FIRST UNITED ETHANOL, LLC. NON-QUALIFIED MEMBERSHIP UNIT OPTION AGREEMENT
Exhibit 10.51
Execution Version
FIRST UNITED ETHANOL, LLC.
MEMBERSHIP UNIT OPTION for a total of Membership Units, representing one percent (1%)
of the outstanding Membership Units, measured as of the close of the federally registered offering
of Membership Units on Form SB-2, of First United Ethanol, LLC (the “Company”) is by this
Membership Unit Option Agreement and Grant Notice (the “Agreement”) hereby granted to Xxxxxxx Xxxxx
(the “Optionee”) subject in all respects to the terms and provisions of the First United Ethanol,
LLC Membership Unit Option Plan (the “Plan”), dated April 11, 2007, which has been adopted by the
Company and is incorporated herein by reference.
X. Xxxxx Under First United Ethanol, LLC Membership Unit Option
Plan. This option is granted pursuant to and is governed by the First United Ethanol, LLC
2007 Membership Unit Option Plan (the “Plan”) and, unless the context otherwise requires, terms
used herein shall have the same meaning as in the Plan. This Agreement shall be effective as of
the 10 day of June, 2007, and such date shall constitute the Grant Date of the Option granted
hereunder. Capitalized terms used but not defined herein shall have the meanings prescribed to
such terms in the Plan. Determinations made in connection with this option pursuant to the Plan
shall be governed by the Plan as it exists on the Grant Date under this Agreement.
X. Xxxxx as Non-Qualified Option; Other Option.
This option is intended to be a non-qualified membership option (rather than an incentive
membership unit option). This option is in addition to any other options heretofore or hereafter
granted to the Optionee by the Company (as defined in the Plan), but a duplicate original of this
instrument shall not effect the grant of another option.
C. Price; Exercisability of Option; Vesting.
1. Price. The Option Price as determined by the Committee is One Thousand Dollars ($1,000.00)
per Membership Unit.
2. Full Exercisability. This option may be exercised at any time and from time to time for
all or any portion of the Option Units, except that this option may not be exercised for a fraction
of a unit. The foregoing right (subject to Sections D or E hereof if the Optionee ceases to be
employed by the Company) may be exercised on or before the date which is ten years from the Grant
Date. Option Units which are “Unvested Units,” as specified in paragraph (3) below, shall, if
purchased, be subject to the Company’s Repurchase Option described in Section F unless and until
they become “Vested Units” in accordance with paragraph (3) below. As of any date, the Option Units
issued upon the exercise of this option on or before such date (the “Issued Units”) shall first be
deemed to be Vested Units up to the number of Option Units that are Vested Units under Section C(2)
above as of such date and any Issued Units in excess of the number of Vested Units as of such date
shall be deemed to be Unvested Units. The term “Option Units” used without reference to either
Unvested Units or Vested Units shall mean both Unvested Units and Vested Units, without
distinction.
2. Vesting. All of the Option Units initially shall be Unvested Units. For so long as the
Optionee maintains a continuous service to the Company as an employee (a “Business Relationship”),
Unvested Units (whether or not previously purchased) shall become Vested Units (or shall “vest”)
and the Optionee may exercise this Option, in accordance with the following schedule:
Execution Version
(i) During calendar year 2007, zero percent (0%) of the Membership Units subject to this
Option.
(ii) During calendar year 2008, eight percent (8%) per calendar quarter
of the Membership Units subject to
this
Option, such Membership Units to vest on the last day of
each respective calendar quarter.
(iii) During calendar year 2009, eight percent (8%) per calendar quarter of the Membership
Units subject to this Option, such Membership Units to vest on the last day of each respective
calendar quarter.
(iv) During calendar year 2010, eight percent (8%) per calendar quarter of the Membership
Units subject to this Option for the first three calendar quarters, such Membership Units to vest
on the last day of each respective calendar quarter. The remaining twelve percent (12%) of the
Membership Units subject to this Option shall vest on the last day of the fourth calendar quarter.
In addition, in the event the Company’s Repurchase Option becomes exercisable pursuant to Section F
below, and the Company elects not to exercise its option for the repurchase of any or all of the
Unvested Units, then upon the expiration of the Repurchase Option Period (as defined in Section F),
any and all Option Units not repurchased by the Company shall become Vested Units. The Committee
may, in its discretion, accelerate any of the foregoing vesting dates.
