Document:

EXHIBIT
NO.: 10.12

To
Form S-1 Registration Statement

 

EXHIBIT
H

 

SECURITY
AND PLEDGE AGREEMENT

 

THIS SECURITY AGREEMENT-PLEDGE
(this “Agreement”) is executed as of ________ ___, 2014, by Hard Rock Solutions, LLC, a Utah limited
liability company (“Pledgor”) in favor of Hard Rock Solutions, Inc., a Texas corporation (“Secured
Party”).

 

RECITALS:

 

WHEREAS, Pledgor, Secured
Party, James D. Isenhour (“Stockholder”) and Superior Drilling Products, LLC, a Utah limited liability
company (“Buyer”) entered into a Membership Interest Purchase Agreement on January 28, 2014 (“Purchase
Agreement”) to evidence, among other things, the purchase and sale of the Interests (as defined below). All capitalized
terms not otherwise defined herein shall have the same meaning ascribed to such term in the Purchase Agreement;

 

WHEREAS, Stockholder
owns one hundred percent (100%) of the issued and outstanding common stock, no par value, of Secured Party;

 

WHEREAS, Secured Party
is the sole member of Pledgor and owner of all of the issued and outstanding membership interests of Pledgor (“Interests”);

 

WHEREAS, at Closing,
Buyer will purchase all of the Interests from Secured Party, and in connection therewith, Buyer and Pledgor have executed a promissory
note in the principal amount of Twelve Million Five Hundred Thousand and No/00 Dollars ($12,500,000.00) (the “Note”)
for the benefit of Secured Party (the “Purchase”);

 

WHEREAS, pursuant to
the Purchase, Buyer will become the sole member of Pledgor and owner of all of the Interests;

 

WHEREAS, upon or immediately
after Closing, Pledgor will acquire all of the rights to the Collateral (hereinafter defined);

 

WHEREAS, after consummation
of the foregoing, Buyer, as new owner of Pledgor, will agree to the grant by Pledgor to Secured Party of a security interest in
the Collateral (hereinafter defined) to secure the payment of the Note and satisfaction of the other Secured Obligations.

 

NOW, THEREFORE, for
good and valuable consideration, the sufficiency of which is hereby acknowledged and agreed, the parties hereto agree as follows:

 

Article
I

definitions

 

Section 1.1           Defined
Terms. As used in this Agreement, the following terms shall have the following meanings.

 

(a)          “Collateral”
shall have the meaning ascribed such term in Section 2.1.

 

    	 

    	 

    

  

(b)          “Event
of Default” shall have the meaning ascribed such term in Section 5.1 hereof.

 

(c)          “Secured
Obligations” shall have the meaning ascribed such term in Section 3.1.

 

(d)          “UCC”
means the uniform commercial code as adopted in Colorado.

 

Article
II

GrantS of Security InterestS

 

Section 2.1           Pledge
by Pledgor. To secure the full and prompt payment and performance of the Secured Obligations, Pledgor hereby pledges and assigns
to Secured Party, and grants to Secured Party, a security interest in, and a lien upon, all of Pledgor’s right, title and
interest in and to (i) the trademarks, trademark registrations, trademark applications, and any and all goodwill associated
therewith (the “Marks”) set forth on Schedule A attached hereto, (ii) the patents and
patent applications (the “Patents”) set forth on Schedule A attached hereto, in each case together
with (iii) all proceeds of the Marks and Patents, (iv) all of the goodwill of the businesses with which the Marks and
Patents are associated, and (v) all causes of action, past, present and future, for infringement, misappropriation, or dilution
of any of the Marks and/or Patents or unfair competition regarding the same (collectively, the “Collateral”).

 

Section 2.2           Perfection
of Security Interests. Pledgor hereby agrees to sign any documents reasonably necessary to evidence, perfect or realize upon
the security interest and obligations created by this Agreement including but not limited to a UCC-1 financing statement.

 

Article
III

SECURED OBLIGATIONS

 

Section 3.1           Indebtedness
and Obligations Secured. The pledge, security interest and assignment of rights contained herein is granted to secure the payment
and performance of the following (collectively, the “Secured Obligations”):

 

(a)          any
and all indebtedness of the Buyer and Pledgor to Secured Party evidenced by the Note (the “Indebtedness”);

 

(b)          all
costs and expenses reasonably incurred by Secured Party to obtain, preserve and perfect and enforce the security interests granted
hereby and all other liens and security interests securing payment of the Indebtedness, to collect the Indebtedness and to maintain,
preserve and collect the Collateral, as applicable, including, but not limited to, taxes, assessments, insurance premiums, reasonable
attorneys’ fees and legal expenses, advertising costs, brokerage fees and expenses of sale; and

 

(c)          all
renewals, extensions and modifications of the Indebtedness.

