or more counterparts (including facsimile counterparts), each of which, when so executed and delivered, shall be deemed to be an original, but all of which together shall constitute one and the same Agreement.  Delivery of a copy of this Agreement bearing an original signature by facsimile transmission or by electronic mail shall have the same effect as physical delivery of the paper document bearing the original signature.

			
			
				 (h)
			Successors and Assigns.  Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by and against the Employee, the Company and their respective successors, assigns, heirs, representatives and estates, as the case may be (including subsequent holders of Series D Units held by the Employee); provided, however, that rights and obligations of the Employee under this Agreement shall not be assignable except in connection with a transfer of Series D Units held by 
		

		 

		

			3437015v2

		

 

		the Employee permitted under the LLC Agreement.  Notwithstanding anything else in this Agreement or in the LLC Agreement (i) each of the Series D Units that is initially held by the Employee shall remain subject to the terms of the LLC Agreement and this Agreement, regardless of who holds such Units and (ii) the effect that the employment of the Employee by the Company, an Employer or their respective Affiliates or events related to such employment have on the rights of and restrictions on Series D Units, including vesting, and the rights of the Company with regard to the Granted Series D-1 Units under this Agreement, shall not be altered by any transfer of any Series D Units.  For the avoidance of doubt, each Permitted Transferee of the Employee who acquires Units from the Employee pursuant to the LLC Agreement shall be subject to the provisions of this Agreement as if such Permitted Transferee or Permitted Transferees were a party or parties to this Agreement.

			
			
				 (i)
			Rights of Third Parties.  Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the parties hereto and the estate, legal representative or guardian of any individual party hereto, any rights or remedies under or by reason of this Agreement.

			
			
				 (j)
			Headings; References; Interpretation.  In this Agreement, unless a clear contrary intention appears:  (i) pronouns in the masculine, feminine and neuter genders shall be construed to include any other gender and words in the singular form shall be construed to include the plural and vice versa; (ii) the term “including” shall be construed to be expansive rather than limiting in nature and to mean “including, without limitation;” (iii) the word “or” is inclusive; (iv) the words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar import refer to this Agreement as a whole, including the Exhibits attached hereto, and not to any particular subdivision unless expressly so limited; (v) references to Articles and Sections refer to Articles and Sections of this Agreement; (vi) references in any Article or Section or definition to any clause means such clause of such Article, Section or definition; (vii) references to Exhibits are to the items identified separately in writing by the parties hereto as the described Exhibits attached to this Agreement, each of which is hereby incorporated herein and made a part hereof for all purposes as if set forth in full herein; (viii) all references to money refer to the lawful currency of the United States; and (ix) references to “federal” or “Federal” means U.S. federal or U.S. Federal, respectively.  Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any party hereto, whether under any rule of construction or otherwise.  On the contrary, this Agreement has been reviewed by each of the parties hereto and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties hereto.  The Article and Section titles and headings in this Agreement are inserted for convenience of reference only and are not intended to be a part of, or to affect the meaning or interpretation of, this Agreement.

			
			
				 (k)
			Survival of Representations, Warranties and Agreements.  All representations, warranties and agreements contained herein shall survive the consummation of the transactions contemplated hereby and the termination of this Agreement.

			
			
				 (l)
			Adjustment.  In the event that the Board determines that any distribution (whether in the form of cash, Units, other securities, or other property), recapitalization, split, reverse split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, 
		

		 

		

			3437015v2

		

 

		or exchange of Units or other securities of the Company, issuance of warrants or other rights to purchase Units or other securities of the Company, or other similar transaction or event affects the Units such that an adjustment is determined by the Board to be appropriate in order to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, then the Board shall, in such manner as it may deem equitable, in its sole discretion, adjust any or all of the terms of this Agreement and/or the number of outstanding Granted Series D-1 Units or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Granted Series D-1 Unit. 

