Exhibit 10.1

 

EXECUTION VERSION

 

ESCROW AGREEMENT

 

This ESCROW AGREEMENT (this “Agreement”) is executed and effective on
December 30, 2011 (the “Closing Date”), by and among Leucadia National
Corporation, a New York corporation (the “Buyer”), for itself and all the other
Buyer Indemnified Persons named in the Purchase Agreement (as defined herein),
U.S. Premium Beef, LLC, a Delaware limited liability company (“USPB”), NBPCo
Holdings, LLC, a South Dakota limited liability company (“NBPCo”, together with
USPB, collectively, the “Indemnifying Sellers”), and Marshall & Ilsley Trust
Company N.A., as escrow agent (the “Escrow Agent”).

 

WHEREAS, the Buyer and the Indemnifying Sellers are parties to that certain
Membership Interest Purchase Agreement, dated as of December 5, 2011, by and
among the Buyer, National Beef Packing Company, LLC, a Delaware limited
liability company, the Indemnifying Sellers, TKK Investments, LLC, a Missouri
limited liability company, TMKCo, LLC, a Missouri limited liability company and
TMK Holdings, LLC, a Missouri limited liability company (as such agreement may
be amended, restated or otherwise modified from time to time, the “Purchase
Agreement”).  Each capitalized term which is used but not otherwise defined in
this Agreement has the meaning assigned to such term in the Purchase Agreement;

 

WHEREAS, the execution and delivery of this Agreement by the Indemnifying
Sellers and the Escrow Agent is a condition to the Buyer’s obligation to effect
the Closing pursuant to the Purchase Agreement;

 

WHEREAS, the Purchase Agreement contemplates that a portion of the consideration
otherwise payable to the Indemnifying Sellers will be deposited in escrow with
the Escrow Agent, to be held and distributed by the Escrow Agent on the terms
and conditions set forth herein;

 

WHEREAS, pursuant to Section 1.2(b) of the Purchase Agreement, the Buyer agreed
to deposit with the Escrow Agent $50,000,000 (the aggregate funds held by the
Escrow Agent from time to time pursuant to this Agreement are referred to as the
“Escrow Fund”) to be held by the Escrow Agent, which will be used as security
for Indemnifying Sellers’ obligations, if any, to indemnify the Buyer under the
applicable provisions of Sections 8.1 and 8.2 of the Purchase Agreement; and

 

WHEREAS, the Escrow Agent agrees to hold and distribute the Escrow Fund in
accordance with the terms and conditions of this Agreement.

 

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

 

1.             Appointment of and Acceptance by Escrow Agent.  The Buyer and the
Indemnifying Sellers hereby appoint and designate the Escrow Agent to acquire
and maintain possession of the Escrow Fund and to act as escrow agent for the
purposes set forth herein, and the Escrow Agent hereby accepts such appointment
and designation under the terms and conditions set forth herein.

 

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2.             Receipt of Deposit; Establishment of Escrow Account; Interest.

 

(a)           On the Closing Date, the Buyer shall deposit with the Escrow
Agent, and the Escrow Agent will acknowledge to the Buyer and the Indemnifying
Sellers its receipt of, the Escrow Fund in the escrow account (the “Escrow
Account”).  The Escrow Agent shall hold, invest and disburse the Escrow Fund in
accordance with the terms of this Agreement.  The Escrow Fund is not intended to
be subject to any lien, attachment, trustee process or any other judicial
process of any creditor of any party hereto.  Notwithstanding this provision,
the Escrow Agent shall act in accordance with Section 6(e).

 

(b)           Any interest, dividends, distributions or other earnings on, or in
respect of, the Escrow Fund shall not become part of the Escrow Account and
shall be held separately by the Escrow Agent and invested in accordance with
Section 3 and distributed to the Indemnifying Sellers pursuant to written
instructions of the Indemnifying Sellers promptly following the end of each
calendar month during the term of this Agreement and upon termination of this
Agreement, which instructions shall set forth the proportions in which such
distributions shall be made to the Indemnifying Sellers.

 

3.             Investment of the Escrow Fund.  At the written direction of the
Indemnifying Sellers, the Escrow Agent will invest the Escrow Fund in one or
more of: (a) direct obligations of the United States of America, (b) obligations
for which the full faith and credit of the United States of America is pledged
to provide for the payment of principal and interest, and/or (c) money market
funds authorized to invest only in short-term securities issued or guaranteed as
to principal and interest by the U.S. Government (collectively, the “Permitted
Investments”).  The Escrow Agent is hereby authorized to execute the purchase
and sale of Permitted Investments through the facilities of its own trading or
capital markets operations.  In the event that the Escrow Agent does not receive
investment instructions to invest the Escrow Fund, the Escrow Agent shall invest
the Escrow Fund in a Fidelity Institutional Money Market Treasury Only - Class I
account.  The Escrow Agent can liquidate any investment in order to comply with
disbursement instructions without any liability for any resulting loss.  Any
loss incurred from an investment will be borne by the Escrow Fund.

