jg12-3011_8ke102.htm





 





Exhibit 10.2


 




Execution Version















 







 


AMENDED AND RESTATED CREDIT AGREEMENT


 







 







 


by and between


 


NATIONAL BEEF PACKING COMPANY, LLC,


 


CERTAIN OF ITS SUBSIDIARIES,


 


VARIOUS ISSUERS AND LENDERS,


 


COÖPERATIEVE CENTRALE RAIFFEISEN BOERENLEENBANK B.A., “RABOBANK NEDERLAND”, NEW YORK BRANCH


 


and


 


U.S. BANK NATIONAL ASSOCIATION,


 


as Documentation Agents,




 


BANK OF AMERICA, N.A.


 


and


 


BANK OF MONTREAL,


 


as Syndication Agents,


 


and


 


COBANK, ACB, as Lead Arranger,


 


Sole Bookrunner, Swing Line Lender


 


and Administrative Agent


Dated as of June 4, 2010


 

















85589953.12




  





  











  



TABLE OF CONTENTS














	 	 	
 Page


 


	
ARTICLE I

	
DEFINITIONS

	
1


	  	
1.1

	
Terms Defined in Colorado Uniform Commercial Code

	
2


	  	
1.2

	
Defined Terms

	
2


	  	
1.3

	
Accounting Terms

	
25


	
ARTICLE II

	
LOANS, SWING LINE AND LETTERS OF CREDIT

	
25


	  	
2.1

	
Loan Facilities

	
26


	  	
2.2

	
Letters of Credit

	
31


	
ARTICLE III

	
INTEREST

	
34


	  	
3.1

	
Interest

	
34


	  	
3.2

	
Voluntary Conversion of Advance

	
35


	
ARTICLE IV

	
PAYMENTS; PREPAYMENTS; ETC

	
35


	  	
4.1

	
Payment of Loans and Swing Line Loans

	
36


	  	
4.2

	
Optional Prepayments of the Loans

	
36


	  	
4.3

	
Term Loan Installments

	
37


	  	
4.4

	
Mandatory Prepayments of Notes

	
37


	  	
4.5

	
Termination of the Commitments

	
37


	
ARTICLE V

	
LIBOR RATE LOANS; INCREASED COSTS; TAXES, ETC

	
38


	  	
5.1

	
LIBOR Rate Advances

	
38


	  	
5.2

	
Increased Costs

	
38


	  	
5.3

	
Funding Losses

	
39


	  	
5.4

	
Capital Adequacy Requirements

	
40


	  	
5.5

	
Taxes

	
40


	
ARTICLE VI

	
FEES

	
42


	  	
6.1

	
Non-Use Fee

	
42


	  	
6.2

	
LC Fees

	
43


	  	
6.3

	
Upfront Fees

	
43


	  	
6.4

	
Calculation of Fees

	
43


	  	
6.5

	
Fees Not Interest; Nonpayment

	
43


	
ARTICLE VII

	
REPRESENTATIONS AND WARRANTIES

	
44


	  	
7.1

	
Judgments, Claims Litigation and Proceedings

	
44


	  	
7.2

	
Contract Defaults and Disputes

	
44


	  	
7.3

	
Licenses, Patents, Etc

	
44


	  	
7.4

	
Title to Assets

	
44







 


 




  i





  











  






 



	 	 	 	
 Page


 


	  	
7.5

	
Tax Liabilities

	
45


	  	
7.6

	
Indebtedness and Producer Payables

	
45


	  	
7.7

	
Other Fictitious Names

	
45


	  	
7.8

	
Affiliates

	
45


	  	
7.9

	
Environmental Matters

	
46


	  	
7.10

	
Bank Accounts

	
46


	  	
7.11

	
Other Agreements or Restrictions

	
46


	  	
7.12

	
[Intentionally Omitted]

	
47


	  	
7.13

	
Existence

	
47


	  	
7.14

	
Authority

	
47


	  	
7.15

	
Binding Effect

	
48


	  	
7.16

	
Correctness of Financial Statements

	
48


	  	
7.17

	
Employee Controversies

	
48


	  	
7.18

	
Compliance with Laws and Regulations

	
48


	  	
7.19

	
Solvency

	
49


	  	
7.20

	
ERISA Matters

	
49


	  	
7.21

	
Margin Security

	
50


	  	
7.22

	
Investment Company Act Not Applicable

	
50


	  	
7.23

	
[Intentionally Omitted]

	
50


	  	
7.24

	
No Consent

	
50


	  	
7.25

	
Full Disclosure

	
50


	  	
7.26

	
Intellectual Property

	
50


	  	
7.27

	
Compliance with Federal Food Security Act

	
51


	  	
7.28

	
Survival of Warranties

	
51


	  	
7.29

	
CoBank Equity Interests

	
51


	
ARTICLE VIII

	
CONDITIONS

	
52


	  	
8.1

	
Conditions to the Restatement Date and the Initial Borrowing

	
52


	  	
8.2

	
Conditions Precedent to All Borrowings, Conversions, Roll Overs and Issuances of Letters of Credit

	
53


	
ARTICLE IX

	
AFFIRMATIVE COVENANTS

	
54


	  	
9.1

	
Financial Statements

	
55


	  	
9.2

	
Conduct of Business

	
56


	  	
9.3

	
Maintenance of Properties

	
56







 


 




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Page


 


	  	
9.4

	
Liability Insurance

	
56


	  	
9.5

	
Property Insurance

	
56


	  	
9.6

	
[Intentionally Omitted]

	
58


	  	
9.7

	
Pension Plans

	
58


	  	
9.8

	
Notice of Suit, Adverse Change, ERISA Event or Default

	
58


	  	
9.9

	
[Intentionally Omitted]

	
58


	  	
9.10

	
Books and Records; Separate Existence

	
58


	  	
9.11

	
Laws and Obligations

	
58


	  	
9.12

	
Environmental Laws

	
59


	  	
9.13

	
Trade Accounts Payable and Producer Payables

	
59


	  	
9.14

	
Compliance with National Security Laws

	
60


	  	
9.15

	
Post Closing Matters

	
60


	  	
9.16

	
Funded Debt to EBITDA Ratio

	
61


	  	
9.17

	
Adjusted Net Worth

	
61


	  	
9.18

	
Fixed Charge Coverage Ratio

	
61


	  	
9.19

	
Additional Collateral

	
61


	
ARTICLE X

	
NEGATIVE COVENANTS

	
62


	  	
10.1

	
Encumbrances

	
62


	  	
10.2

	
Consolidations, Mergers or Acquisitions

	
63


	  	
10.3

	
Deposits, Investments, Advances or Loans

	
63


	  	
10.4

	
Indebtedness

	
64


	  	
10.5

	
Guarantees and Other Contingent Obligations

	
65


	  	
10.6

	
Disposition of Property

	
65


	  	
10.7

	
Change in Nature of Business

	
65


	  	
10.8

	
ERISA Matters

	
65


	  	
10.9

	
[Intentionally Omitted]

	
65


	  	
10.10

	
Equity Distributions

	
65


	  	
10.11

	
Amendment of Organizational Documents

	
66


	  	
10.12

	
Lease Limitations

	
66


	  	
10.13

	
Use of Other Fictitious Names

	
66


	  	
10.14

	
[Intentionally Omitted.]

	
67


	  	
10.15

	
Fiscal Year

	
67


	  	
10.16

	
Limitations on Bank Accounts

	
67







 


 




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Page


 


	  	
10.17

	
Use of Trademarks

	
67


	  	
10.18

	
Amendments of Other Documents

	
67


	  	
10.19

	
Ownership of Cattle and Deposits on Cattle with Feeders

	
67


	  	
10.20

	
Enforcement of Certain Documents

	
67


	
ARTICLE XI

	
DEFAULT REMEDIES

	
68


	  	
11.1

	
Acceleration

	
68


	  	
11.2

	
Other Remedies

	
68


	  	
11.3

	
Right to Cure

	
68


	
ARTICLE XII

	
THE AGENT

	
69


	  	
12.1

	
Authorization and Action

	
69


	  	
12.2

	
Agent’s Reliance, Etc

	
70


	  	
12.3

	
Notices of Defaults

	
71


	  	
12.4

	
The Agent as a Lender, Fiduciary

	
71


	  	
12.5

	
Non Reliance on Agent and Other Lenders

	
72


	  	
12.6

	
Indemnification of the Agent

	
72


	  	
12.7

	
Successor Agent

	
73


	  	
12.8

	
Verification of Borrowing Notices

	
73


	  	
12.9

	
Action Upon Instructions of the Lenders

	
73


	  	
12.10

	
Action Upon Request of the Borrower

	
74


	  	
12.11

	
Additional Functions of Certain Lenders

	
74


	
ARTICLE XIII

	
MISCELLANEOUS

	
74


	  	
13.1

	
Timing of Payments

	
74


	  	
13.2

	
Attorneys’ Fees and Costs

	
75


	  	
13.3

	
Expenditures by the Agent

	
75


	  	
13.4

	
The Agent’s Costs as Additional Liabilities

	
76


	  	
13.5

	
Indemnification

	
76


	  	
13.6

	
Inspection

	
78


	  	
13.7

	
Examination of Banking Records

	
78


	  	
13.8

	
Governmental Reports

	
79


	  	
13.9

	
Reliance by the Agent, the Issuers and the Lenders

	
79


	  	
13.10

	
Parties

	
79


	  	
13.11

	
Applicable Law; Severability

	
79







 


 




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Page


 


	  	
13.12

	
SUBMISSION TO JURISDICTION; WAIVER OF BOND AND TRIAL BY  JURY

	
79


	  	
13.13

	
Application of Payments

	
80


	  	
13.14

	
Marshaling; Payments Set Aside

	
82


	  	
13.15

	
Section Titles

	
82


	  	
13.16

	
Continuing Effect

	
82


	  	
13.17

	
No Waiver

	
82


	  	
13.18

	
Notices

	
83


	  	
13.19

	
Maximum Interest

	
84


	  	
13.20

	
Representations by the Lenders and Swing Line Lender

	
85


	  	
13.21

	
Counterparts and Facsimile Signatures

	
85


	  	
13.22

	
Set-off

	
85


	  	
13.23

	
Assignments and Participation

	
86


	  	
13.24

	
Loan Agreement Controls

	
88


	  	
13.25

	
Obligations Several

	
88


	  	
13.26

	
Pro Rata Treatment

	
89


	  	
13.27

	
Confidentiality

	
89


	  	
13.28

	
Independence of Covenants

	
90


	  	
13.29

	
Amendments and Waivers; Commitment Increases

	
90


	  	
13.30

	
Binding Effect

	
91


	  	
13.31

	
FINAL AGREEMENT

	
91


	  	
13.32

	
[Intentionally Omitted.]

	
91


	  	
13.33

	
USA Patriot Act Notice

	
91


	  	
13.34

	
Subsidiaries

	
91


	  	
13.35

	
Amendment and Restatement; Renewal Notes.

	
92























v




  





  











  








List of Exhibits







Exhibit 1A                      Loan Commitment Amounts and Percentages


Exhibit 1B                      Borrowing Base Calculation


Exhibit 1C                      Borrowing Base Certificate


Exhibit 1D                      Form of NB, Inc. Acknowledgment


Exhibit 1E                      Letters of Credit


Exhibit 2A                      Line of Credit Note


Exhibit 2B                      Term Note


Exhibit 2C                      Swing Line Note


Exhibit 3A(i)                      Account Debtors of Borrower


Exhibit 3B(i)                      Borrower’s Inventory Locations


Exhibit 7A                      Litigation


Exhibit 7B                      Material Contract Defaults


Exhibit 7C                      Intellectual Property


Exhibit 7D                      Existing Liens


Exhibit 7E                      Tax Liability Issues


Exhibit 7F                      Indebtedness


Exhibit 7G                      Prior Names


Exhibit 7H                      Affiliates


Exhibit 7I                      Environmental


Exhibit 7J                      Bank Accounts


Exhibit 7K                      Other Agreements


Exhibit 7L                      Employee Controversies


Exhibit 7M                      ERISA Matters


Exhibit 7N                      Intellectual Property Litigation


Exhibit 8A                      List of Closing Documents


Exhibit 9A                      Compliance Certificate


Exhibit 9B                      Property Insurance


Exhibit 13A                      Form of Assignment


Exhibit 13B                      List of Farm Credit System Voting Participants


Exhibit 13C                      Form of Voting Participant Notice and Consent












 


1-PH/2700959.9




  





  











  








AMENDED AND RESTATED CREDIT AGREEMENT


 


THIS AMENDED AND RESTATED CREDIT AGREEMENT (as amended, amended and restated, supplemented, renewed or otherwise modified from time to time, this “Agreement”) is made as of June 4, 2010, by and between NATIONAL BEEF PACKING COMPANY, LLC, a Delaware limited liability company (together with its successors as permitted herein, the “Borrower”), certain of its Subsidiaries, as Subsidiary Loan Parties, the lenders from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), COÖPERATIEVE CENTRALE RAIFFEISEN BOERENLEENBANK B.A., “RABOBANK NEDERLAND”, NEW YORK BRANCH and U.S. BANK NATIONAL ASSOCIATION, as Documentation Agents, BANK OF AMERICA, N.A. and BANK OF MONTREAL, as Syndication Agents, and COBANK, ACB, an agricultural credit bank (“CoBank”), as Lead Arranger, Sole Bookrunner, Swing Line Lender and administrative agent for the Lenders, the Issuers and the Swing Line Lender hereunder (in its capacity as administrative agent, together with its successors and assigns in such capacity, the “Agent”).


 


RECITALS


 


WHEREAS, the Borrower, Rabobank, the Agent, and the lenders from time to time party thereto (collectively, the “Existing Lenders”) are parties to a Sixth Amended and Restated Credit Agreement dated as of July 25, 2007, as amended by a First Amendment to Sixth Amended and Restated Credit Agreement dated as of June 27, 2008, a Second Amendment to Sixth Amended and Restated Credit Agreement dated as of April 13, 2009, and a Third Amendment to Sixth Amended and Restated Credit Agreement dated as of October 8, 2009 (as so amended, together with its predecessor agreements, the “Existing Credit Agreement”), pursuant to which the Existing Lenders have extended certain revolving credit loans and term loans to the Borrower;


 


WHEREAS, the Borrower has requested that the Existing Lenders and certain new Lenders increase and extend the Line of Credit Loan Facility and the Term Loan Facility in the Existing Credit Agreement, and that other changes be made to the terms of the Existing Credit Agreement; and


 


WHEREAS, as of and on, but subject to the occurrence of, the Restatement Date, the Existing Line of Credit Notes will be extended and renewed by the Line of Credit Notes, the Existing Term Notes will be extended and renewed by the Term Notes and the Existing Credit Agreement shall be amended and restated as set forth in this Agreement;


 


NOW, THEREFORE, in consideration of the foregoing and of the terms and conditions contained in this Agreement, and for any loans or extensions of credit or other financial accommodations at any time made to or for the benefit of the Borrower by the Agent or the Lenders, the parties hereto agree that as of and on, but subject to the occurrence of, the Restatement Date, the Existing Credit Agreement shall be amended and restated in its entirety to read as follows:


 


ARTICLE I


DEFINITIONS


 






  





1











  








1.1 Terms Defined in Colorado Uniform Commercial Code


 


All capitalized terms contained in this Agreement or any of the other Financing Documents which are not specifically defined herein or therein shall have the meanings set forth in the Uniform Commercial Code of Colorado (“Code”) to the extent the same are used or defined therein, specifically including, but not limited to the following: Accounts, Account Debtor, Chattel Paper, Commercial Tort Claims, Commodity Accounts, Commodity Contracts, Deposit Accounts, General Intangibles, Goods, Investment Property, Instruments, Letter of Credit Rights, Money, Payment Intangibles, Securities Accounts and Tangible Chattel Paper.


 


1.2 Defined Terms.


 


When used herein, the following capitalized terms shall have the meanings indicated, whether used in the singular or the plural:


 


“$150 Million Basket” has the meaning set forth in Section 10.10 hereof.


 


“Adjusted Net Worth” means, on any date of determination, an amount equal to the Net Worth of Borrower and its consolidated Subsidiaries adjusted to exclude any negative impact occurring as a result of Borrower making any Equity Distributions in accordance with the $150 Million Basket.


 


“Advance” means any portion of the outstanding Line of Credit Loans or Term Loans by a Lender as to which one of the available interest rate options and, if pertinent, an Interest Period, is applicable.  An Advance may be a Base Rate Advance or a LIBOR Rate Advance.


 


“Affiliate” means any Person: (a) that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, the Borrower; (b) that directly or beneficially owns or holds ten percent (10%) or more of any class of the Borrower’s equity; (c) ten percent (10%) or more of the equity interest of which is owned directly or beneficially or held by the Borrower; or (d) that is a member of the Borrower.


 


“Agent” has the meaning set forth in the introduction hereof and shall include any successor agent which has been appointed in accordance with Section 12.7.


 


“Agent’s Letter” means the letter agreement between the Borrower and CoBank dated April 13, 2010.


 


“Applicable Margin” means, with respect to Line of Credit Loans, Swing Line Loans, Term Loans, LC Fees or Non-Use Fees, as the case may be, the rates per annum set forth below for the then applicable “Financial Performance Level” referenced in the first column below (each being called a “Financial Performance Level”):


 







 



	
Financial Performance Level:

	
Funded Debt to EBITDA Ratio:

	
Base Rate Advance Line of Credit Loans, Swing Line Loans and Term Loans:

	
LIBOR Rate Line of Credit Loans and Term Loans:

	
LC Fee:

	
Non-Use Fee:





 


 




  





2











  






 


	
Level I

	
Less than 1.00: 1.00

	
1.25%

	
2.25%

	
2.25%

	
0.25%


	
Level II

	
Greater than or equal to 1.00:1.00 and less than 2.00:1.00

	
1.50%

	
2.50%

	
2.50%

	
0.375%


	
Level III

	
Greater than or equal to 2.00:1.00 and less than 3.00:1.00

	
1.75%

	
2.75%

	
2.75%

	
0.50%


	
Level IV

	
Greater than or equal to 3.00:1.00

	
2.25%

	
3.25%

	
3.25%

	
0.625%












The initial Financial Performance Level shall be Level II until the Borrower’s consolidated financial statements (and the related Compliance Certificate) in respect of the first full fiscal quarter ending after the Closing Date are delivered pursuant to Section 9.1(b) and, thereafter, upon Agent’s receipt of the Borrower’s consolidated financial statements (and the related Compliance Certificate) for each subsequent fiscal quarter.  The Agent will review each of the Borrower’s Compliance Certificates to determine the Funded Debt to EBITDA Ratio as of the end of the applicable fiscal quarter.  Any change in the Financial Performance Level will be effective five (5) days after receipt of the relevant Compliance Certificate; provided, however, that if the Borrower’s consolidated financial statements (and the related Compliance Certificate) are not delivered on a timely basis in accordance with Section 9.1(b), the Agent may, at its option, deem the Borrower’s Financial Performance Level to be Level IV until ten (10) Business Days after the Agent’s receipt of such financial statements (and the Compliance Certificate).


 


Notwithstanding the foregoing, if at any time while any Commitment is in effect or any of the Liabilities remain outstanding, any financial statement or Compliance Certificate delivered by the Borrower is shown to be inaccurate, and such inaccuracy, if it had been corrected prior to the Borrower’s delivery, would have caused the application of a higher Applicable Margin (as defined above) for any period than the Applicable Margin that was actually applied for such period, then (a) within five (5) Business Days of discovery or notice of discovery of such inaccuracy the Borrower shall deliver to the Agent for distribution to the Lenders a corrected financial statement or Compliance Certificate, as applicable, for such period, (b) the Applicable Margin for such period shall be recalculated and applied as if the higher Applicable Margin had originally been applicable, and (c) within five (5) Business Days of such recalculation the Borrower shall pay to the Agent the additional amount of interest and fees owed as a result of such higher Applicable Margin for such period to the extent accrued through the last applicable payment date, and any subsequent payments required to be made on any subsequent payment date shall be adjusted accordingly.  Nothing contained in this paragraph shall limit or otherwise prejudice any of the other rights and remedies of the Agent or the Lenders under this Agreement.


 


“Application” has the meaning set forth in Section 2.2(b) hereof.


 


“Assignee” has the meaning set forth in Section 13.23(a) hereof.


 






  





3











  








“Assignment and Acceptance” has the meaning set forth in Section 13.23(a) hereof.


 


“Attributable Indebtedness” means, on any date, (a) in respect of any capitalized lease of any Person, the capitalized amount thereof that would appear on such Person’s balance sheet prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on such Person’s balance sheet prepared as of such date in accordance with GAAP if such lease were accounted for as a capitalized lease.


 


“Available Amount” means, at any time, an amount equal to (a) the aggregate Line of Credit Loan Commitments minus (b) the sum of (i) the aggregate outstanding principal amount of the Line of Credit Loans, (ii) the aggregate outstanding amount of the LC Obligations and (iii) the aggregate outstanding principal amount of all Swing Line Loans.


 


“Base Rate” means a rate per annum announced by the Agent on the first Business Day of each week, which shall be the highest of (a) 150 basis points (1.50 percent) greater than the higher of the one week or one month LIBOR Rate, (b) the Prime Rate; or (c) the Federal Funds Rate plus one half of one percent (0.5%).


 


“Base Rate Advance” means an Advance with respect to which the interest rate is determined by reference to the Base Rate.


 


“Bill of Sale” means that certain Bill of Sale dated as of December 1, 2004 from the Borrower to the City together with any and all amendments, modifications, supplements, renewals or restatements thereof.


 


“Bond Documents” means, collectively, the Indenture, the Bonds, the Bond Purchase Agreement, the Deed, the Bill of Sale, the Payment in Lieu of Tax Agreement and the Lease.


 


“Bond Pledge Agreement” means that certain Bond Pledge Agreement dated December 29, 2004, executed by the Borrower in favor of the Agent, and any and all amendments, modifications, supplements, renewals or restatements thereof.


 


“Bond Purchase Agreement” means that certain Bond Purchase Agreement dated as of December 1, 2004 between the City and the Borrower, together with any and all amendments, modifications, supplements, renewals or restatements thereof.


 


“Bonds” means the Industrial Development Revenue Bonds (National Beef Packing Company, LLC Project), Series 2004, issued by the City.


 


“Borrower” has the meaning set forth in the introduction hereof.


 


“Borrowing Base” means an amount determined as of the most recent date of the Borrowing Base Certificate delivered pursuant to Section 9.1 and computed as set forth in Exhibit 1B.


 


“Borrowing Base Availability” means, at any time, an amount (if positive) equal to (a) the Borrowing Base minus (b) the sum of (i) the aggregate outstanding principal amount of the


 






  





4











  








Line of Credit Loans, (ii) the aggregate outstanding amount of the LC Obligations and (iii) the aggregate outstanding principal amount of the Swing Line Loans.


 


“Borrowing Base Certificate” means a certificate in substantially the form of Exhibit 1C, signed as indicated thereon, setting forth the amount of the Borrower’s Borrowing Base.


 


“Borrowing Base Deficiency” means, at any time, the amount, if any, by which  (a) the sum of (i) the aggregate outstanding principal amount of the Line of Credit Loans, (ii) the aggregate outstanding amount of the LC Obligations and (iii) the aggregate outstanding principal amount of the Swing Line Loans exceeds (b) the Borrowing Base.


 


“Business Day” means any day of the year, other than a Saturday or Sunday, on which commercial banks in New York, New York and Denver, Colorado are not required or authorized to close and, if such day relates to any LIBOR Rate Advance, a day on which dealing in Dollar deposits is occurring among banks in the London interbank market.


 


“California Property” means the real property located in Brawley, California, as more particularly described in the Intercompany Deed of Trust.


 


“Cash Equivalent Investments” means, at any time:


 


(a) any evidence of Indebtedness, maturing not more than one year after such time, issued or guaranteed by the United States Treasury;


 


(b) commercial paper, maturing not more than nine months from the date of issue, which is issued by a corporation (other than an Affiliate of the Borrower) organized under the laws of any state of the United States or of the District of Columbia and rated A-l by Standard & Poor’s Rating Services, a division of The McGraw Hill Companies, Inc. or P-l by Moody’s Investors Service;


 


(c) any certificate of deposit or banker’s acceptance, maturing not more than one year after such time, which is issued by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000 (or the equivalent thereof in any other currency); or


 


(d) any repurchase agreement entered into with any Lender or other commercial banking institution of the stature referred to in clause (c) which


 


(i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c); and


 


(ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such Lender or other commercial banking institution thereunder.


 


“Change of Control” means the occurrence of any of the following events: (a) at any time prior to the consummation of a Permitted IPO, the Existing Equity Holders cease to hold,


 






  





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collectively, directly or indirectly, a controlling interest in the Borrower, and (b) at any time from and after the consummation of a Permitted IPO, (i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have "beneficial ownership" of all securities that such person or group has the right to acquire (such right, an "option right"), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of the equity securities of NB, Inc. entitled to cast thirty-five percent (35%) or more of the votes for members of the board of directors or equivalent governing body of NB, Inc. on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right), other than the Existing Equity Holders, (ii) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of NB, Inc. ceases to be composed of individuals (A) who were members of that board or equivalent governing body on the first day of such period, (B) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (C) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (A) and (B) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (B) and clause (C), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors), (iii) the Existing Equity Holders cease to own, directly or indirectly, equity of NB, Inc. entitled to cast thirty-five percent (35%) or more of the votes for members of the board of directors or equivalent governing body of NB, Inc., or (iv) NB, Inc. ceases to be the sole manager of the Borrower.  It being understood and agreed that, in the event the Permitted IPO occurs but not pursuant to the structure contemplated on the date hereof, then the term “Change of Control” shall be modified in the reasonable discretion of the Agent and Borrower in order to address such changes and to preserve the original intent of the parties hereto.


 


“City” means the City of Dodge City, Kansas, a municipal corporation organized under the law of the State of Kansas.


 


“Closing Date” means the date of this Agreement.


 


“CoBank” has the meaning set forth in the introduction hereof.


 


“Code” has the meaning set forth in Section 1.1 hereof.


 


“Collateral” means all real and personal property in which, pursuant to the terms of the respective Security Documents, the Borrower, any Subsidiary Loan Party or any third Person has granted to the Agent a security interest or assigned to the Agent its right, title and interest to secure the Liabilities.  The Borrower acknowledges and agrees that all of its right, title and


 






  





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interest in and to the Intercompany Financing Documents and its limited liability company interests in KC Steak constitute collateral under the Security Documents.


 


“Collateral Accounts” means Deposit Accounts established and maintained in accordance with Section 4.07 of the Security Agreement.


 


“Commitment” means, as to any Lender, such Lender’s (a) Line of Credit Loan Commitment, (b) Term Loan Commitment, (c) obligation to purchase participations in LC Obligations, and/or (d) obligation to purchase participations in Swing Line Loans, and, as the context requires “Commitments” shall mean, collectively, such Commitments for all the Lenders.


 


“Compliance Certificate” has the meaning set forth in Section 9.1(b) hereof.


 


“Deed” means that certain Kansas Special Warranty Deed dated as of December 1, 2004 from the Borrower to the City, together with any and all amendments, modifications, supplements, renewals or restatements thereof.


 


“Default” means the occurrence or existence of: (a) an event which, through the passage of time or the service of notice or both, would (assuming no action is taken by the Borrower or any other Person to cure the same) mature into a Matured Default; or (b) an event which requires neither the passage of time nor the service of notice to mature into a Matured Default.


 


“Default Rate” has the meaning set forth in Section 3.1(c) hereof.


 


“Defaulting Lender” means any Lender that (a) has failed to fund any portion of the Loans or participations in LC Obligations or Swing Line Loans required to be funded by such Lender within three (3) Business Days after the date required to be funded by it, (b) has otherwise failed to pay over to the Agent or any other Lender any other amount required to be paid by it within three (3) Business Days after the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of an insolvency proceeding (or such parent or holding company of such Lender that has been deemed insolvent or become the subject of an insolvency proceeding).


 


“Dodge City Facilities” means the beef processing facilities located in Dodge City, Kansas, as further described in the Kansas Mortgage.


 


“Dollars” and “$” mean lawful currency of the United States of America.


 


“Domestic Subsidiary” means any Subsidiary that is not a Foreign Subsidiary.


 


“Draft Prospectus” means that certain draft Preliminary Prospectus relating to the initial public offering of shares of Class A common stock of NB, Inc. dated April 21, 2010.


 


“EBITDA” means, for any period of determination, the consolidated net income of the Borrower and its Subsidiaries before provision for income taxes, interest expense (including without limitation, implicit interest expense on capitalized leases), depreciation, amortization and other noncash expenses or charges, excluding (to the extent otherwise included): (a)


 






  





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nonoperating gains (including without limitation, extraordinary or nonrecurring gains, gains from discontinuance of operations and gains arising from the sale of assets other than Inventory or property, plant and equipment) during the applicable period; and (b) similar nonoperating losses during such period.


 


“Eligible Accounts” means Accounts of the Loan Parties which the Agent determines in the exercise of the Agent’s reasonable discretion are eligible for inclusion in the Borrowing Base at any particular time.  Without limiting the Agent’s right to determine that Accounts do not constitute Eligible Accounts, but without duplication, the following Accounts of the Loan Parties shall not be Eligible Accounts:  (a) all Accounts which are at that time unpaid for a period exceeding twenty one (21) days after the original invoice date of the original invoice related thereto, except for Accounts which are covered by a letter of credit; (b) all Accounts owing by an Account Debtor if more than twenty-five percent (25%) of the Accounts owing by such Account Debtor are at that time unpaid for a period exceeding that allowed by the preceding clause, except, in each case, Accounts which are covered by a letter of credit in amount, form and substance satisfactory to, and from an issuer acceptable to the Agent; (c)(i) those Accounts, except Accounts owing from the Account Debtors listed on Exhibit 3A(i), of an Account Debtor, the aggregate face amount of which is in excess of five percent (5%) of the aggregate face amount of all Eligible Accounts of all Account Debtors (prior to eliminations based on concentration), (ii) those Accounts of an Account Debtor listed on Exhibit 3A(i), the aggregate face amount of which is in excess of ten percent (10%) of the aggregate face amount of all Eligible Accounts of all Account Debtors (prior to eliminations based on concentration), and (iii) those Accounts of Wal-Mart and Affiliates thereof (Sam’s Club, etc.), the aggregate face amount of which is in excess of fifteen percent (15%) of the aggregate face amount of all Eligible Accounts of all Account Debtors (prior to eliminations based on concentration), but in each case only to the extent of such excess; (d) those Accounts owing from the United States or any department, agency or instrumentality thereof unless the Borrower shall have complied with the Assignment of Claims Act to the satisfaction of the Agent; (e) Accounts which arise out of transactions with Affiliates of the Borrower, except Accounts owing from Beef Products, Inc. up to the aggregate face amount of $4,000,000; (f) Accounts, except Accounts owing from the Account Debtors listed on Exhibit 3A(i), of an Account Debtor that are located outside the United States, unless such Accounts are covered by a letter of credit issued or confirmed by a bank acceptable to the Agent; (g) Accounts which are or may be subject to rights of setoff or counterclaim by the Account Debtor (to the extent of the amount of such setoff or counterclaim); (h) Accounts in which the Agent does not, for any reason, have a first priority perfected security interest; and (i) Accounts which in the Agent’s opinion may be subject to liens or conflicting claims of ownership, whether such liens or conflicting claims are asserted or could be asserted by any Person except for statutory liens or encumbrances permitted by Section 10.1(a), (b) and (d).  With regard to Accounts included in the Borrowing Base by the Borrower in good faith, a determination by the Agent that such Accounts are not Eligible Accounts in accordance with the foregoing shall be effective on the third Business Day after notice thereof by the Agent to the Borrower in accordance with Section 13.18.


