Exhibit 10.6

 

SCIO DIAMOND TECHNOLOGY CORP.

 

QUALIFIED STOCK OPTION GRANT AGREEMENT

 

This Stock Option Grant Agreement (the “Agreement”) is entered into on [Date],
by and between Scio Diamond Technology Corp., a Nevada corporation (the
“Corporation”), and [Name of Optionee] (the “Optionee”), effective as of [Grant
Date] (the “Grant Date”).

 

In consideration of the premises, mutual covenants and agreements herein, the
Corporation and the Optionee agree as follows:

 

1.             Grant of Option.  The Corporation hereby grants to the Optionee,
pursuant to the 2012 Share Incentive Plan (the “Plan”), a stock option to
purchase from the Corporation, at a price of [Exercise Price] per share (the
“Exercise Price”), up to [Amount] shares of Common Stock of the Corporation,
$0.001 par value, subject to the provisions of this Agreement and the Plan (the
“Options”).  The Options shall expire at 5:00 p.m. Pacific Time on the last
business day preceding the 3 year anniversary of the Grant Date (the “Expiration
Date”), unless fully exercised or terminated earlier.

 

2.             Terminology.  Unless stated otherwise in this Agreement,
capitalized terms in this Agreement shall have the meaning set forth in the
Plan.

 

3.             Exercise of Option.

 

(a)           Vesting.  Subject to the terms of the Plan with respect to
vesting, the Options granted shall vest in amounts and as of the dates
Corporation reaches the performance milestones shown in Exhibit A as determined
by the Administrator, and shall stay vested, provided that the Optionee is in
the continuous employ of, or in a service relationship with, the Corporation
from the Grant Date through the applicable date upon which such Options become
vested.  The extent to which the Options are vested as of a particular vesting
date shall be rounded down to the nearest whole share.  However, vesting is
rounded up to the nearest whole share on the last vesting date.

 

(b)           Right to Exercise. The Optionee shall have the right to exercise
the Options, to the extent vested, in whole or in part, at any time prior to the
Expiration Date or earlier termination of the Options in accordance with the
Plan and this Agreement.  Any Options that do not qualify as incentive stock
options will be treated as nonqualified stock options. To the extent not
exercised, the number of shares as to which the Option is exercisable shall
accumulate and remain exercisable, in whole or in part, at any time after
becoming vested (exercisable), but not later than the Expiration Date or other
termination of the Option.  In the event of the Optionee’s voluntary or
involuntary termination of employment, all Options that have not been previously
exercised shall be terminated immediately.

 

(c)           Exercise Procedure.  Subject to the conditions set forth in this
Agreement, the Option shall be exercised (to the extent then exercisable) by
delivery of written notice of exercise on any business day to the Corporate
Secretary of the Corporation in such form as the Administrator may require from
time to time.  Such notice shall specify the number of shares in respect to
which the Option is being exercised and shall be accompanied by full payment of
the

 

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Exercise Price for such shares in accordance with Section 3(e) of this
Agreement.  The exercise shall be effective upon receipt by the Corporate
Secretary of the Corporation of such written notice accompanied by the required
payment.  The Option may be exercised only in multiples of whole shares and may
not be exercised at any one time as to fewer than one hundred shares (or such
lesser number of shares as to which the Option is then exercisable).  No
fractional shares shall be issued pursuant to this Option.

 

(d)           Effect.  The exercise, in whole or in part, of the Option shall
cause a reduction in the number of shares of Common Stock subject to the Option
equal to the number of shares of Common Stock with respect to which the Option
is exercised.

 

(e)           Method of Payment. In addition to any other method approved by the
Administrator, if any, and permitted by applicable statutes and regulations,
payment of the Exercise Price shall be by delivery of cash, certified or
cashier’s check, or money order or other cash equivalent acceptable to
Administrator in its sole discretion.

 

(f)            Issuance of Shares Upon Exercise. Upon due exercise of the
Option, in whole or in part, in accordance with the terms of this Agreement, the
Corporation shall issue to the Optionee or such other person exercising the
Option, as the case may be, the number of shares of Common Stock so paid for, in
the form of fully paid and non-assessable stock and shall deliver certificates
therefore as soon as practicable thereafter.