 

4.             Tax Reporting.

 

(a)           The Escrow Agent shall, no later than January 31 of each year,
report to the Internal Revenue Service, as of each calendar year-end, and to the
Indemnifying Sellers all income and gain earned on the Escrow Fund during the
preceding calendar year (to the extent treated as earned under the provisions of
the Internal Revenue Code of 1986, as amended (the “Code”) and its regulations)
as income of the Indemnifying Sellers.

 

(b)           Any taxes payable on income and gain earned (to the extent treated
as earned under the provisions of the Code and its regulations) from the
investment of any sums held in the Escrow Fund shall be paid by the Indemnifying
Sellers.

 

(c)           Except as otherwise set forth herein, the Escrow Agent shall have
no responsibility for the preparation and/or filing of any tax or information
return with respect to

 

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any transaction, including but not limited to any FIRPTA reporting, whether or
not related to this Agreement (or a related agreement) with respect to the
Escrow Fund.

 

(d)           On or before the execution of this Agreement, the Buyer and the
Indemnifying Sellers shall each furnish the Escrow Agent with a Form W-8 or
Form W-9, as applicable.  The Escrow Agent shall withhold any taxes it is
required to withhold, including but not limited to required withholding in the
absence of proper tax documentation, and shall remit such taxes to the
appropriate authorities and provide documentation of such remittance to the
Buyer and the Indemnifying Sellers, as the case may be.

 

5.             Escrow Agent’s Disbursement of the Escrow Fund.  The Escrow Agent
shall disburse the Escrow Fund on behalf of the Buyer or the Indemnifying
Sellers as instructed pursuant to this Section 5.

 

(a)           Indemnification Claims.

 

(i)            From time to time before 5:00 p.m., Eastern Time, on the last
Business Day immediately preceding the Release Date (as defined below), the
Buyer may give notice (the “Indemnification Notice”) to the Indemnifying Sellers
and the Escrow Agent, specifying the nature and dollar amount, of a claim
relating to any claim for indemnification (a “Buyer Indemnification Claim”) that
a Buyer Indemnified Person has made against an Indemnifying Seller under
Section 8.1(j) of the Purchase Agreement.  The Indemnifying Sellers shall have a
period of sixty (60) days (the “Sellers Reviewing Period”) in which to review
the Indemnification Notice provided by the Buyer and to request reasonable
additional information from the Buyer regarding the Buyer Indemnification Claim.

 

(ii)           If the Indemnifying Sellers do not deliver a notice, in the form
attached hereto as Exhibit I, to the Buyer and the Escrow Agent disputing such
Buyer Indemnification Claim (a “Rejection Notice”) prior to 5:00 p.m., Eastern
Time, by the expiration of the period ending on the fifteenth (15th) Business
Day following the end of the Sellers Reviewing Period (the “Rejection Notice
Period”), then the dollar amount of the Buyer Indemnification Claim set forth in
the applicable Indemnification Notice of the Buyer shall be deemed conclusive
for purposes of this Agreement, and on the Business Day immediately following
expiration of the Rejection Notice Period, the Escrow Agent shall release from
the Escrow Account by wire transfer to an account or accounts designated by the
Buyer, the dollar amount of the Buyer Indemnification Claim in the applicable
Indemnification Notice.  The Escrow Agent shall not inquire into or consider
whether a Buyer Indemnification Claim complies with the requirements of the
Purchase Agreement.

 

(iii)          If a Rejection Notice is given with respect to a Buyer
Indemnification Claim, then the Escrow Agent shall make payment with respect to
an applicable Indemnification Notice only (1) in accordance with a Joint Written
Instruction (as defined below), on the Business Day immediately following the
Escrow Agent’s receipt thereof, or (2) in accordance with a Certificated Final
Order (as defined below) and an accompanying instruction from the Buyer
directing payment with respect thereto,

 

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on the third (3rd) Business Day following the Escrow Agent’s receipt thereof,
provided that the Buyer shall simultaneously provide a copy of such Certificated
Final Order and the accompanying instruction to the Indemnifying Sellers.

 

(iv)          If any Rejection Notice includes an objection to only a portion of
a Buyer Indemnification Claim, the Escrow Agent shall promptly release out of
the Escrow Fund from the Escrow Account by wire transfer to an account
designated by the Buyer an amount equal to the portion of the Buyer
Indemnification Claim for which there is no objection.