 


“Eligible Inventory” means Inventory of the Loan Parties which the Agent determines in the exercise of the Agent’s reasonable discretion is eligible for inclusion in the Borrowing Base at any particular time.  Without limiting the Agent’s right to determine that Inventory does not constitute Eligible Inventory, but without duplication, the following Inventory of the Loan


 






  





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Parties shall not be Eligible Inventory: (a) Inventory deemed to be out-of-condition or otherwise unmerchantable by the United States Department of Agriculture, any state’s Department of Agriculture, or any other Governmental Authority having regulatory authority over the Loan Parties or any of the Loan Parties’ assets or activities; (b) Inventory for which a prepayment has been received; (c) Inventory in the possession of third parties, unless it is Inventory: (i) at a location (x) shown on Exhibit 3B(i) or (y) permitted hereunder or under the Security Agreement, in each case, for which the Agent has received a bailee letter satisfactory to the Agent, or (ii) covered by negotiable warehouse receipts or negotiable bills of lading issued by either: (A) a warehouseman licensed and bonded by the United States Department of Agriculture or any state’s Department of Agriculture, or (B) a recognized carrier having an office in the United States and in a financial condition reasonably acceptable to the Agent, which receipts or bills of lading designate the Agent directly or by endorsement as the only Person to which or to the order of which the warehouseman or carrier is legally obligated to deliver such Goods; (d) Inventory in which the Agent does not, for any reason, have a first priority perfected security interest; and (e) Inventory which in the Agent’s opinion may be subject to liens or conflicting claims of ownership, whether such liens or conflicting claims are asserted or could be asserted by any Person except for statutory liens or encumbrances permitted by Section 10.1(a), (b) and (d). With regard to Inventory included in the Borrowing Base by the Borrower in good faith, a determination by the Agent that such Inventory is not Eligible Inventory in accordance with the foregoing shall be effective on the third Business Day after notice thereof by the Agent to the Borrower in accordance with Section 13.18.


 


“Environmental Laws” has the meaning set forth in Section 7.9 hereof.


 


“Equipment” means any and all Goods, other than Inventory (including without limitation, equipment, machinery, motor vehicles, implements, tools, parts and accessories) which are at any time owned by the Borrower, together with any and all accessions, parts and appurtenances and any other “equipment” (as defined in the Code).


 


“Equity Cure Issuance” has the meaning set forth in the definition of Equity Cure Proceeds.


 


“Equity Cure Proceeds” means, with respect to any exercise of the Borrower’s rights under Section 11.3, the net cash proceeds received by the Borrower pursuant to a capital contribution to its common equity funded by the concurrent sale or issuance by the Borrower of shares of its equity interests (the “Equity Cure Issuance”).


 


“Equity Distribution” means any dividend or other distribution (whether in cash, securities or other property) with respect to any membership interest or other equity interest in the Borrower, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such membership or other equity interest or of any option, warrant or other right to acquire any such membership or other equity interest.


 


“ERISA” means the Employee Retirement Income Security Act of 1974, as amended and in effect at any time, and all rules, regulations and rulings thereof issued by the Internal Revenue Service or the Department of Labor thereunder.


 






  





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“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the IRC (and Sections 414(m) and (o) of the IRC for purposes of provisions relating to Section 412 of the IRC).


 


“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.


 


“Excess” has the meaning set forth in Section 13.19 hereof.


 


“Excess Disposition Proceeds” means the Borrower’s net cash proceeds, including insurance or condemnation proceeds, from the sale or other disposition or loss of assets (other than the sale of Inventory in the ordinary course of business or the casualty loss of Inventory), which are not used by the Borrower for the replacement of the assets sold, disposed of or lost or not used for the acquisition of other assets with similar business utility within one hundred eighty (180) days after such sale, disposition or loss, in excess of $100,000 in the aggregate during any rolling twelve month period.


 


“Excess Equity Proceeds” means, during any period of determination, the Borrower’s net cash proceeds from the sale or issuance of stock, membership, partnership or other equity interests (or warrants or other options therefor), including capital contributions in respect of any such interests previously issued.


 


“Existing Credit Agreement” has the meaning set forth in the recitals hereof.


 


“Existing Equity Holders” means, collectively, US Premium Beef, TKK Investments, LLC, TMKCo, LLC and NBPCo Holdings, LLC.


 


“Existing Line of Credit Notes” means the Line of Credit Notes of the Borrower delivered to the Existing Lenders under the Existing Credit Agreement.


 


“Existing Term Notes” means the Term Notes of the Borrower delivered to the Existing Lenders under the Existing Credit Agreement.


 


“Facility” means the Line of Credit Loan Facility, the Swing Line, the Term Loan Facility or the Letter of Credit Sublimit, as the context may require.


 






  





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“Farm Credit System Participant” has the meaning set forth in Section 13.23(e) hereof.


 


“Farm Products” means all of the Borrower’s harvested or unharvested crops of all types and descriptions, whether annual or perennial and all other personal property of the Borrower used or for use in farming or livestock operations, including without limitation, native grass, grain, harvested crops, feed, feed additives, feed ingredients, feed supplements, fertilizer, hay, silage, supplies (including without limitation, veterinary supplies and related Goods), livestock (including without limitation, the offspring of such livestock and livestock in gestation) and any other “farm products” (as defined in the Code).


 


“Federal Funds Rate” means, for any day, the rate of interest per annum (rounded upward, if necessary, to the nearest whole multiple of 1/100th of 1%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on such day, or if no such rate is so published on such day, on the most recent day preceding such day on which such rate is so published.


 


“Feeder Deposits” has the meaning set forth in Section 10.19 hereof.


 


“Financial Performance Level” has the meaning set forth in the definition of Applicable Margin.


 


“Financing Documents” means this Agreement, the Notes, the Agent’s Letter, the NB, Inc. Acknowledgment, all Security Documents, and all documents, instruments, certificates and agreements at any time executed or delivered by the Borrower to any of the Agent or any one or more of the Lenders pursuant to or in connection with any of the foregoing, and any and all amendments, modifications, supplements, renewals, extensions, increases and rearrangements of, and substitutions for, any of the foregoing.


 


“Fiscal Year” means the Borrower’s fiscal year, which shall be the twelve month period ending on the last Saturday in August each year; references to a Fiscal Year with a number corresponding to any calendar year (e.g., the “Fiscal Year 2010”) refer to the Fiscal Year ending on the last Saturday in August of such calendar year.


 


“Fixed Charge Coverage Ratio” means , as of the end of any fiscal quarter, the ratio of (a) EBITDA during the eight consecutive fiscal quarters then ended, less Net Capital Expenditures during such eight fiscal quarter period to (b) the sum of (i) the aggregate amount of all scheduled payments of principal of and interest on Funded Debt during such eight fiscal quarter period, (ii) Borrower’s consolidated cash income taxes incurred and paid during such eight fiscal quarter period and (iii) Equity Distributions made by Borrower during such eight fiscal quarter period (other than (x) Equity Distributions permitted under the $150 Million Basket, (y) up to $125,484,074.72 in Equity Distributions made by Borrower in April 2009 and (z) up to $8,000,000 in Equity Distributions made by Borrower pursuant to the terms of the Consent to Sixth Amended and Restated Credit Agreement dated May 27, 2010.


 


“Foreign Subsidiary” means any direct or indirect Subsidiary of the Borrower which is organized under the laws of any jurisdiction other than the United States (or any State thereof) of the District of Columbia.


 






  





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“Funded Debt” means, for any date of determination, the then outstanding principal amount of all of the Borrower’s consolidated interest-bearing Indebtedness (including without limitation, capitalized leases) plus the then undrawn amount of all outstanding letters of credit (including without limitation, the LCs); provided, however, that (a) LCs or indemnity obligations issued to support other Indebtedness shall not be included in Funded Debt to the extent that such other Indebtedness is, itself, included in Funded Debt; (b) the Borrower’s Class A or B Units subject to redemption rights shall not be included in Funded Debt; and (c) the Borrower’s obligations under deferred compensation plans shall not be included in Funded Debt.


 


“Funded Debt to EBITDA Ratio” means, for any date of determination, the ratio of: (a) Funded Debt as of such date, over (b) EBITDA during the four consecutive fiscal quarters most recently ended.


 


“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, which are applicable to the circumstances as of the date of determination.


 


“Georgia Mortgage” means that certain Deed to Secure Debt and Security Agreement between the Borrower and the Agent, dated as of November 25, 2009 and that certain financing statement dated as of November 25, 2009, in each case, together with any and all amendments, modifications, supplements, renewals or restatements thereof.


 


“Governmental Authority” means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including without limitation, any arbitration panel, any court or any commission.


 


“Governmental Requirement” means any material law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other directive or requirement of any federal, state, county, municipal, parish, provincial or other Governmental Authority or any department, commission, board, court, agency or any other instrumentality of any of them.


 


“Guaranty Agreement” means that certain Guaranty Agreement dated as of even date herewith, executed by and certain of the Borrower’s Subsidiaries in favor of the Agent, together with any and all amendments, modifications, supplements, renewals or restatements thereof.


 


“Guaranty Obligation” means, as to any Person, any (a) any obligation, contingent or otherwise, of such Person guarantying or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other


 






  





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obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligees in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligees against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person; provided, however, that the term “Guaranty Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business.  The amount of any Guaranty Obligation shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guaranty Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.


 


“Highest Lawful Rate” means, with respect to each Lender, the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged, or received with respect to the Notes or on other amounts, if any, payable to such Lender pursuant to this Agreement or any other Financing Document, under laws applicable to such Lender which are presently in effect, or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow.


 


“Holding Account” means a deposit account belonging to the Agent into which the Borrower may be required to make deposits pursuant to the provisions of this Agreement, such account to be under the sole dominion and control of the Agent and not subject to withdrawal by the Borrower, with any amounts therein to be held for application toward payment of any outstanding LCs when drawn upon.  The Holding Account shall be a money market savings account or substantial equivalent (or other appropriate investment medium as the Borrower may from time to time request and to which the Agent in its sole discretion shall have consented) and shall bear interest in accordance with the terms of similar accounts held by the Agent for its customers.


 


“Indebtedness” shall mean with respect to any Person and without duplication:


 


(a) All obligations of such Person for borrowed money (including, without limitation, all notes payable and drafts accepted representing extensions of credit, all obligations evidenced by credit agreements, bonds, debentures, notes or other similar instruments and all obligations upon which interest charges are customarily paid);


 


(b) any direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), banker’s acceptances, bank guaranties, surety bonds and similar instruments;


 


(c) whether or not so included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable incurred in the ordinary course of the Borrower’s


 






  





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business), and indebtedness (excluding prepaid interest thereon and excluding operating leases) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;


 


(d) capitalized leases and Synthetic Lease Obligations;


 


(e) net obligations under any Swap Contract in an amount equal to (i) if such Swap Contract has been closed out, the termination value thereof, or (ii) if such Swap Contract has not been closed out, the mark-to-market value thereof determined on the basis of readily available quotations provided by any recognized dealer in such Swap Contract; and


 


(f) all Guaranty Obligations of such Person in respect of any of the foregoing.


 


For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person except for customary exceptions acceptable to the Required Lenders.  The amount of any capitalized lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.


 


“Indemnified Amounts” has the meaning set forth in Section 13.5(b) hereof.


 


“Indemnitee” has the meaning set forth in Section 13.5(b) hereof.


 


“Indenture” means that certain Trust Indenture dated as of December 1, 2004 between the City and Commerce Bank. N.A., as trustee, together with any and all amendments, modifications, supplements, renewals or restatements thereof.


 


“Insurance Reserve” means a collateral reserve against casualty losses that would not be covered by insurance as a result of the self-insured retention deductible provision in the Borrower’s property insurance (a) in an amount equal to $10,000,000 when the self-insured retention deductible under the Borrower’s property insurance procured in accordance with Section 9.5 exceeds $15,000,000; (b) in an amount equal to $5,000,000 when the self-insured retention deductible under the Borrower’s property insurance procured in accordance with Section 9.5 exceeds $10,000,000 but is less than or equal to $15,000,000; and (c) in an amount equal to $0 when the self-insured retention deductible under the Borrower’s property insurance procured in accordance with Section 9.5 is less than or equal to $10,000,000.


 


“Intercompany Financing Documents” means: (a) the Loan Agreement dated as of May 30, 2006, by and between the Borrower and NBC (the “Intercompany Loan Agreement”), (b) the Security Agreement dated as of May 30, 2006, by NBC in favor of the Borrower, (c) the Trademark License Agreement between NBC and the Borrower dated as of May 30, 2006, (d) the Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing from NBC to the Borrower dated as of June 2, 2006 (the “Intercompany Deed of Trust”), (e) the Note






  





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(as defined in the Intercompany Loan Agreement), (f) the Security Agreement (Security Interest in Partnership Interests) by NCI in favor of the Borrower dated as of May 30, 2006, (g) the Loan Agreement dated as of August 6, 2003, among NCI, NCI Leasing and the Borrower’s predecessor in interest, (h) the Security Agreement dated as of August 6, 2003, by NCI and NCI Leasing in favor of the Borrower’s predecessor in interest, (i) the Promissory Note dated as of August 6, 2003, from NCI and NCI Leasing to the Borrower’s predecessor in interest, (j) the Trademark Security Agreement dated as of August 6, 2003, by NCI and NCI Leasing in favor of the Borrower’s predecessor in interest, (k) the Loan Agreement dated as of May 29, 1998, as amended by the Loan Extension Agreement dated as of May 31, 2001, the Second Amendment to Loan Agreement dated as of August 21, 2001, the Third Amendment to Loan Agreement dated as of September 1, 2005 and the Fourth Amendment to Loan Agreement dated as of May 30, 2006, in each case, between KC Steak and the Borrower’s predecessor in interest, (l) the First Amended and Restated Security Agreement dated as of August 29, 2001, between KC Steak and the Borrower’s predecessor in interest, (m) the Amended and Restated Promissory Note dated as of May 30, 2006, from KC Steak to the Borrower, and any and all other agreements, chattel mortgages, security agreements, pledges, guaranties, assignments of proceeds, assignments of contract rights, assignments of partnership interest, assignments of performance or other collateral assignments, trademark license agreements, completion or surety bonds, standby agreements, subordination agreements, undertakings and other similar documents, agreements, instruments and financing statements at any time executed and delivered by any of the Borrower’s Subsidiaries or a third Person in connection with, or as security for the payment or performance of, any agreements or documents that may from time to time incur, evidence, or govern indebtedness that any Subsidiary owes from time to time directly or indirectly to the Borrower, as the foregoing may be amended, supplemented or otherwise modified from time to time in accordance with this Agreement.







“Interest Period” means:  the period of time for which the LIBOR Rate shall be in effect as to any LIBOR Rate Advance and which shall be a one, two, three or six month period of time, commencing with the borrowing date of such LIBOR Rate Advance or the expiration date of the immediately preceding Interest Period, as the case may be, applicable to and ending on the effective date of any rate change or rate continuation made as provided herein as the Borrower may specify in a notice of borrowing or a notice of interest conversion; provided, however, all interest periods for all LIBOR Rate Advances outstanding under the Existing Credit Agreement as of the Restatement Date shall be deemed to have ended on the day immediately preceding the Restatement Date; and provided further that: (a) any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) no Interest Period applicable to a Line of Credit Loan shall extend beyond the scheduled Maturity Date applicable to the Line of Credit Loan; (c) no Interest Period for a Term Advance shall extend beyond the Maturity Date applicable to the Term Loan; (d) there shall be no more than five Interest Periods for LIBOR Rate Advances outstanding at any one time under the Line of Credit; and (e) there shall be no more than five Interest Periods for LIBOR Rate Advances at any one time under the Term Loan.


 


“Inventory” means, with respect to any Person, any and all Goods which shall at any time constitute “inventory” (as defined in the Code) or Farm Products of such Person, wherever located (including without limitation, Goods in transit and Goods in the possession of third


 






  





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parties), or which from time to time are held for sale, lease or consumption in such Person’s business, furnished under any contract of service or held as raw materials, work in process, finished inventory or supplies (including without limitation, packaging and/or shipping materials).


 


“IPO Proceeds” means the net cash proceeds, if any, received by the Borrower in connection with the Permitted IPO.


 


“IRC” means the Internal Revenue Code of 1986, as amended, as at any time in effect, together with all regulations and rulings thereof or thereunder issued by the Internal Revenue Service.


 


“Issuer” means CoBank or, with respect to the “LCs” issued by Rabobank under (and as defined in) the Existing Credit Agreement and listed on Exhibit 1E, Rabobank, as issuers of LCs.


 


“Kansas Mortgage” means the Amended and Restated Mortgage, Assignment of Rents and Leases, Security Agreement and Fixture Filing between the Borrower and the Agent, dated December 29, 2004, and the Amended and Restated Collateral Assignment of Amended and Restated Lease from the Borrower in favor of the Agent, dated as of December 29, 2004, in each case, together with any and all further amendments, modifications, supplements, renewals or restatements thereof.


 


“KC Steak” means Kansas City Steak Company, LLC, a Missouri limited liability company, a majority owned Subsidiary of the Borrower.


 


“LC” means a documentary, direct pay or standby letter of credit issued for the account of the Borrower pursuant to Section 2.2, including any “LCs” issued under (and as defined in) the Existing Credit Agreement.


 


“LC Fee” has the meaning set forth in Section 6.2 hereof.


 


“LC Obligations” means, at any time, an amount equal to the sum of (a) the aggregate undrawn and unexpired amount of the outstanding LCs plus (b) the aggregate amount of drawings under LCs which have not then been reimbursed pursuant to Section 2.2(f).


 


“LC Sublimit” means an amount equal to the lesser of (a) $75,000,000 and (b) the Line of Credit Loan Commitments.  For the avoidance of doubt, the LC Sublimit is part of, and not in addition to, the Line of Credit Loan Commitments.


 


“Lease” means that certain Lease dated as of December 1, 2004 between the City and the Borrower, together with any and all amendments, modifications, supplements, renewals or restatements thereof.


 


“Lenders” has the meaning set forth in the introduction hereof.


 


“Liabilities” means any and all liabilities, obligations and indebtedness of the Borrower to the Agent, the Lenders, the Swing Line Lender, the Issuers, the Swap Parties and/or the Indemnitees of any and every kind and nature, at any time owing, arising, due or payable and


 






  





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howsoever evidenced, created, incurred, acquired or owing, primary, secondary, direct, contingent, fixed or otherwise (including without limitation, LC Obligations, the Borrower’s obligations under any Swap Contracts with Swap Parties, fees, charges and obligations of performance) arising or existing under this Agreement or any of the other Financing Documents or by operation of law relating to this Agreement or any of the other Financing Documents.


 


“LIBOR Rate” means (a) with respect to each day during each Interest Period applicable to a LIBOR Rate Account, the per annum rate for the Interest Period selected by Borrower, as quoted by the British Bankers' Association (or if such quotation source is unavailable, such other quotation source as may be reasonably selected by the Administrative Agent) for the purpose of displaying London Interbank Offered Rates for U.S. Dollar deposits, (which shall be the LIBOR rate in effect two Business Days prior to the related Advance) rounded up to the 1/100th of 1% per annum, or (b) with respect to the determination of the Base Rate, the LIBOR rate, as quoted by the British Bankers' Association (or if such quotation source is unavailable, such other quotation source as may be reasonably selected by the Administrative Agent) for the purpose of displaying London Interbank Offered Rates for U.S. Dollar deposits, in each case divided by a percentage equal to 100% minus the stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves) applicable on such date to any member bank of the Federal Reserve System in respect of “Eurocurrency liabilities” as defined in Regulation D (or any successor category of liabilities under Regulation D).


 


“LIBOR Rate Advance” means an Advance with respect to which the interest rate is determined by reference to the LIBOR Rate.


 


“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Code or comparable laws of any jurisdiction), including the interest of a purchaser of accounts.


 


“Line of Credit Loan” has the meaning set forth in Section 2.1.1 hereof.


 


“Line of Credit Loan Commitment” means as to any Lender, such Lender’s obligation to make Line of Credit Loans up to its Pro Rata Percentage of $250,000,000, as set forth opposite such Lender’s name under the heading “Line of Credit Loan Commitments” on Exhibit 1A, subject to Assignments and Acceptances executed and delivered in accordance with Section 13.23, and as such amount may be reduced or terminated from time to time pursuant to Section 4.5 or 11.1; and “Line of Credit Loan Commitments” means, collectively, the Line of Credit Loan Commitments for all the Lenders.


 


“Line of Credit Loan Facility” means, at any time, the aggregate amount of the Lenders’ Line of Credit Loan Commitments.


 


“Line of Credit Notes” has the meaning set forth in Section 2.1.1 hereof.


 






  





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“Loan” means each Line of Credit Loan and each Term Loan; however, unless particularly specified in the relevant text, the term “Loan” does not include Swing Line Loans.


 


“Loan Account” has the meaning set forth in Section 2.1.5(d) hereof.


 


“Loan Date” means the date of the making of any Line of Credit Loan or Swing Line Loan hereunder.


 


“Loan Parties” means the Borrower and the Subsidiary Loan Parties.


 


“Margin Accounts” means, collectively, all Commodity Accounts and all Commodity Contracts credited thereto.


 


“Matured Default” means the occurrence or existence of any one or more of the following events: (a) the Borrower fails to pay any principal or interest pursuant to any of the Financing Documents at the time such principal or interest becomes due or is declared due; (b)  the Borrower fails to pay any of the Liabilities (other than principal and interest) on or before ten (10) days after such Liabilities become due or are declared due; (c) the Borrower or any of its  Subsidiaries fails or neglects to perform, keep or observe any of the covenants, conditions, promises or agreements contained in Sections 2.2(a), 9.16, 9.17, 9.18, 10.1, 10.2 or 10.4 of this Agreement; (d) the Borrower or any of its Subsidiaries fails or neglects to perform, keep or observe any of the covenants, conditions, promises or agreements contained in this Agreement or in any of the other Financing Documents (other than those covenants, conditions, promises and agreements referred to or covered in (a), (b) or (c) above), and such failure continues for more than thirty (30) days after such failure or neglect first occurs, provided that such grace period shall not apply, and a Matured Default shall be deemed to have occurred and to exist immediately if such failure or neglect is material and may not, in the Agent’s reasonable determination, be cured by the Borrower or its Subsidiaries during such thirty (30) day grace period; (e) the Borrower or any of its Subsidiaries directly or indirectly contests in any manner the validity, binding nature, or enforceability of any Financing Document, or, any Lien securing any Liabilities; (f) any of the Borrower’s Subsidiaries directly or indirectly contests in any manner the validity, binding nature, or enforceability of any of the Intercompany Financing Documents or the assignment thereof to the Agent; (g) any warranty or representation at any time made by or on behalf of the Borrower or any of its Subsidiaries in connection with this Agreement or any of the other Financing Documents is untrue or incorrect in any material respect, or any schedule, certificate, statement, report, financial data, notice, or writing furnished at any time by or on behalf of either the Borrower or any of its Subsidiaries to the Agent or the Lenders is untrue or incorrect in any material respect on the date as of which the facts set forth therein are stated or certified; (h) a judgment in excess of $3,000,000 is rendered against the Borrower or any of the other Loan Parties and such judgment remains unsatisfied or undischarged and in effect for forty-five (45) consecutive days without a stay of enforcement or execution, provided that this clause shall not apply to any judgment for which the Borrower or any other Loan Party is fully insured subject only to a deductible not exceeding $500,000, and with respect to which the insurer has admitted liability in writing for such judgment; (i) all or any part of the Borrower’s or any other Loan Party’s assets come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors and the same continues for a period of forty-five (45) days; (j) a proceeding under any bankruptcy, reorganization,


 


 




  





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 arrangement of debt, insolvency, readjustment of debt or receivership law or statute is filed against the Borrower or any of the other Loan Parties and such proceeding is not dismissed within forty-five (45) days of the date of its filing, or a proceeding under any bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of debt or receivership law or statute is filed by either the Borrower or any of the other Loan Parties, or the Borrower or any of the other Loan Parties applies for, consents to, or acquiesces in, the appointment of a trustee, receiver, sequestrate, or other custodian for the Borrower or any of the other Loan Parties or any of their respective property, or the Borrower or any of the other Loan Parties makes an assignment for the benefit of creditors; (k) the Borrower or any of the other Loan Parties becomes insolvent or generally fails to pay, or admits in writing its inability to pay, debts as they become due; (l) the Borrower or any of the other Loan Parties voluntarily or involuntarily dissolves or is dissolved, terminates or is terminated; (m) the Borrower or any of the other Loan Parties is enjoined, restrained, or in any way prevented by the order of any court or any administrative or regulatory agency or by the termination or expiration of any permit or license, from conducting all or any material part of its respective business affairs; (n) the Borrower or any of the other Loan Parties fails to make any payment due or otherwise defaults on any other obligation for borrowed money and the effect of such failure or default is to cause or permit the holder of such obligation or a trustee to cause such obligation to become due prior to its date of maturity; (o) the Agent makes an expenditure under Section 13.3 of this Agreement and such expenditure is not reimbursed within five (5) Business Days after the Agent notifies the Borrower of such expenditure; (p) the occurrence of a Change of Control; (q) the Borrower or any of its Subsidiaries fail to pay any Producer Payables in accordance with Section 9.13, and such failure continues for a period of more than three (3) consecutive Business Days; (r) an “event of default” as defined in the Lease shall occur and the effect is to cause the Trustee to accelerate the Lease Payments (as defined in the Lease) or act to dispossess the Borrower and such acceleration or action shall continue without waiver, cure, rescission or annulment for a period of thirty (30) days; (s) (i) an ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of either the Borrower or any of its Subsidiaries under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $1,000,000, or (ii) the Borrower or any of its Subsidiaries, or any ERISA Affiliate of the Borrower or any of its Subsidiaries fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $1,000,000; or (t) at any time from and after the consummation of the Permitted IPO, NB, Inc fails to keep or observe any of the covenants, promises or agreements set forth in the NB, Inc. Acknowledgment.


 


“Maturity Date” means the earliest of (a) the date on which the Commitments are terminated in whole pursuant to Section 11.1, (b) the date on which the Borrower voluntarily terminates the Commitments in whole and pays the Liabilities in full, (c) in the case of the Line of Credit Loans, June 4, 2015, (d) in the case of the Term Loans, June 4, 2015, and (e) in the case of any Swing Line Loan, June 4, 2015, or any earlier Business Day specified by notice from the Swing Line Lender to the Borrower and the Lenders.


 


“Member” means any Person who holds directly or indirectly, an ownership interest in the Borrower.


 


 


 




  





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“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding three calendar years, has made or been obligated to make contributions.


 


“NBC” means National Beef California, LP, a Delaware limited partnership, and a wholly owned indirect Subsidiary of the Borrower.


 


“NB, Inc.” means National Beef, Inc., a Delaware corporation.


 


“NB, Inc. Acknowledgment” means that certain Acknowledgment by and between NB, Inc., and the Agent in form of Exhibit 1D.


 


“NCI” means National Carriers, Inc., a Kansas corporation, and a wholly owned Subsidiary of the Borrower.


 


“NCI Leasing” means NCI Leasing, Inc., a Kansas corporation, and a wholly owned Subsidiary of NCI.


 


“Net Capital Expenditures” means, during any period of determination: (a) the Borrower’s consolidated net property, plant and equipment at the end of such period, less (b) the Borrower’s consolidated net property, plant and equipment at the beginning of such period, plus (c) the Borrower’s consolidated depreciation during such period.


 


“Net Worth” means, as of any date of determination, (a) the aggregate book value of the assets of Borrower and its consolidated Subsidiaries as of such date prepared in accordance with GAAP less (b) Total Liabilities (as defined below).


 


“Non-Material Domestic Subsidiary” means any Domestic Subsidiary that, together with its consolidated Subsidiaries, has (a) assets, as of the last day of the Borrower’s most recently ended fiscal quarter, with a book value of less than 5% of the total assets of the Borrower and its Subsidiaries on a consolidated basis on such date and (b) EBITDA, as of the last day of the Borrower’s most recently ended Fiscal Year, of less than $20,000,000; provided, that, if the Non-Material Domestic Subsidiaries, taken as a whole, together with the assets of their respective consolidated Subsidiaries, have assets, as of the last day of the Borrower’s most recently ended fiscal quarter, valued at greater than or equal to 10% of the total assets of the Borrower and its Subsidiaries on a consolidated basis, then the Borrower shall cause one or more additional Domestic Subsidiaries to become Subsidiary Loan Parties in accordance with Section 9.19; provided, further, that if a Non-Material Domestic Subsidiary, together with its consolidated Subsidiaries, has EBITDA, as of the last day of the Borrower’s most recently ended Fiscal Year, greater than or equal to $20,000,000, then the Borrower shall cause such Domestic Subsidiary to become a Subsidiary Loan Party in accordance with Section 9.19; provided, further, that in no event shall National Beef Leathers, LLC be or become a Subsidiary Loan Party, except upon the consent of the Agent.  As of the Restatement Date, each of National Beef Leathers, LLC, NCI Leasing, National Elite Transportation LLC, National Beef aLF, LLC and NB Finance Corp. shall be a Non-Material Domestic Subsidiary.


 


“Non-Use Fee” has the meaning set forth in Section 6.1 hereof.


 






  





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“Note” or “Notes” shall mean any one or more of the Line of Credit Notes, the Term Notes and/or the Swing Line Note, as the context may require.