 

(g)           Restrictions on Exercise and upon Shares Issued upon Exercise.
Notwithstanding any other provision of the Agreement, the Option may not be
exercised at any time that the Corporation does not have in effect a
registration statement under the Securities Act of 1933, as amended, and any
applicable state securities laws, relating to the offer of Common Stock to the
Optionee under the Plan, unless the Corporation receives, if requested by the
Corporation, an opinion of counsel acceptable to the Corporation that such
registration is not required.  Upon the issuance of any shares of Common Stock
pursuant to the exercise of the Option, the Optionee will, upon the request of
the Corporation, agree in writing that the Optionee is acquiring such shares for
investment only and not with a view to resale, and that the Optionee will not
sell, pledge or otherwise dispose of such shares so issued unless (i) the
Corporation is furnished with an opinion of counsel to the effect that
registration of such shares pursuant to the Securities Act of 1933, as amended,
is not required by that Act or by the rules and regulations thereunder; (ii) the
staff of the Securities and Exchange Commission has issued a “no-action” letter
with respect to such disposition; or (iii) such registration or notification as
is, in the opinion of counsel for the Corporation, required for the lawful
disposition of such shares has been filed by the Corporation and has become
effective; provided, however, that the Corporation is not obligated hereby to
file any such registration or notification. In addition, the Common Stock issued
upon the exercise of any Options shall be subject to repurchase by the
Corporation for an amount equal to the Exercise Price of such Options upon the
occurrence of an event described in Section 4(d) of this Agreement.  The
Corporation may place a legend embodying such restrictions on the certificates
evidencing such shares.

 

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4.             Termination of Employment or Service.

 

(a)           Exercise Period Following Cessation of Employment or Other Service
Relationship, In General.  If Optionee ceases to be employed by, or in a service
relationship with the Corporation for any reason other than death, Disability,
or discharge for Cause, (i) the unvested Options shall terminate immediately
upon such cessation, and (ii) the vested Options shall remain exercisable during
the 30-day period following such cessation, but in no event after the Expiration
Date.  Unless sooner terminated, any unexercised vested Options shall terminate
upon the expiration of such 30-day period.

 

(b)           Death of Optionee.  If Optionee dies prior to the expiration or
other termination of the Options, (i) the unvested Options shall terminate
immediately upon Optionee’s death, and (ii) the vested Options shall remain
exercisable during the one-year period following Optionee’s death, but in no
event after the Expiration Date, by Optionee’s executor, personal
representative, or the person(s) to whom the Options are transferred by will or
the laws of descent and distribution.  Unless sooner terminated, any unexercised
vested Options shall terminate upon the expiration of such one-year period.

 

(c)           Disability of Optionee.  If Optionee ceases to be employed by, or
in a service relationship with, the Corporation as a result of Optionee’s
Disability, (i) the unvested Options shall terminate immediately upon such
cessation, and (ii) the vested Options shall remain exercisable during the
one-year period following such cessation, but in no event after the Expiration
Date.  Unless sooner terminated, any unexercised vested Options shall terminate
upon the expiration of such one-year period.

 

(d)           Misconduct.  Notwithstanding anything to the contrary in this
Agreement, the Options shall terminate in their entirety, regardless of whether
the Options are vested, immediately upon Optionee’s discharge of employment or
other service relationship for Cause or upon Optionee’s commission of any of the
following acts during any period following the cessation of Optionee’s
employment or other service relationship during which the Options otherwise
would be exercisable:  (i) fraud on or misappropriation of any funds or property
of the Corporation, or (ii) breach by Optionee of any provision of any
employment, non-disclosure, non-competition, non-solicitation, assignment of
inventions, or other similar agreement executed by Optionee for the benefit of
the Corporation, as determined by the Administrator, which determination will be
conclusive.

 

5.             Adjustments and Business Combinations.

 

(a)           Adjustments for Events Affecting Common Stock.  In the event of
changes in the Common Stock of the Corporation by reason of any stock dividend,
spin-off, split-up, reverse stock split, recapitalization, reclassification,
merger, consolidation, liquidation, business combination or exchange of shares
and the like, the Administrator shall, in its discretion, make appropriate
substitutions for or adjustments in the number, kind and price of shares covered
by this Option, and shall, in its discretion and without the consent of the
Optionee, make any other substitutions for or adjustments in this Option,
including but not limited to reducing the number of shares subject to the Option
or providing or mandating alternative settlement methods such as settlement of
the Option in cash or in shares of Common Stock or other securities of the
Corporation or of any other entity, or in any other matters which relate to the
Option as the Administrator shall, in its sole discretion, determine to be
necessary or appropriate.

 

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(b)           Pooling of Interests Transaction.  Notwithstanding anything in the
Plan or this Agreement to the contrary and without the consent of the Optionee,
the Administrator, in its sole discretion, may make any modifications to the
Option, including but not limited to cancellation, forfeiture, surrender or
other termination of the Option in whole or in part regardless of the vested
status of the Option, in order to facilitate any business combination that is
authorized by the Board to comply with requirements for treatment as a pooling
of interests transaction for accounting purposes under generally accepted
accounting principles.

