Document:

exv10w2

Exhibit 10.2 

STOCK OPTION CANCELLATION AGREEMENT

          THIS
STOCK OPTION CANCELLATION AGREEMENT (the “Agreement”) is made and entered into as of               
      
              
             
                                 ,          
           2009 (the “Effective Date”), by and between
                                                            (the “Optionee”) and Quiksilver, Inc., a Delaware corporation
(the “Corporation”).

WITNESSETH:

          WHEREAS, the Corporation has previously granted to Optionee stock options to purchase shares
of the Corporation’s common stock pursuant to the Quiksilver 2000 Stock Incentive Plan (As Amended
and Restated through February 5, 2009) (the “2000 Plan”) and/or the Quiksilver, Inc. 1996 Stock
Option Plan (the “Options”); and

          WHEREAS, the Optionee believes it to be in the Optionee’s best interest as an officer of the
Corporation and in the best interest of the Corporation and its shareholders to surrender and
cancel certain outstanding Options that the Optionee presently holds and are identified on Exhibit
A hereto (the “Exhibit A Options”), so that additional shares become available under the 2000 Plan
which the Corporation may use for future stock option grants to Corporation personnel in order to
recruit, retain and motivate such personnel; and

          WHEREAS, the Optionee desires to surrender the Exhibit A Options for cancellation without
receiving any cash, stock options or other consideration and without any expectation to receive,
and without imposing any obligation on the Corporation to pay or grant, any cash, stock options or
other consideration presently or in the future in regard to the cancellation of such Exhibit A
Options; and

          WHEREAS, the Corporation is relying upon the Optionee’s surrender and cancellation of the
Exhibit A Options in making determinations about the future grant of stock options pursuant to the
2000 Plan and otherwise in regard to the administration of the 2000 Plan.

          NOW, THEREFORE, the Optionee and the Corporation hereby agree as follows:

     1. Surrender and Cancellation of Options. The Optionee hereby surrenders the Exhibit
A Options, and the Corporation hereby accepts such surrender and cancellation, effective as of the
Effective Date.

     2. No Expectations or Obligations. The Optionee and the Corporation acknowledge and
agree that the surrender and cancellation of the Exhibit A Options described herein shall be
without any expectation of the Optionee to receive, and without imposing any obligation on the
Corporation to pay or grant, any cash, stock options or other consideration presently or in the
future in regard to the cancellation of such Exhibit A Options.

     3. Reliance. The Optionee acknowledges and agrees that the Corporation is relying on
the provisions of Sections 1 and 2 herein in connection with the administration of the 2000 Plan
including, without limitation, determinations regarding the nature of future grants thereunder.

 

 

     4. Successor and Assigns. This Agreement shall inure to the benefit of, and be
binding upon, the Corporation and its successors and assigns and the Optionee and the Optionee’s
successor and assigns.

     5. Governing Law. The interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of California without resort to the State’s
conflict-of-laws rules.

     6. Counterparts. This Agreement may be executed in several counterparts and all
documents so executed shall constitute one agreement, binding on each of the parties hereto,
notwithstanding that both of the parties did not sign the original or the same counterparts.

     7. Headings. The section and other headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning and interpretation of this
Agreement.

     8. Severability. Nothing contained herein shall be construed to require the commission
of any act contrary to law. Should there be any conflict between any provisions hereof and any
present or future statute, law, ordinance, regulation or other pronouncement having the force of
law, the latter shall prevail, but the provision of this Agreement affected thereby shall be
curtailed and limited only to the extent necessary to bring it within the requirements of the law,
and the remaining provisions of this Agreement shall remain in full force and effect.

     9. Entire Agreement. This Agreement contains all of the terms and conditions agreed
upon by the parties relating to the subject matter hereof and supersedes any and all prior and
contemporaneous agreements, negotiations, correspondence, understanding and communications of the
parities, whether oral or written, with respect to the subject matter hereof.

2

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

	 	 	 	 	 
	 	 	QUIKSILVER, INC.
 	 
	 
	 	 	By:  	 
	 	 	 	 
	 	 	Title: 	 
	 	 	 	 
	 
	 	 	OPTIONEE
 	 
	 
	 	 	By:  	 
	 	 	 	 
	 	 	Address: 	 
	 	 	 	 

3

 

	 	 	 	 	 

EXHIBIT A

Name of Optionee:   
             
             
            
             
         
           

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Number of Shares	 	Per Share
	Plan Name	 	Date of Grant	 	Subject to Option	 	Exercise Price

4Exhibit 10.1

 

 

 

 

 

 

 

 

 

AMENDED AND RESTATED CREDIT AGREEMENT

 AND SECURITY AGREEMENT

(Term Loan –
Tranche A and Tranche B)

 

by and between

 

COBANK, ACB,

as Agent and as a Syndication Party,

 

 

and

 

 

U.S. PREMIUM BEEF, LLC.

 

 

 

Dated as of June 22,
2009

 

 

 

 

 

 

 

 

	

 

 

 

 

 

 

 

 

AMENDED AND RESTATED
CREDIT AGREEMENT

AND SECURITY
AGREEMENT

(Term Loan –
Tranche A and Tranche B)

 

THIS AMENDED AND RESTATED
CREDIT AGREEMENT AND SECURITY AGREEMENT (“Credit Agreement”) is entered into as
of June 22, 2009, by and between COBANK, ACB a federally chartered
instrumentality of the United States (“CoBank”) for its own benefit as a lender
(in that capacity sometimes referred to as “CoBank”) and, as Agent Bank for the
benefit of the present and future Syndication Parties (in that capacity
“Agent”), and U.S. PREMIUM BEEF, LLC, a Delaware limited liability
company (“Borrower”).

Borrower and CoBank as Agent
and, presently, the sole Syndication Party, are parties to the Credit Agreement
dated November 25, 1997, as amended by the First through Ninth Amendments thereto
(the "Prior Agreement") whereby CoBank (as the Agent and a Syndication
Party), and the other Syndication Parties, agreed to make loans, advances,
extensions of credit and/or other financial accommodations to or for the
benefit of Borrower.  Borrower has requested that the Prior Agreement be
amended and restated to provide for the continuation of the existing loans,
additional loans, advances, extensions of credit and/or other financial
accommodations, and the Syndication Parties are willing to do so on the
following terms and conditions.

ARTICLE
1.  DEFINED TERMS.

As used in this Credit
Agreement, the following terms shall have the meanings set forth below (and
such meaning shall be equally applicable to both the singular and plural form
of the terms defined, as the context may require):

Additional Costs: 
shall have the meaning set forth in Section 17.12.

Advance Payment:  shall have the meaning set
forth in Subsection 16.2.

Aggregate
Commitment: 
shall be in the initial amount of $15,316,763.34 (reducing with
the reductions in the Tranche A Commitment and the Tranche B Commitment) comprised of:
(a) a fully funded
Tranche A Commitment in the initial amount of $2,316,763.34, and
reducing with each payment of principal on the Tranche A Loan(s), and (b) a partially funded Tranche B
Commitment in
the initial amount of $13,000,000.00, and reducing to $10,000,000
on May 31, 2010.

 

 

 

	

 

 

 

 

 

Applicable
Margin:

(a) With respect to the Tranche
A Loan(s), the rates per annum set forth below for the then applicable
“Leverage Ratio” referenced in the first column below (each being called a
“Leverage Ratio Level”):

		
			
			Leverage
  Ratio Level
	
			
			Leverage
  Ratio
	
			
			Base
  Rate 
Loans
	
			
			LIBOR
  Rate 
Loans

	
			Level
  1
	
			Greater
  than or equal to 2.75 to 1.0 
	
			0.50%

				
			2.75%

			
	
			Level
  2
	
			Less
  than 2.75 to 1.0 but greater than or equal to 2.25 to 1.0 
	
			0.25%

				
			2.50%

			
	
			Level
  3
	
			Less
  than 2.25 to 1.0 but greater than or equal to 1.75 to 1.0
	
			0.00%

				
			2.25%

			
	
			Level
  4
	
			Less
  than 1.75 to 1.0 but greater than or equal to 1.25 to 1.0
	
			0.00%

				
			2.00%

			
	
			Level
  5
	
			Less
  than 1.25 to 1.0
	
			0.00%

				
			1.75%

			

 

The initial Leverage Ratio
Level shall be Level 2 until after the National Beef Leverage Ratio Certificate
as of the end of the current fiscal year of National Beef has been delivered. 
Each National Beef Leverage Ratio Certificate shall be delivered not later than
120 days after the end of each fiscal year of National Beef.  The Base Rate
Loans Applicable Margin and the LIBOR Rate Loans Applicable Margin shall be
determined pursuant to the table above based on the National Beef Leverage
Ratio, as of the end of each fiscal year of National Beef, with such Applicable
Margins effective as of the fifth Business Day after Agent’s receipt of a
certificate executed by National Beef’s chief financial officer setting forth
the National Beef Leverage Ratio for such fiscal year and including the
detailed calculation thereof and a copy of the audited financial statement of
National Beef (“National Beef Leverage Ratio Certificate”) ( and it being
expressly understood that the LIBOR Rate Loans Applicable Margin once set for a
LIBOR Rate Loan will not change during the LIBOR Rate Interest Period); and

 

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(b) With respect to the Tranche
B Loan(s), the rates per annum set forth below (subject to automatic amendment
as set forth below) for the then applicable “Borrowing Base Availability Level”
referenced in the first column below (each being called a “Borrowing Base
Availability Level”):

		
			
			Borrowing
  Base 
Availability Level
	
			Average Amount of 
Borrowing Base Availability

				
			
			Base
  Rate 
Loans
	
			
			LIBOR
  Rate 
Loans

	
			Level
  1
	
			Greater than or equal to $150,000,000 
	
			2.00%

				
			3.00%

			
	
			Level
  2
	
			Less than $150,000,000 but greater than or equal to
  $50,000,000 
	
			2.25%

				
			3.25%

			
	
			Level
  3
	
			Less than $50,000,000
	
			2.75%

				
			3.75%

			

 

The initial Borrowing Base
Availability Level shall be Level 2 until the Borrowing Base Certificate is
required to be delivered by National Beef in October 2009.  The Agent will
review National Beef’s Borrowing Base Certificates to determine the amount of
Borrowing Base Availability on the Borrowing Base measurement date referenced
in National Beef's current Borrowing Base Certificate.  Any change in the
Borrowing Base Availability will be effective five (5) days after receipt from
National Beef of the relevant Borrowing  Base Certificate; provided,
however,
that if National Beef’s Borrowing Base Certificate is not delivered on a timely
basis in accordance with Section 9.1 of the National Beef Credit
Agreement, the Agent may, at its option, deem the Borrowing Base Availability
Level to be Level 3 until ten (10) Business Days after the Agent’s receipt from
National Beef of such Borrowing Base Certificate.  Notwithstanding the
foregoing, if at any time while any Tranche B Loan(s) remains outstanding, any
Borrowing Base Certificate, financial statement or compliance certificate
delivered by National Beef is shown to be inaccurate, and such inaccuracy, if
it had been corrected prior to such delivery, would have caused the application
of a higher Applicable Margin for any period than the Applicable Margin that
was actually applied for such period, then (i) within five (5) Business Days of
discovery or notice of discovery of such inaccuracy National Beef shall deliver
to the Agent for distribution to the Syndication Parties a corrected Borrowing
Base Certificate, financial statement or compliance statement for such period,
(ii) the Applicable Margin for such period shall be recalculated and applied as
if the higher Applicable Margin had originally been applicable, and (iii)
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 Syndication Parties under this Credit Agreement. 
In the event that the National Beef Credit Agreement is amended to change the
table set forth in the definition of Applicable Margin related to Line of
Credit Loans, then the preceding table in this Agreement shall be deemed to be
amended correspondingly, effective at the same time as such amendment to the
National Beef Credit Agreement is effective.

3

	

 

 

 

 

 

 

Authorized
Officer:  shall
have the meaning set forth in Subsection 11.1.5.

Availability
Period: 
shall have the meaning set forth in Section 4.1.

Bank Debt:  all amounts owing under any
Note, fees, Borrower's obligations to purchase CoBank Equity Interests, Funding
Losses and all interest, expenses, charges, and other amounts payable by
Borrower pursuant to the Loan Documents.

Base Rate:  a rate per
annum announced by the Agent on the first Business
Day of each week, which shall be the higher 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 Loans:  Loans with respect to which
the interest rate is determined by reference to the Base Rate.

Borrowing
Base Availability: at any time, an amount (if positive) equal to (a) the
Borrowing Base, as determined in accordance with the National Beef Credit
Agreement minus (b) the sum of (i) the aggregate outstanding principal amount
of the Line of Credit Loans outstanding under the National Beef Credit
Agreement, (ii) the aggregate outstanding amount of the LC Obligations
outstanding under the National Beef Credit Agreement and (iii) the aggregate
outstanding principal amount of the Swing Line Loans outstanding under the National
Beef Credit Agreement.

Borrowing
Base Availability Level: shall have the meaning set forth in the
definition of Applicable Margin.

Borrowing
Base Certificate: a certificate issued by National Beef in substantially
the form set forth in the National Beef Credit Agreement, signed as indicated
thereon, setting forth the amount of National Beef’s Borrowing Base as
determined in accordance with the National Beef Credit Agreement.

Borrower
Benefit Plan:  shall have the meaning set forth in Section 10.11.

 

4

	

 

 

 

 

 

Borrower
Pension Plan:  a Borrower Benefit Plan that is an “employee pension benefit
plan” as defined in Section 3(2) of ERISA that is intended to satisfy the
requirements of Section 401(a) of the Code. 

Borrower’s
Real Property:  shall have the meaning set forth in Section 10.13.

Business
Day:  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 Loans, a day on
which dealing in Dollar deposits is occurring among banks in the London interbank
market.

Cattle
Purchase and Sale Agreement: The agreement entitled Cattle Purchase and
Sale Agreement dated December 1, 1997 by and between Farmland National Beef
Packing Company, L.P., a Delaware limited partnership (now National Beef) and
U.S. Premium Beef, Ltd., a Kansas cooperative corporation (now Borrower)
whereby National Beef agrees to purchase cattle from Borrower.

Change
in Law:  shall have the meaning set forth in Subsection 5.2.2.

Closing
Date:  the date of this Credit Agreement.

CoBank Equity
Interests:  shall have the meaning set forth in Article 8 hereof.

Code: 
shall have the meaning set forth in Section 10.11.

Collateral: 
shall have the meaning set forth in Section 9.1. 

Compliance
Certificate:  a certificate of the treasurer of Borrower in form and
substance reasonably acceptable to Agent.

Contributing
Syndication Parties:  shall have the meaning set forth in
Section 16.4.

 

5

	

 

 

 

 

 

Debt:
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 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; and (e) all Guaranty Obligations of such Person in respect
of any of the foregoing.

Debt
Service Coverage Ratio:  for any consecutive four Fiscal Quarters (a)
net income (i) plus depreciation and amortization, and (ii) plus cash
distributions received from National Beef, (iii) less (A) the following, as
permitted under Section 13.11 hereof: retirements of equity (in the form of the
payment of patronage notices), and tax distributions, and (B) earnings from
National Beef, (b) divided by the total scheduled principal payments made on
all Debt during such period.  For purposes of this definition, (x) cash
distributions received from National Beef calculated for each Fiscal Quarter
shall include, but without duplication in the following Fiscal Quarter, those
cash distributions received from National Beef up to and including the last day
of such Fiscal Quarter; and (y) the results of operations of National Beef
shall not be included in any calculations required, notwithstanding any provision
of GAAP to the contrary.

Default
Interest Rate:  a rate of interest equal to 200 basis points in
excess of the rate or rates of interest otherwise being charged on the Loans.

Delinquency
Interest:  shall have the meaning set forth in Section 16.4.

Delinquent
Amount:  shall have the meaning set forth in Section 16.4.

Delinquent
Syndication Party:  shall have the meaning set forth in
Section 16.4. 

Delivery Agreement(s):  the agreements entered into
by and between Borrower and its producers whereby Borrower agrees to market,
and the producer agrees to deliver, one head of cattle for each Class A unit
owned by the producer at or during specified delivery periods, substantially in
the form and substance of the documents designated “Uniform Cattle Delivery and
Marketing Agreement (Even Slots)” and “Uniform Cattle Delivery and Marketing
Agreement (Odd Slots)” and attached hereto as Exhibit 1.29(a) and Exhibit
1.29(b), respectively.

Dollar(s)
and $: lawful currency of the United States of America

 

6

	

 

 

 

 

 

EBITDA:
for any period of determination, the consolidated net income of National Beef,
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) 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. Payments made under the Water Services Agreement (as
defined in the National Beef Credit Agreement) shall be treated as operating
expenses for the purposes of calculating EBITDA.

Environmental
Laws:  the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended, 42 U.S.C. 9601-9657 (“CERCLA”) and the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901-6987 (“RCRA”).

Environmental
Regulations:  as defined in the definition of Hazardous Substances.

ERISA: 
shall have the meaning set forth in Section 10.11.

Event of
Default:  shall have the meaning set forth in Section 15.1.

Fiscal
Quarter: the period of approximately three months ending on the last
Saturday in August, November, February and May of each calendar year and
beginning on the following day.

Fair Market Value: 
a valuation as determined in a written appraisal from an MAI certified
appraiser or by such other method as shall be agreed upon by Borrower and
Agent.

Funded
Debt: for any date of determination, the then outstanding principal
amount of all of National Beef’s consolidated interest-bearing Debt (including
without limitation, capitalized leases) plus the then undrawn amount of all
outstanding letters of credit (including without limitation, the LCs);
provided, however, that (i) LC’s or indemnity obligations issued to support
other Debt shall not be included in Funded Debt to the extent that such other
Debt is, itself, included in Funded Debt; (ii) National Beef’s Debt under the
Water Services Agreement (as defined in the National Beef Credit Agreement) shall
not be included in Funded Debt; (iii) National Beef’s Class A or Class B Units
subject to redemption rights shall not be included in Funded Debt; and (iv)
National Beef’s obligations under deferred compensation plans shall not be
included in Funded Debt

Funding Losses: 
shall have the meaning set forth in Subsection 7.1.1.

GAAP: 
generally accepted accounting principles in the United States of America,
applied consistently, as in effect from time to time.

 

7

	

 

 

 

 

 

Guaranty
Obligation: as to any Person, (a) any obligation, contingent or
otherwise, of such Person guarantying or having the economic effect of
guaranteeing any Debt 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 Debt or other obligation, (ii) to purchase or lease property, securities
or services for the purpose of assuring the obligee in respect of such Debt or
other obligation of the payment or performance of such Debt 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 Debt or other obligation, or (iv)
entered into for the purpose of assuring in any other manner the obligees in
respect of such Debt 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 Debt or other
obligation of any other Person, whether or not such Debt 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.

Hazardous
Substances:  dangerous, toxic or hazardous pollutants, contaminants,
chemicals, wastes, materials or substances, as defined in or governed by the
provisions of any Environmental Laws or any other federal, state or local law,
statute, code, ordinance, regulation, requirement or rule relating thereto (“Environmental
Regulations”), and also including urea formaldehyde, polychlorinated
biphenyls, asbestos, asbestos-containing materials, nuclear fuel or waste, and
petroleum products, or any other waste, material, substances, pollutant or
contaminant which would subject an owner of property to any damages, penalties
or liabilities under any applicable Environmental Regulations.

Indemnified
Agency Parties:  shall have the meaning set forth in
Section 16.19.

Indemnified
Parties:  shall have the meaning set forth in Section 14.1.

Interest
Period:  the period of time for which the LIBOR Rate shall be in effect
as to any LIBOR Rate Loans and which shall be a one, two, three or six month
period of time, commencing with the borrowing date of such LIBOR Rate Loans 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,
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
shall extend beyond the applicable Maturity Date, and (c) there shall be no
more than ten (10) Interest Periods for LIBOR Rate Loans outstanding at any one
time. 

 

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Leverage
Ratio: as of the end of any fiscal year of National Beef, the
ratio of: (a) National Beef’s Funded Debt as of the end of the fiscal year,
divided by (b) National Beef’s EBITDA during the fiscal year.

LIBOR
Rate: (a) with respect to each day during each Interest Period
applicable to a LIBOR Rate Loan, 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 Agent) for the purpose of displaying London
Interbank Offered Rates for Dollar deposits, (which shall be the LIBOR rate in
effect on the Business Day of the related LIBOR Rate Loan) 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 Agent) for the purpose of displaying London
Interbank Offered Rates for 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 Loans:  Loans with respect to which the interest rate is determined
by reference to the LIBOR Rate.

Licensing Laws:  shall have the meaning set forth in Section 10.4.

Loans:  shall have the meaning set forth in Section 2.1.

Loan Advance
Amount:  shall have the meaning set forth in Section 16.3.

Loan Documents: 
this Credit Agreement, the Notes, the Security Documents and other documents
required to grant to Agent, for the benefit of the Syndication Parties, a
perfected security interest in the Collateral.

Loan Proceeds: 
shall have the meaning set forth in Section 3.1.

Majority
Lenders:  shall have the meaning set
forth in Section 16.8.

Material
Adverse Effect:  means: (a) a material adverse effect on the
financial condition, results of operation, business or property of Borrower;
(b) a material adverse effect on the ability of Borrower to perform its
obligations under this Credit Agreement and the other Loan Documents; or (c) a
material adverse effect upon the ability of Agent to enforce its rights and
remedies under the Loan Documents.

Material
Agreements:  shall have the meaning set forth in Section 10.17.

 

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Maturity
Date:  the earliest of (i) July 1, 2011, (ii) the date on which the
Commitments are terminated in whole pursuant to Section 15.1, or (iii) the date
on which the Borrower voluntarily terminates the Tranche B Commitment in whole
and pays the Bank Debt in full.

Maximum Syndication Amount:

For CoBank-                             $15,316,763.34

subject to pro rata reduction
in accordance with the reduction of the Aggregate Commitment and subject to
adjustment in the event of the sale of all or a portion of a Syndication
Interest in accordance with Section 16.26 hereof.

National Beef:  National Beef Packing Company, LLC,
a Delaware limited liability company.

