exhibit10_2-2009adopt.htm


    
      Exhibit
10.2

      


      


      NATURAL
GAS SERVICES GROUP, INC.

      1998
STOCK OPTION PLAN

       

      (as
amended by the Board of Directors on May 9, 2006 (approved by the Stockholders
on June 20, 2006) and as amended by the Board of Directors on April 15, 2009
(approved by the Stockholders on June 16, 2009))

      


      


      1.           Purposes of this
Plan.  The purposes of this 1998 Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants and
to promote the success of the Company’s business. Options granted hereunder may
be either “incentive stock options,” as defined in Section 422 of the Internal
Revenue Code of 1986, as amended, or “nonstatutory stock options,” at the
discretion of the Board and as reflected in the terms of the written stock
option agreement.

      


      2.           Definitions.   As
used herein, the following definitions shall apply:

      


                 a.           “Board”
shall mean the Committee, if one has been appointed, or the Board of Directors
of the Company if no Committee is appointed.

      


                 b.           “Code”
shall mean the Internal Revenue Code of 1986, as amended.

      


                 c.           “Common
Stock” shall mean the $0.01 par value common stock of the Company.

      


                 d.           “Company”
shall mean Natural Gas Services Group, Inc., a Colorado
corporation.

      


                 e.           “Committee”
shall mean the Committee appointed by the Board in accordance with paragraph (a)
of Section 4 of this Plan, if one is appointed, or the Board if no committee is
appointed.

      


                 f.           “Consultant”
shall mean any person who is engaged by the Company or by any Parent or
Subsidiary to render consulting services and is compensated for such consulting
services, but does not include a director of the Company who is compensated for
services as a director only with the payment of a director’s fee by the
Company.

      


                 g           “Continuous
Status as an Employee” shall mean the absence of any interruption or termination
of service as an Employee. Continuous Status as an Employee shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Board, provided that such leave is for a period
of not more than 90 days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.

      


                 h.           “Employee”
shall mean any person, including officers and directors, employed by the Company
or by any Parent or Subsidiary. The payment of a director’s fee by the Company
shall not be sufficient to constitute “employment” by the Company.

       

          i.           “Incentive
Stock Option” shall mean an Option which is intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code and which shall be
clearly identified as such in the written Stock Option Agreement provided by the
Company to each Optionee granted an Incentive Stock Option under this
Plan.

      


                 j.           “Non-Employee
Director” shall mean a director who:

      


                 (i)           Is
not currently an officer (as defined in Section 16a-1(1) of the Securities
Exchange Act of 1934, as amended) of the Company or of a Parent or Subsidiary or
otherwise currently employed by the Company or by a Parent or
Subsidiary.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      


                 (ii)           Does
not receive compensation, either directly or indirectly, from the Company or
from a Parent or Subsidiary, for services rendered as a Consultant or in any
capacity other than as a director, except for an amount that does not exceed the
dollar amount for which disclosure would be required pursuant to Item 404(a) of
Regulation S-K adopted by the United States Securities and Exchange
Commission.

      


                 (iii)           Does
not possess an interest in any other transaction for which disclosure would be
required pursuant to Item 404(a) of Regulation S-K adopted by the United States
Securities and Exchange Commission.

      


                 k.           “Nonstatutory
Stock Option” shall mean an Option granted under this Plan which does not
qualify as an Incentive Stock Option and which shall be clearly identified as
such in the written Stock Option Agreement provided by the Company to each
Optionee granted a Nonstatutory Stock Option under this Plan. To the extent that
the aggregate fair market value of Optioned Stock to which Incentive Stock
Options granted under Options to an Employee are exercisable for the first time
during any calendar year (under this Plan and all plans of the Company or any
Parent or Subsidiary) exceeds $100,000, such Options shall be treated as
Nonstatutory Stock Options under this Plan. The aggregate fair market value of
the Optioned Stock shall be determined as of the date of grant of each Option
and the determination of which Incentive Stock Options shall be treated as
qualified incentive stock options under Section 422 of the Code and which
Incentive Stock Options exercisable for the first time in a particular year in
excess of the $100,000 limitation shall be treated as Nonstatutory Stock Options
shall be determined based on the order in which such Options were granted in
accordance with Section 422(d) of the Code.

