EXHIBIT 10.70
EXECUTION COPY
HANOVER COMPRESSOR COMPANY
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is entered into between
HANOVER COMPRESSOR COMPANY, a Delaware corporation (the "Company"), and
("Optionee"), on this __________ day of _______________ (all capitalized terms
used herein but not otherwise defined shall have the meaning assigned to them in
Section 19). In consideration of the mutual promises and covenants made herein,
the parties hereby agree as follows:
1. Grant of Option. Under the terms and conditions set forth
herein, the Company grants to Optionee an option to purchase the Shares at a
purchase price of $__________ per share (the "Option"). The "Shares" shall
consist of ________ shares of the Company's common stock, par value $.001 per
share (the "Common Stock").
The Option is a non-statutory option and is not intended to qualify for
any special tax benefits in the hands of Optionee. The Option is not intended to
qualify as an incentive stock option described in Section 422 of the Internal
Revenue Code of 1986, as amended. All provisions of this Agreement are to be
construed in conformity with this intention.
2. Term. Except as provided below, the Option shall be valid for a
term commencing on the date hereof (the "Date of Grant") and ending 10 years
from the Date of Grant (the "Termination Date").
(a) Option Rights Upon Termination of Employment. If
Optionee ceases to be employed by the Company or any subsidiary or
affiliate thereof for any reason other than Cause or Optionee's
Permanent Disability or death, the Option shall be exercisable (to the
extent exercisable on the date of termination of employment) at any time
prior to the earlier of (i) the Termination Date or (ii) within 30 days
after the date of termination of employment.
(b) Termination of Employment for Cause. If Optionee ceases
to be employed by the Company or any subsidiary or affiliate thereof
because Optionee is terminated for Cause, the Option shall automatically
expire and Optionee shall have no right to exercise any portion of the
Option, whether or not vested, thereafter.
(c) Option Rights Upon Permanent Disability or Death of
Optionee. If Optionee ceases to be employed by the Company as a result
of Optionee's Permanent Disability or death, the Option shall be
exercisable at any time prior to the earlier of (i) the Termination Date
or (ii) 30 days after the date of termination of employment. Following
the death of Optionee, the Option may be exercised by Optionee's
personal representative or by the distributee to whom Optionee's rights
under the Option shall pass by will or by the laws of descent and
distribution.
3. Vesting. The Option may only be exercised to the extent vested.
(a) The Option will vest according to the following
schedule:
Number of Years
Since Grant Date Vested Percentage
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Fewer than one 0%
One but fewer than two 20%
Two but fewer than three 40%
Three but fewer than four 60%
Four but fewer than five 80%
Five or more 100%
If Optionee's employment with the Company is terminated prior to
becoming fully vested, Optionee will forfeit the non-vested portion of the
Option.
(b) Notwithstanding the vesting provisions in Section 3(a),
if Optionee's employment is terminated for Cause, Optionee's vested
percentage shall be zero percent (0%) and Optionee shall forfeit any and
all rights in and to the Option.
(c) Notwithstanding the vesting provisions in Section 3(a),
(i) if Optionee's employment is terminated because of Optionee's death
or Permanent Disability or (ii) upon the occurrence of a Capital Event,
Optionee shall be immediately one hundred percent (100%) fully vested in
the Option. The Company shall notify Optionee at least 10 days prior to
a contemplated Capital Event.
4. Restriction on Exercise. The Option may not be exercised during
any period in which Optionee is in default under the terms of any loan or other
obligation that Optionee may have with the Company. Upon cure of such default,
the restrictions of this Section 4 will lapse and the Option shall be
exercisable to the extent vested and otherwise exercisable under the terms of
this Agreement.
5. Procedure for Exercise. Exercise of the Option or a portion
thereof shall be effected by the giving of written notice by Optionee to the
Company at its principal office and payment of the pro rata portion of the
purchase price prescribed in Section 1 for the number of Shares to be acquired
pursuant to the exercise.
6. Payment for Shares. Payment of the purchase price for any shares
purchased pursuant to the exercise of the Option shall be made in (i) cash; (ii)
by certified or cashier's check, (iii) by shares of Common Stock, subject to the
consent of the Board, (iv) by cash or certified or cashier's check for the par
value of the Shares plus a promissory note for the balance of the purchase
price, which note shall not provide for full personal liability of Optionee and
shall contain such other terms and provisions as the Board may determine,
including, without
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limitation, the right to repay the note partially or wholly with Common Stock or
(v) by delivery of a copy of irrevocable instructions from Optionee to a broker
or dealer, reasonably acceptable to the Company, to sell certain of the Shares
purchased upon exercise of the Option or to pledge them as collateral for a loan
and promptly to deliver to the Company the amount of sale or loan proceeds
necessary to pay such purchase price. If any portion of the purchase price or a
note given at the time of exercise is paid in shares of Common Stock, those
shares shall be valued at their then Fair Market Value.
7. Option Not Transferable and Subject to Certain Restrictions. The
Option may not be sold, pledged, assigned or transferred in any manner other
than by will or the laws of descent and distribution and may be exercised during
the lifetime of Optionee only by Optionee or by Optionee's legally authorized
representative. Following the death of Optionee, the Option may be exercised by
Optionee's personal representative or by the distributee to whom Optionee's
rights under the Option shall pass by will or by the laws of descent and
distribution.