National
Beef Credit Agreement:  the Sixth Amended and Restated Credit Agreement
made as of the 25th day of July, 2007, as amended by the First and Second
Amendments thereto by and among National Beef, CoBank, and the other financial
institutions signatory thereto.  In the event there are subsequent amendments
to the National Beef Credit Agreement that
affect the references made herein to the terms of the National Beef Credit Agreement, then this Agreement
shall be deemed to be amended correspondingly, effective at the same time as
such amendment to the National Beef Credit Agreement is effective.  In the
event the National Beef Credit Agreement is terminated or is
amended or restated in such a way that the terms of this Agreement cannot be
rationally or logically conformed, or if the financing thereunder is refinanced
under a new agreement with dissimilar terms, then the parties to this Agreement
shall negotiate in good faith to amend or restate this Agreement so that this
Agreement substantially corresponds to the intent of the parties expressed
herein as applied to the new circumstances related to National Beef.

NB Interest:  the membership interests in National
Beef held by Borrower.

Net
Worth:  the amount of Borrower’s consolidated total assets (based on
Borrower’s results as determined in accordance with GAAP) less Borrower’s total
consolidated liabilities (based on Borrower’s results as determined in
accordance with GAAP).  For purposes of computing Net Worth, Borrower’s total
consolidated liabilities shall not include minority interest in National Beef
Packing Company, LLC and Kansas City Steak Company, LLC. 

Note or Notes: 
the promissory notes executed by Borrower pursuant to Section 6.1 hereof,
and all amendments, renewals, substitutions and extensions thereof.

Notice of Loan
Advance:  shall have the meaning set forth in Section 16.3.

 

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Organization
Documents:  in the case of a corporation, its articles or certificate of
incorporation and bylaws; in the case of a partnership, its partnership
agreement and certificate of limited partnership, if applicable; in the case of
a limited liability company, its articles of organization and its operating
agreement.

Payment Account: 
shall have the meaning set forth in Section 16.10.

Payment Distribution: 
shall have the meaning set forth in Section 16.10.

Permitted
Encumbrance:  shall have the meaning set forth in
Section 10.13.  

Person: 
any individual, corporation, limited liability company, association,
partnership, trust, organization, government, governmental agency, or other entity.

Potential
Default:  any event, other than an event described in
Section 15.1(a) hereof, which with the giving of notice or lapse of time,
or both, would become an Event of Default.

Prime
Rate: 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 Agent in its
reasonable discretion.

Purchase
Agreement: the document entitled “Partnership Interest Purchase
Agreement” dated as of July 31, 1997, by and between Borrower and the Sellers.

Required
License:  shall have the meaning set forth in Section 10.10.

Regulatory
Change:  shall have the meaning set forth in Section 17.12.

Security
Documents:  the security agreements, mortgages, deeds of trust,
financing statements, pledge agreements, leasehold assignment and consents,
assignments and/or other security documents executed by Borrower in favor of
Agent, for the benefit of the Syndication Parties, to secure Borrower's
performance of its obligations under the Notes and other Loan Documents with a
first lien (subject to Permitted Encumbrances) on all assets, real and
personal, of Borrower, in form and substance acceptable to Agent.

Sellers:   the Persons from which Borrower acquired
a portion of the NB Interest pursuant to the Purchase Agreement.

Successor Agent: 
such Person as may be appointed as successor to the rights and duties of Agent
as provided in Section 16.8 of this Credit Agreement.

 

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Syndication
Acquisition Agreement:  shall have the meaning set forth in
Section 16.26.

Syndication
Interest:  shall have the meaning set forth in Section 16.1.

Syndication Parties: 
CoBank in its role as a lender hereunder, but not in its role as Agent
hereunder and such Persons as shall from time to time execute a Syndication
Acquisition Agreement substantially in the form of Exhibit 16.26 hereto
signifying their election to purchase all or a portion of the Syndication
Interest of any Syndication Party, in accordance with Section 16.26 hereof, and
to become a Syndication Party hereunder.

Syndication
Party Advance Date:  shall have the meaning set forth in
Section 16.3.

Syndication Share: 
shall mean:

For CoBank  100%

subject to adjustment (a) as
provided in Section 16.4 hereof; and (b) for sales or transfers of
Syndication Interests by any Syndication Party as provided in Section 16.26
hereof.

Synthetic
Lease Obligation: 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).

Tranche
A Commitment:
the portion of the Aggregate Commitment in the initial amount of $2,316,763.34,
and reducing with each payment of principal on the Tranche A Loan(s).

Tranche
A Loan(s):  shall have the meaning set forth in Section 2.1.

Tranche
B Commitment:
the portion of the Aggregate Commitment in the initial amount of $13,000,000.00,
and reducing to $10,000,000 on May 31, 2010.

Tranche
B Loan(s):  shall have the meaning set forth in Section 2.1.

Transfer: 
shall have the meaning set forth in Section 16.26.

Type:
with respect to any Loans, whether such Loans are Base Rate Loans or LIBOR Rate
Loans.

Wire
Instructions:  shall have the meaning set forth in
Section 16.28.

 

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Working
Capital: the excess of Borrower’s consolidated current assets (based on
Borrower’s results as determined in accordance with GAAP) over Borrower’s consolidated
current liabilities (based on Borrower’s results as determined in accordance
with GAAP).  For the purpose of determining Working Capital, current assets
will include cash distributions reasonably expected to be received from
National Beef during the quarterly reporting period that follows the date of
determination of Working Capital. 

ARTICLE
2.  LOAN AMOUNT.

2.1     Loans. 
Borrower and the Syndication Parties acknowledge and agree that the Tranche A
Commitment has been fully funded under the Prior Agreement (if held by one
Syndication Party as one Type the “Tranche A Loan” and if held by more
than one Syndication Party or if more than one Type, the “Tranche A Loans”). 
Amounts repaid on the Tranche A Loan(s) shall not be reborrowed.   On the terms
and conditions set forth in this Credit Agreement, the Syndication Parties
agree, each as to their Syndication Share and to the extent of their Maximum
Syndication Amount, to make loans to Borrower in an amount up to the Tranche B
Commitment (if held by one Syndication Party as one Type the “Tranche B Loan”
and if held by more than one Syndication Party or if more than one Type, the “Tranche
B Loans”).  Amounts repaid on the Tranche B Loan(s) may be reborrowed. 
Notwithstanding the foregoing, and other terms set forth in this Agreement,
during at least 30 consecutive days during each calendar year the amount
outstanding under the Tranche B Loan shall be $0.  The Tranche A Loan(s) and
the Tranche B Loan(s) are sometimes collectively referred to herein as the “Loans”.

ARTICLE
3.  PURPOSE.

3.1     Purpose. 
The proceeds of the Tranche B Loan(s) (“Loan Proceeds”) may be used by
Borrower only for working capital, general corporate purposes related to the
operation of its business as described in Section 13.2 hereof, and tax
distributions, subject to the limitations of Section 13.11 hereof, and Borrower
agrees to use the Loan Proceeds for such purposes only.

ARTICLE
4.  AVAILABILITY.

 

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4.1     Availability. 
The Loan Proceeds will be made available to Borrower provided that the
applicable conditions set forth in Article 11 hereof are satisfied and
until the Maturity Date (“Availability Period”).  Unless otherwise
agreed, the Loan Proceeds will be made available on any Business Day during the
Availability Period by wire transfer of immediately available funds in
accordance with written wire transfer instructions to be furnished by Borrower
on a form supplied by Agent.  Any request by the Borrower for Loan Proceeds
hereunder must be given by the Borrower in accordance with Section 11.2.1 not
later than 11:00 a.m. (Denver time) on the Business Day on which any proposed
LIBOR Rate Loan and not later than 11:00 a.m. (Denver time) on the Business Day
on which any proposed Base Rate Loan, is proposed to be made.  Each request for
Loan Proceeds hereunder shall be irrevocable and shall be deemed to be a
representation by the Borrower that on the date the Loan Proceeds are requested
and after giving effect to the requested Loan Proceeds the applicable
conditions specified in Article 11 have been and will be satisfied.  Each
request for Loan Proceeds hereunder, in addition to meeting the applicable
requirements of Section 4.2, shall specify (i) the requested date thereof, (ii)
the aggregate amount of the Loan Proceeds to be made on such date, which shall be
in a minimum amount of $25,000 and an integral multiple of $25,000, (iii)
whether such Loan Proceeds are to be funded as a Base Rate Loans or LIBOR Rate Loans
and (iv) in the case of LIBOR Rate Loans, the duration of the initial Interest
Period applicable thereto. Promptly upon receipt of such notice, the Agent
shall advise each Syndication Party of the requested Loan Proceeds and of such Syndication
Parties’ ratable share of such Loans.  At or before 1:00 p.m. (Denver time) on
the date of the requested Loan Proceeds, each relevant Syndication Party shall
provide the Agent at the Agent’s principal office in Denver with immediately
available funds covering such Syndication Parties’ Syndication Share of the
requested Loans.  Unless the Agent determines that any applicable condition
specified in Article 11 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 date
the Loan Proceeds are requested the amount of the requested Loan Proceeds to
the extent received by the Agent.

4.2     Conversion
of Loans.  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 Business Day of any proposed interest conversion or
roll over, (a) convert Loans of one Type into Loans of another Type, or (b)
continue or roll over existing LIBOR Rate Loans; provided, however,
that (i) with respect to any conversion into or roll over of LIBOR Rate Loans,
no Event of 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 LIBOR Rate Loans for the same or a different
Interest Period or into Base Rate Loans, shall be made on, and only on, the
last day of an Interest Period for such LIBOR Rate Loans.  Each such notice of
interest conversion shall specify therein the requested (x) date of such
conversion, (y) the Loans to be converted and whether such Loans constitute
LIBOR Rate Loans, and (z) if such interest conversion is into LIBOR Rate Loans,
the duration of the Interest Period for such Loans.  The Agent shall promptly
deliver a copy thereof to each Syndication Party. 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 Loans as set forth
above, such Loans shall automatically convert to Base Rate Loans on the last
day of the Interest Period with respect thereto.  The provisions of this Section
4.2 shall also apply to initial Loans made as LIBOR Rate Loans.  Written notice
of requests for Loan Proceeds or conversions or continuations of Loans shall be
in substantially the form of Exhibit 4.2 attached hereto.

 

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ARTICLE 5.  INTEREST AND
FEES.

5.1     Interest Calculation
and Payment.  The Borrower shall pay
interest on the unpaid principal amount of the Loans made by each Syndication
Party from the date of such Loans until such principal amount shall be paid in
full, at the times and at the rates per annum set forth below:

(a)      Base Rate Loans, so
long as no Event of Default has occurred and is continuing, shall bear interest
at a rate per annum equal to the sum of the Base Rate in effect from time to
time plus the then Applicable Margin (calculated according to the Leverage
Ratio Level or Borrowing Base Availability Level, as the case may be).  Such
interest shall be payable monthly in arrears on the twentieth day of each month
and on the Maturity Date applicable thereto.

(b)     LIBOR Rate Loans, so
long as no Event of Default has occurred and is continuing, shall bear interest
at a rate per annum during each day of each Interest Period for such Loans
equal to the sum of the LIBOR Rate for such Interest Period for such Loans plus
the then Applicable Margin (calculated according to the Leverage Ratio Level or
Borrowing Base Availability Level, as the case may be).  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 Loans were disbursed.

(c)      After the occurrence
of an Event of Default and for so long as such Event of Default is continuing,
the Agent may (upon the direction of the Majority Lenders) notify the Borrower
that any and all amounts due hereunder, under the Notes or under any other Loan
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 Event Default
continues, payable on demand, at the Default Interest Rate.

(d)     All computations of
interest shall be made by the Agent, 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 Loans)
or 365 or 366 days (in the case of Base Rate Loans), as applicable. Each
determination of an interest rate by the Agent 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.

5.2     Additional
Provisions for LIBOR Rate Loans. 

 

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5.2.1  Inapplicability
or Unavailability of LIBOR Rate. 
If Agent at any time shall determine that for any reason adequate and
reasonable means do not exist for ascertaining the LIBOR Rate, then Agent shall
promptly give notice thereof to Borrower.  If such notice is given and until
such notice has been withdrawn by Agent, then any portion of the outstanding
principal balance hereof which bears interest determined in relation to the LIBOR
Rate shall, subsequent to the end of the Interest Period applicable thereto,
bear interest at the Base Rate (“Base Rate Loans”). 

5.2.2  Change in
Law; LIBOR Rate Loans Unlawful. 
If any law, treaty, rule, regulation or determination of a court or
governmental authority or any change therein or in the interpretation or
application thereof (each, a “Change in Law”) shall make it unlawful for
any of the Syndication Parties to (a) advance its Syndication Share of any LIBOR
Rate Loans or (b) maintain its Syndication Share of all or any portion of the LIBOR
Rate Loans, each such Syndication Party shall promptly, by telephone or
facsimile, notify Agent thereof, and of the reasons therefor and Agent shall
promptly notify Borrower thereof and if the notice from such Syndication Party
is in writing, Agent shall provide a copy of such notice to Borrower.  In the
former event, any obligation of any such Syndication Party to make available
its Syndication Share of any future LIBOR Rate Loans shall immediately be
canceled (and, in lieu thereof shall be made as Base Rate Loans), and in the
latter event, any such unlawful LIBOR Rate Loans or portions thereof then
outstanding shall be converted, at the option of such Syndication Party, to
Base Rate Loans; provided, however, that if any such Change in Law shall permit
the LIBOR Rate to remain in effect until the expiration of the Interest Period
applicable to any such unlawful LIBOR Rate Loans, then such LIBOR Rate Loans
shall continue in effect until the expiration of such Interest Period.  Upon
the occurrence of any of the foregoing events on account of any change in any
law, treaty, rule, regulation or determination of a court or governmental
authority or in the interpretation or application thereof , Borrower shall pay
to Agent immediately upon demand such amounts as may be necessary to compensate
any such Syndication Party for any fines, fees, charges, penalties or other
costs incurred or payable by such Syndication Party as a result thereof and
which are attributable to any LIBOR Rate Loans made available to Borrower
hereunder, and any reasonable allocation made by any such Syndication Party
among its operations shall be conclusive and binding upon Borrower absent
manifest error.

5.3     Fees.  Borrower
shall pay or cause to be paid the following fees: 

5.3.1  Non-Use Fee. 
Borrower agrees to pay to the Agent for distribution to the Syndication Parties
(based on their applicable respective Syndication Shares) a quarterly non-use
fee on the daily average unused amount of Tranche B Loans at the rate per annum
of one quarter of one percent (0.25%) (the “Non-Use Fee”).  The Non-Use
Fee for each calendar quarter shall be due and payable in arrears on the first
Business Day of each January, April, July and October hereafter through the
Maturity Date applicable to the Tranche B Loans.  A pro-rated non-use fee shall
be due and payable on the first Business Day of the quarter following the date
of this Agreement and on the Maturity Date applicable to the Tranche B Loans.  Each
Non-Use Fee shall be earned as it accrues.

5.4     This Section
Intentionally Omitted.

 

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ARTICLE 6.  NOTES; PAYMENTS.

6.1     Promissory Notes. 
Each Syndication Party's Syndication Interest in the Loans shall be evidenced
by a promissory note, payable to the order of such Syndication Party in the
face amount equal to such Syndication Party's Maximum Syndication Amount, in
the form attached hereto as Exhibit 6.1 (each a “Note” and
collectively, the “Notes”).

6.2     Principal Payments. 
Principal owing under the Tranche A Loan(s) shall be payable in equal quarterly
installments of $257, 418.14, commencing on July 1, 2009 and on the first day
of each succeeding October, January, April and July (or on the next succeeding
Business Day in the event the date specified is not a Business Day) to and
including the Maturity Date, at which time the entire amount of principal shall
be due and payable in full.  Principal owing under the Tranche B Loan(s) shall
be payable as follows: (a) on May 31, 2010 in such amount, if any, as is
necessary to reduce the outstanding principal balance to an amount not more
than $10,000,000, and (b) on the  Maturity Date, the entire amount of any
principal outstanding shall be due and payable in full.

6.3     Interest Payments.  Interest
shall be payable as set forth in Section 5.1, with any accrued and unpaid
interest payable on the Maturity Date.  

6.4     Application of
Payments.  Provided that an Event of Default or
Potential Default has not occurred and is continuing, payments shall be applied
as directed by Borrower.  Upon the occurrence and during the continuance of an
Event of Default or Potential Default, all amounts paid to Agent shall be
applied, as Agent in its sole discretion shall determine, to fees, interest,
principal or to any other Bank Debt.  The amount of Loan Proceeds advanced and
other Bank Debt, and all payments by or on behalf of Borrower, of such amounts,
shall be entered on the books of the Agent and/or the Syndication Parties and
such entries shall be presumptive evidence of the unpaid amounts outstanding
from time to time under the Notes and other Loan Documents. 

6.5     Manner of Payment. 
All payments, including prepayments, that Borrower is required or permitted to
make under the terms of this Credit Agreement shall be made to Agent (a) in
immediately available federal funds, to be received no later than 12:00 noon
Central Time of the Business Day on which such payment is due by wire transfer to
such account as Agent may designate by notice; and (b) without setoff or
counterclaim and free and clear of and without deduction for any taxes, levies,
impost, duties, charges, fees, deductions, withholding, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed or levied by
any jurisdiction or any political subdivision thereof or taxing or other authority
therein unless Borrower is required by law to make such deduction or
withholding. 

6.6     This Section Intentionally Omitted.

 

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ARTICLE 7.  PREPAYMENTS.

7.1     Voluntary Prepayments. 
Borrower shall have the right to prepay all or any part of the outstanding
principal balance under the Loans at any time in integral multiples of $250,000.00
(or the entire outstanding balance, if less), with at least three Business Days
prior notice and upon payment of all Funding Losses calculated as provided in
Subsection 7.1.1 hereof.

7.1.1  Funding Losses.
“Funding Losses” shall be applicable only to payment or prepayment of LIBOR
Rate Loans and shall be determined by the Agent for the purposes of this Credit
Agreement as follows:

(a)      Determine the
difference between:  (i) the LIBOR Rate in effect for the first day of the Interest
Period during which the prepayment occurs for the LIBOR Rate Loans being
prepaid, minus (ii) the LIBOR Rate in effect on the day on which the prepayment
occurs, provided the amount shall not be less than zero.

(b)     Then divide the amount
so determined by 360 and multiply the result (i) by the amount being prepaid,
and (ii) by the number of days remaining in the Interest Period of the LIBOR
Rate Loans being prepaid.

7.2     This Section Intentionally Omitted.

7.3     This Section Intentionally Omitted.

ARTICLE
8.  COBANK EQUITY.

So long as CoBank is a Syndication
Party under this Agreement, the Borrower will acquire equity in CoBank (“CoBank
Equity Interests”) 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 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 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 Debt 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 Debt due to any other Syndication Party
under this Agreement.  CoBank shall not be obligated to set off or otherwise
apply such equities to the Borrower’s Debt to CoBank.

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So long as CoBank is a Syndication
Party under this Agreement, the Borrower will acquire equity in CoBank (“CoBank
Equity Interests”) 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 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 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 Debt 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 Debt due to any other Syndication Party
under this Agreement.  CoBank shall not be obligated to set off or otherwise
apply such equities to the Borrower’s Debt to CoBank.

ARTICLE
9.  SECURITY.

9.1     Borrower's Assets. 
To secure the payment and performance of the Bank Debt, Borrower hereby grants
to the Agent for the ratable benefit of the Syndication Parties a continuing
security interest in all property and interests in property of Borrower,
whether now owned or existing or hereafter acquired or arising and wheresoever
located, including but not limited to: all Accounts, Inventory, Equipment, Farm
Products, Goods, General Intangibles, Payment Intangibles, Commercial Tort
Claims (specifically described as those Commercial Tort Claims which are
proceeds of any of the other herein described collateral), Deposit Accounts,
Margin Accounts, Commodity Accounts, Commodity Contracts, Securities Accounts,
Investment Property, Instruments, Letter of Credit Rights, Documents, Chattel
Paper, Electronic Chattel Paper, Tangible Chattel Paper, Investor Notes and
Investor Loan Documents, all accessions to, substitutions for, and all
replacements, products and proceeds of the foregoing (including without
limitation, proceeds of insurance policies insuring any of the foregoing), all
books and records pertaining to any of the foregoing (including without
limitation, customer lists, credit files, computer programs, printouts and
other computer materials and records), and all insurance policies insuring any
of the foregoing, including, without limitation, the NB Interest, all cattle,
all feed, all accounts, Borrower’s rights under the Purchase Agreement (including
indemnification rights), the Cattle Purchase and Sale Agreement, and the
Delivery Agreements (“Collateral”); provided that none of the
Syndication Parties other than CoBank shall have a lien on the CoBank Equity
Interests. Borrower shall execute and deliver to Agent, for the benefit of the
Syndication Parties, a Pledge Agreement to evidence the security interest of
Agent, for the benefit of the Syndication Parties, in the NB Interest. 
Borrower shall deliver the originals of any certificates representing the NB
Interest to Agent, for the benefit of all present and future Syndication
Parties.  Borrower shall also execute such further security agreements,
mortgages, deeds of trust, financing statements, assignments or other documents
as Agent shall reasonably request, in form and substance as Agent shall
specify, to establish, confirm, perfect or provide notice of Agent's security
interest (for the benefit of all Syndication Parties) in the Collateral.  If
requested by Agent:  (a) Borrower and Agent shall place a legend on any chattel
paper included in the Collateral showing Agent's security interest therein; and
(b) Borrower shall deliver to Agent possession of any chattel paper,
instruments and securities included in the Collateral (duly endorsed to Agent's
reasonable satisfaction).

 

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9.2     This Section Intentionally Omitted. 
 

ARTICLE
10.  REPRESENTATIONS AND WARRANTIES.

To induce the Syndication
Parties to make the Loans, and recognizing that the Syndication Parties are
relying thereon, Borrower represents and warrants as follows:

10.1   Organization,
Good Standing, Etc..  Borrower: 
(a) is duly organized, validly existing, and in good standing under the laws
of its state of organization; (b) qualifies as a limited liability company
under the laws of its state of organization; (c) is duly qualified to do
business and is in good standing in each jurisdiction in which the transaction
of its business makes such qualification necessary; and (d) has all
requisite corporate and legal power (i) to own and operate its assets and
to carry on its business, and (ii) to enter into and perform the Loan
Documents to which it is a party.