      


                 l.           “Option”
shall mean an Incentive Stock Option, a Nonstatutory Stock Option or both as
identified in a written Stock Option Agreement representing such stock option
granted pursuant to this Plan.

      


                 m.           “Optioned
Stock” shall mean the Common Stock subject to an Option.

      


                 n.           “Optionee”
shall mean an Employee or other person who is granted an option.

      


                 o.           “Parent”
shall mean a “parent corporation” of the Company, whether now or hereafter
existing, as defined in Section 424(e) of the Code.

      


                 p.            “Plan”
shall mean this 1998 Stock Option Plan.

      


                 q.           “Share”
shall mean a share of the Common Stock of the Company, as adjusted in accordance
with Section 11 of this Plan.

      


                 r.           “Stock
Option Agreement” shall mean the agreement to be entered into between the
Company and each Optionee which shall set forth the terms and conditions of each
Option granted to each Optionee, including the number of Shares underlying such
Option and the exercise price of each Option granted to such Optionee under such
agreement.

      


                 s.           “Subsidiary”
shall mean a “subsidiary corporation” of the Company, whether now or hereafter
existing, as defined in Section 424(f) of the Code.

      


      3.
           Stock Subject to this
Plan.   Subject to the provisions of Section 11 of this
Plan, the maximum aggregate number of Shares which may be optioned and sold
under this Plan is 750,000 shares of Common Stock. The Shares may be authorized,
but unissued, or reacquired Common Stock. If an Option should expire or become
unexercisable for any reason without having been exercised in full, the
unpurchased Shares which were subject thereto shall, unless this Plan shall have
been terminated, become available for future grant under this
Plan.


      
        
           


        

        
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      4.           Administration of this
Plan.

      


                 a.           Procedure.  This
Plan shall be administered by the Board or a Committee appointed by the Board
consisting of two or more Non-Employee Directors to administer this Plan on
behalf of the Board, subject to such terms and conditions as the Board may
prescribe.

      


                 (i)           Once
appointed, the Committee shall continue to serve until otherwise directed by the
Board (which for purposes of this paragraph (a)(i) of this Section 4 shall be
the Board of Directors of the Company). From time to time the Board may increase
the size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and thereafter
directly administer this Plan.

      


                 (ii)           Members
of the Board who are granted, or have been granted, Options may vote on any
matters affecting the administration of this Plan or the grant of any Options
pursuant to this Plan.

      


                 b.           Powers of the
Board.  Subject to the provisions of this Plan, the Board shall
have the authority, in its discretion:

      


                 (i)           To
grant Incentive Stock Options, in accordance with Section 422 of the Code, and
Nonstatutory Stock Options or both as provided and identified in a separate
written Stock Option Agreement to each Optionee granted such Option or Options
under this Plan; provided however, that in no event shall an Incentive Stock
Option and a Nonstatutory Stock Option granted to any Optionee under a single
Stock Option Agreement be subject to a “tandem” exercise arrangement such that
the exercise of one such Option affects the Optionee’s right to exercise the
other Option granted under such Stock Option Agreement;

      


                 (ii)          To
determine, upon review of relevant information and in accordance with Section
8(b) of this Plan, the fair market value of the Common Stock;

      


                 (iii)         To
determine the exercise price per Share of Options to be granted, which exercise
price shall be determined in accordance with Section 8(a) of this
Plan;

      


                 (iv)          To
determine the Employees or other persons to whom, and the time or times at
which, Options shall be granted and the number of Shares to be represented by
each Option;

      


                 (v)           To
interpret this Plan;

      


                 (vi)          To
prescribe, amend and rescind rules and regulations relating to this
Plan;

      


                 (vii)         To
determine the terms and provisions of each Option granted (which need not be
identical) and, with the consent of the holder thereof, modify or amend each
Option;

      


                 (viii)        To
accelerate or defer (with the consent of the Optionee) the exercise date of any
Option, consistent with the provisions of Section 7 of this Plan;

      


                 (ix)          To
authorize any person to execute on behalf of the Company any instrument required
to effectuate the grant of an Option previously granted by the Board;
and

      


                 (x)           To
make all other determinations deemed necessary or advisable for the
administration of this Plan.


