Document:

Exhibit 10.1

 

 

MLA No. RI0992

 

 

MASTER LOAN AGREEMENT

 

 

            THIS
MASTER LOAN AGREEMENT is entered into as
of July 26, 2011, between CoBANK,
ACB (“CoBank”) and U.S.
Premium Beef, LLC, a Delaware limited liability company
located in Kansas City, Missouri (the “Company”).

 

BACKGROUND

 

            CoBank and the Company are parties to an
Amended and Restated Credit Agreement and Security Agreement dated June 22, 2009, as amended (the
“Existing Agreement”).  CoBank and the Company now desire to amend and restate
the Existing Agreement.  For that reason and for valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), CoBank and the
Company hereby agree that the Existing Agreement shall be amended and restated
to read as follows:

 

            SECTION
1.   Supplements.  In the event the Company desires to borrow from CoBank
and CoBank is willing to lend to the Company, or in the event CoBank and the
Company desire to consolidate any existing loans hereunder, the parties will
enter into a Supplement to this agreement (a “Supplement”).  Each Supplement
will set forth the amount of the loan, the purpose of the loan, the interest
rate or rate options applicable to that loan, the repayment terms of the loan,
and any other terms and conditions applicable to that particular loan.  Each
loan will be governed by the terms and conditions contained in this agreement
and in the Supplement relating to the loan.

 

            SECTION
2.   Availability.  Loans will be made available on any day on which CoBank
and the Federal Reserve Banks are open for business upon the telephonic or
written request of the Company.  Requests for loans must be received no later
than 12:00 Noon Company’s local time on the date the loan is desired.  Loans
will be made available by wire transfer of immediately available funds to such
account or accounts as may be authorized by the Company.  The Company shall
furnish to CoBank a duly completed and executed copy of a CoBank Delegation and
Wire and Electronic Transfer Authorization Form, and CoBank shall be entitled
to rely on (and shall incur no liability to the Company in acting on) any
request or direction furnished in accordance with the terms thereof.

 

            SECTION
3.   Repayment.  The Company's obligation to repay each loan shall be
evidenced by the promissory note set forth in the Supplement relating to that
loan or by such replacement note as CoBank shall require.  CoBank shall
maintain a record of all loans, the interest accrued thereon, and all payments
made with respect thereto, and such record shall, absent proof of manifest error,
be conclusive evidence of the outstanding principal and interest on the loans. 
All payments shall be made by wire transfer
of immediately available funds, by check, or by automated clearing house or
other similar cash handling processes as specified by separate agreement
between the Company and CoBank.  Wire transfers shall be made to ABA
No. 307088754 for advice to and credit of CoBank (or to such other account
as CoBank may direct by notice).  The Company shall give CoBank telephonic
notice no later than 12:00 Noon Company’s local time of its intent to pay by
wire and funds received after 3:00 p.m. Company’s local time shall be credited
on the next business day.  Checks shall be mailed to CoBank, Department 167, Denver, Colorado 80291‐0167 (or to such other place as CoBank may direct by notice). 
Credit for payment by check will not be given until the later of:  (A) the day
on which CoBank receives immediately available funds; or (B) the next business
day after receipt of the check.

 

 

 

	

Master Loan Agreement RI0992

U.S PREMIUM BEEF, LLC

Kansas City , Missouri

			
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            SECTION
4.   Capitalization.  The
Company agrees to acquire equity in CoBank in such amounts and at such times as
CoBank may from time to time require in accordance with its Bylaws and Capital
Plan (as each may be amended from time to time), except that the maximum amount
of equity that the Company may be required to purchase in connection with a
loan may not exceed the maximum amount permitted by the Bylaws at the time the
Supplement relating to such loan is entered into or such loan is renewed or
refinanced by CoBank.  The rights and obligations of the parties with respect
to such equity and any patronage or other distributions made by CoBank shall be
governed by CoBank’s Bylaws and Capital Plan (as each may be amended from time
to time).

 

            SECTION
5.   Security.  The Company’s obligations under this agreement, all
Supplements (whenever executed), and all instruments and documents contemplated
hereby or thereby, shall be secured by a statutory first lien on all equity
which the Company may now own or hereafter acquire in CoBank.  In addition, the Company's obligations under each
Supplement (whenever executed) and this agreement shall be secured by a first
lien (subject only to exceptions approved in writing by CoBank) pursuant to all
personal property security agreements executed by the Company in favor of
CoBank, whether now existing or hereafter entered into.  As additional security for those obligations, the Company
agrees to grant to CoBank, (1) a first lien on all of the Company's membership
interests in National Beef Packing Company, LLC, pursuant to a Pledge Agreement
of even date herewith (the "Pledge Agreement"), and (2) by means of
such instruments and documents as CoBank shall require, a first priority lien
on such of its other assets, whether now existing or hereafter acquired, as
CoBank may from time to time require.