10.2   Corporate
Authority, Due Authorization; Consents. 
Borrower has full power and authority (a) to conduct its business as
contemplated to be operated from and after the Closing Date; and (b) to
execute, deliver and perform under (i) this Credit Agreement, (ii) the Notes, (iii)
all other Loan Documents (iv) all other documents and agreements as contemplated
by this Credit Agreement, (v) the Delivery Agreements, and (vi) the Cattle
Purchase and Sale Agreement.  All consents or approvals of any Person which are
necessary for, or are required as a condition of the execution, delivery and
performance of the Loan Documents, the Delivery Agreements, and the Cattle
Purchase and Sale Agreement have been obtained. 

10.3   Litigation. 
Except as described on Exhibit 10.3 hereto, there are, no pending
legal or governmental actions, proceedings or investigations to which Borrower
is a party or to which any property of Borrower is subject which might result
in any Material Adverse Effect and, to Borrower's knowledge, no such actions or
proceedings are threatened or contemplated by any federal, state, county, or
city (or similar unit) governmental agency or any other Person.

10.4   No Violations. 
The execution, delivery and performance of the Loan Documents, the Delivery
Agreements, and the Cattle Purchase and Sale Agreement will not: (a) violate
any provision of Borrower's articles of organization or operating agreement, or
any law, rule, regulation, judgment, order or ruling of any court or governmental
agency; (b) violate, conflict with, result in a breach of, constitute a default
under, or with the giving of notice or the expiration of time or both,
constitute a default under, any existing real estate mortgage, indenture,
lease, security agreement, contract, note, instrument or any other agreements
or documents binding on Borrower or affecting its property; or (c) violate,
conflict with, result in a breach of, constitute a default under, or result in
the loss of, or restriction of rights under, any Required License or any order,
law, rule, or regulation under or pursuant to which any Required License was
issued or is maintained (“Licensing Laws”).

 

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10.5   Binding
Agreement.  Each of the Loan Documents to which Borrower
is a party is, or when executed and delivered, will be, the legal, valid and
binding obligation of Borrower, enforceable in accordance with its terms,
subject only to limitations on enforceability imposed by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting creditors'
rights generally and by general principles of equity.

10.6   Compliance with Laws. 
Borrower is in compliance with all federal, state, and local laws, rules,
regulations, ordinances, codes and orders, including without limitation all
Environmental Laws and all Licensing Laws, with respect to which noncompliance
would result in a Material Adverse Effect.

10.7   Principal Place of
Business. 
Borrower's place of business, or chief executive office if it has more than one
place of business, and the place where the records required by
Section 12.1 hereof are kept, is located at the place(s) shown on Exhibit 10.7
hereto.

10.8   This Section Intentionally Omitted.

10.9   Payment of Taxes. 
Borrower has filed all required federal, state and local tax returns and has
paid all taxes as shown on such returns as they have become due.  Borrower has
paid when due all other taxes, assessments or impositions levied or assessed
against Borrower or its business or properties.

10.10 Licenses and Approvals. 
Borrower has ownership of, or license to use, or has been issued, all
trademarks, patents, copyrights, franchises, certificates, approvals, permits,
authorities, agreements, and licenses which are used or necessary to permit it
to own its properties and to conduct the business as presently being conducted
(“Required Licenses”).  Exhibit 10.10 lists all Required
Licenses presently in existence with respect to Borrower.  Each Required
License is in full force and effect, and there is no outstanding notice of
cancellation or termination or, to Borrower's knowledge, any threatened
cancellation or termination in connection therewith, nor has an event occurred
with respect to any Required License which, with the giving of notice or
passage of time or both, could result in the revocation or termination thereof
or otherwise in any impairment of Borrower's rights with respect thereto, which
impairment could reasonably be expected to have a Material Adverse Effect.  No
consent, permission, authorization, order, or license of any governmental
authority, is necessary in connection with the:  (a) execution, delivery,
performance, or enforcement of and under the Loan Documents to which Borrower
is a party; or (b) the execution, delivery, and performance of and under the
Delivery Agreements or the Cattle Purchase and Sale Agreement, except such as
have been obtained and are in full force and effect and as are described on Exhibit 10.10.

 

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10.11 Employee
Benefit Plans.  Borrower does not presently maintain or
participate in, and has not in the past maintained or participated in, and is
not obligated to contribute to, any of the following (each a “Borrower
Benefit Plan” and collectively “Borrower Benefit Plans”): (a) any
funded “employee welfare benefit plan,” as that term is defined in Section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereunder (“ERISA”); (b) any “multiemployer plans,” as
defined in Section 3(37) of ERISA; (c) any  “employee pension benefit
plan” as defined in Section 3(2) of ERISA; (d) any “employee benefit
plan”, as such term is defined in Section 3(3) of ERISA; (e) any “multiple
employer plan” within the meaning of Section 413 of the Internal Revenue Code
of 1986, as amended from time to time (“Code”); (f) any “multiple
employer welfare arrangement” within the meaning of Section 3(40) of ERISA; (g)
a “voluntary employees’ beneficiary association” within the meaning of Section
501(a)(9) of the Code; (h) a “welfare benefit fund” within the meaning of
Section 419 of the Code; or (i) any employee welfare benefit plan within the
meaning of Section 3(1) of ERISA for the benefit of retired or former
employees.

10.12 Equity Investments.  Borrower does
not now own any stock or other voting or equity interest, directly or
indirectly, in any Person other than:  (a) the NB Interest, (b) the CoBank
Equity Interests, and (c) as set forth on Exhibit 10.12.

10.13 Real
Property; Title to Real and Personal Property.  Borrower: 
(a) has all real property interests, including without limitation, fee
interests, leasehold interests, easements, licenses and rights of way which are
necessary for the conduct of Borrower's business; and (b) does not own any fee
interest or leasehold interest, or any other interest, including without
limitation any easements, rights of way or licenses, in real property, other
than as set forth on Exhibit 10.13 hereto (“Borrower’s Real
Property”).  Borrower holds good and marketable title to all of Borrower’s
Real Property (other than rights of way, easements and similar interests in
real property which in the aggregate are not material), owns all of its
personal property, and holds all of its leases, free and clear of any lien,
pledge, restriction, or encumbrance, except as specifically identified in Exhibit 10.13
attached hereto or as permitted by Section 13.3 hereof (“Permitted
Encumbrances”).  All of Borrower's leases which constitute Material
Agreements are in full force and effect and afford Borrower peaceful and
undisturbed possession of the subject matter thereof.

10.14 Personal Property.
 Borrower has all tangible personal property necessary for the conduct of
Borrower's business as it is being conducted; all such property is in good
operating condition and repair, reasonable wear and tear excepted, and suitable
in all material respects for the uses for which it is being utilized; and all
such property (other than titled motor vehicles) is described in one or more of
the Security Documents.

10.15 Environmental
Compliance. 
Without limiting the provisions of Section 10.6 above, all property owned
or leased by Borrower and all operations conducted by it are in compliance in
all material respects with all Laws relating to environmental protection, with
respect to which the failure to comply would have a Material Adverse Effect.

10.16 Fiscal Year. 
Each fiscal year of Borrower ends on the last Saturday in August of each
calendar year and begins on the following day.  

 

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10.17 Material
Agreements.  That Exhibit 10.17 attached
hereto sets forth all agreements of Borrower, the termination or breach of
which, based upon Borrower's knowledge as of the date of making any
representation with respect thereto, would have a Material Adverse Effect (“Material
Agreements”).  Neither Borrower nor, to Borrower's knowledge, any other
party to any Material Agreement, is in default thereunder, and no facts exist
which with the giving of notice or the passage of time, or both, would
constitute such a default.  

10.18 Regulations T, U and X.  No
portion of any Loans will be used for the purpose of purchasing, carrying, or
making loans to finance the purchase of, any “margin security” or “margin
stock” as such terms are used in Regulations T, U or X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 207, 221, and 224. 

10.19 Trademarks, Trade Names,
etc.  
Borrower has ownership or the lawful right to use all trade names, trademarks,
and other intellectual property which it utilizes in its business as presently
being conducted and as anticipated to be conducted, and all such property or
property rights are described on Exhibit 10.19 hereto. 

10.20 This Section Intentionally Omitted.

10.21 This Section
Intentionally Omitted.

10.22 Disclosure. 
The representations and warranties contained in this Article 10 and in the
other Loan Documents or in any financial statements or projections provided to
CoBank do not contain any untrue statement of a material fact or omit to state
a material fact necessary to make such representations or warranties not
misleading.

ARTICLE
11.  CONDITIONS TO ADVANCES.

11.1   Conditions to
Closing.  The obligation of the Syndication Parties to
make the Loans thereunder is subject to satisfaction, in Agent's sole
discretion, of each of the following conditions precedent:

11.1.1 Loan Documents. 
Agent shall have received duly executed originals of the Loan Documents.

 

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11.1.2 Searches;
UCC Filings.  Agent shall have received: searches of
appropriate filing offices dated no more than fourteen (14) days prior to the
Closing Date showing that (a) no state or federal tax liens have been filed
which remain in effect against Borrower, (b) except with respect to Permitted
Encumbrances no financing statements have been filed by any Person except to
perfect the security interests required by this Credit Agreement, which remain
in effect against Borrower or any of its assets, and (c) all financing
statements necessary to perfect the security interests granted to Agent (for
the benefit of the Syndication Parties) under the Loan Documents have been
filed or recorded, to the extent such security interests are capable of being
perfected by such filing.

11.1.3 This Section
Intentionally Omitted.

11.1.4 Organizational Documents.  Agent shall
have received: (a) good standing certificates, dated no more than thirty (30)
days prior to the Closing Date, for Borrower, from each state where its
operations require qualification or authorization to transact business; (b) a
copy of the Articles of Organization of Borrower; and (c) a copy of the Operating
Agreement of Borrower.

11.1.5 Evidence of
Corporate Action.  
Agent shall have received in form and substance satisfactory to Agent,
documents evidencing all corporate action taken by Borrower to authorize
(including the specific names and titles of the persons authorized to so act (“Authorized
Officers”)) the execution, delivery and performance of the Loan Documents
to which it is a party.

11.1.6 This Section Intentionally Omitted.

11.1.7 Evidence of Insurance. 
Borrower shall have provided Agent with insurance certificates and such other
evidence, in form and substance satisfactory to Agent, of all insurance
required to be maintained by it under the Loan Documents. 

11.1.8 This Section Intentionally Omitted.

11.1.9 This Section
Intentionally Omitted. 

11.1.10 Material Agreements.  Agent
shall have received copies of those Material Agreements as Agent may request in
its sole discretion.

11.1.11 This Section Intentionally Omitted.

11.1.12 No Material Change.  No change
shall have occurred in the condition or operations of Borrower since the
Closing Date which could result in a Material Adverse Effect.

11.1.13 Fees and Expenses. 
Borrower shall have paid Agent, by wire transfer of immediately available
federal funds all expenses owing pursuant to Section 17.1 hereof.

11.1.14 CoBank
Equity Interest Purchase Obligation. 
Borrower shall have purchased such CoBank Equity Interests as CoBank may
require pursuant to Article 8 hereof. 

11.1.15 This Section
Intentionally Omitted.

11.1.16 This Section
Intentionally Omitted.

 

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11.1.17 This Section Intentionally Omitted.

11.1.18 This Section Intentionally Omitted.

11.1.19 This Section
Intentionally Omitted.

11.1.20 This Section Intentionally Omitted.

11.1.21 This Section Intentionally Omitted.

11.1.22 This Section
Intentionally Omitted.

11.1.23 Further Assurances. 
Borrower shall have provided and/or executed and delivered to Agent such
further assignments, documents or financing statements, in form and substance
satisfactory to Agent, that Borrower is to execute and/or deliver pursuant to
the terms of the Loan Documents or as Agent may reasonably request.

11.2   Conditions to Loans.  The
Syndication Parties’ obligation to fund Loans is subject to the satisfaction,
in Agent’s sole discretion, of each of the following conditions precedent, as
well as those set forth in Section 11.1 hereof: 

11.2.1 Request For Loan
Proceeds.  Agent shall have received from Borrower (including by
facsimile transmission) prior to the date Borrower requests Loan Proceeds:  (a)
a duly completed request in the form prescribed by the Agent which has been
signed by an Authorized Officer; and (b) such other information or documentation
as Agent may request; provided that the request for Loan Proceeds shall
not be deemed to have been received by Agent until it is satisfactory to Agent
and includes all information and documentation that Agent may request. The request
for Loan Proceeds shall be irrevocable.

11.2.2 Possession
of Documents.  Agent shall
have received possession of all instruments or securities, if any, representing
the NB Interest, in form and substance satisfactory to Agent. 

11.2.3 This Section Intentionally Omitted

11.2.4 This Section Intentionally Omitted.

11.2.5 This Section Intentionally Omitted.

11.2.6 National
Beef Acknowledgment, Consent and Agreement. 
Borrower shall have provided Agent with the written and executed
acknowledgment, consent and agreement of National Beef in form and substance
satisfactory to Agent in its discretion regarding Borrower’s pledge of a
security interest in the NB Interest to Agent and the Syndication Parties as
required hereunder and the rights arising on account of such pledge. 

 

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11.2.7 This Section Intentionally Omitted.

11.2.8 This Section
Intentionally Omitted.

11.2.9 Default. As of the date
of a request for Loan Proceeds no Event of Default or Potential Default shall
have occurred and be continuing, and the disbursing of the amount of the Loan
Proceeds requested in the Advance Request shall not result in an Event of
Default or Potential Default.

11.2.10 Representations
and Warranties.  The
representations and warranties of Borrower contained in each of the Loan
Documents to which it is a party, shall be true and correct in all material
respects on and as of the date on which each of the Loans are to be made as
though made on such date.  Borrower shall have
paid Agent, by wire transfer of immediately available U.S. funds all expenses
owing pursuant to Section 17.1 hereof. 

11.3   Additional
Disbursement Conditions. 
At no time and in no event shall the Syndication Parties collectively be
obligated to make Loans: (a) in an amount which, when added to all prior Loans,
would be in excess of the Aggregate Commitment; (b) other than during the
Availability Period; or (c) after the enactment of any law by any governmental
authority having jurisdiction over any Syndication Party which would make it
unlawful in any respect for such Syndication Party to make the Loans or
maintain its Syndication Share of the Loans.

ARTICLE
12.  AFFIRMATIVE COVENANTS.

From and after the date of this
Credit Agreement and until the Bank Debt is indefeasibly paid in full and the
Syndication Parties have no obligation to make any Loans hereunder, Borrower
agrees that it will observe and comply with, the following covenants for the
benefit of Agent and the Syndication Parties:

12.1   Books and Records. 
Borrower shall at all times keep proper books of record and account, in which
correct and complete entries shall be made of all its dealings, in accordance
with GAAP.  

12.2   Reports and Notices. 
Borrower shall provide to Agent the following reports, information and notices:

 

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12.2.1 Annual
Financial Statements. 
As soon as available, but in no event later than one hundred and twenty (120)
days after the end of any fiscal year of Borrower occurring during the term
hereof the Borrower’s annual report prepared in accordance with GAAP
consistently applied which shall:  (a) be audited by independent certified
public accountants selected by Borrower which are reasonably acceptable to
Agent; (b) be accompanied by a report of such accountants containing an opinion
reasonably acceptable to Agent; (c) be accompanied by a Compliance
Certificate; (d) be prepared in reasonable detail and in comparative form; and
(e) include a balance sheet, a statement of operations, a statement of
cash flows, a statement of capital
shares and equities, and all notes and schedules relating thereto.

12.2.2 Quarterly
Financial Statements. 
As soon as available but in no event more than sixty (60) days after the end of
each Fiscal Quarter the following consolidating financial statements or other
information concerning Borrower's operations, prepared in accordance with GAAP
consistently applied:  (a) a balance sheet, (b)  a statement of operations, and
(c) a statement of cash flows, for such Fiscal Quarter and for the year to date
and (g) such other quarterly statements as Agent may reasonably request, which
quarterly statements requested under this clause (g) shall include any and all
notes and schedules thereto.  Such quarterly financial statements required
pursuant to this Subsection shall be accompanied by a Compliance
Certificate.

12.2.3 Notice of Suit, Adverse Change or Default. 
The Borrower shall, as soon as possible, and in any event within ten (10)
Business Days after either the Borrower learns of the following, give written
notice to the Agent of (a) any proceeding being instituted or threatened to be
instituted by or against either the Borrower 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 either the Borrower, and (c) the occurrence of any Potential
Default or Event of Default.  Within three (3) Business Days after the Agent’s
receipt of such written notice, the Agent shall forward such notice to the
Syndication Parties.

12.2.4 Notice of Certain Changes. 
Borrower shall: (a) notify Agent at least ten (10) Business Days prior to the
occurrence of any change in the name or business form of Borrower; and (b) take
all actions necessary or reasonably requested by Agent in order to maintain the
perfected status of Agent's first lien and security interest (subject only to
Permitted Encumbrances) in the Collateral.  

12.2.5 This Section Intentionally
Omitted.

12.2.6 This Section
Intentionally Omitted.

12.2.7 Notice of
Environmental Litigation. 
Promptly after Borrower's receipt thereof, notice of the receipt of all
pleadings, orders, complaints, indictments, or other communication alleging a
condition that may require Borrower to undertake or to contribute to a cleanup
or other response under Environmental Regulations, or which seeks penalties,
damages, injunctive relief, or criminal sanctions related to alleged violations
of such laws, or which claims personal injury or property damage to any person
as a result of environmental factors or conditions or which, if adversely
determined, could have a Material Adverse Effect.

 

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12.2.8 Regulatory
and Other Notices. 
Promptly after Borrower's receipt thereof, copies of any notices or other
communications received from any governmental authority with respect to any
matter or proceeding the effect of which could reasonably be expected to have a
Material Adverse Effect.

12.2.9 Adverse
Action Regarding Required Licenses. 
In the event Borrower learns that any petition, action, investigation, notice
of violation or apparent liability, notice of forfeiture, order to show cause,
complaint or proceeding is pending, or, to the best of Borrower's knowledge,
threatened, to seek to revoke, cancel, suspend, modify, or limit any of the
Required Licenses, Borrower shall provide Agent with prompt written notice
thereof and shall take, or cause to be taken, all reasonable measures to
contest such action in good faith.

12.2.10  Default Under
Delivery Agreements or Cattle Purchase and Sale Agreement. 
As soon as the existence of any event of default or occurrence becomes known to
Borrower which, with the giving of notice or the lapse of time, or both, would
become an event of default under (a) any of the Delivery Agreements or (b) the Cattle
Purchase and Sale Agreement, Borrower shall promptly give Agent written notice
of such event of default or occurrence, the nature and status thereof, and the
action being taken or proposed to be taken with respect thereto; provided
that no report shall be required under subpart (a) of this Subsection so long
as the total number of cattle as to which all such events of default or
occurrence which, with the giving of notice or the lapse of time, or both,
would become an event of default exist does not at any time exceed, in the
aggregate, twenty-five percent (25%) of the number of cattle which Borrower is required,
at such time, to be delivered under the Cattle Purchase and Sale Agreement. 

12.2.11  Additional Information.  With
reasonable promptness:  (a) copies of all communications which Borrower
receives or initiates from or to any counterparty which in any way discuss or
relate to nonperformance of any such counterparty to (i) any of the Delivery
Agreements or (ii) the Cattle Purchase and Sale Agreement; (b) such additional
financial information or other documentation as Agent may reasonably request;
and (c) all financial statements, business reports, projections or forecasts,
notices of distributions, or notices of capital calls received by Borrower with
respect to National Beef; provided that no report shall be required
under subpart (a)(i) of this Subsection so long as the total number of cattle
subject to those Delivery Agreements as to which such communications relate
does not at any time exceed, in the aggregate, twenty-five percent (25%) of the
number of cattle which Borrower is required, at such time, to be delivered
under the Cattle Purchase and Sale Agreement.

12.3   Eligibility.
Borrower shall maintain its membership base so that not less than fifty percent
(50%) of its equity interest is owned by Persons engaged in the business of
raising and feeding cattle or producing other agricultural products.

 

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12.4   Maintenance
of Existence and Qualification. 
Borrower shall maintain its corporate existence in good standing under the laws
of the state of Delaware.  Borrower will qualify and remain qualified as a
foreign limited liability company in each jurisdiction in which such
qualification is necessary or desirable in view of its business, operations and
properties.

12.5   Compliance
with Legal Requirements and Agreements. 
Borrower shall: (a) comply with all laws, rules, regulations and orders
applicable to Borrower or its business; and (b) comply with all agreements,
indentures, mortgages, and other instruments to which it is a party or by which
it or any of its property is bound; provided, however, that the failure of
Borrower to comply with this sentence in any instance not directly involving
Agent or a Syndication Party shall not constitute an Event of Default unless
such failure would have a Material Adverse Effect.

12.6   Compliance
with Environmental Laws. 
Without limiting the provisions of Section 12.5 of this Credit Agreement,
Borrower shall comply in all material respects with, and take all reasonable
steps necessary to cause all persons occupying or present on any properties
owned or leased by Borrower to comply with, all Environmental Regulations, the
failure to comply with which would have a Material Adverse Effect.

12.7   Taxes. 
Borrower shall cause to be paid when due all taxes, assessments, and other
governmental charges upon it, its income, its sales, its properties and federal
and state taxes withheld from its employees' earnings, unless such taxes,
assessments, or other governmental charges shall be contested in good faith by
appropriate actions or legal proceedings and Borrower shall establish adequate
reserves therefor in accordance with GAAP.

