Exhibit 10.6

 

FORM STOCK OPTION AGREEMENT

 

This Incentive Stock Option Agreement (this “Agreement”) is made as of the day
of _____________ (the “Date of Grant”), between Eco-Stim Energy Solutions, Inc.,
a Nevada corporation (the “Company”), and _______________ (“Employee”).

 

To carry out the purposes of the Company’s 2013 Stock Incentive Plan (the
“Plan”), by affording Employee the opportunity to purchase shares of Common
Stock, and in consideration of the mutual agreements and other matters set forth
herein and in the Plan, the Company and Employee hereby agree as follows:

 

1. Grant of Option. The Company hereby irrevocably grants to Employee the right
and option (“Option”) to purchase all or any part of an aggregate of shares of
Common Stock on the terms and conditions set forth herein and in the Plan.
Employee acknowledges receipt of a copy of the Plan and agrees that the terms
and provisions of the Plan are 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. Employee 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 Common Stock purchased pursuant to the
exercise of this Option shall be $_____ per share, which has been determined to
be not less than the Fair Market Value of a share of Common Stock at the Date of
Grant. For all purposes of this Agreement, the Fair Market Value of Common 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 employee 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, 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 to
the date of such exercise, in accordance with the following schedule:

 

1

 

 

Number of Full Years  Percentage of Shares
That May Be Purchased  Less than 6 months   0% 6-11 months   25% 12-17 months 
 50% 18-23 months   75% 24 months or more   100%

 

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

 

(a) If Employee’s employment with the Company terminates by reason of disability
(within the meaning of section 22(e)(3) of the Code) or retirement (within the
meaning of the Company’s standard corporate policies, this Option may be
exercised [in full] by Employee (or Employee’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 Employee) at any time during the period of one year
following such termination, but only as to the number of shares Employee was
entitled to purchase hereunder as of the date Employee’s employment so
terminates.

 

(b) If Employee dies while in the employ of the Company, Employee’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 Employee, may exercise this
Option in full at any time during the period of one year following the date of
Employee’s death, but only as to the number of shares Employee was entitled to
purchase hereunder as of the date of Employee’s death.

 

(c) If Employee’s employment with the Company terminates for any reason other
than as described in (a) or (b) above, unless Employee voluntarily terminates
such employment or such employment is terminated for cause, this Option may be
exercised by Employee at any time during the period of three months following
such termination, or by Employee’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 Employee) during a period of one year following Employee’s death if
Employee dies during such three month period, but in each case only as to the
number of shares Employee was entitled to purchase hereunder as of the date
Employee’s employment so terminates. The Committee may, in its sole discretion,
advise Employee in writing, prior to a voluntary termination of Employee’s
employment, that such termination will be treated for purposes of this paragraph
as an involuntary termination for a reason other than cause. As used in this
paragraph, the term “cause” shall mean Employee (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 Employee’s
employment, (iii) has willfully disregarded any written corporate policies
established by the Company, or (iv) has materially breached any material
provision of any written agreement between Employee and the Company or any of
its Affiliates.

 

2

 

 

This Option shall not be exercisable in any event after the expiration of ten
years from the Date of Grant. 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) if permitted by the Committee in its sole discretion, by
delivering or constructively tendering to the Company shares of Common Stock
having a Fair Market Value equal to the purchase price (provided such shares
used for this purpose must have been held by Employee for such minimum period of
time as may be established from time to time by the Committee), (c) if the
Common 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
Common 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,
Employee shall provide a cash payment for such amount as is necessary to effect
the issuance and acceptance of only whole shares of Common Stock. Unless and
until a certificate or certificates representing such shares shall have been
issued by the Company to Employee, Employee (or the person permitted to exercise
this Option in the event of Employee’s death) shall not be or have any of the
rights or privileges of a stockholder of the Company with respect to shares
acquirable upon an exercise of this Option.

 

4. Withholding of Tax. To the extent that the grant or exercise of this Option
or the disposition of shares of Common Stock acquired by exercise of this Option
results in compensation income or wages to Employee for federal, state, local or
foreign tax purposes, Employee shall deliver to the Company or to any Affiliate
nominated by the Company at the time of such grant, exercise or disposition such
amount of money or, if permitted by the Committee in its sole discretion, shares
of Common Stock as the Company or any Affiliate nominated by the Company may
require to meet its minimum obligation under applicable tax or social security
laws or regulations. No exercise of this Option shall be effective until
Employee (or the person entitled to exercise this Option, as applicable) has
made arrangements approved by the Company to satisfy all applicable minimum tax
withholding requirements of the Company or, if applicable, any Affiliate of the
Company.

 

5. Lock-up Provision. Employee hereby agrees that in the event of any
underwritten public offering of Common Stock, including an initial public
offering of Common Stock, pursuant to an effective registration statement filed
under the Securities Act of 1933, as amended (the “Securities Act”), Employee
shall not effect any public sale or distribution of Common Stock or of any
securities convertible into or exchangeable or exercisable for Common Stock or
hedging transactions relating to Common Stock, including a sale pursuant to Rule
144 under the Securities Act, during the period beginning 14 days prior to the
expected date of “pricing” of such public offering and continuing for a period
not to exceed 180 days after the date of the final prospectus (or prospectus
supplement if the offering is made pursuant to a “shelf” registration statement)
as may be established by the underwriter(s) for such public offering (the
“Lock-Up Period”); provided, however, that if (i) during the last 17 days of the
initial Lock-Up Period, the Company releases earnings results or material news
or a material event relating to the Company occurs or (ii) prior to the
expiration of the initial Lock-Up Period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the initial Lock-Up Period, then in each case the Lock-Up Period will be
extended until the expiration of the 18-day period beginning on the date of
release of the earnings results or the occurrence of the material news or
material event, as applicable, unless the managing underwriter(s) of such
underwritten public offering waive, in writing, such extension. If and to the
extent requested by the managing underwriter(s), Employee agrees to execute an
agreement to the foregoing effect with the underwriter(s) for such public
offering on such terms as the managing underwriter(s) shall reasonably request
(with such modification as reasonably requested by such managing underwriter(s)
to take into consideration then existing rules of an applicable securities
exchange regarding research analyst publications). The limitations contained in
this Section 6 shall not apply to any shares registered in such public offering
under the Securities Act.

