Exhibit 10.7(a)


 


CATTLE PURCHASE AND SALE AGREEMENT


BETWEEN


NATIONAL BEEF PACKING COMPANY, LLC


AND


U.S. PREMIUM BEEF, LLC


 


THIS
CATTLE PURCHASE AND SALE AGREEMENT (this “Agreement”) is entered into as of the
             day of
                                      ,
2009, by and between NATIONAL BEEF PACKING COMPANY, LLC, a Delaware limited
liability company (“National Beef”), and U.S. PREMIUM BEEF, LLC, a Delaware
limited liability company (“USPB”). 
National Beef and USPB are referred to individually as a “Party” and
collectively as the “Parties.”


 


RECITALS


 


A.            USPB members are engaged in the
production and marketing of cattle;


 


B.            National Beef is engaged in the
business of purchasing and processing cattle and marketing beef and related
products (the “Beef Business”); and


 


C.            National Beef desires to purchase
cattle from USPB members, and USPB members desire to sell and deliver cattle to
National Beef, on the terms and conditions in this Agreement.


 


NOW,
THEREFORE, in consideration of the mutual agreements contained in this
Agreement, the parties hereto agree as follows:


 


1.             PURCHASE/SALE OF CATTLE.


 


(a)           Purchase through USPB.  Subject to the terms and conditions in this
Agreement and during the term of this Agreement, National Beef shall purchase
through USPB from its members, and USPB shall cause to be sold and delivered
from its members to National Beef, on an annual basis, a base amount of 735,385
(plus or minus ten percent (10%)) head of cattle per year.


 


(b)           Additional Cattle Delivery
Rights.  National Beef agrees
to discuss terms and conditions for USPB to increase cattle delivery rights
through cattle producers who would deliver to National Beef processing
(slaughter) facilities, at current and future locations.  If National Beef acquires or develops new
processing (slaughter) facilities, then USPB shall have a first right to
provide cattle to those facilities at the same proportion as provided to the
existing facilities as of the effective date of this Agreement.


 


(c)           Scheduling.  Delivery schedules shall be determined by
National Beef on a reasonable basis, consistent with all other provisions of
this Agreement, taking into account operational practicalities.  Delivery will be to National Beef’s beef
processing facilities located in 


 

















 


the
United States in the traditional areas where USPB members have or are
delivering cattle to National Beef processing facilities.  Upon receipt of a request by National Beef,
USPB will forecast USPB’s anticipated deliveries thirty (30) days in advance of
any scheduled deliveries to National Beef.


 


2.             PURCHASE PRICE OF CATTLE.


 


(a)           Grid Pricing
Criteria.  The purchase price for cattle purchased by
National Beef under this Agreement shall be an amount determined pursuant to
National Beef’s pricing grid for cattle to be delivered through USPB by USPB
members, as the pricing grid may be modified or supplemented from time to time
through mutual agreement by National Beef and USPB (Provided that the pricing
grid shall at all times be no less favorable than any other pricing grid being
utilized by National Beef and is competitive with National Beef’s major
competitors for purchase of cattle. “Competitive with National Beef’s major
competitors” means the pricing grid is competitive with the best pricing grids
offered by any two or more competitors.). 
For purposes of the pricing grid, National Beef shall grade beef derived
from cattle purchased under this Agreement in accordance with standard industry
practice.  An example of grid pricing is
given on Exhibit A.


 


(b)           Carcass Data. 
National Beef shall provide USPB carcass data on all cattle delivered by
USPB members to National Beef in a manner similar to the customary information
provided by National to USPB, an example of which is in Exhibit B, or as
otherwise agreed to by the Parties.


 


3.             PAYMENT OF PURCHASE PRICE.  Cattle purchased under this Agreement from USPB members shall be paid
for by National Beef on a finish and grade basis consistent with standard
industry practice, or on any other basis that is consistent with any other
standard industry practice utilized by National Beef with respect to cattle
purchased from third parties, and shall in any event be in accordance with
applicable law.


 


4.             CATTLE QUALITY.  For purposes of this Agreement, USPB agrees
that USPB members will not deliver to National Beef any cattle that have been
condemned by the United States Department of Agriculture or any other
regulatory authority over the Beef Business.


 


5.             PERMITS.  USPB members shall provide National Beef with
all permits necessary to qualify cattle for interstate shipment, if applicable,
in the same manner as required for other cattle purchased by National
Beef.  Each Party otherwise covenants
with the other Party to perform the party’s obligations under this Agreement in
accordance with all applicable laws.