 

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12.8   Insurance. 
Borrower shall keep the Collateral (including, without limitation, all cattle
during such times as Borrower has, or is deemed to have, title thereto or while
they are in Borrower’s control, care, or possession, and including while they
are being transported) insured at all times by an insurance carrier or carriers
reasonably acceptable to Agent which have an AI rating by the current BEST Key
Rating Guide, against all risks covered by a special form policy (and including
flood (for property located in a flood plain zone), earthquake and windstorm
coverage) in the amount of the full replacement cost (other than with respect
to motor vehicles) of the Collateral as well as liability, worker's
compensation, business interruption, boiler and machinery and such other
insurance as Bank may reasonably require, in amounts and with deductibles or
maximum payouts customarily carried by entities in similar lines of business. 
Borrower shall also maintain fidelity coverage (including employee dishonesty)
on such officers and employees and in such amounts as Agent shall specify, or
in the absence of any such specification, as customarily carried by companies
engaged in comparable businesses and comparably situated.  Such insurance
policies shall contain such reasonable endorsements as Agent shall from time to
time require and all liability policies shall name Agent as an additional
insured as its interests may appear (and for the benefit of the Syndication
Parties).  All such casualty insurance policies shall be endorsed with a
mortgagee's or loss payable clause, as appropriate, in favor of Agent (and for
the benefit of the Syndication Parties). Certificates of all insurance referred
to in this Section satisfactory to Agent shall be delivered to and held by
Agent, and the policy or policies evidencing all such insurance shall be provided
to Agent upon Agent’s request therefor.  All such insurance policies shall
contain a provision requiring at least ten (10) days' notice to Agent
prior to any cancellation for non-payment of premiums and at least forty-five
(45) days' notice to Agent of cancellation for any other reason or of
modification or non-renewal.  No later than forty (40) days prior to
expiration, Borrower shall give Agent (a) satisfactory written evidence of
renewal of all such policies with premiums paid, or (b) a written report as to
the steps being taken by Borrower to renew or replace all such policies,
provided that notwithstanding the receipt of such written report, Agent may at
any time thereafter give Borrower written notice to provide Agent with such
evidence as described in clause (a), in which case Borrower must do so within
ten (10) days of such notice.  Borrower agrees to pay all premiums on such
insurance as they become due, and will not permit any condition to exist on or
with respect to the Collateral which would wholly or partially invalidate any
insurance thereon.  Effective upon the occurrence of an Event of Default, all
of Borrower's right, title and interest in and to all such policies and any
unearned premiums paid thereon are hereby assigned to Agent (for the benefit of
the Syndication Parties) who shall have the right, but not the obligation, to
assign the same to any purchaser of the Collateral at any foreclosure sale. 
Borrower shall give immediate written notice to the insurance carrier and Agent
of any loss.  Borrower hereby authorizes and empowers Agent upon the occurrence
and during the continuation of an Event of Default, at Agent's option and in
Agent's sole discretion, to act as attorney-in-fact for Borrower to make proof
of loss, to adjust and compromise any claim under insurance policies, to
collect and receive insurance proceeds, and to deduct therefrom Agent's
expenses incurred in the collection of such proceeds.

12.9   Title to Assets
and Maintenance. 
Borrower shall defend and maintain title to all its properties and assets,
including the Collateral.  Borrower shall keep its assets, both real and
personal, including the Collateral, in good order and condition consistent with
industry practice and shall make all necessary repairs, replacements and
improvements so that its business may be properly and advantageously conducted.

12.10 Payment
of Liabilities. 
Borrower shall pay all liabilities (including, without limitation: (a) any Debt
for borrowed money or for the deferred purchase price of property or services;
(b) any obligations under leases which have or should have been characterized
as capitalized leases, as determined in accordance with GAAP; and (c) any
contingent liabilities, such as guaranties, for the obligations of others
relating to Debt for borrowed money or for the deferred purchase price of
property or services or relating to obligations under leases which have or
should have been characterized as capitalized leases, as determined in
accordance with GAAP) as they become due beyond any period of grace under the
instrument creating such liabilities, unless (with the exception of the Bank
Debt) they are contested in good faith by appropriate actions or legal
proceedings, Borrower establishes adequate reserves therefor in accordance with
GAAP, and such contesting will not result in a Material Adverse Effect.

 

 

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12.11 Further
Assurances; Real Property Security Interests. 
Borrower shall, as may be required from time to time by Agent, provide such
documents as may be necessary or desirable in the judgment of Agent to verify
the existence and perfection of the security interest in the Collateral granted
to Agent for the benefit of the Syndication Parties.  Promptly after the
purchase or other acquisition of any fee interest in real estate having a cost
or Fair Market Value of $25,000.00 or more, Borrower shall provide Agent with
written notice of such acquisition and shall grant to Agent (for the benefit of
the Syndication Parties) a first deed of trust or mortgage on such real estate
(subject to liens permitted by Section 13.3 hereof), such deed of trust or
mortgage to be in form and substance as reasonably specified by Agent.  In
connection with the delivery of any mortgage or deed of trust, Borrower shall,
where required under the guidelines set forth in Subsection 11.1.2 of this
Credit Agreement, deliver to Agent a mortgagee's Title Policy satisfactory to
Agent in such amount as Agent shall specify, but in no event greater than the
value of the real estate, to be obtained at Borrower's sole cost.  In
connection with entering into, as lessee, any lease of an interest in real property
which lease calls for a rental payment equal to or in excess of $25,000.00 per
annum, Borrower shall deliver to Agent a leasehold assignment
& consent (naming Agent as assignee for the benefit of the Syndication
Parties) in form and substance satisfactory to Agent, together with such
consents or estoppels of lessor as Agent shall specify.

12.12 Inspection. 
Borrower shall permit Agent or its agents, during normal business hours or at
such other times as the parties may agree, to examine Borrower's properties,
books, and records, and to discuss Borrower's affairs, finances, operations,
and accounts with its respective officers, directors, employees, and
independent certified public accountants.

12.13 Required Licenses;
Permits; Etc.  Borrower
shall duly and lawfully obtain and maintain in full force and effect all
Required Licenses as appropriate for the business being conducted and
properties owned by Borrower at any given time.

12.14 ERISA.
In the event Borrower adopts , maintains, or
becomes obligated to make payments under, any Borrower Benefit Plan in the
future (which Borrower may not do without the prior written consent of Agent), Borrower
shall: (a) cause each such Borrower Benefit Plan to comply in all material
respects with the Code and ERISA, including but not limited to preparing and
delivering each material report, statement or other document required by ERISA
and the Code within the period specified therein and conforming in form and
substance to the provisions thereof; (b) cause any Borrower Benefit Plan that
is intended to satisfy the requirements of Section 401(a) of the Code to
satisfy such requirements including, but not limited to obtaining a favorable
determination letter with respect to each such Borrower Benefit Plan; and (c)
prepare, deliver, and (d) administer each Borrower Benefit Plan in all
material respects in accordance with the terms of such plan and with ERISA, the
Code, and any other applicable law, except to the extent any failure to comply
with the preceding clauses (a), (b) or (c) would not have a Material Adverse
Effect.  Borrower shall take any actions necessary to terminate its status as a
participating employer in any employee benefit plan (within the meaning of
Section 3(3) of ERISA) sponsored by another entity.  Within ten (10)
Business Days after receiving such notice, Borrower shall furnish to Agent any
notice received by Borrower relating to an assertion of withdrawal liability
imposed by any Multiemployer Plan upon Borrower or Borrower's controlled group
prior to the Closing Date, or relating to any violation of the provisions of
the Code or ERISA asserted by the Department of Labor, the Pension Benefit
Guaranty Corporation or the Department of the Treasury with respect to any
Borrower Benefit Plan that could reasonably be expected to have a Material
Adverse Effect. 

 

 

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12.15 Cattle Acquisition
and Sale. 
In acquiring cattle, Borrower shall: (a) comply with all applicable state and
federal laws, including brand inspection and bill of sale laws in connection
with its acquisition and sale of cattle or other livestock, and (b) take such
steps as are necessary and prudent to be certain that the cattle Borrower
acquires from its members or otherwise, and the cattle it sells to National
Beef, are, in each case, free of any security interest or agister’s or similar
lien, other than the lien created pursuant hereto and to the Security
Documents.  In selling cattle to National Beef, Borrower shall: (x) sell to
National Beef in cash sales only (and not for credit), (y) if National Beef
fails to pay Borrower for such cattle in a timely manner as provided in the Packers
and Stockyards Act (i) give written notice to National Beef (with a copy filed
with the Secretary of Agriculture) within thirty (30) days after payment is due
or within fifteen (15) days after a payment instrument is dishonored, and (ii)
as, and within the time, required by the Packers and Stockyards Act in order to
take advantage of the statutory trust provisions thereof, commence suit against
National Beef for damages or file a reparation complaint with the Secretary of
Agriculture, and (z) not provide to National Beef or otherwise any written
waiver of the trust provisions of the Packers and Stockyards Act.

12.16 This Section Intentionally Omitted.

12.17 This Section Intentionally Omitted.

12.18 This Section
Intentionally Omitted.

12.19 Financial Covenants. 
Borrower shall maintain the following financial covenants to be tested on a
quarterly basis:

(a)      Borrower’s Working
Capital shall be calculated on a consolidated basis and shall be not less than
$2,300,000 measured as of the last day of each Fiscal Quarter;

 

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(b)     Borrower shall maintain
a Debt Service Coverage Ratio of not less than 1.1 to 1.0 measured as of the
end of each Fiscal Quarter; provided that compliance with this
Subsection shall not be required if at the end of such Fiscal Quarter,
Borrower’s Working Capital calculated on a consolidated basis is in excess of
the greater of (i) an amount equal to one half of the Syndication Parties then
current Aggregate Commitment, or (ii) $4,000,000; and

(c)      Borrower’s Net Worth
shall be calculated on a consolidated basis and shall be not less than $70,000,000
measured as of the last day of each Fiscal Quarter.

12.20 Performance
Under Delivery Agreements and Cattle Purchase and Sale Agreement. 
Borrower shall perform in a timely manner all of its obligations under the
Delivery Agreements and the Cattle Purchase and Sale Agreement.

ARTICLE
13.  NEGATIVE COVENANTS.

From and after the date of this
Credit Agreement until the Bank Debt is indefeasibly paid in full and the
Syndication Parties have no obligation to disburse Loan Proceeds, Borrower
agrees that it will observe and comply with the following covenants:

13.1   Borrowing. 
Borrower shall not create, incur, assume or permit to exist: (a) any Debt for
borrowed money or for the deferred purchase price of property or services;
(b) any contingent liabilities, such as guarantees; or (c) any obligations
under leases which have or should have been characterized as capital leases, as
determined in accordance with GAAP, except for:  (w) amounts owing on open
account for purchases and services where such purchases and services were made
or obtained in the ordinary course of Borrower’s business and where such
accounts call for payment within no more than forty-five (45) days from the
date of the billing for such purchases or services; (x) leases and purchase
money financing of property used in the ordinary course of Borrower's business
the aggregate amount of which does not exceed $50,000.00 at any one time;
(y) the Debt outstanding on the date hereof and which is described on Exhibit 13.1
hereto; and (z) Debt constituting any refinancing or refunding of Debt
described in subparagraphs (x) and (y) of this Section, provided that the
principal amount thereof does not increase as a result of any such refinancing
or refunding from the balance owing on the date hereof or on the date of such
refinancing or refunding, whichever is lower. 

13.2   No Other Businesses. 
Borrower shall not transact or engage in any business other than the purchasing
of cattle from members, the selling and marketing of cattle, and the development
of an integrated cattle processing and beef marketing structure (including the
execution of marketing and processing agreements) for the benefit of its members,
the development and marketing of cattle identification and information data,
collection and transfer systems, the facilitating the assignment or lease by members
of their rights and obligations arising out of their interests in Borrower, the
ownership of the NB Interest and participation in management of National Beef.

 

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13.3   Liens. 
Borrower will not create, incur, assume or suffer to exist any mortgage,
pledge, lien, charge or other encumbrance on, or any security interest in, any
of the Collateral, except:

(a)      liens for taxes or
other governmental charges which are not due or remain payable without penalty,
or are being contested in good faith by appropriate actions or proceedings;
provided that such reserves or other appropriate provisions, if any, as shall
be required by GAAP, shall have been made for such taxes or other governmental
charges;

(b)     deposits or pledges to
secure workmen's compensation, unemployment insurance, old age benefits or
other social security obligations or in connection with or to secure the
performance of bids, tenders, trade contracts or leases or to secure statutory
obligations or surety or appeal bonds or other pledges or deposits of like
nature and all in the ordinary course of business;

(c)      mechanics', carriers',
workmen's, repairmen's or other like liens arising in the ordinary course of business
in respect of obligations not yet due or which are being contested in good
faith and by appropriate proceedings;

(d)     easements, rights‐of‐way,
zoning restrictions and other similar matters incidental to the ownership of
property which do not in the aggregate materially detract from the value of
such property or assets or materially impair their use in the operation of the
business of Borrower; and

(e)      purchase money
security interests in property (including any security interest created in a
lease transaction); provided that:  (i) such property is used in the
ordinary course of Borrower's business, provided that such security interests
shall attach only to the property so purchased (or, if applicable, leased),
(ii) the amount of the purchase money financing so secured does not exceed
the amount permitted under Section 13.1 hereof, and (iii) the
purchase (or, if applicable, lease) occurred subsequent to the Closing Date.

13.4   Sale of Assets. 
Borrower will not sell, convey, assign, lease or otherwise transfer or dispose
of, voluntarily, by operation of law or otherwise, any of the Collateral to any
Person, except that; (a) Borrower may dispose of equipment which is obsolete or
no longer used or useful by Borrower in its business so long as (i) no
Event of Default has occurred and is continuing, and (ii) the transfer is
made in an arms length transaction; (b) Borrower may dispose of worn-out
equipment so long as (i) if an Event of Default has occurred and is
continuing, any proceeds are paid to Agent (for the benefit of the Syndication
Parties) and (ii) such sales do not involve equipment having an aggregate
fair market value in excess of $50,000.00 for all such equipment disposed of in
any calendar year; and (c) Borrower may sell cattle, inventory, and farm
products in the ordinary course of its business.

 

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13.5   Liabilities
of Others.  Borrower will not assume, guarantee, endorse
or otherwise become directly or contingently liable in connection with any
obligation of any other Person.

13.6   Payments on Debt. 
Borrower shall not make any principal payment on any Debt except:  (a) Debt
owing hereunder; and (b) so long as no Event of Default or Potential Default
shall exist, other Debt permitted by Section 13.1 hereof.

13.7   Merger; Acquisitions; Business Form; Etc.  Borrower
shall not merge or consolidate with any entity, or acquire all or substantially
all of the assets of any person or entity, or form or create any new subsidiary
or affiliate, change its business form from a Delaware limited liability
company, or commence operations under any other name, organization, or entity,
including any joint venture; provided that Borrower may operate under a
trade name so long as (a) it has made a prior written request to Agent for
permission to do so and (i) Borrower shall have received Agent’s consent, or
(ii) Agent has not responded to such request within ten (10) Business Days of
receipt thereof, in which case Agent shall be deemed to have consented, and (b)
in any case, Borrower shall have taken such action and executed such documents,
including, without limitation, UCC-1 financing statements, as Agent shall
reasonably request to create, perfect, or maintain perfection, of Syndication
Parties’ security interest in the Collateral, including such trade name.

13.8   Loans, Advances
and Investments. 
Except for the purchase of CoBank Equity Interests, Borrower will not make or
permit to remain outstanding any loan or advance to, or own, purchase or
acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to, any Person, except that Borrower may own,
purchase or acquire:

(a)      commercial paper
maturing not in excess of one year from the date of acquisition and rated P1 by
Moody's Investors Service, Inc. or A1 by Standard & Poor's Corporation
on the date of acquisition;

(b)     certificates of deposit
in North American commercial banks rated C or better by Keefe,
Bruyette & Woods, Inc. or 3 or better by Cates Consulting
Analysts, maturing not in excess of one year from the date of acquisition;

(c)      obligations of the
United States government or any agency thereof, the obligations of which are
guaranteed by the United States government, maturing, in each case, not in
excess of one year from the date of acquisition; 

(d)     repurchase agreements
of any bank or trust company incorporated under the laws of the United States
of America or any state thereof and fully secured by a pledge of obligations
issued or fully and unconditionally guaranteed by the United States government;

 

35

	

 

 

 

 

 

(e)      the NB Interest; and

(f)      investments in
CoBank’s cash investment program.

13.9   Transactions
With Related Parties. 
Borrower shall not purchase, acquire, or sell any equipment, other personal
property, real property or services from or to any affiliate, except in the
ordinary course of Borrower's business and upon fair and reasonable terms no
less favorable than would be obtained by Borrower in a comparable arm's‐length
transaction with an unrelated Person; provided that the purchase of
cattle under the terms of the Delivery Agreements and the sale of cattle
pursuant to the terms of the Cattle Purchase and Sale Agreement shall not be
subject to the prohibitions of this Section.

13.10 ERISA. 
Borrower shall not:  (a) adopt, maintain or become obligated to contribute to
any Borrower Benefit Plan without the prior written consent of Agent; (b)
engage in or permit any transaction which results in a “prohibited transaction”
(as such term is defined in Section 406 of ERISA) or in the imposition of
an excise tax pursuant to Section 4975 of the Code; (c) engage in or
permit any transaction or other event which results in a “reportable event” as
such term is defined in Section 4043 of ERISA for any Borrower Pension
Plan; (d) fail to make full payment when due of all amounts which, under
the provisions of any Borrower Benefit Plan, Borrower is required to pay as
contributions thereto; (e) permit to exist any “accumulated funding
deficiency” (as such term is defined in Section 302 of ERISA) in excess of
$25,000.00, whether or not waived, with respect to any Borrower Pension Plan;
(f) fail to make any payments to any “multiemployer plan” that Borrower may be
required to make under any agreement relating to such “multiemployer plan” or
any law pertaining thereto; or (g) terminate any Borrower Pension Plan in
a manner which could result in the imposition of a lien on any property of
Borrower pursuant to Section 4068 of ERISA.  Borrower shall not terminate
any Borrower Pension Plan so as to result in any liability to the Pension
Benefit Guaranty Corporation.  As used in this Section, all terms enclosed
in quotation marks shall have the meanings set forth in ERISA.  Borrower's
failure to comply with any of the foregoing provisions of this
Section shall not constitute a breach of this Credit Agreement or an Event
of Default unless such failure has a Material Adverse Effect. 

 

36

	

 

 

 

 

 

13.11 Payment
of Dividends.  Borrower shall not, directly or indirectly,
declare or pay any dividends on account of any units of any class of its equity
or any of its patronage notices now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any units of any class of its equity or
any of its patronage notices (or set aside or otherwise deposit or invest any
sums for such purpose) for any consideration other than additional units or
patronage notices or apply or set apart any sum, or make any other distribution
(by reduction of capital or otherwise) in respect of any such units of any
class of its equity or any of its patronage notices, or make any other
distribution or allocation of its assets to any holder of units of any class of
its equity or any of its patronage notices, or agree to do any of the
foregoing; provided, that Borrower may, so long as Borrower is treated
as a partnership for tax purposes, make distributions to its unitholders on
account of the federal and state income taxes that would be assessed to such unitholders
based on Borrower’s income, provided that Borrower delivers to the Agent a
certificate that no Event of Default has occurred or will result thereby,
further provided that the aggregate amount of all such distributions with
respect to any calendar year may not exceed the amount of such income which
would be taxable to such unitholders for such calendar year multiplied by the
maximum applicable state and federal income tax rate for the calendar year in
which taxed, and further provided that interim quarterly distributions shall
not exceed seventy five percent (75%) of the estimated federal and state income
taxes that would be assessed to such unitholders based on Borrower’s income
multiplied by the maximum applicable state and federal income tax rate.

13.12 Change in Fiscal Year. 
Borrower shall not change its fiscal year from a year ending on the last
Saturday in the month of August. 

13.13 This Section
Intentionally Omitted.

13.14 Amendment
and/or Waiver of Provisions of Delivery Agreements and/or Cattle Purchase and
Sale Agreement. 
Borrower shall not, without the prior written consent of Agent, amend, or
agree to amend, or waive any material provision of, or give its consent with
respect to any material matter under, any of the Delivery Agreements or the Cattle
Purchase and Sale Agreement.

ARTICLE
14.  INDEMNIFICATION.

14.1   General;
Stamp Taxes; Intangibles Tax. 
Borrower agrees to indemnify and hold Agent and each Syndication Party and
their directors, officers, employees, agents, professional advisers and
representatives (“Indemnified Parties”) harmless from and against any
and all claims, damages, losses, liabilities, costs or expenses whatsoever
which Agent or any other Indemnified Party may incur (or which may be claimed
against any such Indemnified Party by any Person), including attorneys' fees
incurred by any Indemnified Party, arising out of or resulting from: (a) the
material inaccuracy of any representation or warranty of or with respect to
Borrower in this Credit Agreement or the other Loan Documents; (b) the material
failure of Borrower to perform or comply with any covenant or obligation of
Borrower under this Credit Agreement or the other Loan Documents; or (c) the
exercise by Agent of any right or remedy set forth in this Credit Agreement or
the other Loan Documents, provided that Borrower shall have no obligation to
indemnify any Indemnified Party against claims, damages, losses, liabilities,
costs or expenses to the extent that a court of competent jurisdiction renders
a final non-appealable determination that the foregoing are solely the result
of the willful misconduct or gross negligence of such Indemnified Party.  In
addition, Borrower agrees to indemnify and hold the Indemnified Parties
harmless from and against any and all claims, damages, losses, liabilities,
costs or expenses whatsoever which Agent or any other Indemnified Party may
incur (or which may be claimed against any such Indemnified Party by any
Person), including attorneys' fees incurred by any Indemnified Party, arising
out of or resulting from the imposition or nonpayment by Borrower of any stamp
tax, intangibles tax, or similar tax imposed by any state, including any
amounts owing by virtue of the assertion that the property valuation used to
calculate any such tax was understated.  Borrower shall have the right to
assume the defense of any claim as would give rise to Borrower's
indemnification obligation under this Section with counsel of Borrower's
choosing so long as such defense is being diligently and properly conducted and
Borrower shall establish to the Indemnified Party's satisfaction that the amount
of such claims are not, and will not be, material in comparison to the liquid
and unrestricted assets of Borrower available to respond to any award which may
be granted on account of such claim.  So long as the conditions of the
preceding sentence are met, Indemnified Party shall have no further right to
reimbursement of attorney's fees incurred thereafter.  The obligation to
indemnify set forth in this Section shall survive the termination of this
Credit Agreement and other covenants.

