Document:

Exhibit
10.20

 

HAWKEYE INTERMEDIATE, LLC

UNIT OPTION PLAN

EFFECTIVE AS OF  JULY 7, 2006

 

 

 

 

HAWKEYE INTERMEDIATE, LLC

UNIT OPTION PLAN

SECTION 1.         PURPOSE.

The purpose of the Plan is to attract and retain the best available
personnel, to provide additional incentive to persons who provide services to
the Company or its affiliates, and to promote the success of the Company’s
business.  Consistent with these
objectives, the Plan authorizes the granting of Options to acquire limited liability
company units in the Company represented by Units pursuant to the terms and
conditions set forth herein.  Capitalized
terms used herein are defined in Section 11 herein.

 

SECTION 2.         ADMINISTRATION.

a.     Committees.  The Plan shall be administered
by the Board of Managers of the Company or, at its election, by one or more
Committees consisting of one or more members who have been appointed by the
Board of Managers.  Each Committee shall
have such authority and be responsible for such functions as may be delegated
to it by the Board of Managers, and any reference to the Board of Managers in
the Plan shall be construed as a reference to the Committee (if any) to whom
the Board of Managers has delegated the relevant function.  If no Committee has been appointed, the
entire Board of Managers shall administer the Plan.

b.     Authority of the Board of Managers. 
The Board of Managers shall have full authority and discretion to take
any actions it deems necessary or advisable for the administration and
operation of the Plan, including a review of any decision, interpretation or
other action by a Committee.  All
decisions, interpretations and other actions of the Board of Managers or, in
the absence of any action by the Board of Managers, any Committee shall be
final and binding on all Participants and other persons deriving their rights
from a Participant.  Without limiting the generality of the foregoing,
the Board of Managers may, in its sole discretion, clarify, construe or resolve
any ambiguity in any provision of the Plan or any Option Agreement, accelerate
vesting or exercisability of Options, extend the term or period of
exercisability of any Options, modify the Purchase Price or Exercise Price
under any Option, or waive any terms or conditions applicable to any Options.

SECTION 3.         UNITS SUBJECT TO
PLAN.

a.     Basic Limitation.  The equity
securities to be subject to Options granted under the Plan shall be membership
interests in the Company represented by Units. The aggregate number of Units
that may be issued under the Plan (upon exercise of Options) shall not exceed 1,516,667
Units.  The number of Units is subject to
adjustment pursuant to Section 7 herein. 
The number of Units that are subject to Options outstanding at any time
under the Plan shall not exceed the number of Units that then remain available
for issuance under the Plan.

b.     Additional Units.  In the event
that any outstanding Option expires, is cancelled or otherwise terminated, the Units
allocable to the unexercised portion of such Option shall again be available

 

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 for the purposes of the Plan.  In the event that Units issued under the Plan
are reacquired by the Company at a price less than Fair Market Value pursuant
to any forfeiture provision or right of repurchase, such Units shall again be
available for the purposes of the Plan. 
In the event a Participant pays for any Option through the delivery of
previously acquired Units, the number of Units available shall be increased by
the number of Units surrendered by the Participant.

SECTION 4.         GENERAL TERMS.

a.     Eligibility.  The Board of
Managers is authorized to grant Options to Employees, Managers and Consultants.

b.     Nontransferability.  Each Option
granted under the Plan to a participant (other than stock for which there are
no transfer restrictions) shall not be transferable otherwise than by will or
the laws of descent and distribution, and shall be exercisable, during the
participant’s lifetime, only by the participant. In the event of the death of a
participant, each Option theretofore granted to him or her shall be exercisable
during such period after his or her death as the Committee shall in its
discretion set forth in the Option Agreement at the date of grant and then only
by the executor or administrator of the estate of the deceased participant or
the person or persons to whom the deceased participant’s rights under the
Option shall pass by will or the laws of descent and distribution.
Notwithstanding the foregoing, at the discretion of the Committee, an award of
a Option may permit the transferability of a Option by a participant solely to
the participant’s spouse, siblings, parents, children and grandchildren or
trusts for the Option of such persons or partnerships, corporations, limited
liability companies or other entities owned solely by such persons, including
trusts for such persons, subject to any restriction included in the award of
the Option..

c.     Restrictions on Transfer of Units.  Any Units
issued under the Plan shall be subject to such vesting and special forfeiture
conditions, rights of first offer and other transfer restrictions as the Board
of Managers may determine.  Such
restrictions shall be set forth in the applicable Option Agreement, and shall
apply in addition to any restrictions that may apply to holders of Units
generally.

d.     Withholding Requirements.  As a
condition to the purchase of Units pursuant to the exercise of an Option, a
Participant shall make such arrangements as the Board of Managers may require
for the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such receipt or purchase.  The Participant shall also make such
arrangements as the Board of Managers may require for the satisfaction of any
federal, state, local or foreign withholding obligations that may arise in
connection with the disposition of Units acquired by exercising an Option.

e.     No Retention Rights.  Nothing in
the Plan or in any Option granted under the Plan shall confer upon a
Participant any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Company
(or any Subsidiary employing or retaining the Participant) or of the
Participant, which rights are hereby expressly reserved by each, to terminate
his or her Service at any time and for any reason, with or without Cause.

