EXHIBIT 10.4
STOCK TRANSFER RESTRICTION AGREEMENT AND
AMENDMENTS TO SITE ACQUISITION AGREEMENT
DATED: June 14, 2006
AMONG: VERASUN ENERGY CORPORATION
Attn: President
100 22nd Ave.
Brookings, SD 57006
Fax no.: (605) 696-7250 "VERASUN"
AND: AMERICAN MILLING, LP
Attn: President
P.O. Box 5005
Fox Terminal Road
Cahokia, IL 62206
Fax no.: (618) 337-8848 "AMERICAN"
AND: Other Parties Listed on the Signature Pages "INVESTORS"
c/o President, American Milling, LP
P.O. Box 5005
Fox Terminal Road
Cahokia, IL 62206
Fax No.: (618) 337-8848
RECITALS
A. VeraSun and American are parties to the Site Acquisition Agreement dated
May 22, 2006 (the "SITE AGREEMENT") governing the acquisition of rights by
VeraSun to purchase or lease greenfield sites designated by American for the
construction of fuel-grade ethanol production facilities, on the terms and
conditions set forth in the Site Agreement, and to a separate agreement relating
to consulting and other services (the "SERVICES AGREEMENT"). Capitalized terms
not otherwise defined herein shall have the meanings set forth in the Site
Agreement.
B. As of the date of this Stock Transfer Restriction Agreement and
Amendments to Site Acquisition Agreement (this "AGREEMENT"), the United States
Securities and Exchange Commission has declared VeraSun's Registration Statement
on Form S-1 (File No. 333-132861) effective.
C. Morgan Stanley & Co. Incorporated ("MS&CO") and Lehman Brothers, Inc.,
the underwriters of the IPO (the "UNDERWRITERS"), have offered to sell an
aggregate of 1,086,955 shares of VeraSun Stock to American and the Investors in
the IPO (the "IPO SHARES") subject to their execution and delivery of a "lock
up" agreement with the Underwriters substantially in the form attached hereto as
EXHIBIT 1.
D. American and the Investors executed and delivered the "lock up"
agreement to the Underwriters.
E. VeraSun, American and the Investors desire to impose additional
restrictions on the transferability of the IPO Shares and to amend the Site
Agreement.
In consideration of the mutual promises and covenants contained in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
AGREEMENT
1. RESTRICTIONS ON TRANSFER. In addition to the restrictions contained in
the "lock up" agreement referenced in Recitals C and D above, the IPO Shares
shall be subject to the additional restrictions described in this Section 1. No
IPO Shares, nor any interest in such shares, may be assigned, encumbered,
disposed of, or transferred (including transfer by operation of law) until the
Restriction Period with respect to such IPO Shares has lapsed. "RESTRICTION
PERIOD" means, (a) with respect to 50% of the IPO Shares, the first anniversary
of the settlement date of purchase of such shares (the "PURCHASE DATE"), (b)
with respect to 25% of the IPO Shares, the second anniversary of the Purchase
Date, and (c) with respect to 25% of the IPO Shares, the third anniversary of
the Purchase Date. VeraSun will not be required (a) to transfer on its books any
IPO Shares that have been sold or transferred in violation of any of the
provisions set forth in this Section 1 or (b) to treat as owner of such IPO
Shares or to accord the right to vote as such owner or to pay dividends to any
transferee to whom such IPO Shares purport to have been so transferred. American
will hold the IPO Shares with MS&Co in custody until the applicable Restriction
Period has lapsed in accordance with a Custody Agreement substantially in the
form attached as EXHIBIT 2. While the IPO shares are custodied at MS&Co,
American will direct MS&Co to send duplicate statements for the account to
VeraSun. Immediately prior to the end of the applicable Restriction Period,
American and each Investor will deliver to VeraSun a statement certifying to
VeraSun that American, the Investors and the Covered Persons (as defined in the
Services Agreement) are in compliance with this Section 1 and with Section 5.03
of the Site Agreement.