 

    	 

    	 

    

 

 

Article
IV

REPRESENTATIONS AND WARRANTIES

 

Section 4.1           Pledgor’s
Representations and Warranties. Pledgor represents and warrants to Secured Party that:

 

(a)          except
for the security interests granted by this Agreement, Pledgor is the record and beneficial owner of the Collateral free and clear
of any lien or any other right, title or interest of any other person.

 

(b)          the
liens granted pursuant to this Agreement constitute perfected liens on the Collateral in favor of Secured Party, and such liens
are prior to all other liens on the Collateral created by Pledgor and in existence on the date hereof and which are enforceable
as such against all creditors of and purchasers from Pledgor and against any owner or purchaser of any of the Collateral where
any of the Collateral is located and any present or future creditor obtaining a lien thereon.

 

(c)          no
consent or authorization of, filing with, or other act by or in respect of, any arbitrator or any governmental body, agency or
official or any other person (including, without limitation, any creditor of Pledgor), is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement.

 

(d)          this
Agreement constitutes a legal, valid and binding obligation of Pledgor enforceable against it in accordance with the terms hereof,
except as such enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally.

 

(e)          the
execution, delivery and performance of this Agreement will not violate any provision of any applicable law, rule, regulation or
contractual obligations of Pledgor and will not result in the creation or imposition of any lien on any of the properties or revenues
of Pledgor pursuant to any applicable law, rule, regulation or contractual obligations of Pledgor, except as contemplated hereby.

 

Article
V

Events of Default

 

Section 5.1           Events
of Default. The occurrence or happening, at any time and from time to time, of any one or more of the following, after any
applicable notice or right to cure period has passed, shall immediately constitute an “Event of Default”
under this Agreement:

 

(a)          Buyer
shall fail to pay the obligations evidenced by the Note, or any part thereof, when it becomes due, whether at the stated maturity,
by acceleration or otherwise; or

 

(b)          Pledgor
shall fail to observe or perform any of the Secured Obligations or covenants contained or referred to in this Agreement.

 

Section 5.2           Remedies.
If any Event of Default shall occur and be continuing, then Secured Party has the right, in any order, in Secured Party’s
sole discretion:

 

    	 

    	 

    

 

 (a)          to
declare the obligations evidenced by the Note immediately due and payable and may proceed to enforce payment of the same and,
in addition to any other rights and remedies provided for under this Agreement or under the Note, or otherwise available at law
or in equity, to exercise with respect to any of the Collateral all the rights and remedies of a secured party under the UCC;

 

(b)          with
respect to the Marks and Patents, subject to any restrictions thereto, to elect to sell, assign, deliver, or otherwise dispose
of all or any part of the Marks and Patents at any public or private sale, or to accept and take title to the Marks and Patents
in satisfaction of the Secured Obligations.

 

All net cash proceeds received by Secured
Party in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied
by Secured Party against the Secured Obligations in such manner as determined by Secured Party in its sole discretion. Any surplus
of such cash or cash proceeds held by Secured Party and remaining after payment in full of all the Note and performance of all
the Secured Obligations shall be paid over to Pledgor or to whomsoever may be lawfully entitled to receive such surplus.

 

Article
VI

COVENANTS

 

Section 6.1           Secured
Party’s Right to Cure. If Pledgor fails to perform any agreement or undertaking contained herein, after ten (10) days
written notice and a failure to cure, Secured Party may perform, or cause the performance of, such agreement or undertaking, and
the expenses of Secured Party or its designees incurred in connection therewith, including attorneys’ fees shall be paid
by Pledgor.

 

Section 6.2           Further
Assurances. At any time from time to time, at the request of Secured Party, Pledgor shall (a) execute, acknowledge, deliver,
record and/or file (or cause to be executed, acknowledged, delivered, recorded and/or filed) such further documents and instruments
and perform such further acts and provide such further assurances as may be reasonably necessary, desirable, or proper, in Secured
Party’s good faith opinion, (i) to perfect its security interest in the Collateral and carry out the provisions and
purposes of this Agreement including but not limited to the execution and filing of such financing statements as Secured Party
may require, (ii) to confirm the rights created under this Agreement, (iii) to protect the validity, priority and enforceability
of this Agreement and the liens and security interests created herein, and (iv) subject any property of Pledgor intended by the
terms of this Agreement to be encumbered; and (b) pay all reasonable costs in connection with any of the foregoing.