 


6.             WEIGHING AND TRANSPORTATION.  All cattle purchased by National Beef from
USPB under this Agreement shall be weighed and transported according to
standard industry practice and on the same basis as other cattle purchased by
National Beef (or as otherwise mutually determined by the Parties through the
pricing grid determination process).


 


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7.             TERM OF AGREEMENT.  The term of this Agreement shall commence on
the date first written above and shall continue so long as USPB holds an
ownership interest in National Beef, subject to the following:


 


(1)           if there is a
material breach of any agreement or covenant of USPB contained in this
Agreement, National Beef may give written notice of the breach to USPB and, if
the breach is not cured within a period (“USPB’s Cure Period”) of thirty (30)
days following the notice of breach by National Beef to USPB, National Beef
shall have the right to terminate all rights of USPB under this Agreement upon
written termination notice to USPB within thirty (30) days following USPB’s
Cure Period, provided, however, if the breach is related to a shortage in the
number of cattle delivered by USPB and its members to National in a given year,
then USPB shall have the right to make up delivery shortages by increasing
cattle deliveries on a prorated basis equal to 10% of the annual deliveries per
month until the shortage in deliveries is made up.  National Beef must continue to purchase and
pay for cattle as provided in this Agreement that are delivered by USPB members
to National Beef for a period of six (6) months following any notice of
termination given under this Section 7(1);


 


(2)           if there is a
material breach of any agreement or covenant of National Beef contained in this
Agreement with respect to USPB, and delivery of cattle by USPB members to
National Beef or failure of National Beef to receive the cattle, USPB may give
written notice of the breach to National Beef and, if the breach is not cured
within a period (“National Beef Cure Period”) of thirty (30) days following the
notice of breach by USPB to National Beef or, in the case of a failure of
National Beef to make a payment to USPB or USPB members, ten (10) days
following the notice of breach by USPB to National Beef, then USPB shall have
the right to terminate all obligations of USPB and its members under this
Agreement upon notice to National Beef, provided that the notice of termination
is given by USPB to National Beef within thirty (30) days following the
National Beef Cure Period.  USPB shall
cause its members to continue to deliver cattle to National Beef for a period
of six (6) months following the termination if the USPB members are paid
as provided in this Agreement for the cattle delivered;


 


(3)           if National Beef, Inc.
(“NBI”) is no longer acting as the sole manager of National Beef or there is a change
in control of NBI or National Beef such that (i) the number of directors
of NBI designated by USPB pursuant to any stockholders agreement or other
agreement or arrangement no longer constitutes a majority of the Board of
Directors of NBI, (ii) NBI and any parties who are members of National
Beef as of the date of this Agreement do not collectively own more than 50% of
the membership interests of National Beef,  or (iii) National Beef is not the
controlling owner of any of the processing facilities where USPB members
deliver cattle under this Agreement, then USPB may terminate this Agreement by
providing written notice to National Beef. 
USPB shall cause its members to continue to deliver cattle to National
Beef for a period of six (6) months following the termination if the USPB
members are paid as provided in this Agreement for the cattle delivered;


 


(4)           if, at any time
after this Agreement has been in effect USPB divests completely of its
ownership interest in National Beef, this Agreement shall terminate; provided,
however, that the Parties may agree in writing to continue this Agreement under
mutually


 


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acceptable terms.  USPB shall
cause its members to continue to deliver cattle to National Beef for a period
of six (6) months following a termination under this Section 7(4) if
the USPB members are paid as provided in this Agreement for the cattle delivered;
and


 


(5)           notwithstanding the
foregoing clauses (1), (2), (3) and (4), the obligation to purchase and
pay for cattle and the obligation to deliver cattle under this Section 7,
and rights of either Party to collect applicable damages and to exercise its
remedies for failure to purchase and deliver cattle as provided under this
Agreement, shall survive any termination of this Agreement.


 


8.             WARRANTIES.  USPB MAKES NO
WARRANTIES EITHER EXPRESS OR IMPLIED TO NATIONAL BEEF OTHER THAN AS EXPRESSLY
PROVIDED IN THIS AGREEMENT AND, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,
SPECIFICALLY MAKES NO WARRANTY AS TO ANY SPECIFIC GRADE OF BEEF TO BE DERIVED
FROM ANY CATTLE SOLD UNDER THIS AGREEMENT, AND DISCLAIMS ANY WARRANTIES OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE.


