Exhibit 10.2

TETRA Technologies, Inc.

EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT

Pursuant to the terms of the TETRA Technologies, Inc. 2006 Equity Incentive
Compensation Plan

1. Grant of Incentive Option. TETRA Technologies, Inc., a Delaware corporation
(“Company”), hereby grants to (“Optionee”) the right, privilege and option as
herein set forth (the “Incentive Option”) to purchase up to xx,xxx shares (the
“Shares”) of common stock, $0.01 par value per share, of the Company (“Common
Stock”), subject to and in accordance with the terms and conditions of this
document. This Employee Incentive Stock Option Agreement (the “Agreement”) is
dated as of xx/xx/xx. The Shares, when issued to Optionee upon exercise of the
Incentive Option, shall be fully paid and nonassessable and the Optionee (or the
person permitted to exercise the Incentive Option in the event of Optionee’s
death) shall be and have all the rights and privileges of a stockholder of
record of the Company with respect to the Shares acquired upon exercise of the
Incentive Option, effective upon such exercise. The Incentive Option is granted
pursuant to and to implement in part the TETRA Technologies, Inc. 2006 Equity
Incentive Compensation Plan (as amended and in effect from time to time, the
“Plan”) and is subject to the provisions of the Plan, which is hereby
incorporated herein and is made a part hereof, as well as the provisions of this
Agreement. By execution of this Agreement, Optionee agrees to be bound by all of
the terms, provisions, conditions and limitations of the Plan as implemented by
the Incentive Option and this Agreement, together with all rules and
determinations from time to time issued by the Committee pursuant to the Plan.
All capitalized terms have the meanings set forth in the Plan unless otherwise
specifically provided. All references to specified paragraphs pertain to
paragraphs of this Incentive Option unless otherwise provided. The Incentive
Option is intended to qualify as an “incentive stock option” within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

2. Option Terms. Subject to earlier termination as provided herein, the
Incentive Option shall expire on the 10th anniversary of the date of grant of
Incentive Option, which anniversary shall be xx/xx/xx. The period during which
the Incentive Option is in effect is referred to as the “Option Period”.

3. Option Exercise Price. The exercise price (the “Exercise Price”) of the
Shares subject to the Incentive Option shall be $xx.xx per Share which has been
determined to be no less than the Fair Market Value Per Share of the Common
Stock on the date of grant of the Incentive Option or if the Optionee, at the
date if grant, owned more than ten percent (10%) of the total combined voting
power of the Company’s voting securities, the Exercise Price has been determined
to be no less than one hundred ten percent (110%) of the Fair Market Value Per
Share of the Common Stock on that date of grant of the Incentive Option.

4. Vesting. Subject to the provisions of this Agreement including, without
limitation, the following provisions of this Paragraph 4, the total number of
Shares subject to this Incentive Option shall vest and be exercisable only in
accordance with the following schedule:

[schedule to be specified]

The vested Shares that may be acquired under the Incentive Option may be
purchased, in whole or in part, at any time after they become vested during the
Option Period. In addition, upon the occurrence of a Change in Control the
Committee may, in accordance with Paragraph 8 below, accelerate vesting and the
time at which the Incentive Option may be exercised.

5. Method of Exercise. To exercise the Incentive Option, Optionee shall deliver
notice to the Company at its principal executive office, directed to the Plan
Administrator, such exercise to

 

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be effective at the time of receipt of such notice at the Company’s principal
executive office during normal business hours, stating the number of Shares with
respect to which the Incentive Option is being exercised together with payment
for such Shares plus any required withholding taxes, unless other arrangements
for withholding tax liability have been made with the Committee. The exercise
notice shall be delivered in person, by certified or regular mail, or by such
other method (including electronic transmission) as determined from time to time
by the Committee or the Plan Administrator. Any exercise of the Incentive Option
must be for a minimum of 100 Shares or, if less, for all remaining Shares
subject to the Incentive Option.