3. Accelerated Vesting of Unvested Units Upon Termination Without Cause Within First Year of
Employment. If the Optionee’s Business Relationship is terminated by the Company or its successor
or assign without Cause (as defined in Section D(1)) within sixteen months after the Vesting Start
Date, then immediately prior to such termination, a number of units as is equal to 8% of such
Optionee’s Option Units shall be deemed Vested Units for purposes of this Agreement.
4. Accelerated Vesting of Unvested Units Upon Change in Control. In the event of a Change of
Control of the Company prior to the year 2011, the Optionee’s rights to exercise this Option shall
immediately become fully vested and the Optionee shall have the right, immediately prior to such
Change of Control, to exercise this Option in full or in part.
Notwithstanding any other provision of this Agreement, the Optionee shall exercise this Option only
to the extent that, when combined with all other applicable employee remuneration, any exercise of
this Option does not result in the inclusion of total remuneration for services exceeding one
million dollars ($1,000,000.00) in the gross income of the Optionee in any taxable year. The total
remuneration dollar limitation shall be adjusted from time to time to reflect the allowable
deduction limitation provided in Section 162(m) of the Code. If otherwise allowed by this
Agreement and the Plan, any exercise of this Option that would result in the inclusion of
applicable employee remuneration exceeding one million dollars ($1,000,000.00) in the gross income
of the Optionee in any taxable year shall be deferred until the taxable year immediately following
the taxable year in which any exercise of this Option is disallowed by this paragraph.
5. Definitions. For purposes of this Section C, the term “Change in Control” shall mean (i)
the effective time of a consolidation of the Company with, or merger of the Company with or into,
another corporation or other business organization in which the units of the Company are converted
into or otherwise exchanged for less than fifty percent (50%) of the units of a resulting or
surviving corporation that is not an affiliate of the Company, (ii) the closing of a sale or
conveyance of all or substantially all of the assets of the Company to another corporation or
business organization that is not an affiliate of the Company, or (iii) an acquisition in a
transaction or a series of related transactions by a
non-affiliated person or group (as defined in Rule 13d-5(b)(1) of the Securities Exchange Act of
1934, as amended) of more than a majority of the outstanding units of the Company. For purposes of
this paragraph, the term “affiliate” shall have the same meaning as the definition set forth in
Rule 405 of the Securities Act of 1933.
Execution Version
D. Termination of Business Relationship.
1. Termination Other Than For Cause. If the Optionee’s Business Relationship with the
Company terminates, other than by reason of death or disability as defined in Section E or
termination for Cause as defined in Section D(3), vesting of Unvested Units shall immediately
cease, this option shall terminate (may no longer be exercised) immediately as to any Unvested
Units and may be exercised only as to any Option Units that are Vested Units on the date of
termination of the Optionee’s Business Relationship. This option may then be exercised only as to
any Option Units that are Vested Units as of such termination date on or prior to the date which is
90 days after the date of termination of the Optionee’s Business Relationship (but not later than
the scheduled expiration date). In the event of termination of the Optionee’s Business
Relationship, the Repurchase Option described in Section F shall also be applicable. For purposes
hereof, a Business Relationship shall be considered as continuing uninterrupted during any bona
fide leave of absence (such as those attributable to illness, military obligations or governmental
service); PROVIDED that the period of such leave does not exceed 90 days or, if longer, any period
during which the Optionee’s right to reemployment is guaranteed by statute or by contract. A bona
fide leave of absence with the written approval of the Company shall not be considered an
interruption of the Business Relationship for purposes hereof; PROVIDED that such written approval
contractually obligates the Company to continue the Business Relationship of the Optionee after the
approved period of absence. This option shall not be affected by any change of Business
Relationship within the Company so long as the Optionee continuously maintains its Business
Relationship with the Company.
2. Termination For Cause. If the Business Relationship of the Optionee is terminated for
Cause (as defined in Section D(3)), this option shall terminate (may no longer be exercised) as to
any Vested Units and Unvested Units upon the Optionee’s receipt of written notice of such
termination. In the event of termination of the Optionee’s Business Relationship, the Repurchase
Option described in Section F shall also be applicable.
