Exhibit 10.7
TETRA TECHNOLOGIES, INC.
Nonqualified Stock Option Agreement
This Agreement (the "Agreement") is effective as of April 1, 1996
(the "Grant Date"), among TETRA Technologies, Inc., a Delaware corporation (the
"Company"), and Xxxxx X. XxXxxxx ("Optionee").
In connection with the initial employment of Optionee with the
Company as an executive officer, in order to incentivize Optionee and to afford
Optionee the opportunity to purchase shares of common stock, par value $0.01 per
share, of the Company ("Stock"), and in consideration of the mutual agreements
set forth herein, the Company and Optionee hereby agree as follows:
1. Grant of Option. The Company hereby grants to Optionee the right
and option (the "Option") to purchase all or any part of an aggregate of 284,977
shares of Stock, on the terms and conditions set forth herein. The Option, if
not previously exercised, shall expire and not be exercisable after ten years
from the Grant Date, unless earlier terminated as provided below. It is not
intended that the Option qualify as an "incentive stock option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), but rather the Option shall be a non-qualified stock option.
2. Purchase Price. The purchase price of Stock purchased upon
exercise of the Option shall be $16.875 per share.
3. Exercise of Option. Subject to the earlier expiration of the
Option as herein provided and subject to the terms and conditions contained
herein, to the extent vested, the Option may be exercised, by written notice to
the Company at its principal executive office addressed to the attention of the
Secretary of the Company, at any time and from time to time on and after the
Grant Date, such exercise to be effective at the time of receipt of such written
notice at the Company's principal executive office during normal business hours,
but any exercise of the Option must be for a minimum of 100 shares of Stock (or,
if less, for all remaining shares subject to the Option). The Option shall vest
and be exercisable only in accordance with the following schedule:
Date Cumulative Shares Vested At Date*
---- ---------------------------------
Grant Date 33 1/3%
1st Anniversary of Grant Date 66 2/3%
2nd Anniversary of Grant Date and thereafte 100%
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* For exercise dates falling between such dates, the
cumulative Shares that will be vested and exercisable
shall be equal to (i) the cumulative Shares vested as of
the immediately preceding date plus (ii) .0278
multiplied by the total number of Shares covered by the
Option multiplied by the number of full months since the
immediately preceding date.
If, upon the exercise of the Option, Optionee purchases less than
the full percentage of Stock that may be purchased at the time of such exercise,
Optionee's right to purchase the Stock not so purchased shall continue until the
expiration date or earlier termination of the Option. Optionee (or the person
permitted to exercise the Option in the event of Optionee's death) shall be and
have all of the rights and privileges of a shareholder of record of the Company
with respect to shares acquired upon exercise of the Option, effective upon such
exercise.
4. Payment of Exercise Price. The purchase price of shares as to
which the Option is exercised shall be paid in full at the time of exercise (i)
in cash or by check payable and acceptable to the Company, (ii) by tendering to
the Company shares of Stock owned by Optionee for at least six months and having
an aggregate Market Value Per Share (as determined by the Management and
Compensation Committee of the Board of Directors of the Company (the
"Committee")), as of the date of exercise and tender that is not greater than
the full
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purchase price for the shares with respect to which the Option is being
exercised and by paying any remaining amount of the purchase price as provided
in (i) above, or (iii) at Optionee's written direction, the Company shall
deliver certificates for the shares of Stock for which the Option is being
exercised to a broker for sale on behalf of Optionee, provided that Optionee has
irrevocably instructed such broker to remit directly to the Company on
Optionee's behalf the full amount of the purchase price from the proceeds of
such sale. In the event that Optionee elects to make payment as allowed under
clause (ii) above, the Committee may, upon confirming that Optionee owns the
number of additional shares being tendered, authorize the issuance of a new
certificate for the number of shares being acquired pursuant to the exercise of
the Option less the number of shares being tendered upon the exercise and return
to Optionee (or not require surrender of) the certificate for the shares being
tendered upon the exercise. Payment instruments will be received subject to
collection.
5. Non-Transferability. The Option may not be transferred by
Optionee otherwise than by will or the laws of descent and distribution.