      
        
           


        

        
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      c.           Effect of Board’s Decision.  All
decisions, determinations and interpretations of the Board shall be final and
binding on all Optionees and any other permissible holders of any Options
granted under this Plan.

      


      5.
           Eligibility.

      


                 a.           Persons
Eligible.  Options may be granted to any person selected by the
Board. Incentive Stock Options may be granted only to Employees.  An
Employee, who is also a director of the Company, its Parent or a Subsidiary,
shall be treated as an Employee for purposes of this Section 5.  An
Employee or other person who has been granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options.

      


                 b.           No Effect on
Relationship.  This Plan shall not confer upon any Optionee any
right with respect to continuation of employment or other relationship with the
Company nor shall it interfere in any way with his right or the Company’s right
to terminate his employment or other relationship at any time.

      


      6.             Term of Plan.  This
Plan, as amended, became effective on June 21, 2006. It shall continue in effect
until March 1, 2016, unless sooner
terminated under Section 13 of this Plan.

      


      7.           Term of Option. The term of
each Option shall be 10 years from the date of grant thereof or such shorter
term as may be provided in the Stock Option Agreement. However, in the case of
an Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than 10% of the total combined voting power of all
classes of stock of the Company or any Parent or Subsidiary, if the Option is an
Incentive Stock Option, the term of the Option shall be five years from the date
of grant thereof or such shorter time as may be provided in the Stock Option
Agreement.

      


      8.
           Exercise Price and
Consideration.

      


                 a.
           Exercise
Price.  The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Board, but the per Share exercise price under an Incentive Stock Option
shall be subject to the following:

      


                 (i)           If
granted to an Employee who, at the time of the grant of such Incentive Stock
Option, owns stock representing more than 10% of the voting power of all classes
of stock of the Company or any Parent or Subsidiary, the per Share exercise
price shall not be less than 110% of the fair market value per Share on the date
of grant.

      


                 (ii)           If
granted to any other Employee, the per Share exercise price shall not be less
than 100% of the fair market value per Share on the date of grant.

      


                 b.           Determination of Fair Market
Value.  The fair market value per Share on the date of grant
shall be determined as follows:

      


                 (i)           If
the Common Stock is listed on the New York Stock Exchange, the American Stock
Exchange or such other securities exchange designated by the Board, or admitted
to unlisted trading privileges on any such exchange, or if the Common Stock is
quoted on a National Association of Securities Dealers, Inc. system that reports
closing prices, the fair market value shall be the closing price of the Common
Stock as reported by such exchange or system on the day the fair market value is
to be determined, or if no such price is reported for such day, then the
determination of such closing price shall be as of the last immediately
preceding day on which the closing price is so reported;

      


                 (ii)           If
the Common Stock is not so listed or admitted to unlisted trading privileges or
so quoted, the fair market value shall be the average of the last reported
highest bid and the lowest asked prices quoted on the National Association of
Securities Dealers, Inc. Automated Quotations System or, if not so quoted, then
by the National Quotation Bureau, Inc. on the day the fair market value is
determined; or


      
        
           


        

        
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                 (iii)           If
the Common Stock is not so listed or admitted to unlisted trading privileges or
so quoted, and bid and asked prices are not reported, the fair market value
shall be determined in such reasonable manner as may be prescribed by the
Board.

      


                 c.           Consideration and Method of
Payment.  The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Board and may consist entirely of cash, check, other shares of
Common Stock having a fair market value on the date of exercise equal to the
aggregate exercise price of the Shares as to which said Option shall be
exercised, or any combination of such methods of payment, or such other
consideration and method of payment for the issuance of Shares to the extent
permitted under the Colorado Business Corporation Act.