 

            SECTION
6.   Conditions Precedent.

 

                  (A)    Conditions
to Initial Supplement.  CoBank’s obligation to extend credit under the
initial Supplement hereto is subject to the conditions precedent that CoBank
receive, in form and content satisfactory to CoBank, each of the following:

 

(1)     This Agreement, Etc.  A duly executed copy of this agreement and all instruments
and documents contemplated hereby.

 

(2)     Security Agreement. 
A security agreement granting to
CoBank a first lien (subject only to exceptions approved in writing by CoBank)
on all personal property of the Company, whether now owned or hereafter
acquired. 

  

(3)     Pledge Agreement.  The
Pledge Agreement signed by the Company.

 

                  (B)    Conditions
to Each Supplement.  CoBank’s obligation to extend credit under each
Supplement, including the initial Supplement, is subject to the conditions
precedent that CoBank receive, in form and content satisfactory to CoBank, each
of the following:

 

                           (1)     Supplement. 
A duly executed copy of the Supplement and all instruments and documents
contemplated thereby.

 

 

 

 

	

Master Loan Agreement RI0992

U.S PREMIUM BEEF, LLC

Kansas City , Missouri

			
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                           (2)   Evidence
of Authority.  Such certified board resolutions, certificates of
incumbency, and other evidence that CoBank may require that the Supplement, all
instruments and documents executed in connection therewith, and, in the case of
initial Supplement hereto, this agreement and all instruments and documents
executed in connection herewith, have been duly authorized and executed.

 

                           (3)     Fees
and Other Charges.  All fees and other charges provided for herein or in
the Supplement.

 

                           (4)    Evidence
of Perfection, Etc.  Such evidence as CoBank may require that CoBank has a
duly perfected first priority lien on all security for the Company’s
obligations, and that the Company is in compliance with Section 8(D) hereof.

  

                  (C)    Conditions
to Each Loan.  CoBank’s obligation under each Supplement to make any loan
to the Company thereunder is subject to the condition that no “Event of
Default” (as defined in Section 11 hereof) or event which with the giving of
notice and/or the passage of time would become an Event of Default hereunder (a
“Potential Default”), shall have occurred and be continuing.

 

            SECTION
7.   Representations and Warranties.

 

                  (A)    This
Agreement.  The Company represents and
warrants to CoBank that as of the date of this agreement the Company is in
compliance with all of the terms of this agreement, and no Event of Default or
Potential Default exists hereunder.

 

                  (B)    Each
Supplement.  The execution by the Company of each Supplement hereto shall
constitute a representation and warranty to CoBank that:

 

                           (1)     Applications. 
Each representation and warranty and all information set forth in any
application or other documents submitted in connection with, or to induce
CoBank to enter into, such Supplement, is correct in all material respects as
of the date of the Supplement.

 

                           (2)     Conflicting
Agreements, Etc.  This agreement, the Supplements, and all security and
other instruments and documents relating hereto and thereto (collectively, at
any time, the “Loan Documents”), do not conflict with, or require the consent
of any party to, any other agreement to which the Company is a party or by
which it or its property may be bound or affected, and do not conflict with any
provision of the Company’s bylaws, articles of incorporation, or other
organizational documents.

 

                           (3)     Compliance. 
The Company is in compliance with all of the terms of the Loan Documents
(including, without limitation, Section 8(A) of this agreement on eligibility
to borrow from CoBank).

 

 

 

 

	

Master Loan Agreement RI0992

U.S PREMIUM BEEF, LLC

Kansas City , Missouri

			
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                           (4)     Binding
Agreement.  The Loan Documents create legal, valid, and binding obligations
of the Company which are enforceable in accordance with their terms, except to
the extent that enforcement may be limited by applicable bankruptcy,
insolvency, or similar laws affecting creditors’ rights generally.

 