2. REMEDY FOR BREACHES OF SECTION 5.03 OF THE SITE AGREEMENT. If American
or any Covered Person breaches Section 5.03 of the Site Agreement, VeraSun shall
have the right to repurchase any or all of the IPO Shares at the per share price
to the public for such shares in the IPO. Such repurchase shall be completed
promptly after notice to American and the Investors, and in any event within 10
days after such notice.
3. LEGENDS. The certificates evidencing the IPO Shares shall bear the
following legend, with the last day of the applicable Restriction Period
inserted in such legend:
"UNTIL _____, 200_, THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS UPON TRANSFER AS SET FORTH IN A STOCK TRANSFER
RESTRICTION AGREEMENT AND AMENDMENTS TO SITE ACQUISITION AGREEMENT BETWEEN
THE CORPORATION AND THE REGISTERED HOLDER, COPIES OF EACH OF WHICH ARE ON
FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION, AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED BEFORE THAT DATE EXCEPT PURSUANT TO A
2
REPURCHASE BY THE CORPORATION IN ACCORDANCE WITH SECTION 1 OF THAT
AGREEMENT."
As soon as practicable after the applicable Restriction Period with respect
to IPO Shares has lapsed and VeraSun has received the applicable certification
described in Section 1 of this Agreement, VeraSun shall direct its transfer
agent to remove the foregoing legend from the certificate representing such IPO
Shares.
4. AMENDMENTS TO THE SITE AGREEMENT.
4.1 Section 1.01 of the Site Agreement is hereby amended to read in
its entirety as follows:
"1.01 DESIGNATED SITES. American shall designate at least four sites
for purchase or lease from among the five sites (the "PRIMARY SITES")
listed on Schedule 1 hereto or other additional sites after American has
obtained options or other rights ("PROPERTY RIGHTS") that would enable
VeraSun or its designee, as an assignee of American, to purchase or lease
the sites (each, a "DESIGNATED SITE"); provided that American shall submit
one of the Primary Sites to VeraSun for purchase or lease within three
months after the date of this Agreement. The Property Rights must not
expire earlier than 120 days after submission of a Designated Site for
approval pursuant to Section 1.03 unless VeraSun otherwise agrees in
writing."
4.2 The first sentence of Section 1.03 of the Site Agreement is hereby
amended to read in its entirety as follows:
"After American has identified a Designated Site, conducted an
evaluation and obtained the associated Property Rights, American shall
submit such Designated Site to VeraSun for acceptance."
4.3 Section 5.03 is hereby added to the Site Agreement as follows:
5.03 EXCLUSIVITY. During the Term of this Agreement (as defined below)
and for a period of three years thereafter, American agrees that neither
American nor any of the Covered Persons (as defined in the Services
Agreement, dated June 14, 2006, among the parties) will, either directly or
indirectly, solicit, entertain or conduct discussions with any person with
respect to any offer for the purchase or sale of any site for construction
of an ethanol facility, including the sites identified on Schedule 1. For
this purpose, the term "PERSON" shall include any corporation, company,
group, partnership or other entity or individual. The restrictions
contained in this Section 5.03 shall terminate immediately if VeraSun
rejects three of the Primary Sites or two of the three sites identified in
Schedule 1 as "KEY SITES" (a "REJECTION EVENT").
4.4 Section 8.01 of the Site Agreement is hereby amended to read in
its entirety as follows:
3
"8.01 TERM; RIGHT OF PARTIES TO TERMINATE. This Agreement will
terminate two years after the date hereof (the "TERM OF THIS AGREEMENT")
and may be terminated earlier as follows:
8.01-1 by mutual written agreement of VeraSun and American;
8.01-2 by VeraSun, if American shall have breached any of its
obligations or representations hereunder in any material respect; or
8.01-3 by American, if VeraSun shall have breached any of its
obligations or representations hereunder in any material respect."