 


“Owner/Operator Agreement” means an agreement with an owner-operator of a tractor, for the use of the tractor, which is cancelable upon not more than ninety days written notice by either party, which agreement has been or may be considered a lease for accounting purposes.


 


“Payment in Lieu of Tax Agreement” means that certain Payment in Lieu of Tax Agreement dated as of December 1, 2004 between the Borrower and the City, together with any and all amendments, modifications, supplements, renewals or restatements thereof.


 


“PBGC” means the Pension Benefit Guaranty Corporation.


 


“Pennsylvania Mortgage” means the Amended and Restated Open-End Mortgage, Assignment of Rents and Leases, Security Agreement and Fixture Filing between the Borrower and the Agent, dated December 29, 2004, together with any and all further amendments, modifications, supplements, renewals or restatements thereof.


 


“Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five plan years.


 


“Permitted IPO” means an initial public offering of shares of common stock of NB, Inc. in a public offering pursuant to an effective registration statement filed with the SEC in accordance with the Securities Act and on substantially the same terms and conditions set forth in the Draft Prospectus or otherwise on terms and conditions satisfactory to the Required Lenders and the Agent; provided, that (a) no Default or Matured Default shall have occurred or be continuing or would be caused thereby, (b) the Borrower shall be in pro forma compliance (based on assumptions and projections acceptable to the Agent) with the financial covenants set forth in Section 9.16, 9.17 and 9.18 after giving effect thereto, (c) NB, Inc. shall substantially simultaneously therewith execute and deliver the NB, Inc. Acknowledgment and Secretary’s Certificates relating to resolutions, incumbency, etc., (d) all net cash proceeds thereof (other than any net cash proceeds paid to the Existing Equity Holders) shall be used to purchase new equity interests in the Borrower and (e) the Agent shall have received opinions of counsel for NB, Inc. and such other information, documents, agreements or instruments that the Agent or Agent’s counsel may reasonably required in connection therewith.


 


“Person” means an individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, limited liability partnership, institution, joint stock company or government (whether national, federal, state, provincial, county, city, municipal or otherwise, including without limitation, any instrumentality, division, agency, body or department thereof).


 


“Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Borrower or any ERISA Affiliate.


 






  





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“Prime Rate” means a rate of interest per annum equal to the “prime rate” as published from time to time in the Eastern Edition of the Wall Street Journal as the average prime lending rate for seventy-five percent (75%) of the United States’ thirty (30) largest commercial banks, or if the Wall Street Journal shall cease publication or cease publishing the “prime rate’’ on a regular basis, such other regularly published average prime rate applicable to such commercial banks as is acceptable to the Administrative Agent in its reasonable discretion.


 


“Pro Rata Percentage” means with respect to any Lender at any time, a fraction (expressed as a percentage), the numerator of which shall be the aggregate amount of the Commitments of such Lender under the applicable Facility or Facilities at such time, and the denominator of which shall be the aggregate Commitments of all of the Lenders under the applicable Facility or Facilities at such time; provided, that if the commitment of each lender to make Loans and the obligation of the Issuer to issue, extend, renew or increase any LCs have been terminated pursuant to Section 11.1, then the Pro Rata Percentage of each Lender shall be determined based on the Pro Rata Percentage of such Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof.


 


“Producer Payables” means with respect to any Person, all amounts at any time payable by such Person for the purchase of cattle, feed, grain or other farm products.


 


“Rabobank” means Coöperatieve Centrale Raiffeisen - Boerenleenbank, B.A., “Rabobank Nederland”, New York Branch.


 


“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.


 


“Required Lenders” means, at any time, Lenders having aggregate Total Percentages of at least 51%.


 


“Restatement Date” means the date on or as of which the conditions precedent set forth in Section 8.1 hereof are completed to the Agent’s satisfaction.


 


“Securities Act” has the meaning set forth in Section 13.20 hereof.


 


“Security Agreement” means that certain Amended and Restated Security Agreement dated as of even date herewith, executed by the Borrower and certain of its Subsidiaries in favor of the Agent, together with any and all amendments, modifications, supplements, renewals or restatements thereof.


 


“Security Documents” means the Security Agreement, the Guaranty Agreement, the Bond Pledge Agreement, the Trademark License, the Kansas Mortgage, the Pennsylvania Mortgage, the Georgia Mortgage, the letter agreement dated May 30, 2006, pursuant to which the Borrower (in its capacity as a limited partner of NBC) consented, among other things, to NCI’s pledge to the Borrower of NCI’s general partnership interest in NBC, the Assignment dated as of May 30, 2006 of the Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing from NBC to the Borrower dated as of May 30, 2006, as each may be amended, modified, renewed or extended from time to time in accordance with this


 






  





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Agreement, and any and all other agreements, chattel mortgages, security agreements, pledges, guaranties, assignments of proceeds, assignments of contract rights, assignments of partnership interest, assignments of performance or other collateral assignments, trademark license agreements, completion or surety bonds, standby agreements, subordination agreements, undertakings and other similar documents, agreements, instruments and financing statements at any time executed and delivered by the Borrower or a third Person in connection with, or as security for the payment or performance of, any of the Liabilities.


 


“Specified Class A-1 Units” means up to $75,484,071 of the Class A-1 Units issued by Borrower in April 2009 (as increased by the amount of any payment in kind notes issued in lieu of cash distributions).


 


“Subsidiary” means, with respect to any Person, a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.


 


“Subsidiary Loan Parties” means each of the Borrower’s direct and indirect Subsidiaries that become party to this Agreement and the Security Agreement as a Subsidiary Loan Party pursuant to the terms of Section 9.19 and the permitted successors and assigns of each such Person; it being understood and agreed that no Foreign Subsidiary or Non-Material Domestic Subsidiary shall be required to be a Subsidiary Loan Party and, so long as the grant of a security interest and the guarantee of the Borrower’s Indebtedness hereunder shall be limited by KC Steak’s constituent documents or the applicable minority interest holder, KC Steak shall not be required to be a Subsidiary Loan Party.


 


“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, but excluding any futures or options contracts credited to any Margin Account, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., the Bond Markets Association, any International Foreign Exchange Master Agreement, or any other master agreement reasonably acceptable to the Agent (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.


 


“Swap Party” means any Lender (or affiliate thereof) that is a party to a Swap Contract with the Borrower.


 




  





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“Swing Line” means the revolving credit facility made available by the Swing Line Lender pursuant to Section 2.1.3.


 


“Swing Line Lender” means CoBank in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.


 


“Swing Line Loan” has the meaning specified in Section 2.1.3 hereof.


 


“Swing Line Note” has the meaning set forth in Section 2.1.3 hereof.


 


“Swing Line Sublimit” means an amount equal to the lesser of (a) $30,000,000 and (b) the Line of Credit Loan Commitments.  The Swing Line Sublimit is a part of, not an addition to, the Line of Credit Loan Commitments.


 


“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).


 


“Taxes” has the meaning set forth in Section 5.5(a) and (b) hereof.


 


“Term Loan” has the meaning set forth in Section 2.1.2 hereof.


 


“Term Loan Commitment” means as to any Lender, such Lender’s obligation to make Term Loans, or additional Term Loans, as the case may be up to its Pro Rata Percentage of $375,000,000, as set forth opposite such Lender’s name under the heading “Term Loan Commitments” on Exhibit 1A, subject to Assignments and Acceptances executed and delivered in accordance with Section 13.23, and as such amount may be reduced or terminated from time to time pursuant to Section 4.5 or 11.1; and “Term Loan Commitments” means, collectively, the Term Loan Commitments for all the Lenders that have a Term Loan Commitment.


 


“Term Loan Facility” means, at any time, (a) prior to the one-year anniversary of the Closing Date, the aggregate amount of the Lenders’ Term Loan Commitments and (b) thereafter, the aggregate Term Loans of all Lenders at such time.


 


“Term Notes” has the meaning set forth in Section 2.1.2 hereof.


 


“Total Liabilities” means, as of any date of determination, all obligations of Borrower and its consolidated Subsidiaries required by GAAP to be classified as liabilities upon the balance sheet of such persons, including the aggregate amount of all Indebtedness, liabilities (including tax and other proper accruals) and reserves of such persons.


 


“Total Percentage” means with respect to any Lender at any time, a fraction (expressed as a percentage), the numerator of which shall be the combined amount of (a) such Lender’s outstanding Term Loan principal balance, (b) and such Lender’s outstanding Term Loan Commitment, and (c) such Lender’s Line of Credit Loan Commitment (or, if such Lender’s Line of Credit Loan Commitment shall have expired, the aggregate outstanding principal balance of 


 




  





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such Lender’s Line of Credit Loans, Swing Line Loans and LC Obligations) at such time, and the denominator of which shall be the combined amount of all the outstanding Term Loan principal balances, Term Loan Commitments and Line of Credit Loan Commitments (or, if the relevant Lenders’ Line of Credit Loan Commitments shall have expired, the aggregate outstanding principal balance of such Lenders’ Line of Credit Loans, Swing Line Loans and LC Obligations) of all the Lenders at such time.


 


“Trademark License” means the Fourth Amended and Restated Trademark License Agreement dated as of December 29, 2004 between the Borrower and the Agent, together with any and all amendments, modifications, supplements, renewals or restatements of such agreement.


 


“Type” means, with respect to any Advance, whether such Advance is a Base Rate Advance or a LIBOR Rate Advance.


 


“UCP” has the meaning set forth in Section 2.2(c) hereof.


 


“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.


 


“Unhedged Cattle” has the meaning set forth in Section 10.19 hereof.


 


“Upfront Fee” has the meaning set forth in Section 6.3 hereof.


 


“US Premium Beef” means U.S. Premium Beef, LLC, a Delaware limited liability company.


 


 




  





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1.3 Accounting Terms.  Any accounting terms used in this Agreement which are not specifically defined in this Agreement shall have the meanings customarily given them in accordance with GAAP.  Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided, that, if the Borrower notifies the Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or the methodologies utilized thereunder or in the application thereof on the operation of such provision (or if the Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or the application thereof, then the Agent and the Borrower shall negotiate in good faith to amend such provision to preserve the original intent thereof in light of such change (subject to the approval of the Required Lenders); provided, further, until so amended, (a) such provision shall continue to be computed in accordance with GAAP as in effect prior to such change and (b) the Borrower shall provide to the Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculation of such provision both before and after giving effect to such change.


 


ARTICLE II


LOANS, SWING LINE AND LETTERS OF CREDIT


 


 




  





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2.1 Loan Facilities.


 


2.1.1 Line of Credit.  Each Lender severally agrees to make loans (each a “Line of Credit Loan” and collectively, the “Line of Credit Loans”) to the Borrower from time to time on any one or more Business Days from and after the Restatement Date (through the Agent as set forth in Section 2.1.4) to but excluding the Maturity Date applicable to Line of Credit Loans, during which period the Borrower may borrow, repay and re-borrow in accordance with the provisions hereof up to an aggregate principal amount not exceeding each such Lender’s Pro Rata Percentage of the Available Amount on such Business Day, in aggregate amounts up to the lesser of the Available Amount or the then-current Borrowing Base Availability (the “Line of Credit”).  The Borrower hereby acknowledges that $7,000,000.00 of “Line of Credit Advances” and $30,000,000.00 of “Regular Swing Line Loans” under the Existing Credit Agreement are outstanding as of the date hereof, which shall be deemed to be Line of Credit Loans or Swing Line Loans under this Agreement on and after the Restatement Date. Line of Credit Loans may be made as LIBOR Rate Advances or Base Rate Advances.  The Line of Credit Loans shall be evidenced by and repayable in accordance with the terms of the Borrower’s promissory notes to each of the Lenders (as the same may be amended, supplemented or otherwise modified from time to time, together with any replacements thereof or substitutions therefor, the “Line of Credit Notes”), the form of which is attached as Exhibit 2A.  The Lenders, in their unanimous, sole and absolute discretion, may elect to make Line of Credit Loans to the Borrower in excess of the amounts available pursuant to the terms of this Agreement, and any such Line of Credit Loans shall also be governed by the terms hereof. The Lenders shall also have the option, in their unanimous, sole discretion and without any obligation to do so, to extend the Maturity Date applicable to the Line of Credit Loans.  In the event that the Lenders elect to extend such Maturity Date, the Agent shall give notice to the Borrower pursuant to Section 13.18.


 


2.1.2 Term Loan.  The Borrower acknowledges that, as of the date hereof, term loans are outstanding under this Section 2.1.2 and owed by the Borrower in the aggregate principal amount of $228,801.167.00.  Each Lender with a Term Loan Commitment as set for on Exhibit 1A severally agrees to make up to three (3) loans to the Borrower from time to time on any one or more Business Days from (and including) the Restatement Date (through the Agent as set forth in Section 2.1.4) to but excluding the one-year anniversary of the date hereof, during which period the Borrower may borrow, up to an aggregate principal amount not exceeding each such Lender’s Pro Rata Percentage of the Term Loan Commitments on such Business Day, in aggregate amounts up to the Term Loan Commitments.  Each Lender’s allocation of term loans as of the date hereof together with term loans thereafter made under this Section 2.1.2 is herein collectively called such Lender’s “Term Loan”, and all such loans of all of the Lenders are herein collectively called the “Term Loans”.  The Term Loans may be maintained as LIBOR Rate Advances or Base Rate Advances.  The Term Loans shall be evidenced by and repayable in accordance with the terms of the Borrower’s promissory notes to each of the Lenders (as the same may be amended, supplemented or otherwise modified from time to time, together with any replacements thereof or substitutions therefor, the “Term Notes”), the form of which is attached as Exhibit 2B.  Amounts representing Term Loans which have been repaid by the Borrower may not be reborrowed.


 






  





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2.1.3 Swing Line Loans.


 


(a) The Swing Line Lender agrees to make loans (each a “Swing Line Loan” and collectively, the “Swing Line Loans”) to the Borrower from time to time on any one or more Business Days from and after the Restatement Date through the Maturity Date applicable to the Line of Credit Loans.  The aggregate outstanding principal amount of Swing Line Loans must not at any time exceed the Swing Line Sublimit, and no Swing Line Loans may be made to the extent that the sum of (i) the aggregate outstanding principal amount of the Line of Credit Loans, (ii) the aggregate outstanding amount of the LC Obligations and (iii) the aggregate outstanding principal amount of all Swing Line Loans would exceed either the Borrowing Base or the aggregate Line of Credit Loan Commitments.  All Swing Line Loans shall bear interest as if they were Base Rate Advances; provided, however, that Swing Line Loans that are disbursed and repaid on the same day shall bear one day’s interest. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow, repay and reborrow in accordance with the terms hereof and prepay in accordance with Section 4.2, provided, however, that the Swing Line Lender may terminate or suspend its commitment to make the Swing Line Loans at any time in its sole discretion upon notice to the Borrower.  The Swing Line Loans shall be evidenced by and repayable in accordance with the terms of the Borrower’s promissory note to the Swing Line Lender (as the same may be amended, supplemented or otherwise modified from time to time, together with any replacements thereof or substitutions therefor, the “Swing Line Note”), the form of which is attached as Exhibit 2C.  Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to such Lender’s Pro Rata Percentage of such Swing Line Loan, which risk participation shall be funded in accordance with Section 2.1.3(b). The Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to Swing Line Lender.


 


(b) Refinancing of Swing Line Loans.


 


(i) In anticipation of the Maturity Date applicable to a Swing Line Loan, or after the occurrence and during the continuance of any Default or Matured Default, as the case may be, the Swing Line Lender may request, on behalf of the Borrower (which hereby irrevocably requests the Swing Line Lender to act on its behalf), that each Lender make a Line of Credit Loan in an amount equal to such Lender’s Pro Rata Percentage of the amount of such Swing Line Loan. Such request shall be made in accordance with the requirements of Article II, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Advances.  The Swing Line Lender shall furnish the Borrower with a copy of the applicable borrowing notice promptly after delivering such notice to the Agent.  Each Lender shall make an amount equal to its Pro Rata Percentage of the amount specified in such borrowing notice available to the Agent in immediately available funds for the account of the Swing Line Lender at the Agent’s office not later than 11:00 a.m., Denver time, on the day specified in such borrowing notice, whereupon, subject to clause (ii)


 






  





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below, each Lender that so makes funds available shall be deemed to have made a Line of Credit Loan to the Borrower in such amount.  The Agent shall then remit the funds so received to the Swing Line Lender.


 


(ii) If for any reason any Advance cannot be requested in accordance with clause (i) above or any Swing Line Loan cannot be refinanced by such an Advance, the borrowing notice submitted by the Swing Line Lender shall be deemed to be a request by the Swing Line Lender that each of the Lenders fund its participation in the relevant Swing Line Loan, and each Lender’s payment to the Agent for the account of the Swing Line Lender pursuant to clause (i) above shall be deemed to be the payment in respect of such participation.


 


(iii) If any Lender fails to make available to the Agent for the account of the Swing Line Lender any amount that such Lender is required to pay pursuant to the foregoing provisions of this subsection (b) by the time specified in clause (i) above, the Swing Line Lender shall be entitled to recover from such Lender (acting through the Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the Federal Funds Rate from time to time in effect.  A certificate of the Swing Line Lender submitted to any Lender (directly or through the Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.


 


(iv) Each Lender’s obligation to make Line of Credit Loans or to purchase and fund participations in Swing Line Loans pursuant to this subsection (b) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default or Matured Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing.  Any such purchase of participations shall not relieve or otherwise impair Borrower’s obligation to repay the Swing Line Loans, together with interest as provided herein.


 


(c) Repayment of Participations.


 


(i) At any time after any Lender has purchased and funded a participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, Swing Line Lender will distribute to such Lender its share of such payment in accordance with such Lender’s Pro Rata Percentage (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s participation was outstanding and funded) in the same funds as those received by the Swing Line Lender.


 






  





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(ii) If any payment received by Swing Line Lender in respect of any Swing Line Loan is required to be returned by the Swing Line Lender, each Lender shall pay to the Swing Line Lender its Pro Rata Percentage thereof on demand of the Swing Line Lender (or the Agent on its behalf), plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate.  The Agent will make such demand upon the request of the Swing Line Lender.


 


2.1.4 Borrowing Procedures.


 


(a) Procedure for Line of Credit Loans.  Any request by the Borrower for Line of Credit Loans hereunder must be given by the Borrower not later than 11:00 a.m. (Denver time) on the third Business Day prior to the date of any proposed LIBOR Rate Advance and not later than 1:00 p.m. (Denver time) on the Business Day prior to the date any Base Rate Advance is proposed to be made.  Each request for Line of Credit Loans hereunder shall be irrevocable and shall be deemed to be a representation by the Borrower that on the requested Loan Date and after giving effect to the requested Line of Credit Loans the applicable conditions specified in Article VIII have been and will be satisfied.  Each request for a Line of Credit Loan hereunder shall specify (i) the requested Loan Date, (ii) the aggregate amount of the Line of Credit Loan to be made on such date, which shall be in a minimum amount of $1,000,000 and an integral multiple of $500,000, (iii) whether such Line of Credit Loans is to be funded as a Base Rate Advances or LIBOR Rate Advances and (iv) in the case of a LIBOR Rate Advance, the duration of the initial Interest Period applicable thereto. Not later than 4:00 p.m. (Denver time) on the Business Day a receipt of such notice is received from the Borrower, the Agent shall advise each Lender of the requested Line of Credit Loans and of such Lender’s ratable share of such Loans.  At or before 10:00 a.m. (Denver time) on the date of the requested Line of Credit Loans, each relevant Lender shall provide the Agent at the Agent’s principal office in Denver with immediately available funds covering such Lender’s Pro Rata Percentage of the requested Loans.  Unless the Agent determines that any applicable condition specified in Article VIII has not been satisfied or waived, the Agent will make available to the Borrower at the Agent’s principal office in Denver, Colorado in immediately available funds not later than 12:00 noon (Denver time) on the requested Loan Date the amount of the requested Line of Credit Loans to the extent received by the Agent.  In accordance with Section 2.1.5(c) the Agent shall not be obligated to provide funds to the Borrower that are not provided to the Agent in accordance with this Section 2.1.4(a).


 


(b) Procedure for Term Loans.  Any request by the Borrower for Term Loans hereunder shall be made in accordance with the same procedure as required for Line of Credit Loans as set forth in the preceding subsection (a).


 


(c) Procedure for Swing Line Loans.  Unless the Swing Line Lender has notified the Borrower that the Swing Line has been terminated or suspended as provided in Section 2.1.3, each request by the Borrower for a Swing Line Loan hereunder must be given by the Borrower to the Swing Line Lender and the Agent not later than 1:00 p.m. (Denver time) on the Business Day on which such Swing Line Loan is proposed to be


 






  





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made.  Each request for a Swing Line Loan hereunder shall be irrevocable and shall be deemed a representation by the Borrower that on the requested Loan Date and after giving effect to the requested Swing Line Loan the applicable conditions specified in Article VIII have been and will be satisfied.  Each request for a Swing Line Loan hereunder shall specify (i) the requested Loan Date, (ii) the amount of the Swing Line Loan to be made on such date, which shall be in a minimum amount of $100,000 and an integral multiple of $100,000.  Unless the Swing Line Lender has received written notice from the Agent (i) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 2.1.3(a) or (ii) that any applicable condition specified in Article VIII has not been satisfied or waived, the Agent will make available to the Borrower at the Agent’s principal office in Denver, Colorado in immediately available funds not later than 2:30 p.m. (Denver time) on the requested Loan Date the amount of the requested Swing Line Loans to the extent received from the Swing Line Lender.


 


(d) Notices.  All notices of the Borrower required under Section 2.1.4 shall be from such natural Persons as have been designated in a written notice signed by the president, chief executive officer or chief financial officer of the Borrower.  Such notice shall provide the Agent and Swing Line Lender with a specimen signature for each such natural Person so designated.  The natural Persons so designated are authorized to request Loans and Swing Line Loans and direct the disposition of any such Loans and Swing Line Loans until written notice of the revocation of such authority is received by the Agent at its address designated below.  Any such Loans or Swing Line Loans shall be conclusively presumed to have been made to or for the benefit of the Borrower when the Agent reasonably believes in good faith that such notice was made by authorized Persons, or when said Loans are deposited to the credit of the account of the Borrower regardless of the fact that Persons other than those authorized hereunder may have authority to draw against such account.


 


2.1.5 General Terms regarding the Notes, the Loans and the Swing Line Loans.


 


(a) The Agent shall promptly notify each Lender of any notice that the Agent receives from the Borrower pursuant to Section 3.2.  In the case of a proposed LIBOR Rate Advance, the Agent shall also promptly notify each Lender of the applicable interest rate.


 


(b) Unless the Agent shall have received notice from a Lender prior to the date of any borrowing of a Loan that such Lender will not make available to the Agent such Lender’s pro rata share of such Loan, the Agent may assume that such Lender will make such portion available to the Agent in accordance with Section 2.1.3 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made its pro rata share available to the Agent in accordance with Section 2.1.3, such Lender and the Borrower severally agree to repay to the Agent, within five (5) Business Days after demand therefor, such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, (i) in the case of the Borrower, at the interest rate


 






  





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applicable at the time the Loans comprising such borrowing were made, and (ii) in the case of such Lender, at the Federal Funds Rate.  If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Loan as part of such borrowing for purposes of this Agreement.


 


(c) The failure of any Lender to make any Loan or to fund any participation to be made by it as required by this Agreement shall not relieve any other Lender of its obligation, if any, to make its Loan on the date the same is required to be made, but no Lender shall be responsible for the failure of any other Lender to make Loans or to fund such other Lender’s participation.


 


(d) The Agent shall maintain a loan account (“Loan Account”) on its books in which the Agent will record the date and amount of: (i) all Loans and Swing Line Loans to the Borrower pursuant to this Agreement; (ii) all payments made by the Borrower on all Loans and Swing Line Loans; and (iii) all other appropriate debits and credits as provided in this Agreement, including without limitation, all fees, charges, expenses and interest.  All entries in the Borrower’s Loan Account shall be made in accordance with the Agent’s customary accounting practices as in effect from time to time.  The balance in the Borrower’s Loan Account, as set forth on the Agent’s most recent printout, shall be rebuttable presumptive evidence of the amounts due and owing to the Agent, the Lenders, the Swing Line Lender and the Issuers by the Borrower.


 


(e) The proceeds of all Loans and Swing Line Loans shall be used (i) to refinance the Indebtedness under the Existing Credit Agreement, (ii) to pay fees and expenses incurred in connection with this Agreement and (iii) for the Borrower’s working capital and general corporate purposes, including financing acquisitions as permitted hereunder, making capital expenditures within the limitation set forth herein and making Equity Distributions pursuant to the $150 Million Basket.


 


2.2 Letters of Credit.


 


(a) Subject to the terms and conditions of this Agreement, the Borrower may from time to time request that an Issuer issue LCs for the Borrower’s account for any purpose acceptable to the Agent in its reasonable discretion; provided, however, that no Issuer shall issue any such LC in an amount exceeding the least of: (i) $75,000,000 minus the LC Obligations; (ii) the Available Amount or (iii) the Borrowing Base Availability.  The proposed expiry date for any such LC shall not be later than the earlier of one year from the date of issuance of such LC or the scheduled Maturity Date applicable to the Line of Credit Loans.  The Borrower hereby acknowledges that LCs in the face amounts set forth on Exhibit 1E are outstanding under the Existing Credit Agreement as of the date hereof, and shall be deemed to be LCs under this Agreement on and after the Restatement Date.


 


(b) In order to effect the issuance of each LC, the Borrower shall deliver to the Agent and the relevant Issuer a letter of credit application (the “Application”) not later than 11:00 a.m. (Denver time), five (5) Business Days prior to the proposed date of issuance of the LC. The Application shall be duly executed by a responsible officer of


 






  





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the Borrower, shall be irrevocable and shall (i) specify the day on which such LC is to be issued (which shall be a Business Day), and (ii) be accompanied by a certificate executed by a responsible officer setting forth calculations evidencing availability for the LC as required pursuant to Section 2.2(a) and stating that all conditions precedent to such issuance have been satisfied.


 


(c) Upon receipt of the Application, and satisfaction of the applicable terms and conditions of this Agreement, and provided that no Default or Matured Default exists, or would, after giving effect to the issuance of the LC, exist, the relevant Issuer shall issue such LC no later than the close of business, in Denver, Colorado, on the date so specified. Such Issuer shall provide the Borrower, the Agent and each Lender with a copy of the LC which has been issued. Each LC shall (i) provide for the payment of drafts presented for honor thereunder by the beneficiary in accordance with the terms thereof, when such drafts are accompanied by the documents described in the LC, if any, and (ii) to the extent not inconsistent with the express terms hereof or the applicable Application, be subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500 and/or the International Standby Practices (ISP98), International Chamber of Commerce Publication No. 590, as the relevant Issuer shall determine to be applicable (collectively, together with any subsequent revisions thereof approved by a Congress of the International Chamber of Commerce and adhered to by the relevant Issuer, the “UCP”), and shall, as to matters not governed by the UCP, be governed by, and construed and interpreted in accordance with, the laws of the State of Colorado (in the case of CoBank) or the State of New York (in the case of Rabobank).


 


(d) Upon the issuance date of each LC, the relevant Issuer shall be deemed, without further action by any party hereto, to have sold to each other Lender, and each other Lender shall be deemed, without further action by any party hereto, to have purchased from such Issuer, a participation, to the extent of such Lender’s Pro Rata Percentage, in such LC, the obligations thereunder and in the Borrower’s reimbursement obligations due in respect of drawings made under such LC. If requested by such Issuer, the other Lenders will execute any other documents reasonably requested by such Issuer to evidence the purchase of such participation.


 


(e) Upon the relevant beneficiary’s presentation of a draft for honor under any LC which the relevant Issuer has determined is in compliance with the conditions for payment thereunder, such Issuer shall promptly notify the Borrower and the Agent. Each drawing under any LC shall (so long as no Default or Matured Default shall have occurred and be continuing) constitute a request by the Borrower to the Agent for a borrowing pursuant to Section 2.1.1 of a Base Rate Advance in the amount of such drawing. If a Default or Matured Default shall have occurred and be continuing, or if Base Rate Advances are otherwise unavailable to the Borrower, at the time when a beneficiary presents a draft for payment under an LC, the Borrower agrees to reimburse the relevant Issuer for the amount of such draft immediately upon such presentation.


 


(f) The Borrower’s obligation to reimburse the relevant Issuer for the amount of any draft drawn under any LC (whether directly or with the proceeds of a


 






  





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Base Rate Advance) shall be absolute, unconditional and irrevocable and shall be paid immediately to the Agent for the account of the Lenders upon demand by the Agent, and otherwise strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including without limitation, the following circumstances:


 


(i) The existence of any claim, set-off, defense or other rights which the Borrower may have at any time against any beneficiary or any transferee of any LC (or any Person for whom any such beneficiary or any such transferee may be acting), any Issuer, any Lender, the Agent or any other Person, whether in connection with this Agreement, any other Financing Document, the transactions contemplated herein or therein or any unrelated transaction, unless otherwise provided by the terms of such LC;


 


(ii) Any statement or any other document presented under any LC proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect;


 


(iii) Payment by the relevant Issuer under any LC against presentation of a draft or certificate which does not comply with the terms of such LC, provided however, that such payment shall not have constituted gross negligence or willful misconduct on the part of such Issuer; and


 


(iv) Any other circumstance or event whatsoever, whether or not similar to the foregoing, provided however, that such other circumstance or event shall not have been the result of gross negligence or willful misconduct of the relevant Issuer.


 


(g) The Borrower assumes all risks of the acts or omissions of the beneficiary and any transferee of each LC with respect to its use of such LC.  Neither the Agent, any Issuer nor any Lender shall be liable or responsible for, and the Borrower indemnifies and holds each Issuer, the Agent and each Lender harmless for: (i) the use which may be made of any LC or for any acts or omissions of the beneficiary and any transferee thereof in connection therewith, or (ii) the validity or genuineness of documents, or of any endorsement(s) thereon, even if such documents should, in fact prove to be in any or all respects invalid, fraudulent or forged, or any other circumstances whatsoever in making or failing to make payment, against the relevant Issuer, the Agent or any Lender, except damages determined to have been caused by gross negligence or willful misconduct of the relevant Issuer in determining whether documents presented under an LC comply with the terms of such LC and there shall have been a wrongful payment as a result thereof; provided, however, that it is the intention of the Borrower to indemnify each Issuer, the Agent and each Lender for its own negligence, other than negligence constituting gross negligence or willful misconduct. In furtherance and not in limitation of the foregoing, each Issuer may accept documents that appear on their face to be in order, without responsibility for investigation, regardless of any notice or information to the contrary.