8. Non-Competition and Confidential Information. In consideration
hereof, Optionee agrees that during the term of this Agreement and for a period
of one year thereafter, Optionee (i) will not compete with any business of the
Company or any subsidiary or affiliate thereof and (ii) will not disclose to
persons outside the Company confidential information concerning the Company or
any subsidiary or affiliate thereof without the Company's express written
consent.
9. Consent to Stockholders' Agreement. Optionee hereby acknowledges
and confirms that the Shares purchased upon exercise of the Option are subject
to the terms and conditions of the Stockholders' Agreement. Optionee further
acknowledges and agrees that prior to delivery of any Shares by the Company,
Optionee will execute such instruments as are necessary to be bound by the terms
and conditions of the Stockholders' Agreement.
10. Investment Purpose. Upon exercise of the Option, Optionee shall
represent and warrant to the Company that Optionee is acquiring the Shares for
Optionee's own account for investment and not with a view to, or for sale in
connection with, any distribution of the Shares and that Optionee consents to be
bound by any transfer restrictions imposed by law, legend, condition or
otherwise. Optionee consents to the imposition of the following legend on all
stock certificates representing the Shares:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER SUCH ACT, OR UNLESS SUCH OFFER, SALE, TRANSFER, PLEDGE OR
HYPOTHECATION IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN
COMPLIANCE WITH SUCH ACT. THE TRANSFERABILITY OF THIS SECURITY
IS ALSO SUBJECT TO RESTRICTIONS CONTAINED IN A STOCKHOLDERS
AGREEMENT WHICH
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AGREEMENT THE COMPANY WILL FURNISH TO THE HOLDER OF THIS
SECURITY UPON REQUEST.
A STATEMENT SUMMARIZING THE VOTING POWERS, DESIGNATIONS,
PREFERENCES, LIMITATIONS, RESTRICTIONS AND RELATIVE RIGHTS OF
THE VARIOUS CLASSES OF STOCK OR SERIES THEREOF MAY BE OBTAINED
BY THE STOCKHOLDERS OF THE COMPANY, WITHOUT CHARGE, FROM THE
PRINCIPAL OFFICES OF THE COMPANY.
11. Tax Withholding.
(a) Option Conditioned upon Satisfaction of Withholding
Obligation. The issuance, delivery, exercise or vesting of the Option is
subject to the condition that if at any time the Board shall determine,
in its discretion, that the satisfaction of withholding tax or other
withholding liabilities under any state or federal law is necessary or
desirable as a condition of, or in connection with, the issuance,
delivery, exercise or vesting of the Option, then the issuance,
delivery, exercise or vesting of the Option shall not be effective
unless the withholding shall have been effected or obtained in a manner
acceptable to the Company.
(b) Manner of Satisfying Withholding Obligation. If Optionee
is required to pay to the Company an amount required to be withheld
under applicable income tax laws in connection with the exercise of the
Option, subject to Section 11(c), Optionee may satisfy the obligation,
in whole or in part, by electing to (i) have the Company withhold a
portion of the Shares acquired upon the exercise of the Option having a
Fair Market Value on the date the amount of tax to be withheld is to be
determined (the "Tax Date") equal to the amount required to be withheld
or (ii) deliver to the Company shares of Common Stock already owned
having a Fair Market Value on the Tax Date equal to the amount required
to be withheld. The amount to be withheld shall be the minimum amount
that is required to be withheld under applicable federal and state
income tax laws; provided, however, in the event a request is made by
Optionee, the amount to be withheld shall be the approximate amount of
federal and state income taxes that will be incurred by Optionee with
respect to such issuance, delivery, exercise or vesting of Options under
this Agreement.
(c) Special Rules for Use of Stock. An election to have
Shares or other shares of Common Stock withheld or delivered out of
already-owned Common Stock for the purposes of Section 11(b) (i) must be
made prior to the Tax Date and (ii) must be irrevocable.
12. Compliance with Securities Laws. Shares shall not be issued
unless the exercise of the Option and the issuance and delivery of the Shares
shall comply, in the opinion of counsel
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for the Company, with all applicable provisions of state and federal law
including, without limitation, (a) the Securities Act and the Exchange Act and
the rules and regulations promulgated thereunder (including Rule 16b-3) and (b)
the requirements of any stock exchange upon which the Shares may then be listed.
Optionee shall furnish evidence showing such compliance, satisfactory to the
Company, including a written and signed representation to such effect.
13. Employment of Optionee. Nothing in this Agreement shall confer
upon Optionee any right to continued employment by the Company or any subsidiary
or affiliate thereof or limit in any way the right of the Company or any
subsidiary or affiliate thereof at any time to terminate or alter the terms of
such employment.