 


9.             DISPUTE RESOLUTION.  Any and all disputes which cannot be settled
amicably, including any ancillary claims of any party, arising out of, relating
to or in connection with the interpretation, performance or non-performance of this
Agreement (each a “Dispute”) shall be finally settled by arbitration conducted
by a single arbitrator in Missouri in accordance with the then-existing
American Arbitration Association Rules and Procedures for commercial
arbitration.  If the parties to the
Dispute fail to agree on the selection of an arbitrator within ten (10) days
of the receipt of the request for arbitration, the American Arbitration
Association shall make the appointment. 
The arbitrator shall be a lawyer admitted to the practice of law in the
State of Missouri and shall conduct the proceedings in the English
language.  Performance under this
Agreement shall continue if reasonably possible during any arbitration
proceedings.


 


10.          REMEDIES.  If either Party is in default under this Agreement,
the other Party may exercise any and all rights and remedies available to the
Party under this Agreement, under any applicable Uniform Commercial Code, or
otherwise at law or in equity. 
Notwithstanding other provisions of this Section, if a force majeure
event occurs precluding National Beef from receiving and/or processing cattle,
National Beef must still purchase cattle from USPB and its members as provided
under this Agreement.  Cattle available
for delivery from USPB and its members to a plant during a force majeure event
are defined as “Force Majeure Cattle.” 
Notwithstanding the foregoing National Beef shall have no obligation to
purchase Force Majeure Cattle unless the logistics and financial components of
purchasing the Force Majeure Cattle (such as delivery to another plant within a
reasonable distance to the plant affected by the force majeure event) would be
substantially the same to National Beef as they would have been without the
occurrence of the force majeure event. 
National Beef shall notify USPB in writing if National Beef will not
purchase Force Majeure Cattle and take delivery at a plant with a force majeure
event and must offer to purchase the Force Majeure Cattle with pricing
adjustments to compensate National Beef for the actual additional costs to
purchase the Force Majeure Cattle over the purchase of the Force Majeure Cattle
if the force majeure event had not occurred.


 


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11.          NOTICES.  All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered by hand, five (5) days after mailed by certified mail with
postage paid and return receipt requested, or sent by facsimile transmission to
the parties at the following addresses and facsimile numbers (or at another
address or facsimile number for a Party as the Party shall designate in a
notice given pursuant to this Section):


 


(a)           If to National
Beef, to:


 


Chief Executive Officer


National Beef Packing Company, LLC


P.O. Box 20046


Kansas City, MO  64195-0046


 


With a copy to:


 


General Counsel


National Beef Packing Company, LLC


P.O. Box 20046


Kansas City, MO  64195-0046


 


(b)           If to USPB, to:


 


Steven D. Hunt, CEO


U.S. Premium Beef, LLC


P.O. Box 20103


Kansas City, MO  64195


Facsimile:  (816) 713-8810


 


with a copy to:


 


Stoel Rives LLP


Attn:  Mark J. Hanson


33 South Sixth Street


Suite 4200


Minneapolis, MN 55402


Facsimile:  (612) 373-8881


 


12.          ENTIRE AGREEMENT.  This Agreement contains all of the terms
agreed upon by the Parties with respect to the subject matter of this Agreement
and supersedes all prior agreements of the Parties or their predecessors in
interest as to the subject matter of this Agreement.  This Agreement may not be modified except in
writing, signed by the Parties hereto, that specifically references this
Agreement.


 


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13.          ASSIGNMENT.  This Agreement may not be assigned by any
Party without prior written consent of the other Party.  This Agreement shall be binding upon, and
inure to the benefit of, the Parties and their respective heirs, legal
representatives, successors, and permitted assigns. Notwithstanding the
foregoing, Beef Co may assign this agreement to any wholly owned subsidiary or
affiliate without any prior written consent.


 


14.          CONSTRUCTION.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Kansas.  The Parties agree that if any part, term or
provision of this Agreement is held by a court of competent jurisdiction to be
illegal or unenforceable or in conflict with any controlling state law, the
validity of the remaining parts, terms and provisions of this Agreement shall
not be affected, and the rights and obligations of the Parties shall be
construed and enforced as if this Agreement did not contain the particular
part, term or provision held to be illegal or unenforceable or in conflict with
any controlling state law.


 


[Signature page follows]


 


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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the             
day of                                     ,
2009, to be effective as of the closing of the transactions under the [S-1 of
NBP, Inc.].


 


 


	
   

  	
  NATIONAL
  BEEF PACKING COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S.
  PREMIUM BEEF, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Title:

  	
   

  
				



 


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