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14.2   Indemnification
Relating to Hazardous Substances. 
Borrower shall not locate, produce, treat, transport, incorporate, discharge,
emit, release, deposit or dispose of any Hazardous Substance in, upon, under,
over or from any property owned or held by Borrower, except in accordance with
all Environmental Regulations; Borrower shall not permit any Hazardous
Substance to be located, produced, treated, transported, incorporated,
discharged, emitted, released, deposited, disposed of or to escape in, upon,
under, over or from any property owned or held by Borrower, except in
accordance with Environmental Regulations; and Borrower shall comply with all
Environmental Regulations which are applicable to such property.  If Agent
reasonably believes that an Environmental Regulation has been violated by
Borrower's activities upon property owned or held by Borrower, and if Agent so
requests, Borrower shall have prepared an environmental review, audit,
assessment and/or report relating to the subject property, at Borrower's sole
cost and expense, by an engineer or other environmental expert acceptable to
Agent. Borrower shall indemnify the Indemnified Parties against, and shall
reimburse the Indemnified Parties for, any and all claims, demands, judgments,
penalties, liabilities, costs, damages and expenses, including court costs and
attorneys' fees incurred by the Indemnified Parties (prior to trial, at trial
and on appeal) in any action against or involving the Indemnified Parties,
resulting from any breach of the foregoing covenants in this Section or the
covenants in Section 12.6 hereof, or from the discovery of any Hazardous
Substance in, upon, under or over, or emanating from, such property, it being
the intent of Borrower and the Indemnified Parties that the Indemnified Parties
shall have no liability or responsibility for damage or injury to human health,
the environmental or natural resources caused by, for abatement and/or clean‐up
of, or otherwise with respect to, Hazardous Substances by virtue of the
interest of Agent, or any Syndication Party, in the property created by any
documents securing Bank Debt (including without limitation the Loan Documents)
or as the result of Agent or any Syndication Party exercising any of its rights
or remedies with respect thereto, including but not limited to becoming the
owner thereof by foreclosure or conveyance in lieu of foreclosure; provided
that such indemnification as it applies to the exercise by Agent or any
Syndication Party of its rights or remedies with respect to the Loan Documents
shall not apply to claims arising solely with respect to Hazardous Substances
brought onto such property by Agent or such Syndication Party while engaged in
activities other than operations substantially the same as the operations
previously conducted on such property by Borrower.  The foregoing covenants of
this Section shall be deemed continuing covenants for the benefit of the
Indemnified Parties, and any successors and assigns of the Indemnified Parties,
including but not limited to the holder of any certificate of purchase, any
transferee of the title of Agent or any Syndication Party or any subsequent
owner of the property, and shall survive the satisfaction or release of any
lien, any foreclosure of any lien and/or any acquisition of title to the
property or any part thereof by Agent or any Syndication Party, or anyone
claiming by, through or under Agent or any Syndication Party or Borrower by
deed in lieu of foreclosure or otherwise.  Any amounts covered by the foregoing
indemnification shall bear interest from the date incurred at the Default
Interest Rate, shall be payable on demand, and shall be secured by the Security
Documents.  The indemnification and covenants of this Section shall
survive the termination of this Credit Agreement and other covenants.

 

38

	

 

 

ARTICLE
15.  EVENTS OF DEFAULT; RIGHTS AND REMEDIES.

15.1   Events of Default. 
The occurrence of any of the following events (each an “Event of Default”)
shall, at the option of Agent, terminate the obligation of the Syndication
Parties to make Loans under the Tranche B Commitment and make the entire Bank
Debt immediately due and payable (provided, that in the case of an Event of
Default under Subsection 15.1(f) the obligation of the Syndication Parties
to make Loans under the Tranche B Commitment shall terminate automatically and all
Bank Debt shall automatically and immediately become due and payable without
any action by or on behalf of Agent), and Agent may exercise all rights and
remedies for the collection of any Bank Debt and take whatever action it deems
necessary to secure itself, all without notice of default, presentment or
demand for payment, protest or notice of nonpayment or dishonor, or other
notices or demands of any kind or character:

(a)      Failure of Borrower to
pay within five (5) days of the date when due, whether by acceleration or
otherwise, any of the Bank Debt in accordance with this Credit Agreement or the
other Loan Documents.

(b)     Any representation or
warranty set forth in any Loan Document, any request for Loan Proceeds or any
financial statements, or in connection with any transaction contemplated by any
such document, shall prove in any material respect to have been false or
misleading when made by Borrower.

(c)      Any default by
Borrower, as applicable, in the performance or compliance with the covenants,
promises, conditions or provisions of Sections 12.3, 12.8, 12.12, 12.15, 12.19,
13.1, 13.3, 13.4, 13.5, 13.7, 13.10, 13.11 or 13.12 of this Credit Agreement.

 

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(d)     Any default by
Borrower, as applicable, in the performance or compliance with the covenants,
promises, conditions or provisions of Sections 12.5, 12.6, 12.7, 12.9, 12.10,
(except as provided in Section 15.1(e)), 12.11, 12.13, 12.14, 13.6, 13.8, or
13.9 of this Credit Agreement, and such failure continues for fifteen (15) days
after Borrower learns of such failure to comply, whether by Borrower's own
discovery or through notice from Agent. 

(e)      The failure of
Borrower to pay when due, or failure to perform or observe any other obligation
or condition with respect to any of the following obligations to any Person, beyond
any period of grace under the instrument creating such obligation: (i) any
Debt for borrowed money or for the deferred purchase price of property or
services, (ii) any obligations under leases which have or should have been
characterized as capitalized leases, as determined in accordance with GAAP, or
(iii) any contingent liabilities, such as guaranties, for the obligations
of others relating to Debt for borrowed money or for the deferred purchase
price of property or services or relating to obligations under leases which
have or should have been characterized as capitalized leases, as determined in
accordance with GAAP; provided that no such failure will be deemed to be an
Event of Default hereunder unless and until the aggregate amount owing under obligations
with respect to which such failures have occurred and are continuing is at
least $50,000.00.

(f)      Borrower applies for
or consents to the appointment of a trustee or receiver for any part of its
properties; any bankruptcy, reorganization, debt arrangement, dissolution or
liquidation proceeding is commenced or consented to by Borrower; or any
application for appointment of a receiver or a trustee, or any proceeding for
bankruptcy, reorganization, debt management or liquidation is filed for or
commenced against Borrower, and is not withdrawn or dismissed within sixty (60)
days thereafter.

(g)      Failure of Borrower to
comply with any other provision of this Credit Agreement or the other Loan
Documents not constituting an Event of Default under any of the preceding
subparagraphs of this Section 15.1, and such failure continues for thirty
(30) days after Borrower learns of such failure to comply, whether by
Borrower's own discovery or through notice from Agent. 

(h)      This Subsection Intentionally
Omitted. 

(i)      The entry of one or
more judgments in an aggregate amount in excess of $50,000.00 against Borrower
not stayed, discharged or paid within thirty (30) days after entry.

 

40

	

 

 

 

 

 

(j)      The occurrence of an
event of default under any Delivery Agreement (if the total number of cattle to
be delivered on an annual basis under all Delivery Agreements as to which all
such an event of default exists at any time exceeds, in the aggregate,
twenty-five percent (25%) of the number of cattle which Borrower is required,
at such time, to be delivered under the Cattle Purchase and Sale Agreement), is
not cured, in either case, within ten (10) days thereof.

(k)     The occurrence of a
Matured Default (as defined in the National Beef Credit Agreement) that is the
subject of a Notice of Default as described in Section 12.3 of the National
Beef Credit Agreement. 

15.2   No Advance. 
The Syndication Parties shall have no obligation to disburse Loan Proceeds if a
Potential Default or an Event of Default shall occur and be continuing.

15.3   Rights and Remedies. 
In addition to the remedies set forth in Section 15.1 and 15.2 hereof,
upon the occurrence of an Event of Default, Agent shall, subject to the
provisions of Section 15.4 hereof, be entitled to exercise all the rights
and remedies provided in the Security Documents and other Loan Documents and by
any applicable law, including, without limitation, the Uniform Commercial Code
as enacted in the state of Colorado or the state where the Collateral is
located at such time, whichever provides Agent with greater rights.  Each and
every right or remedy granted to Agent pursuant to this Credit Agreement and
the other Loan Documents, or allowed Agent by law or equity, shall be cumulative. 
Failure or delay on the part of Agent to exercise any such right or remedy
shall not operate as a waiver thereof.  Any single or partial exercise by Agent
of any such right or remedy shall not preclude any future exercise thereof or
the exercise of any other right or remedy.

15.4   Limitation on
Rights and Remedies. 
Notwithstanding the provisions of Section 15.3 hereof, when the sole Event
of Default is an Event of Default caused by Section 15.1(j) hereof, Agent
will, for a period of time designated by Agent in its sole discretion, refrain
from accelerating the Loans if Borrower promptly proposes, and diligently
pursues, a course of action to remedy such default or minimize the effects on
Borrower’s operations of such default (for example, by executing a similar
agreement with another Person to supply the same number of cattle or to provide
the same processing or marketing services on substantially the same economic
terms) to which course of action the Majority Lenders give Agent their prior
written approval in their sole discretion.

ARTICLE
16.  AGENCY AGREEMENT.

 

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16.1   Funding
of Syndication Interest. 
Each Syndication Party, severally but not jointly, hereby irrevocably agrees to
fund its Syndication Share of the Loans pursuant to the terms and conditions
contained herein; provided that no Syndication Party shall be required
to fund Loans in an amount such that the aggregate principal balance owing to
such Syndication Party after such funding would be in excess of such
Syndication Party's Maximum Syndication Amount.  Each Syndication Party's
interest (“Syndication Interest”) in the Loans hereunder shall be
without recourse to Agent or any other Syndication Party and shall not be
construed as a loan from any Syndication Party to Agent or any other
Syndication Party.

16.2   Syndication
Parties' Obligations to Remit Funds. 
Each Syndication Party agrees to remit an amount equal to the amount of the
Loans requested by Borrower as set forth in a request for Loan Proceeds made in
accordance with this Agreement multiplied by its Syndication Share (“Advance
Payment”) as such Notice of Loan Advance may be sent, in the manner
provided in Section 16.3 hereof, for Loans during the Availability Period.

16.3   Notice
and Timing of Advance Payment. 
On the Business Day on which Agent approves a request for Loan Proceeds, Agent
shall provide each Syndication Party with a notice (“Notice of Loan Advance”),
indicating, among other things, the amount (“Loan Advance Amount”) and date
of the a request for Loan Proceeds and the amount of the Syndication Party’s
Advance Payment.  Each Syndication Party shall remit its Advance Payment
directly to Agent on the date specified in the Notice of Loan Advance which
shall not be later than the date of the a request for Loan Proceeds (“Syndication
Party Advance Date”).  

16.4   Syndication
Party's Failure to Remit Funds. 
If a Syndication Party (“Delinquent Syndication Party”) fails to remit
its Advance Payment in full by 11:00 a.m. Central time on the Syndication Party
Advance Date (the unpaid amount of any such payment being hereinafter referred
to as the “Delinquent Amount”), in addition to any other remedies
available hereunder, any other Syndication Party or Syndication Parties may,
but shall not be obligated to, advance the Delinquent Amount (the Syndication
Party or Syndication Parties which advance such Delinquent Amount are referred
to as the “Contributing Syndication Parties”), in which case (a) the
Delinquent Amount which any Contributing Syndication Party advances shall not
count as an Advance Payment against the Maximum Syndication Amount of the
Contributing Syndication Party, and (b) the Delinquent Syndication Party shall
be obligated to pay to Agent, for the account of the Contributing Syndication
Parties, interest on the Delinquent Amount at a rate of interest equal to the
rate of interest which Borrower is obligated to pay on the Delinquent Amount (“Delinquency
Interest”) until the Delinquent Syndication Party remits the full
Delinquent Amount and remits all Delinquency Interest to Agent, which will
distribute such payments to the Contributing Syndication Parties (pro rata
based on the amount of the Delinquent Amount which each of them (if more than
one) paid) on the same Business Day as such payments are received by Agent if
received no later than 11:00 a.m. Central time or the next Business Day if
received by Agent thereafter.  In addition, the Contributing Syndication
Parties shall be entitled to share, on the same pro rata basis, and Agent shall
pay over to them, for application against Delinquency Interest and the
Delinquent Amount, the Delinquent Syndication Party's Payment Distribution and
any fee distributions made under Section 16.11 hereof until the Delinquent
Amount and all Delinquency Interest have been paid in full.  For voting
purposes the Agent shall readjust the Syndication Shares of such Delinquent
Syndication Party and the Contributing Syndication Parties from time to time
first to reflect the advance of the Delinquent Amount by the Contributing
Syndication Parties, and then to reflect the full or partial reimbursement to
the Contributing Syndication Parties of such Delinquent Amount.  In the event
no Syndication Party elects to pay the Delinquent Amount with respect to any
Loan Advance Amount but Borrower elects to receive such Loan Advance Amount
(less the Delinquent Amount), the proportionate share of Payment Distributions
to which the Delinquent Syndication Party is entitled and its proportionate
voting rights shall be adjusted to reflect its failure to pay the Delinquent
Amount.  As between the Delinquent Syndication Party and the Contributing
Syndication Parties, the Delinquent Syndication Party's interest in its Note
shall be deemed to have been partially assigned to the Contributing Syndication
Parties in the amount of the Delinquent Amount and Delinquency Interest owing
to the Contributing Syndication Parties from time to time.

 

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16.5   Agency Appointment.  Each of the
Syndication Parties hereby designates and appoints Agent to act as agent to
service and collect the Loans and its respective Note and to take such action
on behalf of such Syndication Party with respect to the Loans and such Note,
and to execute such powers and to perform such duties, as specifically
delegated or required herein, as well as to exercise such powers and to perform
such duties as are reasonably incident thereto, and to receive and benefit from
such fees and indemnifications as are provided for or set forth herein, until
such time as a successor is appointed and qualified to act as Agent.

16.6   Power and Authority
of Agent. 
Without limiting the generality of the power and authority vested in Agent
pursuant to Section 16.5 hereof, the power and authority vested in Agent
includes, but is not limited to, the following:

16.6.1 Advice. 
To solicit the advice and assistance of each of the Syndication Parties
concerning the administration of the Loans and the exercise by Agent of its
various rights, remedies, powers, and discretions with respect thereto. 

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

16.6.3 Proceedings. 
To initiate, prosecute, defend, and to participate in, actions and proceedings
in its name as Agent for the ratable benefit of the Syndication Parties. 

16.6.4 Retain Professionals. 
To retain attorneys, accountants, and other professionals to provide advice and
professional services to Agent, with their fees and expenses reimbursable to
Agent by Syndication Parties pursuant to Section 16.18 hereof.

16.6.5 Incidental Powers. 
To exercise powers reasonably incident to Agent's discharge of its duties
enumerated in Section 16.7 hereof.

 

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16.7   Duties
of Agent.  The duties of Agent hereunder shall consist
of the following:

16.7.1 Possession of Documents.  To
safekeep one original of each of the Loan Documents other than the Notes (which
will be in the possession of the Syndication Party named as payee therein).

16.7.2 Distribute Payments.  To
receive and distribute to the Syndication Parties payments made by Borrower
pursuant to the Loan Documents.

16.7.3 Loan
Administration. 
Subject to the provisions of Section 16.9 hereof, to, on behalf of and for
the ratable benefit of all Syndication Parties, in accordance with customary
banking practices, exercise all rights, powers, privileges, and discretion to
which Agent is entitled to administer the Loans. 

16.7.4 Collection
Action Upon Default.
Each Syndication Party agrees that upon its learning of any facts which would
constitute a Potential Default or Event of Default, it shall promptly notify
Agent by a writing designated as a notice of default specifying in detail the
nature of such facts and default, and Agent shall promptly send a copy of such
notice to all other Syndication Parties.  Agent shall be entitled to assume
that no Event of Default or Potential Default has occurred or is continuing
unless an officer thereof primarily responsible for Agent's duties as such with
respect to the Loans or primarily responsible for the credit relationship
between Agent and Borrower has actual knowledge of facts which would result in
or constitute a Potential Default or Event of Default, or has received written
notice from Borrower of such fact, or has received written notice of default
from a Syndication Party.  In the event Agent has obtained actual knowledge (in
the manner described above) or received written notice of the occurrence of a
Potential Default or Event of Default as provided in the preceding sentences,
Agent may, but is not required to exercise or refrain from exercising any
rights which may be available under the Loan Documents or at law on account of
such occurrence and shall be entitled to use its discretion with respect to
exercising or refraining from exercising any such rights, unless and until
Agent has received specific written instruction from the Majority Lenders to
refrain from exercising such rights or to take specific designated action, in
which case it shall follow such instruction; provided that Agent shall not be
required to take any action which will subject it to personal liability, or
which is or may be contrary to any provision of the Loan Documents or
applicable law.  Agent shall not be subject to any liability by reason of its
acting or refraining from acting pursuant to any such instruction.

 

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16.8   Agent's
Resignation or Removal. 
Agent may resign at any time by giving at least sixty (60) days' prior written
notice of its intention to do so to each of the Syndication Parties and
Borrower.  After the receipt of such notice, the Syndication Parties holding in
the aggregate at least 66 2/3% of the Syndication Shares of the Loans (“Majority
Lenders”) shall appoint a successor (“Successor Agent”).  If (a) no
Successor Agent shall have been so appointed which is either (i) a Syndication
Party, or (ii) if not a Syndication Party, which is a Person approved by
Borrower, or (b) if such Successor Agent has not accepted such appointment, in
either case within forty-five (45) days after the retiring Agent's giving of
such notice of resignation, then the retiring Agent may appoint a Successor
Agent which shall be a bank or a trust company organized under the laws of the
United States of America or any state thereof and having a combined capital,
surplus and undivided profit of at least $250,000,000.  Any Agent may be
removed upon the written demand of the Majority Lenders, which demand shall
also appoint a Successor Agent.  Upon the appointment of a Successor Agent
hereunder, (a) the term “Agent” shall for all purposes of this Credit Agreement
thereafter mean such Successor Agent, and (b) the Successor Agent shall notify
Borrower of its identity and of the information called for in Subsection 17.4.2
hereof.  After any retiring Agent's resignation hereunder as Agent, or the
removal hereunder of any Agent, the provisions of this Credit Agreement shall
continue to inure to the benefit of such Agent as to any actions taken or
omitted to be taken by it while it was Agent under this Credit Agreement. 

16.9   Consent
Required for Certain Actions. 
Except as provided in Section 15.4 hereof, and notwithstanding the fact that
this Credit Agreement may otherwise provide that Agent may act at its
discretion, Agent may not take any of the following actions (nor may the
Syndication Parties take the action described in Subsection 16.9.1(c))
with respect to, or under, the Loan Documents without the prior written
consent, given after notification by Agent of its intention to take any such action
(or notification by such Syndication Parties as are proposing the action
described in Subsection 16.9.1(c) of their intention to do so), of
Syndication Parties holding in the aggregate, at the time of such notification:

16.9.1 Unanimous. 
One hundred percent (100%) of the Syndication Shares before:

(a)      Agreeing to an
increase in the Aggregate Commitment amount or an extension of the Maturity
Date;

(b)     Agreeing to a reduction
in the amount, or to a delay in the due date, of any payment by Borrower of
interest, principal, or fees; provided, however, this restriction shall not
apply to a delay in payment granted by Agent in the ordinary course of
administration of the Loans and the exercise of reasonable judgment, so long as
such payment delay does not exceed five (5) days;

(c)      Reducing the voting
rights percentage set forth in this Subsection 16.9.1; or

(d)     Releasing the lien on
any of the Collateral.

16.9.2 Majority Lenders. 
A sufficient interest to constitute the Majority Lenders before:

 

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(a)      Consenting to any
action, amendment, or granting any waiver, not covered in
Subsection 16.9.1; or

(b)     Agreeing to amend
Article 16 of this Credit Agreement. 

16.9.3 Action Without Vote. 
Notwithstanding any other provisions of this Section, Agent may take the
following actions without obtaining the consent of the Syndication Parties:

(a)      Determining (i) whether
the conditions to Loans have been met, and (ii) the amount of such Loans; 

(b)     Intentionally Omitted;
and

(c)      Approving Borrower’s
use of a trade name as provided in Section 13.7 hereof.

If no written consent or denial
is received from a Syndication Party within five (5) Business Days after
written notice of any proposed action as described in this Section is
delivered to such Syndication Party by Agent, such Syndication Party shall be
conclusively deemed to have consented thereto for the purposes of this Section.

16.10 Distribution
of Principal and Interest. 
Agent will receive and accept all payments (including prepayments) of principal
and interest made by Borrower on the Loans and the Notes and will hold all such
payments in trust for the benefit of all present and future Syndication
Parties, and, if requested in writing by the Majority Lenders, in an account
segregated from Agent's other funds and accounts (“Payment Account”). 
After the receipt by Agent of any payment representing interest or principal on
the Loans, Agent shall remit to each Syndication Party an amount equal to such
payment, multiplied by the Syndication Party's Syndication Share (“Payment
Distribution”) no later than the same Business Day as such payment is
received by Agent if received no later than 11:00 a.m. Central Time or the next
Business Day if received by Agent thereafter.  Any Syndication Party's rights
to its Payment Distribution shall be subject to the rights of any Contributing
Syndication Parties to such amounts as set forth in Section 16.4 hereof.

16.11 Distribution
of Certain Amounts. 
Agent shall (a) receive and hold in trust for the benefit of all present and
future Syndication Parties, in the Payment Account and, if requested in writing
by the Majority Lenders, segregated from Agent's other funds and accounts and
(b) shall remit to the Syndication Parties, as indicated, the amounts described
below:

 

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16.11.1        Funding
Losses.  The amount of any Funding Losses paid by
Borrower to Agent in connection with a prepayment of any portion of LIBOR Loans
shall be distributed to the Syndication Parties in accordance with their
respective Syndication Shares no later than the same Business Day that payment
of such Funding Losses is received by Agent, if received no later than 11:00
a.m. Central time, or the next Business Day if received by Agent thereafter.

16.11.2        Proceeds of Collateral.  The
amount of proceeds received, net of expenses of collection, from foreclosure,
or transfer in lieu of foreclosure, of any Collateral shall be distributed to
the Syndication Parties in accordance with their respective Syndication Shares
no later than the same Business Day that payment of such Funding Losses is
received by Agent, if received no later than 11:00 a.m. Central time, or the
next Business Day if received by Agent thereafter.