4.5 The following clause is hereby added to the second sentence of
Section 8.02 of the Site Agreement:
, and except for Section 5.03 which section will continue for a period of
three years after termination of this Agreement, but only upon a
termination by VeraSun pursuant to Section 8.01-2.
5. EFFECT OF AMENDMENTS. The amendments to the Site Agreement set forth in
Section 4 of this Agreement are not intended to supersede or amend the Site
Agreement, except as specifically set forth in Section 4 of this Agreement. All
other terms of the Site Agreement shall remain in full force and effect. In the
event of a conflict, then the terms of this Agreement shall govern. The
termination of the Site Agreement shall have no effect on this Agreement which
shall remain in full force and effect.
6. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns. No party hereto may voluntarily or involuntarily assign such party's
interest under this Agreement without the prior written consent of the other
parties; provided, however, that VeraSun may assign its purchase rights to an
Accepted Site to an affiliate of VeraSun.
7. ENTIRE AGREEMENT. This Agreement, the Site Agreement, the Services
Agreement and the Schedules and Exhibits referred to therein, and the
Confidentiality Agreement between VeraSun and American dated March 14, 2006,
embody the entire agreement and understanding of the parties and supersede any
and all prior agreements, arrangements and understandings relating to matters
provided for herein and therein.
8. AMENDMENT, WAIVER, ETC. The provisions of this Agreement may be amended
or waived only by an instrument in writing signed by the party against which
enforcement of such amendment or waiver is sought. Any waiver of any term or
condition of this Agreement or any breach hereof shall not operate as a waiver
of any other such term, condition or breach, and no failure to enforce any
provision hereof shall operate as a waiver of such provision or of any other
provision hereof.
9. GOVERNING LAW. The construction and performance of this Agreement will
be governed by the laws of the state of South Dakota (except for the conflicts
of law provisions thereof).
4
10. NOTICES. All notices required or permitted to be given under this
Agreement shall be in writing. Notices may be delivered by certified or
registered mail, postage paid with return receipt requested; by private courier
prepaid; by facsimile or other telecommunication device capable of transmitting
or creating a written record; or personally. Mailed notices shall be deemed
received five days after mailing, properly addressed. Couriered notices shall be
deemed received on the date that the courier warrants that delivery will occur.
Telecommunicated notices shall be deemed received when receipt is either
confirmed by confirming transmission equipment or acknowledged by the addressee
or its office. Personal delivery shall be effective when accomplished. If a
notice is provided under this Agreement, it shall be delivered, mailed or sent
to the address for the relevant party set forth on the first page of this
Agreement or to such other address for such party as shall be furnished in
accordance with this Section 10.
11. ATTORNEYS' FEES. If suit or action is filed by any party to enforce the
provisions of this Agreement or otherwise with respect to the subject matter of
this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees as fixed by the trial court and, if any appeal is taken from the
decision of the trial court, reasonable attorneys' fees as fixed by the
appellate court. For purposes of this Agreement, the term "PREVAILING PARTY"
shall be deemed to include a party that successfully opposes a petition for
review filed with an appellate court.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS ON NEXT PAGE]
5
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
VERASUN: VERASUN ENERGY CORPORATION
By: /s/ Donald L. Endres
------------------------------------
Name: Donald L. Endres
Title: Chief Executive Officer
AMERICAN: AMERICAN MILLING, LP
By: /s/ David Jump
------------------------------------
Name: David Jump
Title: President
INVESTORS: BAAKA L.L.C.
By: /s/ Michael Heiy
------------------------------------
Name: Michael Heiy
Title: Authorized Signer
DAVID JUMP IRA
By: /s/ David Jump
------------------------------------
Name: David Jump
Title: Authorized Signer
DAVID JUMP ROTH IRA
By: /s/ David Jump
------------------------------------
Name: David Jump
Title: Authorized Signer
6
The following exhibits to the Agreement have been omitted and will be
provided to the Securities and Exchange Commission upon request:
Exhibit 1 Lock-up Agreement
Exhibit 2 Custody Agreement
7