 

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SECTION 5.         OPTIONS.

a.     Option Agreement.  Each grant of
an Option under the Plan shall be evidenced by an Option Agreement between the
Participant and the Company.  Such Option
shall be subject to all applicable terms and conditions of the Plan and may be
subject to any other terms and conditions which are not inconsistent with the
Plan and which the Board of Managers deems appropriate for inclusion in an
Option Agreement.  The provisions of the
various Option Agreements entered into under the Plan need not be identical.

b.     Number of Units.  Each Option
Agreement shall specify the number of Units that are subject to the Option and
shall provide for the adjustment of such number in accordance with Section 7
herein.

c.     Exercise Price.  Each Option
Agreement shall specify the Exercise Price. 
The Exercise Price shall not be less than one hundred percent (100%) of
the Fair Market Value of a Unit on the date of grant.  The Exercise Price under any Option shall be
determined by the Board of Managers in its sole discretion and the Exercise
Price shall be payable in a form described in Section 6 herein.

d.     Vesting.  Each Option Agreement shall
specify the date and events on which all or any installment of the Option shall
be vested and nonforfeitable (except as provided in the Plan or the Option
Agreement).  The vesting and
nonforfeitability provisions applicable to any Option shall be determined by
the Board of Managers in its sole discretion.

e.     Exercisability.  Each  Option Agreement shall specify the date when
all or any installment of the Option is to become exercisable.  The exercisability provisions of any Option
Agreement shall be determined by the Board of Managers in its sole discretion.

f.      Basic Term.  The  Option Agreement shall specify the term of
the Option.  The term shall not exceed 10
years from the date of grant.  Subject to
the preceding sentence, the Board of Managers at its sole discretion shall
determine when an Option is to expire.

g.     Termination of Service (Except for Cause).  Except
as set forth in the Option Agreement, if a Participant’s Service terminates for
any reason other than for Cause, then the Participant’s Options shall expire on
the earliest of the following occasions:

(i)                   The expiration date determined pursuant
to Subsection (f) above;

(ii)                The date sixty (60) days after the
termination of the Participant’s Service for any reason other than death or
Disability or for Cause (or such later date as the Board of Managers may
determine);

(iii)             The date six (6) months after the
termination of the Participant’s Service by reason of Disability (or such later
date as the Board of Managers may determine);

(iv)       The date twelve (12) months after the termination of
the Participant’s Service due to the Participant’s death; or

 

 

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(v)         The date of termination of the Participant’s Service
if such termination is for Cause.

 

A
Participant (or in the case of the Participant’s death or Disability, the
Participant’s representative) may exercise all or part of the Participant’s
Options at any time before the expiration of such Options under the preceding
sentence, but only to the extent that such Options had become exercisable for
vested Units on or before the date Participant’s Service terminates   The balance
of such Options shall lapse when the Participant’s Service terminates.

h.     Leaves of Absence.  For purposes
of this Section, Service shall be deemed to continue while the Participant is
on a bona fide leave of absence, if such leave was approved by the Company in
writing or if continued crediting of Service for this purpose is expressly
required by the terms of such leave or by applicable law (as determined by the
Company).

i.      No Rights as a Unitholder.  A
Participant, or a transferee of a Participant, shall have no rights as a unitholder
with respect to any Units covered by the Participant’s Option until such person
becomes entitled to receive such Units by filing a notice of exercise, paying
the Purchase Price pursuant to the terms of such Option, becoming a signatory
to the LLC Agreement provided by the Board of Managers and satisfying such
other conditions as the Board of Managers shall reasonably require.

j.      Modification, Extension and Assumption of Options. 
Within the limitations of the Plan, the Board of Managers may modify or
extend outstanding Options or may provide for the cancellation of outstanding
Options in return for the grant of new Options for the same or a different
number of Units and at the same or a different Exercise Price.

SECTION 6.         PROCEDURE FOR
EXERCISE.

a.     General Rule.  The Purchase
Price of Units issued under the Plan shall be payable in cash or by check at
the time when such Units are purchased, except as otherwise provided in this
Section 6 herein.

b.     Surrender of Units.  At the sole
discretion of the Board of Managers, all or any part of the Purchase Price and
any applicable withholding requirements may be paid by surrendering, or
attesting to the ownership of, Units that are already owned by the
Participant.  Such Units shall be
surrendered to the Company in good form for transfer and shall be valued at
their Fair Market Value on the date when the Option is exercised.

c.     Transfer Restrictions.  Units
acquired upon exercise of an Option shall be subject to the terms and conditions
of the LLC Agreement and may not be sold, assigned or otherwise transferred in
any manner except as set forth in the LLC Agreement.

d.     Exercise of Discretion.  Should the
Board of Managers exercise its discretion to permit the Participant to exercise
the Option in whole or in part in accordance with Subsection (b) above, it
shall not be bound to permit such alternative exercise for the remainder of any
such Option or with respect to any other Option or Participant under the Plan.

 

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SECTION 7.         ADJUSTMENT OF
UNITS.

a.     General.  In the event of a subdivision
of the outstanding Units, a combination or consolidation of the outstanding Units
into a lesser number of Units, a recapitalization, a spin-off, a
reclassification, initial public offering, or a similar occurrence, the Board
of Managers shall make appropriate adjustments in one or more of (i) the
number and kind of Units or other securities available under Section 3 herein
for future Option grants, (ii) the number and kind of Units covered by
each outstanding Option, (iii) the Exercise Price of each outstanding
Option under the Plan.

b.     Dispositions, Mergers and Consolidations.  In
the event the Company is a party to a merger or consolidation or similar
transaction, the Committee is authorized to make adjustments in the terms and
conditions of outstanding Options, including, without limitation:

(i)                                     the continuation or assumption of such
outstanding Options under the Plan by the Company (if it is the surviving
corporation) or by the surviving corporation or its parent;

(ii)                                  the substitution by the surviving
corporation or its parent of options with substantially the same terms for such
outstanding Options;

(iii)                               the acceleration of the vesting of or right
to exercise such outstanding Options immediately prior to or as of the date of
the merger or consolidation, and the expiration of such outstanding Options to
the extent not timely exercised by the date of the merger or consolidation or
other date thereafter designated by the Board of Managers; or

(iv)                              the cancellation of all or any portion of
such outstanding Options by a cash payment of the excess, if any, of the fair
market value of the Units subject to such outstanding Options or portion
thereof being canceled over the Purchase Price with respect to such Options or
portion thereof being canceled.

c.     Reservation of Rights.  Except as
provided in this Section 7 herein, neither a Participant nor a Participant’s
representative shall have any rights by reason of (i) any subdivision or
consolidation of units of any class, (ii) the payment of any distribution or
(iii) any other increase or decrease in the number of units of any class.  Any issuance by the Company of units of any
class, or securities convertible into units of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Units subject to an Option. 
The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.