 

(c)           Adjustments for Other Events.  The Administrator is authorized to
make, in its discretion and without the consent of the Optionee, adjustments in
the terms and conditions of, and the criteria included in, the Option in
recognition of unusual or nonrecurring events affecting the Corporation, or the
financial statements of the Corporation, or of changes in applicable laws,
regulations, or accounting principles, whenever the Administrator determines
that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Option or the Plan.

 

(d)           Binding Nature of Adjustments.  Adjustments under this Section 5
will be made by the Administrator, whose determination as to what adjustments,
if any, will be made and the extent thereof will be final, binding and
conclusive.  No fractional shares will be issued pursuant to this Option on
account of any such adjustments.

 

(e)           Effect of Change of Control.  All outstanding portions of the
Option, if any, shall become fully vested upon the closing of any Change of
Control which involves any of the following: (i) a merger in which the
Corporation is not the surviving entity, (ii) a sale of all of the outstanding
shares of the Corporation’s stock or (iii) a sale by the Corporation of
substantially all of its assets, except to the extent that provision is made in
connection with such Change of Control for the continuation or assumption of the
Option by, or for the substitution of equivalent options with respect to, the
surviving or successor entity or a parent thereof, and such Options  shall be
exercisable in accordance with the Plan for a period of five years following the
vesting date, subject to approval of the Board (except that in no event may any
portion of any Option be exercised after ten years following the Grant Date);
provided, that unless otherwise decided in the sole discretion of the
Administrator, the acceleration of vesting in connection with such Change of
Control shall be limited as provided in the Plan.

 

6.             Non-Guarantee of Employment.  Nothing in the Plan or in this
Agreement shall confer on an individual any legal or equitable right against the
Corporation or the Administrator, except as expressly provided in the Plan or
this Agreement.  Nothing in the Plan or in this Agreement shall (a) constitute
inducement, consideration, or contract for employment or service between an
individual and the Corporation; (b) confer any right on an individual to
continue in the service of the Corporation; or (c) shall interfere in any way
with the right of the Corporation to terminate such service at any time with or
without cause or notice, or to increase or decrease compensation for such
service.

 

7.             No Rights as Stockholder.  The Optionee shall not have any of the
rights of a stockholder with respect to the shares of Common Stock that may be
issued upon the exercise of the Option (including, without limitation, any
rights to receive dividends or noncash distributions with respect to such
shares) until such shares of Common Stock have been issued to him or her

 

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upon the due exercise of the Option.  No adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to the date
such certificate or certificates are issued.

 

8.             Incentive/Nonqualified Nature of the Option.  The Options are
intended to qualify as an incentive stock option within the meaning of
Section 422A of the Code to the extent set forth herein, and this Agreement
shall be so construed; provided, however, to the extent that the aggregate Fair
Market Value as of the date of this grant, of the shares into which the Option
becomes exercisable for the first time by the Optionee during any calendar year
exceeds $100,000, the portion of the Option which is in excess of the $100,000
limitation will be treated as a nonqualified stock option.

 

9.             Withholding of Taxes.

 

(a)           In General.  At the time the Option is exercised in whole or in
part, or at any time thereafter as requested by the Corporation, the Optionee
hereby authorizes withholding from payroll or any other payment of any kind due
the Optionee and otherwise agrees to make adequate provision for foreign,
federal, state and local taxes required by law to be withheld, if any, which
arise in connection with the Option (including, without limitation, upon a
disqualifying disposition with the meaning of Code section 421(b)).  The
Corporation may require the Optionee to make a cash payment to cover any
withholding tax obligation as a condition of exercise of the Option.  If the
Optionee does not make such payment when requested, the Corporation may refuse
to issue any stock certificate under the Plan until arrangements satisfactory to
the Administrator for such payment have been made.

 

(b)           Means of Payment.  The Administrator may, in its sole discretion,
permit the Optionee to satisfy, in whole or in part, any withholding tax
obligation which may arise in connection with the Option by any of the following
means or by a combination of such means:  (i) tendering a cash payment,
(ii) authorizing the Corporation to deduct any such tax obligations from any
payment of any kind otherwise due to the Optionee, (iii) authorizing the
Corporation to withhold shares of Common Stock otherwise issuable to the
Optionee pursuant to the exercise of this Option, or (iv) delivering to the
Corporation unencumbered shares of Common Stock already owned by the Optionee.

 

(c)           Disposition of Shares.  The acceptance of shares of Common Stock
upon exercise of this Option shall constitute an agreement by the Optionee
(i) to notify the Corporation if any of such shares are disposed of by the
Optionee within two years from the Grant Date or within one year from the date
the shares were issued to the Optionee pursuant to the exercise of the Option,
and (ii) if required by law, to remit to the Corporation, at the time of any
such disposition, an amount sufficient to satisfy the Corporation’s withholding
tax obligations with respect to such disposition, whether or not, as to both
(i) and (ii), the Optionee is employed by or has any other relationship with the
Corporation at the time of such disposition.