6. Payment of Exercise Price and Required Withholding. In order to exercise the
Incentive Option, the Optionee or other person or persons entitled to exercise
such Incentive Option shall deliver to Company payment in full for (i) the
Shares being purchased and (ii) unless other arrangements have been made with
the Committee, any required withholding taxes. The payment of the Exercise Price
for the Incentive Option shall either be (i) in cash, or by check payable and
acceptable to the Company, (ii) with the consent of the Committee, by tendering
to Company shares of Common Stock owned by the person exercising the Incentive
Option for more than six months having an aggregate Fair Market Value as of the
date of exercise that is not greater than the full exercise price for the Shares
with respect to which the Incentive Option is being exercised and by paying any
remaining amount of the Exercise Price (and any required withholding taxes) as
provided in (i) above, or (iii) with the consent of the Committee and compliance
with such instructions as the Committee may specify, by delivering to the
Company and to a broker a properly executed exercise notice and irrevocable
instructions to such broker to deliver to the Company cash or a check payable
and acceptable to the Company to pay the exercise price and any applicable
withholding taxes. Upon receipt of the cash or check from the broker, the
Company will deliver to the broker the shares for which the Incentive Option is
exercised. In the event that the person elects to make payment as allowed under
clause (ii) above, the Committee may, upon confirming that the 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 Incentive Option less that number of Shares being tendered upon the exercise
and return to the person (or not require surrender of) the certificate for the
Shares being tendered upon the exercise. The date of sale of the shares by the
broker pursuant to a cashless exercise under (iii) above shall be the date of
exercise of the Incentive Option. If the Committee so requires, such person or
persons shall also deliver a written representation that all Shares being
purchased are being acquired for investment and not with a view to, or for
resale in connection with, any distribution of such Shares.

7. Termination of Employment. Termination of Employment, Retirement, death or
Disability of Optionee, shall affect Optionee’s rights under the Incentive
Option as follows:

(a) Termination of Employment. If Employment of Optionee is terminated for any
reason whatsoever other than death, Disability or Retirement, subject to the
provisions of this Section 7, any nonvested portion of the Incentive Option
outstanding at the time of such termination and all rights thereunder shall
wholly and completely terminate and no further vesting shall occur, and Optionee
shall be entitled to exercise his or her rights with respect to the portion of
the Incentive Option vested as of the date of termination for a period that
shall end on the earlier of (i) the expiration date set forth in the Incentive
Option with respect to the vested portion of the Incentive Option or (ii) the
date that occurs three (3) months after such termination date.

(b) Retirement. Upon the Retirement of Optionee:

(i) any nonvested portion of the Incentive Option shall immediately terminate
and no further vesting shall occur; and

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(ii) any vested portion of the Incentive Option shall expire on the earlier of
(A) the expiration of the Option Period; or (B) the expiration of twelve (12)
months after the date of Retirement; provided, however, any exercise more than
three (3) months after the Optionee’s Retirement shall result in the Incentive
Option becoming a Nonqualified Option.

(c) Disability or Death. Upon termination of Employment as a result of
Disability or death of Optionee or if Optionee retires and dies during the
period described in Section 7(b)(ii) above (hereinafter the “Applicable
Retirement Period”), or if the Optionee’s Employment was terminated as a result
of Disability and the Optionee dies during the period that expires on the
earlier of the expiration of the Option Period or the first anniversary of the
Optionee’s termination of Employment due to Disability (hereinafter the
“Applicable Disability Period”),

(i) any nonvested portion of the Incentive Option that has not already
terminated shall immediately terminate and no further vesting shall occur; and

(ii) any vested portion of the Incentive Option shall expire upon the earlier of
(A) the expiration of the Option Period or (B) the later of (1) the first
anniversary of such termination of Employment as a result of Disability or
death, or (2) the first anniversary of Optionee’s death during the Applicable
Retirement Period or the Applicable Disability Period; provided, however, if the
Optionee’s death occurs in any Applicable Retirement Period more than three (3)
months after the Optionee’s Retirement, the Incentive Option shall automatically
become a Nonqualified Option.