SECTION 8.         SECURITIES LAW
REQUIREMENTS.  UNITS SHALL NOT BE ISSUED
UNDER THE PLAN UNLESS THE ISSUANCE AND DELIVERY OF SUCH UNITS COMPLY WITH (OR
ARE EXEMPT FROM) ALL APPLICABLE REQUIREMENTS OF LAW, INCLUDING (WITHOUT
LIMITATION) THE SECURITIES ACT OF 1933, AS AMENDED, THE RULES AND REGULATIONS
PROMULGATED THEREUNDER, STATE SECURITIES LAWS AND REGULATIONS, AND THE
REGULATIONS OF

 

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 ANY STOCK EXCHANGE OR OTHER
SECURITIES MARKET ON WHICH THE COMPANY’S SECURITIES MAY THEN BE TRADED.  THE COMPANY SHALL NOT BE OBLIGATED TO FILE
ANY REGISTRATION STATEMENT UNDER ANY APPLICABLE SECURITIES LAWS TO PERMIT THE
PURCHASE OR ISSUANCE OF ANY UNITS UNDER THE PLAN, AND ACCORDINGLY ANY
CERTIFICATES FOR UNITS MAY HAVE AN APPROPRIATE LEGEND OR STATEMENT OF
APPLICABLE RESTRICTIONS ENDORSED THEREON. 
EACH PARTICIPANT AND ANY PERSON DERIVING ITS RIGHTS FROM ANY PARTICIPANT
SHALL, AS A CONDITION TO THE PURCHASE OR ISSUANCE OF ANY UNITS UNDER THE PLAN,
DELIVER TO THE COMPANY AN AGREEMENT OR CERTIFICATE CONTAINING SUCH
REPRESENTATIONS, WARRANTIES AND COVENANTS AS THE COMPANY MAY DEEM NECESSARY OR
APPROPRIATE TO ENSURE THAT THE ISSUANCE OF UNITS IS NOT REQUIRED TO BE
REGISTERED UNDER ANY APPLICABLE SECURITIES LAWS.

SECTION 9.         DURATION AND
AMENDMENTS.

a.     Term of the Plan.  The Plan, as
set forth herein, shall become effective on the date of its adoption by the
Board of Managers.

b.     Right to Amend or Terminate the Plan. 
The Board of Managers may amend, suspend or terminate the Plan at any
time and for any reason.  No Units shall
be issued under the Plan after the termination thereof, except upon exercise of
an Option granted prior to such termination.

SECTION 10.       SECTION 409A OF
THE CODE

Notwithstanding anything herein or in any Option Agreement to the contrary,
this Plan and any Option shall be interpreted in accordance with Section 409A
of the Code, Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other
guidance that may be issued after the effective date of the Plan.  Notwithstanding any provision of the Plan or
an Option Agreement to the contrary, in the event that the Board of Managers
determines that the Plan and/or Option are subject to Section 409A of the Code,
the Board of Managers may, in its sole discretion and without a participant’s
prior consent, amend the Plan and/or Option, adopt policies and procedures, or
take any other actions (including amendments, policies, procedures and actions
with retroactive effect) as are necessary or appropriate to (a) exempt the Plan
and/or any Option from the application of Section 409A of the Code, (b)
preserve the intended tax treatment of any such Option, and (c) comply with the
requirements of Section 409A of the Code, including any regulations or other
interpretive guidance that may be issued after the grant of any Option.   Notwithstanding the foregoing, neither the
Board of Managers nor the Company is obligated to ensure that Options comply
with Section 409A of the Code or to take any actions to ensure such compliance.

SECTION 11.               DEFINITIONS.

a.     “Affiliate” of any particular Person
means any other Person controlling, controlled by or under common control with
such particular Person or, with respect to any individual, such individual’s
spouse and descendants (whether natural or adopted) and any trust, partnership,

 

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 limited liability company or similar vehicle
established and maintained solely for the benefit of (or the sole members or
partners of which are) such individual, such individual’s spouse and/or such
individual’s descendants.

b.     “Cause” shall mean, with respect to
the Employer of Participant, (a) the admission, confession, or plea bargain to
or conviction in a court of law of any felony or other crime involving moral
turpitude or the commission by the Participant of any other act or any omission
to act involving dishonesty, disloyalty or fraud, involving the Company which
is material; (b) engaging in conduct that is demonstrably and materially
injurious to the business, reputation, character, or community standing of the
Employer (c) continued material failure to perform the material duties of the Participant’s
employment for 15 days after written notice from the Employer to the Participant
providing a detailed description of the failure constituting cause; (d) gross
negligence or willful misconduct with respect to the Employer that is
demonstrably and materially injurious to the Company; or (e) breach of any restrictive
covenant with the Employer not cured within 15 days of written notice from the
Employer to the Participant providing a detailed description of the activities
constituting Cause (or if the Participant’s employment with an Employer is
pursuant to an employment agreement at the time of his termination of
employment, then Cause shall be as defined in such employment agreement).

c.     “Change of Control” shall mean the
consummation of a transaction, whether in a single transaction or in a series
of related transactions that are consummated contemporaneously (or consummated
pursuant to contemporaneous agreements), with any other party or parties, other
than an Affiliate of THL, on an arm’s-length basis, pursuant to which (a) a
party or group (as defined under Rule 13d under the Securities Exchange Act of
1934, as amended) who is not a unitholder of the Company on the Effective Date,
acquires, directly or indirectly (whether by merger, stock purchase,
recapitalization, reorganization, redemption, issuance of capital stock or
otherwise), more than 50% of the voting power of the Company or otherwise
becomes entitled to designate a majority of the members of the Company’s Board,
or (b) such party or parties, directly or indirectly, acquire assets
constituting all or substantially all of the assets of the Company and its
subsidiaries on a consolidated basis.

d.     “Code” shall mean the Internal Revenue Code of 1986, as amended.

e.     “Committee” shall mean a committee of the Board of Managers, as
described in Section 2(a) herein.

f.      “Company” shall mean Hawkeye Intermediate, LLC, a Delaware limited
liability company.

g.     “Consultant” shall mean a person who performs bona fide services
for the Company or a  Subsidiary as a
consultant or advisor, excluding Employees and Managers.

h.     “Disability” shall mean any physical or
mental disability of the Participant rendering the Participant unable to
perform the duties of his employment for a period of at least 120 days out of
any twelve-month period.  Any
determination of Disability shall be made by the Board in consultation with a
qualified physician or physicians selected by the Board and reasonably
acceptable to the Participant.