6. Termination of Employment. In the event of termination of an
Optionee's employment due to death, retirement on or after reaching age 65 (or
if prior to age 65, with the consent of the Committee) or permanent disability
(such three events being a "Qualified Termination"), the Option may be exercised
by Optionee (or his estate, personal representative or beneficiary) at any time
within the twelve-month period following such Qualified Termination to the full
extent that Optionee was entitled to exercise the same on the day immediately
prior to such termination.
If Optionee's employment is terminated for any reason other than a
Qualified Termination, the Option may be exercised at any time within the
three-month period following such termination to the full extent that Optionee
was entitled to exercise the same on the day immediately prior to such
termination.
Notwithstanding any other provision contained in the this Section 6
or elsewhere herein, the Option shall not be exercisable after the tenth
anniversary of the Grant Date.
7. Withholding of Tax. To the extent that the exercise of the Option
is a taxable event with respect to which the Company has a duty to withhold for
federal or state income tax purposes, Optionee shall pay to the Company at the
time of such exercise (or if Optionee is subject to Section 16(b), Optionee may
direct the Company to withhold from the exercise a number of Shares with an
aggregate Market Value Per Share equal to) such amount of money as the Company
may require to meet its obligation under applicable tax laws or regulations,
and, if Optionee fails to do so, the Company is authorized, in its sole
discretion, either to withhold from any cash remuneration then or thereafter
payable to Optionee any tax required to be withheld by reason of such resulting
compensation income or otherwise refuse to issue or transfer any shares
otherwise required to be issued pursuant to the terms hereof.
8. Employment Relationship. For purposes of the Agreement, Optionee
shall be considered to be in the employment of the Company as long as Optionee
remains an employee of either the Company, a parent or subsidiary corporation
(as defined in Section 424 of the Code) of the Company, or a corporation or a
parent or subsidiary of such corporation assuming or substituting a new
agreement for this Agreement. Any question as to whether and when there has been
a termination of such employment, for purposes of this Agreement, and the cause
of such termination, for purposes of this Agreement, shall be determined by the
Committee, and its determination shall be final. Nothing herein shall give
Optionee any right to continued employment or affect in any manner the right of
the Company or any subsidiary or parent corporation to terminate the employment
of Optionee.
9. Recapitalization or Reorganization
A. The existence of the Option shall not affect in any way the right
or power of the Board or the stockholders of the Company to make or authorize
any adjustment, recapitalization, reorganization or other change in the
Company's capital structure or its business, any merger or consolidation of the
Company, any issue of bonds, debentures, preferred or prior preference stocks
ahead of or affecting Stock or the rights thereof, the dissolution or
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liquidation of the Company or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding.
B. The shares underlying the Option are shares of Stock as presently
constituted, but if, and whenever, prior to the expiration of the Option, the
Company shall effect a subdivision or consolidation of shares of Stock or the
payment of a stock dividend on Stock without receipt of consideration by the
Company, the remaining shares of Stock available under the Plan and the number
of shares of Stock with respect to which the Option may thereafter be exercised
(i) in the event of an increase in the number of outstanding shares, shall be
proportionately increased and the Exercise Price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares, shall be proportionately reduced, and the Exercise Price per
share shall be proportionately increased.
C. Except as may otherwise be expressly provided in the Plan, the
issuance by the Company of shares of stock of any class or securities
convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, and in any case whether or not for fair
value, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Stock underlying the Option or the Exercise
Price per share thereof.
D. If the Company effects a recapitalization or otherwise materially
changes its capital structure (both of the foregoing are herein referred to as a
"Fundamental Change"), then thereafter upon any exercise of the Option the
Optionee shall be entitled to purchase under the Option, in lieu of the number
of shares of Stock as to which the Option shall then be exercisable, the number
and class of shares of stock and securities to which the optionee would have
been entitled pursuant to the terms of the Fundamental Change if, immediately
prior to such Fundamental Change, the optionee had been the holder of record of
the number of shares of Stock as to which the Option is then exercisable.