(d) Notwithstanding any other provision of the Incentive Option, the Committee,
in its discretion, may provide for the continuation of the Incentive Option for
such period and upon such terms and conditions as are determined by the
Committee in the event that the Optionee ceases to be an Employee.

8. Change in Control.

(a) Change in Control. In the event of a Change in Control described in clauses
(ii), (iii) and (iv) of the definition of Change in Control under Section 1.2 of
the Plan, the Committee may accelerate vesting and the time at which the
Incentive Option may be exercised so that the Incentive Option may be exercised
in full for a limited period of time on or before a specified date fixed by the
Committee, after which the unexercised Incentive Option and all rights of
Optionee thereunder shall terminate, or the Committee may accelerate vesting and
the time at which the Incentive Option may be exercised so that the Incentive
Option may be exercised in full for its then remaining term.

Notwithstanding the above, the Committee shall not be required to take any
action described in the preceding sentence and any decision made by the
Committee, in its sole discretion, not to take some or all of the actions
described in the preceding sentence shall be final, binding and conclusive with
respect to the Company and all other interested persons.

(b) Right of Cash-Out. If approved by the Board prior to or within thirty (30)
days after such time as a Change in Control shall be deemed to have occurred,
the Board shall have the right for a forty-five (45) day period immediately
following the date that the Change in Control is deemed to have occurred to
require Optionee to transfer and deliver to Company the Incentive Option in
exchange for an amount equal to the “cash value”

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(defined below) of the Incentive Option. Such right shall be exercised by
written notice to Optionee. The cash value of the Incentive Option shall equal
the excess of the “market value” (defined below) per Share over the Exercise
Price, if any, multiplied by the number of Shares subject to the Incentive
Option. For purposes of the preceding sentence, “market value” per Share shall
mean the higher of (i) the average of the Fair Market Value per Share of Common
Stock on each of the five trading days immediately following the date a Change
in Control is deemed to have occurred or (ii) the highest price, if any, offered
in connection with the Change in Control. The amount payable to Optionee by
Company pursuant to this Paragraph 8(b) shall be in cash or by certified check
and shall be reduced by any taxes required to be withheld.

9. Reorganization of Company and Subsidiaries. The existence of the Incentive
Option shall not affect in any way the right or power of Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its
business, or any merger or consolidation of Company or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Shares
or the rights thereof, or the dissolution or liquidation of Company, or any sale
or transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.

10. Adjustment of Shares. In the event of stock dividends, spin-offs of assets
or other extraordinary dividends, stock splits, combinations of shares,
recapitalizations, mergers, consolidations, reorganizations, liquidations,
issuances of rights or warrants and similar transactions or events involving
Company, the Committee shall, in such manner as it may deem equitable, make
adjustments to the terms and provisions of this Incentive Option.

11. No Rights in Shares. Optionee shall have no rights as a stockholder in
respect of Shares until such Optionee becomes the holder of record of such
Shares.

12. Certain Restrictions. The certificate issued for the Shares subject to the
restrictions described in this Paragraph 12 may, in the Committee’s discretion,
be issued with an appropriate legend describing such restrictions, and the
Committee may establish an escrow or other custodial arrangement for holding of
the certificate by a person (other than Optionee) selected by the Committee.

By exercising the Incentive Option, Optionee agrees that if at the time of such
exercise the sale of Shares issued hereunder is not covered by an effective
registration statement filed under the Securities Act of 1933 (Act), Optionee
will acquire the Shares for Optionee’s own account and without a view to resale
or distribution in violation of the Act or any other securities law, and upon
any such acquisition Optionee will enter into such written representations,
warranties and agreements as Company may reasonably request in order to comply
with the Act or any other securities law or with this Agreement. Optionee agrees
that Company shall not be obligated to take any affirmative action in order to
cause the issuance or transfer of Shares hereunder to comply with any law, rule
or regulation that applies to the Shares subject to the Incentive Option.