 

10.          Section 409A.  It is intended that this Agreement and the Plan
comply with the provisions of Section 409A of the Code to the extent subject
thereto, and accordingly, to the maximum extent permitted, this Agreement and
the Plan shall be interpreted and administered to be in compliance therewith. 
Optionee acknowledges that the Administrator shall have the sole

 

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discretion and authority to amend this Agreement or the Plan to the extent
necessary to cause this Agreement or the Plan to comply with the provisions of
Section 409A of the Code if the Administrator determines that any such amendment
will not materially and adversely affect the Optionee.  Such amendment may be
retroactive to the extent permitted by Section 409A of the Code and shall not
require the consent of the Optionee.

 

11.          The Corporation’s Rights.  The existence of this Option shall not
affect in any way the right or power of the Corporation or its stockholders to
make or authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the Corporation’s capital structure or its business, or any
merger or consolidation of the Corporation, or any issue of bonds, debentures,
preferred or other stocks with preference ahead of or convertible into, or
otherwise affecting the Common Stock or the rights thereof, or the dissolution
or liquidation of the Corporation, or any sale or transfer of all or any part of
the Corporation’s assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.

 

12.          Optionee.  Whenever the word “Optionee” is used in any provision of
this Agreement under circumstances where the provision should logically be
construed, as determined by the Administrator, to apply to the estate, personal
representative or beneficiary to whom this Option may be transferred by will, by
the laws of descent and distribution, or pursuant to a qualified domestic
relations order as defined in Code section 414(p), the word “Optionee” shall be
deemed to include such person.

 

13.          Transferability of Option.  This Option is not transferable other
than by will or the laws of descent and distribution, pursuant to a qualified
domestic relations order as defined in Code section 414(p), or as otherwise
permitted by the Administrator, in its sole discretion.  During the lifetime of
the Optionee, the Option may be exercised only by the Optionee, by such
permitted transferees or, during the period the Optionee is under a legal
disability, by the Optionee’s guardian or legal representative.  Except as
provided above, the Option may not be assigned, transferred, pledged,
hypothecated or disposed of in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process.

 

14.          Notices.  All notices and other communications made or given
pursuant to this Agreement shall be in writing and shall be sufficiently made or
given if hand delivered or mailed by certified mail, addressed to the Optionee
at the address contained in the records of the Corporation, or addressed to the
Administrator, care of the Corporation for the attention of its Corporate
Secretary at its principal office or, if the receiving party consents in
advance, transmitted and received via telecopy or via such other electronic
transmission mechanism as may be available to the parties.

 

15.          Entire Agreement.  This Agreement and the Plan contain the entire
agreement between the parties with respect to the Option granted hereunder.  Any
oral or written agreements, representations, warranties, written inducements, or
other communications made prior to the execution of this Agreement with respect
to the Option granted hereunder shall be void and ineffective for all purposes.

 

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16.          Amendment.  This Agreement may not be modified, except as provided
in the Plan or in a written document signed by each of the parties hereto.

 

17.          Conformity with Plan.  This Agreement is intended to conform in all
respects with, and is subject to all applicable provisions of, the Plan, which
is incorporated herein by reference.  Inconsistencies between this Agreement and
the Plan shall be resolved in accordance with the terms of the Plan.  In the
event of any ambiguity in this Agreement or any matters as to which this
Agreement is silent, the Plan shall govern.  A copy of the Plan is available
upon request to the Administrator.

 

18.          Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Nevada, other than the conflict of
laws principles thereof.

 

19.          Headings.  The headings in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.

 

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed by
its duly authorized officer as of the date first above written.

 

SCIO DIAMOND TECHNOLOGY CORP.

 

By:

 

 

 

 

Print Name:

 

 

 

 

Title:

 

 

The undersigned hereby acknowledges that he/she has carefully read this
Agreement and the Plan and agrees to be bound by all of the provisions set forth
in such documents.

 

OPTIONEE:

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Date:

 

 

 

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Exhibit A

Number of Options Vesting

 

Vesting Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXERCISE FORM

 

Scio Diamond Technology Corp.

411 University Ridge, Suite D
Greenville SC  29601

 

Ladies and Gentlemen:

 

I hereby exercise the Options granted to me on                     , by Scio
Diamond Technology Corp. (the “Corporation”), subject to all the terms and
provisions thereof and of the 2012 Share Incentive Plan (the “Plan”), and notify
you of my desire to purchase
                                                     shares of Common Stock of
the Corporation at a price of $                per share pursuant to the
exercise of said Option.

 

Payment Amount: $                               

 

Date:

 

 

 

 

Optionee Signature

 

 

 

Received by Scio Diamond Technology Corp. on:

 

 

 

 

 

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