3. Definition
of Cause. “Cause” shall mean conduct involving one or more of the following:
(i) the substantial and continuing failure of the Optionee, after notice thereof, to render
services to the Company in accordance with the terms or requirements of his Business Relationship;
provided, however, that any actions taken in good faith, based on appropriate information and
carried out with the honest belief that the action taken was in the best interests of the Company
shall not, regardless of the actual or perceived results of such actions, be deemed grounds for
Cause as herein defined; (ii) disloyalty, gross negligence, willful misconduct, dishonesty, fraud
or breach of fiduciary duty to the Company; (iii) deliberate disregard of the rules or policies of
the Company, or breach of an employment or other agreement with the Company, which results in
direct or indirect loss, damage or injury to the Company; (iv) the unauthorized disclosure of any
trade secret or confidential information of the Company; or (v) the commission of an act which
constitutes unfair competition with the Company or which induces any customer or supplier to breach
a contract with the Company.
Execution Version
E. Death; Disability.
1. Death. If the Optionee dies while in a Business Relationship with the Company, vesting of
Unvested Units shall immediately cease. In such event, this option may be exercised only as to any
Option Units that are Vested Units on the date of the Optionee’s death, by the Optionee’s estate,
personal representative or beneficiary to whom this option has been assigned pursuant to Section J,
and this option may be exercised only on or prior to the date which is 180 days after the date of
death (but not later than the scheduled expiration date). In the event of death, the Repurchase
Option described in Section F shall also be applicable.
2. Disability. If the Optionee ceases its Business Relationship with the Company by reason of
his or her disability, vesting of Option Units shall immediately cease; this option may be
exercised only as to any Option Units that are Vested Units on the date of termination of the
Optionee’s Business Relationship; and this option may be exercised only on or prior to the date
which is 12 months after the date of termination of the Optionee’s Business Relationship (but not
later than the scheduled expiration date). In the event of such termination of Business
Relationship, the Repurchase Option described in Section F shall also be applicable. For purposes
hereof, “disability” means “permanent and total disability” as defined in Section 22(e)(3) of the
Code.
F. Repurchase Option. In the event of any voluntary or involuntary
termination of the Optionee’s Business Relationship with the Company for any or no reason,
including by reason of death or disability, the Company shall, upon and from the date of such
termination (as reasonably fixed and determined by the Company) have an irrevocable, exclusive,
assignable option (the “Repurchase Option”) for a period of ninety (90) days following the
termination of such Business Relationship (the “Repurchase Option Period”) to repurchase all or any
portion of the Unvested Units held by the Optionee at the original purchase price per unit paid by
the Optionee. Such option may be exercised by the Company by sending written notice to the
Optionee, which notice shall specify the number of Unvested Units being so repurchased and which
notice shall be accompanied by the Company’s check for the purchase price of those units. Upon the
sending of such notice and check, the Company shall become the legal and beneficial owner of the
Unvested Units being repurchased and all rights and interests therein or relating thereto, and the
Company shall have the right to retain and transfer to its own name the number of Unvested Units
being repurchased by the Company.
G. Payment of Exercise Price.
1. Payment Options. The exercise price shall be paid by one or any combination of the
following forms of payment:
(i) in cash, or by check payable to the order of the Company; or
(ii) delivery of an irrevocable and unconditional undertaking, satisfactory in form and
substance to the Company, by a creditworthy broker to deliver promptly to the Company sufficient
funds to pay the exercise price, or delivery by the Optionee to the Company of a copy of
irrevocable and unconditional instructions, satisfactory in form and substance to the Company, to a
creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the
exercise price.
H. Restrictions on Resale; Legend.
1. Transfer Restrictions.
(i) Unvested Units. The Optionee agrees not to sell, assign, transfer, pledge, hypothecate,
gift, mortgage or otherwise encumber or dispose of (except to the Company or any successor to the
Company) all or any Unvested Units or any interest therein, and any Unvested Units purchased
upon exercise of this option shall be held in escrow by the Company in accordance with the terms of
Section R below unless and until they become Vested Units.
Execution Version
(ii) Vested Units. Option Units that are Vested Units may not be transferred without the
Company’s written consent except by will, by the laws of descent and distribution and in accordance
with the provisions of Section P, if applicable.