 






  





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(h) In the event that any provision of an Application is inconsistent, or in conflict with, any provision of this Agreement, including provisions for the rate of interest applicable to draws thereunder, delivery of collateral or rights of set-off or any representations, warranties, covenants or any events of default set forth therein, the provisions of this Agreement shall govern.


 


ARTICLE III


INTEREST


 


3.1 Interest.


 


The Borrower shall pay interest on the unpaid principal amount of each Loan and Swing Line Loan made by each Lender from the date of such Loan or Swing Line Loan until such principal amount shall be paid in full, at the times and at the rates per annum set forth below:


 


(a) Base Rate Advances and Swing Line Loans, so long as no Matured Default has occurred and is continuing, shall bear interest at a rate per annum equal to the lesser of (i) the sum of the Base Rate in effect from time to time plus the then Applicable Margin (calculated according to the Borrower’s actual Financial Performance Level) and (ii) the Highest Lawful Rate; provided, however, that with respect to each Base Rate Advance, the rate of interest accruing shall change concurrently with each change in the Prime Rate as announced by CoBank or with each change in the Federal Funds Rate, as the case may be.  Such interest shall be payable (1) in the case of a Swing Line Loan, monthly in arrears on the first day of each month and on the Maturity Date applicable thereto, and (2) in the case of other Base Rate Advances, monthly in arrears on the first day of each month and on the Maturity Date applicable thereto.


 


(b) Each LIBOR Rate Advance, so long as no Matured Default has occurred and is continuing, shall bear interest at a rate per annum during each day of each Interest Period for such Advance equal to the lesser of (i) the sum of the LIBOR Rate for such Interest Period for such Advance plus the then Applicable Margin (calculated according to the Borrower’s actual Financial Performance Level) and (ii) the Highest Lawful Rate.  Such interest shall be payable in arrears on the last day of the relevant Interest Period, and, if such Interest Period exceeds three months, the day which is three months after the date on which the relevant LIBOR Rate Advance was disbursed.


 


(c) After the occurrence of a Matured Default and for so long as such Matured Default is continuing, the Agent may (upon the direction of the Required Lenders) notify the Borrower that any and all amounts due hereunder, under the Notes or under any other Financing Document, whether for principal, interest (to the extent permitted by applicable law), fees, expenses or otherwise, shall bear interest, from the date of such notice by the Agent and for so long as such Matured Default continues, payable on demand, at a rate per annum (the “Default Rate”) equal to the lesser of (A) with respect to a Base Rate Advance, (i) the sum of two percent (2.0%) per annum plus the Base Rate in effect from time to time plus the Applicable Margin or (ii) the Highest Lawful Rate; or (B) with respect to a LIBOR Rate Advance, (i) during the Interest


 






  





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Period in which the Matured Default has occurred, the sum of two percent (2.0%) per annum plus the LIBOR Rate then in effect for such LIBOR Rate Advance plus the Applicable Margin, and in Interest Periods subsequent to that in which the Matured Default occurred, the Default Rate applicable to a Base Rate Advance as calculated under (A) hereof, or (ii) the Highest Lawful Rate.


 


(d) All computations of interest pursuant to Section 3.1(a) shall be made by the Swing Line Lender or the Agent, each, as the case may be, by reference to the actual number of days elapsed based on a year of 360 days (in the case of fees and of LIBOR Rate Advances) or 365 or 366 days (in the case of Base Rate Advances), as applicable. Each determination of an interest rate by the Agent or the Swing Line Lender shall be conclusive and binding for all purposes, absent manifest error.  Any accrued interest unpaid on the Maturity Date shall be due and payable on the Maturity Date.


 


(e) The Swing Line Lender shall be responsible for invoicing the Borrower for interest on the Swing Line Loans.  Until each Lender funds its Line of Credit Loan or participation pursuant to Section 2.1.3 to refinance such Lender’s Pro Rata Percentage of any Swing Line Loan, interest in respect of such Swing Line Loan shall be solely for the account of the Swing Line Lender.


 


3.2 Voluntary Conversion of Advance.


 


With respect to Loans, the Borrower may, upon written notice given by the Borrower to the Agent not later than 11:00 a.m. (Denver time) on the third Business Day prior to the date of any proposed interest conversion or roll over, (a) convert Advances of one Type into Advances of another Type, or (b) continue or roll over existing LIBOR Rate Advances; provided, however, that (i) with respect to any conversion into or roll over of a LIBOR Rate Advance, no Default or Matured Default shall have occurred and be continuing, (ii) with respect to any facsimile notice of interest conversion, the Borrower shall promptly confirm such notice by sending the original notice to the Agent and (iii) any continuation or roll over of a LIBOR Rate Advance for the same or a different Interest Period or into a Base Rate Advance, shall be made on, and only on, the last day of an Interest Period for such LIBOR Rate Advance.  Each such notice of interest conversion shall specify therein the requested (x) date of such conversion, (y) the Advances to be converted and whether such Advances constitute LIBOR Rate Advances, and (z) if such interest conversion is into LIBOR Rate Advances, the duration of the Interest Period for each such Advance.  The Agent shall promptly deliver a copy thereof to each Lender. Each such notice shall be irrevocable and binding on the Borrower.  If the Borrower shall fail to give a notice of interest conversion with respect to any LIBOR Rate Advance as set forth above, such Advance shall automatically convert to a Base Rate Advance on the last day of the Interest Period with respect thereto.  The provisions of this Section 3.2 shall also apply to initial Advances on Loans made as LIBOR Rate Advances.


 


ARTICLE IV


PAYMENTS; PREPAYMENTS; ETC.


 






  





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4.1 Payment of Loans and Swing Line Loans.


 


(a) The outstanding principal balance of the Term Notes, Line of Credit Notes and the Swing Line Notes shall be due and payable on their respective Maturity Dates.


 


(b) Subject to the definition of Interest Period in the case of LIBOR Rate Advances, whenever any payment hereunder or under any Note shall be due on a day other than a Business Day, the date for payment of such amounts shall be extended to the next succeeding Business Day.


 


(c) The Borrower shall make each payment hereunder and under the Term Notes and Line of Credit Notes not later than 11:00 a.m. (Denver time) on the day when due in Dollars and in immediately available funds to the Agent for the account of the Lenders, unless such payment is scheduled to be made with the proceeds of a Line of Credit Advance otherwise available hereunder.  Subject to Section 2.1.3, the Agent will promptly distribute in Dollars and in immediately available funds to each Lender its Pro Rata Percentage of each such payment received by the Agent for the account of the Lenders.


 


(d) The Borrower shall make each Swing Line Loan payment not later than 1:00 p.m. (Denver time) on the day when due in Dollars and in immediately available funds to the Swing Line Lender unless such Swing Line Loan is being refinanced through Line of Credit Loans.


 


4.2 Optional Prepayments of the Loans.


 


The Borrower may at any time prepay the outstanding principal amount of any Loan or Swing Line Loan, in either case in whole or in part, in accordance with this Section 4.2.  With respect to any prepayment other than prepayments made pursuant to the Agent’s routine collection of Accounts in accordance with the provisions of the Security Agreement, the Borrower shall give prior written notice of any such prepayment to the Agent, which notice shall state the proposed date of such prepayment (which shall be a Business Day), the Loan or Swing Line Loan to be prepaid and the aggregate amount of the prepayment, and which notice shall be delivered to the Agent not later than 11:00 a.m. (Denver time): (a) with respect to any Base Rate Advance, on the date of the proposed prepayment, and (b) with respect to any LIBOR Rate Advance, three (3) Business Days prior to the date of the proposed prepayment. All prepayments of Base Rate Advances shall be without premium or penalty of any kind.  All such prepayments of LIBOR Rate Advances shall be made together with accrued and unpaid interest (if any) to the date of such prepayment on the principal amount prepaid without premium or penalty thereon; provided, however, that funding losses incurred by any Lender as described in Section 5.3 shall be payable with respect to each such prepayment.  All notices of prepayment shall be irrevocable and the payment amount specified in each such notice shall be due and payable on the prepayment date described in such notice, together with, in the case of LIBOR Rate Advances, accrued and unpaid interest (if any) on the principal amount prepaid and any amounts due under Section 5.3.  The Borrower shall have no optional right to prepay the principal amount of any LIBOR Rate Advance other than as provided in this Section 4.2.  Voluntary prepayments of the


 






  





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Term Notes shall be applied pro rata to the remaining unpaid installments described in Section 4.3.


 


4.3 Term Loan Installments.


 


The principal amount outstanding under the Term Notes shall be payable in quarterly installments commencing on the first day of the fourth full fiscal month following the Closing Date and, thereafter, on each three-month anniversary thereof (each such date, a “Term Loan Payment Date”) as follows: (a) on each Term Loan Payment Date, in an amount calculated based upon a 10-year level amortization of the aggregate principal amount of the Term Loans outstanding as of such payment date and (b) on the Maturity Date, in any amount equal to the remaining aggregate principal amount of the Term Loans outstanding on such date.


 


4.4 Mandatory Prepayments of Notes.


 


(a) Mandatory Prepayments—Borrowing Base Deficiency.  If at any time a Borrowing Base Deficiency exists, the Borrower shall immediately pay on the principal of the Swing Line Loans and the Line of Credit Loans an aggregate amount equal to such Borrowing Base Deficiency. Any such payments shall be applied to the Swing Line Loans first, then to the Line of Credit Loans first against Base Rate Advances and then to LIBOR Rate Advances in order starting with the LIBOR Rate Advances having the shortest time to the end of the applicable Interest Period.  Amounts paid on the Line of Credit Loans under this Section 4.4(a) shall be for the account of each Lender in proportion to its share of outstanding Swing Line Loans and Line of Credit Loans.  If, after paying all outstanding Line of Credit Loans, a Borrowing Base Deficiency still exists, the Borrower shall pay into the Holding Account an amount equal to the amount of the remaining Borrowing Base Deficiency.


 


(b) Other Mandatory Prepayments.  Additional mandatory prepayments of the Term Notes and Line of Credit Notes shall be payable as follows: (i) upon receipt thereof, an amount equal to any Excess Disposition Proceeds; and (ii) from and after the consummation of a Permitted IPO and on or before the second anniversary of the Restatement Date, concurrent with the receipt by the Existing Equity Holders of any IPO Proceeds or the making of any Equity Distributions by the Borrower pursuant to clause (d) of Section 10.10, an amount equal to, on a dollar-for-dollar basis, (A) the aggregate amount of such IPO Proceeds received and such Equity Distributions paid during such period minus (B) $275,000,000.  All prepayments under this Section 4.4 shall be applied (pro rata among the Lenders) first to the unpaid installments due under the Term Notes in the inverse order of their maturity until all such installments are paid, second to the outstanding principal of the Line of Credit Notes, and third to the outstanding principal of the Swing Line Loans.


 


4.5 Termination of the Commitments.


 


The Borrower shall have the right, upon at least five Business Days’ written notice to the Lenders, to terminate the Line of Credit Loan Commitments and/or the Term Loan Commitments, (i) in whole, or (ii) in part, in a minimum amount of $5,000,000 and an integral


 






  





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multiple of $5,000,000, but not to an amount less than $50,000,000; provided, however, that any termination of the Line of Credit Loan Commitments shall be accompanied, (i) in the case of a termination in whole, by payment of the Liabilities in full and the return or cash coverage (pursuant to documentation in form and substance satisfactory to the Agent) of any LC then outstanding, or (ii) in the case of a partial termination, payment of the Line of Credit Loans, the Swing Line Loans and/or the LC Obligations to the extent necessary to cause the Available Amount to be not less than zero.  Any partial reduction of the Line of Credit Loan Commitments or the Term Loan Commitments pursuant to this Section 4.5 shall result in a reduction pro rata of the Line of Credit Loan Commitments or the Term Loan Commitments, as applicable, of each of the Lenders.


 


ARTICLE V


LIBOR RATE LOANS; INCREASED COSTS; TAXES, ETC.


 


5.1 LIBOR Rate Advances.


 


Anything in this Agreement to the contrary notwithstanding:


 


(a) If any Lender shall notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or that any central bank or other Governmental Authority asserts that it is unlawful, for such Lender to perform its obligations to make LIBOR Rate Advances or to fund or maintain LIBOR Rate Advances (whether or not such assertion carries the force of law), the obligation of such Lender to make, roll over or convert Loans into LIBOR Rate Advances shall be suspended until the Agent shall notify the Borrower and such Lender that the circumstances causing such suspension no longer exist, and the existing LIBOR Rate Advances of such Lender shall automatically convert, on and as of the date of such notification, into Base Rate Advances; provided that each Lender represents and warrants to the Borrower that as of the later of (i) the Closing Date or (ii) the date on which it shall have executed an Assignment and Acceptance pursuant to Section 13.23(a), it has no actual knowledge that it would be unlawful for such Lender to make LIBOR Rate Advances as contemplated.


 


(b) If the Required Lenders shall, not later than 11:00 a.m. (Denver time) one Business Day before the date of any requested borrowing consisting of LIBOR Rate Advances, notify the Agent that the LIBOR Rate for LIBOR Rate Advances comprising such borrowing will not adequately reflect the cost to such Required Lenders of making or funding their respective LIBOR Rate Advances for such borrowing, the Borrower’s right to select LIBOR Rate Advances for such borrowing or any subsequent borrowing respectively shall be suspended until the Required Lenders shall notify the Agent that the circumstances causing such suspension no longer exist, and the Advances comprising such requested borrowing shall be Base Rate Advances.


 


5.2 Increased Costs.


 


If, due to either (a) introduction of or any change in or in the interpretation of any law or regulation or (b) compliance with any guideline or request from any central bank or other


 






  





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Governmental Authority (whether or not having the force of law), there shall be any increase in the cost or reduction in yield or rate of return to any Lender of agreeing to make or making or maintaining any LIBOR Rate Advance or maintaining its Commitment or any to any Issuer issuing or maintaining any LC, with respect thereto (other than any increase in income or franchise taxes imposed on it by the jurisdiction under the laws of which such Lender is organized or the jurisdiction in which such Lender’s relevant office is located), then the Borrower shall from time to time, three (3) Business Days after written demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost, reduction in yield or rate of return over a period not to exceed one hundred eighty (180) days, which amounts shall be due and payable at the end of such period, subject, however, to the provisions of Section 12.10.  Any request for payment under this Section 5.2 will be submitted to the Borrower and the Agent by such Lender within sixty (60) days of such occurrence described in this Section 5.2, identifying with reasonable specificity the basis for and the amount of such increased cost, and shall be conclusive and binding for all purposes, absent manifest error.


 


5.3 Funding Losses.


 


The Borrower will indemnify each Lender against, and reimburse each Lender on demand for, any loss, cost or expense incurred or sustained by such Lender (including without limitation, any loss or expense incurred by reason of the liquidation or redeployment of deposits or other funds acquired by such Lender to fund or maintain any LIBOR Rate Advance and/or loss of net yield) as a result of (a) any payment, conversion, roll over, or prepayment of all or a portion of any LIBOR Rate Advance on a day other than the last day of an Interest Period for such LIBOR Rate Advance, (b) any payment, conversion, roll over or prepayment (whether required hereunder or otherwise) of such Lender’s LIBOR Rate Advance made after the delivery of a notice of borrowing (whether oral or written) but before the proposed date for such LIBOR Rate Advance if such payment or prepayment prevents the proposed borrowing from becoming fully effective, (c) after the Agent receives a notice of borrowing, the failure of any LIBOR Rate Advance to be made or effected by such Lender due to any condition precedent to a borrowing not being satisfied or due to any other action or inaction of the Borrower or (d) any rescission of a notice of borrowing or a notice of interest conversion.  Any Lender demanding payment under this Section 5.3 shall deliver to the Borrower and the Agent a statement reasonably setting forth the amount and manner of determining such loss, cost or expense, which statement shall be conclusive and binding for all purposes, absent manifest error.  Compensation owing to a Lender as a result of any such loss, cost or expense resulting from a payment, prepayment, conversion or roll over of a LIBOR Rate Advance shall include without limitation, an amount equal to the sum of (i) the difference between (A) the amount of interest that, but for such event, such Lender would have earned during the period from the date of such event to the last day of the applicable Interest Period and (B) the amount of interest such Lender would have earned for such period at the market interest rate which such Lender would obtain, at the commencement of such period, for U.S. Dollar deposits of a comparable amount and period (excluding, in the case of clauses (A) and (B) loss of the Applicable Margin) plus (ii) any reasonable expense incurred by such Lender in connection with such payment, prepayment, conversion or roll over.  Notwithstanding any provision herein to the contrary, each Lender shall be entitled to fund and maintain its funding of all of any part of the LIBOR Rate Advance in any manner it elects; it being understood, however, that all determinations hereunder shall be made as if the Lender had


 






  





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actually funded and maintained each LIBOR Rate Advance during the Interest Period for such Advance through the purchase of deposits having a term corresponding to such Interest Period and bearing an interest rate equal to the LIBOR Rate for such Interest Period (whether or not the Lender shall have granted any participations in such Loans).


 


5.4 Capital Adequacy Requirements.


 


(a) If any Lender or Issuer shall have determined that the adoption after the date of this Agreement of any applicable law, rule or regulation regarding capital adequacy, or any change therein after the date of this Agreement, or any change in the interpretation or administration thereof after the date of this Agreement by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by such Lender or Issuer with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency issued after the date of this Agreement, affects or would affect the amount of capital required or expected to be maintained by such Lender or Issuer or any corporation controlling such Lender or Issuer, and that the amount of such capital requirement is increased, or has or would have the effect of reducing the rate of return on such Lender’s or such Issuer’s or such corporation’s capital to a level below that which such Lender or Issuer or such corporation could have achieved but for such adoption, change or compliance, in each case as a consequence of its obligations hereunder (taking into consideration such Lender’s or Issuer’s policies with respect to capital adequacy), then the Borrower shall pay to such Lender such additional amount or amounts as such Lender or Issuer  reasonably determines to be sufficient to compensate such Lender or Issuer or such corporation in the light of such circumstances, for a period not to exceed one hundred eighty (180) days, which amounts shall be due and payable at the end of such period, subject to the provisions of Section 12.10.


 


(b) A certificate of such Lender or Issuer setting forth such amount or amounts as shall be necessary to compensate such Lender or Issuer as specified in Section 5.4(a) above shall be delivered within sixty (60) days of such occurrence described in Section 5.4(a) above to the Borrower and shall be conclusive and binding, absent manifest error.  The Borrower shall pay such Lender or Issuer the amount shown as due on any such certificate within fifteen (15) days after such Lender or Issuer delivers such certificate. In preparing such certificate, such Lender or Issuer may employ such assumptions and allocations of costs and expenses as it shall in good faith deem reasonable and may use any reasonable averaging and attribution method.


 


5.5 Taxes.


 


(a) Except as otherwise provided in Section 5.5(d), any and all payments by the Borrower hereunder or under the other Financing Documents shall be made free and clear of and without deduction for any and all present or future taxes, deductions, charges or withholdings, and all liabilities with respect thereto, including without limitation, such taxes, deductions, charges, withholdings or liabilities whatsoever imposed, assessed, levied or collected by any taxing authority and all (other than to the


 






  





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extent due to the gross negligence or willful misconduct of the relevant Lender, Issuer or Swing Line Lender) interest, penalties, expenses or similar liabilities with respect thereto (“Taxes”), excluding, however, from the definition of Taxes, in the case of each Lender, each Issuer, the Swing Line Lender and the Agent, (i) taxes imposed on its income (including penalties and interest payable in respect thereof), and franchise taxes imposed on it, by the jurisdiction under the laws of which such Lender, such Issuer, the Swing Line Lender or the Agent (as the case may be) is organized or any political subdivision thereof and (ii) taxes imposed on its income (including penalties and interest payable in respect thereof), and franchise taxes imposed on it, by the applicable jurisdiction in which such Person’s relevant office is located or any political subdivision thereof.  If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Lender, any Issuer, the Swing Line Lender or the Agent (other than payments for which taxes are withheld pursuant to the last sentence of Section 5.5(d) under circumstances in which the recipient is able to deliver the relevant forms under applicable law), (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 5.5) such recipient receives an amount equal to the sum it would have received had no such deductions been made and (ii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law, less any credits due to the Borrower.


 


(b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any other Financing Document or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Financing Document (hereinafter included within the definition of “Taxes”).


 


(c) The Borrower will indemnify each Lender, each Issuer, the Swing Line Lender and the Agent for the full amount of Taxes (including without limitation, any Taxes imposed by any jurisdiction on amounts payable under this Section 5.5) paid by such Person and any liability arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted. This indemnification shall be made within five (5) days from the date such Person makes written demand therefor; provided, however, that to the extent that any such recipient is reimbursed for any Taxes that were incorrectly or illegally asserted with respect to the Borrower, such recipient shall promptly return to the Borrower the amount of such reimbursement net of any costs of recovery incurred by such recipient, together with any interest that may have been paid by the taxing jurisdiction with respect thereto, to the extent the Borrower has actually paid such recipient with respect thereto.


 


(d) Prior to the date of any Lender becoming a Lender hereunder, and from time to time thereafter if requested by the Borrower or the Agent (to the extent that such Person is still able to do so under applicable law), each Lender organized outside the United States shall provide the Agent and the Borrower with the forms prescribed by the Internal Revenue Service of the United States (including, without limitation, Form W-8BEN, Form W-8ECI, or Form W-9) certifying such Lender’s exemption from United


 






  





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States withholding taxes with respect to all payments to be made to such Lender hereunder and under the other Financing Documents. Unless the Borrower and the Agent have received forms or other documents satisfactory to them indicating that payments hereunder or under the other Financing Documents are not subject to United States withholding tax or are subject to such tax at a rate reduced by an applicable tax treaty, the Borrower or the Agent shall withhold taxes from such payments for the account and benefit of the Borrower at the applicable statutory rate in the case of payments to or for any Lender organized under the laws of a jurisdiction outside the United States; provided, however, that all such withholding for such Lender shall cease upon delivery by such Lender of the applicable forms to the Borrower and Agent.


 


(e) Promptly after the date on which payment of any Taxes are due pursuant to applicable law, the Borrower will, at the request of the Agent, any Issuer or any Lender, furnish to the Agent, such Issuer or such Lender evidence in form and substance satisfactory to the Agent, such Issuer or such Lender, that the Borrower has met its obligations under this Section 5.5.


 


(f) Without prejudice to the survival of the Borrower’s other agreements, the Borrower’s agreements and obligations contained in this Section 5.5 shall survive the payment in full of the Liabilities.


 


(g) Each Lender, each Issuer and the Swing Line Lender agrees that, upon the occurrence of any event giving rise to any payment by the Borrower pursuant to this Section 5.5 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to its overall policy considerations) to designate another lending office for any Loans and other extensions of credit affected by such event with the object of avoiding the consequences of such event; provided, that such designation is made on terms that, in such Lender’s sole judgment, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage.


 


ARTICLE VI


FEES


 


6.1 Non-Use Fee.


 


Commencing on the Closing Date, the Borrower agrees to pay to the Agent for distribution to the Lenders (based on their applicable respective Pro Rata Percentages) a quarterly non-use fee (the “Non-Use Fee”) on the daily average unused amount of the Line of Credit Loan Commitments and the Term Loan Commitments, as the case may be, at the applicable rate per annum for the relevant Financial Performance Level set forth in the definition of Applicable Margin.  The Non-Use Fee shall be due and payable in arrears on the first day of each January, April, July and October hereafter through the Maturity Date.  A pro-rated Non-Use Fee shall be due and payable on the first day of the quarter following the Closing Date and on the applicable Maturity Date.  The Non-Use Fee shall be earned as it accrues.  Swing Line Loans shall not be considered usage of the Line of Credit Loan Commitments for purposes of this Section 6.1.


 






  





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6.2 LC Fees.


 


The Borrower agrees to pay to the Agent, for distribution to the Lenders (based on their respective Pro Rata Percentages), a quarterly fee in respect of each LC issued hereunder (the “LC Fee”), computed at the applicable rate per annum set forth in the definition of Applicable Margin on the daily average amount available to be drawn under such LC for as long as it is outstanding.  The quarterly letter of credit fee shall be due and payable in arrears on the first day of each January, April, July and October hereafter through the Maturity Date applicable to the Line of Credit Loans.  A pro-rated letter of credit fee shall be due and payable on the first day of the quarter following the Closing Date and on the Maturity Date applicable to the Line of Credit Loans.  Each quarterly letter of credit fee shall be earned as it accrues.  The Borrower shall also pay to the Agent for the account of each Issuer the normal and customary processing fees that such Issuer charges in connection with the issuance of or drawings under each such LC (to include, without limitation, a fee in respect of the issuance, increase or renewal of any LC in an amount equal to the greater of (x) $2,000 and (y) 0.125% of the face amount of such LC).  A pro-rated letter of credit fee shall be due and payable to the Lenders under the Existing Credit Agreement on the Restatement Date.


 


6.3 Upfront Fees.


 


The Borrower agreed to pay to the Agent, for distribution to the Lenders (based on their respective Commitments as of the Restatement Date), an upfront fee (the “Upfront Fee”), computed as specified in the Agent’s Letter.  The Upfront Fee shall be due and payable on the Restatement Date; provided, that the portion of the Upfront Fee attributable to any Term Loans advanced after the Restatement Date shall be payable in respect thereof in two equal installments on (a) the Restatement Date and (b) the date of the borrowing of the applicable Term Loan as a condition thereof.  Amounts paid in respect of the Term Loans on the Restatement Date shall be fully earned whether or not the Borrower shall draw (or shall be permitted, pursuant to the terms hereof, to draw) additional Term Loans after the Restatement Date.


 


6.4 Calculation of Fees.


 


The fees payable under Sections 6.1 and 6.2 shall be calculated by the Agent on the basis of a 360-day year, for the actual days (including the first day but excluding the last day) occurring in the period for which such fee is payable. Each determination by the Agent of fees payable under Sections 6.1 and 6.2 shall be conclusive and binding for all purposes, absent manifest error.


 


6.5 Fees Not Interest; Nonpayment.


 


The fees described in this Agreement represent compensation for services rendered and to be rendered separate and apart from the lending of money or the provision of credit and do not constitute compensation for the use, detention, or forbearance of money, and the Borrower’s obligation to pay each fee described herein shall be in addition to, and not in lieu of, the Borrower’s obligation to pay interest and expenses otherwise described in this Agreement. Fees shall be payable when due in Dollars and in immediately available funds.  All fees shall be non-refundable.


 






  





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ARTICLE VII


 


REPRESENTATIONS AND WARRANTIES


 


In order to induce the Agent, each Issuer, the Swing Line Lender and the Lenders to enter into this Agreement and to induce each Issuer to issue LCs under this Agreement, each of the Borrower and the other Loan Parties represents and warrants to the Agent, each Issuer, the Swing Line Lender and the Lenders that the following statements are and on each date hereafter that the Borrower is required to execute and deliver a Compliance Certificate to the Agent, will be, true and correct:


 


7.1 Judgments, Claims Litigation and Proceedings.


 


Except as set forth on Exhibit 7A or as disclosed in writing to the Agent from time to time hereafter, no judgments are outstanding against the Borrower or any of its Subsidiaries, nor is there now pending or threatened any litigation, contested claim, or governmental proceeding by or against the Borrower or any of its Subsidiaries, except for judgments and pending or threatened litigation, contested claims and governmental proceedings which are not, in the aggregate, material to the financial condition, results of operations or business of the Borrower and its Subsidiaries, taken as a whole.


 


7.2 Contract Defaults and Disputes.


 


Except as set forth on Exhibit 7B, none of the Borrower nor any of its Subsidiaries is in default under any material contract, lease or commitment to which it is a party or by which it is bound, which is material to the continued financial success and well-being of the Borrower and its Subsidiaries, taken as a whole.  Except as set forth on Exhibit 7B or as disclosed in writing to the Agent from time to time hereafter, none of the Borrower nor any of its Subsidiaries knows of any material dispute relating to any contract, lease, or commitment, which is material to the continued financial success and well-being of the Borrower and its Subsidiaries, taken as a whole.


 


7.3 Licenses, Patents, Etc.


 


All of the Borrower’s and its Subsidiaries’ licenses, patents, copyrights, trademarks and trade names and all of the Borrower’s and its Subsidiaries’ applications for any of the foregoing are set forth on Exhibit 7C. There is no action, proceeding, claim or complaint pending or threatened to be brought against any of the Borrower or its Subsidiaries by any Person which might jeopardize any of the Borrower’s or any of its Subsidiaries interest in any of the foregoing licenses, patents, copyrights, trademarks, trade names or applications and which, if successful, would have a material adverse effect on the consolidated financial condition, results of operations or business of the Borrower and its Subsidiaries.


 


7.4 Title to Assets.


 


Except for the security interests granted in the Security Documents, as permitted under Section 10.1 or as set forth on Exhibit 7D, the Borrower and each of its Subsidiaries owns all of their respective assets free and clear of all security interests, liens, claims, and encumbrances.


 






  





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No Goods held by the Borrower or any of its Subsidiaries on consignment or under sale or return contracts have been represented to be Inventory and no amounts receivable by the Borrower or any of its Subsidiaries in respect of the sale of such Goods (except markups or commissions which have been fully earned by the Borrower or its Subsidiaries) have been represented to be Accounts.  The Borrower represents that all amounts in the form of ordinary trade payables which are owing to suppliers of any of the Inventory of the Borrower or any of its Subsidiaries have been paid when due and that none of such suppliers has asserted any interest in the Inventory.  The Borrower will furnish, at the Agent’s request, the names and addresses of all Persons who supply Inventory to the Borrower or any of its Subsidiaries or who deliver Goods to the Borrower or any of its Subsidiaries on consignment or under sale or return contracts.


 


7.5 Tax Liabilities.


 


Each of the Borrower and its Subsidiaries has filed all federal and all other material tax reports and returns required by any law or regulation to be filed and each of the Borrower and its Subsidiaries have either duly paid all taxes, duties and charges indicated to be due on the basis of such returns and reports or have made adequate provision for the payment thereof, and the assessment of any material amount of additional taxes in excess of those paid and reported is not reasonably expected.  The reserves for taxes reflected on the Borrower’s consolidated balance sheet are materially adequate in amount for the payment of all of the Borrower’s consolidated liabilities for all taxes (whether or not disputed) accrued through the date of such balance sheet.  There are no material unresolved questions or claims concerning any tax liability of any of the Borrower or its Subsidiaries, except as described on Exhibit 7E or as disclosed in writing to the Agent from time to time hereafter.


