SUPERIOR DRILLING PRODUCTS, INC.

NonSTATUTORY Stock Option AGREEMENT

 

(Employee, Consultant)

 

1. Grant of Stock Option. As of the Grant Date [[GRANTDATE]] Superior Drilling
Products, Inc., a Utah corporation (the “Company”), hereby grants a Nonstatutory
Stock Option (the “Option”) to the Optionee [[FIRSTNAME]] [[LASTNAME]] an
[Employee/Consultant] of the Company, to purchase [[SHARESGRANTED]] shares of
the Company’s common stock, $0.001 par value per share (the “Stock”), subject to
the terms and conditions of this agreement (the “Agreement”) and the Superior
Drilling Products, Inc. 2015 Long Term Incentive Plan (the “Plan”) which is
hereby incorporated herein in its entirety by reference and is attached as
Exhibit A. The Option is not an “incentive stock option” as defined in Section
422 of the Internal Revenue Code.

 

2. Definitions. All capitalized terms used herein shall have the meanings set
forth in the Plan unless otherwise specifically provided herein. The Award
Notice sets forth meanings for various capitalized terms used in this Agreement.

 

3. Option Term. The Option shall commence on the Grant [[GRANTDATE]] and
terminate on the date immediately prior to the tenth (10th) anniversary of the
Grant Date. The period during which the Option is in effect and may be exercised
is referred to herein as the “Option Period.”

 

4. Option Price. The Option Price per share of Stock is [[GRANTPRICE]].

 

5. Vesting. This Option may be exercised for the total number of shares Stock
subject to this Option in accordance with the Vesting Schedule as follows: 33.3%
on the Grant Date, 33.3% on the first anniversary of the Grant Date and 33.4% on
the second anniversary of the Grant Date provided that the Optionee is
continuously providing Services to the Company or an Affiliate through the
applicable vesting date. The Stock may be purchased at any time after they
become vested, in whole or in part, during the Option Period; provided, however,
the Option may only be exercisable to acquire whole Stock. The right of exercise
provided herein shall be cumulative so that if the Option is not exercised to
the maximum extent permissible after vesting, the vested portion of the Option
shall be exercisable, in whole or in part, at any time during the Option Period.

 

6. Method of Exercise. The Option is exercisable by delivery of an electronic
notice to a designated representative of the Company Maxim Group LLC (“Maxim”),
subject to the Maxim Broker agreement by the Optionee, specifying the number of
shares of Stock to be acquired on, and the effective date of, such exercise.

 

7. Restrictions on Exercise. The Option may not be exercised if the issuance of
such Stock or the method of payment of the consideration for such Stock would
constitute a violation of any applicable federal or state securities or other
laws or regulations, including any laws or regulations or Company policies
respecting blackout periods, or any rules or regulations of any stock exchange
on which the Stock may be listed.

 

   

 

 

8. Termination of Employment/Engagement. Voluntary or involuntary termination of
the Optionee as an Employee/Consultant of the Company and its Affiliates shall
affect Optionee’s rights under the Option as follows:

 

  a. Termination for Cause or Breach of Noncompetition or Confidentiality
Agreement. The vested and non-vested portions of the Option shall expire on
12:01 a.m. (CST) on the date of termination of employment/engagement or the date
of the breach, as applicable and shall not be exercisable to any extent if
Optionee’s employment/engagement is terminated for Cause or the Optionee
breaches a noncompetition and/or confidentiality agreement between Optionee and
the Company or any of its Affiliates at any time.         b. Death or
Disability. If Optionee’s employment/engagement is terminated by death or
Disability (as determined by the Committee at the time of such termination as a
member of the Company’s Board of Directors), then the unvested portion of any
Award shall be forfeited and terminated and vested portion of an Option may be
exercised by the Participant or the applicable of his guardian or legal
representative or estate for a period of three (3) months after the date on
which the participant’s Service terminated due to Disability or one (1) Year
after the date on which the Participant’s Services terminated due to death,
respectively, but in any event no later than the date of expiration of the
option’s term, which in no event shall exceed ten (10) years from the date of
grant, as set forth in the Award Agreement evidencing such Option, except as
provided in section 6.2 9a)(i) of the Long Term incentive plan for a
Nonstatutory Stock Option or SAR (the “Option Expiration Date”).         c.
Other Involuntary Termination. If Optionee’s employment with the Company and its
Affiliates is terminated by the Company for any reason other than for Cause,
death or Disability, then (i) the non-vested portion of the Option shall
immediately expire on the date of termination of employment and (ii) the vested
portion of the Option shall expire to the extent not exercised six (6) months
after the date of such termination of employment/engagement. In no event may the
Option be exercised by anyone after the earlier of (i) the expiration of the
Option Period or (ii) six (6) months after the date of termination.         d.
Other Voluntary Termination. If Optionee’s employment with the Company and its
Affiliates is terminated by the Optionee for any reason other than for death or
Disability, then (i) the non-vested portion of the Option shall immediately
expire on the date of termination of employment and (ii) the vested portion of
the Option shall expire to the extent not exercised three (3) months after the
date of such termination of employment/engagement. In no event may the Option be
exercised by anyone after the earlier of (i) the expiration of the Option Period
or (ii) three (3) months after the date of termination.         e. Change in
Control. Notwithstanding the vesting provisions in this Agreement, in the event
of a “Change in Control” of the Company, vesting of the Option shall be
accelerated and the entire Option shall automatically become 100% vested as of
the day of the Change in Control date and the Option shall otherwise be affected
as provided in the Plan.

