EXHIBIT 10.2
VERASUN ENERGY CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
This Agreement is between VeraSun Energy Corporation, a South Dakota
corporation (the "Company"), and _____________ (the "Optionee"), pursuant to the
Company's Stock Incentive Plan (the "Plan"). The Company and the Optionee agree
as follows:
1. OPTION GRANT. The Company grants to the Optionee on the terms and
conditions of this Agreement the right and the option (the "Option") to purchase
all or any part of _____________ shares of the Company's Common Stock at a
purchase price of $_______ per share. The terms and conditions of the Option
grant set forth in attached Exhibit A are incorporated into and made a part of
this Agreement. The Option is intended to be an Incentive Stock Option as
defined in Section 422 of the Internal Revenue Code of 1986, as amended.
2. GRANT DATE; EXPIRATION DATE. The Grant Date for this Option is
____________. The Option shall continue in effect until the tenth anniversary of
the Grant Date (the "Expiration Date") unless earlier terminated as provided in
Sections 2, 7 or 8 of Exhibit A. The Option shall not be exercisable on or after
the Expiration Date.
3. EXERCISE OF OPTION. The Vesting Reference Date of this Option is
___________. The Option will become exercisable in accordance with Section 1 of
Exhibit A.
The parties have executed this Agreement in duplicate as of the Grant Date.
VERASUN ENERGY CORPORATION OPTIONEE
By: Name:
--------------------------------- ----------------------------------
Name: Address:
------------------------------- -------------------------------
Title:
------------------------------ -------------------------------
000 00xx Xxxxxx
Xxxxxxxxx, XX 00000 -------------------------------
VERASUN ENERGY CORPORATION
EXHIBIT A TO
STOCK OPTION AGREEMENT
1. TIME OF EXERCISE OF OPTION.
1.1 VESTING SCHEDULE. Until it expires or is terminated as provided in
Sections 2, 7 or 8 of this Exhibit A, the Option may be exercised from time to
time to purchase whole shares as to which it has become exercisable. The Option
shall become exercisable for _____% of the shares on the first anniversary of
the Vesting Reference Date, _____% of the shares on the second anniversary of
the Vesting Reference Date, _____% of the shares on the third anniversary of the
Vesting Reference Date, _____% of the shares on the fourth anniversary of the
Vesting Reference Date, and _____% of the shares on the fifth anniversary of the
Vesting Reference Date, so that the Option will be fully exercisable with
respect to all of the shares on ____________.
1.2 EARLY VESTING. Notwithstanding Section 1.1, the Option shall
become fully exercisable if, during the period beginning two months before a
Change of Control and ending 12 months after a Change in Control, Optionee's
employment by the Company shall be terminated (A) by the Company other than for
Cause, Total Disability or death or (B) by Optionee for Good Reason based on an
event occurring during such period.
1.3 DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings specified.
(A) "Cause" shall mean (1) the willful and continued failure by
Optionee substantially to perform Optionee's reasonably assigned duties
with the Company, other than a failure resulting from Optionee's incapacity
due to physical or mental illness or impairment, after a written demand for
performance has been delivered to Optionee by the Chief Executive Officer
or the President which specifically identifies the manner in which the CEO
or the President believes that Optionee has not substantially performed
Optionee's duties, or (2) the willful engagement by Optionee in illegal
conduct, or the conviction of guilty or entering of a nolo contendere plea
to a felony, which is materially and demonstrably injurious to the Company,
(3) the willful failure by Optionee to follow material written Company
policies or (4) the commission of an act by Optionee, or the failure by
Optionee to act, which constitutes gross negligence or gross misconduct.
For purposes of this definition, no act, or failure to act, on Optionee's
part shall be considered "willful" unless done, or omitted to be done, by
Optionee in bad faith.