 

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i.      “Employee” shall mean an individual who is a common-law employee
of the Company or a Subsidiary.

j.      “Employer” means the Company and its
subsidiaries and at all times includes Hawkeye Renewables, LLC and Hawkeye
Holdings, Inc. and their subsidiaries and shall also include any successor to
the Company after a Change of Control.

k.    “Exercise Price” shall mean the amount for which one Unit may
be purchased upon exercise of an Option, as specified by the Board of Managers
in the applicable Option Agreement.

l.      “Fair
Market Value” shall be determined by the Board in good faith.

m.    “Good
Reason” means:  (i) a material
diminution in or assignment of duties inconsistent with Participant’s position
prior to the date of this Agreement or a change in the Participant’s direct
reporting relationship, provided, however, that a change in title shall not
itself be considered a material diminution; (ii) a reduction in base salary or
a reduction in any annual bonus (it being understood that the failure to
receive an annual bonus or a reduced annual bonus due to failure to meet
applicable performance targets shall not be considered a reduction in annual
bonus hereunder); (iii) if the Participant’s employment with an Employer is
pursuant to an employment agreement at the time of his termination of
employment, then Good Reason shall be as defined in such employment agreement;
or (iv) any material breach of the Securityholders’ Agreement, the IPO Corp.
Securityholders’ Agreement or the LLC Agreement by the Company which is not
cured within 15 days after written notice of such breach is provided by
Executive to the Company.

n.     “IPO
Corp. Securityholders’ Agreement”  means the Hawkeye Holdings, Inc.
Securityholders’ Agreement to be entered into among Hawkeye Holdings, Inc. and
certain securityholders of IPO Corp., as amended, modified or supplemented from
time to time.

o.     “LLC Agreement” means that
certain Amended and Restated Limited Liability Company Agreement of the Company
dated June 30, 2006 by and among the Company, Hawkeye Holdings, L.L.C., certain
Affiliates of THL and the other parties thereto.

p.     “Manager” shall mean a member of the Board of Managers who is not an Employee.

q.     “Option” shall mean an Option granted under the Plan and entitling the holder to
purchase Units at such time or times as set forth in the Plan or Option
Agreement.

r.     Option Agreement” shall mean the agreement between the
Company and a Participant which contains the terms, conditions and restrictions
pertaining to the Participant’s Option.

s.     “Participant” shall mean an individual to whom the Board of Managers
in its sole discretion may designate from time to time to receive an Option
under the Plan.

t.      “Person” shall be construed broadly
and shall include, without limitation, an individual, a partnership, an
investment fund, a limited liability company, a corporation, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization
and a governmental entity or any department, agency or political subdivision
thereof.

 

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u.     “Plan” shall mean this Hawkeye Intermediate, LLC Unit Option Plan.

v.     “Purchase Price” shall mean the Exercise Price multiplied by the number
of Units with respect to which an Option is being exercised.

w.    “Securityholders Agreement” means the
Limited Liability Securityholders Agreement dated June 30, 2006 between the
Company and certain securityholders of the Company, as amended, modified or
supplemented from time to time.

x.     “Service” shall mean service as an Employee, Manager or Consultant.

y.     “Subsidiary” shall mean any person of which a majority of the outstanding voting securities or
other equity interests are owned, directly or indirectly, by the Company.

z.     “THL” means Thomas
H. Lee Equity Fund VI, L.P., a Delaware limited partnership, and its Affiliates.

aa.   “Transfer” means the
sale, transfer, assignment, pledge or other disposal (whether with or without
consideration and whether voluntarily or involuntarily or by operation of law)
of the Option; provided, that a Transfer does not include any portion of the
Option that has vested in accordance with the terms of this Agreement.

bb.   “Unit” shall mean Class A Common Units of the Company, as
defined in the LLC Agreement.

SECTION 12.       MISCELLANEOUS.

a.     Choice of Law. 
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of  Delaware, as
such laws are applied to contracts entered into and performed in such State.

b.     Execution.  To record the
adoption of the Plan by the Board of Managers, the Company has caused its
authorized officer to execute the same.

	
   

  	
  Hawkeye Intermediate, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  

 

9Exhibit 10.21

 

 

Hawkeye Intermediate, LLC

Unit Option Plan

Option Agreement

 

THIS OPTION AGREEMENT (the “Agreement”) is
entered into as of July 7, 2006 by and among Hawkeye Intermediate, LLC, a
Delaware limited liability company (the “Company”), Hawkeye Holdings,
Inc., a Delaware corporation (“IPO Corp.”), and the employee of the Company or one of its
subsidiaries set forth on the signature page hereto (“Optionee”)
pursuant to the Hawkeye Intermediate, LLC Unit Option Plan (the “Plan”).  Certain capitalized terms used herein are
defined in Section 9.

 

WHEREAS, the Company
believes it to be in the best interests of the Company and its unitholders to
take action to promote work-force stability, to reward performance and
otherwise align interests of key management employees with those of the
Company;

WHEREAS, accordingly the
Company has determined to issue options to acquire Class A Common Units of the
Company (the “Units”) in accordance with the provisions of this
Agreement and the Plan; and

WHEREAS, after the
Conversion (as defined below) it is intended that the provisions of this
Agreement shall continue to apply to the common stock of IPO Corp. received in
the Conversion and be subject to such successor option plan of IPO Corp.

