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Exhibit
10.1
November 28, 2007
[name, title]
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Re: |
Change in Control Agreement |
Dear [name] :
VeraSun Energy Corporation, a South
Dakota corporation (the “ Company ”), considers
the establishment and maintenance of a sound and vital management
to be essential to protecting and enhancing the best interests of
the Company and its shareholders. In this connection, the Company
recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control may exist and
that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Company
and its shareholders. Accordingly, the Board of Directors of the
Company (the “ Board ”) has determined that
appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the
Company’s management to their assigned duties without
distraction in circumstances arising from the possibility of a
change in control of the Company.
In order to induce you to remain in the
employ of the Company, this letter agreement, which has been
approved by the Board, sets forth the severance benefits which the
Company agrees will be provided to you in the event your employment
with the Company is terminated subsequent to a “Change in
Control” of the Company under the circumstances described
below.
1. Agreement to Provide Services;
Right to Terminate.
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(i) |
Except as otherwise provided in paragraph (ii) below, the
Company or you may terminate your employment at any time, subject
to the Company’s providing the benefits specified in this
Agreement in accordance with the terms of this
Agreement. |
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(ii) |
In the event of a Potential Change in Control (as defined
below), you agree that you will not leave the employ of the Company
(other than as a result of Total Disability or upon Retirement, as
such terms are defined in Section 4) and will continue to
render services as an officer until such Potential Change in
Control has been abandoned or terminated or a Change in Control, as
defined in Section 3, has occurred. |
2. Term of Agreement . This
Agreement shall continue in effect until December 31, 2009;
except that:
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(i) |
commencing on January 1, 2010 and each January 1
after that, the term of this Agreement shall automatically be
extended for one additional year unless at least ninety
(90) days prior to such January 1 date, the Company or
you shall have given notice that this Agreement shall not be
extended; |
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(ii) |
this Agreement shall continue in effect for a period of twenty
four (24) months beyond the term otherwise provided if a
Change in Control shall have occurred during such term; |
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(iii) |
this Agreement shall terminate if you or the Company terminate
your employment prior to and not in anticipation of a Change in
Control of the Company; and |
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(iv) |
the Company may terminate this Agreement during your employment
if, prior to and not in anticipation of a Change in Control of the
Company, you cease to hold your current position with the Company,
except by reason of a promotion. |
Notwithstanding the foregoing, following
the occurrence of the first Change in Control during the term of
this Agreement (other than an event described in paragraph
(a)(i)(D) of Section 3 below) and immediately after the
Company and you have discharged all of your respective obligations
hereunder, this Agreement shall terminate. For the avoidance of
doubt, after the first Change in Control occurs under this
Agreement (other than an event described in paragraph (a)(i)(D) of
Section 3 below), no further Change in Control shall occur
under this Agreement.
3. Change in Control; Potential
Change in Control; Person; Plan . For purposes of this
Agreement,
(a) “ Change in
Control ” shall mean the occurrence of any of the
following events:
(i) 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
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 fifty percent (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 to 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;
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(C) the adoption of any plan
or proposal for the liquidation or dissolution of the Company;
or
(D) any issuance (in one
transaction or series of related transactions) of Voting Securities
by the Company (other than for cash) representing fifty percent
(50%) or more of the voting power of the Voting Securities
outstanding immediately before such issuance;
(ii) At any time during a
period of two (2) 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
(iii) Any Person (as defined
below) 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 Securities Exchange Act of
1934), directly or indirectly, of Voting Securities representing
twenty percent (20%) or more of the combined voting power of
the then outstanding Voting Securities.
Notwithstanding anything in
the foregoing to the contrary, unless otherwise determined by the
Board, no Change in Control shall be deemed to have occurred for
purposes of this Agreement if (1) you acquire (other than on
the same basis as all other holders of shares of Common Stock of
the Company) an equity interest in an entity that acquires the
Company in a Change in Control otherwise described under
subparagraph (i)(A) above, or (2) you are part of a group that
constitutes Person which becomes a beneficial owner of Voting
Securities in a transaction that otherwise would have resulted in a
Change in Control under subparagraph (iii) above.