13. Shares Reserved. Company shall at all times during the Option Period reserve
and keep available such number of Shares as will be sufficient to satisfy the
requirements of this Incentive Option.

14. Nontransferability of Option. The Incentive Option evidenced by this
Agreement is not transferable other than by will, and the laws of descent and
distribution. The Incentive Option will be exercisable during Optionee’s
lifetime only by Optionee or by Optionee’s guardian or legal

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representative. No right or benefit hereunder shall in any manner be liable for
or subject to any debts, contracts, liabilities, or torts of Optionee.

15. Amendment and Termination. The Incentive Option may not be terminated by the
Board or the Committee at any time without the written consent of Optionee. This
Agreement may be amended in writing by the Company and Optionee, provided the
Company may amend this Agreement unilaterally (i) if the amendment does not
adversely affect the Optionee’s rights hereunder in any material respect, (ii)
if the Company determines that an amendment is necessary to comply with Rule
16b-3 under the Exchange Act, or (iii) if the Company determines that an
amendment is necessary to meet the requirements of the Code or to prevent
adverse tax consequences to the Optionee.

16. No Guarantee of Employment. The Incentive Option shall not confer upon
Optionee any right with respect to continuance of employment or other service
with the Company or any Affiliate, nor shall it interfere in any way with any
right Company or any Affiliate would otherwise have to terminate such Optionee’s
employment or other service at any time.

17. Notice of Disqualifying Disposition. If the Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the exercise of the Incentive
Option on or before the later of (i) the date that is two years after the date
of grant of the Incentive Option, and (ii) the date that is one (1) year after
the transfer of the Shares to the Optionee upon exercise of the Incentive
Option, the Optionee shall make the information regarding such disposition
available to the Company upon the Company’s request.

18. Withholding of Taxes. Any issuance of Common Stock pursuant to the exercise
of the Incentive Option shall not be made until appropriate arrangements
satisfactory to the Company have been made for the payment of any tax amounts
(federal, state, local or other) that may be required to be withheld or paid by
the Company with respect thereto at the minimum statutory rate. Company shall
have the right to take such action as may be necessary or appropriate to satisfy
any such tax withholding obligations.

19. No Guarantee of Tax Consequences. Neither Company nor any Affiliate nor the
Board or Committee makes any commitment or guarantee that any federal or state
tax treatment will apply or be available to any person eligible for the benefits
under the Incentive Option.

20. Consent to Electronic Delivery; Electronic Signature. In lieu of receiving
documents in paper format, Optionee agrees, to the fullest extent permitted by
law, to accept electronic delivery of any documents that the Company may be
required to deliver (including, but not limited to, prospectuses, prospectus
supplements, grant or award notifications and agreements, account statements,
annual and quarterly reports, and all other forms of communications) in
connection with this and any other award made or offered by the Company.
Electronic delivery may be via a Company electronic mail system or by reference
to a location on a Company intranet to which Optionee has access. Optionee
hereby consents to any and all procedures the Company has established or may
establish for an electronic signature system for delivery and acceptance of any
such documents that the Company may be required to deliver, and agrees that his
or her electronic signature is the same as, and shall have the same force and
effect as, his or her manual signature.

21. Severability. In the event that any provision of the Incentive Option shall
be held illegal, invalid, or unenforceable for any reason, such provision shall
be fully severable, but shall not affect the remaining provisions of the
Incentive Option, and the Incentive Option shall be construed and enforced as if
the illegal, invalid, or unenforceable provision had never been included herein.

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22. Governing Law. The Incentive Option and this Agreement shall be construed in
accordance with the laws of the State of Delaware to the extent federal law does
not supersede and preempt Delaware law.

COMPANY

TETRA Technologies, Inc.

By: ____________________

Geoffrey M. Hertel

President & Chief Executive Officer

OPTIONEE

By: ____________________

Employee

 

 

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