NOW, THEREFORE, in
consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

SECTION 1.  GRANT OF OPTION.

(a)   Option.  On the terms and conditions set forth in this
Agreement, the Company grants to the Optionee on the Grant Date (as set forth
below) the following option to purchase a number of Units at the Exercise Price,
as set forth below (the “Option”):

	
  Grant Date

  	
   

  	
  July 7, 2006

  
	
  Expiration Date

  	
   

  	
  July 7, 2016

  
	
  Number of Units Subject to Option

  	
   

  	
   

  
	
  Exercise Price

  	
   

  	
  $1.00

  

 

(b)   Vesting. 
The Option shall vest as follows:

                (i)            Vesting in General.

(A)          Fifty percent (50%)
of the Units granted under this Agreement (the “Time Units”) will vest
in forty-eight (48) equal installments on the last day of 

 

 

each
calendar month occurring after the date of this Agreement; provided, that the Optionee
is an employee, whether at-will or otherwise, of an Employer on such date.

(B)           Fifty percent (50%) of the Units granted
under this Agreement (the “Time-Performance Units”) will vest in sixty
(60) equal  installments on the last day
of each calendar month occurring after the date of this Agreement; provided,
that the Optionee is an employee, whether at-will or otherwise, of an
Employer on such date; further  provided  that, no such
Time-Performance Units will be considered vested unless THL has previously
(together with any proceeds to be received concurrently at the time of
determination) received in cash proceeds (the “Return”) either as
distributions with respect to, or from the sale or disposition of, THL’s
initial equity investment in the Company and any subsequent equity investments
in the Company (the “Investment”) (excluding any management or
transaction fees or expenses but including any amounts received by THL in
respect of the cash savings, if any, in U.S. federal income or Iowa franchise
taxes as a result of the increase in tax basis of the Company’s assets as a
result of the acquisition of the Company’s interests by THL as the date hereof
and any other payment made to THL under Section 3.6(b) of the Securityholders’
Agreement) an amount equal to 200% of THL’s Investment (the “Return Hurdle”).

(C)           Notwithstanding the
foregoing, if the Optionee’s employment is terminated by an Employer for Cause,
by the Optionee without Good Reason, or due to death or Disability within 18
months of the date of Grant Date, no portion of the Option shall be deemed
vested.

(ii)           Vesting Upon a Change of Control.  Notwithstanding Section 1(b)(i):

(A)          all Time Units that have not
previously vested will become vested upon a Change of Control; and

(B)           all Time-Performance Units that have
not previously vested will vest in full upon a Change of Control if the Return
Hurdle has been met.  In the event of a
Change of Control in which all or a portion of the consideration payable to the
Company’s equityholders is in the form of equity securities, the value of the
equity securities will be included in the calculation of whether the Return
Hurdle has been met.  If the Return
Hurdle has not been met, then that number of Time-Performance Units that have
not previously vested will vest as follows: 
(i) the total number of unvested Time-Performance Units multiplied
by (ii) the Percentage.  The
Percentage shall equal the following number, expressed as a percentage:  (x) 0.5 multiplied  by (y)
the percentage by which the Return exceeds 100% of THL’s Investment.

For purposes of illustration only, if the Return was
150%, then the Time-Performance Units would be 25% vested, and if the Return
was 110%, then the Time-Performance Units would be 5% vested.

 

2

 

(iii)          Vesting Upon Death or Disability.  Except as otherwise provided herein, vesting
ceases upon termination of employment with an Employer.  Notwithstanding Section 1(b)(i), in the
event the Optionee’s employment with an Employer, whether at will or otherwise,
is terminated by reason of death or Disability, then the time-based vesting of
the Option shall be accelerated by one year such that the applicable date of
termination for vesting shall be deemed to be one year after the actual date of
termination.

(c)   Transfers of Employment Among
Employers.  For
purposes of this Agreement, any transfer of the Optionee’s employment from one
Employer to another Employer shall not constitute a termination of employment
with an Employer.

(d)   Unit Option Plan and
Defined Terms.  The Option is
granted under and subject to the terms of the Plan, which is incorporated
herein by this reference.  Unless
otherwise defined herein, capitalized terms shall have the meanings ascribed to
such terms in the Plan.

(e)   Securityholders’ Agreement;
LLC Agreement.  The Option may
not be exercised unless the Optionee shall have executed the Securityholders’
Agreement and the LLC Agreement.

SECTION 2.  REPURCHASE OR FORFEITURE OF OPTION.

(a)   In the event that the Optionee ceases to be an
employee, whether at-will or otherwise, of an Employer, then those portions of
the Option which are not then vested in accordance with Section 1 hereof, will
be forfeited and returned to the Company.

(b)   In the event the Optionee ceases to be an employee of
an Employer by reason of termination by an Employer for Cause, then portions of
the Option which are vested in accordance with Section 1 hereof, will be
forfeited and returned to the Company.

(c)    In the event the Optionee ceases to be an
employee of an Employer (other than by reason of termination by an Employer for
Cause), then portions
of the Option which are vested in accordance with Section
1 hereof will be
subject to repurchase by the Company, at the Company’s option (the “Repurchase
Option”), for Fair Market Value.  The
Repurchase Option shall terminate upon the Company’s or IPO Corp.’s initial
Public Offering (as defined in the Securityholders’ Agreement).