 

   

 

 

9. Independent Legal and Tax Advice. Optionee acknowledges that the Company has
advised Optionee to obtain independent legal and tax advice regarding the grant
and exercise of the Option and the disposition of any Stock acquired thereby.

 

10. No Rights in Stock. Subject to the terms of the Plan, Optionee shall have no
rights as a stockholder until the Optionee becomes the record holder of such
Stock, or upon a Change in Control, with respect to the Stock.

 

11. Investment Representation. Optionee will enter into such written
representations, warranties and agreements as Company may reasonably request in
order to comply with any federal or state securities law. Moreover, any stock
certificate for any Stock issued to Optionee hereunder may contain a legend
restricting their transferability as determined by the Company in its
discretion. Optionee agrees that Company shall not be obligated to take any
affirmative action in order to cause the issuance or transfer of Stock hereunder
to comply with any law, rule or regulation that applies to the Stock subject to
the Option.

 

12. No Guarantee of Employment, Engagement or Services. The Option shall not
confer upon Optionee any right to continued employment, engagement or Services
with the Company or any Affiliate.

 

13. Withholding of Taxes. The Option is subject to and the Company shall have
the right to take any action as may be necessary or appropriate to satisfy any
federal, state, or local (foreign and domestic) tax and withholding obligations
upon exercise of the Option.

 

14. General.

 

(a) Notices. All notices under this Agreement shall be delivered electronically
to the parties at their respective e-mail addresses set forth beneath their
signatures below or at such other address as may be designated in writing by
either of the parties to one another. Notices shall be effective upon receipt.

 

(b) Nontransferability of Option. The Option granted pursuant to this Agreement
is not transferable other than by will or by the laws of descent and
distribution or by a qualified domestic relations order (as defined in Section
4l4(p) of the Internal Revenue Code). The Option will be exercisable during
Optionee’s lifetime only by Optionee or by Optionee’s legal representative in
the event of Optionee’s Disability. No right or benefit hereunder shall in any
manner be liable for or subject to any debts, contracts, liabilities,
obligations or torts of Optionee.

 

(c) Amendment and Termination. No amendment, modification or termination of the
Option or this Agreement shall be made at any time without the written consent
of Optionee and Company.

 

(d) No Guarantee of Tax Consequences, Legal Consult. The Company and the
Committee make no commitment or guarantee that any federal or state tax
treatment will apply or be available to any person eligible for benefits under
the Option. The Optionee has been advised and been provided the opportunity to
obtain independent legal and tax advice regarding this Award including, without
limitation, with respect to the grant and exercise of the Option and the
disposition of any Stock acquired thereby.

 

(e) Severability. In the event that any provision of this Agreement shall be
held illegal, invalid, or unenforceable for any reason, such provision shall be
fully severable, but shall not affect the remaining provisions of the Agreement,
and the Agreement shall be construed and enforced as if the illegal, invalid, or
unenforceable provision had not been included herein.

 

(f) Supersedes Prior Agreements. This Agreement shall supersede and replace all
prior agreements and understandings, oral or written, between the Company and
the Optionee regarding the grant of the Options covered hereby.

 

15. Counterparts: This Agreement may be executed in multiple original
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.

 

[SIGNATURE PAGE FOLLOWS]

 

   

 

 

IN WITNESS WHEREOF, the Company, as of the Grant Date has caused this Agreement
to be executed on its behalf by its duly authorized officer and Optionee has
hereunto executed this Agreement as of the same date.

 

  SUPERIOR DRILLING PRODUCTS, INC.         By: (Signature on File)   Name: 
Annette Meier   Title: Chief Operating Officer

 

  Address for Notices:       [[RESADDR1]] [[RESADDR2]]   [[RESCITY]]
[[RESSTATEORPROV]]   [[RESPOSTALCODE]] [[RESCOUNTRYCODE]]

 

  Attention: [[FIRSTNAME]] [[LASTNAME]]

 

  OPTIONEE:       [[SIGNATURE]]   Signature           [[FIRSTNAME]] [[LASTNAME]]

  Address: