Document:

Unassociated Document

    Exhibit
      10.4

    
 

    INCENTIVE
      STOCK OPTION AGREEMENT

     

    THIS
      INCENTIVE STOCK OPTION AGREEMENT
      (the
“Agreement”) is made as of the XX
      day of <DATE>, XXXX,
      between
STANDARD
      DRILLING, INC.,
      a
      Delaware corporation (the “Company”), and <NAME>(“Executive”).

     

    To
      carry
      out the purposes of the STANDARD
      DRILLING, INC. 2006 STOCK INCENTIVE PLAN
      (the
“Plan”), by affording Executive the opportunity to purchase shares of the common
      stock of the Company, par value $0.001 per share (“Stock”), and in consideration
      of the mutual agreements and other matters set forth herein and in the Plan,
      the
      Company and Executive hereby agree as follows: 

     

    1.
      Grant
      of Option.
      The
      Company hereby irrevocably grants to Executive the right and option (“Option”)
      to purchase all or any part of an aggregate of <NUMBER>
      shares of
      Stock on the terms and conditions set forth herein and in the Plan, which Plan
      is incorporated herein by reference as a part of this Agreement. In the event
      of
      any conflict between the terms of this Agreement and the Plan, the Plan shall
      control. Capitalized terms used but not defined in this Agreement shall have
      the
      meaning attributed to such terms under the Plan, unless the context requires
      otherwise. This Option is intended to constitute an incentive stock option,
      within the meaning of section 422(b) of the Code, to the maximum extent
      permitted under the Code. Executive acknowledges that only a portion of this
      Option may qualify as such an incentive stock option due to the limitation
      set
      forth in section 422(d) of the Code. 

     

    2.
      Purchase
      Price.
      The
      purchase price of Stock purchased pursuant to the exercise of this Option shall
      be <PRICE>
      per
      share, which has been determined to be not less than the Fair Market Value
      of
      the Stock at the date of grant of this Option. For all purposes of this
      Agreement, Fair Market Value of Stock shall be determined in accordance with
      the
      provisions of the Plan.

     

    3.
      Exercise
      of Option.
      Subject
      to the earlier expiration of this Option as herein provided, this Option may
      be
      exercised, by written notice to the Company at its principal executive office
      addressed to the attention of its Corporate Secretary (or such other officer
      or
      Executive of the Company as the Company may designate from time to time), at
      any
      time and from time to time after the date of grant hereof, but, except as
      otherwise provided below, this Option shall not be exercisable for more than
      a
      percentage of the aggregate number of shares offered by this Option determined
      by the number of full years from the date of grant hereof to the date of such
      exercise, in accordance with the following schedule:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	
              Number
                of Full Years

            	
              Percentage
                of Shares

              That
                May Be Purchased

            

    

     

    
      	
              Less
                than 

            	1
              year	
              0%

            
	
               

            	
              1
                year

            	
              25%

            
	
               

            	
              2
                years

            	
              50%

            
	
               

            	
              3
                years

            	
              75%

            
	
               

            	
              4
                years or more

            	
              100%

            

    

     

    Notwithstanding
      the exercise schedule above or any provision in the Plan to the contrary, if
      Executive is employed by the Company immediately prior to the consummation
      of
      any Corporate Change (as defined below), this Option shall be exercisable for
      the entire number of shares set forth in Paragraph 1 hereof upon the
      consummation of such Corporate Change. For purposes of the preceding sentence,
      the term “Corporate Change” shall have the same meaning as is assigned to such
      term in the Plan; provided, however, that the term “Corporate Change” shall not
      include any reorganization, merger, consolidation, or similar transaction or
      series of transactions pursuant to which the record holders of the outstanding
      shares of the Company’s stock immediately prior to such transaction or series of
      transactions continue to hold immediately following such transaction or series
      of transactions 50% or more of the outstanding voting securities (based upon
      voting power) of (a) any entity which owns (directly or indirectly) the stock
      of
      the Company, (b) any entity with which the Company has merged, or (c) any entity
      that owns an entity with which the Company has merged. In addition, in no event
      shall a recapitalization of the Company, a reclassification of the Company’s
      capital stock, or other change in the Company’s capital structure (a
“recapitalization”), or an underwritten initial public offering of stock made by
      the Company pursuant to an effective registration statement filed under the
      Securities Act of 1933, as amended (the “Securities Act”), constitute a
      Corporate Change, and the exercise of this Option shall not be accelerated
      upon
      the occurrence of any such recapitalization or initial public offering.

     

    This
      Option may be exercised only while Executive remains an Executive of the Company
      and will terminate and cease to be exercisable upon Executive’s termination of
      employment with the Company, except that:

     

    (a)If
      Executive’s employment with the Company terminates by reason of disability
      (within the meaning of section 22(e)(3) of the Code), this Option may be
      exercised by Executive (or Executive’s estate or the person who acquires this
      Option by will or the laws of descent and distribution or otherwise by reason
      of
      the death of Executive) at any time during the period of one year following
      such
      termination, but only as to the number of shares Executive was entitled to
      purchase hereunder as of the date Executive’s employment so
      terminates.

     

    (b)If
      Executive dies while in the employ of the Company, Executive’s estate, or the
      person who acquires this Option by will or the laws of descent and distribution
      or otherwise by reason of the death of Executive, may exercise this Option
      at
      any time during the period of one year following the date of Executive’s death,
      but only as to the number of shares Executive was entitled to purchase hereunder
      as of the date of Executive’s death.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

       

    

    (c)If
      Executive’s employment with the Company terminates for any reason other than as
      described in (a) or (b) above, unless such employment is terminated for cause,
      this Option may be exercised by Executive at any time during the period of
      three
      months following such termination, or by Executive’s estate (or the person who
      acquires this Option by will or the laws of descent and distribution or
      otherwise by reason of the death of Executive) during a period of one year
      following Executive’s death if Executive dies during such three month period,
      but in each case only as to the number of shares Executive was entitled to
      purchase hereunder as of the date Executive’s employment so terminates. As used
      in this paragraph, the term “cause” shall mean Executive (i) has been convicted
      of a misdemeanor involving moral turpitude or of a felony, (ii) has engaged
      in
      gross negligence or willful misconduct in the performance of the duties of
      Executive’s employment, or (iii) has materially breached any material provision
      of any written agreement between Executive and the Company or any of its
      Affiliates. 

     

    This
      Option shall not be exercisable in any event after the expiration of 10 years
      from the date of grant hereof. 

     

    Except
      as
      provided in Paragraph 4, the purchase price of shares as to which this Option
      is
      exercised shall be paid in full at the time of exercise (a) in cash (including
      check, bank draft or money order payable to the order of the Company), (b)
      by
      delivering or constructively tendering to the Company shares of Stock having
      a
      Fair Market Value equal to the purchase price (provided such shares used for
      this purpose must have been held by Executive for such minimum period of time
      as
      may be established from time to time by the Committee), (c) if the Stock is
      readily tradable on a national securities market, through a “cashless exercise”
in accordance with a Company established policy or program for the same, or
      (d)
      any combination of the foregoing. No fraction of a share of Stock shall be
      issued by the Company upon exercise of an Option or accepted by the Company
      in
      payment of the exercise price thereof; rather, Executive shall provide a cash
      payment for such amount as is necessary to effect the issuance and acceptance
      of
      only whole shares of Stock. Unless and until a certificate or certificates
      representing such shares shall have been issued by the Company to Executive,
      Executive (or the person permitted to exercise this Option in the event of
      Executive’s death) shall not be or have any of the rights or privileges of a
      shareholder of the Company with respect to shares acquirable upon an exercise
      of
      this Option. 

     

    4.
      Stock
      Appreciation Right.
      Upon an
      exercise of this Option, Executive (or the person exercising this Option in
      the
      event of Executive’s death) may request the Company to compute an amount (the
“Appreciation Amount”) equal to the excess of the aggregate Fair Market Value of
      any number of the shares of Stock with respect to which this Option is exercised
      over the aggregate purchase price of such number of shares. Moreover, Executive
      (or such person) may elect (subject to the consent or disapproval of the
      Committee of any election to receive cash) to have the Company distribute to
      Executive (or such person), in lieu of Executive’s purchasing such number of
      shares, an amount of cash and/or a whole number of shares of Stock (in any
      combination thereof as Executive or such person may elect) in Fair Market Value
      equal to the Appreciation Amount. Notwithstanding anything to the contrary
      herein, if Executive is then an officer, director or affiliate of the Company
      who is subject to section 16 of the Securities Exchange Act of 1934, as amended
      (the “Securities Exchange Act”), this Option may not be exercised prior to the
      expiration of six months from the date of grant hereof (except in the event
      of
      the death or disability of Executive prior to the expiration of such six month
      period); thereafter, any exercise of this Option or election pursuant to this
      Paragraph 4 wherein Executive would receive any portion of the Appreciation
      Amount in cash (other than cash in lieu of a fractional share) may be made
      only
      during a period beginning on the third business day and ending on the twelfth
      business day following the date of release by the Company for publication of
      quarterly and annual summary statements of sales and earnings. Should Executive
      elect pursuant to this Paragraph 4 to receive the Appreciation Amount solely
      in
      shares of Stock, the number of shares of Stock distributable to Executive shall
      be the highest whole number of shares whose value does not exceed the
      Appreciation Amount, and any fractional share shall be paid in
      cash.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

       

    

    5.
      Withholding
      of Tax.
      To the
      extent that the exercise of this Option or the disposition of shares of Stock
      acquired by exercise of this Option results in compensation income or wages
      to
      Executive for federal, state or local tax purposes, Executive shall deliver
      to
      the Company at the time of such exercise or disposition such amount of money
      as
      the Company may require to meet its minimum obligation under applicable tax
      laws
      or regulations. Executive may elect with respect to this Option to surrender
      or
      authorize the Company to withhold shares of Stock (valued at their Fair Market
      Value on the date of surrender or withholding of such shares) to satisfy any
      tax
      required to be withheld upon exercise of this Option. An election pursuant
      to
      the preceding sentence shall be referred to herein as a “Stock Withholding
      Election.” All Stock Withholding Elections shall be made by written notice to
      the Company’s Corporate Secretary (or such other officer or Executive of the
      Company as the Company may designate from time to time). If Executive is not
      a
      Section 16 Person (as hereinafter defined), Executive may revoke such election
      by delivering to the Company’s Corporate Secretary (or such other designated
      officer or Executive) written notice of such revocation prior to the date such
      election is implemented through actual surrender or withholding of shares of
      Stock (the “Withholding Date”). If Executive is a Section 16 Person, the Stock
      Withholding Election must:

     

    (a)
      be
      irrevocable and made six months prior to the Withholding Date; or

     

    (b)
      (i)
      be
      approved by the Committee either before or after such election is made, (ii)
      be
      made, and the Withholding Date occur, during a period beginning on the third
      business day following the date of release by the Company for publication of
      quarterly and annual summary statements of sales and earnings and ending on
      the
      twelfth business day following such date, and (iii) be made more than six months
      after the date of the grant of this Option to Executive; or

     

    (c)
      be
      made in
      connection with (i) a delivery to the Company of shares of Stock owned by
      Executive prior to the exercise of this Option to satisfy the portion of the
      tax
      required to be withheld with respect to those shares of Stock received by
      Executive upon exercise of this Option for which payment of the purchase price
      was made to the Company in shares of Stock owned by Executive prior to the
      exercise of this Option pursuant to Paragraph 3 hereof and (ii) the exercise
      of
      this Option more than six months after the date of grant hereof.

     

    If
      Executive fails to pay the required amount to the Company or fails to make
      a
      Stock Withholding Election, the Company is authorized to withhold from any
      cash
      remuneration (or, if Executive is not a Section 16 Person, Stock remuneration,
      including withholding any shares of Stock distributable to Executive upon
      exercise of this Option) then or thereafter payable to Executive any tax
      required to be withheld by reason of the exercise of this Option or the
      disposition of shares of Stock acquired by exercise of this Option. For purposes
      of this Agreement, the term “Section 16 Person” means an officer, director or
      affiliate of the Company or a former officer, director or affiliate of the
      Company who is subject to Section 16 of the Securities Exchange
      Act.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    6.
      Certain
      Restrictions.
      Shares
      of Stock purchased pursuant to the exercise of this Option shall be subject
      to
      the following restrictions (until such time as such restrictions terminate
      as
      provided below):

     

    (a)
      such
      shares of Stock may not be sold,
      assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered
      or disposed of by Executive;
      and

     

    (b)
      if
      Executive’s employment with the Company is terminated for “cause,” as defined in
      Paragraph 3(c) hereof, the Company (or any subsidiary of the Company designated
      by it) shall have the option for 60 days after such termination of employment
      to
      purchase for cash all or any part of such shares of Stock at the purchase price
      paid therefor upon exercise of this Option.

     

    The
      restrictions imposed on such shares of Stock under this Paragraph shall
      terminate on the earliest to occur of the following: 

     

    (a)
      the
      90th
      day after the date on which shares of Stock are first listed or admitted to
      unlisted trading privileges on a national stock exchange or on the National
      Market System of NASDAQ or have sales or bid and offer quotations reported
      in
      the automated quotation system operated by the National Association of
      Securities Dealers, Inc.; 

     

    (b)
      the
      10th
      anniversary of the date of grant of this Option; 

     

    (c)
      as
      to any
      shares of Stock for which the Company’s (or a subsidiary’s) 60 day option to
      purchase upon termination of Executive’s employment with the Company shall have
      become exercisable but shall have expired without having been exercised, on
      the
      first business day of the calendar month next following the expiration of such
      60 day option period; 

     

    (d)
      the
      first
      business day of the calendar month next following the termination of Executive’s
      employment with the Company because of Executive’s death, normal or early
      retirement in accordance with his employer’s established employment policies or
      practices, or disability (within the meaning of section 22(e)(3) of the Code);
      or 

     

    (e)
      the
      date
      of the termination of this Option due to an adjustment being made to this Option
      pursuant to Paragraph IX of the Plan.

     

    7.
      Lock-up
      Provision.
      Executive hereby agrees that in the event of any underwritten public offering
      of
      stock, including an initial public offering of stock, made by the Company
      pursuant to an effective registration statement filed under the Securities
      Act,
      Executive shall not offer, sell, contract to sell, pledge, hypothecate, grant
      any option to purchase or make any short sale of, or otherwise dispose of any
      shares of stock of the Company or any rights to acquire stock of the Company
      for
      such period of time from and after the effective date of such registration
      statement as may be established by the underwriter for such public offering;
      provided,
      however,
      that
      such period of time shall not exceed 180 days from the effective date of the
      registration statement to be filed in connection with such public offering.
      The
      foregoing limitation shall not apply to shares registered in the public offering
      under the Securities Act. Executive shall be subject to this Paragraph provided
      and only if the officers and directors of the Company are also subject to
      similar arrangements.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    8.
      Status
      of Stock.
      Executive understands that at the time of the execution of this Agreement the
      shares of Stock to be issued upon exercise of this Option have not been
      registered under the Securities Act, or any state securities law, and that
      the
      Company does not currently intend to effect any such registration. Until the
      shares of Stock acquirable upon the exercise of the Option have been registered
      for issuance under the Securities Act, the Company will not issue such shares
      unless the holder of the Option provides the Company with a written opinion
      of
      legal counsel, who shall be satisfactory to the Company, addressed to the
      Company and satisfactory in form and substance to the Company’s counsel, to the
      effect that the proposed issuance of such shares to such Option holder may
      be
      made without registration under the Securities Act. In the event exemption
      from
      registration under the Securities Act is available upon an exercise of this
      Option, Executive (or the person permitted to exercise this Option in the event
      of Executive’s death or incapacity), if requested by the Company to do so, will
      execute and deliver to the Company in writing an agreement containing such
      provisions as the Company may require to assure compliance with applicable
      securities laws.

     

    Executive
      agrees that the shares of Stock which Executive may acquire by exercising this
      Option shall be acquired for investment without a view to distribution, within
      the meaning of the Securities Act, and shall not be sold, transferred, assigned,
      pledged or hypothecated in the absence of an effective registration statement
      for the shares under the Securities Act and applicable state securities laws
      or
      an applicable exemption from the registration requirements of the Securities
      Act
      and any applicable state securities laws. Executive also agrees that the shares
      of Stock which Executive may acquire by exercising this Option will not be
      sold
      or otherwise disposed of in any manner which would constitute a violation of
      any
      applicable federal or state securities laws.

     

    In
      addition, Executive agrees that (i) the certificates representing the shares
      of
      Stock purchased under this Option may bear such legend or legends as the
      Committee deems appropriate in order to assure compliance with Paragraph 6,
      Paragraph 7, and applicable securities laws, (ii) the Company may refuse to
      register the transfer of the shares of Stock purchased under this Option on
      the
      stock transfer records of the Company if such proposed transfer would in the
      opinion of counsel satisfactory to the Company constitute a violation of
      Paragraph 6, Paragraph 7, or any applicable securities law, and (iii) the
      Company may give related instructions to its transfer agent, if any, to stop
      registration of the transfer of the shares of Stock purchased under this
      Option.

     

    9.
      Employment
      Relationship.
      For
      purposes of this Agreement, Executive shall be considered to be in the
      employment of the Company as long as Executive remains an Executive of either
      the Company, an Affiliate, or a corporation or a parent or subsidiary of such
      corporation assuming or substituting a new option for this Option. Without
      limiting the scope of the preceding sentence, it is expressly provided that
      Executive shall be considered to have terminated employment with the Company
      at
      the time of the termination of the “Affiliate” status under the Plan of the
      entity or other organization that employs Executive. Any question as to whether
      and when there has been a termination of such employment, and the cause of
      such
      termination, shall be determined by the Committee and its determination shall
      be
      final.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    10.
      Binding
      Effect.
      This
      Agreement shall be binding upon and inure to the benefit of any successors
      to
      the Company and all persons lawfully claiming under Executive.

     

    11.
      Entire
      Agreement.
      This
      Agreement constitutes the entire agreement of the parties with regard to the
      subject matter hereof, and contains all the covenants, promises,
      representations, warranties and agreements between the parties with respect
      to
      the Option granted hereby. Without limiting the scope of the preceding sentence,
      all prior understandings and agreements, if any, among the parties hereto
      relating to the subject matter hereof are hereby null and void and of no further
      force and effect. Any modification of this Agreement shall be effective only
      if
      it is in writing and signed by both Executive and an authorized officer of
      the
      Company.

     

    12.
      Governing
      Law. This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of Delaware, without regard to conflicts of laws principles
      thereof.

     

    13.
      Jurisdiction.Each
      of
      the Company and Executive hereby irrevocably (i) submits and consents to the
      personal jurisdiction of the state and federal courts sitting in Harris County,
      Texas with respect to any suit, action, or proceeding arising out of or based
      upon this Agreement or the transactions contemplated hereby and (ii) waives
      the
      right to contend in any such action that venue is improperly laid in any such
      court or that it is an improper or inconvenient forum or lacks personal
      jurisdiction. If Executive now or hereafter resides outside the State of Texas,
      Executive hereby irrevocably appoints the General Counsel of the Company as
      Executive’s authorized agent upon whom process may be served at such General
      Counsel’s Company office for notices under this Agreement in any suit, action,
      or proceeding arising out of or based upon this Agreement or the transactions
      contemplated hereby that may be instituted in any state or federal court in
      the
      State of Texas by the Company, and Executive hereby agrees to so act. Executive
      agrees to take any and all action, including the filing of any and all documents
      and instruments, that may be necessary to continue such appointment in full
      force and effect as aforesaid. Service of process upon the authorized agent
      of
      Executive and written notice of such service to Executive shall be deemed,
      in
      every respect, effective service of process as to Executive for purposes of
      any
      such suit, action, or proceeding instituted in any state or federal court in
      the
      State of Texas.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Agreement to be duly executed by its officer thereunto
      duly authorized, and Executive has executed this Agreement, all as of the day
      and year first above written.

     

     

    
      	 	
              STANDARD
                DRILLING, INC.

               

            	 
	
               By: 
                

            	 	 
	 	
              Prentis
                B. Tomlinson, Jr., CEO

            	 
	 	 	 
	 	 (DIRECTOR
              / EXECUTIVE)	 
	 	 	 
	 	
              Print
                NameUnassociated Document

    Exhibit
      10.5

     

    NONSTATUTORY
      STOCK OPTION AGREEMENT

     

    AGREEMENT
      made as
      of the <DATE> between STANDARD
      DRILLING, INC.,
      a
      Delaware corporation (the “Company”), and<Executive>
(“Executive”).

     

    To
      carry
      out the purposes of the STANDARD
      DRILLING, INC.
      2006 STOCK INCENTIVE PLAN
      (the
“Plan”), by affording Executive the opportunity to purchase shares of the common
      stock of the Company, par value $0.001 per share (“Stock”), and in consideration
      of the mutual agreements and other matters set forth herein and in the Plan,
      the
      Company and Executive hereby agree as follows: 

     

    1.
      Grant
      of Option.
      The
      Company hereby irrevocably grants to Executive the right and option (“Option”)
      to purchase all or any part of an aggregate of <NUMBER> shares of Stock on
      the terms and conditions set forth herein and in the Plan, which Plan is
      incorporated herein by reference as a part of this Agreement. In the event
      of
      any conflict between the terms of this Agreement and the Plan, the Plan shall
      control. Capitalized terms used but not defined in this Agreement shall have
      the
      meaning attributed to such terms under the Plan, unless the context requires
      otherwise. This Option shall not be treated as an incentive stock option within
      the meaning of section 422(b) of the Code. 

     

    2.
      Purchase
      Price.
      The
      purchase price of Stock purchased pursuant to the exercise of this Option shall
      be <PRICE> which has been determined to be not less than the Fair Market
      Value of the Stock at the date of grant of this Option. For all purposes of
      this
      Agreement, Fair Market Value of Stock shall be determined in accordance with
      the
      provisions of the Plan.

     

    3.
      Exercise
      of Option.
      Subject
      to the earlier expiration of this Option as herein provided, this Option may
      be
      exercised, by written notice to the Company at its principal executive office
      addressed to the attention of its Corporate Secretary (or such other officer
      or
      Executive of the Company as the Company may designate from time to time), at
      any
      time and from time to time after the later of the date the closing price of
      our
      common stock on any exchange on which the common stock of Standard Drilling,
      Inc. is traded or quoted equals or exceeds $2.50 for 10 trading days or January
      1, 2007. 

     

    This
      Option shall survive the Executive’s termination date if such termination occurs
      after December 31, 2006. If the Executive’s termination date occurs prior to
      January 1, 2007, the Option shall be forfeited unexercised.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
       

      This
        Option shall not be exercisable in any event after January 25, 2008. Except
        as
        provided in Paragraph 4, the purchase price of shares as to which this Option
        is
        exercised shall be paid in full at the time of exercise (a) in cash (including
        check, bank draft or money order payable to the order of the Company), (b)
        by
        delivering or constructively tendering to the Company shares of Stock having
        a
        Fair Market Value equal to the purchase price (provided such shares used
        for
        this purpose must have been held by Executive for such minimum period of
        time as
        may be established from time to time by the Committee), (c) if the Stock
        is
        readily tradable on a national securities market, through a “cashless exercise”
in accordance with a Company established policy or program for the same,
        or (d)
        any combination of the foregoing. No fraction of a share of Stock shall be
        issued by the Company upon exercise of an Option or accepted by the Company
        in
        payment of the exercise price thereof; rather, Executive shall provide a
        cash
        payment for such amount as is necessary to affect the issuance and acceptance
        of
        only whole shares of Stock. Unless and until a certificate or certificates
        representing such shares shall have been issued by the Company to Executive,
        Executive (or the person permitted to exercise this Option in the event of
        Executive’s death) shall not be or have any of the rights or privileges of a
        shareholder of the Company with respect to shares acquirable upon an exercise
        of
        this Option. 

       

    

    4.
      Stock
      Appreciation Right.
      In lieu
      of exercising this Option, with the consent of the Committee Executive (or
      the
      person entitled to exercise this Option in the event of Executive’s death) may
      elect to have the Company compute an amount (the “Appreciation Amount”) equal to
      the excess of the aggregate Fair Market Value of any number of the shares of
      Stock with respect to which this Option is exercisable over the aggregate
      purchase price of such number of shares and pay to Executive (or such person),
      in lieu of Executive’s purchasing such number of shares, an amount of cash, a
      whole number of shares of Stock, or any combination thereof as Executive or
      such
      person may elect, with the consent of the Committee, equal to the Appreciation
      Amount. Notwithstanding anything to the contrary herein, if Executive is then
      an
      officer, director or affiliate of the Company who is subject to section 16
      of
      the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”),
      this Option may not be exercised prior to the expiration of six months from
      the
      date of grant hereof (except in the event of the death or disability of
      Executive prior to the expiration of such six month period); thereafter, any
      exercise of this Option or election pursuant to this Paragraph 4 wherein
      Executive would receive any portion of the Appreciation Amount in cash (other
      than cash in lieu of a fractional share) may be made only during a period
      beginning on the third business day and ending on the twelfth business day
      following the date of release by the Company for publication of quarterly and
      annual summary statements of sales and earnings. Should Executive elect pursuant
      to this Paragraph 4 to receive the Appreciation Amount solely in shares of
      Stock, the number of shares of Stock distributable to Executive shall be the
      highest whole number of shares whose value does not exceed the Appreciation
      Amount, and any fractional share shall be paid in cash.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    5.
      Withholding
      of Tax.
      To the
      extent that the exercise of this Option or the disposition of shares of Stock
      acquired by exercise of this Option results in compensation income or wages
      to
      Executive for federal, state or local tax purposes, Executive shall deliver
      to
      the Company at the time of such exercise or disposition such amount of money
      as
      the Company may require to meet its minimum obligation under applicable tax
      laws
      or regulations. Executive may elect with respect to this Option to surrender
      or
      authorize the Company to withhold shares of Stock (valued at their Fair Market
      Value on the date of surrender or withholding of such shares) to satisfy any
      tax
      required to be withheld upon exercise of this Option. An election pursuant
      to
      the preceding sentence shall be referred to herein as a “Stock Withholding
      Election.” All Stock Withholding Elections shall be made by written notice to
      the Company’s Corporate Secretary (or such other officer or Executive of the
      Company as the Company may designate from time to time). If Executive is not
      a
      Section 16 Person (as hereinafter defined), Executive may revoke such election
      by delivering to the Company’s Corporate Secretary (or such other designated
      officer or Executive) written notice of such revocation prior to the date such
      election is implemented through actual surrender or withholding of shares of
      Stock (the “Withholding Date”). If Executive is a Section 16 Person, the Stock
      Withholding Election must:

     

    (a)
      Be
      irrevocable and made six months prior to the Withholding Date; or

     

    (b)
      (i)
      be
      approved by the Committee either before or after such election is made, (ii)
      be
      made, and the Withholding Date occur, during a period beginning on the third
      business day following the date of release by the Company for publication of
      quarterly and annual summary statements of sales and earnings and ending on
      the
      twelfth business day following such date, and (iii) be made more than six months
      after the date of the grant of this Option to Executive; or

     

    (c)
      be
      made in
      connection with (i) a delivery to the Company of shares of Stock owned by
      Executive prior to the exercise of this Option to satisfy the portion of the
      tax
      required to be withheld with respect to those shares of Stock received by
      Executive upon exercise of this Option for which payment of the purchase price
      was made to the Company in shares of Stock owned by Executive prior to the
      exercise of this Option pursuant to Paragraph 3 hereof and (ii) the exercise
      of
      this Option more than six months after the date of grant hereof.

     

    If
      Executive fails to pay the required amount to the Company or fails to make
      a
      Stock Withholding Election, the Company is authorized to withhold from any
      cash
      remuneration (or, if Executive is not a Section 16 Person, Stock remuneration,
      including withholding any shares of Stock distributable to Executive upon
      exercise of this Option) then or thereafter payable to Executive any tax
      required to be withheld by reason of the exercise of this Option or the
      disposition of shares of Stock acquired by exercise of this Option. For purposes
      of this Agreement, the term “Section 16 Person” means an officer, director or
      affiliate of the Company or a former officer, director or affiliate of the
      Company who is subject to Section 16 of the Securities Exchange
      Act.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    6.
      Certain
      Restrictions.
      Shares
      of Stock purchased pursuant to the exercise of this Option shall be subject
      to
      the following restrictions (until such time as such restrictions terminate
      as
      provided below):

     

    (a)
      such
      shares of Stock may not be sold,
      assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered
      or disposed of by Executive;
      and

     

    (b)
      if
      Executive’s employment with the Company is terminated for “cause,” as defined in
      Paragraph 3(c) hereof, the Company (or any subsidiary of the Company designated
      by it) shall have the option for 60 days after such termination of employment
      to
      purchase for cash all or any part of such shares of Stock at the purchase price
      paid therefore upon exercise of this Option.

     

    The
      restrictions imposed on such shares of Stock under this Paragraph shall
      terminate on the earliest to occur of the following: 

     

    (a)
      the
      90th
      day after the date on which shares of Stock are first listed or admitted to
      unlisted trading privileges on a national stock exchange or on the National
      Market System of NASDAQ or have sales or bid and offer quotations reported
      in
      the automated quotation system operated by the National Association of
      Securities Dealers, Inc.; 

     

    (b)
      the
      2nd
      anniversary of the date of grant of this Option; 

     

    (c)
      as
      to any
      shares of Stock for which the Company’s (or a subsidiary’s) 60 day option to
      purchase upon termination of Executive’s employment with the Company shall have
      become exercisable but shall have expired without having been exercised, on
      the
      first business day of the calendar month next following the expiration of such
      60 day option period; 

     

    (d)
      the
      first
      business day of the calendar month next following the termination of Executive’s
      employment with the Company because of Executive’s death, normal or early
      retirement in accordance with his employer’s established employment policies or
      practices, or disability (within the meaning of section 22(e)(3) of the Code);
      or 

     

    (e)
      the
      date
      of the termination of this Option due to an adjustment being made to this Option
      pursuant to Paragraph IX of the Plan.

     

    7.
      Lock-up
      Provision.
      Executive hereby agrees that in the event of any underwritten public offering
      of
      stock, including an initial public offering of stock, made by the Company
      pursuant to an effective registration statement filed under the Securities
      Act
      of 1933, as amended (the “Securities Act”), Executive shall not offer, sell,
      contract to sell, pledge, hypothecate, grant any option to purchase or make
      any
      short sale of, or otherwise dispose of any shares of stock of the Company or
      any
      rights to acquire stock of the Company for such period of time from and after
      the effective date of such registration statement as may be established by
      the
      underwriter for such public offering; provided,
      however,
      that
      such period of time shall not exceed 180 days from the effective date of the
      registration statement to be filed in connection with such public offering.
      The
      foregoing limitation shall not apply to shares registered in the public offering
      under the Securities Act. Executive shall be subject to this Paragraph provided
      and only if the officers and directors of the Company are also subject to
      similar arrangements.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    8.
      Status
      of Stock.
      Executive understands that at the time of the execution of this Agreement the
      shares of Stock to be issued upon exercise of this Option have not been
      registered under the Securities Act, or any state securities law, and that the
      Company does not currently intend to affect any such registration. Until the
      shares of Stock acquirable upon the exercise of the Option have been registered
      for issuance under the Securities Act, the Company will not issue such shares
      unless the holder of the Option provides the Company with a written opinion
      of
      legal counsel, who shall be satisfactory to the Company, addressed to the
      Company and satisfactory in form and substance to the Company’s counsel, to the
      effect that the proposed issuance of such shares to such Option holder may
      be
      made without registration under the Securities Act. In the event exemption
      from
      registration under the Securities Act is available upon an exercise of this
      Option, Executive (or the person permitted to exercise this Option in the event
      of Executive’s death or incapacity), if requested by the Company to do so, will
      execute and deliver to the Company in writing an agreement containing such
      provisions as the Company may require to assure compliance with applicable
      securities laws.

