Exhibit 10.51
Execution Version
FIRST UNITED ETHANOL, LLC.
NON-QUALIFIED MEMBERSHIP UNIT OPTION AGREEMENT
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 Anthony Flagg (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.
A
. Grant 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.
B. Grant 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 sub
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