 

(v)           For purposes of this Agreement:

 

(A)          a “Joint Written Instruction” shall mean a notice in the form
attached hereto as Exhibit II that is executed by the Buyer and the Indemnifying
Sellers directing the release or disbursement of a specified amount from the
Escrow Fund pursuant to this Agreement; and

 

(B)           a “Certificated Final Order” means a certification provided by an
authorized person on behalf of the Buyer or the Indemnifying Sellers, as the
case may be, that an order, judgment or decree attached thereto and specifying
the amount of the Seller’s Obligation Amount owed by such Indemnifying Seller
under the Purchase Agreement or specifying the amount of the Escrow Fund that
should be released to the Indemnifying Sellers was rendered by a court or
binding arbitrator (as applicable) of competent jurisdiction and that such
order, judgment or decree is final and non-appealable and is entitled to be
relied on based on such status.  For purposes of the foregoing definition,
“final and non-appealable” means that such order, judgment or decree has not
been reversed, stayed, modified or amended and, as to which (1) the time to
appeal, petition for certiorari, or seek reargument or rehearing has expired and
no timely appeal, petition for certiorari, or request for reargument or
rehearing is pending, (2) any right to appeal, petition for certiorari, or seek
reargument or rehearing has been waived in writing, or (3) if an appeal,
petition for certiorari, or reargument or rehearing thereof has been denied, the
time to take any further appeal or to further petition for certiorari or seek
further reargument or rehearing has expired.  The Escrow Agent shall not be
liable to any of the parties hereto or to any other person by reason of
compliance with any instruction accompanied by a Certificated Final Order,
notwithstanding that any order, judgment or decree being certificated therein is
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.

 

(b)           Other Escrow Distributions.

 

(i)            If, on the one year anniversary of the Closing, there has been no
claims for indemnification pursuant to Section 8.1 of the Purchase Agreement
properly made by the Buyer on or prior to such one year anniversary, the Buyer
and the Indemnifying Sellers shall provide a Joint Written Instruction to the
Escrow Agent, directing the Escrow Agent to, on the Business Day immediately
following the Escrow

 

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Agent’s receipt of such Joint Written Instruction, release $20,000,000 of the
Escrow Fund from the Escrow Account to the Indemnifying Sellers by wire transfer
pursuant to an account or accounts specified in such Joint Written Instruction.

 

(ii)           On the Business Day immediately following the two year
anniversary of the Closing (the “Release Date”), the Escrow Agent shall send a
statement (the “Release Statement”) to the Buyer and the Indemnifying Sellers
that sets forth (x) the amount of the Escrow Fund then remaining in the Escrow
Account and (y) the aggregate amount of all Unresolved Claims (as defined
below).  For purposes of this Agreement, (x) an “Unresolved Claim” means a Buyer
Indemnification Claim that has been asserted and notified to the Indemnifying
Sellers pursuant to an Indemnification Notice but the amount of which has not
been fully paid, and (y) the amount of an Unresolved Claim means the amount of
such claim remaining subject to dispute.

 

(iii)          For purposes of this Agreement, “Releasable Funds” means the
difference of (x) the amount of the Escrow Fund remaining in the Escrow Account
as set forth in the Release Statement minus (y) the aggregate amount of all
Unresolved Claims as set forth in the Release Statement.

 

(iv)          On the third (3rd) Business Day following delivery of the Release
Statement (the “Release Notification Period”), the Escrow Agent shall release
from the Escrow Account to the Indemnifying Sellers by wire transfer an amount
equal to the Releasable Funds pursuant to written instructions of the
Indemnifying Sellers.

 

(v)           Following expiration of the Release Notification Period with
respect to each Unresolved Claim, the Escrow Agent shall release a portion of
the Escrow Fund:

 

(A)          that is the subject of a Joint Written Instruction, to the Buyer
and/or the Indemnifying Sellers, as specified therein, on the Business Day
immediately following the Escrow Agent’s receipt thereof;

 

(B)           that is the subject of a Certificated Final Order with an
accompanying instruction from the Buyer directing payment with respect thereto,
to the Buyer, on the third (3rd) Business Day following the Escrow Agent’s
receipt thereof; provided that the Buyer shall simultaneously provide a copy of
such Certificated Final Order and the accompanying instruction to the
Indemnifying Sellers;

 

(C)           that is the subject of a Certificated Final Order with an
accompanying instruction from the Indemnifying Sellers directing payment with
respect thereto, to the Indemnifying Sellers, on the third (3rd) Business Day
following the Escrow Agent’s receipt thereof; provided that the Indemnifying
Sellers shall simultaneously provide a copy of such Certificated Final Order and
the accompanying instruction to the Buyer; or

 

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(D)          that is the subject of an Indemnification Notice with respect to
which a Rejection Notice has not been timely received by the Escrow Agent in
accordance with Section 5(a), to the Buyer on the Business Day immediately
following expiration of the Rejection Notice Period,

 

in each case by wire transfer to an account or accounts as described in or
determined in accordance with such Joint Written Instruction, the instruction to
make payment accompanying the Certificated Final Order or the Indemnification
Notice, as the case may be.