 

3

 

 

6. Status of Common Stock. Employee understands that at the time of the
execution of this Agreement the shares of Common 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 Common 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, if requested by
the Company, 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, Employee (or the person permitted to exercise this Option in the event
of Employee’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.

 

Employee agrees that the shares of Common Stock which Employee 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 sale of such 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. Employee also agrees that the shares of Common Stock which
Employee 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, Employee agrees that (i) the certificates representing the shares
of Common Stock purchased under this Option may bear such legend or legends as
the Committee deems appropriate in order to assure compliance with the terms and
provisions of the Stockholders Agreement and applicable securities laws, (ii)
the Company may refuse to register the transfer of the shares of Common 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 the terms and provisions of the Stockholders Agreement
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 Common Stock purchased under this Option.

 

4

 

 

7. Employment Relationship. For purposes of this Agreement, Employee shall be
considered to be in the employment of the Company as long as Employee remains an
employee 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 Employee 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 Employee. Nothing in the
adoption of the Plan, nor the award of this Option thereunder pursuant to this
Agreement, shall affect in any way the right of Employee or the Company to
terminate such employment at any time. Unless otherwise provided in a written
employment agreement or by applicable law, Employee’s employment by the Company
shall be on an at-will basis, and the employment relationship may be terminated
at any time by either Employee or the Company for any reason whatsoever or for
no reason, with or without cause or notice. Any question as to whether and when
there has been a termination of Employee’s employment with the Company, and the
cause of such termination, shall be determined by the Committee, and its
determination shall be final.

 

8. Surrender of Option. At any time and from time to time prior to the
termination of this Option, Employee may surrender all or a portion of this
Option to the Company for no consideration by providing written notice to the
Company at its principal executive office addressed to the attention of its
Corporate Secretary (or such other officer or employee of the Company as the
Company may designate from time to time). Such notice shall specify the number
of shares with respect to which this Option is being surrendered and, if this
Option is being surrendered with respect to less than all of the shares then
subject to this Option, then such notice shall also specify the date upon which
this Option became (or would become) exercisable in accordance with Section 3
with respect to the shares being surrendered.

 

9. Acknowledgements Regarding Section 409A and Section 422 of the Code. Employee
understands that if the purchase price of the Common Stock under this Option is
less than the fair market value of such Common Stock on the date of grant of
this Option, then Employee may incur adverse tax consequences under section 409A
and section 422 of the Code. Employee acknowledges and agrees that (a) he is not
relying upon any determination by the Company, its affiliates, or any of their
respective employees, directors, officers, attorneys or agents (collectively,
the “Company Parties”) of the fair market value of the Common Stock on the date
of grant of this Option, (b) he is not relying upon any written or oral
statement or representation of the Company Parties regarding the tax effects
associated with Employee’s execution of this Agreement and his receipt, holding
and exercise of this Option, and (c) in deciding to enter into this Agreement,
Employee is relying on his own judgment and the judgment of the professionals of
his choice with whom he has consulted. Employee hereby releases, acquits and
forever discharges the Company Parties from all actions, causes of actions,
suits, debts, obligations, liabilities, claims, damages, losses, costs and
expenses of any nature whatsoever, known or unknown, on account of, arising out
of, or in any way related to the tax effects associated with Employee’s
execution of this Agreement and his receipt, holding and exercise of this
Option.

 

5

 

 

10. Notices. Any notices or other communications provided for in this Agreement
shall be sufficient if in writing. In the case of Employee, such notices or
communications shall be effectively delivered if hand delivered to Employee at
Employee’s principal place of employment or if sent by certified mail, return
receipt requested, to Employee at the last address Employee has filed with the
Company. In the case of the Company, such notices or communications shall be
effectively delivered if sent by certified mail, return receipt requested, to
the Company at its principal executive offices.

 

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
Employee.

 

12. Entire Agreement; Amendment. 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; provided, however, that the
terms of this Agreement shall not modify and shall be subject to the terms and
conditions of any employment and/or severance agreement between the Company (or
an Affiliate) and the Employee in effect as of the date a determination is to be
made under this Agreement. Without limiting the scope of the preceding sentence,
except as provided therein, 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. The Committee may, in its sole
discretion, amend this Agreement from time to time in any manner that is not
inconsistent with the Plan; provided, however, that except as otherwise provided
in the Plan or this Agreement, any such amendment that materially reduces the
rights of Employee shall be effective only if it is in writing and signed by
both Employee 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 Texas, without regard to conflicts of
laws principles thereof.

 

[Signature page follows.]

 

6

 

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
an officer thereunto duly authorized, and Employee has executed this Agreement,
all as of the date first above written.

 

  Eco-Stim Energy Solutions, Inc.       By:                 Employee

 

7