(b) A “ Potential
Change in Control ” shall be deemed to have occurred
if:
(i) the Company enters into
an agreement, the consummation of which would result in the
occurrence of a Change in Control;
(ii) any Person (as defined
below, including the Company) publicly announces an intention to
take or to consider taking actions which if consummated would
constitute a Change in Control; or
(iii) the Board adopts a
resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control has occurred.
(c) “ Person
” shall mean and include any individual, corporation,
partnership, group, association or other “person,” as
such term is used in Section 14(d) of the Securities Exchange
Act of 1934, other than the Company or any employee benefit plan
sponsored by the Company.
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(d) “ Plan
” shall mean any compensation plan such as an incentive,
stock option or restricted stock plan or any employee benefit plan
such as a thrift, pension, profit sharing, deferred compensation,
medical, disability, accident, life insurance, or relocation plan
or policy or any other plan, program or policy of the Company
intended to benefit employees.
4. Termination Following Change in
Control . If a Change in Control shall have occurred, you shall
be entitled to the benefits provided in paragraph (iii) of
Section 5 upon the termination of your employment within
twenty four (24) months after such event, unless such
termination is (a) because of your death or Retirement,
(b) by the Company for Cause or Total Disability or
(c) by you other than for Good Reason.
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(i) |
Total Disability . Termination by the Company of your
employment based on “ Total Disability ” shall
mean termination due to a medically determinable mental or physical
impairment that is expected to result in death or that has lasted
or is expected to last for a continuous period of twelve
(12) months or more and that, in the opinion of the Company
and two (2) independent physicians, causes you to be unable to
perform your duties 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 (2) independent physicians have
furnished their written opinion of Total Disability to the Company
and the Company has reached an opinion of Total
Disability. |
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(ii) |
Retirement . Termination by you of your employment based
on “ Retirement ” shall mean termination at age
62 with a minimum of five (5) years of service or at age
65. |
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(iii) |
Cause . Termination by the Company of your employment
for “ Cause ” shall mean termination based on
(1) the willful and continued failure by you substantially to
perform your reasonably assigned duties with the Company, other
than a failure resulting from your incapacity due to physical or
mental illness or impairment, after a written demand for
performance has been delivered to you by the Chief Executive
Officer or the President which specifically identifies the manner
in which you have not substantially performed your duties, or
(2) the willful engagement by you 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 you to follow material
written Company policies or (4) the commission of an act by
you, or the failure by you to act, which constitutes gross
negligence or gross misconduct. For purposes of this definition, no
act, or failure to act, on your part shall be considered
“willful” unless done, or omitted to be done, by you in
bad faith. |
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(iv) |
Good Reason . Termination by you of your employment for
“ Good Reason ” shall mean termination based
on: |
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a material
diminution of your status, title, position(s) or responsibilities
from your status, title, position(s) and responsibilities as in
effect immediately prior to the Change in Control or the assignment
to you of any duties or responsibilities which are materially
inconsistent with such status, title, position(s) or
responsibilities, or any removal of you from such position(s),
except in connection with the termination of your employment for
Cause, Total Disability or as a result of your death or voluntarily
by you other than for Good Reason; or
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• |
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a reduction
by the Company in your 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
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• |
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a relocation
of your principal place of employment to a new work location
[number] miles or more from your principal place of employment
immediately prior to the Change in Control.
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Termination shall not be for
Good Reason unless you have notified the Board in writing within
ninety (90) days of the initial occurrence of the event or
condition that constitutes Good Reason and no adequate remedy is
effected within thirty (30) days and you terminate employment,
if at all, within ninety (90) days following the end of such
thirty (30) day period.