 

Section 6.3           Encumbrances.
Pledgor shall not create, permit, or suffer to exist, and shall defend the Collateral against, and will take such action as is
necessary to remove, any lien or encumbrance on the Collateral except the currently existing security interest of Secured Party
hereunder, and shall defend Pledgor’s and Secured Party’s rights, title and interest in and to the Collateral against
the claims and demands of all persons. Pledgor shall promptly notify Secured Party of (i) any lien, security interest, encumbrance,
or claim made or threatened against the Collateral, and (ii) any material change in the Collateral.

 

    	 

    	 

    

 

 

Section 6.4           Rights
to Collateral. Pledgor shall not sell or otherwise dispose of the Collateral or any part thereof without the prior written
consent of Secured Party nor take any action to impair the rights of Secured Party in the Collateral.

 

Article
VII

Miscellaneous

 

Section 7.1           Governing
Law; Submission to Jurisdiction. This Agreement and the legal relations between the parties hereto shall be governed by and
construed in accordance with the laws of the state of Colorado, excluding any choice of law rules which may direct the application
of the laws of another jurisdiction. Pledgor hereby submits to the jurisdiction of any Colorado state or federal court sitting
in Denver County, Colorado.

 

Section 7.2           Successors
and Assigns. The terms and provisions hereof shall be binding upon and inure to the benefit of Pledgor and Secured Party and
their respective successors and assigns.

 

Section 7.3           Notices.
All notices or communications permitted or required under this Agreement shall be given as set forth in the Purchase Agreement.

 

Section 7.4           Entire
Agreement; Amendment. This Agreement, together with the Note and the Purchase Agreement, embodies the entire agreement and
understanding of the parties with respect to the subject matter contained herein and supersedes all prior agreements and understandings
between the parties with respect to such subject matter. This Agreement may not be amended except by a written agreement executed
by all of the parties hereto.

 

Section 7.5           Severability.
If any provision of this Agreement would, under applicable law, be invalid or unenforceable in any respect, such provision shall
(to the extent permitted by applicable law) be construed by modifying or limiting it so as to be valid and enforceable to the maximum
extent compatible with, and possible under, applicable law. The provisions hereof are severable, and in the event any provision
hereof should be held invalid or unenforceable in any respect, it shall not invalidate, render unenforceable or otherwise affect
any other provision of this Agreement.

 

Section 7.6           Headings.
 Headings in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

 

Section 7.7           Drafting.
Each of the parties hereto acknowledge that each party was actively involved in the negotiation and drafting of this Agreement
and that no law or rule of construction shall be raised or used in which the provisions of this Agreement shall be construed in
favor or against any party hereto because one is deemed to be the author thereof.

 

[Signature page
follows]

 

    	 

    	 

    

 

The parties have executed
this Agreement to be effective as of the date and year first above written.

 

	 	PLEDGOR:
	 	 
	 	Hard Rock Solutions, LLC
	 	a Utah limited liability company
	 	 
	 	By Its Manager:
	 	 	Superior Drilling Products, LLC
	 	 	a Utah limited liability company
	 	 	 	 
	 	 	By:	/s/ Troy Meier
	 	 	 	Troy Meier, President
	 	 	 	 
	 	SECURED PARTY:
	 	 
	 	Hard Rock Solutions, Inc.
	 	a Texas corporation
	 	 	 	 
	 	By:	/s/ James
    D. Isenhour
	 	 	James D. Isenhour, President

 

This Agreement is ACKNOWLEDGED AND AGREED to by:

 

	BUYER:	 
	 	 
	Superior Drilling Products, LLC	 
	a Utah limited liability company	 
	 	 	 
	By:	/s/ Troy Meier	 
	 	Troy Meier, President	 

 

    	 

    	 

    

 

SCHEDULE A

 

Patent Applications

 

	Country/Pledgor	 	 	 	Application No.	 	Filing Date (Priority
	Reference No.	 	Application Title	 	(Priority No.)	 	Date)
	 	 	 	 	 	 	 
	
        USA

        3039.002.US
	 	Method and Apparatus for Reaming Well-Bore Surfaces Nearer the Center of Drift	 	
        13/442,316

        (61/437,587)
	 	
        04/09/12

        (04/08/11)

	 	 	 	 	 	 	 
	
        International (National Stage applications filed in AU, CA,
        CN, EP, MX)

        3039.002.PCT
	 	Method and Apparatus for Reaming Well-Bore Surfaces Nearer the Center of Drift	 	
        12/32714

        (61/437,587)
	 	
        04/09/12

        (04/08/11)

	 	 	 	 	 	 	 
	
        Australia

        3039.002.AU
	 	Method and Apparatus for Reaming Well-Bore Surfaces Nearer the Center of Drift	 	TBA	 	10/03/13
	 	 	 	 	 	 	 
	
        Canada

        3039.002.CA
	 	Method and Apparatus for Reaming Well-Bore Surfaces Nearer the Center of Drift	 	TBA	 	 
	 	 	 	 	 	 	 
	
        China

        3039.002.CN
	 	Method and Apparatus for Reaming Well-Bore Surfaces Nearer the Center of Drift	 	TBA	 	 
	 	 	 	 	 	 	 
	
        Europe

        3039.002.EP
	 	Method and Apparatus for Reaming Well-Bore Surfaces Nearer the Center of Drift	 	TBA	 	 
	 	 	 	 	 	 	 
	
        Mexico.MX

        3039.002
	 	Method and Apparatus for Reaming Well-Bore Surfaces Nearer the Center of Drift	 	TBA	 	 
	 	 	 	 	 	 	 
	
        USA

        3039.003.US
	 	Well Bore Conditioning System	 	
        13/644,218

        (61/566,079)

        (61/542,601)
	 	
        10/03/12

        (12/02/12)

        (10/03/11)

	 	 	 	 	 	 	 
	
        International

        3039.003.PCT
	 	Well Bore Conditioning System	 	
        12/58573

        (61/566,079)

        (61/542,601)
	 	
        10/03/12

        (12/02/12)

        (10/03/11)

	 	 	 	 	 	 	 
	
        Argentina

        3039.003.AR
	 	Well Bore Conditioning System	 	
        2012 01 03695

        (61/566,079)

        (61/542,601)
	 	
        10/03/12

        (12/02/12)

        (10/03/11)

	 	 	 	 	 	 	 
	
        USA

        3039.006.US
	 	Method and Apparatus for Reaming Well-Bore Surfaces Nearer the Center of Drift	 	
        13/411,230

        (61/437,587)
	 	
        04/06/12

        (04/08/11)

	 	 	 	 	 	 	 
	
        USA

        3039.006.USCN
	 	Method and Apparatus for Reaming Well-Bore Surfaces Nearer the Center of Drift	 	
        13/517,870

        (61/437,587)
	 	
        06/14/12

        (04/08/11)

 

    	 

    	 

    

 

Trademarks

 

	 	 	 	 	 	 	Application 
	Country/Pledgor 	 	 	 	Registration & 	 	No. & Filing 
	Reference No.	 	Mark	 	Goods/Services Class	 	Date
	 	 	 	 	 	 	 
	
        USA

        3039.003 USTM
	 	Drill-n-Ream	 	
        U.S. Reg. No. 4,207,933

        Sept 11, 2012

        Supplemental Register

        & International Class 7
	 	
        85/386,210

        &

        08/01/11EXHIBIT NO.: 10.14

To Form S-1 Registration Statement

 

Execution Version

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the
“Agreement”), is entered into as of February __, 2014 between SD COMPANY, INC., a Utah corporation (“SDCI”),
and SUPERIOR DRILLING PRODUCTS, LLC, a Utah limited liability company (“SDP”, and together with SDCI,
the “Companies”) and D4D LLC, a Texas limited liability Company, or its successors, transferees or assigns
(the “Investor”).

 

BACKGROUND

 

A.           The
Investor desires to provide a $2 million bridge loan (“Bridge Loan”) to the Companies, and the Companies
desire to accept the Bridge Loan from the Investor, under the terms of this Agreement, the Note (as defined in Section 1),
and and all other documents executed to evidence the Bridge Loan (collectively, the “Loan Documents”).

 

B.           The
Companies are issuing the Note in a transaction exempt from registration under Section 4(2) of, or Rule 506 promulgated under,
the Securities Act of 1933 (“Act”), or any other applicable exemption, and applicable state exemptions
in each state in which the Investor’s members reside. The Investor is an accredited investor by virtue of each of Investor’s
member being accredited investors.

 

AGREEMENT

 

The Companies and the Investor agree as follows:

 

1.           Note.
The Companies agree to issue and sell to the Investor, and the Investor agrees to purchase from the Companies, a Secured Convertible
Promissory Note in substantially the form attached as Exhibit A (the “Note”), having an initial
principal balance of $2,000,000 (the “Loan Amount”).

 

2.           Warrant.
As additional consideration for the Note, the Companies agrees to issue to the Investor a common stock purchase warrant in the
form attached to the Note (the “Warrant”), upon conversion of the Note in accordance with the conversion
provisions of the Note. The Warrant will grant to the Investor the right to purchase the number of shares of the Companies’s
common stock (the “Warrant Shares”), and at an exercise price, as set forth in the Warrant.

 

3.           Contemporaneous
Closing.  Contemporaneously with signing this Agreement, each of the parties will make, or have previously made, all of the
following deliveries which shall constitute closing of the Bridge Loan transaction (“Closing ”):

 

3.1         Companies’
Deliveries. In addition to the Disclosure Documents (as defined and listed in Section 5.4), the Companies will deliver
the following documents to the Investor on or before the Closing Date:

 

3.1.1       Each
of the following fully executed Loan Documents

 

		(a)	This Agreement.

 

		(b)	The Note, including the attached form of Warrant.

 

		(c)	The Security Agreements for SDCI and SDP substantially
in the form attached as Exhibit B and Exhibit C, respectively ( collectively, the “Security Agreements”).

 

		(d)	UCC Financing Statements perfecting Investor’s
security interest in the collateral, as set forth in the Security Agreements (“Financing Statements”).

 

    	 

    	 

    

  

		(e)	Guarantees substantially in the forms attached as Exhibits
D and E from Gilbert Troy Meier and Annette D. Meier.

 

		(f)	The Registration Rights Agreement in the form attached
as Exhibits E (“Registration Rights Agreement”).

 

		(g)	Borrowers’ authorizations to sign the Loan Documents.

 

3.1.2       A
payoff statement and payment instructions from WCMF, Inc., a Nevada Corporation (“WCMF”), which shall
be acceptable to Investor in its sole discretion, for the full repayment of the loan from WCMF to Superior Drilling Products, LLC
made pursuant to that certain Loan Agreement dated July 23, 2012, and that certain Note dated July 23, 2013. Those payment instructions
will include instructions to WCMF to provide Investor with evidence of WCMF’s release of lien with respect to the security
interest(s) granted by that certain All Asset Security Interest Agreement dated July 23, 2012, as required upon payoff of that
loan.

 

3.1.3       A
Consent to Lien from American Bank of the North, which shall be acceptable to Investor in its sole discretion, in which American
Bank of the North agrees that the Bridge Loan and Investor’s lien of the Companies’ assets in accordance with the Security
Agreements will not constitute a default under any of the loans from American Bank of the North to the Companies or their affiliates.

 

3.1.4       A
Consent to Lien from Proficio Bank, A state chartered commercial bank with an address of 6985 Union Park Center, Suite 150, Cottonwood
Heights, Utah 84047, which shall be acceptable to Investor in its sole discretion, in which Proficio Bank agrees that the Bridge
Loan and Investor’s lien of the Companies’ assets in accordance with the Security Agreements will not constitute a
default under any of the loans from Proficio Bank to the Companies or their affiliates.

 

3.1.5       The
fees of Investor’s legal counsel incurred in connection with this Note in the amount of $[27,500]; provided, however, that
Investor shall be entitled to offset the amount of such fees against the Loan Amount at Closing.

 

3.1.6       All
other consents, approvals and waivers of governmental authorities and third-parties necessary to consummate the transactions contemplated
by the Loan Documents.

 

3.2         Investor’s
Deliveries. On or before the Closing Date, the Investors will make each of the following deliveries to the Companies:

 

3.2.1       The
following fully executed Loan Documents

 

(a)          This
Agreement.

 

(b)          The
Security Agreements.

 

(c)          The
Registration Rights Agreement.

 

(d)          A
Lock-Up Agreement from the Investor and each of its members in the form required by SDCI’s underwriter.

 

3.2.2       Completed
and signed Investor qualification questionnaires from each of Investor’s limited liability company members in the form provided
by the Companies.