 


7.6 Indebtedness and Producer Payables.


 


Except (a) for the Loans and Swing Line Loans from the Lenders and the Swing Line Lender respectively, and the LC Obligations, each as contemplated by this Agreement; (b) as disclosed on Exhibit 7F; and (c) as disclosed on the financial statements identified in Section 7.16 of this Agreement, none of the Borrower nor any of its Subsidiaries has any other indebtedness, known contingent obligations or liabilities, outstanding bonds, letters of credit or acceptances to any other Person or loan commitments from any other Person which in the aggregate, are material to the financial position of the Borrower and its Subsidiaries, taken as a whole.  None of the Borrower’s nor any of its Subsidiaries’ Producer Payables, other than those being contested in good faith by any of such Persons, are past due.


 


7.7 Other Fictitious Names.


 


During the preceding five (5) years, neither the Borrower nor any of its Subsidiaries has been known by or used any fictitious name, or changed its organizational form, the location of its chief executive office, or the jurisdiction of its organization except as disclosed on Exhibit 7G.


 


7.8 Affiliates.


 


Neither the Borrower nor any of its Subsidiaries has any Affiliates, other than those Persons disclosed on Exhibit 7H or those disclosed in writing to the Agent from time to time


 






  





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hereafter, and the legal relationships of the Borrower and its Subsidiaries to each such Affiliate are accurately and completely described thereon.


 


7.9 Environmental Matters.


 


Except as disclosed on Exhibit 7I or as disclosed in writing to the Agent from time to time hereafter, (a) none of the Borrower nor any of its Subsidiaries has received any notice to the effect, and does not have any knowledge, that their respective operations are not in compliance with any of the requirements of applicable federal, state and local environmental, health and safety statutes and regulations (“Environmental Laws”) or are the subject of any federal or state investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, which non-compliance or remedial action could have a material adverse effect on the consolidated business, operations, assets or condition (financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole; (b) there have been no releases of hazardous materials at, on or under the Borrower’s or any of its Subsidiaries’ premises that, singly or in the aggregate, have, or may reasonably be expected to have, a material adverse effect on the consolidated financial condition, operations, assets, business or prospects of the Borrower and its Subsidiaries, taken as a whole; (c) there are no underground storage tanks, active or abandoned, including petroleum storage tanks, on or under the Borrower’s or any of its Subsidiaries’ premises that, singly or in the aggregate, have, or may reasonably be expected to have, a material adverse effect on the consolidated financial condition, operations, assets, business or prospects of the Borrower and its Subsidiaries, taken as a whole; (d) none of the Borrower nor any of its Subsidiaries has directly transported or directly arranged for the transportation of any hazardous material to any location which is listed or proposed for listing on the National Priorities List pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time, or on any similar federal, state or local list or which is the subject of federal, state or local enforcement actions or other investigations which may lead to claims against the Borrower or any of its Subsidiaries for any remedial work, damage to natural resources or personal injury, including claims under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time, that are material in the aggregate to the consolidated financial position of the Borrower and its Subsidiaries; and (e) to the best of the Borrower’s and each of its Subsidiaries’ knowledge, no conditions exist at, on or under the Borrower’s or any of its Subsidiaries’ premises which, with the passage of time, or the giving of notice or both, would give rise to any liability under any Environmental Laws that would be material relative to the consolidated financial position of the Borrower and its Subsidiaries.


 


7.10 Bank Accounts.


 


Exhibit 7J sets forth, as of the Closing Date, the account numbers and location of each of the Borrower’s and any of its Subsidiaries bank accounts (including blocked accounts).


 


7.11 Other Agreements or Restrictions.


 


Except as disclosed on Exhibit 7K, none of the Borrower nor any of its Subsidiaries is a party to any contract or agreement or subject to any restriction which restricts the conduct of its respective business which could have a material adverse effect on the consolidated financial


 






  





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condition, operations, assets, business or prospects of the Borrower and its Subsidiaries.  None of the Borrower nor any of its Subsidiaries is in default under or in violation of any Governmental Requirement related to the Loans, the LCs, or the Swing Line Loans or any other Governmental Requirement which default could have a material adverse effect on the consolidated financial condition, operations, assets, business or prospects of the Borrower and its Subsidiaries.  Neither the execution and delivery of the Financing Documents or the Bond Documents, nor the consummation of the transactions contemplated thereby, nor fulfillment of and compliance with the respective terms, conditions and provisions thereof, will conflict with or result in a breach of any of the terms, conditions or provisions of, or constitute a default under, or result in any material violation of, or result in the creation or imposition of any lien or security interest on any of the Collateral pursuant to: (a) any agreement, instrument or document pertaining to the governance of the Borrower or any of its Subsidiaries; (b) any Governmental Requirement applicable to the Borrower or any of its Subsidiaries; (c) any order, writ, injunction or decree of any court; or (d) the terms, conditions or provisions of any material agreement or instrument to which the Borrower or any of its Subsidiaries is a party or by which the Borrower, NBC or their respective properties is bound or to which the Borrower, any of its Subsidiaries or their respective properties is subject in any material respect.


 


7.12 [Intentionally Omitted].


 


7.13 Existence.


 


Each of the Borrower and its Subsidiaries is duly organized or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, except in respect of any non-Loan Party to the extent such failure shall not have a material adverse effect on the financial condition, results of operations or business of the Borrower and its Subsidiaries, taken as a whole.  The Borrower and each of its Subsidiaries is duly licensed to do business in all states where the nature and extent of the business it transacts or the ownership of its assets make such licensing necessary, except for those jurisdictions in which the failure to be so licensed would not, in the aggregate, have a material adverse effect on the consolidated financial condition, results of operations or business of the Borrower and its Subsidiaries.


 


7.14 Authority.


 


The execution and delivery by the Borrower and each of its Subsidiaries of this Agreement, the other Financing Documents and the Bond Documents to which it is a party, and the performance of their respective obligations hereunder and thereunder, (a) are within the such Person’s powers; (b) are duly authorized by all necessary corporate or other organizational action; (c) are not in contravention of any material law or laws, or the terms of such Person’s operating agreement, or other organizational documents, or of any indenture, agreement or undertaking to which such Person is a party or by which the Borrower, any of its Subsidiaries or any of their respective property is bound; (d) do not require any governmental consent, registration or approval; (e) do not contravene any contractual or governmental restriction binding upon such Person; and (f) will not, except as contemplated or permitted by this Agreement, result in the imposition of any lien, charge, security interest or encumbrance upon any of the Borrower’s or any of its Subsidiaries’ property under any existing indenture, mortgage, deed of trust, loan or credit agreement or other material agreement or instrument to


 






  





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which the Borrower or any of its Subsidiaries is a party or by which the Borrower, any of its Subsidiaries or any of their respective property may be bound or affected.


 


7.15 Binding Effect.


 


This Agreement, the other Financing Documents and the Bond Documents set forth the legal, valid and binding obligations of the Borrower and each of its Subsidiaries party thereto and are enforceable against the Borrower and its Subsidiaries in accordance with their respective terms.


 


7.16 Correctness of Financial Statements.


 


The financial statements delivered by the Borrower to the Agent, the Swing Line Lender and the Lenders present fairly the consolidated financial condition of the Borrower and its Subsidiaries, and have been prepared in accordance with GAAP consistently applied.  Since the end of the Borrower’s Fiscal Year 2009, there has been no materially adverse change in the condition or operations of the Borrower and its Subsidiaries, taken as a whole, and none of the Borrower or any of its Subsidiaries has granted a Lien on any of their respective assets or properties since such date other than pursuant to the Security Documents, as permitted under Section 10.1 or as set forth on Exhibit 7D.  As of each date hereafter that the Borrower is required to execute and deliver a compliance certificate to the Agent, there has been no materially adverse change in the condition or operation of the Borrower and its Subsidiaries, taken as a whole, and (unless otherwise permitted in this Agreement) none of the Borrower or any of its Subsidiaries  has granted a Lien on any of their respective assets or properties since the date of the most recent financial statement delivered to the Agent and the Lenders.


 


7.17 Employee Controversies.


 


Except as disclosed on Exhibit 7L, there are no controversies pending or threatened between the Borrower or any of its Subsidiaries, on the one hand, and any of their respective employees, on the other hand, other than employee grievances arising in the ordinary course of the Borrower’s or its Subsidiaries’ respective business which are not, in the aggregate, material to the continued financial success and well-being of the Borrower and its Subsidiaries, taken as a whole, and which employee grievances are disclosed in writing to the Agent from time to time hereafter.


 


7.18 Compliance with Laws and Regulations.


 


The Borrower and each of its Subsidiaries each are in compliance with all laws, orders, regulations and ordinances of all federal, foreign, state and local Governmental Authorities relating to the Borrower’s and its Subsidiaries’ business operations and assets, except for laws, orders, regulations and ordinances, the violation of which would not have a material adverse effect on the value of the Collateral or the Agent’s interest in any of the Collateral and, in the aggregate, would not have a material adverse effect on the consolidated financial condition, results of operations or business of the Borrower and its Subsidiaries.


 






  





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7.19 Solvency.


 


The Borrower and each of the other Loan Parties are solvent, able to pay their respective debts generally as such debts mature, and have capital sufficient to carry on their business and all businesses in which the Borrower and the other Loan Parties each expect to engage. The saleable value of each of the Borrower’s and the other Loan Parties’ total assets at a fair valuation, and at a present fair saleable value, are greater than the amount of each of the Borrower’s and any of the other Loan Parties’ total obligations to all Persons.  None of the Borrower nor any of the other Loan Parties will be rendered insolvent by the execution or delivery of this Agreement, the other Financing Documents, the Intercompany Financing Documents or by the transactions contemplated hereunder or thereunder.


 


7.20 ERISA Matters.


 


(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the IRC and other Federal or state Laws, and each Plan that is intended to qualify under Section 401(a) of the IRC has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto or may legally rely upon an opinion letter issued by the IRS to a prototype plan sponsor, and, to the Borrower’s and the other Loan Parties’ best knowledge, nothing has occurred which would prevent, or cause the loss of, such qualification. The Borrower, the other Loan Parties and each of their ERISA Affiliates have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.


 


(b) There are no pending or, to either the Borrower’s or any of the other Loan Parties’ best knowledge, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a material adverse effect on the consolidated financial condition, results of operations, business or prospects of the Borrower and its Subsidiaries.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could be reasonably expected to result in a material adverse effect on the consolidated financial condition, results of operations, business or prospects of the Borrower and its Subsidiaries.


 


(c) (i) No material ERISA Event (except as set forth in Exhibit 7M has occurred or is reasonably expected to occur; (ii) no Pension Plan has any material Unfunded Pension Liability; (iii) none of the Borrower, any of the other Loan Parties, nor any ERISA Affiliate thereof has incurred, or reasonably expects to incur, any material liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) none of the Borrower, any of the other Loan Parties, nor any ERISA Affiliate thereof has incurred, or reasonably expects to incur, any material liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) none of the Borrower, any of the other Loan Parties, nor any ERISA Affiliate of either


 






  





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has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.


 


7.21 Margin Security.


 


None of the Borrower nor any of its Subsidiaries owns any margin security and none of the loans advanced hereunder shall be used for the purpose of purchasing or carrying any margin securities or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase any margin securities or for any other purpose not permitted by Regulations T, U or X of the Board of Governors of the Federal Reserve System.


 


7.22 Investment Company Act Not Applicable.


 


None of the Borrower nor any of its Subsidiaries is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.


 


7.23 [Intentionally Omitted].


 


7.24 No Consent.


 


The execution, delivery and performance of, and the effectuation of the transactions contemplated under, this Agreement, the other Financing Documents and the Bond Documents by the Borrower and each of its Subsidiaries which is a party thereto, and the borrowings contemplated herein, do not require the consent or approval of any other Person, except such consents or approvals as have been obtained or will be obtained by the Restatement Date.  None of the Borrower nor any of its Subsidiaries has otherwise failed to obtain any material governmental consent, approval, license, permit, franchise or other governmental authorization necessary to the ownership of any of its properties or the conduct of its business.


 


7.25 Full Disclosure.


 


The factual information taken as a whole in the materials furnished by or on behalf of the Borrower and its Subsidiaries to the Agent, any Lender, any Issuer, the Swing Line Lender, or any Existing Lender for purposes of or in connection with the transactions contemplated under this Agreement, the Existing Credit Agreement, the other Financing Documents and the Bond Documents does not contain any untrue statement of a material fact or omit to state any material fact necessary to keep the statements contained therein from being misleading as of the date of this Agreement, and thereafter as supplemented by information provided to the Agent and the Lenders, any Issuer and the Swing Line Lender in writing pursuant to this Agreement. The financial projections and other financial information furnished to the Agent and the Lenders by the Borrower and its Subsidiaries, and to be delivered under Section 9.1 of this Agreement, were prepared in good faith on the basis of information and assumptions that the Borrower and each of its Subsidiaries believed to be reasonable as of the date of such information.


 






  





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7.26 Intellectual Property.


 


Except as set forth in Exhibit 7C, the Borrower and each of its Subsidiaries owns or possesses (or will be licensed or otherwise have the full right to use) all intellectual property which is necessary for the operation of their respective businesses, without any known conflict with the rights of others.  Except as set forth in Exhibit 7N, no product of the Borrower or any of its Subsidiaries infringes upon any intellectual property owned by any other Person and no claim or litigation is pending or (to the Borrower’s and each of its Subsidiaries’ knowledge) threatened against or affecting such Person, contesting the Borrower’s or any of its Subsidiaries’ right to sell or to use any product or material, in any case which could have a material adverse effect on the consolidated financial condition, operations, assets, or business of the Borrower and its Subsidiaries.  To the best of their knowledge, none of the Borrower nor any of its Subsidiaries is in violation of any of their respective obligations with respect to any material patent, trademark, trade name, service mark, copyright or license owned or used by the Borrower or any of its Subsidiaries.


 


7.27 Compliance with Federal Food Security Act.


 


The Borrower and each of its Subsidiaries have adequate procedures in place to insure that Collateral purchased by the Borrower or any of its Subsidiaries is free of security interests in favor of Persons other than the Agent in accordance with the Federal Food Security Act.  The Borrower and each of its Subsidiaries will furnish, at the Agent’s request, the names and addresses of all Persons who supply Inventory to the Borrower or any of its Subsidiaries or who deliver Goods to the Borrower or any of its Subsidiaries on consignment or under sale or return contracts.


 


7.28 Survival of Warranties.


 


All representations and warranties contained in this Agreement or any of the other Financing Documents shall survive the execution and delivery of this Agreement and shall be true on the date of this Agreement and on each date hereafter on which the Borrower is required to execute and deliver a compliance certificate to the Agent, until the Liabilities shall be paid in full and the Commitments have been fully terminated in accordance with the provisions of this Agreement.


 


7.29 CoBank Equity Interests.


 


So long as CoBank is a Lender under this Agreement, the Borrower will acquire equity in CoBank in such amounts and at such times as CoBank may require in accordance with CoBank’s Bylaws and Capital Plan (as each may be amended from time to time), except that the maximum amount of equity that the Borrower may be required to purchase in CoBank in connection with the Loans and Swing Line Loans made by CoBank under this Agreement shall not exceed the maximum amount permitted by CoBank’s Bylaws as of the date of this Agreement.  The rights and obligations of the parties with respect to such equity and any distributions made on account thereof or on account of the Borrower’s patronage with CoBank shall be governed by CoBank’s Bylaws, except that if CoBank sells a participation in a portion of any Loans due to CoBank, such portion of the Loans due to CoBank shall not be entitled to patronage distributions.  A sale


 






  





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of a participation interest may include certain voting rights of the participants regarding the loans hereunder (including without limitation the administration, servicing and enforcement thereof).  The Borrower hereby consents and agrees that the amount of any distributions with respect to the Borrower’s patronage with CoBank that are made in qualified written notices of allocation (as defined in 26 U.S.C. § 1388) and that are received by the Borrower from CoBank will be taken into account by the Borrower at the stated Dollar amounts whether the distribution is evidenced by a stock certificate or other form of written notice that such distribution has been made and recorded in the Borrower’s name on CoBank’s records.  The Loans due to CoBank under this Agreement and other Indebtedness due to CoBank hereunder shall be secured by a statutory first Lien on all equity that the Borrower may now own or hereafter acquire in CoBank.  Such equity shall not, however, constitute security for Indebtedness due to any other Lender under this Agreement.  CoBank shall not be obligated to set off or otherwise apply such equities to the Borrower’s Indebtedness to CoBank.


 


ARTICLE VIII


 


CONDITIONS


 


8.1 Conditions to the Restatement Date and the Initial Borrowing.


 


The occurrence of the Restatement Date, each Lender’s obligation to make its Loans, the Swing Line Lender’s obligation to make the Swing Line Loans, and each Issuer’s obligation to issue one or more LCs comprising a part of the initial borrowing hereunder, are subject to the following conditions precedent:


 


(a) Documents.


 


The Agent shall have received, appropriately dated and in form and substance reasonably satisfactory to the Agent (together with original counterparts or copies, as the case may be, for each Lender), the documents listed on the List of Closing Documents which is attached as Exhibit 8A.


 


(b) Actions and Events.


 


(i) Payment of Fees and Expenses.


 


The Borrower shall have paid all fees (including, without limitation, the Upfront Fee) due on or before the Restatement Date as specified herein or in the Agent’s Letter and all fees and expenses of or incurred by the Agent and its special and local counsel to the extent billed on or before the Restatement Date;


 


(ii) No Prohibitions.


 


No law or regulation shall prohibit, and no order, judgment or decree of any Governmental Authority shall prohibit, and no litigation shall be pending or threatened which would enjoin, prohibit, restrain or otherwise adversely affect the consummation of the transactions contemplated under the Financing Documents or the Intercompany Financing Documents, or which would otherwise have a


 






  





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material adverse effect on either the Borrower’s or any of its Subsidiaries’ financial condition, results of operations or business;


 


(iii) Material Adverse Change.


 


No material adverse change shall have occurred since: (i) the end of Fiscal Year 2009, or (ii) the date of the most recent financial statement delivered to the Agent and the Lenders, as applicable, with respect to:


 


(A) the Borrower’s and its Subsidiaries’ condition (financial or otherwise), business, assets, liabilities (actual or contingent), operations or prospects;


 


(B) the syndication markets for credit facilities similar in nature to those discussed in this Agreement; or


 


(C) the financial, banking or capital markets, the effect of which would have an adverse change or effect in the syndication market;


 


in each case, as determined by the Agent in its sole discretion.


 


(iv) Wiring Instructions.


 


The Agent shall have received wiring instructions with respect to the proceeds of the Loans and Swing Line Loans (if any) to be made on the Restatement Date;


 


(v) Other Documents.


 


The Borrower and each of its Subsidiaries shall have taken such actions, and the Agent shall have received such other documents (including, without limitation, amendments or modifications to the Security Documents and the Intercompany Loan Documents specified by the Agent in order to reflect the changes to the Existing Credit Agreement that are set forth in this Agreement), as the Agent may reasonably request; and


 


(vi) Compliance.


 


Each of the Borrower’s and its Subsidiaries’ representations and warranties contained in this Agreement shall be true on and as of the Restatement Date as if such representations and warranties had been made on and as of the Restatement Date, and no Default or Matured Default shall have occurred and be continuing or shall exist, as evidence by a current compliance certificate in the format required to be delivered to the Agent from time to time in accordance with Section 9.1.


 






  





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8.2 Conditions Precedent to All Borrowings, Conversions, Roll Overs and Issuances of Letters of Credit.


 


Each Lender’s obligation to make (or convert or roll over) a Loan, the Swing Line Lender’s obligation to make Swing Line Loans, and each Issuer’s obligation to issue an LC on the occasion of each borrowing (including the initial borrowing), conversion, roll over or issuance of an LC shall be subject to the further condition precedent that the following statements shall be true (and the Borrower’s acceptance of the proceeds of each borrowing, the delivery of the notice of interest conversion under Section 3.2 in the case of a conversion or roll over, or the delivery of the Application in the case of the issuance of an LC, shall be deemed to constitute a representation and warranty by the Borrower that on the date of such borrowing, conversion, roll over or issuance of LC such statements are true) and on the date of each borrowing the Agent shall have received a certificate (dated the date of such borrowing) from a responsible officer of the Borrower certifying that all conditions under Section 8.1 have been satisfied and that such statements are true:


 


(a) The Borrower is duly authorized and empowered to make such request for borrowing, conversion, roll over or issuance of LC and such borrowing, conversion, roll over or issuance of LC will not violate any Governmental Requirement;


 


(b) No material adverse change has occurred with respect to the Borrower’s consolidated financial condition, business, operations or prospects since the date of the last audited financial statements delivered to the Agent and the Lenders;


 


(c) The representations and warranties set forth in Article 7 are, as of the Restatement Date, true and correct in all respects and are, from and after the Restatement Date, true and correct in all material respects, in each case, with the same effect as if then made (unless stated to relate solely to an earlier date, in which case the representations and warranties shall be true and correct as of such earlier date);


 


(d) No event has occurred and is continuing, or would result from such borrowing, conversion, roll over or issuance of LC, which constitutes a Default or a Matured Default;


 


(e) The Borrower has delivered to the Agent its notice of borrowing or notice of interest conversion;


 


(f) The Borrower has complied with any post-closing requirements of the Agent by the deadline for such requirements;


 


(g) The Borrower has paid any portion of the Upfront Fees due on or before the applicable date of borrowing as specified in the Agent’s Letter; and


 


(h) With respect to the issuance of any LC, the Borrower has delivered to the Agent an Application for such LC as described in Section 2.2(b).


 


ARTICLE IX


AFFIRMATIVE COVENANTS


 






  





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The Borrower and each other Loan Party covenants and agrees that from the date of execution hereof until the Liabilities are paid in full, and the Commitments, all LCs and all other obligations of the Agent, the Issuers, the Swing Line Lender and the Lenders hereunder are finally terminated, the Borrower will comply (and will cause its Subsidiaries to comply) with the following provisions of this Article 9:


 


9.1 Financial Statements.


 


Except as otherwise expressly provided for in this Agreement, the Borrower and its Subsidiaries each shall keep proper books of record and account in which full and true entries will be made of all dealings and transactions of or in relation to the Borrower’s and its Subsidiaries’ business and affairs, in accordance with GAAP consistently applied in all material respects, and the Borrower shall cause to be furnished to the Agent and the Lenders, from time to time and in a form acceptable to the Agent, such information as the Agent may reasonably request, including without limitation, the following as to the Borrower and/or its Subsidiaries (as the case may be):


 


(a) as soon as practicable and in any event within thirty (30) days after the end of each monthly accounting period in each Fiscal Year (as measured at the end of such monthly accounting period), or, during the existence of any Default, as frequently as the Agent may request, a Borrowing Base Certificate of the chief financial or other authorized officer of the Borrower;


 


(b) as soon as practicable and in any event within thirty (30) days after the end of each fiscal quarter in each Fiscal Year (i) consolidated statements of income and retained earnings for such fiscal quarter and for the period from the beginning of the then current Fiscal Year to the end of such fiscal quarter, and a consolidated balance sheet as of the end of such fiscal quarter, setting forth in each case in comparative form, figures for the corresponding periods in the preceding Fiscal Year, all in reasonable detail and certified as accurate by the chief financial or other authorized officer, subject to changes resulting from normal year-end adjustments, (ii) copies of statements of cash flow, and (iii) a compliance certificate of the chief financial or other authorized officer of the Borrower in substantially the form attached as Exhibit 9A (the “Compliance Certificate”);


 


(c) as soon as practicable and in any event within one hundred twenty (120) days after the end of each Fiscal Year, (i) audited consolidated statements of income, retained earnings and changes in the financial condition for each year, and a consolidated balance sheet for such year, setting forth in each case, in comparative form, corresponding figures as of the end of the preceding Fiscal Year, all in reasonable detail and satisfactory in scope to the Agent and certified to the Borrower by KPMG LLP or such other independent public accountants as are selected by the Borrower and satisfactory to the Agent, whose opinion shall be in scope and substance satisfactory to the Agent, (ii) a true and complete copy of the management letter from KPMG LLP or such other independent public accountants as are selected by the Borrower and satisfactory to the Agent, in connection with such audited financial statements; and (iii) a Compliance Certificate; and


 






  





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(d) as soon as practicable and in any event within thirty (30) days after the end of each Fiscal Year, a month by month operating and capital budget for the then current Fiscal Year and annual operating and capital budgets for the three following Fiscal Years.


 


9.2 Conduct of Business.


 


Except as contemplated by this Agreement, the Borrower and each of its Subsidiaries shall:  (a) not fail to maintain their respective existence and not fail to maintain in full force and effect all material licenses, bonds, franchises, leases, patents, contracts and other rights necessary or appropriate which if not maintained could be reasonably expected to have a material adverse effect on the consolidated financial condition, operations, assets, business or prospects of the Borrower and its Subsidiaries; (b) continue in, and limit each of the Borrower’s and its Subsidiaries’ operations to, the same general line of business as that presently conducted by the Borrower and each of its Subsidiaries; (c) comply with all applicable laws and regulations of any Governmental Authority, except for such laws and regulations the violation of which would not, in the aggregate, have a material adverse effect on the consolidated financial condition, results of operations or business of the Borrower and its Subsidiaries; and (d) keep and conduct their respective businesses separate and apart from the business of the Borrower’s Affiliates; provided, however, that the Borrower and its Subsidiaries may enter into transactions with its Affiliates as long as such transactions are entered into in the ordinary course of the Borrower’s or its Subsidiaries’ business, and as long as such transactions are not less favorable to the Borrower or its Subsidiaries than similar transactions with non-Affiliates would be.


 


9.3 Maintenance of Properties.


 


The Borrower and each of its Subsidiaries each shall keep its real estate, leaseholds, equipment and other fixed assets in good condition, repair and working order, normal wear and tear excepted, except to the extent such real estate, leaseholds, equipment or other fixed assets are not material to the conduct of its business.


 


9.4 Liability Insurance.


 


The Borrower and each of its Subsidiaries shall maintain, at the Borrower’s and/or such Subsidiaries own expense (as the case may be), such public liability and property damage insurance as is ordinarily maintained by other companies in similar businesses, provided that in no event shall such public liability insurance provide for coverage less than $10,000,000 per occurrence for personal injury and $10,000,000 per occurrence for property damage.  Each of the Borrower’s and its Subsidiaries’ public liability insurance may provide for a deductible of not more than $500,000 per occurrence.  All such policies of insurance shall be in form and with insurers reasonably acceptable to the Agent and proper certificates evidencing the same, shall be provided to the Agent within ten (10) days of receipt thereof.


 


9.5 Property Insurance.


 


At the Borrower’s own cost and expense, or at the cost and expense of a Subsidiary, in the case of property owned by such Subsidiary, the Borrower shall keep all of its and its Subsidiaries’ assets fully insured, with carriers, and in amounts acceptable to the Agent, against


 






  





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the hazards of fire, theft, collision, spoilage, hail, those covered by extended or all risk coverage insurance and such others as may reasonably be required by the Agent.  The Borrower shall cause to be delivered to the Agent the proper certificates evidencing the same. All such policies covering the Borrower’s and the other Loan Parties’ assets shall provide, in manner satisfactory to the Agent, that any amounts in excess of $500,000 payable under such policies shall be payable first to the Agent (for the ratable benefit of the Lenders), as the Agent’s interest may appear.  Each such policy covering the Borrower’s or any of the other Loan Parties’ assets shall include a provision for thirty (30) days’ prior written notice to the Agent of any cancellation or expiration thereof and show the Agent as lender loss payee as provided in a form of loss payable endorsement in form and substance satisfactory to the Agent.  In the event of any loss covered by any such policy covering the Borrower’s or any of the other Loan Parties’ assets, the Borrower or such Loan Party, as applicable, shall direct the carrier named in such policy to make payment for such loss to the Agent for application to the Liabilities and not to the Borrower or such Loan Party, as applicable, or to the Borrower or such Loan Party, as applicable, and the Agent jointly.  The Borrower and each of and the other Loan Parties irrevocably makes, constitutes and appoints the Agent (and all officers, employees or agents designated by the Agent) as the Borrower’s and such Loan Party’s true and lawful attorney and agent-in-fact for the purpose of making, settling or adjusting claims under such policies of insurance after the occurrence of a Matured Default.  If payment as a result of any insurance losses under such policies of insurance covering the Borrower’s or any of the Loan Parties’ assets shall be paid by check, draft or other instrument payable to the Borrower or any of the other Loan Parties, or to the Borrower or any of the other Loan Parties, as applicable, and the Agent jointly, the Agent (for the ratable benefit of the Lenders) may endorse the Borrower’s or such Loan Party’s name on such check, draft or other instrument, and may do such other things as the Agent may deem advisable to reduce the same to cash.  Subject to Section 4.4(b)(i), all loss recoveries received by the Agent on account of any such insurance on the Collateral up to $2,500,000 may be reinvested by the Borrower in the Collateral.  All loss recoveries received by the Agent on account of any such insurance on the Collateral in excess of $2,500,000 may be applied and credited by the Agent to the Liabilities, to the extent that there are at the time Liabilities outstanding, or subject to Section 4.4(b)(i), reinvested by the Borrower in the Collateral in the discretion of the Agent.  The Borrower and each of it’s the other Loan Parties hereby assigns all of the Borrower’s and such Loan Party’s insurance coverage proceeds to the Agent (for the ratable benefit of the Lenders) as additional collateral security for the Liabilities.  To the extent actually received by the Agent in immediately available funds, the Agent shall pay any surplus of insurance proceeds from such insurance policies in excess of the Liabilities to the Borrower.  If the Borrower or any of its Subsidiaries fails to procure insurance as provided in this Agreement, or to keep the same in force, or fails to perform any of its other obligations hereunder, then the Agent may, at the Agent’s option, and without obligation to do so, obtain such insurance and pay the premium thereon for the account of the Borrower or any of its Subsidiaries, or make whatever other payments the Agent may deem appropriate to protect the Agent’s security for the Liabilities.  Any such payments shall be additional Liabilities of the Borrower, each payable on demand and secured by the Collateral.  Upon the Agent’s written request, copies of the policies of insurance referred to in this Section 9.5 and in Section 9.4, together with all amendments and schedules thereto, shall be provided to the Agent by the Borrower. The Borrower’s and each of its Subsidiaries’ insurance policies are summarized on Exhibit 9B.


 






  





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9.6 [Intentionally Omitted].