 

(vi)          After the resolution of all Unresolved Claims, any portion of the
Escrow Fund that was the subject of such Unresolved Claims that is not
distributed to the Buyer pursuant to the foregoing provisions of
Section 5(b)(v) shall be released and disbursed by the Escrow Agent to the
Indemnifying Sellers by wire transfer to an account or accounts pursuant to
written instructions of the Indemnifying Sellers.

 

(vii)         The Buyer and the Indemnifying Sellers hereby agree to execute and
deliver, not later than three (3) Business Days after the date of their mutual
resolution of any Unresolved Claim, a Joint Written Instruction for the
distribution of the Escrow Fund (or portion thereof) pursuant to and provided
under such Joint Written Instruction to an account or accounts as designated in
such Joint Written Instruction.

 

(viii)        Notwithstanding any provision herein to the contrary, the Escrow
Agent shall release any portion of the Escrow Fund pursuant to a Joint Written
Instruction to the Buyer and/or the Indemnifying Sellers, as specified therein,
on the Business Day immediately following the Escrow Agent’s receipt thereof.

 

(c)           Upon the final distribution of all of the Escrow Fund in
accordance with the terms of this Agreement, this Agreement shall terminate.

 

6.             Liability and Duties of the Escrow Agent.  The Escrow Agent’s
duties and obligations under this Agreement shall be determined solely by the
express provisions of this Agreement.  The Escrow Agent shall be under no
obligation to refer to any documents other than this Agreement and the
instructions and requests delivered to the Escrow Agent hereunder.  The Escrow
Agent shall not be obligated to recognize, and shall not have any liability or
responsibility arising under, any agreement to which the Escrow Agent is not a
party, even though reference thereto may be made herein.  With respect to the
Escrow Agent’s responsibility, the Buyer and the Indemnifying Sellers further
agree that:

 

(a)           The Escrow Agent, including its officers, directors, employees and
agents, shall not be liable to anyone whomsoever by reason of any error of
judgment or for any act done or step taken or omitted by the Escrow Agent, or
for any mistake of fact or law or anything which the Escrow Agent may do or
refrain from doing in connection herewith, unless caused by or arising out of
the Escrow Agent’s gross negligence or willful misconduct.  The Escrow Agent may
consult with counsel of its own choice and shall have full and complete
authorization and protection for any action taken or suffered by the Escrow
Agent hereunder in good faith and in accordance with the opinion of such
counsel.  The Buyer and the Indemnifying Sellers shall

 

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severally, and not jointly, indemnify and hold the Escrow Agent harmless from
and against any and all liability and reasonable expense which may arise out of
its acceptance of the Escrow Fund or any action taken or omitted by the Escrow
Agent in accordance with this Agreement, except for such liability and
reasonable expenses which results from the Escrow Agent’s gross negligence or
willful misconduct.  The Buyer and the Indemnifying Sellers proportionate
indemnity obligations for such liabilities and expenses shall be as follows: 
Buyer = 50%; USPB = 36.84%; and NBPCo = 13.16%.  Such indemnification shall
survive the Escrow Agent’s resignation or removal, or the termination of this
Agreement.

 

(b)           Each of the Buyer and the Indemnifying Sellers may examine the
Escrow Fund and the records pertaining thereto at any time during normal
business hours at the Escrow Agent’s office upon 24 hours prior notice and
pursuant to the reasonable regulations of the Escrow Agent.  The Escrow Agent
shall provide the Indemnifying Sellers and the Buyer with monthly statements
within ten (10) Business Days after the end of each month setting forth the
balance in the Escrow Account, the amount of interest or other earnings accrued
on the Escrow Fund to date that year and a description of all transactions,
including disbursements, if any, with respect to the Escrow Fund during such
month.

 

(c)           This Agreement is a personal one, the Escrow Agent’s duties
hereunder being only to the Buyer and the Indemnifying Sellers, their
successors, permitted assigns, heirs and legal representatives, and to no other
person whomsoever.

 

(d)           The Escrow Agent may rely or act upon Joint Written Instructions
bearing signatures properly believed by the Escrow Agent to be genuine of the
Buyer and the Indemnifying Sellers.