16.12 Possession of Loan
Documents. 
The Loan Documents (other than the Notes) shall be held by Agent in its name,
for the ratable benefit of itself and the other Syndication Parties without
preference or priority.

16.13 Collateral Application.  The
Syndication Parties shall have no interest in any other loans made to Borrower
by any other Syndication Party other than the Loans, or in any property taken
as security for any other loan or loans made to Borrower by any other
Syndication Party, or in any property now or hereinafter in the possession or
control of any other Syndication Party, which may be or become security for the
Loans solely by reason of the provisions of a security instrument that would
cause such security instrument and the property covered thereby to secure
generally all indebtedness owing by Borrower to such other Syndication Party. 
Notwithstanding the foregoing, to the extent such other Syndication Party
applies such funds or the proceeds of such property to reduction of the Loans,
such other Syndication Party shall share such funds or proceeds with all
Syndication Parties according to their respective Syndication Shares.  In the
event that any Syndication Party shall obtain payment, whether partial or full,
from any source in respect of the Loans, including without limitation payment
by reason of the exercise of a right of offset, banker's lien, general lien, or
counterclaim, reducing such Syndication Party's outstanding balance in the Loans
to below its Syndication Share, such Syndication Party will promptly make such
adjustments (which may include payment in cash or the purchase of further
syndications or participations in the Loans) to the end that such excess
payment shall be shared with all other Syndication Parties in accordance with
their respective Syndication Shares.  

 

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16.14 Amounts
Required to be Returned. 
If Agent makes any payment to a Syndication Party in anticipation of the
receipt of final funds from Borrower, and such funds are not received from
Borrower, or if excess funds are paid by Agent to any Syndication Party as the
result of a miscalculation by Agent, then Syndication Party shall, on demand of
Agent, forthwith return to Agent any such amounts, plus interest thereon (from
the day such amounts were transferred by Agent to the Syndication Party to, but
not including, the day such amounts are returned by Syndication Party) at a
rate per annum equal to the Federal Funds Rate in effect on the date of such
demand.  If Agent is required at any time to return to Borrower or a trustee,
receiver, liquidator, custodian, or similar official any portion of the
payments made by Borrower to Agent, whether pursuant to any bankruptcy or
insolvency law or otherwise, then each Syndication Party shall, on demand of
Agent, forthwith return to Agent any such payments transferred to such
Syndication Party by Agent but without interest or penalty (unless Agent is
required to pay interest or penalty on such amounts to the person recovering
such payments).

16.15 Reports
and Information to Syndication Parties. 
Agent shall use reasonable efforts to provide to Syndication Parties, as soon
as practicable after actual knowledge thereof is acquired by an officer thereof
primarily responsible for Agent's duties as such with respect to the Loans or
primarily responsible for the credit relationship between Agent and Borrower,
any material factual information which has a material adverse effect on the
creditworthiness of Borrower and Borrower hereby authorizes such disclosure by
Agent to the Syndication Parties (and by the Syndication Parties to any of
their participants).  Failure of Agent to provide the information referred to
in this Section or in Subsection 16.7.4 shall not result in any liability
upon, or right to make a claim against, Agent except where a court of competent
jurisdiction renders a final non-appealable determination that such failure is
a result of the willful misconduct or gross negligence of Agent.  Syndication
Parties acknowledge and agree that all information and reports received
pursuant to this Credit Agreement will be received in confidence in connection
with their Syndication Interest, and that such information and reports
constitute confidential information and shall not, without the prior written
consent of Agent or Borrower, as applicable, be (x) disclosed to any third
party (other than Agent, another Syndication Party or potential Syndication
Party, or a participant or potential participant in the interest of a
Syndication Party, which disclosure is hereby approved by Borrower), except
pursuant to appropriate legal or regulatory process, or (y) used by the
Syndication Party except in connection with the Loans and its Syndication
Interest.

16.16 Standard of Care. 
Agent shall not be liable to Syndication Parties for any error in judgment or
for any action taken or not taken by Agent or its agents, except for its gross
negligence or willful misconduct.  Subject to the preceding sentence, Agent
will exercise the same care in administering the Loans and the Loan Documents
as it exercises for similar loans which it holds for its own account and risk,
and Agent shall not have any further responsibility to the Syndication
Parties.  Without limiting the foregoing, Agent may rely on the advice of
counsel concerning legal matters and on any written document it believes to be
genuine and correct and to have been signed or sent by the proper Person or
Persons.

 

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16.17 No
Trust Relationship. 
Neither the execution of this Credit Agreement, nor the sharing in the Loans,
nor the holding of the Loan Documents in its name by Agent, nor the management
and administration of the Loans and Loan Documents by Agent (including the
obligation to hold certain payments and proceeds in the Payment Account in
trust for the Syndication Parties), nor any other right, duty or obligation of
Agent under or pursuant to this Credit Agreement is intended to be or create,
and none of the foregoing shall be construed to be or create, any express,
implied or constructive trust relationship between Agent and any Syndication
Party.  Each Syndication Party hereby agrees and stipulates that Agent is not
acting as trustee for such Syndication Party with respect to the Loans, this
Credit Agreement, or any aspect of either, or in any other respect.

16.18 Sharing of Costs
and Expenses. 
To the extent not paid by Borrower, each Syndication Party will promptly upon
demand reimburse Agent, ratably according to their respective Syndication
Shares, for all reasonable costs, disbursements, and expenses incurred by Agent
on or after the date of this Credit Agreement for legal, accounting,
consulting, and other services rendered to Agent in its role as Agent in the
administration of the Loans, interpreting the Loan Documents, and protecting,
enforcing, or otherwise exercising any rights, both before and after default by
Borrower under the Loan Documents, and including, without limitation, all costs
and expenses incurred in connection with any bankruptcy proceedings; provided,
however, that the costs and expenses to be shared in accordance with this
Section shall not include any costs or expenses incurred by CoBank solely
as a Syndication Party in connection with the Loans, nor to Agent's internal
costs and expenses.

16.19 Syndication
Parties' Indemnification of Agent. 
Each of the Syndication Parties agree to indemnify Agent, including any
Successor Agent, and its directors, officers, employees, agents, professional
advisers and representatives (“Indemnified Agency Parties”), (to the
extent not reimbursed by Borrower, and without in any way limiting the
obligation of Borrower to do so), ratably according to their respective
Syndication Shares, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Loans and/or the
expiration or termination of the Syndication Interests or this Credit
Agreement) be imposed on, incurred by or asserted against Agent (or any of the
Indemnified Agency Parties while acting for Agent or for any Successor Agent)
in any way relating to or arising out of this Credit Agreement or the Loan
Documents, or the performance of the duties of Agent hereunder or thereunder or
any action taken or omitted while acting in the capacity of Agent under or in
connection with any of the foregoing; provided that the Syndication Parties
shall not be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of an Indemnified Agency Party to the extent that any
of the forgoing result from the gross negligence or willful misconduct of that
Indemnified Agency Party as determined by a court of competent jurisdiction. 
The agreements and obligations in this Section shall survive the payment
of the Loans, the Syndication Interests, and the expiration or termination of
this Credit Agreement.

 

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16.20 Books
and Records.  Agent shall maintain such books of account
and records relating to the Loans as it maintains with respect to other loans
of similar type and amount, and which shall clearly and accurately reflect the
Syndication Interest of each Syndication Party.  Syndication Parties, or their
agents, may inspect such books of account and records at all reasonable times
during Agent's regular business hours.

16.21 This Section
Intentionally Omitted. 

16.22 Representations
and Warranties of All Parties. 
Agent and each Syndication Party represents and warrants that:  (a) the
execution and delivery of, and performance of its obligations under, this
Credit Agreement is within its power and has been duly authorized by all
necessary corporate and other action by it; (b) this Credit Agreement is in
compliance with all applicable laws and regulations promulgated under such laws
and does not conflict with nor constitute a breach of its charter or by-laws
nor any agreements by which it is bound, and does not violate any judgment,
decree or governmental or administrative order, rule or regulation applicable
to it; (c) no approval, authorization or other action by, or declaration to or
filing with, any governmental or administrative authority or any other Person
is required to be obtained or made by it in connection with the execution and
delivery of, and performance of its obligations under, this Credit Agreement;
and (d) this Credit Agreement has been duly executed by it, and constitutes the
legal, valid, and binding obligation of such Person, enforceable in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and general equitable principles
(regardless of whether such enforceability is considered in a proceeding at law
or in equity).  Each Syndication Party that is a state or national bank
represents and warrants that the act of entering into and performing its
obligations under this Credit Agreement has been approved by its board of
directors or its loan committee and such action was duly noted in the written
minutes of the meeting of such board or committee, and that it will furnish
Agent with a certified copy of such minutes or an excerpt therefrom reflecting
such approval. 

16.23 Representations
and Warranties of CoBank. 
CoBank, in its role as Syndication Party and as Agent, makes no express or
implied representation or warranty and assumes no responsibilities with respect
to the due authorization, execution, or delivery of the Loan Documents; the
accuracy of any information, statements, or certificates provided by Borrower,
the legality, validity, or enforceability of the Loan Documents; the filing or
recording of any document; the collectibility of the Loans; the performance by
Borrower of any of its obligations under the Loan Documents; or the financial
condition or solvency of Borrower or any other party obligated with respect to
the Loans or the Loan Documents.  

 

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16.24 Syndication
Parties' Independent Credit Analysis. 
Each Syndication Party acknowledges receipt of true and correct copies of all
Loan Documents (other than any Note payable to another Syndication Party) from
Agent.  Each Syndication Party agrees and represents that it has relied upon
its independent review (a) of the Loan Documents, and (b) any information
independently acquired by such Syndication Party from Borrower or otherwise in
making its decision to acquire an interest in the Loans independently and
without reliance on CoBank or Agent.  Each Syndication Party represents and
warrants that it has obtained such information as it deems necessary (including
any information such Syndication Party independently obtained from Borrower or
others) prior to making its decision to acquire an interest in the Loans.  Each
Syndication Party further agrees and represents that it has made its own
independent analysis and appraisal of and investigation into each Borrower's
authority, business, operations, financial and other condition,
creditworthiness, and ability to perform its obligations under the Loan
Documents and has relied on such review in making its decision to acquire an
interest in the Loans.  Each Syndication Party agrees that it will continue to
rely solely upon its independent review of the facts and circumstances related
to Borrower, and without reliance upon CoBank or Agent, in making future decisions
with respect to all matters under or in connection with the Loan Documents and
the Loans.  CoBank and Agent assume no responsibility for the financial
condition of Borrower or for the performance of Borrower's obligations under
the Loan Documents nor for the performance of any party to a Delivery Agreement
or of National Beef under the Cattle Purchase and Sale Agreement.  Except as
otherwise expressly provided herein, neither CoBank nor any other Syndication
Party shall have any duty or responsibility to furnish to any other Syndication
Parties any credit or other information concerning Borrower which may come into
its possession. 

16.25 No Joint Venture
or Partnership. 
Neither the execution of this Credit Agreement, the sharing in the Loans, nor
any agreement to share in payments or losses arising as a result of this
transaction is intended to be or to create, and the foregoing shall not be
construed to be, any partnership, joint venture or other joint enterprise
between Agent and any Syndication Party, nor between or among any of the
Syndication Parties.

 

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16.26 Purchase
for Own Account; Restrictions on Transfer; Participations. 
Each Syndication Party represents that it has acquired and is retaining its
Syndication Interest in the Loans for its own account in the ordinary course of
its banking or financing business and not with a view toward the sale,
distribution, further participation, or transfer thereof.  Each Syndication
Party other than CoBank agrees that it will not sell, assign, convey or
otherwise dispose of (“Transfer”), or create or permit to exist any lien
or security interest on all or any part of its Syndication Interest in the Loans,
without the prior written consent of Agent and Borrower (which consent will not
be unreasonably withheld); provided that:  (a) any such Transfer (except a
Transfer to another Syndication Party or a Transfer by CoBank) must be in a
minimum amount of  $5,000,000.00; (b) each Syndication Party must maintain
a Syndication Interest (measured as the amount of its Maximum Syndication
Amount) of no less than $10,000,000.00, unless it Transfers its entire
Syndication Interest; (c) the transferee must execute an agreement
substantially in the form of Exhibit 16.26 hereto (“Syndication
Acquisition Agreement”) and  assume all of the transferor's obligations
hereunder and execute such documents as Agent may reasonably require; and (d) the
Syndication Party making such Transfer must pay Agent an assignment fee of
$2,500.00.  Any Syndication Party may participate any part of its Syndication
Interest in the Loans to any Person with the prior written consent of Agent and
Borrower (which consent will not be unreasonably withheld), and each
Syndication Party understands and agrees that in the event of any such
participation:  (x) its Syndication Share and Maximum Syndication Amount
will not change on account of such participation; (y) except as provided in
Section 16.27 hereof, the participant will have no rights under this
Credit Agreement, including, without limitation, voting rights or the right to
receive payments or distributions; and (z) Agent shall continue to deal
directly with the Syndication Party with respect to the Loans and the
Syndication Party's Syndication Interest (including with respect to voting
rights) as though no participation had been granted and will not be obligated
to deal directly with any participant.  Notwithstanding any provision contained
herein to the contrary, any Syndication Party may at any time pledge or assign
all or any portion of its Syndication Interest to any Federal Reserve Bank in
accordance with applicable law.  CoBank reserves the right to sell participations
on a non-patronage basis.

16.27 Certain
Participants' Voting Rights.
All Persons which purchase a participation interest in CoBank's interest as a
Syndication Party hereunder may, in CoBank's sole discretion (or as required in
any agreement under which such purchase is made and governed), be allowed by
CoBank to vote, on a Dollar basis, on any matter requiring or allowing CoBank,
in its capacity as a Syndication Party, to provide or withhold its consent, or
to otherwise vote on any proposed action.

16.28 Method of Making Payments. 
Payment and transfer of all amounts owing or to be paid or remitted hereunder,
including, without limitation, payment of the Advance Payment by Syndication
Parties, and distribution of principal or interest payments or fees or other
amounts by Agent, shall be by wire transfer in accordance with the instructions
contained on Exhibit 16.28 hereto (“Wire Instructions”).

16.29 Events of
Syndication Default/Remedies.

 

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16.29.1        Syndication
Party Default. 
Any of the following occurrences, failures or acts, with respect to any of the
Syndication Parties shall constitute an Event of Syndication Default hereunder
by such party: (a) if any representation or warranty made by such party in this
Credit Agreement shall be found to have been untrue in any material respect; (b)
if such party fails to make any distributions or payments required under this
Credit Agreement within five (5) days of the date required; (c) if such party
breaches any other covenant, agreement, or provision of this Credit Agreement
which breach shall have continued uncured for a period of thirty (30)
consecutive days after such breach first occurs, unless a shorter period is
required to avoid prejudicing the rights and position of the other Syndication
Parties; (d) if any agency having supervisory authority over such party, or any
creditors thereof, shall file a petition to reorganize or liquidate such party
pursuant to any applicable federal or state law or regulation and such petition
shall not be discharged or denied within fifteen (15) days after the date on
which it is filed; (e) if by the order of a court of competent jurisdiction or
by any appropriate supervisory agency, a receiver, trustee or liquidator shall
be appointed for such party or for all or any material part of its property or
if such party shall be declared insolvent; or (f) if such party shall be
dissolved, or shall make an assignment for the benefit of its creditors, or
shall file a petition seeking to take advantage of any debtors' act, including
the bankruptcy act, or shall admit in writing its inability to pay its debts
generally as they become due, or shall consent to the appointment of a receiver
or liquidator of all or any material part of its property.

16.29.2        Remedies. 
Upon the occurrence of an Event of Syndication Default, the non-defaulting
parties, acting by, or through the direction of, a simple majority (determined
on the basis of Syndication Share) of the non-defaulting parties, may, in
addition to any other remedy specifically set forth in this Credit Agreement,
have and exercise any and all remedies available generally at law or equity,
including the right to damages and to specific performance.

16.30 Withholding Taxes.  Each
Syndication Party represents that it is entitled to receive any payments to be
made to it hereunder without the withholding of any tax and will furnish to
Agent and to Borrower such forms, certifications, statements and other
documents as Agent or Borrower may request from time to time to evidence such
Syndication Party’s exemption from the withholding of any tax imposed by any
jurisdiction or to enable Agent or Borrower, as the case may be, to comply with
any applicable laws or regulations relating thereto.  Without limiting the
effect of the foregoing, if any Syndication Party is not created or organized
under the laws of the United States of America or any state thereof, such
Syndication Party will furnish to Agent and Borrower IRS Form 4224 or Form
1001, or such other forms, certifications, statements or documents, duly
executed and completed by such Syndication Party, as evidence of such
Syndication Party’s exemption from the withholding of United States tax with
respect thereto.  Notwithstanding anything herein to the contrary, Borrower
shall not be obligated to make any payments hereunder to such Syndication Party
until such Syndication Party shall have furnished to Agent and Borrower the
requested form, certification, statement or document. 

16.31 This Section
Intentionally Omitted.

16.32 Further Assurances. 
Agent and each Syndication Party agree to take whatever steps and execute such
documents may be reasonable and necessary to implement this Article 16 and to
carry out fully the intent thereof.

ARTICLE
17.  MISCELLANEOUS.

 

53

	

 

 

 

 

 

17.1   Costs
and Expenses.  To the extent permitted by law, Borrower
agrees to pay to Agent and the Syndication Parties, on demand, all reasonable out-of-pocket
costs and expenses (a) incurred by Agent (including, without limitation, the
reasonable fees and expenses of counsel retained by Agent, and including fees
and expenses incurred for consulting, appraisal, engineering, inspection, and
environmental assessment services) in connection with the preparation,
negotiation, and execution of the Loan Documents and the transactions
contemplated thereby, and processing the requests for Loan Proceeds; and (b)
incurred by Agent or any Syndication Party (including, without limitation, the
reasonable fees and expenses of counsel retained by Agent and the Syndication
Parties) in connection with the enforcement or protection of the Syndication
Parties' rights under the Loan Documents upon the occurrence of an Event of
Default or upon the commencement of an action by Borrower against Agent or any
Syndication Party (except that if the court makes a specific finding that
Borrower has prevailed on all or substantially all of its claims in such action
brought by Borrower, Borrower shall not be obligated to pay the out-of-pocket
costs and expenses of Agent and the Syndication Parties in connection with such
action), including without limitation collection of the Loans (regardless of
whether such enforcement or collection is by court action or otherwise). 
Borrower shall not be obligated to pay the costs or expenses of any Person
whose only interest in the Loans is as a holder of a participation interest.

17.2   Submission
to Jurisdiction; Waiver of Bond and Trial by Jury. 
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 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 BORROWER. BORROWER HEREBY CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO BORROWER AT
THE ADDRESS SET FORTH IN SECTION 17.4 OF THIS AGREEMENT.  SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.  AT THE OPTION OF THE AGENT,
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.  BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED
FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION
OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS
A MATERIAL INDUCEMENT FOR THE AGENT, AND THE LENDERS TO ENTER INTO THIS AGREEMENT
AND EACH SUCH OTHER LOAN DOCUMENT.

17.3   Jury Waiver. 
IT IS MUTUALLY AGREED BY AND BETWEEN EACH SYNDICATION PARTY AND BORROWER THAT
THEY EACH WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
BROUGHT BY EITHER OF THEM AGAINST THE OTHER PARTY ON ANY MATTER WHATSOEVER
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS CREDIT AGREEMENT, THE NOTES,
OR THE OTHER LOAN DOCUMENTS.

 

54

	

 

 

 

 

 

17.4   Notices. 
All notices, requests and demands required or permitted under the terms of this
Credit Agreement shall be in writing and (a) shall be addressed as set forth
below or at such other address as either party shall designate in writing, (b)
shall be deemed to have been given or made:  (i) if delivered personally,
immediately upon delivery, (ii) if by telex, telegram or facsimile
transmission, immediately upon sending and upon confirmation of receipt,
(iii) if by nationally recognized overnight courier service with
instructions to deliver the next Business Day, one (1) Business Day after
sending, and (iv) if by United States Mail, certified mail, return receipt
requested, five (5) days after mailing.

17.4.1 Borrower:

U.S. Premium Beef, LLC

12200 North Ambassador Drive, Suite
501

Kansas City, Missouri 64163

FAX: (816) 713-8810

Attention: Chief Executive Officer

 

17.4.2 Agent:

CoBank, ACB

P.O. Box 5110,

Denver, Colorado 80217

FAX: (720) 528-6225

Attention:  James Matzat, Vice
President

 

17.4.3 CoBank:

CoBank, ACB

P.O. Box 5110,

Denver, Colorado 80217

FAX: (720) 528-6225

Attention:  James Matzat, Vice
President

17.5   This
Section Intentionally Left Blank..

17.6   Successors and Assigns.  This
Credit Agreement shall be binding upon and inure to the benefit of Borrower,
Agent, and Syndication Parties, and their respective successors and assigns,
except that Borrower may not assign or transfer its rights or obligations
hereunder without the prior written consent of all of the Syndication Parties.

 

55

	

 

 

 

 

 

17.7   Severability. 
The invalidity or unenforceability of any provision of this Credit Agreement or
the other Loan Documents shall not affect the remaining portions of such
documents or instruments; in case of such invalidity or unenforceability, such
documents or instruments shall be construed as if such invalid or unenforceable
provisions had not been included therein.

17.8   Entire Agreement.  This Credit
Agreement (together with all exhibits hereto, which are incorporated herein by
this reference) and the other Loan Documents represent the entire understanding
of Agent, each Syndication Party, and Borrower with respect to the subject
matter hereof and shall replace and supersede any previous agreements of the
parties with respect to the subject matter hereof.  

17.9   Applicable Law. 
To the extent not governed by federal law, this Credit Agreement and the other
Loan Documents, and the rights and obligations of the parties hereto and
thereto shall be governed by and interpreted in accordance with the internal
laws of the State of Colorado, without giving effect to any otherwise
applicable rules concerning conflicts of law.

17.10 Captions. 
The captions or headings in this Credit Agreement and any table of contents
hereof are for convenience only and in no way define, limit or describe the
scope or intent of any provision of this Credit Agreement.