 


9.7 Pension Plans.


 


The Borrower and each of its Subsidiaries each shall:  (a) keep in full force and effect any and all Plans which are presently in existence or may, from time to time, come into existence under ERISA, unless such Plans can be terminated without material liability to the Borrower in connection with such termination (as distinguished from any continuing funding obligation); (b) make contributions to all Plans in a timely manner and in an amount sufficient to comply with the requirements of ERISA; (c) comply with all requirements of ERISA which relate to such Plans; and (d) notify the Agent immediately upon the Borrower’s or any of its Subsidiaries’ receipt of any notice of the institution of any proceeding or other action which may result in the termination of any Plan.  Notwithstanding the requirements of this Section 9.7, neither the Borrower’s nor any of its Subsidiaries’ failure to comply with any of said requirements shall constitute a Default or a Matured Default under this Agreement, unless such failure could result in the imposition on the Borrower or such Subsidiary of a liability in excess of $1,000,000 on a consolidated basis for the Borrower and its Subsidiaries.


 


9.8 Notice of Suit, Adverse Change, ERISA Event or Default.


 


The Borrower and each of its Subsidiaries shall, as soon as possible, and in any event within ten (10) Business Days after either the Borrower or such Subsidiary learns of the following, give written notice to the Agent of (a) any proceeding being instituted or threatened to be instituted by or against the Borrower or any of its Subsidiaries in any federal, state, local or foreign court or before any commission or other regulatory body (federal, state, local or foreign) for which claimed damages exceed $2,000,000, (b) any material adverse change in the business, assets or condition, financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole, (c) any ERISA Event and (d) the occurrence of any Default or Matured Default.  Within three (3) Business Days after the Agent’s receipt of such written notice, the Agent shall forward such notice to the Lenders.


 


9.9 [Intentionally Omitted].


 


9.10 Books and Records; Separate Existence.


 


The Borrower and each of its Subsidiaries shall maintain proper books of record and account in accordance with GAAP consistently applied in which true, full and correct entries will be made of all of their respective dealings and business affairs.


 


9.11 Laws and Obligations.


 


The Borrower and each of its Subsidiaries shall comply with all Governmental Requirements in all material respects; and pay all taxes, assessments, governmental charges, claims for labor, supplies and rent, including without limitation, taxes, assessments, governmental charges, claims for labor, supplies and rent imposed upon or against or with respect to the ownership, use, occupancy or enjoyment of any real property owned by the Borrower or any of its Subsidiaries, or any utility service thereon; provided, however, that the Borrower and its Subsidiaries shall not be required to pay any ad valorem or other real property


 






  





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taxes or any other taxes, assessments, governmental charges or claims or charges of amounts claimed to be due in any event, if, in any such case, the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings diligently conducted by or on behalf of the Borrower or any of its Subsidiaries and, if required under GAAP, the Borrower and each of its Subsidiaries shall have set up adequate reserves therefor; and provided further that, with respect to such other taxes, assessments, governmental charges or claims, no lien is claimed by the United States or any state or other political subdivision thereof which could have priority over the liens and security interests granted to the Agent pursuant to the Security Documents.


 


9.12 Environmental Laws.


 


The Borrower and each of its Subsidiaries shall at all times:


 


(a) use and operate all of its businesses and properties in compliance in all material respects with all environmental laws; keep all necessary permits relating to environmental and safety and health matters in effect and remain in compliance in all material respects therewith; handle all hazardous materials in compliance in all material respects with all applicable environmental laws; and dispose of all hazardous materials generated by the Borrower or any of its Subsidiaries or at any property owned or leased by the Borrower or any of its Subsidiaries at facilities or with carriers that maintain valid permits for such disposal or transportation under applicable environmental laws, except to the extent that failure to so comply shall not have a material adverse effect on the financial condition, results of operations or business of the Borrower and its Subsidiaries, taken as a whole;


 


(b) promptly notify the Agent (and provide copies upon receipt) of all material claims, complaints, notices or inquiries relating to the environmental condition of its facilities and properties or its compliance with environmental laws; and


 


(c) provide such other information and certifications which the Agent may reasonably request from time to time to evidence compliance with this Section 9.12.


 


9.13 Trade Accounts Payable and Producer Payables.


 


The Borrower and each of its Subsidiaries shall pay, within two (2) Business Days after the Borrower’s or such Subsidiary’s purchase of the related Inventory, all cattle Producer Payables other than (a) those not yet due for livestock priced on a grade and yield matrix, and (b) those which are not yet due and have deferred payment terms.  The Borrower and each of its Subsidiaries shall pay, within five (5) Business Days after the Borrower’s or any of its Subsidiaries’ purchase of the related Inventory, all grain Producer Payables.  The Borrower and each of its Subsidiaries may pay Producer Payables by wire transfer on the date of presentment of checks representing payment of Producer Payables.  The Borrower and each of its Subsidiaries shall pay all cattle Producer Payables for livestock priced on a grade and yield matrix and those which have deferred payment terms, in accordance with the terms governing the same.  The Borrower and each of its Subsidiaries shall pay all trade accounts payable other than Producer Payables on a basis not more than forty-five (45) days past due, except (a)


 






  





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accounts payable contested in good faith or (b) accounts payable in an aggregate amount not to exceed at any time outstanding $250,000 and with respect to which no proceeding to enforce collection has been commenced or, to the knowledge of the Borrower or any of its Subsidiaries, threatened.  Packers and Stockyard Act claims shall remain:  (i) unsecured at all times; (ii) secured by LCs; (iii) secured by performance bonds satisfactory to Agent; or (iv) secured by a trust account or other form of security permitted by the Packers and Stockyards Act and satisfactory to the Agent.


 


9.14 Compliance with National Security Laws.


 


The Borrower shall (a) ensure, and cause each Subsidiary to ensure, that no person who owns a controlling interest in or otherwise controls the Borrower or any Subsidiary is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury, or included in any Executive Orders, (b) not use or permit the use of the LCs or the proceeds of the Loans or Swing Line Loans to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, and (c) comply, and cause each Subsidiary to comply, with all applicable Bank Secrecy Act (“BSA”) laws and regulations, as amended.


 


9.15 Post Closing Matters.


 


(a) The Borrower shall use commercially reasonable efforts to deliver to the Agent on or before July 8, 2010, bailee letters in form and substance satisfactory to the Agent in respect of each location of Inventory of the Loan Parties and KC Steak listed on Exhibit 3B(i);


 


(b) On or before the date that is 120 days after the Restatement Date (or such later date as the Agent may agree in its sole discretion), NBC shall have delivered to the Agent, in form and substance acceptable to the Agent, a Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing and an Assignment of Leases and Rents together with such other instruments as Agent may require to create a Lien on the California Property to secure the Liabilities, and such instruments shall be recorded, at Borrower’s cost, in the Official Records of Imperial County, California.  Agent shall cause the Intercompany Deed of Trust to be released upon satisfaction of the foregoing requirement.   In addition, on or before the date that is 120 days after the Restatement Date (or such later date as the Agent may agree in its sole discretion), the Borrower shall have delivered to the Agent, in form and substance acceptable to the Agent, (i) a mortgagee title insurance policy in the amount of $61,542,000.00 on the California Property naming Lenders as the insureds; and (ii) an opinion of legal counsel in the State of California.; and


 


(c) On or before the date that is 90 days after the Restatement Date (or such later date as the Agent may agree in its sole discretion), the Borrower shall have delivered to the Agent, in form and substance acceptable to the Agent, with respect to the Kansas Mortgage, the Pennsylvania Mortgage and Georgia Mortgage and the properties covered thereby: (i) mortgagee title insurance policies, or date down and


 






  





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modification endorsements to existing policies, as the case may be; and (ii) if and to the extent requested by the Agent, modifications to the Kansas Mortgage, the Pennsylvania Mortgage and the Georgia Mortgage to reflect the new Maturity Date, the increase in the Indebtedness and such other matters with respect to this Agreement as Agent shall require.  The Borrower shall pay all costs required to comply with this Section 9.15(c).


 


(d) On or before the date that is 90 days after the Restatement Date (or such later date as the Agent may agree in its sole discretion), Borrower shall have taken action satisfactory to Agent to obtain good and insurable title to the strip of land between Parcel A-4 and the adjoining real property as shown on the survey of the Dodge City Facilities dated May 4, 2010 prepared by Cornerstone Professional Services.


 


(e) On or before the date that is 10 days after the Restatement Date (or such later date as the Agent may agree in its sole discretion), the Loan Parties shall deliver to the Agent the endorsements required by Section 9.5 of this Agreement in respect of property insurance.


 


(f) On or before the date that is 30 days after the Restatement Date (or such later date as the Agent may agree in its sole discretion), the Loan Parties shall deliver to the Agent each certificate (if any) representing “Pledged Equity” (as defined in the Security Agreement) that is required to be delivered under the Security Agreement, together with corresponding stock or transfer powers executed in blank.


 


9.16 Funded Debt to EBITDA Ratio.


 


The Borrower shall have a Funded Debt to EBITDA Ratio of not more than 3.25 to 1.00 as at the end of each fiscal quarter.


 


9.17 Adjusted Net Worth


 


The Borrower and its consolidated Subsidiaries shall have Adjusted Net Worth of not less than $275,000,000 as at the end of each Fiscal Year.


 


9.18 Fixed Charge Coverage Ratio.


 


The Borrower shall have a Fixed Charge Coverage Ratio of at least 1.05 to 1.00 as at the end of each fiscal quarter.


 


9.19 Additional Collateral.


 


(a) Upon the formation or acquisition of any new direct or indirect Subsidiary by the Borrower (other than a Foreign Subsidiary or Non-Material Domestic Subsidiary), the Borrower shall, at the Borrower’s expense, within sixty (60) days after such formation or acquisition or such longer period as the Agent may agree in its sole discretion, cause each such Subsidiary to execute and deliver to the Agent a joinder to this Agreement, the Security Agreement and the Guaranty Agreement in form and substance reasonably satisfactory to the Agent; provided, further, that, if at any time a Non-Material Domestic Subsidiary shall, together with its consolidated Subsidiaries,


 






  





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have assets, as of the last day of the Borrower’s most recently ended fiscal quarter, with a book value of 5% or more of the total assets of the Borrower and its Subsidiaries on a consolidated basis on such date, then the Borrower shall cause such Non-Material Domestic Subsidiary to execute and deliver to the Agent a joinder to this Agreement, the Security Agreement and the Guaranty Agreement in form and substance reasonably satisfactory to the Agent; provided, further, that, if at any time the aggregate book value of the assets of the Domestic Subsidiaries which have not become Subsidiary Loan Parties in accordance with this Section 9.19, together with the assets of their respective consolidated Subsidiaries, shall equal or exceed 10% of the total book value of the assets of the Borrower and its Subsidiaries on a consolidated basis, then the Borrower shall cause one or more additional Domestic Subsidiaries to become Subsidiary Loan Parties in accordance with this Section 9.19; provided, further, that, if at any time the aggregate EBITDA of a Domestic Subsidiary which has not become a Subsidiary Loan Party in accordance with this Section 9.19, together with its consolidated Subsidiaries, shall be greater than or equal to $20,000,000, then the Borrower shall cause such Domestic Subsidiary to become Subsidiary Loan Parties in accordance with this Section 9.19; provided, further, that, notwithstanding anything else to the contrary contained in this clause (a), in no event shall National Beef Leathers, LLC be or become a Subsidiary Loan Party, except upon consent of the Agent.


 


(b) The Borrower shall cause, and shall cause each other Subsidiary Loan Party to cause, all of its respective property to be subject at all times to first priority perfected Liens in favor of or for the benefit of the Agent on behalf of itself and the other secured parties, subject in each case to Liens permitted by Section 10.1, in accordance with the terms of the Security Agreement.  Without limiting the foregoing, subject to the terms of the Security Documents, the Borrower will, and will cause each Subsidiary Loan Party to, execute and deliver, or cause to be executed and delivered, such documents, agreements or instruments and will take or cause to be taken such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents) which may be required by law or which the Agent may, from time to time, reasonably request to carry out the terms and conditions of this Agreement and the other Financing Documents and to ensure perfection and priority of the Liens created or intended to be created by the Security Documents, all at the expense of the Borrower.


 


(c) If, in compliance with the terms and provisions of the Financing Documents, the Borrower or any Subsidiary (i) sells or otherwise transfers equity interests of any Subsidiary Loan Party to a Person which is not the Borrower or a Subsidiary and after giving effect to such sale or transfer the Borrower and its Subsidiaries cease to own any of the equity interests of such Subsidiary Loan Party, (ii) liquidates or dissolves any Subsidiary Loan Party or (iii) subject to compliance with clause (a) above, any Subsidiary Loan Party shall be or become a Non-Material Domestic Subsidiary, in each case, the Agent will, on behalf of the Lenders, execute and deliver to the Borrower a release of such Subsidiary Loan Party from its obligations under this Agreement and the other Financing Documents.


 






  





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ARTICLE X


 


NEGATIVE COVENANTS


 


The Borrower and each other Loan Party covenants and agrees that from the date of execution hereof until the Liabilities are paid in full, and the Commitments, all LCs and all other obligations of the Agent, the Issuers, the Swing Line Lender and the Lenders hereunder are finally terminated, the Borrower will comply (and will cause each of its Subsidiaries to comply) with the following provisions of this Article 10:


 


10.1 Encumbrances.


 


Except for those Liens presently in existence and reflected in either the Borrower’s or its Subsidiaries’ financial statements referred to in Section 7.16 or security interests granted in the Security Documents or in the Intercompany Financing Documents, none of the Borrower nor any of its Subsidiaries shall create, incur, assume or suffer to exist any Lien of any nature whatsoever on or with regard to any of its assets (including, without limitation, the Collateral) other than:  (a) Liens securing the payment of taxes, either not yet due or the validity of which is being contested in good faith by appropriate proceedings, and as to which the Borrower or its Subsidiaries (as the case may be) shall, if appropriate under GAAP, have set aside on its books and records adequate reserves; (b) Liens securing deposits under workers’ compensation, unemployment insurance, social security and other similar laws, or securing the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, or securing indemnity, performance or other similar bonds for the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, or securing statutory obligations or surety or appeal bonds, or securing indemnity, performance or other similar bonds in the ordinary course of the Borrower’s or its Subsidiaries’ business (as the case may be); (c) Liens granted under the Bond Documents and Liens in favor of the Agent securing the Liabilities; (d) zoning restrictions, easements, licenses, covenants and other restrictions affecting the use of the Borrower’s or any of its Subsidiaries’ real property, and other Liens on property which are subordinate to the Liens of the Agent securing the Liabilities and which do not, in the determination of the Required Lenders (i) materially impair the use of such property or (ii) materially lessen the value of such property for the purposes for which the same is held by the Borrower or any of its Subsidiaries; (e) purchase money security interests and capitalized leases securing indebtedness permitted to be incurred under Section 10.4(d); (f) in the case of the Borrower, Liens securing the interests of any broker in any Margin Account; (g) in the case of the Borrower, Liens securing indebtedness permitted to be incurred under Section 10.4(f); and (h) Liens permitted under Section 7.29.


 


10.2 Consolidations, Mergers or Acquisitions.


 


None of the Borrower nor any of its Subsidiaries shall recapitalize or consolidate with, merge with, or otherwise acquire all or substantially all of the assets or properties of any other Person; provided, however, that (a) any Subsidiary of the Borrower shall be permitted to consolidate or merge with (i) the Borrower, provided that the Borrower shall be the continuing or surviving Person or (ii) any one or more other Subsidiaries of the Borrower, provided, that, in the event of a consolidation or merger with a Loan Party, the Loan Party shall be the continuing or surviving Person, and (b) the Borrower may make acquisitions, so long as no Default or Matured Default is then continuing or would occur as a result of such transaction, the Funded Debt to


 






  





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EBITDA Ratio on a pro forma basis after giving effect to such acquisition (based on assumptions and projections acceptable to the Agent) shall not exceed 2.50 to 1.00 and the Borrower shall otherwise be in pro forma compliance (based on assumptions and projections acceptable to the Agent) with the financial covenants set forth in Sections 9.16 and 9.18.


 


10.3 Deposits, Investments, Advances or Loans.


 


None of the Borrower nor any of its Subsidiaries shall make or permit to exist deposits, investments, advances or loans (other than those existing on the date of the execution of this Agreement and disclosed to the Lenders in writing on or prior to such date) in or to Affiliates or any other Person, except: (a) the Collateral Accounts; (b) deposits under workers’ compensation, unemployment insurance, social security and other similar laws, or securing the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, or securing indemnity, performance or other similar bonds for the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, or securing statutory obligations or surety or appeal bonds, or securing indemnity, performance or other similar bonds in the ordinary course of the Borrower’s or its Subsidiaries’ business (as the case may be); (c) in the case of the Borrower, loans not exceeding $2,000,000 in the aggregate at any one time outstanding; (d) demand deposits (other than payroll accounts and the Collateral Accounts) not to exceed $250,000 in the aggregate for the Borrower and its Subsidiaries combined; (e) in the case of the Borrower, margin deposits required to be made in connection with any Margin Account; (f) in the case of the Borrower, deposits permitted by Section 10.19 of this Agreement; (g) in the case of the Borrower, margin deposits required to be made in connection with the Borrower’s obligations under any Swap Contracts with any Lender or any Affiliates of a Lender; (h) deposits in trust accounts required under the Packers and Stockyards Act; (i) in the case of the Borrower, loans to KC Steak pursuant to the Intercompany Financing Documents not to exceed $20,000,000 in amount outstanding; (j) investments, advances or loans by a Loan Party to another Loan Party; (k) Cash Equivalent Investments in which the Agent has a perfected first priority security interest, including those credited to any deposit account or securities account (as the case may be) at CoBank; (l) in the case of the Borrower, investments in the purchase of Bonds; (m) in the case of the Borrower, loans to or investments in aLF Ventures, LLC or other investments related to the development of lactoferrin, in each case, occurring prior to the date hereof not to exceed $8,000,000 in the aggregate at any one time outstanding; (n) investments permitted under Section 10.2; (o) in the case of the Borrower, investments permitted under Section 7.29; (p) in the case of the Borrower and each of its Subsidiaries, advances for travel and expenses to the officers or managers or employees of the Borrower and its Subsidiaries paid in the ordinary course of business; (q) in the case of the Borrower, investments in National Beef Leathers, LLC from and after the Restatement Date in an aggregate amount not to exceed $50,000,000 for the purpose of making capital improvements, provided that such investments shall be in a form and subject to documentation reasonably acceptable to the Agent and all investments in an aggregate amount in  excess of $20,000,000 shall be in the form of a secured intercompany loans which shall be collateral assigned to the Agent; (r) in the case of the Borrower, other investments not to exceed $5,000,000 in the aggregate; and (s) at any time from and after the consummation of a Permitted IPO, in the case of the Borrower, loans to NB, Inc. in an aggregate amount not to exceed $5,000,000; provided that such loans shall be unsecured and otherwise on terms and conditions reasonably satisfactory to the Agent.  The Borrower shall not


 






  





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permit to exist any other Deposit Accounts for the receipt of Collateral proceeds of any type whatsoever, except the Collateral Accounts.


 


10.4 Indebtedness.


 


Except for those obligations and that Indebtedness presently in existence referred to in Section 7.6, none or the Borrower nor any of its Subsidiaries shall incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any obligations or Indebtedness, direct or indirect, fixed or contingent, except: (a) the Liabilities and, in the case of its Subsidiaries, the Indebtedness outstanding under the Intercompany Financing Documents; (b) obligations secured by liens or security interests permitted under Section 10.1 or contingent obligations permitted under Section 10.5; (c) trade obligations, Producer Payables and normal accruals in the ordinary course of the Borrower’s or its Subsidiaries’ business (as the case may be) not yet due and payable, or with respect to which the Borrower or its Subsidiaries (as applicable) is contesting in good faith the amount or validity thereof by appropriate proceedings, and then only to the extent that the Borrower or any of its Subsidiaries (as applicable) has set aside on its books adequate reserves therefor, if appropriate under GAAP; (d) other indebtedness secured by Liens permitted under clause (e) of Section 10.1, not exceeding $30,000,000 in the aggregate (on a combined basis for the Borrower and its Subsidiaries) at any one time outstanding; (e) other unsecured Indebtedness not exceeding $10,000,000 in the aggregate (on a combined basis for the Borrower and its Subsidiaries) at any one time outstanding; (f)  in the case of the Borrower, the Bonds; (g) in the case of the Borrower, the Borrower’s Class A or B Units subject to redemption rights to the extent classified as debt and obligations arising from the exercise of those redemption rights; and (h) in the case of the Borrower, Swap Contracts with any Lender or any of its Affiliates.


 


10.5 Guarantees and Other Contingent Obligations.


 


None of the Borrower nor any of its Subsidiaries shall incur any Guaranty Obligations, except:  (a) for endorsements of negotiable Instruments for collection in the ordinary course of business; and (b) in the case of the Borrower, guaranties of the Indebtedness (including capitalized leases) or operating lease obligations of Domestic Subsidiaries of the Borrower to the extent permitted under Section 10.4 or 10.12, respectively; provided, however, that the amount payable under such guaranties shall (i) in the case of guaranteed Indebtedness (including capitalized lease obligations) be deemed to be “Funded Debt” for purposes of Section 9.18 of this Agreement, and (2) in the case of guaranteed operating lease obligations, the annual amount payable shall be included in the computation of the Borrower’s annual financial obligations for purposes of Section 10.12 of this Agreement.


 


10.6 Disposition of Property.


 


None of the Borrower nor any of its Subsidiaries shall sell, lease, transfer or otherwise dispose of any of its properties, assets or rights, to any Person, except (a) sales or other dispositions of Inventory or obsolete Equipment in the ordinary course of the Borrower’s or its Subsidiaries’ business (as applicable), (b) as permitted in the Security Agreement and (c) sales, transfers, dispositions of assets other than as set forth above of up to $5,000,000 (on a combined basis for the Borrower and its Subsidiaries) during any single Fiscal Year. The Agent hereby


 






  





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covenants that upon the sale or disposition of any asset permitted hereunder it shall release its Lien on such asset.


 


10.7 Change in Nature of Business.


 


None of the Borrower nor any of its Subsidiaries shall engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Subsidiaries on the Closing Date or any business reasonably related or ancillary thereto..


 


10.8 ERISA Matters.


 


None of the Borrower nor any of its Subsidiaries shall at any time engage in a transaction which could be subject to Section 4069 or 4212(c) of ERISA, or permit any Plan to (a) engage in any non-exempt “prohibited transaction” (as defined in Section 4975 of the IRC); (b) fail to comply with ERISA or any other applicable laws; or (c) incur any material “accumulated funding deficiency” (as defined in Section 302 of ERISA), which, with respect to each event listed above, could be reasonably expected to have a material adverse effect on the Borrower’s consolidated business, assets, operations, financial condition or prospects.


 


10.9 [Intentionally Omitted].


 


10.10 Equity Distributions.


 


None of the Borrower nor any of its Subsidiaries shall directly or indirectly, make any Equity Distributions, except that (a) the Borrower may make quarterly distributions to its Members in respect of Borrower’s taxable income, in amounts proportionate to the respective percentage interests of each of such Member so that each such Member shall have received an amount equal to 48% of such Member’s share of the Borrower’s net taxable income for the relevant quarter (subject to any increase in accordance with the terms of the Borrower’s Amended and Restated Limited Liability Company Agreement) (the “Permitted Taxable Distribution Amount”), provided that if the aggregate distribution made during any calendar year exceeds the Permitted Taxable Distribution Amount, then the excess distribution for such tax year shall be applied to the permitted distributions for the immediately subsequent quarters, Dollar-for-Dollar, until all such excess has been applied to future permitted distributions,  b) the Borrower may make distributions to pay an annual 5% return on its Class A Units, so long as no Default or Matured Default has occurred and is continuing or would be caused thereby, (c) the Borrower may (i) make distributions to pay up to an annual 7% return on the Specified Class A-1 Units, so long as no Default or Matured Default has occurred and is continuing or would be caused thereby, or (ii) if the conditions in clause (i) are not satisfied, issue payment in kind notes in lieu thereof in an amount equal to an annual 7% return on the Specified Class A-1 Units, (d) the Borrower may make distributions in respect of its outstanding equity interests in an amount not to exceed $150,000,000 in the aggregate during the period from (and including) the Restatement Date until the first anniversary of the Restatement Date (the “$150 Million Basket”), (i) so long as no Default or Matured Default has occurred and is continuing or would be caused thereby, and (ii) subject to any concurrent mandatory prepayment required to be made pursuant to Section 4.4(b)(ii), and (e) the Borrower may make additional Equity Distributions (the “Additional Equity Distributions”), so long as (i) no Default or Matured Default has


 






  





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occurred and is continuing or would be caused thereby, (ii) the Borrower shall be in pro forma compliance (based on assumptions and projections acceptable to the Agent) with the Fixed Charge Coverage Ratio after giving effect to such Equity Distribution and (iii) to the extent such Additional Equity Distributions shall be made with IPO Proceeds, subject to any concurrent mandatory prepayment required to be made pursuant to Section 4.4(b)(ii).


 


10.11 Amendment of Organizational Documents.


 


Neither the Borrower nor any of its Subsidiaries shall amend any agreement, instrument or document pertaining to either the Borrower’s or any of its Subsidiaries’ governance, in any manner that affects either of the Borrower’s or any of its Subsidiaries’ name or jurisdiction of organization or that otherwise could reasonably be expected to have a material adverse effect on the rights, powers or remedies of the Agent and/or the Lenders.


 


10.12 Lease Limitations.


 


The Borrower’s and its Subsidiaries’ combined annual financial obligations under all operating leases and other similar agreements (excluding capitalized leases and Owner/Operator Agreements shall not exceed $25,000,000 in the aggregate in any of the Borrower’s Fiscal Years.


 


10.13 Use of Other Fictitious Names.


 


None of the Borrower nor any of its Subsidiaries shall use any fictitious name except for the names referred to in Section 7.7 of this Agreement or as otherwise may be disclosed at least thirty (30) days in advance in writing to the Agent.


 


10.14 [Intentionally Omitted.]


 


10.15 Fiscal Year.


 


None of the Borrower nor any of its Subsidiaries shall change its Fiscal Year or any of the fiscal quarters or monthly accounting periods therein.


 


10.16 Limitations on Bank Accounts.


 


None of the Borrower nor any of its Subsidiaries shall maintain any cash in any bank accounts other than those listed on Exhibit 7J or as approved by the Agent from time to time.


 


10.17 Use of Trademarks.


 


None of the Borrower nor any of its Subsidiaries shall use any trademarks with respect to Inventory except for such trademarks as have been properly licensed to the Agent.


 


10.18 Amendments of Other Documents.


 


None of the Borrower nor any of its Subsidiaries shall without the Agent’s advance written consent (which shall not be unreasonably withheld) amend, waive any obligation owed to the Borrower or any of its Subsidiaries under, or grant any consents under any Bond Document


 






  





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or any Intercompany Financing Document, in each case, in any way that is reasonably likely to be prejudicial to the interests of the Agent or the other holders of the Liabilities.


 


10.19 Ownership of Cattle and Deposits on Cattle with Feeders.


 


The Borrower and its Subsidiaries together shall not at any time own more than 25,000 head of cattle, whether such cattle are hedged or unhedged.  The Borrower and its Subsidiaries together shall not at any time own more than 10,000 head of Unhedged Cattle to be finished in any single month.  In determining the number of hedged or Unhedged Cattle for purposes of this Section 10.19, any partial ownership interests of the Borrower or any of its Subsidiaries in cattle shall be counted at the percentage of interest owned.  As used herein, the phrase “Unhedged Cattle” shall refer to cattle which are not hedged with either futures contracts or option contracts at prices that limit the Borrower’s or any of its Subsidiaries’ combined potential losses to no more than $50 per head. Notwithstanding the provisions of Section 10.3, the Borrower and its Subsidiaries shall be allowed to make deposits on cattle with such feeders as are approved by the Agent, up to $75 per head, not to exceed $2,000,000 (on a combined basis for the Borrower and its Subsidiaries) at any time outstanding in the aggregate (the “Feeder Deposits”). The Feeder Deposits may not be treated as tangible assets of the Borrower or any of its Subsidiaries for the purposes of determining compliance with the covenants set forth herein without the prior approval of the Required Lenders.


 


10.20 Enforcement of Certain Documents.


 


The Borrower shall not at any time fail to enforce, or fail to cause its relevant Subsidiaries to enforce, in all material respects, any of the Intercompany Financing Documents.


 


ARTICLE XI


DEFAULT REMEDIES


 


11.1 Acceleration.


 


With respect to: (a) any Matured Default described in clauses (i), (j), (k) and (l) of the definition thereof, all of the Liabilities shall automatically become immediately due and payable, the Borrower shall without demand pay into the Holding Account an amount equal to the aggregate undrawn amount of all outstanding LCs, and the obligations of the Lenders to make Loans, the Swing Line Lender to make Swing Line Loans, and the Issuers to issue or cause the issuance of LCs and the Commitments shall automatically terminate, without presentment, demand, protest or further notice (including without limitation, notice of intent to accelerate and notice of acceleration) of any kind, all of which are expressly waived by the Borrower, and (b) any other Matured Default, the Agent may with the consent of the Required Lenders, and shall at the request of the Required Lenders, by notice to the Borrower and the Lenders, (i) declare the several obligations of the Lenders to make Loans, the Swing Line Lender to make Swing Line Loans, and the Issuers and to issue or cause the issuance of LCs and the Commitments to be terminated, whereupon such obligations and the Commitments of each Lender shall terminate, and (ii) declare all of the Liabilities to be due and payable, whereupon the Liabilities shall become and be due and payable and the Borrower shall be required to pay into the Holding Account an amount equal to the aggregate undrawn amount of all outstanding LCs, without


 






  





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presentment, demand, protest or further notice (including without limitation, notice of intent to accelerate and notice of acceleration) of any kind, all of which are expressly waived by the Borrower.


 


11.2 Other Remedies.


 


Upon the occurrence and during the continuance of any Matured Default, the Agent may with the consent of the Required Lenders (subject to the provisions of the other Financing Documents), and shall at the direction of the Required Lenders, proceed:  (a) to protect and enforce the rights of the Lenders by suit in equity, by action at law or both, whether for the specific performance of any covenant or agreement contained in this Agreement or in any other Financing Document or in aid of the exercise of any power granted in this Agreement or any other Financing Document, (b) to enforce the payment of the Liabilities, or (c) to foreclose upon any Liens granted pursuant to the Security Documents and other Financing Documents in the manner set forth therein; it being intended that no remedy conferred herein or in any of the other Financing Documents is to be exclusive of any other remedy, and each and every remedy contained herein or in any other Financing Document shall be cumulative and shall be in addition to every other remedy given hereunder and under the other Financing Documents, or at any time existing at law or in equity or by statute or otherwise.