E. If a Corporate Change (as defined below) shall occur, then as of
its Effective Date (as defined below) the Committee, acting in its sole
discretion without the consent or approval of the Optionee, shall effect one or
more of the following Alternatives (as defined below) or a combination of
Alternatives with respect to the Option.
A "Corporate Change" shall have occurred if:
(i) the Company shall not be the surviving entity in any
merger or consolidation (or survives only as a subsidiary of another
entity),
(ii) the Company sells, exchanges, disposes or otherwise
transfers all or substantially all of its assets to any other person
or entity (other than a wholly-owned subsidiary),
(iii) any person or entity (including a "group" as
contemplated by Section 13(d)(3) of the 0000 Xxx) after the date
hereof acquires or gains ownership or control of (including, without
limitation, power to vote) more than 50% of the outstanding shares
of Stock,
(iv) the Company is to be dissolved and liquidated, or
(v) as a result of or in connection with a contested election
of directors, the persons who were directors of the Company before
such election shall cease to constitute a majority of the Board.
The "Effective Date" shall be a date selected by the Committee,
which (a) in the event of the occurrence of a Corporate Change specified in
clause (i), (ii) or (iv) above, shall be no later than a date determined by the
Committee to be far enough in advance of the date of such Corporate Change to
permit the Optionee to exercise the Option to purchase shares of Stock and
participate therewith in such Corporate Change or (b) in the event of the
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occurrence of a Corporate Change specified in Clause (iii) or (v) above, shall
be no later than thirty days after such Corporate Change.
For purposes of the Corporate Changes described in (iii) and (v)
above, the "Committee" shall be either the Committee as constituted prior to the
occurrence of such Corporate Change or, if no Committee had been appointed, the
Board as constituted prior to the occurrence of such Corporate Change.
The "Alternatives" are:
(1) In the case of a Corporate Change specified in clauses
(i), (ii) or (iv), the Committee may accelerate the time at the
Option may be exercised so that the Option may be exercised in full
for a limited period of time on or before a specified date fixed by
the Committee, after which specified date the unexercised Option and
all rights of the Optionee thereunder shall terminate;
(2) The Committee may accelerate the time at the Option may be
exercised so that the Option may be exercised in full for its then
remaining term; or
(3) The Committee may require the mandatory surrender to the
Company of the Option (irrespective of whether the Option is then
exercisable by its terms) as of a date, before or not later than
sixty days after such Corporate Change, specified by the Committee,
and in such event the Committee shall thereupon cancel the Option
and the Company shall pay to the Optionee an amount of cash equal to
the excess of the Market Value Per Share (determined as of the date
such Corporate Change is effective) of the aggregate shares of Stock
subject to the Option (whether or not then vested), over the
aggregate Exercise Price of such shares.
The Alternatives may be made conditional on the occurrence of any of
the Corporate Changes specified in clauses (i) through (v) above.
Notwithstanding the foregoing, the Committee shall not select an Alternative
(unless consented to by the Optionee) such that, if the Optionee exercised his
accelerated Option pursuant to Alternative (1) or (2) and participated in a
transaction specified in clause (i), (ii) or (iv) or received cash pursuant to
Alternative (3), the Alternative would result in the Optionee owing any money by
virtue of operation of Section 16(b) of the 1934 Act. If all such Alternatives
have such a result, the Committee shall take such action, which is hereby
authorized, to put the Optionee in as close to the same position as he would
have been in had Alternative (1), (2) or (3) been selected but without resulting
in any payment by the Optionee pursuant to Section 16(b) of the 1934 Act.
Notwithstanding the foregoing, (1) with the consent of the optionee,
the Committee may in lieu of the foregoing make such provision with respect to
any Corporate Change as it deems appropriate, and (2) in the event that a
Corporate Change described in Clauses (i), (ii) or (iii) occurs, but such
Corporate Change does not result in any effective change in ownership or control
of the Company, the Committee shall make such adjustments in the number of
shares subject to the Option, the Exercise Price thereof, and such other terms
and provisions of the Option as the Committee may determine to be appropriate
and equitable.