			
			
				 (m)
			Arbitration; Waiver of Jury Trial.  The Company and the Employee agree to the resolution by binding arbitration of all claims, demands, causes of action, disputes, controversies or other matters in question (“claims”) whether or not arising out of this Agreement, whether sounding in contract, tort or otherwise and whether provided by statute or common law, that the Company may have against the Employee or that the Employee may have against the Company or its parents, subsidiaries and affiliates, and each of the foregoing entities’ respective officers, directors, employees or agents in their capacity as such or otherwise; except that this agreement to arbitrate shall not limit the Company’s right to seek equitable relief, including injunctive relief and specific performance, and damages in a court of competent jurisdiction.  The Company and the Employee agree that any arbitration shall be in accordance with the Federal Arbitration Act (“FAA”) and, to the extent an issue is not addressed by the FAA, with the then-current National Rules for the Resolution of Employment Disputes of the American Arbitration Association (“AAA”) or such other rules of the AAA as applicable to the claims being arbitrated.  If a party refuses to honor its obligations under this agreement to arbitrate, the other party may compel arbitration in either federal or state court.  The arbitrator shall apply the substantive law of the State of Texas (excluding Texas choice-of-law principles that might call for the application of some other state’s law), or federal law, or both as applicable to the claims asserted.  The arbitrator shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this agreement to arbitrate, including any claim that all or part of this Agreement is void or voidable and any claim that an issue is not subject to arbitration.  The parties agree that venue for arbitration will be in Houston, Texas, and that any arbitration commenced in any other venue will be transferred to Houston, Texas, upon the written request of any party to this Agreement.  In the event that an arbitration is actually conducted pursuant to this Section 8(m), the party in whose favor the arbitrator renders the award shall be entitled to have and recover from the other party all costs and expenses incurred, including reasonable attorneys’ fees, expert witness fees, and costs actually incurred.  Any and all of the arbitrator’s orders, decisions and awards may be enforceable in, and judgment upon any award rendered by the arbitrator may be confirmed and entered by, any federal or state court having jurisdiction.  All proceedings conducted pursuant to this agreement to arbitrate, including any order, decision or award of the arbitrator, shall be kept confidential by all parties.   EACH PARTY ACKNOWLEDGES THAT, BY SIGNING THIS AGREEMENT, SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING ANY RIGHT THAT SUCH PARTY MAY HAVE TO A JURY TRIAL OR A COURT TRIAL OF ANY COVERED CLAIM ALLEGED BY SUCH PARTY. 

			
			
				 (n)
			WAIVER OF CERTAIN DAMAGE CLAIMS.  NOTWITHSTANDING ANYTHING IN ANY TRANSACTION DOCUMENTS TO THE CONTRARY, TO THE FULLEST EXTENT PERMITTED BY LAW, NEITHER THE 
		

		 

		

			3437015v2

		

 

		COMPANY NOR ANY COVERED PERSON SHALL BE LIABLE TO THE COMPANY, TO ANY MEMBER OR TO ANY OTHER PERSON MAKING CLAIMS ON BEHALF OF THE FOREGOING FOR CONSEQUENTIAL, EXEMPLARY, PUNITIVE, INDIRECT OR SPECIAL DAMAGES, INCLUDING DAMAGES FOR LOSS OF PROFITS, LOSS OF USE OR REVENUE OR LOSSES BY REASON OF COST OF CAPITAL, ARISING OUT OF OR RELATING TO THE BUSINESS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR THE GRANTING OR WITHHOLDING OF ANY APPROVAL REQUIRED UNDER THE LLC AGREEMENT, REGARDLESS OF WHETHER BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, VIOLATION OF ANY APPLICABLE DECEPTIVE TRADE PRACTICES ACT OR SIMILAR LAW OR ANY OTHER LEGAL OR EQUITABLE DUTY OR PRINCIPLE, AND THE COMPANY AND EACH COVERED PERSON RELEASE EACH OF THE OTHER SUCH PERSONS FROM LIABILITY FOR ANY SUCH DAMAGES.

			
			
				 (o)
			Spouses.

			
			
				 (i)
			The Employee’s spouse shall be required to execute a spousal consent in substantially the form required to be executed by spouses of members of the Company in the LLC Agreement (the “Spousal Agreement”) to evidence such spouse’s agreement and consent to be bound by the terms and conditions of this Agreement and the LLC Agreement as to such spouse’s interest, whether as community property or otherwise, if any, in the Series D Units held by the Employee.  If the spouse of the Employee fails to execute the Spousal Agreement, until such time as the Spousal Agreement is duly executed, the Employee’s economic rights associated with his or her Series D Units will be suspended and not subject to recovery. 