 

3.2.3       The
Loan Amount by confirmed wire transfer to the account specified by the Companies.

 

    	2

    	 

    

 

 

4.           Companies
Representations, Warranties and Covenants. The Companies represent, warrant and covenant to the Investor that as of the date
of this Agreement, and except with respect to Section 4.8, through the date of the full repayment of the indebtedness evidenced
by the Note or the full conversion of the indebtedness evidenced by the Note pursuant to the terms of the Note:

 

4.1          Existence.
(a) Borrower Parent is a corporation duly incorporated, validly existing and in good standing under the laws of Utah and has the
requisite power and authority, and the legal right, to own, lease and operate its properties and assets and to conduct its business
as it is now being conducted, and (b) Borrower Subsidiary is a limited liability company duly formed, validly existing and in good
standing under the laws of Utah and has the requisite power and authority, and the legal right, to own, lease and operate its properties
and assets and to conduct its business as it is now being conducted.

 

4.2          Power
and Authority. Each Borrower has the power and authority, and the legal right, to (i) execute and deliver this Note and the
other Loan Documents, as applicable, to which such Borrower is a party, and (ii) to perform its obligations thereunder.

 

4.3          Authorization.
The execution and delivery of this Note by each Borrower and the performance of each Borrower’s obligations under the Loan
Documents has been duly authorized by all necessary organizational action in accordance with each Borrower’s organizational
documents and applicable laws. Each Borrower has duly executed and delivered each of the Loan Documents.

 

4.4          Enforceability.
The obligations of the Borrowers under this Note are valid, legal and binding obligations of the Borrowers, enforceable against
the Borrowers in accordance with their terms.

 

4.5          Reservation.
Sufficient shares of the Companies’s common stock will be reserved for issuance of (a) the shares of common stock issuable
upon conversion of the Note (“Conversion Shares”) and (b) the Warrant
Shares upon exercise of the Warrant, if any, after is issuance in connection with any conversion of the Note.

 

4.6          Title.
 When issued, the Conversion Securities (as defined in the Note) and the Note (the “Securities”)
will be (a) validly issued, fully paid and non-assessable, (b) free from all taxes, liens, and charges, and (c) not subject to
preemptive or similar rights of the Companies’s shareholders.

 

4.7          No
Violation.  The execution and delivery of this Note and the consummation by the Borrowers of the transactions contemplated
thereby do not and will not (a) violate any provision of the Borrowers’ organizational documents; (b) violate any applicable
law or order of any court or other tribunal applicable to either Borrower or by which any of the Borrowers’ properties or
assets may be bound; or (c) constitute a default under any material agreement or contract by which either Borrower may be bound.

 

4.8          Ownership.
On the date of this Agreement, the equity ownership and voting power of the Companies is as follows:

 

4.8.1       SDCI
is owned (a) 64% by Meier Family Holding Company, LLC, and (b) 36% by Meier Management Company, LLC.

 

4.8.2       SDP
is owned (a) 95% by Meier Family Holding Company, LLC and (b) 5% by Meier Management Company, LLC.

 

4.8.3       Meier
Management Company, LLC is 50% owned by Mr. Meier, and 50% owned by Ms. Meier.

 

    	3

    	 

    

  

4.8.4       Meier
Family Holding Company, LLC is 64% owned by Meier Management Company, LLC, and 36% owned by the children of Gilbert Troy Meier
and Annette D. Meier.

 

4.9          Filing
of Financing Statements. The Companies will promptly file, or cooperate with Investor in filing, the Financing Statements following
the Closing.

 

5.          Investor
Covenants, Representations and Warranties. The Investor covenants, represents and warrants to the Companies, as of the date
of this Agreement, and as of any and each date that (a) any Conversion Shares are issued, (b) the Warrant is issued, and (c) any
Warrant Shares are issued, that:

 

5.1          Authorization;
Enforcement. This Agreement has been duly and validly authorized, executed and delivered by the Investor, and is a valid and
binding agreement of the Investor enforceable in accordance with its terms, subject as to enforceability to general principles
of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to
the enforcement of applicable creditors’ rights and remedies.

 

5.2          Investment
Purpose. Except as permitted under Section 9, the Investor is acquiring the Securities on its own account for investment
purposes only, and not as a nominee or agent or with a view towards, or for resale in connection with, the public sale or distribution
of the Securities.

