Exhibit 10.3

 

EXECUTION COPY

 

AVENTINE RENEWABLE ENERGY HOLDINGS, INC.

2010 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

 

THIS AGREEMENT, made this 5th day of May, 2010 (the “Date of Grant”), by and
between Aventine Renewable Energy Holdings, Inc. (the “Company”) and John Castle
(the “Participant”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Aventine Renewable Energy Holdings, Inc. 2010 Equity
Incentive Plan (the “Plan”), the Company desires to afford the Participant the
opportunity to acquire ownership of the Company’s common shares, $0.001 par
value per share (“Common Shares”), so that the Participant may have a direct
proprietary interest in the Company’s success.

 

NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:

 

1.             Grant of Option.  Subject to the terms and conditions set forth
herein and in the Plan, the Company hereby grants to the Participant the right
and option (the right to purchase any one Common Share hereunder being an
“Option”) to purchase from the Company, at a price of $43.75 per share (the
“Option Price”), an aggregate of 100,000 Common Shares (the “Option Shares”). 
The Options granted hereunder shall expire ten (10) years following the Date of
Grant.

 

2.             Limitation on Exercise of Option.

 

(a)           Subject to the terms and conditions set forth herein and the Plan,
the Participant will become vested in the Options as follows: (i)  16,667
Options will vest and become exercisable each of the first two anniversaries of
the Date of Grant, (ii) an additional 16,666 Options will vest and become
exercisable on December 31, 2012, and (iii) the remaining 50,000 Options will
vest and become exercisable subject to the attainment of reasonable performance
criteria to be determined by the Board, and once so determined will be set forth
on Annex A hereto; provided, that, the Participant is then employed by the
Company.

 

(b)           Notwithstanding the foregoing, in the event that the Participant’s
employment with the Company is terminated (i) by the Company without Cause (as
defined in the Employment Agreement between the Company and the Participant
dated as of May 5, 2010 (the “Employment Agreement”)), or (ii) by the
Participant for Good Reason (as defined in the Employment Agreement), the
Options shall immediately vest and become exercisable in full.

 

(c)           Change in Control.  Upon the occurrence of a Change in Control (as
defined in the Employment Agreement), the Options shall immediately vest and
become exercisable in full.

 

3.             Post-Termination Exercise Period. If the Participant’s
termination of employment is due to (i) (a) the Participant’s death, (b) the
Participant’s termination by the

 

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Company for Disability (as defined in the Employment Agreement) or without
Cause, or (c) due to the expiration of the Term of Employment (as defined in the
Employment Agreement), all vested Options then held by the Participant shall
remain exercisable until the earlier of (x) the first anniversary of the Date of
Termination (as defined in the Employment Agreement) and (y) the expiration of
the Option Period, and shall thereafter terminate; or (ii) termination by the
Participant with or without Good Reason, all vested Options then held by the
Participant shall remain exercisable until the earlier of (x) ninety days
following the Date of Termination and (y) the expiration of the Option Period,
and shall thereafter terminate.  If the Participant’s termination of employment
is for any other reason, all unvested Options (and in the case of a termination
by the Company for Cause, all vested Options) shall terminate on the Date of
Termination.

 

4.             Method of Exercising Option.

 

(a)           Payment of Option Price.  Options, to the extent vested, may be
exercised, in whole or in part, by giving written notice of exercise to the
Company specifying the number of Common Shares to be purchased.  Such notice
shall be accompanied by the payment in full of the aggregate Option Price.  Such
payment shall be made: (i) in cash or by check, bank draft or money order
payable to the order of the Company, (ii) through a cashless exercise whereby
the Company reduces the number of Common Shares issuable upon exercise with a
value equal to the aggregate Option Price and withholding obligation,
(iii) solely to the extent permitted by applicable law, if the Common Shares are
then traded on an established securities exchange or system in the United
States, through a procedure whereby the Participant delivers irrevocable
instructions to a broker reasonably acceptable to the Committee to deliver
promptly to the Company an amount equal to the aggregate Option Price or (iv) on
such other terms and conditions as the Committee may permit, in its sole
discretion.

 

(b)           Tax Withholding.  At the time of exercise, the Participant shall
pay to the Company such amount as the Company deems necessary to satisfy its
obligation, if any, to withhold federal, state or local income or other taxes
incurred by reason of the exercise of Options granted hereunder.  Such payment
shall be made: (i) in cash, (ii) by having the Company withhold from the
delivery of Common Shares for which the Option was exercised that number of
Common Shares having a Fair Market Value equal to the minimum withholding
obligation, (iii) by delivering Common Shares owned by the holder of the Option
that are Mature Shares, or (iv) by a combination of any such methods.  For
purposes hereof, Common Shares shall be valued at Fair Market Value.