(d)   The Repurchase Option shall be exercised by the
Company, or its designee, from time to time, with respect to portions of the
Option which are vested within 270 days after the date of termination by
delivering to the Optionee a written notice of exercise and a check in the
amount of the Fair Market Value, if applicable, determined as of the date the
Optionee ceased to be employed by an Employer. 
Upon delivery of such notice and payment of the purchase price as
described above (or automatically upon any forfeiture of the Option pursuant to
Section 2(a) or (b), the Company, or its designee, shall become the legal and
beneficial owner of the Option being repurchased and all rights and interest
therein or related thereto, and the Company, or its designee, shall have the
right to Transfer to its own name that portion of the Option being repurchased
without further action by the Optionee or any of his or her transferees.  If the Company or its designee elects to
exercise the Repurchase Option pursuant to this Section 2 and the Optionee
or his or her transferee fails to deliver the Option in accordance with the
terms

 

3

 

hereof, the
Company, or its designee, may, at its option, in addition to all other remedies
it may have, deposit the purchase price in an escrow account administered by an
independent third party (to be held for the benefit of and payment over to the
Optionee or his or her transferee in accordance herewith), whereupon (or, in
any case, upon any forfeiture of any portion of the Option pursuant to this
Section 2) the Company shall by written notice to the Optionee cancel on its
books such portion of the Option registered in the name of the Optionee and all
of the Optionee’s or his or her transferee’s right, title, and interest in and
to such portion of the Option shall terminate in all respects; provided that
the Company shall instruct the escrow agent to release the purchase price to
the Optionee immediately following the Optionee’s or his or her transferee’s
written acknowledgement that the Optionee’s or his or her transferee’s right,
title and interest in and to such Option has been terminated in all respects.

(e)   Notwithstanding the foregoing,
if at any time the Company elects to repurchase any portion of the Option
pursuant to the Repurchase Option, the Company shall pay the purchase price for
the portion of the Option it purchases (i) first, by offsetting
indebtedness, if any, owing from the Optionee to the Company and (ii) then, by
the Company’s delivery of cash for the remainder of the purchase price, if any,
against delivery of the certificates or other instruments representing the portion
of the Option so purchased, duly endorsed; provided  that, (x) if
any such cash payment at the time such payment is required to be made would
result (A) in a violation of any law, statute, rule, regulation, policy,
order, writ, injunction, decree or judgment promulgated or entered by any
federal, state, local or foreign court or governmental authority applicable to
the Company or any of its subsidiaries or any of its or their property or
(B) after giving effect thereto, in a Financing Default, or (y) if the
Board determines in good faith that immediately prior to such purchase there
shall exist a Financing Default which prohibits such purchase ((x) and (y)
collectively the “Cash Deferral Conditions”), the portion of the cash
payment so affected may be made by the Company’s delivery of a promissory note
or senior preferred units of the Company with a liquidation preference equal to
the balance of the purchase price.  The
promissory note or senior preferred units shall accrue interest or yield, as
the case may be, annually at the “prime rate” published in The Wall Street
Journal on the date of issuance, which interest or yield, as the case may be,
shall be payable at maturity.  The value
of each such senior preferred unit shall as of its issuance be deemed to equal
(A) the portion of the cash payment paid by the issuance of such preferred
units divided by (B) the number of senior preferred units so issued.  Any senior preferred units or the promissory note shall be redeemed or payable when and
to the extent the Cash Deferral Condition which prompted their issuance no longer
exists.  The Company shall use its
reasonable best efforts to cause any Cash Deferral Conditions to be resolved.

(f)    In the event that all or a
portion of the Option is repurchased or forfeited pursuant to this Section 2,
the Optionee and his or her successors, assigns or representatives shall take
(at the Company’s expense) all steps necessary and desirable to obtain all
required third-party, governmental and regulatory consents and approvals
and take all other actions necessary and desirable to facilitate consummation
of such repurchase in a timely manner.

 

4

 

SECTION 3.  TRANSFER OR ASSIGNMENT OF OPTION.

(a)   Generally.  This Option shall be exercisable during the
Optionee’s lifetime, only by the Optionee. 
Except as otherwise provided in Section 3(b) below, the Option and the
rights and privileges conferred hereby shall not be sold, pledged or otherwise
Transferred (whether by operation of law or otherwise) other than by will or
the laws of descent and distribution and shall not be subject to sale under
execution, attachment, levy or similar process.

(b)   Permitted Transfers.  Subject to the approval of the Board of
Managers, the Optionee shall be permitted to Transfer the Option, in connection
with his or her estate plan, to the Optionee’s spouse, siblings, parents,
children and grandchildren or trusts for the benefit of such Persons or
partnerships, corporations, limited liability companies or other entities owned
solely by such Persons, including trusts for such Persons.

SECTION 4.  EXERCISE PROCEDURES.

(a)   Notice of Exercise.  The Optionee or the Optionee’s representative
may exercise the Option, to the extent vested, by giving written notice to the
Company, in a form provided by the Committee, specifying the election to
exercise the Option, the number of Units for which it is being exercised and
the form of payment.  The notice of exercise
shall be signed by the Person exercising the Option.  In the event that the Option is being
exercised by the Optionee’s representative, the notice shall be accompanied by
proof (satisfactory to the Company) of the representative’s right to exercise the
Option.  The Optionee or the Optionee’s
representative shall deliver to the Company, at the time of giving the notice,
payment in a form permissible under Section 5 herein for the full amount of the
Purchase Price.

(b)   Signatory to LLC Agreement
and Securityholders’ Agreement. 
As a condition precedent to the exercise of the Option, pursuant to
procedures established by the Committee and the Board of Managers, the Optionee
shall become a signatory to the LLC Agreement and the Securityholders’
Agreement, respectively, and satisfy such other conditions as the Board of
Managers shall reasonably require.

(c)   Issuance of Units.  After satisfying all requirements with
respect to the exercise of the Option, the Company shall cause to be issued a
certificate or certificates for the Units as to which the Option has been
exercised, registered in the name of the Person exercising the Option (or in
the names of such Person and his or her spouse as community property or as
joint tenants with right of survivorship).

(d)   Withholding Requirements.  The Company may withhold any tax (or other
governmental obligation) as a result of the exercise of the Option, as a
condition to the exercise of the Option, and the Optionee shall make
arrangements satisfactory to the Company to enable it to satisfy all such
withholding requirements.

SECTION 5.  PAYMENT FOR UNITS.