10. Withholding for Taxes
Any cash payment under the Plan shall be reduced by any amounts
required to be withheld or paid with respect thereto under all present or future
federal, state and local taxes and other laws and regulations that may be in
effect as of the date of each such payment ("Tax Amounts"). Any issuance of
Stock pursuant to the exercise of the Option shall not be made until appropriate
arrangements have been made for the payment of any amounts that may be required
to be withheld or paid with respect thereto. Such arrangements may, at the
discretion of the Committee, include any arrangements similar to those
permissible for payment of the Exercise Price of the Option.
11. Preemption by Applicable Laws and Regulations
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Anything herein to the contrary notwithstanding, if, at any time
specified herein for the making of any determination or the issuance or other
distribution of shares of Stock, any law, regulation or requirement of any
governmental authority having jurisdiction in the premises shall require either
the Company or the Optionee (or the Optionee's beneficiary), as the case may be,
to take any action in connection with any such determination, the shares then to
be issued or distributed, the issue or distribution of such shares or the making
of such determination or payment, as the case may be, shall be deferred until
such action shall have been taken.
12. Unregistered Shares
The shares of Stock to be issued upon exercise of the Option has not
been registered under any securities laws and may not be sold or distributed
unless (1) a registration statement under the Securities Act of 1933, as
amended, with respect to such shares shall then be in effect or (2) the
availability of an exemption from such registration shall be established to the
satisfaction of counsel to the Company. If, at any time in the opinion of
counsel for the Company, it is necessary or desirable, in order to comply with
any then applicable laws or regulations relating to the sale of securities, for
the Optionee to agree to hold any shares of Stock issued to him for investment
and without intention to resell or distribute the same and for the Optionee to
agree to dispose of such shares only in compliance with such laws and
regulations, the Optionee will, upon the request of the Company, execute and
deliver to the Company a further agreement to such effect.
13. Miscellaneous
A. No Rights as a Stockholder. The Optionee shall have no rights as
a stockholder with respect to shares covered by the Option until the date of the
issuance of shares to the Optionee pursuant hereto. No adjustment will be made
for dividends or other distributions or rights for which the record date is
prior to the date of such issuance.
B. No Right to Corporate Assets. Nothing contained herein shall be
construed as giving Optionee or his beneficiaries or any other person any equity
or other interest of any kind in any assets of the Company or any Affiliate or
creating a trust of any kind or a fiduciary relationship of any kind between the
Company or an Affiliate and any such person.
C. No Restriction on Corporate Action. Nothing contained herein
shall be construed to prevent the Company or any Affiliate from taking any
corporate action that is deemed by the Company or such Affiliate to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Optionee. Neither the Optionee nor any beneficiary of his
or any other person shall have any claim against the Company or any Affiliate as
a result of any such action.
D. Non-assignability. Neither the Optionee nor his beneficiaries
shall have the power or right to sell, exchange, pledge, transfer, assign or
otherwise encumber or dispose of their interest arising under the Option; nor
shall such interest be subject to seizure for the payment of the Optionee's or
such beneficiary's debts, judgments, alimony, or separate maintenance or be
transferable by operation of law in the event of the Optionee's or such
beneficiary's bankruptcy or insolvency and to the extent any such interest
arising hereunder is awarded to a spouse pursuant to any divorce proceeding,
such interest shall be deemed to be terminated and forfeited notwithstanding any
vesting provisions or other terms herein.
E. Application of Funds. The proceeds received by the Company from
the sale of shares pursuant hereto will be used for general corporate purposes.
F. 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 Optionee. This Agreement and all actions taken hereunder shall be governed
by and constructed in accordance with the laws of the State of Delaware, except
for the choice of law principles thereof. The Committee shall have authority to
construe the terms of the Agreement, and the Committee's determinations shall be
final and binding on Optionee.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and Optionee has executed this agreement as of the day and year first
above written.
TETRA Technologies, Inc.
By: /Xxx X. Xxxxxxxxxx/
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Xxx X. Xxxxxxxxxx, Chairman
Management and Compensation Committee
of the Board of Directors
Optionee
/Xxxxx X. XxXxxxx/
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Xxxxx X. XxXxxxx, President and CEO
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