 

5.             Issuance of Shares.  Except as otherwise provided in the Plan, as
promptly as practical after receipt of such written notification of exercise and
full payment of the Option Price and any required income tax withholding, the
Company shall issue or transfer to the Participant the number of Option Shares
with respect to which Options have been so exercised (less shares withheld for
payment of the Option Price and/or in satisfaction of tax withholding
obligations, if any), and shall deliver to the Participant a certificate or
certificates therefor, registered in the Participant’s name.

 

6.             Non-Transferability.  The Options are not transferable by the
Participant otherwise than to a designated beneficiary upon death or by will or
the laws of descent and

 

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distribution, and are exercisable during the Participant’s lifetime only by
him/her (or his or her legal representative in the event of incapacity).  No
assignment or transfer of the Options, or of the rights represented thereby,
whether voluntary or involuntary, by operation of law or otherwise (except to a
designated beneficiary, upon death, by will or the laws of descent and
distribution), shall vest in the assignee or transferee any interest or right
herein whatsoever, but immediately upon such assignment or transfer the Options
shall terminate and become of no further effect.  Notwithstanding the foregoing,
the Participant may transfer the Options to an Immediate Family Member in
accordance with Section 16(b)(ii) and (iii) of the Plan.

 

7.             Rights as Shareholder.  The Participant or a transferee of the
Options shall have no rights as shareholder with respect to any Option Shares
until he shall have become the holder of record of such shares, and no
adjustment shall be made for dividends or distributions or other rights in
respect of such Option Shares for which the date on which shareholders of record
are determined for purposes of paying cash dividends on Common Shares is prior
to the date upon which he/she shall become the holder of record thereof.

 

8.             Adjustments.  In the event of any adjustment pursuant to
Section 12 of the Plan that would adversely affect the value of the Options
granted hereunder or cause such Options to become subject to Section 409A of the
Code, such adjustment may only be made with the Participant’s written consent,
which consent shall not be unreasonably withheld.

 

9.             Compliance with Law.  Notwithstanding any of the provisions
hereof, the Participant hereby agrees that he/she will not exercise the Options,
and that the Company will not be obligated to issue or transfer any shares to
the Participant hereunder, if the exercise hereof or the issuance or transfer of
such shares shall constitute a violation by the Participant or the Company of
any provisions of any law or regulation of any governmental authority.  Any
determination in this connection by the Committee shall be final, binding and
conclusive.

 

10.           Notice.  Every notice or other communication relating to this
Agreement shall be in writing, and shall be mailed to or delivered to the party
for whom it is intended at such address as may from time to time be designated
by it in a notice mailed or delivered to the other party as herein provided;
provided, that, unless and until some other address be so designated, all
notices or communications by the Participant to the Company shall be mailed or
delivered to the Company at its principal executive office, and all notices or
communications by the Company to the Participant may be given to the Participant
personally or may be mailed to him at his address as recorded in the records of
the Company.

 

11.           Non-Qualified Stock Options.  The Options granted hereunder are
not intended to be incentive stock options within the meaning of Section 422 of
the Code.

 

12.           Binding Effect.  Subject to Section 6 hereof, this Agreement shall
be binding upon the heirs, executors, administrators and successors of the
parties hereto.

 

13.           Governing Law.  This Agreement shall be construed and interpreted
in accordance with the laws of the State of New York without regard to its
conflict of law principles.

 

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14.           Plan.  The terms and provisions of the Plan are incorporated
herein by reference, and the Participant hereby acknowledges receiving a copy of
the Plan.  In the event of a conflict or inconsistency between the terms and
provisions of the Plan and the provisions of this Agreement, this Agreement
shall govern and control.  All capitalized terms not defined herein shall have
the meaning ascribed to them as set forth in the Plan.  Notwithstanding anything
herein or in the Plan to the contrary, the provisions of Section 15 of the Plan
shall not apply to the Participant.

 

15.           Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by the Participant or the Company to the Committee
for review.  The resolution of such a dispute by the Committee shall be binding
on the Company and the Participant.

 

16.           No Right to Continued Employment.  Nothing in this Agreement shall
be deemed by implication or otherwise to impose any limitation on any right of
the Company to terminate the Participant’s employment.

 

17.           Severability.  Every provision of this Agreement is intended to be
severable and any illegal or invalid term shall not affect the validity or
legality of the remaining terms.

 

18.           Headings.  The headings of the Sections hereof are provided for
convenience only and are not to serve as a basis for interpretation of
construction, and shall not constitute a part of this Agreement.

 

19.           Signature in Counterparts. This Agreement may be signed in
counterparts, each of which shall be deemed an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.

 

 

 

AVENTINE RENEWABLE ENERGY HOLDINGS, INC.

 

 

 

 

 

By:

 

 

Name:

Thomas Manuel

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

PARTICIPANT

 

 

 

 

 

 

 

By:

 

 

Name: John Castle

 

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ANNEX A

 

[PERFORMANCE CRITERIA]

 

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