EIGHTH AMENDMENT TO CREDIT AGREEMENT

 

This EightAmendment to Credit Agreement (“**Amendment**”) is made as of April 14, 2009,by and among U.S. PREMIUM BEEF, LLC, a****Delaware limited liabilitycompany (together with its successors and assigns, the “**Borrower**”), and COBANK,ACB, an agricultural credit bank (“**CoBank**”), as Agent (in such capacity,the “**Agent**”) and as the sole Syndication Party as of the date of thisAmendment.

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**RECITAL**

 

This Amendmentis made with respect to the Credit Agreement (Term Loan) dated as of November25, 1997 (as amended, modified, supplemented, renewed or restated from time totime, the “**Agreement**”).  Capitalized terms that are not defined in thisAmendment shall have the meanings assigned to them in the Agreement.  The partiesdesire to re-advance amounts of the Loan from time to time up to $10,000,000 inthe aggregate outstanding and to otherwise amend certain provisions of theAgreement.

 

NOW, THEREFORE,in consideration of the foregoing and of the terms and conditions contained inthis Amendment, and of any loans or extensions of credit or other financialaccommodations heretofore, now or hereafter made to or for the benefit ofBorrower, the parties agree as follows:

 

            1.         Borroweris presently indebted under the Loan in the amount $2,316,763.34 (said existingindebtedness may sometimes be referred to herein as “**Tranche A**” of theLoan).  All terms of the Agreement relating to Tranche A of the Loan, includingbut not limited to the accrual and repayment of interest and the repayment of principalshall not be affected by this Amendment.  

 

2.         Subjectto the conditions set forth in Section 9 hereof and Sections 11.1.12, 11.1.23,11.2.1, 11.2.9 and 11.2.10 and 11.3 of the Agreement, but otherwise the termsof the Agreement to the contrary notwithstanding, the Syndication Partiesagree, each as to their Syndication Share to, in addition to Tranche A of theLoan, to re-advance amounts of the Loan previously repaid, from time to timethrough the Maturity Date, up to $10,000,000 in the aggregate outstanding (saidre-advances may sometimes be referred to herein as “**Tranche B**” of theLoan).  Amounts re-advanced and repaid under Tranche B of the Loan may be againre-advanced, provided that at no time shall the aggregate amount outstanding underTranche B of the Loan exceed $10,000,000.  As of the date of this Amendment theSyndication Share of CoBank is 100%.  Amounts re-advanced and repaid under TrancheB of the Loan may be used by Borrower for working capital and for generalcorporate purposes.  Notwithstanding the foregoing, during at least 30consecutive days during each calendar year the amount outstanding under TrancheB of the Loan shall be $0.  The Aggregate Commitment shall be $12,316,763.34. The amount set forth in the Note payable to CoBank shall be deemed to read $12,316,763.34and the Agreement (as amended by this Amendment) shall govern and control overany contrary terms of the Note.

 

 

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3.         Termsof the Agreement to the contrary notwithstanding, as to Tranche B of the Loanthe Maturity Date shall be April 30, 2011.  If not due sooner by reason ofacceleration, the principal amount outstanding under Tranche B of the Loan togetherwith any unpaid interest accrued thereon, shall be due and payable on saidMaturity Date.

 

4.         Termsof the Agreement to the contrary notwithstanding, as to Tranche B of the Loan,interest shall accrue and be payable as follows:

 

(a)        Advancesmay be maintained as Base Rate Advances or LIBOR Rate Advances according to thesame terms and procedures as are set forth in the Sixth Amended and RestatedCredit Agreement made as of the 25th day of July, 2007, as amended by the Firstand Second Amendments thereto (but not as may be subsequently amended unlessagreed by the appropriate parties to this Agreement) by and among National BeefPacking Company, LLC, a****Delaware limited liability company (“**NationalBeef**”), and the other financial institutions signatory thereto (the “**NationalBeef Agreement**”);

 

(b)        Forpurposes of determining Applicable Margin (but for no other purpose), BorrowingBase Availability shall have the meaning assigned to it in the National BeefAgreement;

 

(c)        Applicable Margin shall have themeaning assigned to it in the National Beef Agreement for Line of Credit Loans to National Beef with reference to the Borrowing Base Availabilityof National Beef, plus, in each case one quarter of one percent (0.25%)**;**

           

(d)        Intereston Advances that are maintained as Base Rate Advances shall be accrued andshall be payable in the same manner and according to the same terms as set forthfor Base Rate Advances under the National Beef Agreement (making reference tothe Base Rate as defined in the National Beef Agreement and the Applicable Margin);

           

(e)        Intereston Advances that are maintained as LIBOR Rate Advances shall be accrued andshall be payable in the same manner and according to the same terms as setforth for LIBOR Rate Advances under the National Beef Agreement (makingreference to the LIBOR Rate as defined in the National Beef Agreement, InterestPeriods as defined in the National Beef Agreement, and the Applicable Margin);and

           

(f)         Afterthe occurrence of an Event Default and for so long as such Event of Default iscontinuing, the Agent may notify Borrower that any and all amounts due shallbear interest, from the date of such notice by the Agent and for so long assuch Event of Default continues, payable on demand, at a rate per annum (the “**DefaultRate**”) equal to the lesser of (i) with respect to a Base Rate Advance, thesum of two percent (2.0%) per annum plus the Base Rate (as defined in the NationalBeef Agreement) in effect from time to time plus the Applicable Margin; or (ii)with respect to a LIBOR Rate Advance, during the Interest Period (as defined inthe National Beef Agreement) in which the Event of Default has occurred, thesum of two percent (2.0%) per annum plus the LIBOR Rate (as defined in the NationalBeef Agreement) then in effect for such LIBOR Rate Advance plus the ApplicableMargin, and in Interest Periods (as defined in the National Beef Agreement) subsequentto that in which the Event of Default occurred, the Default Rate applicable toa Base Rate Advance as calculated under (i) hereof.