      


      9.           Exercise of
Option.

      


                 a.           Procedure for Exercise: Rights as a
Shareholder. Any Option granted hereunder shall be exercisable at such
times and under such conditions as determined by the Board, including
performance criteria with respect to the Company and/or the Optionee, and as
shall be permissible under the terms of this Plan.

      


                 An
Option may not be exercised for a fraction of a Share.

      


                 An
option shall be deemed to be exercised when written notice of such exercise has
been given to the Company in accordance with the terms of the Stock Option
Agreement by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment, as authorized by the Board, may consist of a
consideration and method of payment allowable under Section 8(c) and this
Section 9(a) of this Plan. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of the duly authorized transfer agent of
the Company) of the stock certificate evidencing such Shares, no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of this Plan.

      


                 Exercise
of an Option in any manner shall result in a decrease in the number of Shares
which thereafter may be available, both for purposes of this Plan and for sale
under the Option, by the number of Shares as to which the Option is
exercised.

      


                 b.           Termination of Status as an
Employee.  In the case of an Incentive Stock Option, if any
Employee ceases to serve as an Employee, he may, but only within such period of
time not exceeding three months as is determined by the Board at the time of
grant of the Option after the date he ceases to be an Employee of the Company,
exercise his Option to the extent that he was entitled to exercise it at the
date of such termination. To the extent that he was not entitled to exercise the
Option at the date of such termination, or if he does not exercise such Option
(which he was entitled to exercise) within the time specified herein, the Option
shall terminate.

      


                 c.           Disability of Optionee. In
the case of an Incentive Stock Option, notwithstanding the provisions of Section
9(b) above, in the event an Employee is unable to continue his employment with
the Company as a result of his total and permanent disability (as defined in
Section 22(e)(3) of the Code), he may, but only within such period of time not
exceeding 12 months as is determined by the Board at the time of grant of the
Option from the date of termination, exercise his Option to the extent he was
entitled to exercise it at the date of such termination. To the extent that he
was not entitled to exercise the Option at the date of termination, or if he
does not exercise such Option (which he was entitled to exercise) within the
time specified herein, the Option shall terminate.

      


                 d.           Death of Optionee. In the
case of an Incentive Stock Option, in the event of the death of the
Optionee:

      


                 (i)           During
the term of the Option if the Optionee was at the time of his death an Employee
and had been in Continuous Status as an Employee or Consultant since the date of
grant of the Option, the Option may be exercised, at any time within 12 months
following the date of death, by the Optionee’s

       

       

      
        
          
          

        

        
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      estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent that the right to exercise would have
accrued had the Optionee continued living and remained in Continuous Status as
an Employee 12 months after the date of death; or

      


                 (ii)           Within
such period of time not exceeding three months as is determined by the Board at
the time of grant of the Option after the termination of Continuous Status as an
Employee, the Option may be exercised, at any time within 12 months following
the date of death, by the Optionee’s estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
that the right to exercise had accrued at the date of termination.

      


      10.           Nontransferability of
Options.  Unless permitted by the Code, in the case of an
Incentive Stock Option, the Option may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent and distribution and may be exercised, during the lifetime
of the Optionee, only by the Optionee.

      


      11.
           Adjustments Upon Changes in
Capitalization or Merger.  Subject to any required action by
the shareholders of the Company, the number of Shares covered by each
outstanding Option, and the number of Shares which have been authorized for
issuance under this Plan but as to which no Options have yet been granted or
which have been returned to this Plan upon cancellation or expiration of any
Option, as well as the price per Share covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares subject to an Option.

      


                 In
the event of the proposed dissolution or liquidation of the Company, the Option
will terminate immediately prior to the consummation of such proposed action,
unless otherwise provided by the Board. The Board may, in the exercise of its
sole discretion in such instances, declare that any Option shall terminate as of
a date fixed by the Board and give each Optionee the right to exercise his
Option as to all or any part of the Optioned Stock, including Shares as to which
the Option would not otherwise be exercisable. In the event of the proposed sale
of all or substantially all of the assets of the Company, or the merger of the
Company with or into another entity in a transaction in which the Company is not
the survivor, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, that the Optionee
shall have the right to exercise the Option as to all of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable. If
the Board makes an Option fully exercisable in lieu of assumption or
substitution in the event of such a merger or sale of assets, the Board shall
notify the Optionee that the Option shall be fully exercisable for a period of
30 days from the date of such notice, and the Option will terminate upon the
expiration of such period.