14. Adjustments. If the outstanding Common Stock of the Company is
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities through merger, consolidation, combination, exchange of
shares, other reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, an appropriate and proportionate
adjustment shall be made in the number and kind of Shares subject to the Option;
provided, however, that no adjustment shall be made upon any conversion of
preferred stock of the Company to Common Stock. Any such adjustment in the
Option shall be made without change in the aggregate purchase price applicable
to the unexercised portion of the Option, but with a corresponding adjustment in
the price for each security covered by the Option. The foregoing adjustments and
the manner of application of the foregoing provisions shall be determined solely
by the Board and any such adjustments may provide for the elimination of
fractional share interests.
15. Shares Not Outstanding. Prior to issuance, the Shares are not
deemed to be outstanding for any purpose and Optionee shall have no voting,
preemptive or other shareholder rights with respect to the Shares.
16. Number. Whenever used herein, nouns in the singular shall
include the plural where appropriate.
17. Headings. Headings of articles and sections hereof are inserted
for convenience of reference only and constitute no part of this Agreement.
18. Binding on Successors. This Agreement shall be binding upon the
successors and assigns of the Company and on the heirs, personal
representatives, successors, assigns and distributees of Optionee.
19. Definitions. Unless otherwise defined herein, terms used herein
with initial capital letters shall have the meanings hereinafter set forth
unless the context clearly indicates to the contrary:
(a) "Board" means the Board of Directors of the Company.
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(b) "Capital Event" means the first to occur of:
(A) the date that GKH sells or otherwise
transfers more than 50% of its Common Stock interest in
the Company;
(B) the date all or substantially all the
assets or property of the Company are sold or otherwise
transferred to an unrelated third-party;
(C) the effective date of a merger or
consolidation under which the Company is not the
surviving entity or the surviving entity is not
controlled by GKH either individually or collectively;
(D) the dissolution or liquidation of the
Company; or
(E) the effective date (as declared by the
Securities and Exchange Commission) the Common Stock is
registered in a public offering and listed on a
nationally recognized stock exchange or national
inter-dealer quotation system.
(c) "Cause" means a termination of Optionee's employment by
the Company or any subsidiary or affiliate thereof due to (i) the
commission by Optionee of an act of fraud, embezzlement or willful
breach of a fiduciary duty to the Company or any subsidiary or affiliate
thereof (including the unauthorized disclosure of confidential or
proprietary material information of the Company or any subsidiary or
affiliate thereof), (ii) a conviction of Optionee (or a plea of nolo
contendere in lieu thereof) for a felony or a crime involving fraud,
dishonesty or moral turpitude, (iii) willful misconduct as an employee
of the Company or any subsidiary or affiliate thereof, (iv) the willful
failure of Optionee to render services to the Company or any subsidiary
or affiliate thereof in accordance with Optionee's employment, which
failure amounts to a material neglect of Optionee's duties to the
Company or any subsidiary or affiliate thereof or (v) substantial
dependence, as determined by the Board, on alcohol or any drug,
immediate precursor or other substance listed in Schedule I-V of the
Federal Comprehensive Drug Abuse Prevention and Control Act of 1970, as
amended.
(d) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(e) "Fair Market Value" means such value as determined by
the Board on the basis of such factors as it deems appropriate;
provided, however, that if the Common Stock is traded on a national
securities exchange or transactions in the Common Stock are quoted on
the NASDAQ National Market System, such value shall be determined by the
Board on the basis of the average reported sales price of the Common
Stock on the national securities exchange or the NASDAQ National Market
System, as the case may be, for the ten days preceding the date for
which such determination is relevant.
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(f) "GKH" shall mean the collective reference to (i) GKH
Investments, L.P., a Delaware limited partnership ("Investments"), (ii)
GKH Partners, L.P., a Delaware limited partnership ("Partners") and
(iii) the respective affiliates of Investments and Partners.
(g) "Permanent Disability" means the inability of Optionee
to perform substantially all of Optionee's duties and responsibilities
to the Company for either (i) a continuous period of six months or (ii)
180 days during any consecutive twelve month period by reason of a
physical or mental disability or infirmity which is expected to be
permanent and continuous for life as determined by a physician selected
by the Board. The date of such Permanent Disability shall be (a) in the
case of clause (i) above, the last day of such six month period or, if
later, the day on which Optionee submits satisfactory medical evidence
of such Permanent Disability or (b) in the case of clause (ii) above,
such date as is determined in good faith by the Board.
(h) "Rule 16b-3" means Rule 16b-3 promulgated under the
Exchange Act or any successor rule.
(i) "Securities Act" means the Securities Act of 1933, as
amended.
(j) "Stockholders' Agreement" means the Amended and Restated
Stockholders' Agreement of the Company dated as of August 7, 1995.
20. Governing Law. The construction and operation of this Agreement
are governed by the laws of the State of Delaware.
21. Amendment. This Agreement may be amended only by an instrument
in writing signed by both the Company and Optionee.
22. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto concerning the subject matter hereof and
supersedes all prior and contemporaneous agreements between the Company and
Optionee relating to the subject matter hereof.
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Executed on the date first written above.
COMPANY:
HANOVER COMPRESSOR COMPANY,
a Delaware corporation
By: /s/ Curtis A. Bedrich
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Curtis A. Bedrich
Chief Financial Officer
and Treasurer
OPTIONEE:
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