(a)   Purchase Price.
The Purchase Price shall mean the Exercise Price multiplied by the number of Units
with respect to which the Option is being exercised.

 

5

 

(b)   Cash or Check.  All or part of the Purchase Price may be paid
in cash or by personal check.

(c)   Other Methods of Payment
for Units.  At the sole
discretion of the Board of Managers, all or any part of the Purchase Price and
any applicable withholding requirements may be paid by any other method
permissible under the terms of the Plan. 
The Company shall notify the Optionee if and when it shall make such
other payment method available to the Optionee.  Should the Board of Managers exercise its
discretion to permit the Optionee to exercise the Option in whole or in part in
accordance with this Section 5(c), it shall have no obligation to permit such
alternative exercise with respect to the remainder of the Option or with
respect to any other option to purchase Units held by the Optionee.

SECTION 6.  TERMINATION OF SERVICE.

(a)   Termination of Service.  If the Optionee’s Service terminates for any
reason, then the exercise period for the Option shall expire on the earliest of
the following occasions (or such later date as the Committee may determine):

(i)            The
Expiration Date as set forth in Section 1(a) above;

(ii)           The
date that is sixty (60) days after the termination of the Participant’s Service
for any reason other than death or Disability of for Cause;

(iii)          The
date that is six (6) months after the termination of the Participant’s Service
by reason of Disability; or

(iv)          The
date that is twelve (12) months after the termination of the Participant’s
Service due to the Participant’s death; or

(v)           The
date of termination of the Optionee’s Service if such termination is for Cause.

The Optionee (or in the case of the Optionee’s death
or Disability, the Optionee’s representative) may exercise all or part of the
Option at any time before its expiration, but only to the extent that the
Option had become exercisable for vested Units.  Upon the Optionee’s termination of Service for
any reason, the Option shall expire immediately with respect to the number of Units
for which the Option is not yet vested.

(b)   Leaves of Absence.  For any purpose under this Agreement, Service
shall be deemed to continue while the Optionee is on a bona fide leave of
absence, if such leave was approved by the Company in writing or if continued
crediting of Service for such purpose is expressly required by the terms of
such leave (as determined by the Committee) or by applicable law.

SECTION 7.  ADJUSTMENT OF UNITS.

Any adjustments to the
Option shall be made in accordance with the terms of the Plan.

 

6

 

SECTION 8.  INITIAL PUBLIC OFFERING.

Notwithstanding the foregoing, upon the Conversion, the Option shall be
exchanged for a nonqualified option to purchase shares of IPO Corp. and the terms of
this Agreement, including, without limitation, all vesting and forfeiture
provisions, will continue to apply to such nonqualified option to purchase
shares of IPO Corp. received in exchange for the Option.

 

SECTION 9.  DEFINITIONS.

The following terms shall have the meanings ascribed
below:

“Affiliate” of any
particular Person means any other Person controlling, controlled by or under common
control with such particular Person or, with respect to any individual, such
individual’s spouse and descendants (whether natural or adopted) and any trust,
partnership, limited liability company or similar vehicle established and
maintained solely for the benefit of (or the sole members or partners of which
are) such individual, such individual’s spouse and/or such individual’s
descendants.

“Board” means the Board of Managers of the
Company and, after the Conversion, the Board of Directors of IPO Corp.

“Cause” shall mean,
with respect to the Employer of Optionee, (a) the admission, confession, or
plea bargain to or conviction in a court of law of any felony or other crime
involving moral turpitude or the commission by the Optionee of any other act or
any omission to act involving dishonesty, disloyalty or fraud, involving the
Company which is material; (b) engaging in conduct that is demonstrably and
materially injurious to the business, reputation, character, or community
standing of the Employer (c) continued material failure to perform the material
duties of the Optionee’s employment for 15 days after written notice from the
Employer to the Optionee providing a detailed description of the failure
constituting cause; (d) gross negligence or willful misconduct with respect to
the Employer that is demonstrably and materially injurious to the Company; or
(e) breach of any restrictive covenant with the Employer not cured within 15
days of written notice from the Employer to the Optionee providing a detailed
description of the activities constituting Cause (or if the Optionee’s
employment with an Employer is pursuant to an employment agreement at the time
of his termination of employment, then Cause shall be as defined in such
employment agreement).

“Change of Control” shall mean the consummation of a transaction, whether in a single
transaction or in a series of related transactions that are consummated
contemporaneously (or consummated pursuant to contemporaneous agreements), with
any other party or parties, other than an Affiliate of THL, on an arm’s-length
basis, pursuant to which (a) a party or group (as defined under Rule 13d under the Securities Exchange Act of 1934, as amended) who is not a
unitholder of the Company on the Effective Date, acquires, directly or
indirectly (whether by merger, stock purchase, recapitalization,
reorganization, redemption, issuance of capital stock or otherwise), more than
50% of the voting power of the Company or otherwise becomes entitled to
designate a majority of the members of the Company’s Board, or (b) such party
or parties, directly or indirectly, acquire assets constituting all or
substantially all of the assets of the Company and its subsidiaries on a
consolidated basis.

 

7

 

“Conversion” shall
mean the conversion of Class A Common Units of the Company to common stock of
IPO Corp. in accordance with Section 3.6 of the Securityholders Agreement.

“Disability” shall
mean any physical or mental disability of the Optionee rendering the Optionee
unable to perform the duties of his employment for a period of at least 120
days out of any twelve-month period.  Any
determination of Disability shall be made by the Board in consultation with a
qualified physician or physicians selected by the Board and reasonably
acceptable to the Optionee.

“Employer” means the
Company and its subsidiaries and at all times includes Hawkeye Renewables, LLC
and IPO Corp. and their subsidiaries and shall also include any successor to
the Company after a Change in Control.

“Fair Market Value”
shall be determined by the Board in good faith.

“Financing
Default” means any event of default or breach under the Senior Debt
Agreements.