                           (5)     Environmental. 
After reasonable inquiry and to the best of the Company’s present knowledge and
belief, the Company represents and warrants that it has no knowledge of any
disposal, known or suspected release, or treatment or storage of Hazardous
Materials (as hereafter defined) on, from, or under any property owned or
leased by the Company or any adjoining property, during the period of the
Company's ownership or lease of such property, except as may have occurred in
the ordinary course of business and in accordance with law, or as heretofore or
herewith disclosed to CoBank in writing.  Having made reasonable inquiry, the
Company further represents and warrants that it has no knowledge of any
presence, disposal, treatment, or known or suspected release of any Hazardous
Materials on, from, or under such property or any adjoining property prior to the
Company's lease or acquisition of title thereto, except as may have occurred in
the ordinary course of business in accordance with law or as heretofore or
herewith disclosed to CoBank in writing.  The Company further represents and
warrants that it has no present knowledge of any material litigation or
administrative enforcement actions that have been instituted or threatened, nor
of any settlements reached with any public or private party or parties, that
may have a material present or future effect on the Company, concerning the
alleged presence, disposal, or known or suspected release of any Hazardous
Materials on, from, or under such properties, except as heretofore or herewith
disclosed to CoBank in writing.  As used herein, Hazardous Materials shall mean
dangerous, toxic, or hazardous pollutants, contaminants, chemicals, wastes,
materials, or substances, as defined in or governed by the provisions of any
federal, state, or local law, statute, code, ordinance, regulation,
requirement, or rule, or any other waste, material, substances, pollutants, or
contaminants that might give rise to common law or regulatory claims, damages,
penalties, or liabilities.

 

            SECTION
8.   Affirmative Covenants.  Unless otherwise agreed to in writing by
CoBank while this agreement is in effect, the Company agrees to:

 

                  (A)    Eligibility. 
Maintain its status as an entity eligible to borrow from CoBank.

 

                  (B)    Corporate
Existence, Licenses, Etc.  (1) Preserve and keep in full force and effect
its existence and good standing in the jurisdiction of its incorporation or
formation; (2) qualify and remain qualified to transact business in all
jurisdictions where such qualification is required; and (3) obtain and maintain
all licenses, certificates, permits, authorizations, approvals, and the like
which are material to the conduct of its business or required by law, rule,
regulation, ordinance, code, order, and the like (collectively, “Laws”).

 

                  (C)    Compliance
with Laws.  Comply in all material respects with all applicable Laws,
including, without limitation, all Laws relating to environmental protection and
any patron or member investment program that it may have.  In addition, the
Company agrees to cause all persons occupying or present on any of its
properties to comply in all material respects with all environmental protection
Laws.

 

 

 

	

Master Loan Agreement RI0992

U.S PREMIUM BEEF, LLC

Kansas City , Missouri

			
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                  (D)   Insurance. 
Maintain insurance with insurance companies or associations acceptable to
CoBank in such amounts and covering such risks as are usually carried by
companies engaged in the same or similar business and similarly situated, and
make such increases in the type or amount of coverage as CoBank may reasonably request. 
All such policies insuring any collateral for the Company’s obligations to
CoBank shall have mortgagee or lender loss payable clauses or endorsements in
form and content acceptable to CoBank.  At CoBank’s request, all policies (or
such other proof of compliance with this Subsection as may be satisfactory to
CoBank) shall be delivered to CoBank.

 

                  (E)    Property
Maintenance.  Maintain all of its property that is necessary to or useful
in the proper conduct of its business in good working condition, ordinary wear
and tear excepted.

 

                  (F)    Books
and Records.  Keep adequate records and books of account in which complete
entries will be made in accordance with generally accepted accounting
principles (“GAAP”) consistently applied.

 

                  (G)   Inspection. 
Permit CoBank or its agents, upon reasonable notice and during normal business
hours or at such other times as the parties may agree, to examine its
properties, books, and records, and to discuss its affairs, finances, and
accounts, with its respective officers, directors, employees, and independent
certified public accountants.

 

                  (H)    Reports
and Notices.  Furnish to CoBank:

 

                           (1)     Annual
Financial Statements.  As soon as available, but in no event more than 120 days after the end of
each fiscal year of the Company occurring during the term hereof, annual
consolidated financial statements of the Company and its consolidated subsidiaries,
if any, prepared in accordance with GAAP consistently applied.  Such financial
statements shall:  (a) be audited by independent certified public
accountants selected by the Company and reasonably acceptable to CoBank;
(b) be accompanied by a report of such accountants containing an opinion
thereon reasonably acceptable to CoBank; (c) be prepared in reasonable
detail and in comparative form; and (d) include a balance sheet, a
statement of income, a statement of retained earnings, a statement of cash
flows, and all notes and schedules relating thereto.

 

                           (2)     Interim
Financial Statements.  As soon as available, but in no event more than 60
days after the end of each fiscal quarter of the Company, a balance sheet of the Company as of the end of such fiscal quarter, a
statement of income for the Company for such period and for the period year to
date, and such other interim statements as CoBank may specifically request, all
prepared in reasonable detail and in comparative form in accordance with GAAP
consistently applied and, if required by written notice from CoBank, certified
by an authorized officer or employee of the Company acceptable to CoBank.

 

                           (3)     Notice
of Default.  Promptly after becoming aware thereof, notice of the
occurrence of an Event of Default or a Potential Default.