17.11 Complete Agreement; Amendments.  THIS
CREDIT AGREEMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS ARE INTENDED BY THE
PARTIES HERETO TO BE A COMPLETE AND FINAL EXPRESSION OF THEIR AGREEMENT AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR OR CONTEMPORANEOUS ORAL
AGREEMENT.  BY INITIALING IN THE MARGIN, AGENT, EACH SYNDICATION PARTY, AND BORROWER
ACKNOWLEDGE AND AGREE THAT NO UNWRITTEN ORAL AGREEMENT EXISTS BETWEEN THEM WITH
RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT.  This Credit Agreement may not
be modified or amended unless such modification or amendment is in writing and
is signed by Borrower, Agent, and all Syndication Parties (and each Syndication
Party hereby agrees to execute any such amendment approved pursuant to Section
16.9 hereof).  Borrower agrees that it shall reimburse Agent for all fees and
expenses incurred by Agent in retaining outside legal counsel in connection
with any amendment or modification to this Credit Agreement requested by
Borrower.

 

56

	

 

 

 

 

 

17.12 Additional
Costs of Maintaining Loans. 
Borrower shall pay to Agent from time to time such amounts as Agent may
determine to be necessary to compensate any Syndication Party for any increase
in costs to such Syndication Party which Agent determines, based on information
presented to it by such Syndication Party, are attributable to such Syndication
Party's making or maintaining Loans hereunder or its obligation to make such Loans,
or any reduction in any amount receivable by such Syndication Party under this
Credit Agreement or the Note payable to it in respect to such Loans or such
obligation (such increases in costs and reductions in amounts receivable being
herein called “Additional Costs”), resulting from any change after the
date of this Credit Agreement in United States federal, state, municipal, or
foreign laws or regulations (including Regulation D of the Federal Reserve
Board), or the adoption or making after such date of any interpretations,
directives, or requirements applying to a class of banks including such
Syndication Party of or under any United States federal, state, municipal, or
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof (“Regulatory Change”), which:  (a) changes the basis
of taxation of any amounts payable to such Syndication Party under this Credit
Agreement or the Note payable to such Syndication Party in respect of such Loans
(other than taxes imposed on the overall net income of such Syndication Party);
or (b) imposes or modifies any reserve, special deposit, or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, such Syndication Party; or (c) imposes
any other condition affecting this Credit Agreement or the Note payable to such
Syndication Party (or any of such extensions of credit or liabilities).  Agent
will notify Borrower of any event occurring after the date of this Credit
Agreement which will entitle such Syndication Party to compensation pursuant to
this Section as promptly as practicable after it obtains knowledge thereof
and determines to request such compensation.  Agent shall include with such
notice, a certificate from such Syndication Party setting forth in reasonable
detail the calculation of the amount of such compensation.  Determinations by
Agent for purposes of this Section of the effect of any Regulatory Change
on the costs of such Syndication Party of making or maintaining Loans or on
amounts receivable by such Syndication Party in respect of Loans, and of the
additional amounts required to compensate such Syndication Party in respect of
any Additional Costs, shall be conclusive absent manifest error, provided that
such determinations are made on a reasonable basis. 

17.13 Capital
Requirements.  In the event that the introduction of or any
change in:  (a) any law or regulation; or (b) the judicial, administrative, or
other governmental interpretation of any law or regulation; or (c) compliance
by any Syndication Party or any corporation controlling any such Syndication
Party with any guideline or request from any governmental authority (whether or
not having the force of law) has the effect of requiring an increase in the
amount of capital required or expected to be maintained by such Syndication
Party or any corporation controlling such Syndication Party, and such
Syndication Party certifies that such increase is based in any part upon such
Syndication Party's obligations hereunder, and other similar obligations,
Borrower shall pay to such Syndication Party such additional amount as shall be
certified by such Syndication Party to Agent and to Borrower to be the net
present value (discounted at the Base Rate) of (a) the amount by which such
increase in capital reduces the rate of return on capital which such
Syndication Party could have achieved over the period remaining until the
Maturity Date but for such introduction or change, (b) multiplied by such
Syndication Party's Syndication Share of the Aggregate Commitment.  Agent will
notify Borrower of any event occurring after the date of this Credit Agreement
that will entitle any such Syndication Party to compensation pursuant to this
Section as promptly as practicable after it obtains knowledge thereof and
of such Syndication Party's determination to request such compensation. Agent
shall include with such notice, a certificate from such Syndication Party
setting forth in reasonable detail the calculation of the amount of such
compensation.  Determinations by any Syndication Party for purposes of this
Section of the effect of any increase in the amount of capital required to
be maintained by any such Syndication Party and of the amount of compensation
owed to any such Syndication Party under this Section shall be conclusive
absent manifest error, provided that such determinations are made on a
reasonable basis.

57

	

 

 

 

 

 

17.14 Replacement Notes. 
Upon receipt by Borrower of evidence satisfactory to it of: (a) the loss,
theft, destruction or mutilation of any Note, and (in case of loss, theft or
destruction) of the agreement of the Syndication Party to which the Note was
payable to indemnify Borrower, and upon surrender and cancellation of such
Note, if mutilated; or (b) the assignment of any Syndication Interest and Note
relating thereto, or any portion thereof, pursuant to this Credit Agreement,
then Borrower will pay any unpaid principal and interest (and Funding Losses,
if applicable) then or previously due and payable on such Note and will (upon
delivery of such Note for cancellation, unless covered by subparagraph (a) of
this Section) deliver in lieu of such Note a new Note or, in the case of an
assignment of a portion of a Syndication Interest new Notes, for any remaining
balance. 

17.15 Patronage
Payments.  Borrower acknowledges and agrees that: (a) only
that portion of the Loans represented by CoBank’s Syndication Share which is
retained by CoBank for its own account is entitled to patronage distributions
in accordance with CoBank’s bylaws and its practices and procedures related to
patronage distribution; and (b) any patronage, or similar, payments to which
Borrower is entitled on account its ownership of CoBank Equity Interests or
otherwise will not be based on any portion of CoBank’s Syndication Share in
which CoBank has at any time granted a participation interest. 

17.16 Mutual Release. 
Upon full indefeasible payment and satisfaction of the Bank Debt and Notes and
the other obligations contained in this Credit Agreement, the parties,
including Borrower, Agent, and each Syndication Party shall, except as provided
in Article 14 hereof, thereupon automatically each be fully, finally, and
forever released and discharged from any further claim, liability, or
obligation in connection with the Bank Debt.

17.17 Liberal Construction. 
This Credit Agreement constitutes a fully negotiated agreement between
commercially sophisticated parties, each assisted by legal counsel, and shall
not be construed and interpreted for or against any party hereto. 

17.18 Advice of Counsel. 
Borrower acknowledges and affirms that this Credit Agreement and the Loan
Documents have been fully and freely negotiated, including, without limitation,
the provisions of Sections 11.1.11, 17.2, and 17.9 hereof, and that Borrower
has had the opportunity to be advised of all of its rights by counsel.

 

58

	

 

 

 

 

 

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

BORROWER:

 

U.S. PREMIUM BEEF, LLC, a limited liability company formed under the
laws of the State of Delaware.

 

 

By:                                                              

Name: 

Title:

 

AGENT:

 

COBANK, ACB

 

 

By:                                                              

Name: 

Title: 

 

 

 

 

59

	

 

 

 

 

 

TABLE OF CONTENTS

	
		
		ARTICLE 1
		DEFINED TERMS

			1
	
		
		ARTICLE 2
		LOAN AMOUNT

			13
	
		
		2.1
		Loans
	13
	
		
		ARTICLE 3
		PURPOSE

			13
	
		
		3.1
		Purpose
	13
	
		
		ARTICLE 4
		AVAILABILITY

			13
	
		
		4.1
		Availability
	14
	
		
		4.2 Conversion of
		Loans

			14
	
		
		ARTICLE 5
		INTEREST AND FEES

			15
	
		
		5.1 Interest Calculation and
		Payment

			15
	
		
		5.2 Additional Provisions for LIBOR Rate
		Loans
	15
	
		
		5.2.1 Inapplicability or Unavailability of LIBOR Rate

			16
	
		
		5.2.2 Change in Law; LIBOR Rate Loan Unlawful

			16
	
		
		5.3
		Fees
	16
	
		
		5.3.1 Non Use
		Fee

			16
	
		
		5.4 This Section Intentionally
		Omitted

			16
	
		
		ARTICLE 6
		NOTES; PAYMENTS

			17
	
		
		6.1 Promissory
		Notes

			17
	
		
		6.2 Principal
		Payments
	17
	
		
		6.3 Interest
		Payments
	17
	
		
		6.4 Application of
		Payments
	17
	
		
		6.5 Manner of
		Payment

			17

 
  

i

	

 

 

 

 

 

	
		
		6.6 This Section Intentionally
		Omitted
	17
	
		
		ARTICLE 7
		PREPAYMENTS.
	18
	
		
		7.1 Voluntary
		Prepayments
	18
	
		
		7.1.1 Funding
		Losses
	18
	
		
		7.2 This Section Intentionally
		Omitted
	18
	
		
		7.3 This Section Intentionally
		Omitted
	18
	
		
		ARTICLE 8
		COBANK EQUITY
	18
	
		
		ARTICLE 9
		SECURITY
	19
	
		
		9.1 Borrower's
		Assets
	19
	
		
		9.2 This Section Intentionally
		Omitted
	20
	
		
		ARTICLE 10
		REPRESENTATIONS AND WARRANTIES

			20
	
		
		10.1 Organization, Good Standing,
		Etc

			20
	
		
		10.2 Corporate Authority, Due Authorization;
		Consents
	20
	
		
		10.3
		Litigation
	20
	
		
		10.4 No
		Violations
	20
	
		
		10.5 Binding
		Agreement
	21
	
		
		10.6 Compliance with
		Laws
	21
	
		
		10.7 Principal Place of
		Business
	21
	
		
		10.8 This Section Intentionally
		Omitted

			21
	
		
		10.9 Payment of
		Taxes
	21
	
		
		10.10 Licenses and
		Approvals
	21
	
		
		10.11 Employee Benefit
		Plans
	22
	
		
		10.12 Equity
		Investments
	22

 

ii

	

 

 

 

 

 

	
		
		10.13 Real Property; Title to Real and Personal
		Property
	22
	
		
		10.14 Personal
		Property
	22
	
		
		10.15 Environmental
		Compliance
	22
	
		
		10.16 Fiscal
		Year
	22
	
		
		10.17 Material
		Agreements
	23
	
		
		10.18 Regulations T, U and
		X
	23
	
		
		10.19 Trademarks, Trade Names,
		etc

			23
	
		
		10.20 This Section Intentionally
		Omitted

			23
	
		
		10.21 This Section Intentionally
		Omitted

			23
	
		
		10.22
		Disclosure
	23
	
		
		ARTICLE 11
		CONDITIONS TO ADVANCES
	23
	
		
		11.1 Conditions to
		Closing
	23
	
		
		11.1.1 Loan
		Documents
	23
	
		11.1.2 Searches; UCC
		Filings

			24
	
		
		11.1.3 This Section Intentionally
		Omitted
	24
	
		
		11.1.4 Organizational
		Documents
	24
	
		
		11.1.5 Evidence of Corporate
		Action
	24
	
		
		11.1.6 This Section Intentionally
		Omitted
	24
	
		
		11.1.7 Evidence of
		Insurance

			24
	
		
		11.1.8 This Section Intentionally
		Omitted
	24
	
		
		11.1.9 This Section Intentionally
		Omitted
	24
	
		
		11.1.10 Material
		Agreements

			24
	
		
		11.1.11 This Section Intentionally
		Omitted
	24

 

iii

	

 

 

 

	
		 

			
		 
	
		
		11.1.12 No Material Change

			
		24
	
		
		11.1.13 Fees and Expenses

			
		24
	
		11.1.14 CoBank
		Equity Interest Purchase Obligation

			
		24
	
		
		11.1.15 This Section Intentionally Omitted

			
		24
	
		
		11.1.16 This Section Intentionally Omitted

			
		24
	
		
		11.1.17 This Section Intentionally Omitted

			
		25
	
		
		11.1.18 This Section Intentionally Omitted

			
		25
	
		
		11.1.19 This Section Intentionally Omitted

			
		25
	
		
		11.1.20 This Section Intentionally Omitted

			
		25
	
		
		11.1.21 This Section Intentionally Omitted

			
		25
	
		
		11.1.22 This Section Intentionally Omitted

			
		25
	
		
		11.1.23 Further Assurances

			
		25
	
		
		11.2 Conditions to Loans

			
		25
	
		
		11.2.1 Request For Loan Proceeds

			
		25
	
		
		11.2.2 Possession of Documents

			
		25
	
		
		11.2.3 This Section Intentionally Omitted

			
		25
	
		
		11.2.4 This Section Intentionally Omitted

			
		25
	
		
		11.2.5 This Section Intentionally Omitted

			
		25
	
		
		11.2.6 National Beef Acknowledgment, Consent and Agreement

			
		25
	
		
		11.2.7 This Section Intentionally Omitted

			
		26
	
		
		11.2.8 This Section Intentionally Omitted

			
		26
	
		
		11.2.9 Default

			
		26
	
		
		11.2.10 Representations and Warranties

			
		26

 

iv

	

 

 

 

 

 

	
		
		11.3 Additional Disbursement Conditions
	26
	
		
		ARTICLE 12
AFFIRMATIVE COVENANTS
	26
	
		
		12.1 Books and Records
	26
	
		
		12.2 Reports and Notices
	26
	
		
		12.2.1 Annual Financial Statements
	27
	
		
		12.2.2 Quarterly Financial Statements
	27
	
		
		12.2.3 Notice of Suit, Adverse Change or Default
	27
	
		
		12.2.4 Notice of Certain Changes
	27
	
		
		12.2.5 This Section Intentionally Omitted
	27
	
		
		12.2.6 This Section Intentionally Omitted
	27
	
		
		12.2.7 Notice of Environmental Litigation
	27
	
		
		12.2.8 Regulatory and Other Notices
	28
	
		
		12.2.9 Adverse Action Regarding Required Licenses
	28
	
		
		12.2.10 Default Under Delivery Agreements or Cattle Purchase and Sale
		Agreement
	28
	
		
		12.2.12 Additional Information
	28
	
		
		12.3 Eligibility
	28
	
		
		12.4 Maintenance of Existence and Qualification
	29
	
		
		12.5 Compliance with Legal Requirements and Agreements
	29
	
		
		12.6 Compliance with Environmental Laws
	29
	
		
		12.7 Taxes
	29
	
		
		12.8 Insurance
	30
	
		
		12.9 Title to Assets and Maintenance
	30
	
		
		12.10 Payment of Liabilities
	31

 

v

	

 

 

 

	
		
		12.11 Further Assurances; Real Property Security Interests
	31
	
		
		12.12 Inspection
	31
	
		
		12.13 Required Licenses; Permits; Etc
	31
	
		12.14 ERISA

			32
	
		
		12.15 Cattle Acquisition and Sale
	32
	
		
		12.16 This Section Intentionally Omitted
	32
	
		
		12.17 This Section Intentionally Omitted
	32
	
		
		12. This Section Intentionally Omitted
	32
	
		
		12.19 Financial Covenants
	32
	
		
		12.20 Performance Under Delivery Agreements and Cattle Purchase and Sale
		Agreement
	33
	
		
		ARTICLE 13
NEGATIVE COVENANTS
	33
	
		
		13.1 Borrowing
	33
	
		
		13.2 No Other Businesses
	33
	
		
		13.3 Liens
	34
	
		
		13.4 Sale of Assets
	34
	
		
		13.5 Liabilities of Others
	35
	
		
		13.6 Payments on Debt
	35
	
		
		13.7 Merger; Acquisitions; Business Form; Etc
	35
	
		
		13.8 Loans, Advances and Investments
	35
	
		
		13.9 Transactions With Related Parties
	36
	
		13.10 ERISA

			36
	
		
		13.11 Payment of Dividends
	37
	
		
		13.12 Change in Fiscal Year
	37

 

vi

	

 

 

 

 

 

	
		
		13.13 This Section Intentionally Omitted
	37
	
		
		13.14 Amendment and/or Waiver of Provisions of Delivery Agreements
		and/or Cattle Purchase and Sale Agreement
	37
	
		
		ARTICLE 14
INDEMNIFICATION
	37
	
		
		14.1 General; Stamp Taxes; Intangibles Tax
	38
	
		
		14.2 Indemnification Relating to Hazardous Substances
	39
	
		
		ARTICLE 15
		EVENTS OF DEFAULT; RIGHTS AND REMEDIES
	39
	
		
		15.1 Events of Default
	39
	
		
		15.2 No Advances
	41
	
		
		15.3 Rights and Remedies
	41
	
		
		15.4 Limitation on Rights and Remedies
	41
	
		
		ARTICLE 16
AGENCY AGREEMENT
	41
	
		
		16.1 Funding of Syndication Interest
	42
	
		
		16.2 Syndication Parties' Obligations to Remit Funds
	42
	
		
		16.3 Notice and Timing of Advance Payment
	42
	
		
		16.4 Syndication Party's Failure to Remit Funds
	43
	
		
		16.5 Agency Appointment
	43
	
		
		16.6 Power and Authority of Agent
	43
	
		
		16.6.1 Advice
	43
	
		
		16.6.2 Documents
	43
	
		
		16.6.3 Proceedings
	43
	
		
		16.6.4 Retain Professionals
	43
	
		
		16.6.5 Incidental Powers
	43
	
		
		16.7 Duties of Agent
	44

 

 

vii

	

 

 

				
					
					16.7.1 Possession of Documents
	44
	
					
					16.7.2 Distribute Payments
	44
	
					
					16.7.3 Loan Administration
	44
	
					
					16.7.4 Collection Action Upon Default
	44
	
					
					16.8 Agent's Resignation or Removal
	45
	
					
					16.9 Consent Required for Certain Actions
	 45
	
					
					16.9.1 Unanimous
	45
	
					
					16.9.2 Majority Lenders
	45
	
					
					16.9.3 Action Without Vote
	46
	
					
					16.10 Distribution of Principal and Interest
	46
	
					
					16.11 Distribution of Certain Amounts
	46
	
					
					16.11.1 Funding Losses
	47
	
					
					16.11.2 Proceeds of Collateral
	47
	
					
					16.12 Possession of Loan Documents
	47
	
					
					16.13 Collateral Application
	47
	
					
					16.14 Amounts Required to be Returned
	48
	
					
					16.15 Reports and Information to Syndication Parties

						48
	
					
					16.16 Standard of Care
	48
	
					
					16.17 No Trust Relationship
	49
	
					
					16.18 Sharing of Costs and Expenses
	49
	
					
					16.19 Syndication Parties' Indemnification of Agent
	49
	
					
					16.20 Books and Records
	50
	
					
					16.21 This Section Intentionally Omitted
	50

 

viii

	

 

				
					
					16.22 Representations and Warranties of All Parties
	50
	
					16.23 Representations and Warranties of CoBank

						50
	
					
					16.24 Syndication Parties' Independent Credit Analysis

						51
	
					
					16.25 No Joint Venture or Partnership
	51
	
					
					16.26 Purchase for Own Account; Restrictions on Transfer;
					Participations
	52
	
					
					16.27 Certain Participants' Voting Rights
	52
	
					
					16.28 Method of Making Payments
	52
	
					
					16.29 Events of Syndication Default/Remedies
	52
	
					
					16.29.1 Syndication Party Default
	53
	
					
					16.29.2 Remedies
	53
	
					
					16.30 Withholding Taxes
	53
	
					
					16.31 This Section Intentionally Omitted
	53
	
					
					16.32 Further Assurances
	53
	
					
					ARTICLE 17
MISCELLANEOUS
	53
	
					
					17.1 Costs and Expenses
	54
	
					
					17.2 Submission to Jurisdiction; Waiver of Bond and Trial by
					Jury
	54
	
					
					17.3 Jury Waiver
	54
	
					
					17.4 Notices
	55
	
					
					17.4.1 Borrower
	55
	
					17.4.2 CoBank

						55
	
					17.4.2 CoBank

						55
	
					
					17.5 This Section Intentionally Left Blank
	55
	
					
					17.6 Successors and Assigns
	55

 

 

 

ix

	

 

 

 

 

 

	
		
		17.7
		Severability
	56
	
		
		17.8 Entire
		Agreement
	56
	
		
		17.9 Applicable
		Law
	56
	
		
		17.10
		Captions
	56
	
		
		17.11 Complete Agreement;
		Amendments

			56
	
		
		17.12 Additional Costs of Maintaining
		Loans
	57
	
		
		17.13 Capital
		Requirements
	58
	
		
		17.14 Replacement
		Notes
	58
	
		
		17.15 Patronage
		Payments
	58
	
		
		17.16 Mutual
		Release
	58
	
		
		17.17 Liberal
		Construction
	58
	
		
		17.18 Advice of
		Counsel
	58

 

 

		
			 

			

 

x

	

 

 

 

 

 

EXHIBITS 

 

Exhibit 1.29(a)        Delivery Agreement (Even Slots) Form

 

Exhibit 1.29(b)        Delivery Agreement (Odd Slots) Form

 

Exhibit 4.2              Form of Notice of Borrowing

 

Exhibit 6.1              Promissory Note Form

 

Exhibit 10.3            Litigation

 

Exhibit 10.7            Borrower's
Business Location(s)

 

Exhibit 10.10          Required Licenses and Consents

 

Exhibit 10.12          Equity Investments

 

Exhibit 10.13          Interests in Real Property;
Permitted Encumbrances

 

Exhibit 10.17          Material Agreements

 

Exhibit 10.19          Trade Names, Trademarks, etc.