(iii) Securities Act Restrictions. Option Units will be of an illiquid nature and will be
deemed to be “restricted securities” for purposes of the Securities Act of 1933, as amended (the
“Securities Act”). Accordingly, such units must be sold in compliance with the registration
requirements of the Securities Act or an exemption therefrom. Each certificate evidencing any of
the Option Units shall bear a legend substantially as follows:
“The units represented by this certificate are subject to restrictions on transfer and may
not be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of except
in accordance with and subject to all the terms and conditions of a certain Non-Qualified
Membership Unit Option Agreement, a copy of which the Company will furnish to the holder of
this certificate upon request and without charge.”
2. Termination of Restrictions. The restrictions on transfer contained in Section H(1)(ii)
(including without limitation the provisions of Section P) shall expire as to Option Units on the
occurrence of a distribution to the public of membership units of the Company pursuant to an
effective registration statement filed under the Securities Act or any successor statute (a “Public
Offering”).
I. Method of Exercising Option. Subject to the terms and conditions of this
Agreement, this option may be exercised by written notice to the Company at its principal executive
office, or to such transfer agent as the Company shall designate. Such notice shall state the
election to exercise this option and the number of Option Units for which it is being exercised and
shall be signed by the person or persons so exercising this option. Such notice shall be
accompanied by payment of the full purchase price of such units, and the Company shall deliver a
certificate or certificates representing such units as soon as practicable after the notice shall
be received. Such certificate or certificates shall be registered in the name of the person or
persons so exercising this option (or, if this option shall be exercised by the Optionee and if the
Optionee shall so request in the notice exercising this option, shall be registered in the name of
the Optionee and another person jointly, with right of survivorship). In the event this option
shall be exercised, pursuant to Section E hereof, by any person or persons other than the Optionee,
such notice shall be accompanied by appropriate proof of the right of such person or persons to
exercise this option.
J. Option Not Transferable. This option is not transferable or assignable
except by will or by the laws of descent and distribution. During the Optionee’s lifetime only the
Optionee can exercise this option.
K. No Obligation to Exercise Option. The grant and acceptance of this option
imposes no obligation on the Optionee to exercise it.
L. No Obligation to Continue Business Relationship. Neither the Plan, this
Agreement, nor the grant of this option imposes any obligation on the Company to continue the
Optionee in the Business Relationship.
Execution Version
M. Adjustments. Except as is expressly provided in the Plan with respect to
certain changes in the capitalization of the Company, no adjustment shall be made for distributions
or similar rights for which the record date is prior to such date of exercise.
N. Capital Changes and Business Successions. The Plan contains provisions
covering the treatment of options in a number of contingencies such as unit splits and mergers.
Provisions in the Plan for adjustment with respect to units subject to options and the related
provisions with respect to successors to the business of the Company are hereby made applicable
hereunder and are incorporated herein by reference.
O. Withholding Taxes, Section 83(b) Election.
1. Withholding Taxes. If the Company in its discretion determines that it is obligated to
withhold any tax in connection with the exercise of this option, or in connection with the transfer
of, or the lapse of restrictions on, any Membership Unit or other property acquired pursuant to
this option, the Optionee hereby agrees that the Company may withhold from the Optionee’s wages or
other remuneration the appropriate amount of tax. At the discretion of the Company, the amount
required to be withheld may be withheld in cash from such wages or other remuneration or in kind
from the Membership Unit or other property otherwise deliverable to the Optionee on exercise of
this option. The Optionee further agrees that, if the Company does not withhold an amount from the
Optionee’s wages or other remuneration sufficient to satisfy the withholding obligation of the
Company, the Optionee will make reimbursement on demand, in cash, for the amount underwithheld.
2. Section 83(b) Election. The Optionee acknowledges that if this option is exercised as to
any Unvested Units, such Unvested Units may be treated as subject to a substantial risk of
forfeiture under Section 83(b) of the Code. In such event, the Optionee may make an election under
Section 83(b) to include in income currently the difference between the fair market value of such
Unvested Units and the exercise price. If the Optionee does not make such an election, the Optionee
understands that he or she will recognize income at the time such Unvested Units become Vested
Units. The Optionee agrees to consult with his or her own tax advisor prior to the exercise of this
option for Unvested Units.