      


      12.           Time of Granting
Options.  The date of grant of an Option shall, for all
purposes, be the date on which the Board makes the determination granting such
Option. Notice of the determination shall be given to each Employee or other
person to whom an Option is so granted within a reasonable time after the date
of such grant. Within a reasonable time after the date of the grant of an
Option, the Company shall enter into and deliver to each Employee or other
person granted such Option a written Stock Option Agreement as provided in
Sections 2(r) and 16 hereof, setting forth the terms and conditions of such
Option and separately identifying the portion of the Option which is an
Incentive Stock Option and/or the portion of such Option which is a Nonstatutory
Stock Option.


      
        
           


        

        
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      13.           Amendment and Termination of this
Plan.

      


                 a.           Amendment and
Termination.  The Board may amend or terminate this Plan from
time to time in such respects as the Board may deem advisable; provided that,
the following revisions or amendments shall require approval of the shareholders
of the Company in the manner described in Section 17 of this Plan:

      


                 (i)           Any
change in the designation of the class of Employees eligible to be granted
Incentive Stock Options; or

      


                 (ii)           Any
material amendment under this Plan that would have to be approved by the
shareholders of the Company for the Board to continue to be able to grant
Incentive Stock Options under this Plan.

      


                 b.           Effect of Amendment or
Termination.  Any such amendment or termination of this Plan
shall not affect Options already granted and such Options shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.

      


      14.           Conditions Upon Issuance of
Shares.  Shares shall not be issued pursuant to the exercise of
an Option unless the exercise of such Option and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder, applicable state securities laws, and the requirements
of any stock exchange upon which the Shares may then be listed, and shall be
further subject to the approval of legal counsel for the Company with respect to
such compliance.

      


                 As
a condition to the existence of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares and such other representations and
warranties which in the opinion of legal counsel for the Company, are necessary
or appropriate to establish an exemption from the registration requirements
under applicable federal and state securities laws with respect to the
acquisition of such Shares.

      


      15.
           Reservation of
Shares.  The Company, during the term of this Plan, will at all
times reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of this Plan. Inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company’s legal counsel to be necessary for the lawful issuance
and sale of any Share hereunder, shall relieve the Company of any liability
relating to the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

      


      16.           Stock Option
Agreement.  Each Option granted to an Employee or other persons
shall be evidenced by a written Stock Option Agreement in such form as the Board
shall approve.

      


      17.           Shareholder Approval.
Continuance of this Plan, as amended, shall be subject to approval by the
shareholders of the Company on or before July 31, 2006.

      


      18.
           Information to
Optionees.  The Company shall provide to each Optionee, during
the period for which such Optionee has one or more Options outstanding, copies
of all annual reports and other information which are provided to all
shareholders of the Company. The Company shall not be required to provide such
information if the issuance of Options under this Plan is limited to key
employees whose duties in connection with the Company assure their access to
equivalent information.

      


      19.           Gender. As used herein, the
masculine, feminine and neuter genders shall be deemed to include the others in
all cases where they would so apply.


      
        
           


        

        
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      20.            CHOICE OF LAW.  ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS PLAN
AND THE INSTRUMENTS EVIDENCING OPTIONS WILL BE GOVERNED BY THE INTERNAL LAW, AND
NOT THE LAW OF CONFLICTS, OF THE STATE OF COLORADO.

       

       

       

      
        	 
      	
                 
      /s/ Stephen C. Taylor

              
	 
      	
                Stephen
      C. Taylor, Chairman of the Board,

              
	 
      	
                President
      and Chief Executive Officer

              


      

      



      
        
           


        

        
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