 

(e)           In case any property held by the Escrow Agent pursuant to this
Agreement shall be attached, garnished or levied upon under a court order, or
the delivery thereof shall be stayed or enjoined by a court order, or any writ,
order, judgment or decree shall be made or entered by any court, or any order,
judgment or decree shall be made or entered by any court affecting the property
deposited under this Agreement or any part thereof, the Escrow Agent is hereby
expressly authorized, in its sole discretion, to obey and comply with all writs,
orders, judgments or decrees so entered or issued, whether with or without
jurisdiction, and in case the Escrow Agent obeys or complies with any such writ,
order, judgment or decree, the Escrow Agent shall not be liable to the Buyer or
the Indemnifying Sellers or to any other person by reason of such compliance in
connection with such proceeding, and shall be entitled to reimburse itself
therefor out of the Escrow Fund, and if the Escrow Agent shall be unable to
reimburse itself from the Escrow Fund, because there are then insufficient
assets remaining in the Escrow Fund, the Buyer and the Indemnifying Sellers
jointly and severally agree to pay to the Escrow Agent on demand its reasonable
costs, attorneys’ fees, charges, disbursements and expenses in connection with
such proceeding.

 

(f)            The Escrow Agent reserves the right to resign at any time by
giving written notice of resignation to the Buyer and the Indemnifying Sellers
specifying the effective date thereof.  Within sixty (60) days after receiving
such notice, the Buyer and the Indemnifying Sellers jointly shall appoint a
successor escrow agent to which the Escrow Agent shall distribute the property
then held under this Agreement, less the Escrow Agent’s fees, costs

 

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and expenses in connection herewith, whereupon the Escrow Agent shall upon such
distribution to a successor escrow agent, be discharged of and from any and all
further obligations arising in connection with this Agreement, except for such
liability and expenses which results from the Escrow Agent’s gross negligence or
willful misconduct.  If a successor escrow agent has not been appointed or has
not accepted such appointment by the end of such sixty-day period, the Escrow
Agent may apply to a court of competent jurisdiction for the appointment of a
successor escrow agent, and the Buyer and the Indemnifying Sellers shall each
pay one-half of the costs, expenses and reasonable attorneys’ fees which are
incurred in connection with such proceeding.  Until a successor escrow agent has
accepted such appointment and the Escrow Agent has transferred the Escrow Fund
to such successor escrow agent, the Escrow Agent shall continue to retain and
safeguard the Escrow Fund until receipt of (A) a Joint Written Instruction by
the Indemnifying Sellers and the Buyer, or (B) an order of a court of competent
jurisdiction.

 

(g)           In the event of any disagreement between the Indemnifying Sellers
and the Buyer resulting in adverse claims or demands being made in connection
with the Escrow Fund or in the event that the Escrow Agent is in doubt as to
what action it should take hereunder, the Escrow Agent shall be permitted to
interplead all of the assets held hereunder into a court of competent
jurisdiction, and thereafter be fully relieved from any and all liability or
obligation with respect to such interpleaded assets or to retain the Escrow Fund
until the Escrow Agent shall have received (A) an order of a court of competent
jurisdiction directing delivery of the Escrow Fund, or (B) a Joint Written
Instruction executed by the Indemnifying Sellers and the Buyer directing
delivery of the Escrow Fund, at which time the Escrow Agent shall disburse the
Escrow Fund in accordance with such court order or Joint Written Instruction. 
The parties hereto other than the Escrow Agent further agree to pursue any
redress or recourse in connection with such a dispute, without making the Escrow
Agent a party to same.

 

(h)           The Escrow Agent does not have any interest in the Escrow Fund but
is serving as escrow holder only and has only possession thereof.  If any
payments of income from the Escrow Fund shall be subject to withholding
regulations then in force with respect to United States taxes, the Buyer and the
Indemnifying Sellers agree to provide the Escrow Agent with appropriate forms
for or with respect to such withholding.  This Section 6(h) and
Sections 6(a) and 7 shall survive notwithstanding any termination of this
Agreement or the Escrow Agent’s resignation.

 

7.             Compensation of Escrow Agent.  The Escrow Agent shall be entitled
to compensation for its services hereunder as per Exhibit III attached hereto,
and for reimbursement of its documented out-of-pocket expenses, including,
without limitation, the reasonable fees and costs of attorneys or agents which
it may find necessary to engage in performance of its duties hereunder.  Such
fees and expenses shall be paid equally by the Indemnifying Sellers, on the one
hand, and the Buyer, on the other hand.  The Escrow Agent shall have, and is
hereby granted, a prior lien upon any property, cash, or assets of the Escrow
Fund, with respect to its unpaid fees and non-reimbursed expenses, superior to
the interests of any other persons or entities and shall be entitled and is
hereby granted, provided that prior notice has been given to the Buyer and the
Indemnifying Sellers, the right to set off and deduct any unpaid fees and/or
non-reimbursed expenses, that have not been paid within sixty (60) days from the
date of the invoice in question, from amounts on deposit in the Escrow Fund.  In
the event any such fees and expenses are deducted by the Escrow Agent from the
Escrow Fund, the Buyer and the

 

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Indemnifying Sellers each agree to make appropriate payment to the other party
such that each of the Buyer, on the one hand, and the Indemnifying Sellers, on
the other hand, ultimately receives the amount of the Escrow Fund that it is
entitled to receive without reduction or deduction for the other party’s one
half share of such fees and expenses.