P. Company’s Right of First Refusal.
1. Exercise of Right. If the Optionee desires to transfer all or any part of the Vested Units
to any person other than the Company (an “Offeror”), the Optionee shall: (i) obtain in writing an
irrevocable and unconditional bona fide offer (the “Offer”) for the purchase thereof from the
Offeror; and (ii) give written notice (the “Option Notice”) to the Company setting forth the
Optionee’s desire to transfer such units, which Option Notice shall be accompanied by a photocopy
of the Offer and shall set forth at least the name and address of the Offeror and the price and
terms of the Offer. Upon receipt of the Option Notice, the Company shall have an assignable option
to purchase any or all of such Vested Units (the “Company Option Units”) specified in the Option
Notice, such option to be exercisable by giving, within 30 days after receipt of the Option Notice,
a written counter-notice to the Optionee. If the Company elects to purchase any or all of such
Company Option Units, it shall be obligated to purchase, and the Optionee shall be obligated to
sell to the Company, such Company Option Units at the price and terms indicated in the Offer within
30 days from the date of delivery by the Company of such counter-notice.
Execution Version
2. Sale of Option Units to Offeror. The Optionee may, for 60 days after the expiration of the
30-day option period as set forth in Section P(1), sell to the Offeror, pursuant to the terms of
the Offer, any or all of such Company Option Units not purchased or agreed to be purchased by
the Company or its assignee; PROVIDED, HOWEVER, that the Optionee shall not sell such Option Units
to such Offeror if such Offeror is a competitor of the Company and the Company gives written notice
to the Optionee, within 30 days of its receipt of the Option Notice, stating that the Optionee
shall not sell his or her Option Units to such Offeror; and PROVIDED, FURTHER, that prior to the
sale of such Option Units to an Offeror, such Offeror shall execute an agreement with the Company
pursuant to which such Offeror agrees to be subject to the restrictions set forth in this Section
P. If any or all of such Option Units are not sold pursuant to an Offer within the time permitted
above, the unsold Option Units shall remain subject to the terms of this Section P.
3. Failure to Deliver Option Units. If the Optionee fails or refuses to deliver on a timely
basis duly endorsed certificates representing Company Option Units to be sold to the Company or its
assignee pursuant to this Section P, the Company shall have the right to deposit the purchase price
for such Company Option Units in a special account with any bank or trust company, giving notice of
such deposit to the Optionee, whereupon such Company Option Units shall be deemed to have been
purchased by the Company. All such monies shall be held by the bank or trust company for the
benefit of the Optionee. All monies deposited with the bank or trust company but remaining
unclaimed for two years after the date of deposit shall be repaid by the bank or trust company to
the Company on demand, and the Optionee shall thereafter look only to the Company for payment.
4. Expiration of Company’s Right of First Refusal and Transfer Restrictions. The first
refusal rights of the Company (or any of its assignees) and the transfer restrictions set forth in
Section P(1)-(3) above shall remain in effect until the occurrence of a Public Offering.
Q. Lock-Up Agreement. The Optionee agrees that in connection with any
underwritten public offering of Membership Units, upon the request of the Company or the principal
underwriter managing such public offering, the Option Units may not be sold, offered for sale or
otherwise disposed of without the prior written consent of the Company or such underwriter, as the
case may be, for at least 180 days after the execution of an underwriting agreement in connection
with such offering, or such longer period of time as the Committee may determine if all of the
Company’s directors and executive officers agree to be similarly bound. The obligations under this
Section Q shall remain effective for all underwritten public offerings with respect to which the
Company has filed a registration statement on or before the date two (2) years after the closing of
the Company’s initial public offering; PROVIDED, HOWEVER, that this Section Q shall cease to apply
to any Option Units sold to the public pursuant to an effective registration statement or an
exemption from the registration requirements of the Securities Act in a transaction that complied
with the terms of this Agreement.
R. Escrow of Unvested Units.
1. If this option is exercised as to any Unvested Units, such Unvested Units shall be issued
in the name of the Optionee, but shall be held in escrow by the Company, acting in the capacity of
escrow agent, together with an unit assignment executed by the Optionee with respect to such
Unvested Units.