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(v) |
Notice of Termination . Any notice of termination by the
Company or by you following a Change in Control shall be
communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a “ Notice of
Termination ” shall mean a written notice which shall
indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your
employment under the provision so indicated. |
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(vi) |
Date of Termination . “ Date of Termination
” following a Change in Control shall mean (a) if your
employment is to be terminated for Total Disability, thirty
(30) days after Notice of Termination is given (provided that
you shall not have returned to the performance of your duties on a
full-time basis during such thirty (30) day period),
(b) if your employment is to be terminated by the Company for
Cause, the date on which a Notice of Termination is given, and
(c) if your employment is to be terminated by you or by the
Company for any other reason, the date specified in the Notice of
Termination, which shall be a date no earlier than thirty
(30) days after the date on which a Notice of Termination is
given, unless an earlier date has been agreed to by the party
receiving the Notice of Termination either in advance of, or after,
receiving such Notice of Termination. |
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5. Compensation Upon Termination or
During Total Disability Following Change in Control
.
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(i) |
Total Disability . During any period following a Change
in Control that you fail to perform your duties as a result of
Total Disability, you shall continue to receive your full base
salary at the rate then in effect and any benefits or awards under
any Plans shall continue to accrue during such period, to the
extent not inconsistent with such Plans, until your employment is
terminated pursuant to and in accordance with Sections 4(i) and
4(v) hereof. Thereafter, your benefits shall be determined in
accordance with the Plans then in effect. |
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(ii) |
Termination for Cause . If your employment shall be
terminated for Cause following a Change in Control, the Company
shall pay you your full base salary through the Date of Termination
at the rate in effect just prior to the time a Notice of
Termination is given plus any benefits or awards (including both
the cash and stock components) which pursuant to the terms of any
Plan have been earned or become payable, but which have not yet
been paid to you. Thereupon the Company shall have no further
obligations to you under this Agreement. |
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(iii)
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Other Termination .
If, within twenty four (24) months after a Change in Control
shall have occurred, your employment by the Company shall be
terminated (a) by the Company other than for Cause, Total
Disability or Retirement or (b) by you for Good Reason based
on an event occurring concurrent with or subsequent to a Change in
Control, then, by no later than the tenth (10 th ) day following your execution and
non-revocation of the release of claims in the form attached hereto
as Exhibit A within thirty (30) days of the Date of
Termination (except as otherwise provided), you shall be entitled,
without regard to any contrary provisions of any Plan, to a
severance benefit (the “ Severance Benefit ”).
The Severance Benefit shall consist of the Specified Benefits
unless you would receive a greater after-tax benefit from the
Capped Benefit, in which case the Severance Benefit shall be the
Capped Benefit. The “ Capped Benefit” is the
Specified Benefits, reduced by the amount necessary to prevent any
portion of the Specified Benefits from being “parachute
payments” as defined in section 280G(b)(2) of the Internal
Revenue Code of 1986, as amended (“ IRC ”), or
any successor provision. For purposes of determining whether you
would receive a greater after-tax benefit from the Capped Benefit
than from the Specified Benefits, there shall be taken into account
all payments and benefits you will receive upon a Change in
Control, including accelerated vesting of options, restricted stock
and other awards under the Company’s stock option and stock
incentive plans (collectively, excluding the Severance Benefit, the
“ Change of Control Payments ”). To determine
whether your after-tax benefit from the Capped Benefit would be
greater than your after-tax benefit from the Specified Benefits,
there shall be subtracted from the sum of the before-tax Severance
Benefit and the Change of Control Payments (including the monetary
value of any non-cash benefits) any excise tax that would be
imposed under IRC § 4999 and all federal, state and local
taxes required to be paid by you in respect of the receipt of such
payments, assuming that such payments would be
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taxed at the highest
marginal rate applicable to individuals in the year in which the
Severance Benefit is to be paid or such lower rate as you advise
the Company in writing is applicable to you, and there shall be
subtracted from the before-tax Capped Benefit all federal, state
and local taxes required to be paid by you in respect of the
receipt of such payments, assuming that such payments would be
taxed at the highest marginal rate applicable to individuals in the
year in which the Severance Benefit is to be paid or such lower
rate as you advise the Company in writing is applicable to you. The
“ Specified Benefits” are as follows:
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(A) |
The Company shall pay to you (i) your full base salary
thr |
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