 

8.             Notices.  All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered personally,
mailed by certified or registered mail, return receipt requested and postage
prepaid, or sent via a nationally recognized overnight courier, or sent via
facsimile to the recipient with telephonic confirmation by the sending party. 
Such notices, demands and other communications will be sent to the address
indicated below:

 

Notices to the Indemnifying Sellers:

 

U.S. Premium Beef, LLC

P.O. Box 20103

Kansas City, MO  64195

Attention:  Steven D. Hunt, CEO

Fax:  (816) 713-8810

with a copy (which copy shall not constitute notice to USPB) to:

 

Mark J. Hanson (mjhanson@stoel.com)

Ronald D. McFall (rdmcfall@stoel.com)

Stoel Rives LLP

33 South Sixth Street, Suite 4200

Minneapolis, MN  55402

Fax:  (612) 373-8881

 

NBPCo Holdings, LLC

891 Two Rivers Drive

Dakota Dunes, SD  57049

Attention:  Rich Jochum

Fax:  (605) 217-8001

 

with a copy (which copy shall not constitute notice to NBPCo):

 

Michael M. Hupp

Koley Jessen P.C., L.L.O.

1125 S. 103rd Street, Suite 800

Omaha, NE  68124

Fax:  (402) 390-9500

 

Notices to the Buyer:

 

Leucadia National Corporation

315 Park Avenue South

New York, NY  10010

 

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Attention: President

Fax: (212) 598-3245

 

with a copy (which copy shall not constitute notice to Buyer) to:

 

Andrea A. Bernstein (andrea.bernstein@weil.com)

Matthew J. Gilroy (matthew.gilroy@weil.com)

Weil, Gotshal and Manges LLP

767 Fifth Avenue

New York, NY  10153

Fax: (212) 310-8007

 

Notices to the Escrow Agent:

 

Marshall & Ilsley Trust Company N.A.

651 Nicollet Mall, Suite 301

Minneapolis, MN  55402

Attention:  David B. Preiner

Fax:  (612) 904-8008

 

Any party may change the address to which notices are to be delivered by giving
the other parties notice in the manner provided in this Section 8.

 

9.             Binding Effect; Assignment.  This Agreement and all of the
provisions hereof will be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.  No assignment of
the interest of any of the parties hereof shall be binding unless and until
written notice of such assignment shall be delivered to the other parties hereto
and shall require the prior written consent of the other parties (such consent
not to be unreasonably withheld); provided, however, that the Buyer may assign
its interest hereof to any of its wholly owned subsidiary without such consent.

 

10.           Severability.  If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term of this Agreement, such provision shall be fully severable; this
Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement; and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid, or unenforceable provision or by
its severance from this Agreement.

 

11.           No Strict Construction.  The language used in this Agreement will
be deemed to be the language chosen by the Indemnifying Sellers and the Buyer to
express their mutual intent, and no rule of strict construction will be applied
against any Person.

 

12.           Headings.  The headings used in this Agreement are for convenience
of reference only and do not constitute a part of this Agreement and will not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement will be enforced and construed
as if no heading had been used in this Agreement.

 

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13.           Counterparts.  This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, any one of
which need not contain the signatures of more than one person, but all such
counterparts taken together will constitute one and the same instrument.

 

14.           Governing Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Delaware without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Delaware.

 

15.           Amendment.  This Agreement may not be amended or modified, except
by a written instrument executed by the Indemnifying Sellers, the Buyer and the
Escrow Agent.

 

16.           Termination.  This Agreement shall remain in effect unless and
until (i) the Escrow Fund is distributed in full in accordance with the terms of
this Agreement, or (ii) it is terminated in a joint written instrument executed
by the Indemnifying Sellers and the Buyer, in which event, termination shall
take effect no later than twenty (20) days after notice to the Escrow Agent of
such termination.  Termination of this Agreement shall not impair the
obligations of the Indemnifying Sellers and the Buyer set forth in Sections
6(a), 6(h) and 7, which such obligations shall survive the termination of this
Agreement in accordance with the terms hereof.

 

17.           Merger or Consolidation.  Any banking association or corporation
into which the Escrow Agent (or substantially all of its corporate trust
business) may be merged, converted or with which the Escrow Agent may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Escrow Agent shall be a party, or any banking
association or corporation to which all or substantially all of the corporate
trust or escrow business of the Escrow Agent shall be sold or otherwise
transferred, shall succeed to all the Escrow Agent’s rights, obligations and
immunities hereunder without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.

