MEMBERSHIP UNIT OPTION AGREEMENT
Exhibit
10.2
THIS AGREEMENT made March 22, 2006, between Western Dubuque Biodiesel, LLC, an Iowa
limited liability company (hereinafter the “Company”), and the Directors of the Company
(hereinafter “the Directors”).
WHEREAS, the company was organized for the purpose of developing, owning and operating a 30
million gallon per year biodiesel plant near Farley, Iowa (the “Project” or the “Plant”);
WHEREAS, the Company desires to provide the directors an incentive to advance the Project and
interests of the Company and determines that such incentive should be in the form of options to
purchase membership units of the Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and
for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties
hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants each Director, serving as a member
of the Company’s Board of Directors as of the date of this Agreement, the right, privilege, and
option to purchase up to 100 units of the Company for the purchase price of $500 per unit. Such
options shall be subject to the conditions hereinafter provided. All units purchased by such
Directors pursuant to such options are subject to the terms of the Operating Agreement of the
Company (the “Operating Agreement”).
2. EXERCISE AND TERMINATION OF OPTION. The Directors may exercise their options
granted under this Agreement upon debt closing and execution of definitive loan documents by the
Company with lenders necessary to capitalize the project as set forth in the Company’s prospectus
filed with the Iowa Securities Bureau in connection with its state registration statement. “Debit
Closing” shall mean the Company has completed everything necessary to execute, and the Company has
executed, definitive loan documents with lenders necessary to capitalize the project as set forth
in the Company’s prospectus. The Directors shall have no more than 30 days following debt closing
and execution of definitive loan documents to exercise the option provided herein, and the
Directors after such expiration shall have no further right to exercise the options or any rights
to the units that were subject to the Options and not exercised or purchase.
3. METHOD OF PAYMENT. The payment of the exercise price is due in full upon
exercise of any or all of an option granted herein. The Directors shall pay the exercise price by
delivering cash payment (in the form of a check or wire transfer as directed by the Company) in an
amount of the total exercise price.
4. DELIVERY OF MEMBERSHIP UNITS. Upon receipt by the Company of a signature page
of the Operating Agreement signed by the Directors and any other reasonable documentation required
by the Company to effectuate the issuance of the units, the Company shall make immediate delivery
of such membership certificates evidencing the units, provided that if any law or regulation
requires the Company to take any action with respect to the units before the issuance thereof, then
the date of delivery of such units shall be extended for the period necessary to take such action.
5. NON-TRANSFERABILITY. Except as provided in this Section 5, the options are
nontransferable by the Directors during their lifetime and are transferable thereafter only in
accordance with the laws of descent and distribution. The Director shall have no rights to the
units which are subject to the options until payment in full of the option/exercise price and
delivery to the Directors of such units as herein provided.
6. AUTHORITY. Each of the signatories hereto certifies that such party has all
necessary authority to execute this Agreement
7. AMENDMENTS. This Agreement sets forth the entire understanding of the parties
and supersedes any prior agreements, oral or written, as to the subject matter hereof. This
Agreement may be amended or modified by, and only by a written instrument executed by the parties hereto.
8. SEVERABILITY. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
9. WAIVER. The failure of any party hereto to insist in any one or more
instances upon performance of any term or condition of this Agreement shall not be construed as a
waiver of future performance of any such term, covenant or condition, but the obligation of such
party with respect thereto shall continue in full force and effect.
10. GOVERNING LAW. This Agreement shall be governed and construed in accordance
with the laws of the State of Iowa without reference to its conflict of law rules. Each of the
parties hereto irrevocably submits to the jurisdiction of any state or federal court sitting in the
State of Iowa in any action or proceeding brought to enforce or otherwise arising out of or
relating to this Agreement.
11. INTERPRETATION. The parties agree that each has had an opportunity to
negotiate fully the terms of this Agreement and that this Agreement shall not be interpreted in
favor of or against the party drafting the Agreement.
IN WITNESS WHEREOF, the parties have caused this agreement to be executed in duplicate by
their duly authorized representatives on the date first above written.
THE COMPANY
By:
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[DIRECTOR/OPTIONEE’S SIGNATURES ON FOLLOWING PAGE]
DIRECTORS:
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