 

5.3          Investor
Status

 

5.3.1       Qualification.
The Investor is an “Accredited Investor” as defined in Rule 501(a) of Regulation D under the Securities Act, due to
each of the Investor’s member being accredited investors for the reasons set forth in their individual Investor Qualification
Questionnaires submitted to the Companies.

 

5.3.2       Broker-Dealer.
The Investor is not a “broker” or “dealer” as those terms are defined in Section 3 of the Securities Exchange
Act of 1934.

 

5.3.3       Residence.
The Investor is duly organized under the laws of the State of Texas. Each of the Investor’s members are U.S. citizens and
a resident of the state set forth after the member’s signature on this Agreement.

 

5.4         Disclosure.
The Investor acknowledges and agrees that:

 

5.4.1       The
Investor has received and carefully read the following documents (collectively, the “Disclosure Documents”):

 

		Ø	The Companies’ (a) draft 2011 and 2012 combined audited financial statements (not including the Meier Property Series,
LLC financial statements) and (b) draft reviewed combined financial statements for September 30, 2012 and 2013 (not including the
Meier Property Series, LLC financial statements).

 

		Ø	(a) The 2011 and 2012 audited financial statements of Hard Rock Solutions, Inc., a Utah corporation (“Hard Rock”),
and (b) Hard Rock’s draft reviewed combined financial statements for September 30, 2012 and 2013.

 

		Ø	The fully executed Membership Interest Purchase Agreement between Superior Drilling Products, LLC and Hard Rock.

 

		Ø	A draft of SD Company, Inc.’s pending Registration Statement on Form S-1.

 

    	4

    	 

    

  

5.4.2       The
Companies has made available to the Investor, or to the Investor’s attorney, accountant or representative, all other documents
that the Investor has requested, and has provided the Investor with answers to all questions concerning its investment in the Securities.

 

5.4.3       The
Investor has requested all documents and other information that the Investor has deemed necessary for making an investment in the
Securities, and carefully considered and has, to the extent the Investor believes such discussion necessary, discussed with the
Investor’s professional legal, tax and financial advisers the suitability of an investment in the Securities for the Investor’s
particular tax and financial situation.

 

5.5         Reliance
on Exemptions.  The Investor understands that (a) the Securities are being offered and sold in reliance on specific exemptions
from the registration requirements of United States federal securities laws and applicable state securities laws, and (b) that
the Companies are relying and will rely, in part, upon the truth and accuracy of, and the Investor’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of the Investor set forth in this Agreement, in order
to determine the availability of such exemptions and the eligibility of the Investor to acquire the Securities.

 

5.6         Investment
Risk.  The Investor understands and acknowledges that (a) an investment in the Securities involves a high degree of risk, (b)
it is able to bear the associated financial risks, including the loss of some or all of its investment, and (c) it has sought whatever
accounting, legal and tax advice that it considers necessary to enter into the Loan Documents.

 

5.7          No
Governmental Review. The Investor understands that no federal or state agency or any other government or governmental agency
has (a) passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment
in the Securities, and (b) passed on or endorsed the merits of the Bridge Loan of the Securities.

 

5.8          Restricted
Securities. The Investor understands that (a) the Securities have not been and are not being registered under the Securities
Act or any state securities laws, and (b) the Companies is not obligated to register the Securities under the Securities Act or
any state securities laws, or to comply with the terms and conditions of any exemption under those laws.

 

5.9      
   Transfer or Resale.  The Investor understands that the Securities may not be offered for
sale, sold, assigned or transferred unless (a) the Securities are registered under federal and state securities laws, (b) the
Investor has delivered to the Companies an opinion of counsel, in a reasonably acceptable form, to the effect that such
securities may be sold, assigned or transferred pursuant to an exemption from such registration, or (c) the Investor
provides the Companies with reasonable assurance that such securities can be and are being sold, assigned or transferred in
accordance with Rule 144 under the Securities Act. However, the Companies (a) understand that the Investor intends to
distribute the Conversion Shares and the Warrant to its members, in proportion to their respective membership interests, and
(b) consent to such transfers upon receipt of the Assignment Agreement attached as Exhibit G from each assignee.

 

5.10       Legends.
The Investor understands that (a) the certificates or other instruments representing the Securities will bear a restrictive legend
in substantially the following form, in addition to any legends required by applicable securities laws, and (b) the Companies may
place a stop-transfer order against the transfer of those certificates or other instruments:

 

The securities represented by
this certificate have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws. The
securities have been acquired for investment and may not be offered for sale, sold, transferred or assigned in the absence of an
effective registration statement for the securities under the Securities Act of 1933, as amended, or applicable state securities
laws, or an opinion of counsel, in a generally acceptable form, that registration is not required under said act or applicable
state securities laws or unless sold pursuant to Rule 144 under said act.