 

18.           Entire Agreement.  This Agreement contains the entire agreement
and understanding among the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings, whether written or
oral, relating to such subject matter in any way.

 

19.           No Third-Party Beneficiaries.  This Agreement is for the sole
benefit of the parties hereto and their permitted successors and assigns and
nothing herein expressed or implied shall give or be construed to give any
Person, other than the parties hereto and such permitted successors and assigns,
any legal or equitable rights hereunder.

 

20.           Waiver of Jury Trial.  Each of the parties hereto waives any right
it may have to trial by jury in respect of any litigation based on, arising out
of, under or in connection with this Agreement or any course of conduct, course
of dealing, verbal or written statement or action of any party hereto.

 

11

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21.           Jurisdiction.  Each of the parties hereto submits to the
jurisdiction of any state or federal court sitting in Delaware, in any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of the action or proceedings may be heard and determined in
any such court and hereby expressly submits to the personal jurisdiction and
venue of such court for the purposes hereof and expressly waives any claim of
improper venue and any claim that such courts are an inconvenient forum.  Each
of the parties hereby irrevocably consents to the service of process of any of
the aforementioned courts in any such suit, action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to its
address set forth in Section 8, such service to become effective ten (10) days
after such mailing.

 

22.           Limited Liability.  IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE,
DIRECTLY OR INDIRECTLY, FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL LOSSES OR
DAMAGES OF ANY KIND WHATSOEVER (INCLUDING BUT NOT LIMITED TO LOST PROFITS), EVEN
IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR
DAMAGES AND REGARDLESS OF THE FORM OF ACTION.

 

23.           Force Majeure.  Notwithstanding any other provision of this
Agreement, the Escrow Agent shall not be obligated to perform any obligation
hereunder and shall not incur any liability for the nonperformance or breach of
any obligation hereunder to the extent that the Escrow Agent is delayed in
performing, unable to perform or breaches such obligation because of acts of
God, war, terrorism, fire, floods, strikes, electrical outages, equipment or
transmission failures, or other causes reasonably beyond its control.

 

24.           Identification.  The Buyer and the Indemnifying Sellers
acknowledge that the Escrow Agent, pursuant to the requirements of the USA
PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Patriot Act”), is required to obtain, verify and record information that
identifies each person who opens an account and, upon request, the Buyer and the
Indemnifying Sellers agree to provide the Escrow Agent with information
sufficient to establish their identity in accordance with the Patriot Act.

 

*     *     *     *

 

12

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IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement on
the day and year first above written.

 

 

 

LEUCADIA NATIONAL CORPORATION

 

 

 

 

 

 

 

By:

/s/ Joseph A. Orlando

 

 

Name:

Joseph A. Orlando

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

U.S. PREMIUM BEEF, LLC

 

 

 

 

 

By:

/s/ Steven D. Hunt

 

 

Name:

Steven D. Hunt

 

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

NBPCO HOLDINGS, LLC

 

 

 

 

 

By:

/s/ Eldon Roth

 

 

Name:

Eldon Roth

 

 

Title:

President

 

 

 

 

 

 

 

MARSHALL & ILSLEY TRUST COMPANY N.A.,

 

as Escrow Agent

 

 

 

 

 

 

By:

/s/ David B. Preiner

 

 

Name:

David B. Preiner

 

 

Title:

Vice President

 

[SIGNATURE PAGE TO ESCROW AGREEMENT]

 

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EXHIBIT I

 

Rejection Notice

 

Marshall & Ilsley Trust Company N.A.

651 Nicollet Mall, Suite 301

Minneapolis, MN  55402

Attention:  David B. Preiner

 

Re:                             Rejection Notice to Distribution from Escrow
Account #[Insert Escrow Account Number]

 

The undersigned hereby gives written notice (this “Rejection Notice”) pursuant
to Section 5(a)(ii) of that certain Escrow Agreement, dated as of December 30,
2011 (the “Escrow Agreement”), by and among Leucadia National Corporation, a New
York corporation, U.S. Premium Beef, LLC, a Delaware limited liability company,
NBPCo Holdings, LLC, a South Dakota limited liability company, and Marshall &
Ilsley Trust Company N.A., as escrow agent (the “Escrow Agent”), of its
objection to the release or disbursement of any amount of the Escrow Fund
pursuant to the notice of the Buyer dated as of [·] (the “Indemnification
Notice”).

 

[If objection only in part to the Buyer Indemnification Claim—The undersigned
agrees that only $[·]] of the amounts notified by the Buyer in the
Indemnification Notice, dated [·] are subject to dispute, and therefore the
undisputed amount of $[·] of the Escrow Fund may be distributed by the Escrow
Agent from the Escrow Account to the account or accounts designated by the Buyer
in such Indemnification Notice.]

