VERASUN ENERGY CORPORATION Restricted Stock Agreement
VERASUN ENERGY CORPORATION
This Restricted Stock Agreement (“Agreement”), dated as of , is between VeraSun
Energy Corporation, a South Dakota corporation (the “Company”), and (“Shareholder”)
and is made pursuant to the Company’s Stock Incentive Plan.
1. Award of Restricted Stock. Pursuant to Section 8 of the Incentive Plan and in
recognition of Shareholder’s past services to the Company, the Company awards to Shareholder
shares of the Company’s fully paid and nonassessable Common Shares as a restricted stock
grant (the “Shares”). All of the Shares are subject to forfeiture as set forth in Sections 2 and
3.
2. Length of Service Restrictions.
2.1 Shares Subject to Forfeiture.
2.1.1 All of the Shares shall initially be subject to forfeiture to the Company. All or a
portion of the Shares shall be automatically forfeited to the Company if Shareholder’s employment
by the Company terminates for any reason, including termination with or without Cause or
retirement, as follows:
| Portion of Restricted Stock Subject to | ||||
| Employment Termination Prior To | Forfeiture | |||
First Anniversary of Grant Date |
% | |||
Second Anniversary of Grant Date |
% | |||
Third Anniversary of Grant Date |
% | |||
Fourth Anniversary of Grant Date |
% | |||
Fifth Anniversary of Grant Date |
% | |||
For purposes of this Agreement, a person is considered to be employed by the Company if the
person is employed by any entity that is either the Company or a parent or subsidiary of the
Company.
2.1.2 Notwithstanding Section 2.1.1, the possibility of forfeiture of the Shares established
above shall lapse in its entirety if, during the period beginning two months before a Change of
Control and ending 12 months after a Change in Control, Shareholder’s employment by the Company
shall be terminated (A) by the Company other than for Cause, Total Disability or death or (B) by
Shareholder for Good Reason based on an event occurring during such period.
2.2 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 Shareholder substantially to
perform Shareholder’s reasonably assigned duties with the Company, other than a failure resulting
from Shareholder’s incapacity due to physical or mental illness or impairment, after a written
demand for performance has been delivered to Shareholder by the Chief Executive Officer or the
President which specifically identifies the manner in which the CEO or the President believes
that Shareholder has not substantially performed Shareholder’s duties, or (2) the willful
engagement by Shareholder 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 Shareholder to follow material written Company policies or (4) the
commission of an act by Shareholder, or the failure by Shareholder to act, which constitutes
gross negligence or gross misconduct. For purposes of this definition, no act, or failure to
act, on Shareholder’s part shall be considered “willful” unless done, or omitted to be done, by
Shareholder 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 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
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percent (20%) or more of the combined voting power of the then outstanding Voting
Securities.
(C) “Good Reason” shall mean:
(1) a diminution of Shareholder’s status, title, position(s) or responsibilities from
Shareholder’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
Shareholder of any duties or responsibilities which are inconsistent with such status, title,
position(s) or responsibilities, or any removal of Shareholder from such position(s), except in
connection with the termination of Shareholder’s employment for Cause, Total Disability or as a
result of Shareholder’s death or voluntarily by Shareholder other than for Good Reason and
provided that Good Reason shall not exist if Shareholder 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;
(2) a reduction by the Company in Shareholder’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 Shareholder to be based anywhere other than the
area except for reasonably required travel on the Company’s business.
(D) “Total Disability” shall mean 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 Shareholder 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.
3. Forfeiture of Shares on Violation of Code of Business Conduct and Ethics.
Shareholder acknowledges that compliance with the Company’s Code of Business Conduct and Ethics
is a condition to the receipt and vesting of the Shares. If, during the term of this Agreement,
the Board of Directors (or a committee of directors designated by the Board of Directors)
determines in good faith that Shareholder’s conduct is or has been in violation of the Company’s
Code of Business Conduct and Ethics, then the Board of Directors or committee may cause
Shareholder to immediately forfeit all or a portion of the Shares subject to forfeiture under
Section 2.1, and Shareholder shall have no right to receive such Shares. If the Chief Executive
Officer or President of the Company reasonably believes that the Shareholder has violated the
Code of Business Conduct and Ethics and that the Board of Directors or its committee should
consider the forfeiture of Shares, the Chief Executive Officer or President may temporarily toll
the period of vesting of the Shares, for a
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period of up to 45 days, in order for the Board of Directors or its committee to make a
determination about Shareholder’s conduct and the potential forfeiture of Shares.
4. Withholding. Upon notification of the amount due, if any, and prior to or
concurrently with delivery of the certificates representing the Shares, Shareholder shall pay to
the Company amounts necessary to satisfy any applicable federal, state, and local withholding tax
requirements. If additional withholding becomes required beyond any amount deposited before
delivery of the certificates, Shareholder shall pay such amount to the Company on demand. If
Shareholder fails to pay any amount demanded, the Company shall have the right to withhold such
amount from other amounts payable by the Company to Shareholder, including salary, subject to
applicable law.
5. Limitations on Transfer.
5.1 While Subject to Forfeiture. Without the written consent of the Company,
Shareholder shall not sell, assign, encumber, dispose of or transfer (including transfer by
operation of law) any interest in any Shares that are subject to forfeiture pursuant to Sections
2 and 3.