 


11.3 Right to Cure.


 


If a Matured Default occurs as a result of non-compliance with one or more of the financial covenants set forth in Sections 9.16 and 9.18 with respect to any fiscal quarter, the Borrower may engage in an Equity Cure Issuance and apply the amount of the Equity Cure Proceeds as an addition to EBITDA (with the amount so applied to be treated for purposes of Sections 9.16 and/or 9.18, as applicable, as if such application had been made on the last day of the respective fiscal quarter for which there has been a non-compliance); provided, that (a) such Equity Cure Proceeds are actually received by the Borrower and applied to EBITDA no later than the tenth (10th) day following the earlier of (i) the date of delivery of the financial statements with respect to such fiscal period or (ii) the date on which the financial statements are required to be delivered under Section 9.1 (without regard to any cure periods applicable thereto) with respect to such fiscal period, (b) in each four (4) fiscal quarter period, there shall be a period of three (3) fiscal quarters in which no Equity Cure Issuance is made, (c) only two Equity Cure Issuances may be made during the term of this Agreement, and (d) this Section 11.3 shall not be relied on for purposes of calculating any financial ratios other those set forth in Sections 9.16 and 9.18 and the Equity Cure Issuance shall be disregarded for all other purposes, including, without limitation, determination of the Applicable Margin and for purposes of determining availability of any baskets with respect to the covenants contained in this Agreement.  The Agent and the Lenders agree that from the date of delivery by the Borrower of notice of its intent to exercise its equity cure rights under this Section 11.3 (but only if such notice is provided on or before the financial statements are required to be delivered under Section 9.1 (without regard to any cure periods applicable thereto) with respect to such fiscal quarter) until the date that is ten (10) days following the earlier of (i) the date of delivery of the financial statements with respect to such fiscal period or (ii) the date on which the financial statements are required to be delivered under Section 9.1 (without regard to any cure periods applicable thereto) with respect to such fiscal


 






  





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quarter, neither the Agent nor any Lender shall exercise any rights or remedies with respect to any Matured Default addressed in such notice.


 


ARTICLE XII


THE AGENT


 


12.1 Authorization and Action.


 


Each Lender and each Issuer appoints the Agent as its Agent under, and irrevocably authorizes the Agent (subject to Section 12.7) to take such action on its behalf and to exercise such powers under any Financing Document and under any Bond Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto. Without limitation of the foregoing, each Lender and each Issuer expressly authorizes the Agent to execute, deliver, and perform its obligations under each of the Financing Documents to which the Agent is a party, and to exercise all rights, powers, and remedies that the Agent may have thereunder. As to any matters not expressly provided for by this Agreement (including without limitation, enforcement or collection of the Liabilities), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act, or to refrain from acting (and shall be fully protected in so acting or refraining from acting), upon the instructions of the Required Lenders (or such other groups of Lenders, the relevant Issuer and/or the Swing Line Lender as may be required pursuant to a particular provision of this Agreement or another Financing Document), and such instructions shall be binding upon all the Lenders, the Issuers, the Swing Line Lender and all holders of and participants in any Note; provided, however, that the Agent shall not be required to take any action which exposes the Agent to personal liability or which is contrary to this Agreement or applicable law.  Without limiting the generality of the power and authority vested in the Agent pursuant to this Section 12.1, the power and authority vested in the Agent includes, but is not limited to, the following:


 


(a) To solicit the advice and assistance of each of the Lenders and Farm Credit System Voting Participants concerning the administration of the Loans and the exercise by the Agent of its various rights, remedies, powers, and discretions with respect thereto;


 


(b) To execute, seal, acknowledge, and deliver as the Agent, all such instruments as may be appropriate in connection with the administration of the Loans and the exercise by the Agent of its various rights with respect thereto;


 


(c) To initiate, prosecute, defend, and to participate in, actions and proceedings in its name as the Agent for the ratable benefit of the Lenders;


 


(d) To retain attorneys, accountants, and other professionals to provide advice and professional services to the Agent, with their fees and expenses reimbursable in accordance with the terms hereof; and


 


(e) To exercise powers reasonably incident to the Agent’s discharge of its duties enumerated in Section 12.1 hereof.


 






  





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12.2 Agent’s Reliance, Etc.


 


Neither the Agent nor any of its directors, officers, agents or employees shall be liable to any Lender or Issuer for any action taken or omitted to be taken by it or them under or in connection with any Financing Document or Bond Document, except for its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, the Agent:  (a) may treat the original or any successor holder of any Note as the holder thereof until it receives notice from the Lender which is the payee of such Note concerning the assignment of such Note; (b) may employ and consult with legal counsel (including counsel for either the Borrower or any of its Subsidiaries), independent public accountants, and other experts selected by it and shall not be liable to any Lender for any action taken, or omitted to be taken, in good faith by it or them in accordance with the advice of such counsel, accountants, or experts received in such consultations and shall not be liable for any negligence or misconduct of any such counsel, accountants or other experts; (c) makes no warranty or representation to any Lender or Issuer and shall not be responsible to any Lender or Issuer for any opinions, certifications, statements, warranties or representations made in or in connection with any Financing Document; (d) shall not have any duty to any Lender or Issuer to ascertain or to inquire as to the performance or observance of any of the terms, covenants, or conditions of any Financing Document or any other instrument or document furnished pursuant thereto or to satisfy itself that all conditions to and requirements for any credit extension have been met or that the Borrower is entitled to any credit extension or to inspect the property (including the books and records) of the Borrower or any of its Subsidiaries; (e) shall not be responsible to any Lender or Issuer for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of any item of Collateral or Financing Document, Bond Document or any other instrument or document furnished pursuant thereto or hereto, nor for the creation, perfection or priority of any Liens purported to be created by any Financing Documents; and (f) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate, or other instrument or writing (which may be by telegram, cable, telex, or otherwise) believed by it to be genuine and signed or sent by the proper party or parties.


 


12.3 Notices of Defaults.


 


Except as provided in this Section 12.3, the Agent shall not be deemed to have knowledge of the occurrence of a Default or a Matured Default unless the Agent has received written notice from a Lender, an Issuer, the Borrower or any of its Subsidiaries specifying such Default or Matured Default and stating that such notice is a “Notice of Default”.  Notwithstanding the foregoing, the Agent shall be deemed to have knowledge of the occurrence of a Default or a Matured Default:  (a) consisting of the non-payment of principal or interest, on the due date such principal or interest, (b) on the date the Agent has received a Compliance Certificate of the Borrower as required by Section 9.1, which compliance certificate discloses (without review of any financial statements attached thereto) the existence of any Default or Matured Default, and (c) ten (10) Business Days after the date the Agent has received a Compliance Certificate of the Borrower as required by Section 9.1, which compliance certificate (after review of any financial statements attached thereto) would disclose the existence of any Default or Matured Default.  In the event that the Agent obtains such knowledge of the occurrence of a Default or a Matured Default, the Agent shall within three (3) Business Days thereafter, give prompt notice thereof to the Lenders and the Issuers.  The Agent shall (subject to


 






  





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Section 12.1) take such action with respect to such Default as may be directed by the Required Lenders; provided that, unless and until the Agent shall have received the directions referred to in Section 12.1, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable and in the best interest of the Lenders and the Issuers.


 


12.4 The Agent as a Lender, Fiduciary.


 


(a) With respect to its Commitment, any Loan or Swing Line Loan made by it, any LC issued by it and any Note issued to it, the Agent shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include the Agent in its individual capacity. The Agent and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower, any of its respective Affiliates and any Person who may do business with or own securities of the Borrower or any such Affiliate, all as if the Agent were not the Agent and without any duty to account therefor to the Lenders.


 


(b) None of the Arranger, any Syndication Agent or Documentation Agent identified as such in this Agreement shall have any right, power, obligation, liability, responsibility or duty under this Agreement, except in its capacity, as applicable, as Agent, a Lender or an Issuer hereunder.  Without limiting the foregoing, none of the Arranger, any Syndication Agent or Documentation Agent shall have or be deemed to have a fiduciary relationship with any Lender.


 


12.5 Non Reliance on Agent and Other Lenders.


 


Each Lender and each Issuer agrees that it has, independently and without reliance on the Agent, any other Issuer, Lender or the Swing Line Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Borrower and its Subsidiaries and its decision to enter into the transactions contemplated by the Financing Documents and that it will, independently and without reliance upon the Agent, any other Issuer, Lender or Swing Line Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under any Financing Document. The Agent shall not be required to keep itself informed as to the performance or observance by the Borrower, or any of its Subsidiaries, or any other Person of any Financing Document, Bond Document, Intercompany Financing Document, or to inspect the properties or books of the Borrower or any of its Subsidiaries. The Agent assumes no responsibility for the financial condition of the Borrower or for the performance of the Borrower’s obligations under the Financing Documents.  Except for notices, reports, and other documents and information expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Borrower (or any of its Affiliates) which may come into the possession of the Agent or any of its affiliates.  Notwithstanding the foregoing, the Agent will, upon the request of any Lender or Issuer, provide to such Person, at such Person’s expense, copies of any and all written information provided to


 






  





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the Agent by the Borrower or any of its Subsidiaries (unless concurrently delivered to such Person by the Borrower or any of its Subsidiaries).


 


12.6 Indemnification of the Agent.


 


Notwithstanding anything to the contrary herein contained, the Agent shall be fully justified in failing or refusing to take any action unless it shall first be indemnified to its satisfaction by the Lenders and the Issuers against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, and disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of its taking or continuing to take any action. Each Lender agrees to indemnify the Agent (to the extent not reimbursed by the Borrower), according to such Lender’s Total Percentage, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of any Financing Document, Intercompany Loan Document or Bond Document or any action taken or omitted by the Agent under any Financing Document, Intercompany Loan Document or Bond Document (which indemnity shall survive any termination of this Agreement); provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements resulting from the gross negligence or willful misconduct of the Person being indemnified; provided further, that it is the intention of each Lender to indemnify the Agent against the consequences of the Agent’s own negligence, whether such negligence be sole, joint, concurrent, active or passive. Without limiting the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its Total Percentage of any out-of-pocket expenses (including attorneys’ fees) incurred by the Agent in connection with the preparation, administration, or enforcement of, or legal advice in respect of rights or responsibilities under, any Financing Document, Intercompany Loan Document or Bond Document, to the extent that the Agent is not reimbursed for such expenses by the Borrower.  If any indemnity in favor of the Agent shall be or become, in the Agent’s determination, inadequate, the Agent may call for additional indemnification from the Lenders and/or the Issuers and cease to do the acts indemnified against hereunder unless such additional indemnity is given.


 


12.7 Successor Agent.


 


The Agent may resign at any time as Agent under the Financing Documents by giving written notice thereof to the Lenders, the Issuers, the Swing Line Lender and the Borrower and may be removed at any time with or without cause by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent with the prior written consent of the Borrower, such consent not to be unreasonably withheld (provided that the Borrower shall have no consent right upon the occurrence and during the continuance of a Matured Default). If no successor Agent shall have been so appointed by the Required Lenders or shall have accepted such appointment within sixty (60) days after the retiring Agent’s giving of notice of resignation or the Required Lenders’ removal of the Agent, then the retiring Agent may, on behalf of the Lenders and the Issuers, appoint a successor Agent with the Borrower’s prior written consent, such consent not to be unreasonably withheld (provided that the Borrower shall have no consent right upon the occurrence and during the


 






  





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continuance of a Matured Default), which shall be a bank or other financial institution having a combined capital and surplus of at least $500,000,000 or its equivalent. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall be entitled to receive from the retiring Agent such documents of transfer and assignment as such successor Agent shall reasonably request and shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After the retiring Agent’s resignation or removal as Agent, the provisions of this Article XII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.


 


12.8 Verification of Borrowing Notices.


 


The Agent shall have no duty to verify the authenticity of the signature appearing on any notice of borrowing, and with respect to any oral request for an advance, the Agent shall have no duty to verify the identity of any Person representing himself as one of the natural Persons authorized to make such request on behalf of the Borrower. Neither the Agent nor any Lender shall incur any liability to the Borrower in acting upon any telephonic notice referred to above which the Agent or such Lender believes in good faith to have been given by a duly authorized Person authorized to borrow on behalf of the Borrower or for otherwise acting in good faith.


 


12.9 Action Upon Instructions of the Lenders.


 


The Agent agrees, upon the written request of the Required Lenders (or such other groups of Lenders, the Issuers and/or the Swing Line Lender as may be required pursuant to a particular provision of this Agreement or another Financing Document), to take any action of the type specified in the Financing Documents or Bond Document as being within the Agent’s rights, duties, power or discretion.  The Agent shall in all cases be fully protected in acting, or in refraining from acting in accordance with written instructions signed by the Required Lenders, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Required Lenders, the Issuers, the Swing Line Lender and on all holders of the Notes.  In the absence of a request by the Required Lenders, the Agent shall have authority, in its sole discretion, to take or not to take any action, unless the Financing Documents specifically require the consent of the Required Lenders, of all of the Lenders or of other specified Persons.


 


12.10 Action Upon Request of the Borrower.


 


If (a) any of the events described in Sections 5.2, 5.3, 5.4 or 5.5 cause the Borrower to be required to pay to any one of the Lenders other than the Agent, costs associated with the LIBOR Rate Advances which are materially disproportionate to such costs required to be paid to the other Lenders (each a “Non-Proportionate Lender”), or (b) a Lender is a Defaulting Lender, then the Borrower or the Agent may elect to replace such Non-Proportionate Lender or Defaulting Lender, as the case may be, as a Lender party to this Agreement in accordance with and subject to the restrictions contained in, and consents required by Section 13.23; provided that (a) if such replacement is requested by the Borrower, the Borrower shall have received the prior written consent of the Agent, and (b) such Non-Proportionate Lender or Defaulting Lender, as the case may be, shall have received payment of an amount equal to the outstanding principal amount of its Loans (including any Swing Line Loans) and participations in Swing Line Loans and LC


 






  





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Obligations, accrued interest thereon, accrued fees and all other amounts payable hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts).  Notwithstanding the foregoing, under no circumstances shall the Lender affected hereby be required to bear any of the costs or expenses associated with the proposed assignment, all of which costs and expenses shall be the sole responsibility of the Borrower and the proposed assignee, and the Lender affected hereby may defer compliance with its obligations under this Section 12.10 until the Borrower has deposited with such Lender such amount as such Lender reasonably believes will be sufficient to reimburse such Lender for such costs and expenses.


 


12.11 Additional Functions of Certain Lenders.


 


The Lenders identified in this Agreement as a “Syndication Agent”, “Documentation Agent”, “Bookrunner” and/or a “Lead Arranger” shall not have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such.


 


ARTICLE XIII


MISCELLANEOUS


 


13.1 Timing of Payments.


 


For purposes of determining the outstanding balance of the Liabilities, including the computations of interest which may from time to time be owing to the Lenders, the receipt by the Agent of any check or any other item of payment whether through a blocked account or lockbox or otherwise, shall not be treated as a payment on account of the Liabilities until such check or other item of payment is actually received by the Agent at its office in Greenwood Village, Colorado and is paid to the Agent in cash or a cash equivalent.


 


13.2 Attorneys’ Fees and Costs.


 


If at any time or times hereafter the Agent employs counsel in connection with protecting or perfecting the Agent’s security interest in the Collateral or in connection with any matters arising out of this Agreement, whether:  (a) to commence, defend or intervene in any litigation or to file a petition, complaint, answer, motion or other pleading; (b) to take any other action in or with respect to any suit or proceeding (bankruptcy or otherwise); (c) to consult with officers of the Agent to advise the Agent or to draft documents for the Agent in connection with any of the foregoing or in connection with any release of the Agent’s claims or security interests or any proposed extension, amendment or refinancing of the Liabilities; (d) to protect, collect, lease, sell, take possession of, or liquidate any of the Collateral; or (e) to attempt to enforce or to enforce any security interest in any of the Collateral, or to enforce any rights of the Agent, the Issuers, the Swing Line Lender or the Lenders to collect any of the Liabilities; then in any of such events, all of the reasonable attorneys’ fees arising from such services, and any expenses, costs and charges relating thereto, including without limitation, all fees of all paralegals, legal assistants and other staff employed by such attorneys whether outside the Agent or in the Agent’s legal department, together with interest at the Default Rate provided for in Section 3.1(c) if a Matured Default has occurred, or at the highest interest rate set forth in any promissory note


 






  





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referred to herein, shall constitute additional Liabilities, payable on demand and secured by the Collateral.  In addition, if the Liabilities have been accelerated in accordance with Section 11.1, and thereafter any Lender employs counsel (a) in connection with protecting such Lender’s interest in the Collateral; (b) to commence, defend or intervene in any litigation or to file a petition, complaint, answer, motion or other pleading; (c) to take any other action in or with respect to any suit or proceeding (bankruptcy or otherwise); (d) to protect, collect, lease, sell, take possession of, or liquidate any of the Collateral; or (e) to attempt to enforce or to enforce any security interest in any of the Collateral, or to enforce any of such Lender’s rights to collect any of the Liabilities; then in any of such events, all of the reasonable attorneys’ fees arising from such services, and any expenses, costs and charges relating thereto, including without limitation, all fees of all paralegals, legal assistants and other staff employed by such attorneys whether outside the Lender or in the Lender’s legal department, together with interest at the Default Rate provided for in Section 3.1(c), or at the highest interest rate set forth in any promissory note referred to herein, shall constitute additional Liabilities, payable on demand and secured by the Collateral.  All of the rights to reimbursement of expenses set forth in this Section 13.2 that are applicable to the Agent, shall also be applicable to CoBank and Rabobank in their respective capacities as an Issuer and/or as the Swing Line Lender.


 


13.3 Expenditures by the Agent.


 


In the event that the Borrower shall fail to pay taxes, insurance, assessments, costs or expenses which the Borrower is, under any of the terms hereof, or of any of the other Financing Documents or of any of the Bond Documents, required to pay, or fails to keep its assets free from other security interests, liens or encumbrances, except as permitted herein, the Agent may, in its sole discretion and without obligation to do so, make expenditures for any or all of such purposes, and the amount so expended, together with interest at the Default Rate provided for in Section 3.1(c), shall constitute additional Liabilities, payable on demand and secured by the Collateral.


 


13.4 The Agent’s Costs as Additional Liabilities.


 


The Borrower shall reimburse the Agent for all expenses and fees paid or incurred in connection with the documentation, negotiation and closing of the loans and other financial accommodations described in this Agreement (including without limitation, filing and recording fees, and the fees, Synd-Trak fees (up to $6,000) and expenses of the Agent’s attorneys, paralegals and legal assistants, whether outside the Agent or in its legal department, and whether such expenses and fees are incurred prior to or after the Closing Date).  The Borrower further agrees to reimburse the Agent for all expenses and fees paid or incurred in connection with the documentation of any renewal or extension of the loans, any additional financial accommodations, or any other amendments to this Agreement.  All costs and expenses incurred by the Agent with respect to such negotiation and documentation together with interest at the highest interest rate set forth in any promissory note referred to herein, shall constitute additional Liabilities, payable on demand and secured by the Collateral. All of the rights to reimbursement of expenses set forth in this Section 13.4 that are applicable to the Agent, shall also be applicable to CoBank and Rabobank in their respective capacities as an Issuer and/or as the Swing Line Lender.


 






  





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13.5 Indemnification.


 


(a) The Borrower agrees to indemnify and hold the Agent, each Issuer, the Swing Line Lender and the Lenders and each of their respective officers, directors, employees and agents harmless from and against any and all claims, demands, liabilities, losses, damages, penalties, costs, and expenses (including without limitation, reasonable attorneys’ fees) relating to or in any way arising out of the possession, use, operation or control of any of the Borrower’s assets (irrespective of whether such party is a party to the action for which indemnification hereunder is sought).  The Borrower shall pay or cause to be paid all license fees, bonding premiums and related taxes and charges, and shall pay or cause to be paid all of the Borrower’s real and personal property taxes, assessments and charges and all of the Borrower’s franchise, income, unemployment, use, excise, old age benefit, withholding, sales and other taxes and other governmental charges assessed against the Borrower, or payable by the Borrower, at such times and in such manner as to prevent any penalty from accruing or any lien or charge from attaching to the Borrower’s property, provided that the Borrower shall have the right to contest in good faith, by an appropriate proceeding promptly initiated and diligently conducted, the validity, amount or imposition of any such tax, and upon such good faith contest to delay or refuse payment thereof, if (i) the Borrower establishes adequate reserves to cover such contested taxes; and (ii) such contest does not and will not have a material adverse effect on the Borrower’s consolidated financial condition of the Borrower, the Borrower’s ability to pay any of the Liabilities or the priority or value of the Agent’s security interests in the Collateral.


 


(b) The Borrower further agrees to defend, protect, indemnify and hold harmless the Agent, each Issuer, the Swing Line Lender, the Lenders, their respective Affiliates and the respective directors, officers, employees, attorneys and agents of each of such Persons (each of the foregoing being an “Indemnitee” and all of the foregoing being collectively the “Indemnitees”) from and against any and all claims, actions, damages, liabilities, judgments, costs and expenses, including all reasonable fees and disbursements of counsel which may be incurred in the investigation or defense of any matter (collectively the “Indemnified Amounts”) imposed upon, incurred by or asserted against any Indemnitee, whether direct, indirect or consequential and whether based on any federal, state, local or foreign laws or regulations (including without limitation securities laws, Environmental Laws, commercial laws and regulations), under common law or on equitable cause, or on contract or otherwise:


 


(i) by reason of, relating to or in connection with the execution, delivery, performance or enforcement of any Financing Document, Bond Document, Intercompany Financing Document or LC, any commitments relating thereto, or any transaction contemplated by any Financing Document, Bond Document, Intercompany Financing Document or LC; or


 


(ii) by reason of, relating to or in connection with any credit extended or used under, or transaction financed by, the Financing Documents, the Bond Documents, the Intercompany Financing Documents or any LC or any act done or omitted by any Person, or the exercise of any rights or remedies thereunder,


 






  





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including the acquisition of any Collateral by the Agent by way of foreclosure of the Lien thereon, deed or bill of sale in lieu of such foreclosure or otherwise;


 


provided, however, that the Borrower shall not be liable to any Indemnitee for any portion of such Indemnified Amounts resulting from such Indemnitee’s gross negligence or willful misconduct.  In the event this indemnity is unenforceable as a matter of law as to a particular matter or consequence referred to herein, it shall be enforceable to the full extent permitted by law.  Furthermore, if and to the extent that any of the foregoing agreements described in this Section 13.5 may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Amounts that is permissible under applicable law.


 


(c) The indemnification set forth in this Section 13.5 applies, without limitation, to any act, omission, event or circumstance existing or occurring on or prior to the later of the Termination Date or the date of payment in full of the Liabilities, including specifically Liabilities arising under clause (a)(ii) of this Section.  The indemnification provisions set forth above shall be in addition to any liability the Borrower may otherwise have.  Without prejudice to the survival of any other obligation of the Borrower hereunder, the indemnities and obligations of the Borrower contained in this Section shall survive the payment in full of the Liabilities.


 


(d) Furthermore, as applied to Liabilities arising under Environmental Laws, the indemnification set forth in this Section 13.5 (i) shall in no way be waived, released, discharged, reduced, mitigated or otherwise affected by the Agent’s, any Issuer’s, the Swing Line Lender’s or any Lender’s extension of credit under the Financing Documents with knowledge of the matters described in documents listed on Exhibit 7I or otherwise made known to the Agent or the Agent’s counsel in connection with this Credit Agreement or the transactions contemplated hereby; and (ii) shall be deemed continuing for the benefit of any purchaser at a foreclosure or other sale under any mortgage and any transferee of the title from the Agent, and shall survive the satisfaction or release of any mortgage, any foreclosure of or other sale under a mortgage and/or any acquisition of title to a mortgaged property or any part thereof by the Agent, or anyone claiming by, through or under the Agent, by deed in lieu of foreclosure or otherwise.  Notwithstanding the foregoing, this indemnification shall not apply with respect to any loss, damage, liability, cost or expense related to a mortgaged property which the Borrower proves was caused solely by or resulted solely from any act or omission of any Person, other than the Borrower or an agent, employee, invitee or contractor of the Borrower, which occurred after the Agent or anyone claiming by, through or under the Agent acquired title to the relevant mortgaged property (by foreclosure of the relevant mortgage or deed in lieu of foreclosure or otherwise) and control of such mortgaged property.  So long as the Borrower has control of any such mortgaged properties, the Borrower agrees that the Indemnitees shall have no responsibility for, and the Borrower hereby releases the Indemnitees from responsibility for, damage or injury to human health, property, the environment or natural resources caused by hazardous substances, pollutants or contaminants or for abatement, clean-up, detoxification, removal or disposal of, or otherwise with respect to, hazardous substance, pollutants and contaminants, provided, however, that the Borrower shall not


 






  





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be liable to any Indemnitee for any portion of such Liabilities resulting from such Indemnitee’s gross negligence or willful misconduct.


 


13.6 Inspection.


 


The Agent (by and through its officers and employees), or any Person designated by the Agent in writing, shall have the right, from time to time upon five (5) Business Days notice if there has not occurred a Matured Default and without notice after the occurrence of a Matured Default, to call at the Borrower’s and/or any of its Subsidiaries’ place or places of business (or any other place where Collateral or any information relating thereto is kept or located) during reasonable business hours, and without hindrance or delay, to:  (a) inspect, audit, check and make copies of and extracts from such Person’s books, records, journals, orders, receipts and any non-privileged correspondence and other data relating to such Person’s business or to any transactions between the parties to this Agreement; (b) make such verification concerning the Collateral (or any collateral underlying the Intercompany Loan Documents) as the Agent may consider reasonable under the circumstances; and (c) review operating procedures, review maintenance of property and discuss such Person’s affairs, finances and business with such Person’s officers, employees or directors.  The Borrower agrees to pay to the Agent an annual audit fee in accordance with the Agent’s Letter.  The Agent will, on the request of any Lender, provide to such Lender a copy of any written report prepared by the Agent in connection with any inspection or audit made pursuant to this Section 13.6.


 


13.7 Examination of Banking Records.


 


The Borrower and its Subsidiaries consents to the examination by the Agent, the Agent’s officers, employees and agents, or any of them, whether or not there shall have occurred a Matured Default, of any and all of the Borrower’s and its Subsidiaries’ banking records, wherever they may be found, and directs any Person which may be in control or possession of such records (including, without limitation, any bank, other financial institution or accountant) to provide such records to the Agent and the Agent’s officers, employees and agents, upon their request.  The Agent may conduct such examination with reasonable notice to the Borrower at the option of the Agent, any such notice being waived by the Borrower and its Subsidiaries.  Nothing in this Section 13.7 shall be construed to require any accountant to provide materials to the Agent or the Agent’s officers, employees and agents, which is subject to a valid privilege.


 


13.8 Governmental Reports.


 


The Borrower will furnish to the Agent, upon the reasonable request of the Agent, copies of the reports of examinations or inspections of the Borrower by all Governmental Authorities, and if the Borrower fails to furnish such copies to the Agent, the Borrower authorizes all such Government Authorities to furnish to the Agent copies of their reports of examinations or inspections of the Borrower.


 


13.9 Reliance by the Agent, the Issuers and the Lenders.


 


All covenants, agreements, representations and warranties made herein by the Borrower shall, notwithstanding any investigation by the Agent, any Issuer, the Swing Line Lender or any


 






  





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of the Lenders, be deemed to be material to and to have been relied upon by the Agent, the Issuers, the Swing Line Lender and the Lenders.


 


13.10 Parties.


 


Whenever in this Agreement there is reference made to any of the parties hereto, such reference shall be deemed to include, wherever applicable, a reference to the respective successors and assigns of the Borrower, the Agent, the Swing Line Lender, the Lenders and the Issuers.


 


13.11 Applicable Law; Severability.


 


This Agreement shall be construed in all respects in accordance with, and governed by, the laws and decisions of the State of Colorado without regard to the application of conflict of laws principles.  Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement.


 


13.12 SUBMISSION TO JURISDICTION; WAIVER OF BOND AND TRIAL BY


JURY.


 


THE BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED WITHIN THE CITY AND COUNTY OF DENVER, COLORADO AND WAIVES ANY OBJECTION WHICH THE BORROWER MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT, WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON THE BORROWER. THE BORROWER HEREBY CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO THE BORROWER AT THE ADDRESS SET FORTH IN SECTION 13.18 OF THIS AGREEMENT.  SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR THREE (3) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO THE BORROWER’S ADDRESS BY THE BORROWER’S AGENT AS SET FORTH BELOW.  THE BORROWER HEREBY IRREVOCABLY APPOINTS THE CORPORATION COMPANY, WITH AN OFFICE ADDRESS LOCATED AT 1675 BROADWAY, DENVER, COLORADO 80202, AS THE BORROWER’S AGENT FOR THE PURPOSE OF ACCEPTING THE SERVICE OF ANY PROCESS WITHIN THE STATE OF COLORADO.  AT THE OPTION OF THE AGENT, THE BORROWER WAIVES, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY, AND WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE AGENT.  THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER FINANCING DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT, EACH ISSUER, THE


 






  





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SWING LINE LENDER AND THE LENDERS TO ENTER INTO THIS AGREEMENT AND EACH SUCH OTHER FINANCING DOCUMENT.


 


13.13 Application of Payments.


 


(a) Application of Payments and Collections Prior to a Matured Default.


 


(i) Subject to subsection (b) below, the Agent shall distribute all funds it receives in respect of any payments made by or on behalf of the Borrower on the Notes or the Non-Use Fees among the Lenders, in like currency and funds as received, ratably according to each Lender’s respective Line of Credit Loan Commitment or the outstanding principal amount of each Lender’s respective Term Loan, as the case may be.


 


(ii) Subject to subsection (b) below, the Agent shall distribute all funds it receives in respect of any payments made by or on behalf of the Borrower on the Borrower’s obligations under a Swap Contract to the applicable Swap Party.


 


(iii) Subject to subsection (b) below, the Agent shall distribute all funds it receives in respect of any payments made by or on behalf of the Borrower on LC Obligations to the applicable Issuer(s).


 


(iv) Subject to subsection (b) below, the Agent shall distribute all funds it receives in respect of any payments made by or on behalf of the Borrower on Swing Line Loans to the Swing Line Lender.