2. With respect to any Unvested Units held in escrow that become Vested Units, the Company
shall promptly issue a new certificate for the number of units that have become Vested Units and
shall deliver such certificate to the Optionee and shall retain in escrow a new certificate for any
remaining Unvested Units in exchange for the all or the relevant portion of the applicable
certificate then being held by the Company as escrow agent.
Execution Version
3. Subject to the terms hereof, the Optionee shall have all the rights of a unitholder with
respect to the Unvested Units while they are held in escrow, including without limitation, the
right to vote the Unvested Units and receive any cash distributions declared thereon.
4. The Company may terminate this escrow at any time. The Company may also appoint another
entity to serve as escrow agent hereunder, in which event the Optionee agrees to execute all
documents requested by the Company in connection therewith.
S. Provision of Documentation to Optionee. By signing this Agreement, the
Optionee acknowledges receipt of a copy of this Agreement and a copy of the Plan.
T. Miscellaneous.
1. Notices. All notices hereunder shall be in writing and shall be deemed given when sent by
certified or registered mail, postage prepaid, return receipt requested, if to the Optionee, to the
address set forth below or at the address shown on the records of the Company, and if to the
Company, to the Company’s principal executive offices, attention of the Corporate Secretary.
2. Entire Agreement; Modification. This Agreement constitutes the entire agreement between
the parties relative to the subject matter hereof, and supersedes all proposals, written or oral,
and all other communications between the parties relating to the subject matter of this Agreement.
This Agreement may be modified, amended or rescinded only by a written agreement executed by both
parties.
3. Issuance of Securities. Except as expressly provided herein or in the Plan, no issuance by
the Company of membership units shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of units subject to this option.
4. Adjustments for Changes in Capital Structure. If there shall be any change in the
Membership Units of the Company through merger, consolidation, reorganization, recapitalization,
unit split, combination or exchange of units, spin-off, split-up or other similar change in
capitalization or event, the restrictions and other provisions contained in Section C, Section F,
Section H, Section P, Section Q and Section R shall apply with equal force to additional and/or
substitute securities, if any, received by the Optionee in exchange for, or by virtue of his or her
ownership of, Option Units, except as otherwise determined by the Committee.
5. Severability. The invalidity, illegality or unenforceability of any provision of this
Agreement shall in no way affect the validity, legality or enforceability of any other provision.
6. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, subject to the limitations set
forth in Section J hereof.
7. Compliance with Securities Laws. This Option may not be exercised if the issuance of
Membership Units of the Company upon such exercise would constitute a violation of any applicable
federal or state securities or other law or valid regulation. The Optionee, as a condition to his
exercise of this Option, represents to the Company that the Membership Units of the Company that he
acquires under this Option are being acquired by him for investment and not with a present view to
distribution or resale, unless counsel for the Company is then of the opinion that such a
representation is not required under the Securities Act of 1933 or any other applicable law,
regulation or rule of any governmental agency.
Execution Version
8. Severability. If any provision of this Agreement shall be held to be invalid or
unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable.
If a court finds that any provision of this Agreement is invalid or unenforceable, but that by
limiting such provision it would become valid and enforceable, then such provision shall be deemed
to be written, construed, and enforced as so limited.
9. Waiver. The failure of either party to enforce any provision of this Agreement shall not
be construed as a waiver or limitation of that party’s right to subsequent enforcement and strict
compliance with every provision of this Agreement.
10. Governing Law. This Agreement shall be governed by and interpreted in accordance with the
laws of Georgia, without giving effect to the principles of the conflicts of laws thereof.
11. Dispute Resolution. The parties agree to arbitrate any dispute, claim or controversy
arising out of this Agreement. The arbitration shall be conducted in Camilla, Georgia and shall be
administered by Xxxxxxx Mediation and Arbitration Services and governed by Georgia law. The
parties agree to cooperate in reasonable, prompt and limited discovery prior to presentation of the
case to the Arbitrator. The Arbitrator’s decision shall be in writing and shall set forth findings
of fact and reasoning on conclusions regarding the issues submitted. The Arbitrator shall not
amend, modify, nullify, ignore or add to the provisions of this Agreement. The Arbitrator’s
decision shall be binding on the parties and may be confirmed and entered as final judgment in any
court of competent jurisdiction and enforced accordingly. All costs and expenses of the Arbitrator
shall be borne equally by the parties. Any other expenses incurred by the parties shall be paid by
the party incurring same.