6. Legend. All certificates representing the Shares shall be endorsed with legends
substantially in the following form:
“THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE SUBJECT TO
FORFEITURE AND CERTAIN RESTRICTIONS UPON TRANSFER AS SET FORTH IN A
RESTRICTED STOCK AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED
HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
CORPORATION.”
7. Specific Performance. Shareholder acknowledges and agrees that the Company will
suffer irreparable harm if Shareholder fails to comply with the terms of this Agreement, and that
monetary damages will be inadequate to compensate the Company for such failure. Accordingly,
Shareholder agrees that this Agreement may be enforced by specific performance or other
injunctive relief, in addition to any other remedies available at law or in equity.
8. Section 83(b) Election. Shareholder is advised that any income recognized as a
result of receiving the Shares will be treated as ordinary compensation income subject to
federal, state and local income, employment and other tax withholding. Shareholder is advised
that if he or she makes an election under Section 83(b) of the Internal Revenue Code of 1986 with
respect to some or all of the Shares, Shareholder will recognize ordinary compensation income at
the time of the award of Shares in an amount equal to the fair market value of the Shares on that
date. If Shareholder does not make a Section 83(b) election, Shareholder will recognize ordinary
compensation income (i) at the time or times any portion of the Shares vests in accordance with
Section 2 of this Agreement, in an amount equal to the fair market value of that Shares on the
vesting date, and (ii) in connection with the payment of
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any cash dividends on the Shares while the Shares are unvested. Prior to or concurrently
with the acceptance by the Company of a Section 83(b) election for the Shares or delivery to
Shareholder of the certificates representing the Shares, Shareholder shall pay to Company the
amount necessary to satisfy all applicable federal, state and local tax withholding requirements
arising in connection with Shareholder’s receipt of the Shares, including any amounts required to
be withheld at the time any portion of the Shares vest in accordance with Section 2 of this
Agreement. Shareholder shall pay these amounts in cash or, at the election of the Shareholder,
by surrendering to Company for cancellation (i) Shares (except in the case of withholding due in
connection with a Section 83(b) election) or (ii) other shares of Company Common Stock held for
at least six months, in each case valued at the closing market price for the Company Common Stock
on the last trading day preceding the date of Shareholder’s election to surrender such shares.
If additional withholding becomes required beyond any amount paid before delivery of the
certificates representing the Shares, Shareholder shall pay such amount to Company upon demand.
If Shareholder fails to pay any amount demanded, Company shall have the right to withhold such
amount from other amounts payable by Company to the Shareholder, including salary, subject to
applicable law. Shareholder is advised that to be valid a Section 83(b) election must be filed
with the Internal Revenue Service within 30 days of the date of the award of Shares, a copy of
the election must be provided to the Company, and a copy of the election must be attached to the
Shareholder’s federal (and possibly state) income tax return for the year of the election.
Shareholder acknowledges that if he or she chooses to make a Section 83(b) election, it is
Shareholder’s sole responsibility, and not Company’s, to make a valid and timely election.
Shareholder is encouraged to review the Federal Income Tax Consequences portion of the Company’s
Stock Incentive Plan Prospectus and to consult Shareholder’s personal tax advisor regarding the
advisability of making a Section 83(b) election with respect to the Shares.
IRS Circular 230 notice: Any tax advice contained herein was not intended or written to be
used, and cannot be used, by Shareholder or any other person (i) in promoting, marketing or
recommending any transaction, plan or arrangement or (ii) for the purpose of avoiding penalties
that may be imposed under federal tax law.
9. Notices. Any required or permitted notice shall be given in writing and shall be
deemed given upon personal delivery or upon deposit in the United States mail by registered or
certified mail, postage prepaid. Any notice to Shareholder shall be addressed to Shareholder at
Shareholder’s address shown on the corporate records of the Company, and any notice to the
Company shall be addressed to the Company at its registered office.
10. No Right to Employment. Nothing in the Company’s Stock Incentive Plan or this
Agreement shall confer upon Shareholder any right to be continued in the employment of the
Company or to interfere in any way with the right of the Company to terminate Shareholder’s
employment at any time for any reason.
11. Entire Agreement; Amendment. This Agreement constitutes the entire agreement of
the parties with regard to the subject matter hereof and may be amended only by written agreement
between the Company and Shareholder.
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12. Successors of Company. This Agreement shall be binding upon and shall inure to
the benefit of any successor or successors of the Company and, subject to the restrictions on
transfer of this Agreement, shall be binding upon and shall inure to the benefit of Shareholder’s
heirs, executors, administrators, successors and assigns.
13. Governing Law, Severability. This Agreement shall be governed by and construed
in accordance with the laws of South Dakota, without regard to the conflict of laws rules applied
in the courts of such state. If any provision or provisions of this Agreement are found to be
unenforceable, the remaining provisions shall nevertheless be enforceable and shall be construed
as if the unenforceable provisions were deleted.
14. Further Action. The parties agree to execute such further instruments and to
take such further actions as may reasonably be necessary to carry out the intent of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Restricted Stock Agreement as of the date
written above.
| VERASUN ENERGY CORPORATION | SHAREHOLDER | |||||
By:
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Name: | |||||
Name:
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Address: | |||||
Title: |
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