(B) "Change in Control" shall mean the occurrence of any of the
following events:
(1) The approval by the shareholders of the Company of:
(a) any consolidation, merger or plan of share exchange
involving the Company (a "Merger") as a result of which the
holders of
A-1
outstanding securities of the Company ordinarily having the right
to vote for the election of directors ("Voting Securities")
immediately prior to the Merger do not continue to hold at least
50% of the combined voting power of the outstanding Voting
Securities of the surviving or continuing entity immediately
after the Merger, disregarding any Voting Securities issued or
retained by such holders in respect of securities of any other
party to the Merger;
(b) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, the assets of the Company; or
(c) the adoption of any plan or proposal for the
liquidation or dissolution of the Company;
(2) At any time during a period of two consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company ("Incumbent Directors") shall cease for
any reason to constitute at least a majority thereof; provided,
however, that the term "Incumbent Director" shall also include each
new director elected during such two-year period whose nomination or
election was approved by two-thirds of the Incumbent Directors then in
office; or
(3) Any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Act")) shall, as a result of a tender or exchange offer, open
market purchases or privately negotiated purchases from anyone other
than the Company, have become the beneficial owner (within the meaning
of Rule 13d-3 under the Act), directly or indirectly, of Voting
Securities representing twenty percent (20%) or more of the combined
voting power of the then outstanding Voting Securities.
(C) "Good Reason" shall mean:
(1) a diminution of Optionee's status, title, position(s) or
responsibilities from Optionee's status, title, position(s) and
responsibilities as in effect immediately prior to the Change of
Control (or two months before the Change in Control) or the assignment
to Optionee of any duties or responsibilities which are inconsistent
with such status, title, position(s) or responsibilities, or any
removal of Optionee from such position(s), except in connection with
the termination of Optionee's employment for Cause, Total Disability
or as a result of Optionee's death or voluntarily by Optionee other
than for Good Reason and provided that Good Reason shall not exist if
Optionee has the same status, title, position(s) and responsibilities
after the Change in Control but the Company is no longer a publicly
held company or is a wholly owned subsidiary of another company;
A-2
(2) a reduction by the Company in Optionee's rate of base
salary, bonus or incentive opportunity (other than as part of any
general salary reduction that may be implemented for all of the
Company's employees) or a substantial reduction in benefits other than
a reduction in benefits applicable to substantially all employees; or
(3) the Company's requiring Optionee to be based anywhere
other than the _________________ area except for reasonably required
travel on the Company's business.
(D) "Total Disability" has the meaning set forth in Section 2.3.
2. TERMINATION OF EMPLOYMENT OR SERVICE.
2.1 GENERAL RULE. Except as provided in this Section 2, the Option may
not be exercised unless at the time of exercise the Optionee is employed by or
in the service of the Company and shall have been so employed or provided such
service continuously since the Grant Date. For purposes of this Exhibit A, the
Optionee is considered to be employed by or in the service of the Company if the
Optionee is employed by or in the service of the Company or any parent or
subsidiary of the Company (an "Employer").
2.2 TERMINATION GENERALLY. If the Optionee's employment or service
with the Company terminates for any reason other than because of Total
Disability or death as provided in Sections 2.3 or 2.4, the Option may be
exercised at any time before the Expiration Date or the expiration of 90 days
after the date of termination, whichever is the shorter period, but only if and
to the extent the Optionee was entitled to exercise the Option at the date of
termination.
2.3 TERMINATION BECAUSE OF TOTAL DISABILITY. If the Optionee's
employment or service with the Company terminates because of Total Disability,
the Option may be exercised at any time before the Expiration Date or before the
date 12 months after the date of termination, whichever is the shorter period,
but only if and to the extent the Optionee was entitled to exercise the Option
at the date of termination. The term "Total Disability" means a medically
determinable mental or physical impairment that is expected to result in death
or has lasted or is expected to last for a continuous period of 12 months or
more and that, in the opinion of the Company and two independent physicians,
causes the Optionee to be unable to perform duties as an employee, director,
officer or consultant of the Employer and unable to be engaged in any
substantial gainful activity. Total Disability shall be deemed to have occurred
on the first day after the two independent physicians have furnished their
written opinion of Total Disability to the Company and the Company has reached
an opinion of Total Disability.