“Good
Reason” means:  (i) a
material diminution in or assignment of duties inconsistent with Optionee’s
position prior to the date of this Agreement or a change in the Optionee’s
direct reporting relationship, provided, however, that a change in title shall
not itself be considered a material diminution; (ii) a reduction in base
salary or a reduction in any annual bonus (it being understood that the failure
to receive an annual bonus or a reduced annual bonus due to failure to meet
applicable performance targets shall not be considered a reduction in annual
bonus hereunder); (iii) if the Optionee’s employment with an Employer is
pursuant to an employment agreement at the time of his termination of
employment, then Good Reason shall be as defined in such employment agreement; or
(iv) any material breach of the Securityholders’ Agreement, the IPO Corp.
Securityholders’ Agreement or the LLC Agreement by the Company which is not
cured within 15 days after written notice of such breach is provided by
Executive to the Company.

“IPO Corp.
Securityholders’ Agreement”  means
the IPO Corp. Securityholders’ Agreement to be executed among Hawkeye Holdings,
Inc. and certain securityholders of IPO Corp., as amended, modified or
supplemented from time to time.

“LLC
Agreement” means that certain Amended and Restated Limited Liability
Company Agreement of the Company dated June 30, 2006 by and among the
Company, Hawkeye Holdings, L.L.C., certain Affiliates of THL and the other
parties thereto, as amended, modified or supplemented from time to
time.

“Person” shall be
construed broadly and shall include, without limitation, an individual, a
partnership, an investment fund, a limited liability company, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.

 

8

“Securityholders
Agreement” means the Limited Liability Securityholders Agreement dated June
30, 2006 between the Company and certain securityholders of the Company, as
amended, modified or supplemented from time to time.

“Senior Debt Agreements”
shall mean (i) that certain
First Lien Credit Agreement dated as of June 30, 2006 (the “First Lien
Credit Agreement”), among the Company, THL-Hawkeye Acquisition LLC, a
Delaware limited liability company (“Merger Sub”), to be merged with and
into Hawkeye Renewables, LLC, a Delaware limited liability company (the “Operating
Company”), the lenders party thereto (the “First Lien Lenders”), and
Credit Suisse, as administrative agent and as collateral agent for the First
Lien Lenders, (ii) all other Loan Documents (as defined in the First Lien
Credit Agreement) delivered in connection with the First Lien Credit Agreement,
(iii) that certain Second Lien Credit Agreement dated as of June 30,
2006 (the “Second Lien Credit Agreement”), among the Company, Merger
Sub, to be merged with and into the Operating Company, the lenders party
thereto (the “Second Lien Lenders”), and Credit Suisse, as
administrative agent and as collateral agent for the Second Lien Lenders and
(iv) all other Loan Documents (as defined in the Second Lien Credit
Agreement) delivered in connection with the Second Lien Credit Agreement.

“THL” means Thomas H. Lee Equity Fund VI, L.P.,
a Delaware limited partnership, and its Affiliates.

“Transfer” means the sale, transfer,
assignment, pledge or other disposal (whether with or without consideration and
whether voluntarily or involuntarily or by operation of law) of the Option;
provided, that a Transfer does not include any portion of the Option that has
vested in accordance with the terms of this Agreement.

 

SECTION 10.  MISCELLANEOUS PROVISIONS.

(a)   Rights as a Unitholder of
the Company.  Neither the
Optionee nor the Optionee’s representative shall have any rights as a Unitholder
of the Company with respect to any Units subject to the Option until the
Optionee or the Optionee’s representative becomes entitled to receive such Units
by (i) filing a notice of exercise, (ii) paying the Purchase Price as provided
in this Agreement, (iii) becoming a signatory to the LLC Agreement, (iv) becoming
a signatory to the Securityholders’ Agreement, (v) the Company issuing the Units
and entering the name of the Optionee in the register of unitholders of the
Company as the registered holder of such units, and (vi) and satisfying such
other conditions as the Board of Managers or the Committee shall reasonably
require.

(b)   Tenure.  Nothing in this Agreement or the Plan shall
confer upon the Optionee any right to continue in Service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining the
Optionee) or of the Optionee, which rights are hereby expressly reserved by
each, to terminate his or her Service at any time and for any reason, with or
without cause.

(c)   Notification.  Any notification required by the terms of
this Agreement shall be given in writing and shall be deemed effective upon
personal delivery or within three (3) days of deposit

 

9

 

 with the United States Postal Service, by
registered or certified mail, with postage and fees prepaid.  A notice shall be addressed to the Company at
its principal executive office and to the Optionee at the address that he or
she most recently provided to the Company.

(d)   Entire Agreement.  This Agreement and the Plan (and following
the exercise of any Option, the LLC Agreement and the Securityholders’
Agreement) constitute the entire contract between the parties hereto with
regard to the subject matter hereof. 
They supersede any other agreements, representations or understandings
(whether oral or written and whether express or implied) which relate to the
subject matter hereof.

(e)   Waiver.  No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition whether of like or different nature.

(f)    Restrictive
Covenants.  The Optionee
agrees and acknowledges that the provisions of Section 10 of the Plan are
reasonable and appropriate (including the remedies set forth therein) and
hereby covenants to comply with the requirements thereof.

(g)   Successors and Assigns.  The provisions of this Agreement shall inure
to the benefit of, and be binding upon, the Company and its successors and
assigns and upon the Optionee, the Optionee’s assigns and the legal
representatives, heirs and legatees of the Optionee’s estate, whether or not
any such Person shall have become a party to this Agreement and have agreed in
writing to be join herein and be bound by the terms hereof.

(h)   Choice of Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of Delaware, as such laws are applied to
contracts entered into and performed in such jurisdiction.

 

10

 

The Optionee, by signing below, acknowledges
and agrees that this Option is granted under and governed by the terms of the Hawkeye
Intermediate, LLC Unit Option Plan, which is attached to and made a part of
this document.

 

	
  Optionee

  	
   

  	
  Hawkeye
  Intermediate, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Hawkeye
  Holdings, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

11

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