 

    	5

    	 

    

  

6.    
      Indemnification. Each party agrees to indemnify, defend, hold harmless
and reimburse the other party from and against all claims, losses, causes of action, debts, liabilities, costs, judgments,
obligations and expenses (including attorney fees and expenses) incurred in connection with or from the first party’s
misrepresentation, breach of representation or warranty or non-fulfillment of any agreement contained in the Loan
Documents.

 

7.       
   Dispute Resolution. The parties will first make a good faith effort to settle by
negotiation any dispute regarding this Agreement, the Securities, or the Loan Documents. If a settlement has not been reached
within 15 days of beginning that negotiation, then either party may submit the dispute for mediation, and the other party
agrees to participate in that mediation proceeding. If a settlement is not reached in the course of the mediation proceeding,
then either party may submit the dispute to binding arbitration by a mutually acceptable arbitrator, and the other party
agrees to participate in that arbitration proceeding. If the parties cannot agree on an arbitrator, then each party will
select one arbitrator, and those two arbitrators will select a third arbitrator who will conduct the arbitration. Any
arbitration under this section will be conducted in Dallas County, Texas pursuant to the Commercial Arbitration
Rules of the American Arbitration Association then in effect, and judgment upon the award rendered by the arbitrator(s) may
be entered in any court having jurisdiction of the matter. However, this section will not apply to (a) actions
for equitable relief, or (b) actions to enforce any mediation or arbitration award. In any action under the preceding clauses
(a) or (b), each party waives all rights to a jury trial. 

 

8.   
       Attorney Fees.  The substantially Prevailing Party in any
mediation, arbitration, other dispute resolution proceeding, or litigation, concerning this Agreement is entitled to
reimbursement of its court costs and reasonable attorney fees by the non-prevailing party, including costs and fees incurred
on appeal or in a bankruptcy proceeding. “Prevailing Party” means a party who
substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the
abandonment by the other party of its claim or defense.

 

9.      
    General Provisions. This Agreement (a) cannot be assigned without the written
consent of all parties, (b) will be enforced, governed and construed exclusively under the laws of the State of Texas, and
under the jurisdiction of and venue in any appropriate court in Texas, (c) benefits and is binding upon each of the parties
and their respective heirs, estate, legal representatives, successors and assigns, as applicable, (d) is not intended for the
benefit of any creditors or other third parties, (e) will remain in full force and effect to the extent possible if any
portion of this Agreement is declared invalid by a court having jurisdiction, (f) together with the Loan Documents,
constitutes the entire agreement of the parties, and supercedes all previous agreements, written or oral, with regard to its
subject matter , (g) may only be waived or modified in writing signed by all parties, and (h) may be signed in two or more
counterparts, which together constitute one and the same document.

 

Signatures appear on the next page

 

    	6

    	 

    

 

Effective as of the first date written above.

 

	INVESTOR:	 	COMPANIES:
	 	 	 	 	 
	D4D LLC	 	SD COMPANY, INC. 
	 	 	 	 	 
	By:	Hard 4 Holdings, LLC, its Managing Member	 	By:	/s/ Troy Meier
	 	 	 	 	Troy Meier, Chief Executive Officer
	By:	/s/ Reid Walker	 	 	 
	 	Reid Walker, its Manager	 	 	 
	 	 	 	SUPERIOR DRILLING PRODUCTS, LLC 
	 	 	 	 	 
	 	 	 	By:	/s/ Annette Meier
	 	 	 	 	Annette Meier, Manager

 

[Signature Page to Securities Purchase Agreement]

 

    	7

    	 

    

 

Exhibit A

 

Secured Convertible Promissory Note

 

    	8

    	 

    

 

Exhibit B

 

SDCI Security Agreement

 

    	9

    	 

    

 

Exhibit C

 

SDP Security Agreement 

 

    	10

    	 

    

 

Exhibit D 

 

Guarantee of Mr. Meier

  

    	11

    	 

    

Exhibit E

 

Guarantee of Ms. Meier 

 

    	12

    	 

    

 

Exhibit F

 

Registration Rights Agreement

 

    	13

    	 

    

 

Exhibit G

 

Assignment Agreement

  

    	14

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