12. Optionee’s Acknowledgement. The Optionee acknowledges receipt of a copy of the Plan, a
copy of which is annexed hereto, and represents that he is familiar with the terms and provisions
thereof. The Optionee hereby accepts this Option subject to all the terms and provisions of the
Plan and this Agreement. As a condition to the issuance of Membership Units of the Company under
this Option, the Optionee agrees to be bound by the terms, conditions and restrictions contained in
the Company’s Operating Agreement as it may be amended from time to time, including but not limited
to Section 9 thereof. The Optionee hereby agrees to accept as binding, conclusive and final all
decisions and interpretations of the Committee upon any questions arising under the Plan. As a
condition to the issuance of Membership Units of the Company under this Option, the Optionee agrees
to remit to the Company at the time of any exercise of this Option any taxes required to be
withheld by the Company under federal, state or local law as a result of the exercise of this
Option.
The Optionee acknowledges that any Membership Units acquired pursuant to the exercise of this
Option will be governed by the terms and conditions of the Company’s Operating Agreement, which the
Optionee accepts and by which the Optionee agrees to be legally bound. The Optionee represents and
has been informed that the Membership Units which may be issued pursuant to an exercise of this
Option cannot be sold to a person who is not a member of the Company purchasing Membership Units
for the purpose of investment and not for resale for a period of twelve months after the exercise
of this option in full or in part. The Optionee hereby acknowledges that following the exercise of
this Option the Company may refuse to transfer any Membership Units to any person unless (i) the
Optionee furnishes the Company with a no action letter from the Securities and Exchange Commission
or an opinion of counsel acceptable to the Company stating that such transfer is not in violation
of the Securities Act of 1933 or state securities laws and will not violate any of the exemptions
from federal and state securities registration relied upon by the Company, and (ii) the transfer is
made in accordance with the terms of the Company’s Operating Agreement. The Optionee agrees that
in the event this Option is exercised,
appropriate legends may be placed on the membership certificate evidencing ownership of Membership
Units to give notice of the restrictions set forth in this Agreement.
Execution Version
The Optionee represents and has been informed that any securities issued pursuant to an exercise of
this Option have not been registered with the Securities and Exchange Commission or any state
securities commission, that the Company will rely upon certain exemptions from registration under
the Securities Act of 1933 and that the Company’s reliance on such exemptions will be based in part
upon the representations of the Optionee contained herein. The Optionee acknowledges that he has
been informed that the Membership Units issued pursuant to an exercise of this Option have not been
approved or disapproved by the Securities and Exchange Commission or any state securities agency or
any other regulatory authority. The Optionee represents and warrants that upon the exercise of
this Option, the Membership Units being acquired will be acquired for the Optionee’s own account
without a view to public distribution or resale and that the Optionee has no contract, undertaking,
agreement or arrangement to sell or otherwise transfer or dispose of any Membership Units or any
portion thereof to any other person. The Optionee understands that the Membership Units issued
pursuant to the exercise of this Option are subject to substantial restrictions on transfer under
the federal and state securities laws, which restrictions are in addition to certain other
restrictions set forth in the Company’s Operating Agreement. The Optionee understands that (i) in
the event this Option is exercised the Company has no obligation or intention to register any
Membership Units issued for resale or transfer under the Securities Act of 1933 or any state
securities laws or to take any action (including the filing of reports or the publication of
information as required by Rule 144 under the Securities Act of 1933) which would make available
any exemption from the registration requirements of any such laws and (ii) the Optionee therefore
may be precluded from selling or otherwise transferring or disposing of any Membership Units or any
portion thereof for an indefinite period of time or at any particular time.
| Chief Executive Officer | First United Ethanol, LLC | |||||||||||
By:
|
/s/ Xxxxxxx Xxxxx | AJF | By: | /s/ Xxxxxx Xxxxxx | ||||||||
| Xxxxxxx Xxxxx | 12/18/07 | Xxxxxx Xxxxxx, Chairman of | ||||||||||
| Compensation Committee | ||||||||||||