2.4 TERMINATION BECAUSE OF DEATH. If the Optionee dies while employed
by or in the service of the Company, the Option may be exercised at any time
before the Expiration Date or before the date 12 months after the date of death,
whichever is the shorter period, but only if and to the extent the Optionee was
entitled to exercise the Option at the date of death and only by the person or
persons to whom the Optionee's rights under the Option shall pass by the
A-3
Optionee's will or by the laws of descent and distribution of the state or
country of domicile at the time of death.
2.5 LEAVE OF ABSENCE. Absence on leave approved by the Employer or on
account of illness or disability shall not be deemed a termination or
interruption of employment or service. Vesting of the Option shall continue
during a medical, family or military leave of absence, whether paid or unpaid,
and vesting of the Option shall be suspended during any other unpaid leave of
absence.
2.6 FAILURE TO EXERCISE OPTION. To the extent that following
termination of employment or service, the Option is not exercised within the
applicable periods described above, all further rights to purchase shares
pursuant to the Option shall cease and terminate.
3. METHOD OF EXERCISE OF OPTION. The Option may be exercised only by notice
in writing from the Optionee to the Company of the Optionee's binding commitment
to purchase shares, specifying the number of shares the Optionee desires to
purchase under the Option and the date on which the Optionee agrees to complete
the transaction, which may not be more than 30 days after delivery of the
notice, and, if required to comply with the Securities Act of 1933, containing a
representation that it is the Optionee's intention to acquire the shares for
investment and not with a view to distribution. On or before the date specified
for completion of the purchase, the Optionee must pay the Company the full
purchase price of those shares in cash or by check, or in whole or in part in
Common Stock of the Company valued at fair market value provided such Common
Stock has been previously acquired and held by the Optionee for at least six
months. The fair market value of Common Stock provided in payment of the
purchase price shall be the closing price of the Common Stock last reported
before the time payment in Common Stock is made or, if earlier, committed to be
made, if the Common Stock is publicly traded, or another value of the Common
Stock as specified by the Board of Directors. No shares shall be issued until
full payment for the shares has been made, including all amounts owed for tax
withholding. The Optionee shall, immediately upon notification of the amount
due, if any, pay to the Company in cash or by check amounts necessary to satisfy
any applicable federal, state and local tax withholding requirements. If
additional withholding is or becomes required (as a result of exercise of the
Option or as a result of disposition of shares acquired pursuant to exercise of
the Option) beyond any amount deposited before delivery of the certificates, the
Optionee shall pay such amount to the Company, in cash or by check, on demand.
If the Optionee fails to pay the amount demanded, the Company or the Employer
may withhold that amount from other amounts payable to the Optionee, including
salary, subject to applicable law.
4. DISQUALIFYING DISPOSITION. If the Option is an Incentive Stock Option
and if within two years after the Grant Date or within 12 months after the
exercise of the Option, the Optionee sells or otherwise disposes of Common Stock
acquired on exercise of the Option, the Optionee shall within 30 days of the
sale or disposition notify the Company in writing of (i) the date of the sale or
disposition, (ii) the amount realized on the sale or disposition and (iii) the
nature of the disposition (e.g., sale, gift, etc.).
5. NONTRANSFERABILITY. The Option is nonassignable and nontransferable by
the Optionee, either voluntarily or by operation of law, except by will or by
the laws of descent and
A-4
distribution of the state or country of the Optionee's domicile at the time of
death, and during the Optionee's lifetime, the Option is exercisable only by the
Optionee.
6. STOCK SPLITS, STOCK DIVIDENDS. If the outstanding Common Stock of the
Company is hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of any stock split, combination of shares, dividend payable in shares,
recapitalization or reclassification, appropriate adjustment shall be made by
the Company in (i) the number and kind of shares subject to the Option, or the
unexercised portion thereof, and (ii) the Option price per share, so that the
Optionee's proportionate interest before and after the occurrence of the event
is maintained. Notwithstanding the foregoing, the Company shall have no
obligation to effect any adjustment that would or might result in the issuance
of fractional shares, and any fractional shares resulting from any adjustment
may be disregarded or provided for in any manner determined by the Company. Any
such adjustments made by the Company shall be conclusive.