 

[If objection in whole to the Buyer Indemnification Claim—The undersigned
objects to the full amount notified by the Buyer in the Indemnification Notice
dated as of [·].]

 

IN WITNESS WHEREOF, the undersigned has caused this notice to be executed and
delivered on this [·] day of [·].

 

 

 

U.S. PREMIUM BEEF, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

NBPCO HOLDINGS, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

I - 1

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EXHIBIT II

 

Joint Written Instruction Form

 

Marshall & Ilsley Trust Company N.A.

651 Nicollet Mall, Suite 301

Minneapolis, MN  55402

Attention:  David B. Preiner

 

Re:          Distribution from Escrow Account #[Insert Escrow Account Number]

 

The undersigned hereby give written notice and direction, pursuant to that
certain Escrow Agreement, dated as of December 30, 2011 (the “Escrow
Agreement”), by and among Leucadia National Corporation, a New York corporation,
U.S. Premium Beef, LLC, a Delaware limited liability company, NBPCo Holdings,
LLC, a South Dakota limited liability company, and Marshall & Ilsley Trust
Company N.A., as escrow agent (the “Escrow Agent”), to the Escrow Agent that the
Escrow Agent make a disbursement as soon as reasonably practicable (but no later
than the time for payment specified in the Escrow Agreement) in the amount and
to the account set forth below (capitalized terms used but not defined in this
notice shall have the meanings ascribed thereto in the Escrow Agreement):

 

Amount of Distribution:                                     [·]

 

Wiring Instructions:                                            [·]

 

IN WITNESS WHEREOF, the undersigned have caused this notice to be executed and
delivered on this [·] day of [·].

 

 

LEUCADIA NATIONAL CORPORATION

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

U.S. PREMIUM BEEF, LLC

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

NBPCO HOLDINGS, LLC

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

II - 1

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EXHIBIT III

 

SCHEDULE OF ESCROW AGENT FEES

 

Fee Schedule

 

·                  Acceptance Fee

 

None

 

This assumes a single escrow account and investment in appropriate Marshall
Money Market Fund Class I shares; multiple subaccounts, an unusual escrow
arrangement or use of a non-Marshall Fund investment may result in an acceptance
fee or a revised administration fee.

 

All escrow agreements are subject to review and approval by M&I Trust legal
counsel.  No fee will be charged for the legal and administrative review of
documents, initial set-up of the account, and other reasonably required services
up to and including the closing.

 

·                  Annual Administration Fee

 

$2,500

 

An annual administration fee will be charged for the performance of routine
escrow agent services.  Annual administration fees are not subject to proration
and are payable in advance at closing and on each anniversary of the closing.

 

·                  Distribution Fee

 

None

 

The annual administration fee assumes no more than five escrow disbursements
annually, which may include checks or wire transfers.  A $25 fee per
disbursement will be charged for each disbursement in excess of five annually.

 

·                  Annual Tax Fee

 

None

 

Income earned on the escrow account must be reported to the appropriate party on
the appropriate tax form.  No fee will be charged for this service if income is
allocated to no more than five parties.  A $25 fee per tax form will be charged
for each annual tax form in excess of five.

 

·                  Out-of-Pocket Expenses and Extraordinary Services

 

At cost or reasonable charge

 

Exhibit III - 1

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Reimbursement of expenses associated with the performance of M&I’s duties,
including without limitation fees and expenses of legal counsel, accountants and
other agents, and any other fees including publication or filing fees.

 

Extraordinary services include duties or responsibilities of an unusual nature
that are not described as routine services in this fee schedule, including
without limitation extraordinary services necessary to amend the escrow
agreement, prepare specialized tax or account reporting, and responding to
actual or threatened litigation, arbitration or mediation proceedings.  A
reasonable charge based on M&I’s hourly rate then in effect for such services
will be assessed.

 

·                  Other Fees (can be deleted if account is exclusively invested
in Marshall money market funds)

 

Class Action Claims

 

M&I will assess a fee to research and process security class action settlement
claims where M&I held custody of the security at the time the claim arose.  For
relationships with accounts on M&I’s Trust Accounting System at the time the
class action proceeds are received, M&I will charge $75 per class action per
trust account holder.  For relationships where the account is no longer on M&I’s
Trust Accounting System due to account closing, investment manager removal or
transfer to a successor provider M&I will charge $150 per class action per trust
account holder.  For successive class action settlement proceeds received with
respect to a previously filed claim of the issuer, M&I will charge $50 where the
account is active on our Trust Accounting System and $100 for relationships
where the account has been closed under the scenarios described above.  These
fees will be netted against the settlement proceeds credited to the account. 
M&I will not assess a fee where a prior provider held the security subject to
the class action at the time the claim arose, collected the settlement proceeds,
and forwarded the settlement to M&I as a successor provider.

 

Exhibit III - 2

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