     

    Executive
      agrees that the shares of Stock which Executive may acquire by exercising this
      Option shall be acquired for investment without a view to distribution, within
      the meaning of the Securities Act, and shall not be sold, transferred, assigned,
      pledged or hypothecated in the absence of an effective registration statement
      for the shares under the Securities Act and applicable state securities laws
      or
      an applicable exemption from the registration requirements of the Securities
      Act
      and any applicable state securities laws. Executive also agrees that the shares
      of Stock which Executive may acquire by exercising this Option will not be
      sold
      or otherwise disposed of in any manner which would constitute a violation of
      any
      applicable federal or state securities laws.

     

    In
      addition, Executive agrees that (i) the certificates representing the shares
      of
      Stock purchased under this Option may bear such legend or legends as the
      Committee deems appropriate in order to assure compliance with Paragraph 6,
      Paragraph 7, and applicable securities laws, (ii) the Company may refuse to
      register the transfer of the shares of Stock purchased under this Option on
      the
      stock transfer records of the Company if such proposed transfer would in the
      opinion of counsel satisfactory to the Company constitute a violation of
      Paragraph 6, Paragraph 7, or any applicable securities law, and (iii) the
      Company may give related instructions to its transfer agent, if any, to stop
      registration of the transfer of the shares of Stock purchased under this
      Option.

     

    9.
      Employment
      Relationship.
      For
      purposes of this Agreement, Executive shall be considered to be in the
      employment of the Company as long as Executive remains an Executive of either
      the Company, an Affiliate, or a corporation or a parent or subsidiary of such
      corporation assuming or substituting a new option for this Option. Without
      limiting the scope of the preceding sentence, it is expressly provided that
      Executive shall be considered to have terminated employment with the Company
      at
      the time of the termination of the “Affiliate” status under the Plan of the
      entity or other organization that employs Executive. Any question as to whether
      and when there has been a termination of such employment, and the cause of
      such
      termination, shall be determined by the Committee and its determination shall
      be
      final.

     

    10.
      Restrictions
      on Transfer.
      An Award
      shall be transferable freely transferable on the date of issuance.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    11.
      Binding
      Effect.
      This
      Agreement shall be binding upon and inure to the benefit of any successors
      to
      the Company and all persons lawfully claiming under Executive.

     

    12.
      Entire
      Agreement.
      This
      Agreement constitutes the entire agreement of the parties with regard to the
      subject matter hereof, and contains all the covenants, promises,
      representations, warranties and agreements between the parties with respect
      to
      the Option granted hereby. Without limiting the scope of the preceding sentence,
      all prior understandings and agreements, if any, among the parties hereto
      relating to the subject matter hereof are hereby null and void and of no further
      force and effect. Any modification of this Agreement shall be effective only
      if
      it is in writing and signed by both Executive and an authorized officer of
      the
      Company.

     

    13.
      Governing
      Law. This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of Delaware, without regard to conflicts of laws principles
      thereof.

     

    14.
      Jurisdiction.Each
      of
      the Company and Executive hereby irrevocably (i) submits and consents to the
      personal jurisdiction of the state and federal courts sitting in Kent County,
      Delaware with respect to any suit, action, or proceeding arising out of or
      based
      upon this Agreement or the transactions contemplated hereby and (ii) waives
      the
      right to contend in any such action that venue is improperly laid in any such
      court or that it is an improper or inconvenient forum or lacks personal
      jurisdiction. If Executive now or hereafter resides outside the State of
      Delaware, Executive hereby irrevocably appoints the General Counsel of the
      Company as Executive’s authorized agent upon whom process may be served at such
      General Counsel’s Company office for notices under this Agreement in any suit,
      action, or proceeding arising out of or based upon this Agreement or the
      transactions contemplated hereby that may be instituted in any state or federal
      court in the State of Delaware by the Company, and Executive hereby agrees
      to so
      act. Executive agrees to take any and all action, including the filing of any
      and all documents and instruments, that may be necessary to continue such
      appointment in full force and effect as aforesaid. Service of process upon
      the
      authorized agent of Executive and written notice of such service to Executive
      shall be deemed, in every respect, effective service of process as to Executive
      for purposes of any such suit, action, or proceeding instituted in any state
      or
      federal court in the State of Delaware. 

     

    Nonstatutory
      Option.

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Agreement to be duly executed by its officer thereunto
      duly authorized, and Executive has executed this Agreement, all as of the day
      and year first above written.

     

    
      	 	
              STANDARD
                DRILLING, INC.

               

               

            
	
               By: 
                

            	 
	 	
               Prentis
                B. Tomlinson, Jr., CEO

            
	 	 
	 	
               <EXECUTIVE>
                (“Executive”)

            
	 	 
	 	
              Print
                Name

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