7. MERGERS, REORGANIZATIONS, ETC. In the event of a merger, consolidation,
plan of exchange, acquisition of property or stock, split-up, split-off,
spin-off, reorganization or liquidation to which the Company is a party or any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the Company
(each, a "Transaction"), the Company shall, in its sole discretion and to the
extent possible under the structure of the Transaction, select one of the
following alternatives for treating the Option:
7.1 The Option shall remain in effect in accordance with its terms.
7.2 The Option shall be converted into an option to purchase stock or
other equity interest in one or more of the corporations or other entities,
including the Company, that are the surviving or acquiring entities in the
Transaction. The amount, type of securities subject thereto and exercise price
of the converted Option shall be determined by the Company, taking into account
the relative values of the companies involved in the Transaction and the
exchange rate, if any, used in determining shares of, or other equity interest
in, the surviving entity or entities to be held by holders of shares of the
Company following the Transaction. The converted Option shall be vested only to
the extent that the vesting requirements relating to the Option have been
satisfied. Optionee understands that if the Option is converted pursuant to this
Section 7.2 into a right to acquire an equity interest in an entity other than a
corporation, the Option will cease to qualify as an Incentive Stock Option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.
7.3 The Company shall provide a period of 30 days or less before the
completion of the Transaction during which the Option may be exercised to the
extent then exercisable, and upon the expiration of that period, the Option
shall immediately terminate. The Company may, in its sole discretion, accelerate
the exercisability of the Option so that the Option is exercisable in full
during that period.
8. DISSOLUTION. In the event of the dissolution of the Company, the Company
shall provide a period of 30 days or less before the dissolution of the Company
during which the Option may be exercised to the extent then exercisable, and
upon the expiration of that period,
A-5
the Option shall immediately terminate. The Company may, in its sole discretion,
accelerate the exercisability of the Option so that the Option is exercisable in
full during that period.
9. RESTRICTIONS ON TRANSFER OF SHARES. Any shares purchased under this
Option will be subject to the restrictions on transfer, if any, included in the
Company's articles of incorporation.
10. CONDITIONS ON OBLIGATIONS. The Company shall not be obligated to issue
shares of Common Stock upon exercise of the Option if the Company is advised by
its legal counsel that such issuance would violate applicable state or federal
laws, including securities laws. The Company will use its best efforts to take
steps required by state or federal law or applicable regulations in connection
with issuance of shares upon exercise of the Option.
11. NO RIGHT TO EMPLOYMENT OR SERVICE. Nothing in the Plan or this
Agreement shall (i) confer upon the Optionee any right to be continued in the
employment of an Employer or interfere in any way with the Employer's right to
terminate the Optionee's employment at will at any time, for any reason, with or
without cause, or to decrease the Optionee's compensation or benefits, or (ii)
confer upon the Optionee any right to be retained or employed by the Employer or
to the continuation, extension, renewal or modification of any compensation,
contract or arrangement with or by the Employer.
12. SUCCESSORS OF COMPANY. This Agreement shall be binding upon and shall
inure to the benefit of any successor of the Company but, except as provided
herein, the Option may not be assigned or otherwise transferred by the Optionee.
13. NOTICES. Any notices under this Agreement must be in writing and will
be effective when actually delivered or, if mailed, three days after deposit
into the United States mail by registered or certified mail, postage prepaid.
Mail shall be directed to the addresses stated on the face page of this
Agreement or to such address as a party may certify by notice to the other
party.
14. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock until the date the
Optionee becomes the holder or record of those shares. No adjustment shall be
made for dividends or other rights for which the record date occurs before the
date the Optionee becomes the holder of record.
15. AMENDMENTS. The Company may at any time amend this Agreement if the
amendment does not adversely affect the Optionee. Otherwise, this Agreement may
not be amended without the written consent of the Optionee and the Company.
16. GOVERNING LAW. This Agreement shall be governed by the laws of the
state of South Dakota.
17. COMPLETE AGREEMENT. This Agreement constitutes the entire agreement
between the Optionee and the Company, both oral and written concerning the
matters addressed herein, and all prior agreements or representations concerning
the matters addressed herein, whether written or oral, express or implied, are
terminated and of no further effect.
A-6