 


(b) Application of Payments and Collections after a Matured Default. After any Matured Default has occurred, all funds received by the Agent, whether as payments by the Borrower or as realization on Collateral or on any guaranties, shall (except as may otherwise be required by law) be distributed by the Agent as follows:


 


(i) First, to pay any unreimbursed cost of collection with respect to any Loan, any Swing Line Loan, any Note, any LC Obligation, any Collateral or otherwise relating to this Agreement to the Agent and each Issuer, Lender, Swing Line Lender or Swap Party who has incurred such costs;


 


(ii) Second, to pay the Agent and each Issuer, Lender, Swing Line Lender or Swap Party to whom the Borrower owes any indemnity obligation or other expense reimbursement obligation (other than those described in the immediately preceding subsection (a)) with respect to any Loan, any Swing Line Loan, any Note, any LC Obligation, any Collateral or otherwise relating to this Agreement, or relating to any Swap Contract, the amount thereof;


 


(iii) Third, (1) to the Lenders, accrued Non-Use Fees then due and payable by the Borrower in accordance with their respective Line of Credit Loan Commitments, (2) to pay to the Agent that portion of the accrued fees payable to the Agent, and (3) to pay any fees then due and payable to the Issuers pursuant to this Agreement;


 






  





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(iv) Fourth, to pay (1) accrued interest that is payable on the Loans to the Lenders, (2) accrued interest that is payable on the Swing Line Loans to the Swing Line Lender, and (3) any obligation (other than an early termination payment obligation) owing to a Swap Party that is due and payable to such Swap Party pursuant to any Swap Contract;


 


(v) Fifth, to pay (1) the principal of the Loans to the Lenders, (2) the principal of the Swing Line Loans to the Swing Line Lender, (3) any obligation that is due and payable to a Swap Party as a result of an early termination of a Swap Contract, (4) the aggregate amount of any drawings under LCs which have not yet been reimbursed to the relevant Issuers, and (5) to the Holding Account an amount equal to the aggregate undrawn amount of all outstanding LCs;


 


(vi) Sixth, to the Borrower or as otherwise may be directed by court order or by other applicable law.


 


To the extent that available funds are sufficient to pay only part of the amount due to all Persons within any of the foregoing clauses, such funds shall be allocated to all such Persons pro rata in accordance with the respective amounts owed.  Upon any sale of the Collateral by the Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt by the Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Agent or such officer or be answerable in any way for the misapplication thereof.


 


13.14 Marshaling; Payments Set Aside.


 


The Agent shall be under no obligation to marshal any assets in favor of the Borrower or against or in payment of any or all of the Liabilities.  To the extent that the Borrower makes a payment or payments to the Agent or the Agent receives any payment or proceeds of the Collateral for the Borrower’s benefit or enforces the Agent’s security interests or exercises the Agent’s rights of set-off, and such payment or payments or the proceeds of such Collateral, enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or set-off had not occurred.


 


13.15 Section Titles.


 


The section titles contained in this Agreement shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement among the parties.


 


13.16 Continuing Effect.


 


This Agreement, the Agent’s security interests in the Collateral, and all of the other Financing Documents shall continue in full force and effect so long as any Liabilities shall be


 






  





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owed to the Agent and/or any of the Lenders and/or the Issuers and/or the Swing Line Lender and (even if there shall be no Liabilities outstanding) so long as the Agent and/or any of the Lenders remains committed to make Loans under this Agreement and/or any Issuer remains committed to issue LCs under this Agreement and/or the Swing Line Lender remains committed to make Swing Line Loans under this Agreement.


 


13.17 No Waiver.


 


The Agent’s, any Issuer’s or the Required Lenders’ failure, at any time or times hereafter, to require strict performance by the Borrower of any provision of this Agreement shall not waive, affect or diminish any right of the Agent or the Required Lenders thereafter to demand strict compliance and performance therewith.  Any suspension or waiver by the Agent or the Required Lenders of any Default or Matured Default under this Agreement or any of the other Financing Documents, shall not suspend, waive or affect any other Default or Matured Default under this Agreement or any of the other Financing Documents, whether the same is prior or subsequent thereto and whether of the same or of a different kind or character.  None of the undertakings, agreements, warranties, covenants and representations of the Borrower contained in this Agreement or any of the other Financing Documents and no Default or Matured Default under this Agreement or any of the other Financing Documents, shall be deemed to have been suspended or waived by the Agent, the Issuers or the Required Lenders unless such suspension or waiver is in writing signed by an officer of the Agent or each of the Required Lenders (as applicable) and is directed to the Borrower specifying such suspension or waiver.


 


13.18 Notices.


 


(a) All notices and other communications provided for herein shall be in writing (including telex, facsimile, or cable communication) and shall be mailed, telexed, cabled or delivered addressed as follows:


 


(i)            If to the Agent at:


CoBank, ACB


5500 South Quebec Street


Greenwood Village, Colorado 80111


Attn:  Jim Matzat


Facsimile: 303-224-2529







(ii)           If to the Borrower or any of its Subsidiaries at:


National Beef Packing Company, LLC


12200 North Ambassador Drive


Kansas City, Missouri  64163


Attn: Jay D. Nielsen, Chief Financial Officer


Facsimile: (816) 713-8856







with copies to:







National Beef Packing Company, LLC


12200 North Ambassador Drive






  





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Kansas City, Missouri  64163


Attn: Bret G. Wilson, General Counsel


Facsimile: (816) 713-8856







Husch Blackwell Sanders LLP


4801 Main Street, Suite 1000


Kansas City, Missouri  64112


Attn: John Brungardt, Esq.


Facsimile: (816) 983-9271







U.S. Premium Beef, LLC


P.O. Box 20103


Kansas City, MO  64195


Attn: Steven D. Hunt, Chief Executive Officer


Facsimile: (816) 713-8810







(i) If to any of the Lenders or Issuers other than the Agent, at the address for such Person provided in writing to the Agent and the Borrower and, as to each party hereto, at such other address as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall, when mailed, telecopied, telexed, transmitted, or cabled, become effective when deposited in the mail, confirmed by telex answerback, transmitted by telecopier, or delivered to the cable company, respectively except that notices and communications to the Agent shall not be effective until actually received by the Agent.


 


(b) The timing of notices to the Agent of terminations or reductions of the Commitment, of borrowings, conversions and prepayments of Loans and Swing Line Loans and of the duration of Interest Periods and of a request for the issuance of an LC is summarized below:


 



	
Borrowing of Base Rate Advances


   and Swing Line Loans

	
1 Business Day


	
Borrowing of LIBOR Rate Advances

	
3 Business Days


	
Conversion of Loans (including changes in


   Interest Period for LIBOR Rate Advances)

	
3 Business Days


	
Prepayments of Base Rate Advances


   and Swing Line Loans

	
Same Business Day


	
Prepayments of LIBOR Rate Advances

	
3 Business Days


	
LCs

	
5 Business Days







13.19 Maximum Interest.


 


No agreements, conditions, provisions or stipulations contained in this Agreement or in any of the other Financing Documents, or any Matured Default, or any exercise by the Agent of the right to accelerate the payment of the maturity of principal and interest, or to exercise any


 






  





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option whatsoever, contained in this Agreement or any of the other Financing Documents, or the arising of any contingency whatsoever, shall entitle the Agent to collect, in any event, interest exceeding the Highest Lawful Rate, and in no event shall the Borrower be obligated to pay interest exceeding the Highest Lawful Rate, and all agreements, conditions or stipulations, if any, which may in any event or contingency whatsoever operate to bind, obligate or compel the Borrower to pay a rate of interest exceeding the Highest Lawful Rate, shall be without binding force or effect, at law or in equity, to the extent only of the excess of interest over such Highest Lawful Rate.  In the event any interest is charged in excess of the Highest Lawful Rate (“Excess”), the Borrower acknowledges and stipulates that any such charge shall be the result of an accidental and bona fide error, and such Excess shall be, first, applied to reduce the principal of any Liabilities due, and, second, returned to the Borrower, it being the intention of the parties hereto not to enter at any time into a usurious or otherwise illegal relationship.  The Borrower and the Agent both recognize that, with fluctuations in the Base Rate and the LIBOR Rate, such an unintentional result could inadvertently occur.  By the execution of this Agreement, the Borrower covenants that (a) the credit or return of any Excess shall constitute the acceptance by the Borrower of such Excess and (b) the Borrower shall not seek or pursue any other remedy, legal or equitable, against the Agent, any Issuer, the Swing Line Lender or the Lenders based, in whole or in part, upon the charging or receiving of any interest in excess of the Highest Lawful Rate.  For the purpose of determining whether or not any Excess has been contracted for, charged or received by the Agent, any Issuer, the Swing Line Lender or the Lenders (as the case may be), all interest at any time contracted for, charged or received by the Agent, the Issuers, the Swing Line Lender or the Lenders in connection with the Liabilities shall be amortized, prorated, allocated and spread in equal parts during the entire term of this Agreement.


 


13.20 Representations by the Lenders and Swing Line Lender.


 


Each Lender and the Swing Line Lender represents that it is such Person’s present intention, as of the date of its acquisition of its Notes, to acquire such Notes for its account or for the account of its affiliates, and not with a view to the distribution or sale thereof, and, subject to any applicable laws, the disposition of such Lender’s or the Swing Line Lender’s property shall at all times be within its control. The Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be transferred, sold or otherwise disposed of except (a) in a registered offering under the Securities Act; (b) pursuant to an exemption from the registration provisions of the Securities Act; or (c) if the Securities Act shall not apply to the Notes or the transactions contemplated by the Financing Documents. Nothing in this Section 13.20 shall affect the characterization of the Loans, the Swing Line Loans and the transactions contemplated hereunder as commercial lending transactions.


 


13.21 Counterparts and Facsimile Signatures.


 


This Agreement, any other Financing Document and any subsequent amendment to any of them may be executed in several counterparts and by the different parties on separate counterparts, each of which together shall be construed as one original and all of which shall constitute together but one and the same agreement.  Facsimile signatures on this Agreement, any other Financing Document and any subsequent amendment to any of them shall be considered as original signatures.


 






  





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13.22 Set-off.


 


The Borrower gives and confirms to each Lender and each Issuer a right of set-off of all moneys, securities and other property of the Borrower (whether special, general or limited) and the proceeds thereof, at any time delivered to remain with or in transit in any manner to such Lender or Issuer, its correspondent or its agents from or for the Borrower, whether for safekeeping, custody, pledge, transmission, collection or otherwise or coming into possession of such Lender or Issuer in any way, and also, any balance of any deposit accounts and credits of the Borrower with, and any and all claims of security for the payment of the Liabilities owed by the Borrower to such Lender or Issuer, contracted with or acquired by the Lender or Issuer, whether such liabilities and obligations be joint, several, absolute, contingent, secured, unsecured, matured or unmatured, and the Borrower authorizes such Lender or Issuer at any time or times, without prior notice, to apply such money, securities, other property, proceeds, balances, credits of claims, or any part of the foregoing, to such liabilities in such amounts as it may select, whether such Liabilities be contingent, unmatured or otherwise, and whether any collateral security therefor is deemed adequate or not. Each Lender and each Issuer agrees to notify the Agent promptly after any such setoff and application made by such Lender or Issuer; provided, however, that the failure to give such notice shall not affect the validity of such setoff and application. The rights described herein shall be in addition to any collateral security described in any separate agreement executed by the Borrower and any other right of setoff under applicable law or otherwise which each Lender and each Issuer may have.


 


13.23 Assignments and Participation.


 


(a) After the Restatement Date and (except in the case of an assignment by a Lender or the Swing Line Lender to one or more of its affiliates) subject to the prior written consent of the Agent and (so long as no Default or Matured Default shall have occurred and be continuing) the Borrower, which consent(s) shall not be unreasonably withheld, each Lender and the Swing Line Lender may assign to any Person (the “Assignee”) all or a portion of its rights and obligations under this Agreement (including without limitation, all or a portion of its Commitment and the Notes and/or Swing Line Note held by it); provided, however, that (i) each such assignment shall be of a constant, and not a varying, percentage of all of the assigning Lender’s rights and obligations under this Agreement, (ii) the total amount of the Commitment (based on the original Commitment without giving effect to any repayments or prepayments) so assigned to an Assignee or to an Assignee and its affiliates taken as a whole shall equal or exceed $5,000,000, (iii) the remaining Commitment (based on the original Commitment without giving effect to any repayments or prepayments) held by the assigning Lender after giving effect to any such assignment shall equal or exceed $5,000,000, (iv) the assignment will not cause the Borrower to incur any additional liability or expense and (v) the parties to each such assignment shall execute and deliver to the Agent for its acceptance an Assignment and Acceptance in substantially the form attached as Exhibit 13A (“Assignment and Acceptance”), together with any Note or Notes to be exchanged in connection with such assignment and a processing and recordation fee of $3,500 to the Agent.  Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be the date on which such Assignment and Acceptance is accepted by the Agent, (vi) the


 






  





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Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender under the Financing Documents and (vii) the Lender assignor thereunder shall be deemed to have relinquished its rights and to be released from its obligations under the Financing Documents, to the extent (and only to the extent) that its rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under the Financing Documents, such Lender shall cease to be a party thereto).


 


(b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows:  (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Financing Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Financing Documents or any other instrument or document furnished pursuant thereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under the Financing Documents, the Security Documents or any other instrument or document furnished pursuant hereto; (iii) such Assignee confirms that it has received a copy of the Financing Documents, together with copies of the financial statements referred to in Section 7.16 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such Assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender or Issuer or Swing Line Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such Assignee appoints and authorizes the Agent to take such action as the Agent on its behalf and to exercise such powers under the Financing Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; and (vi) such Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Financing Documents are required to be performed by it as a Lender.


 


(c) The Agent shall maintain at its address referred to in Section 13.18 a copy of each Assignment and Acceptance delivered to and accepted by it.


 


(d) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender, together with any Note or Notes subject to such assignment, the Agent shall, if such Assignment and Acceptance has been completed, (i) accept such Assignment and Acceptance and (ii) give prompt notice thereof to the Borrower. Within five (5) Business Days after its receipt of such notice, the Borrower, at its own expense, shall execute and deliver to the Agent in exchange for the surrendered Note a new Note to the order of such Assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a


 






  





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Commitment hereunder, a new Note to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit 2A or Exhibit 2B, as the case may be.  Upon the Agent’s receipt of such new Note or Notes conforming to the requirements set forth in the preceding sentences, the Agent shall return to the Borrower such surrendered Note or Notes, marked to show that such surrendered Note or Notes has (have) been replaced, renewed and extended by such new Note or Notes.


 


(e) Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement (including without limitation, all or a portion of its Commitment and the Notes held by it); provided however, that (i) such Lender’s obligations under this Agreement (including without limitation, its Commitments to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of this Agreement, (iv) the sale of the participation will not cause the Borrower to incur any additional liability, and (v) the Borrower, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement, provided that no participant shall be entitled to recover under the above-described provisions an amount in excess of the proportionate share which such participant holds of the original aggregate principal amount hereunder to which the assigning Lender would otherwise be entitled.  Notwithstanding the foregoing, in the case of participations sold to members of the Farm Credit System (a “Farm Credit System Participant”), with the written consent of the Agent and the Borrower and provided that such participation is not less than $10,000,000, such participant shall have the right to vote (each, a “Farm Credit System Voting Participant”) on any matter which requires the consent of the Lenders.  For purposes of voting, such Farm Credit System Voting Participant shall receive voting rights in proportion to the interest purchased, and the voting right percentage of the Lender selling the participation shall be correspondingly reduced.  The initial list of Farm Credit System Voting Participants is set forth on Exhibit 13B.  In the case of such participations to Farm Credit System Voting Participants, the Lender selling such participation shall promptly provide to the Agent a Voting Participant Notice and Consent in the form of Exhibit 13C.


 


(f) Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 13.23, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree in writing to preserve the confidentiality of any confidential information relating to the Borrower received by it from such Lender.


 


(g) Any Lender may assign and pledge all or any of the instruments held by it as collateral security; provided that any payment made by the Borrower for the benefit


 






  





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of such assigning and/or pledging Lender in accordance with the terms of the Financing Documents shall satisfy the Borrower’s obligations under the Financing Documents in respect thereof to the extent of such payment. No such assignment and/or pledge shall release the assigning and/or pledging Lender from its obligations hereunder.


 


13.24 Loan Agreement Controls.


 


If there are any conflicts or inconsistencies among this Agreement and any of the other Financing Documents, the provisions of this Agreement shall prevail and control.


 


13.25 Obligations Several.


 


Each Lender’s, each Issuer’s, the Agent’s and the Swing Line Lender’s obligations under each Financing Document to which it is a party are several, and no Lender, Issuer, Agent or Swing Line Lender shall be responsible for any obligation or Commitment of any other such Person under any Financing Document to which it is a party. Nothing contained in any Financing Document to which it is a party, and no action taken by any Lender, Issuer, Agent or Swing Line Lender pursuant thereto, shall be deemed to constitute such Persons (or any of them) as a partnership, an association, a joint venture, or any other kind of entity.


 


13.26 Pro Rata Treatment.


 


All Loans under, and all payments and other amounts received in connection with this Agreement for application to the Loans (including, without limitation, amounts received as a result of the exercise by any Lender of any right of set-off) shall be effectively shared by the Lenders ratably in accordance with their respective pro rata shares of the relevant type of Loan. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the principal of, or interest on, or fees in respect of, any Note held by it (other than pursuant to Section 5.2, 5.3 or 5.4) in excess of its pro rata share of payments on account of similar Notes obtained by all the Lenders, such Lender shall purchase from the other Lenders such participation in the Notes or Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (a) the amount of such Lender’s required repayment to (b) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. Disproportionate payments of interest shall be shared by the purchase of separate participation in unpaid interest obligations, disproportionate payments of fees shall be shared by the purchase of separate participation in unpaid fee obligations, and disproportionate payments of principal shall be shared by the purchase of separate participation in unpaid principal obligations. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 13.26 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. Notwithstanding the foregoing, a Lender may receive and


 






  





90











  








retain an amount in excess of its pro rata share of the relevant type of Loan to the extent, but only to the extent, that such excess results from such Lender’s Highest Lawful Rate exceeding another Lender’s Highest Lawful Rate.


 


13.27 Confidentiality.


 


Each of the Agent, the Issuers, the Swing Line Lender and the Lenders agrees that it will use its best efforts to keep confidential, in accordance with its customary procedures for handling confidential information and in accordance with safe and sound banking practices, any proprietary information of the Borrower identified in writing by the Borrower to the Agent, as being proprietary and confidential; provided that the Agent, any Issuer, the Swing Line Lender or any Lender may disclose any such information  (a) to enable it to comply with any Governmental Requirement applicable to it, (b) in connection with the defense of any litigation or other proceeding brought against it arising out of the transactions contemplated by this Agreement and the other Financing Documents, (c) in connection with the supervision and enforcement of the rights and remedies of the Agent, the Issuers, the Swing Line Lender and/or the Lenders under any Financing Document and (d) as set forth in Section 13.23(f).


 


13.28 Independence of Covenants.


 


All covenants under Section 10 shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of a Default or a Matured Default if such action is taken or condition exists.


 


13.29 Amendments and Waivers; Commitment Increases.


 


Any term, covenant, agreement or condition of this Agreement or any Financing Document may be amended only by a written amendment executed by the Borrower, the Required Lenders and, if the rights or duties of the Agent are affected thereby, the Agent, or compliance therewith only may be waived (either generally or in a particular instance and either retroactively or prospectively), if the Borrower shall have obtained the consent in writing of the Required Lenders (or in the case of provisions relating to any Bond Document, any Bond Document or the Bond Pledge Agreement, the Agent without necessity of consent of the Required Lenders) and, if the rights or duties of the Agent, Swing Line Lender and/or an Issuer are affected thereby, such Person; provided, however, that without the consent in writing of the holders of all outstanding Notes and LC Obligations, or of all Lenders and the Swing Line Lender if no Notes or LCs are outstanding, no such amendment or waiver shall (a) change the amount or postpone the date of payment of any scheduled payment or required payment of principal of the Notes or reduce the rate or extend the time of payment of interest on the Notes, or reduce the amount of principal thereof, or modify any of the provisions of the Notes with respect to the payment or prepayment thereof, (b) give to any Note any preference over any other Notes, (c) amend the definition of Required Lenders, (d) alter, modify or amend the provisions of this Section 13.29, (e) change the amount or term of any of the Commitments or the fees required under Section 6, (f) alter, modify or amend the provisions of Section 8 of this Agreement, (g) alter, modify or amend any Lender’s right hereunder to consent to any action, make any request or give any notice, or (h) release all or substantially all of the Collateral


 






  





91











  








(except such Collateral relating to the Bond Documents, which release shall be at the Agent’s sole discretion), unless such release is permitted by the Financing Documents.  Any such amendment or waiver shall apply equally to all Lenders and all the holders of the Notes and/or LC Obligations and shall be binding upon them, upon each future holder of any Note or LC Obligation and upon the Borrower, whether or not such Note or LC shall have been marked to indicate such amendment or waiver.  No such amendment or waiver shall extend to or affect any obligation not expressly amended or waived.  Notwithstanding the foregoing, the Borrower may increase the Line of Credit Loan Commitment and the aggregate outstanding principal amount of the Term Loans from time to time by obtaining applicable commitments from one or more Lenders (or from other lenders reasonably acceptable to the Agent) so long as (a)  no Default or Matured Default shall have occurred and be continuing, (b) the Borrower shall be in pro forma compliance (based on assumptions and projections acceptable to the Agent) with the financial covenants set forth in Sections 9.16, 9.17 and 9.18 after giving effect to such increase, (c) the cumulative increase in the sum of the Line of Credit Loan Commitment and the Term Loan Commitment may not exceed $100,000,000 and (d) an amendment to this Agreement, in form satisfactory to the Agent, that amends the definition of “Line of Credit Loan Commitment” and Exhibit 1A to reflect such increase and that includes provisions to cause any outstandings relating to the Line of Credit Loans or the Term Loans to be held by the Lenders on a ratable basis after giving effect to the relevant increase, shall have been executed and delivered by the Borrower and the Agent.  Additionally, all new Term Loans and Line of Credit Loans disbursed pursuant to any increase made under this Section 13.29 shall have the same Maturity Date as the previously outstanding Term Loans and Line of Credit Loans (as the case may be) and all the economic terms of the new Term Loans and Line of Credit Loans (as the case may be), including the interest margin, yield and fees applicable thereto, shall not be more favorable to the incremental lenders than the terms of the existing Loans for the Lenders.


 


13.30 Binding Effect.


 


This Agreement and the other Financing Documents set forth the legal, valid and binding obligations of the Borrower, the Agent, the Issuers, the Swing Line Lender and the Lenders and are enforceable against the Borrower in accordance with their respective terms.


 


13.31 FINAL AGREEMENT.


 


THIS WRITTEN AGREEMENT, THE NOTES AND THE OTHER FINANCING DOCUMENTS COLLECTIVELY REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.


 


13.32 [Intentionally Omitted.]


 


13.33 USA Patriot Act Notice.


 


Each Lender, each Issuer, the Swing Line Lender and the Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA


 






  





92











  








Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the Borrower’s name and address and other information that will allow such Lender, such Issuer, the Swing Line Lender or the Agent, as applicable, to identify the Borrower in accordance with the Act.


 


13.34 Subsidiaries.


 


Each Subsidiary party hereto, by its signature hereto, makes each representation and warranty in the Financing Documents made by the Borrower with respect to it.  Furthermore, each Subsidiary party hereto, by its signature hereto, covenants and agrees that, until the Liabilities are paid in full, and the Commitments, all LCs and all other obligations of the Agent, the Issuers, the Swing Line Lender and the Lenders hereunder are finally terminated, such Subsidiary will perform and observe all terms, covenants and agreements applicable to it set forth in the Financing Documents.


 


13.35 Amendment and Restatement; Renewal Notes.


 


This Agreement amends and restates in its entirety the Existing Credit Agreement.  This Agreement does not constitute and shall not be construed to evidence a novation of or a payment and readvance of any of the Liabilities (as defined in the Existing Credit Agreement), it being the intention of the parties hereto that this Agreement is an amendment and restatement (but not an extinguishment) of the Existing Credit Agreement.  From and after the date hereof, except as the context otherwise provides, (a) all references to the Existing Credit Agreement (or to any amendment, supplement, modification or amendment and restatement thereof) in the Financing Documents (other than this Agreement) and the use of the words “thereunder”, “thereof”, or words of similar import when referring to the Existing Credit Agreement shall be deemed to refer to this Agreement, (b) all references to any Article, Section (or clause) of the Existing Credit Agreement in any Financing Document (other than this Agreement) shall be amended to become mutatis mutandis, references to the corresponding provisions of this Agreement and (c) all references to this Agreement herein (including for purposes of indemnification and reimbursement of fees) shall be deemed to be references to this Agreement as the same may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time pursuant to the terms of this Agreement.  The Borrower reaffirms the Liens granted pursuant to the Security Documents to the Agent for the benefit of the Agent, the Issuer, the Lenders, the Swap Parties and any other Person, which Liens shall continue in full force and effect during the term of this Agreement and any renewals or extensions thereof.  The Notes have been given in renewal, extension and modification of the promissory notes delivered in connection with the Existing Credit Agreement.


 


{SIGNATURE PAGES FOLLOW}











  





93











  













IN WITNESS WHEREOF, the parties have executed this Agreement as of the day first written above.


 





	  	
BORROWER:


	  	  
	  	
NATIONAL BEEF PACKING


	  	
COMPANY, LLC







 



	  	
By:


Name:    


Title:   

	
 /s/ Jay D. Nielsen                 


Jay D. Nielsen


Chief Financial Officer







 



	  	  
	  	
SUBSIDIARY LOAN PARTIES:


	  	  
	  	
NATIONAL BEEF CALIFORNIA, LP


	  	  
	  	
By:  NATIONAL CARRIERS, INC.,


its General Partner







 




	  	
By:


Name:    


Title:   

	
 /s/ Jay D. Nielsen                 


Jay D. Nielsen


Chief Financial Officer









 



	  	  
	  	
NATIONAL CARRIERS, INC.







 




	  	
By:


Name:    


Title:   

	
 /s/ Jay D. Nielsen                 


Jay D. Nielsen


Chief Financial Officer









 






{SIGNATURE PAGE ONE OF THREE TO AMENDED


 


AND RESTATED CREDIT AGREEMENT}


 







85589953


National Beef Packing Company Credit Agreement









  





  











  






 




	  	
LENDERS:


	  	  
	  	
COBANK, ACB, individually and as


	  	
Lead Arranger, Swing Line Lender


	  	
and Administrative Agent


	  	  
	  	
 
By: James Matzat




	  	
Its: Vice President


	  	  
	  	
BANK OF AMERICA, N.A., individually and as Syndication Agent


	  	  
	  	
By: /s/ Daniel J. Ricke


	  	
Its: Vice President


	  	  
	  	  
	  	
BANK OF MONTREAL, individually and as Syndication Agent


	  	  
	  	
 
By: /s/ Manuel Diaz




	  	
 
Its: Vice President




	  	  
	  	
COÖPERATIEVE CENTRALE RAIFFEISEN BOERENLEENBANK B.A., “RABOBANK NEDERLAND”, NEW YORK BRANCH, individually and as Documentation Agent


	  	  
	  	
By: /s/ D. Shane Bounds


	  	
 
Its: Executive Director




	  	  
	  	  
	  	
 
By: /s/ Rebecca O. Morrow




	  	
 
Its: Executive Director                                                       
















{SIGNATURE PAGE TWO OF THREE TO AMENDED


 


AND RESTATED CREDIT AGREEMENT}


 







85589953


National Beef Packing Company Credit Agreement









  





  











  













 









	  	  
	  	
U.S. BANK NATIONAL ASSOCIATION, individually and as Documentation Agent


	  	  
	  	
By: /s/ Thomas L. Martin


	  	
 
Its: Senior Vice President                  




	  	  
	  	  
	  	
WELLS FARGO BANK, NATIONAL ASSOCIATION


	  	  
	  	
 
By: /s/ John R. Carley




	  	
 
Its: Vice President




	  	  
	  	  
	  	
UMB BANK, N.A.


	  	  
	  	
 
By: /s/ Thomas E. Brusnahan




	  	
 
Its: Community Bank President




	  	  
	  	  
	  	
AMERICAN AGCREDIT, PCA


	  	  
	  	
 
By: /s/ Gary Van Schuyver




	  	
Its: Vice President


	  	  






























{SIGNATURE PAGE THREE OF THREE TO AMENDED


 


AND RESTATED CREDIT AGREEMENT}


 












85589953


National Beef Packing Company Credit Agreement




  





  











  








Exhibit 1A to


 


Amended and Restated


 


Credit Agreement


 







Loan Commitment Amounts and Percentages







Swing Line Loan Commitments








	
Name of Lender

	
Pro Rata Percentage

	
Commitment Amount


	
CoBank, ACB

	
100.000000000%

	
$30,000,000.00 (Swing Line Loans)












Line of Credit Loan Commitments








	
Name of Lender

	
Pro Rata Percentage

	
Commitment Amount


	
CoBank, ACB

	
55.200000000%

	
$138,000,000.00


	
Bank of America, N.A.

	
8.000000000%

	
$20,000,000.00


	
Bank of Montreal

	
8.000000000%

	
$20,000,000.00


	
Rabobank Nederland

	
8.000000000%

	
$20,000,000.00


	
U.S. Bank National Association

	
8.000000000%

	
$20,000,000.00


	
Wells Fargo Bank, National Association

	
8.000000000%

	
$20,000,000.00


	
UMB Bank, N.A.

	
3.200000000%

	
$8,000,000.00


	
American AgCredit, PCA

	
1.600000000%

	
$4,000,000.00


	  	  	  
	
TOTAL:

	
100.000000000%

	
$250,000,000.00












Term Loan Commitments








	
Name of Lender

	
Pro Rata Percentage

	
Commitment Amount


	
CoBank, ACB

	
55.200000000%

	
$207,000,000.00


	
Bank of America, N.A.

	
8.000000000%

	
$30,000,000.00


	
Bank of Montreal

	
8.000000000%

	
$30,000,000.00


	
Rabobank Nederland

	
8.000000000%

	
$30,000,000.00


	
U.S. Bank National Association

	
8.000000000%

	
$30,000,000.00


	
Wells Fargo Bank, National Association

	
8.000000000%

	
$30,000,000.00


	
UMB Bank, N.A.

	
3.200000000%

	
$12,000,000.00


	
American AgCredit, PCA

	
1.600000000%

	
$6,000,000.00


	  	  	  
	
TOTAL:

	
100.000000000%

	
$375,000,000.00






















85589953.12                                                                 1-A-2