 

Exhibit 13.1            Existing
Indebtedness

 

Exhibit 16.26          Syndication Acquisition Agreement

 

Exhibit 16.28          Wire Instructions

 

	 

 

		
			xi

			

	

 

 

 

 

 

U.S. PREMIUM BEEF,
LLC

EXHIBIT 1.29(a)

TO THE AMENDED AND
RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT

DELIVERY AGREEMENT
(EVEN SLOTS) FORM

 

Attached

 

 

 

 

 

 

 

 

 

 

		
			xii

			

 

 

	

 

 

 

 

 

U.S. PREMIUM BEEF,
LLC

EXHIBIT 1.29(b)

TO THE AMENDED AND
RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT

DELIVERY AGREEMENT
(ODD SLOTS) FORM

 

Attached

 

 

 

 

 

 

 

 

 

 

		
			xiii

			

 

 

	

 

 

 

 

 

U.S. PREMIUM BEEF,
LLC

EXHIBIT 4.2

TO THE AMENDED AND
RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT

FORM OF NOTICE OF
BORROWING

 

Attached

 

 

 

 

 

 

 

 

 

 

 

		
			xiv

			

 

 

	

 

 

 

 

 

FORM
OF NOTICE OF BORROWING/CONVERSION/CONTINUATION

 

 

CoBank, ACB, as Administrative Agent

5500 S. Quebec Street

Greenwood Village, Colorado  80111

 

Ladies and
Gentlemen:

Pursuant to that certain Amended and Restated Credit Agreement and
Security Agreement, dated as of June 22, 2009 (as such Amended and Restated
Credit Agreement and Security Agreement may hereafter be amended, modified,
supplemented, extended or restated, the “Credit Agreement”), among U.S.
Premium Beef, LLC (“Borrower”), CoBank, ACB, as Agent (“Agent”)
and a Syndication Party, and such other Syndication Parties as from time to
time may become a party to the Credit Agreement.  Borrowers hereby request that
Agent take the actions indicated below.  Capitalized terms used but not defined
herein have the meanings given to them in the Credit Agreement.

Note:  The following requirements apply to all requests:

-        Requests must be made no later than 11:00 am (Denver, Colorado
time) on the Business Day for Loans that are Base Rate Loans.

-        Requests must be made no later than 11:00 am (Denver, Colorado
time) on the Business Day for Loans that are LIBOR Rate Loans or for
conversions to or continuations of LIBOR Rate Loans.

-        Each request for Loans shall be in a minimum amount of $25,000
and an integral multiple of $25,000.

-        No more than ten LIBOR Loans may be outstanding at any one
time.

 

 

 

 

 

		
			xv

			

 

 

	

 

 

 

 

 

___   
REQUEST FOR BORROWING

___    REQUEST FOR CONVERSION

___    REQUEST FOR
CONTINUATION 

Borrower hereby
requests a continuation / conversion under the Tranche A Commitments in the
amount of $____________, to be made on _______, 20__ and to bear interest
pursuant to the interest rate option(s) checked below:  

          ___    Base Rate Loan in the principal amount of $___________

          ___    LIBOR Loan option in the
principal amount of $___________, for an Interest Period of 

__1 month    __2 months      /_3 months   
   6
months

Borrower hereby
requests an advance/ continuation / conversion under the Tranche B Commitments
in the amount of $____________, to be made on _______, 20__ and to bear
interest pursuant to the interest rate option(s) checked below:  

          ___    Base Rate Loan in the principal amount of $___________

          ___    LIBOR Loan option in the
principal amount of $___________, for an Interest Period of 

__1 month    __2 months   
  /_3 months       6
months

 

In connection with such request, Borrower hereby certifies as follows:

(a)  The amount available as
reduced pursuant to the Credit Agreement is $__________________; 

(b) The aggregate principal balance of
Loans outstanding (not including this requested Loan) is $______________; and

(c)  Therefore, the amount
available, calculated as provided in the definition thereof in the Credit
Agreement, is $_______________ ((a) minus (b)).

 

 

 

 

		
			xvi

			

 

 

	

 

 

 

 

 

REQUEST FOR
CONVERSION / CONTINUATION:

Borrower hereby
requests that the following __________ Loan(s) be converted / continued as set
forth above:

Description of Loan(s) to be Converted / Continued  [check one]:

___    On [insert date] _________, convert / continue
$________________ of the Base Rate Loan under the __________.

___    Upon expiration of its current Interest Period, convert /
continue the LIBOR Loan under the __________ in the principal amount of
$_______________, the Interest Period for which expires on [insert date]:
__________________.   

[If a new borrowing:  The borrowing will be used for the following
purpose: [PLEASE PROVIDE PURPOSE]].

          The
undersigned hereby certifies that, both before and after giving effect to the
borrowing, conversion or continuation request above (i) all of the representations
and warranties contained in the Credit Agreement, together with all
supplemental disclosures delivered to Agent prior to the date hereof, are true,
correct and complete in all material respects as of the date hereof, except for
any representation or warranty limited by its terms to a specific date and
taking into account any amendments to the Exhibits as a result of any disclosures
made in writing by Borrower to Agent after the Closing Date which disclosures
are acceptable to Agent, (ii) no Event of Default has occurred and is
continuing on the date hereof, (iii) no order, judgment or decree of any court,
or arbitrator purports to enjoin or restrain any Syndication Party from making
any Loan, (iv) since the Closing Date, there has not occurred any event or
condition that has had or would reasonably be expected to have, in the
aggregate, a material adverse effect on Borrower's financial condition, results
of operations or business, (v) all Loan Documents are in full force and
effect, and (vi) the undersigned is authorized to execute and deliver this
Notice on behalf of Borrower.

 

U.S.
PREMIUM BEEF, LLC

 

By:
                                         

Title:
                                       

Date:_________________________

 

 

 

		
			xvii

			

 

 

	

 

 

 

 

 

U.S. PREMIUM BEEF,
LLC

EXHIBIT 6.1

TO THE AMENDED AND
RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT

PROMISSORY NOTE
FORM

 

Attached

 

 

 

 

 

 

 

 

		
			xviii

			

 

 

	

 

 

 

 

 

NOTE

Term Loan -
Tranche A and Tranche B

	
		
		$15,316,763.34 
	
		June 22, 2009

 

FOR VALUE RECEIVED, U.S.
PREMIUM BEEF, LLC, a Delaware limited liability company (“Maker”), promises to
pay to the order of COBANK, ACB (“Payee”) at the office of the Agent (as
defined in the Credit Agreement), c/o CoBank, ACB at 5500 South Quebec Street,
Greenwood Village, Colorado 80111, or such other place as the Agent shall
direct in writing, the principal sum of Fifteen Million Three Hundred Sixteen
Thousand Seven Hundred Sixty-Three and 34/100ths Dollars ($15,316,763.34) or,
if less, the amount outstanding under this Note for Loans made pursuant to the
Amended and Restated Credit Agreement and Security Agreement dated as of June
22, 2009, by and between CoBank, ACB (for its own benefit as a Syndication
Party, and as the Agent for the benefit of the present and future Syndication
Parties as named or defined therein), and Maker (as it may be amended from time
to time, the “Credit Agreement”) and any Bank Debt related thereto.  This Note
is issued and delivered to Payee pursuant to the Credit Agreement.  All
capitalized terms used in this Note and not otherwise defined herein shall have
the same meanings as set forth in the Credit Agreement.

The unpaid balance of this Note
from time to time outstanding shall bear interest as set forth in the Credit
Agreement.  Interest shall be payable as provided in the Credit Agreement. 
Principal shall be payable on the Maturity Date and as otherwise provided in
the Credit Agreement. This Note has been issued by Maker to Payee pursuant to
the Credit Agreement and reference is made thereto for specific terms and
conditions under which this Note is made and to which this Note is subject.

Upon the occurrence of an Event
of Default, Maker agrees that the Agent and the Payee shall have all rights and
remedies set forth in the Credit Agreement, including without limitation the
rights of acceleration set forth in the Credit Agreement.  In addition, the
Agent and the Payee shall have the right to recover all costs of collection and
enforcement of this Note as provided in the Credit Agreement.

Maker and any endorser,
guarantor, surety or assignor hereby waives presentment for payment, demand,
protest, notice of protest, and notice of dishonor and nonpayment of this Note,
and all defenses on the ground of delay, suretyship, impairment of collateral,
or of extension of time at or after maturity for the payment of this Note.

This Note shall be governed in
all respects by the law of the State of Colorado.

Maker:

U.S. PREMIUM
BEEF, LLC

 

By: 
_____________________________

 

 

 

 

		
			xix

			

 

 

	

 

 

 

 

 

Name:__________________________ 

Title:___________________________

 

 

 

 

 

 

 

		
			xx

			

 

 

	

 

 

 

 

 

U.S. PREMIUM BEEF,
LLC

EXHIBIT 10.3

TO THE AMENDED AND
RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT

LITIGATION

 

None

 

 

 

 

 

 

 

 

		
			xxi

			

 

	

 

 

 

 

 

U.S. PREMIUM BEEF,
LLC

EXHIBIT 10.7

TO THE AMENDED AND
RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT

BORROWER’S
BUSINESS LOCATIONS

 

Chief Executive Office

U.S. Premium Beef, LLC

12200 N.  Ambassador Drive, Suite 501

Kansas City, Missouri 64195

Secondary Location

U.S. Premium Beef, LLC

100 Military Ave., Suite 201

Dodge City, KS 67801

 

 

 

 

 

 

 

		
			xxii

			

 

	

 

 

 

 

 

 

U.S. PREMIUM BEEF,
LLC

EXHIBIT 10.10

TO THE AMENDED AND
RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT

REQUIRED LICENSES

 

Licensed to transact business in:

          City of Kansas City, Missouri

 

Registered to transact business in:

State of Kansas

          State of Missouri

 

 

 

 

 

 

 

 

		
			xxiii

			

	

 

 

 

 

 

 

U.S. PREMIUM BEEF,
LLC

EXHIBIT 10.12

TO THE AMENDED AND
RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT

EQUITY INVESTMENTS

 

None
  

 

 

 

 

 

 

 

 

xxiv

	

 

 

 

 

 

 

U.S. PREMIUM BEEF,
LLC

EXHIBIT 10.13

TO THE AMENDED AND
RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT

BORROWER’S REAL
PROPERTY, PERMITTED ENCUMBRANCES

 

None.

 

 

 

 

 

 

 

 

 

		
			xxv

			

 

 

	

 

 

 

 

 

 

U.S. PREMIUM BEEF,
LLC

EXHIBIT 10.17

TO THE AMENDED AND
RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT

MATERIAL AGREEMENTS

 

Cattle Purchase and Sale Agreement

Uniform Cattle Delivery and Marketing Agreement - Even Slots

Uniform Cattle Delivery and Marketing Agreement - Odd Slots

 

 

 

 

 

 

 

 

 

		
			xxvi

			

 

 

	

 

 

 

 

 

 

U.S. PREMIUM BEEF,
LLC

EXHIBIT 10.19

TO THE AMENDED AND
RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT

TRADENAMES,
TRADEMARKS, ETC.

 

None.

 

 

 

 

 

 

 

 

 

 

 

 

		
			xxvii

			

 

 

	

 

 

 

 

 

 

U.S. PREMIUM BEEF,
LLC

EXHIBIT 13.1

TO THE AMENDED AND
RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT

EXISTING
INDEBTEDNESS

 

Amounts currently outstanding under the Credit Agreement by
and between CoBank and U.S. Premium Beef, LLC

 

 

 

 

 

 

 

 

 

 

		
			xxviii

			

 

 

	

 

 

 

 

 

U.S. PREMIUM BEEF,
LLC

EXHIBIT 16.26

TO THE AMENDED AND
RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT

SYNDICATION
ACQUISITION AGREEMENT

 

Attached

 

 

 

 

 

 

 

 

 

 

 

		
			xxix

			

 

 

	

 

 

 

 

 

SYNDICATION
ACQUISITION AGREEMENT 

 

          This Syndication
Acquisition Agreement entered into this _____ day of _____, 20__ (“Effective
Date”) pursuant to the Credit Agreement (as defined below) by and between
CoBank, ACB, in its capacity as the Agent under the Credit Agreement (in such
role, “Agent”), ____________________, a Syndication Party under the
Credit Agreement (“Transferor”), and ____________________ (“Purchaser”).

 

Recitals

 

A.       Pursuant
to the Amended and Restated Credit Agreement and Security Agreement by and
between Agent, the Syndication Parties named therein, and U.S. Premium Beef,
LLC, a Delaware limited liability company (“Borrower”), dated as
of June 22, 2009 (as amended and as it may be amended in the future, the (“Credit
Agreement”), the Syndication Parties have agreed to provide, limited to
their respective Syndication Share and Maximum Syndication Amount, financing to
Borrower through the Term Loan - Tranche A and Tranche B, to be used for the
purposes set forth in the Credit Agreement. 

 

B.       Transferor
wishes to sell and assign a portion of its Syndication Share of the amounts
outstanding under the Term Loan - Tranche A and Tranche B (“Term Loan
Interest”), as indicated on Exhibit A hereto, and Purchaser wishes
to purchase and assume such Term Loan Interest [IF TRANSFEROR IS ALSO THE
ADMINSTRATIVE AGENT, INSERT THE FOLLOWING (as Syndication Party, and not as
Agent)] under the Credit Agreement. 

 

Agreement 

 

          For good and valuable
consideration, the receipt and sufficiency of which the parties hereto hereby
acknowledge, and each to induce the others to enter into this Syndication
Acquisition Agreement (“Agreement”), the parties hereto hereby agree as
follows:

 

         
DEFINITIONS

 

          Capitalized terms used
herein without definition shall have the meaning given them in the Credit
Agreement, if defined therein. 

 

          “Loan” as used
herein shall, where the context requires, means the Term Loan - Tranche A and
Tranche B facility with respect to which Purchaser has acquired its Term Loan
Interest hereunder. 

 

 

		
			xxx

			

 

 

	

 

 

 

 

 

 

1.   
Purchase and Sale
of Syndication Interest. 

 

1.1.              
Purchaser hereby purchases from Transferor and Transferor hereby
sells to Purchaser, pursuant to the terms and conditions contained herein and
in Article 16 of the Credit Agreement, a Term Loan Interest equal to the Tranche A Commitment and
Tranche B Commitment as set forth in Exhibit A hereto (“Purchaser’s
Commitment Amount”) and a proportionate undivided interest in the Loan
Documents (other than the Notes payable to the other Syndication Parties), and
all applicable amounts owing and all applicable payments made by Borrower
thereunder (excluding Borrower’s obligation to purchase Bank Equity Interests,
and patronage dividends and patronage shares paid or payable on account of such
Bank Equity Interests).

1.2.              
Purchaser’s obligation as set forth in Section 1.1 above to purchase
the Purchaser’s Commitment Amount shall, subject to the terms and conditions
hereof and of Article 16 of the Credit Agreement, be continuing, unconditional,
and irrevocable.  Purchaser’s acquisition of Purchaser’s Commitment Amount
shall be without recourse to Transferor and shall not be construed as a loan
from Purchaser to Transferor.

1.3.              
Purchaser agrees to remit to Transferor on the Effective Date, the
Purchaser’s Syndication Share of the amount outstanding under the Tranche A Loan and Tranche B
Loan.  Transferor and Purchaser agree to make settlement among
themselves, without involvement of the Agent, with respect to any interest
accrued and outstanding on such as of the Effective Date.

1.4.              
Purchaser agrees to, as of the Effective Date, and at all times
thereafter, comply with all of the obligations of a Syndication Party under the
Credit Agreement.

1.5.              
Transferor agrees to pay, or cause Purchasers to pay, to Agent on
the Effective Date (a) a fee in the amount of $3,500 for processing Purchaser’s
acquisition of the Purchaser’s Commitment Amount, and (b) Agent’s out of pocket
fees and expense incurred in connection with the transaction described herein,
including its attorney’s fees.

2.    Purchaser’s Representations, Warranties, and
Agreements

 

 

 

 

 

 

		
			xxxi

			

 

 

	

 

 

 

 

 

2.1.              
Purchaser represents and warrants that: (a) the marking and
performance of this Agreement including its agreement to be bound by the Credit
Agreement is within its power and has been duly authorized by all necessary
corporate and other action by it; (b) this Agreement is in compliance with all
applicable laws and regulations promulgated thereunder and entering into this
Agreement and performance of its obligations hereunder and under the Credit
Agreement will not conflict with nor constitute a breach of its charter or
by-laws nor any agreements by which it is bound, and will not violate any
judgment, decree or governmental or administrative order, rule or regulation
applicable to it; (c) no approval, authorization or other action by, or
declaration to or filing with, any governmental or administrative authority or
any other Person is required to be obtained or made by it in connection with
the execution, delivery and performance of its duties under this Agreement and
the Credit Agreement; (d) this Agreement has been duly executed by it, and,
this Agreement and the Credit Agreement, constitute its legal, valid, and
binding obligation, enforceable in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and general equitable principles (regardless of whether
such enforceability is considered in a proceeding at law or in equity); and (e)
the act of entering into and performing its obligations under this Agreement
and the Credit Agreement have been approved by its board of directors at an
authorized meeting thereof (or by written consent in lieu of a meeting) and
such action was duly noted in the written minutes of such meeting, and that it
will, if requested by the Agent, furnish Agent with a certified copy of such
minutes or an excerpt therefrom reflecting such approval. 

2.2.              
Purchaser further represents that it is entitled to receive any
payments to be made to it under the Credit Agreement without the withholding of
any tax and will furnish to Agent and to Borrower such forms, certifications,
statements and other documents as Agent or Borrower may request from time to
time to evidence Purchaser’s exemption from the withholding of any tax imposed
by any jurisdiction or to enable Administrative or Borrower, as the case may
be, to comply with any applicable laws or regulations relating thereto. 
Without limiting the effect of the foregoing, if Purchaser is not created or
organized under the laws of the United States of America or any state thereof,
Purchaser will furnish to the Agent and Borrower the IRS Forms described in
Section 14.30 of the Credit Agreement, completed by Purchaser, as evidence of
Purchaser’s exemption from the withholding of United States tax with respect
thereto.  Notwithstanding anything herein to the contrary, Borrower shall not
be obligated to make any payments to Purchaser until Purchaser shall have
furnished to Agent and Borrower the requested form, certification, statement or
document.

 

 

 

		
			xxxii

			

 

 

	

 

 

 

 

 

2.3.              
Purchaser acknowledges receipt of true and correct copies of all
Loan Documents from Transferor and agrees and represents that: (a) it has
relied upon its independent review (i) of the Loan Documents, and (ii) any
information independently acquired by it from Borrower or otherwise in making
its decision to acquire an interest in the Loan independently and without
reliance on Transferor or Agent; (b) it has obtained such information as it
deems necessary (including any information it independently obtained from Borrower
or others) prior to making its decision to acquire the Purchaser’s Syndication
Interest; (c) it has made its own independent analysis and appraisal of and
investigation into Borrower’s authority, business, operations, financial and
other condition, creditworthiness, and ability to perform its obligations under
the Loan Documents and has relied on such review in making its decision to
acquire the Purchaser’s Syndication Interest, and will continue to rely solely
upon its independent review of the facts and circumstances related to Borrower,
and without reliance upon Transferor or Agent, in making future decisions with
respect to all matters under or in connection with the Loan Documents and its
participation in the Loan as a Syndication Party.

2.4.              
Purchaser acknowledges and agrees that: (a) neither Agent nor
Transferor has made any representation or warranty, except as expressly stated
in the Credit Agreement and this Agreement, nor do they assume any
responsibility with respect to the due execution, validity, sufficiency,
enforceability or collectibility of the Loan, the Loan Documents or the Notes
or with respect to the accuracy and completeness of matters disclosed,
represented or warranted in the Loan Documents by Borrower (including financial
matters); (b) neither Agent nor Transferor assumes any responsibility for the
financial condition of Borrower or for the performance of Borrower’s
obligations under the Loan Documents; (c) except  as otherwise expressly
provided in this Agreement or the Credit Agreement, neither Transferor nor
Agent nor any other Syndication Party shall have any duty or responsibility to
furnish to any other Syndication Parties any credit or other information
concerning Borrower which may come into its or their possession 

2.5.              
Purchaser: (a) represents that it has acquired and is retaining the
Term Loan Interest for its own account in the ordinary course of its banking or
financing business and not with a view towards the sale, distribution, further
participation, or transfer thereof.

 

 

IN WITNESS HEREOF, the parties hereto have caused
this Syndication Acquisition Agreement to be executed as of the Effective Date
by their duly authorized representatives.

 

Agent:                                      

 

COBANK, ACB                       

 

By
___________________________

 

Name
_________________________

 

Title
__________________________

 

Transferor                                

 

______________________________

 

By____________________________

 

Name__________________________

		
			xxxiii

			

 

 

	

 

 

 

 

 

 

Title___________________________

 

 

BORROWER’S CONSENT

 

          Borrower hereby
signifies its consent to Transferor’s sale of the Purchaser’s Syndication
Interest to Purchaser as described above.

 

U.S. PREMIUM BEEF, LLC

 

 

By:
_________________________________

Name:

Title: 

 

[Purchaser’s
signature appears on the next page]

 

 

 

 

 

 

 

 

 

		
			xxxiv

			

 

 

	

 

 

 

 

 

Purchaser

 

______________________________

 

By____________________________

 

Name__________________________

 

Title___________________________

 

 

	
		 

		
	
		Contact Name:
		

	
		Title:
		

	
		Address:      
		

	
		                  
		

	
		Phone No.:
		

	
		Fax No.: 
		

	
		E-mail:
		

	
		Tranche A Commitment and Tranche B Commitment
  Commitment: $____________

	
		 

		
	
		Payment Instructions:

		          Bank:

		          ABA No.: 
		

		          Acct. Name: 
		

		          Account No.: 
		

		          Attn: 
		

		          Reference: U.S.
  Premium Beef

		 

		

 

 

 

 

 

		
			xxxv

			

 

 

	

 

 

 

 

 

EXHIBIT A TO

SYNDICATION
ACQUISITION AGREEMENT

 

 

          A Tranche A Commitment and Tranche B Commitment of
$____________________, and

 

          The following percentage of the principal amount
outstanding under the Tranche
A Loan and Tranche B Loan:____________% (“Syndication Share”).

 

 

 

 

 

 

 

 

 

 

		
			xxxvi

			

 

 

	

 

 

 

 

 

U.S. PREMIUM BEEF,
LLC

EXHIBIT 16.28

TO THE AMENDED AND
RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT

WIRE INSTRUCTIONS

 

WIRE
INSTRUCTIONS  When funds are to be wired to CoBank, including in its role as
the Agent, the following wiring information must be used:

 

	
		To: 
	
		CoBank, ACB

		
	 	
		
		Denver, Co

	 	
		ABA#   
307088754

	 	
		Account
#       00001544

	 	Ref:  U.S. Premium Beef
	 	 
	 	 
	 	  
	 	 
	 	 
	 	 
	 	 
	 	 

		
			xxxvii

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}]]