			
			
				 (ii)
			In the event of a property settlement or separation agreement between the Employee and his spouse, the Employee will use his best efforts to assign to his spouse only the right to share in profits and losses, to receive distributions, and to receive allocations of income, gain, loss, deduction or credit or similar item to which the Employee was entitled, with respect to the Employee’s Series D Units to the extent assigned to the Employee’s spouse.

			
			
				 (iii)
			If a spouse or former spouse of the Employee acquires all or a portion of the Series D Units held by the Employee as a result of any property settlement or separation agreement, such spouse or former spouse hereby grants an irrevocable power of attorney (which will be coupled with an interest) to the Employee to give or withhold such approval as the Employee will himself or herself approve with respect to such matter and without the necessity of the taking of any action by any such spouse or former spouse. Such power of attorney will not be affected by the subsequent disability or incapacity of the spouse or former spouse granting such power of attorney. Furthermore, such spouse or former spouse agrees that the Company will have the option at any time to purchase all, but not less than all, of such Series D Units at Fair Market Value determined by the Company as of the date the Company elects to so purchase such Units.

			
			
				 (p)
			Sections 83 and 409A of the Code.  The parties intend for the issuance of the Granted Series D-1 Units to be a transfer of property within the meaning of Section 83 of the Code rather than a deferral of compensation pursuant to Section 409A of the Code.  
		

		 

		

			3437015v2

		

 

		Accordingly, this Agreement and the issuance of the Granted Series D-1 Units shall be construed and interpreted in accordance with such intent and any action required by either of the parties pursuant to this Agreement will be provided in such a manner that the Granted Series D-1 Units shall not become subject to the provisions of Section 409A of the Code, including any IRS guidance promulgated with respect to Section 409A; provided, however, in no event shall any such action to comply with Section 409A reduce the aggregate amount of the benefit provided or payable to the Employee hereunder unless expressly agreed in writing by the Employee.

		
			[Signature Page Follows]
		

		
			 
		

		

		

		 

		

			3437015v2

		

 

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

		
			COMPANY
		

		
			 
		

		
			 
		

		
			_/s/ Brian Stewart_______________________
		

		
			Name: Brian Stewart
		

		
			Title: President and CEO 
		

		
			 
		

		
			 
		

		
			 
		

		
			EMPLOYEE
		

		
			 
		

		
			 
		

		
			_/s/ Jeff McPherson  _____________________
		

		
			Jeff McPherson 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		

		

		 

		

			 

		

 

		

			 

		

		

			 

		

		

			 

		

		EXHIBIT A
DEFINED TERMS
		

		
			“Addendum Agreement” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Affiliate” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Board” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Business Day” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Code” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Company Market Value” means, at the time of the applicable valuation, the difference between (a) the aggregate fair market value of all Company assets and (b) the aggregate amount of all debts and other liabilities (including an appropriate value, if any, for contingent liabilities of the Company) of the Company and its Subsidiaries (including any unpaid tax distributions that are payable for any calendar year prior to the date of such valuation).
		

		
			“Controlled by” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Covered Person” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Exchange Act” means the Securities Exchange Act of 1934, as amended. 
		

		
			“Exit Event” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Fair Market Value” means, at the time of the valuation of the applicable Series D Units, the amount that would be distributable to the holders of such Units if the Company Market Value determined at the time of such valuation were distributed to the holders of all of the Membership Interests in complete liquidation pursuant to the rights and preferences set forth in Section 6.1 of the LLC Agreement (or any provision of the LLC Agreement that replaces such Section 6.1 as the result of an amendment to the LLC Agreement after the date hereof) as in effect immediately prior to such valuation.
		

		
			“Liquidation Event” has the meaning assigned to such term in the LLC Agreement.
		

		
			“LLC Agreement” means the Limited Liability Company Agreement of the Company.
		

		
			“Membership Interests” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Permitted Transferee” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Person” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Securities Act” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Series D Units” has the meaning assigned to such term in the LLC Agreement.
		

		

		

		 

		

			Exhibit A-1

		

		

			3437015v2

		

 

		“Subsidiary” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Threshold Value” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Units” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Unvested Units” has the meaning assigned to such term in the LLC Agreement.
		

		
			“Vested Units” has the meaning assigned to such term in the LLC Agreement.
		

		
			 
		

		
			 
		

		 

		

			Exhibit A-2

		

		

			3437015v2

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