 

 

 

 

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5.         Termsof the Agreement to the contrary notwithstanding, Borrower agrees to pay to theAgent for distribution to the Syndication Parties (based on their applicable respectiveSyndication Shares) a quarterly non-use fee on the daily average unused amountof Tranche B of the Loan at the rate per annum of one quarter of one percent(0.25%) (the “**Non-Use Fee**”).  The Non-Use Fee for each calendar quartershall be due and payable in arrears on the first Business Day of each January,April, July and October hereafter through the Maturity Date applicable to theLine of Credit Loans.  A pro-rated non-use fee shall be due and payable on thefirst Business Day of the quarter following the date of this Amendment and onthe Maturity Date applicable to the Tranche B of the Loan.  The Non-Use Feeshall be earned as it accrues.

 

6.         Termsof the Agreement to the contrary notwithstanding, Working Capital and Net Worthshall be calculated on a consolidated basis.

 

7.         Section13.11 of the Agreement is hereby amended in its entirety to read as follows:

 

“**13.11Payment of Dividends. **Borrower shall not, directly or indirectly, declareor pay any dividends on account of any units of any class of its equity or anyof its patronage notices now or hereafter outstanding, or set aside orotherwise deposit or invest any sums for such purpose, or redeem, retire,defease, purchase or otherwise acquire any units of any class of its equity orany of its patronage notices (or set aside or otherwise deposit or invest anysums for such purpose) for any consideration other than additional units orpatronage notices or apply or set apart any sum, or make any other distribution(by reduction of capital or otherwise) in respect of any such units of anyclass of its equity or any of its patronage notices, or make any otherdistribution or allocation of its earnings, surplus or assets to any holder ofunits of any class of its equity or any of its patronage notices, or agree todo any of the foregoing; provided, that Borrower may:  (a) so long asBorrower is treated as a partnership for tax purposes, make distributions toits members on account of the federal and state income taxes that would beassessed to such members based on Borrower’s income, provided that theaggregate amount of all such distributions with respect to any calendar yearmay not exceed the amount of such income which would be taxable to such membersfor such calendar year, multiplied by the maximum applicable state and federalincome tax rate for the calendar year in which taxed, and (b) in addition tothe foregoing, make disbursements with respect to any units of any class of itsequity or any of its patronage notices, or both; provided, that theaggregate amount of disbursements pursuant to this clause (b) shall not exceed$2,000,000 in any one calendar year.”

 

 

 

 

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8.         TheLoan (Tranche A of the Loan and Tranche B of the Loan) shall continue to besecured as provided for in the Security Documents.

 

9.         Inaddition to all other Event’s of Default set forth in the Agreement, theoccurrence of a Matured Default under the National Beef Agreement shall be an Eventof Default.  Agent shall use its commercially reasonable best efforts toprovide to Borrower any default notice or termination notice under the NationalBeef Agreement at the same time that such notices are delivered to NationalBeef.

 

10.       This Amendment shall be effective as ofits date, conditioned upon the execution and delivery to the Agent in form andsubstance acceptable to the Agent of: (a) this Amendment, executed by Borrowerand the Agent; and (b) Secretaries Certificates from Borrower relating toresolutions, incumbency, etc; and payment of an Amendment Fee to the Agent inthe amount of $25,000.

 

11.       This Amendment shall be an integral partof the Agreement, and all of the terms set forth therein are hereby incorporatedin this Amendment by reference, and all terms of this Amendment are herebyincorporated into said Agreement as if made an original part thereof.  All ofthe terms and conditions of the Agreement, which are not modified in thisAmendment, shall remain in full force and effect.  To the extent the terms ofthis Amendment conflict with the terms of the Agreement, the terms of thisAmendment shall control.

 

12.       This Amendment may be executed in severalcounterparts, each of which shall be construed together as one original.  Facsimile(or other electronic) signatures on this Amendment shall be considered asoriginal signatures.

 

[Signature Pages Follow]

 

 

 

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment asof the day and year first herein above written.

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| **U.S. PREMIUM BEEF, LLC**                                          |
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| ** **                                                          |
| **By: __________________________**                                  |
| **Its: __________________________**                                 |
| ** **                                                          |
| **COBANK, ACB, individually and as 			Agent and Syndication Party** |
|                                                                |
| By: __________________________                                      |
| **Its: __________________________**                                 |

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**{SIGNATURE PAGE TOEIGHTH AMENDEMENT TO CREDIT AGREEMENT}**