Item 1.01 Entry into a Material Definitive Agreement.
Stock Purchase Agreement
On December 29, 2022, Benson Hill, Inc. (the “Company”), through its wholly owned subsidiaries, Benson Hill Fresh, LLC (the “Seller”) and Benson Hill Holdings, Inc. (“Holdings”), entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Sweet Sixty, LLC, a Florida limited liability company (the “Buyer”). Pursuant to the Stock Purchase Agreement, the Seller agreed to sell all of the outstanding equity securities of J&J Produce, Inc. (“J&J”), and all of the outstanding equity securities of J&J’s subsidiaries, to the Buyer for aggregate cash consideration of $3 million, subject to adjustment for the value of certain fixed assets that have been sold, stolen, or destroyed, as set forth in the Stock Purchase Agreement (the “Stock Sale”).
The parties have agreed that $900,000 of the purchase price will be placed into an escrow account to cover any indemnification claims or any other claims pursuant to the Stock Purchase Agreement by the Buyer. The escrow account will be governed by the terms of an escrow agreement to be entered into among the Buyer, the Seller and the escrow agent. Pursuant to the Stock Purchase Agreement, $450,000 of the funds in the escrow account will be released to the Seller after the first anniversary of the closing under the Stock Purchase Agreement, with the remaining funds released after the second anniversary of the closing date, provided that any funds subject to outstanding claims by the Buyer will be retained in escrow until the final disposition of such claims.
The Stock Purchase Agreement does not prohibit the Company, the Seller, Holdings or their affiliates from soliciting, encouraging, initiating or otherwise participating in an alternative proposal to purchase or acquire J&J. If another offer is received from a third party, the Buyer will have ten business days to match the terms of the other offer. If the Buyer does not match, the Seller and Holdings may terminate the Stock Purchase Agreement without liability and accept the other offer.
The Stock Purchase Agreement contains customary representations, warranties and covenants by the parties thereto, and provides for customary closing conditions and deliverables, termination provisions and mutual indemnification obligations. The closing of the transactions contemplated by the Stock Purchase Agreement is scheduled to occur on June 30, 2023, or such other date as is mutually agreed by the parties.
Purchase and Sale Agreement
In connection with the Stock Purchase Agreement, on December 29, 2022, J&J entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) with the Buyer. Pursuant to the Purchase and Sale Agreement, J&J sold certain real and personal property comprising an agricultural production and processing facility located in Vero Beach, Florida to the Buyer for an aggregate purchase price of $18 million, subject to the adjustments set forth in the Purchase and Sale Agreement (the “Asset Sale”). The Purchase and Sale Agreement contemplates that certain property will be leased back to the Seller pursuant to a separate agricultural and facility lease.
The parties have agreed that $500,000 of the purchase price will be placed into an escrow account to secure completion of certain work by the Seller following the closing of the transaction. The escrow account is governed by the terms of an escrow agreement among the Buyer, J&J, Holdings, and the escrow agent.
The Purchase and Sale Agreement contains mutual indemnification obligations. Holdings has agreed to guaranty the Seller’s indemnification obligations. The closing of the transactions contemplated by the Purchase and Sale Agreement occurred on December 29, 2022.
Non-Escrowed Cash Closing Proceeds
Pursuant to the Second Amendment to Loan Documents which was previously filed as Exhibit 10.1 to the Company’s current report on Form 8-K filed on November 10, 2022 (the “Second Amendment”), the non-escrowed cash closing proceeds from the Stock Sale and the non-escrowed cash closing proceeds from the Asset Sale will be held by the Seller in a restricted, blocked account in favor of Avenue Capital Management II, L.P., as administrative agent and collateral agent (the “Agent”). Those non-escrowed cash closing proceeds will be held in the restricted, blocked account, and applied, as described in the Company’s current report on Form 8-K filed on November 10, 2022.
The foregoing descriptions of the Stock Purchase Agreement and the Purchase and Sale Agreement do not purport to be complete and are qualified in their entirety by reference to the Stock Purchase Agreement and the Purchase and Sale Agreement, which are attached as Exhibits 2.1 and 2.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. The representations, warranties and covenants contained in the Stock Purchase Agreement and the Purchase and Sale Agreement were made only for the purposes of the Stock Purchase Agreement and the Purchase and Sale Agreement, respectively, and as of specific dates, were solely for the benefit of the parties thereto, may have been used for purposes of allocating risk between the parties rather than establishing matters of fact and may be subject to qualifications or limitations agreed upon by the parties in connection with the negotiated terms, including being qualified by schedules and other disclosures made by the parties. Accordingly, investors should not rely on the representations, warranties and covenants in the Stock Purchase Agreement or the Purchase and Sale Agreement as statements of factual information regarding the parties.