 

 

 

	

Master Loan Agreement RI0992

U.S PREMIUM BEEF, LLC

Kansas City , Missouri

			
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                           (4)     Notice
of Non-Environmental Litigation.  Promptly after the commencement thereof,
notice of the commencement of all actions, suits, or proceedings before any
court, arbitrator, or governmental department, commission, board, bureau,
agency, or instrumentality affecting the Company which, if determined adversely
to the Company, could have a material adverse effect on the financial
condition, properties, profits, or operations of the Company.

 

                           (5)     Notice of Environmental Litigation, Etc.  Promptly after receipt thereof, notice of the receipt of
all pleadings, orders, complaints, indictments, or any other communication
alleging a condition that may require the Company to undertake or to contribute
to a cleanup or other response under environmental Laws, or which seek
penalties, damages, injunctive relief, or criminal sanctions related to alleged
violations of such Laws, or which claim personal injury or property damage to
any person as a result of environmental factors or conditions.

 

                           (6)     Bylaws
and Articles.  Promptly after any change in the Company’s articles of
organization or operating agreement (or like documents), copies of all such
changes, certified by the Company’s Secretary.

 

                           (7)     Compliance
Certificates.  Together with each set of financial statements furnished to
CoBank pursuant to Subsection (1) hereof and, if applicable, Subsection (2)
hereof, a certificate of an officer or employee of the Company acceptable to
CoBank, in the form attached as Exhibit “A” hereto:  (a) certifying that no
Event of Default or Potential Default occurred during the period covered by
such statement(s) or, if an Event of Default or Potential Default occurred, a
description thereof and of all actions taken or to be taken to remedy same; and
(b) setting forth calculations showing compliance with the financial covenants
set forth in Section 10 hereof.

 

                           (8)     Other Information.  Such
other information regarding the condition or operations, financial or
otherwise, of the Company as CoBank may from time to time reasonably request,
including but not limited to copies of all pleadings, notices, and communications
referred to in Subsections 8(H)(4) and (5) above.

 

                  (I)     Pledge
Agreement.  On or
before November 30, 2011, Provide to CoBank (a) a certified resolution of the
Board of Managers of National Beef Packing Company, LLC, consenting to the
Pledge Agreement and, (b) a separate consent to the Pledge Agreement, in form
and substance satisfactory to CoBank, signed by the Chairman of the Board of
Managers of National Beef Packing Company, LLC.

  

            SECTION
9.   Negative Covenants.  Unless otherwise agreed to in writing by CoBank,
while this agreement is in effect the Company will not:

 

                  (A)    Borrowings. 
Create, incur, assume, or allow to exist, directly or indirectly, any
indebtedness or liability for borrowed money (including trade or bankers’
acceptances), letters of credit, or the deferred purchase price of property or
services (including capitalized leases), except for:  (1) debt to CoBank; (2)
accounts payable to trade creditors incurred in the ordinary course of
business;
(3) current operating liabilities (other than for borrowed money) incurred in
the ordinary course of business; and (4) leases and purchase
money financing of property used in the ordinary course of Borrower's business
the aggregate amount of which does not exceed $200,000 at any one time.  

 

 

 

	

Master Loan Agreement RI0992

U.S PREMIUM BEEF, LLC

Kansas City , Missouri

			
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                  (B)    Liens. 
Create, incur, assume, or allow to exist any mortgage, deed of trust, pledge,
lien (including the lien of an attachment, judgment, or execution), security
interest, or other encumbrance of any kind upon any of its property, real or
personal (collectively, “Liens”).  The forgoing restrictions shall not apply
to:  (1) Liens in favor of CoBank; (2) Liens for taxes, assessments, or
governmental charges that are not past due; (3) Liens and deposits under
workers’ compensation, unemployment insurance, and social security Laws; (4)
Liens and deposits to secure the performance of bids, tenders, contracts (other
than contracts for the payment of money), and like obligations arising in the
ordinary course of business as conducted on the date hereof; (5) Liens imposed
by Law in favor of mechanics, materialmen, warehousemen, and like persons that
secure obligations that are not past due; (6) easements, rights-of-way,
restrictions, and other similar encumbrances which, in the aggregate, do not
materially interfere with the occupation, use, and enjoyment of the property or
assets encumbered thereby in the normal course of its business or materially
impair the value of the property subject thereto; and 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 the Company's business, provided that such security interests shall
attach only to the property so purchased (or, if applicable, leased), and (ii)
the purchase (or, if applicable, lease) occurred subsequent to the date of this
agreement.

 

                  (C)    Mergers,
Acquisitions, Etc.  Merge or consolidate with any other entity or acquire
all or a material part of the assets of any person or entity, or form or create
any new subsidiary or affiliate, or commence operations under any other name,
organization, or entity, including any joint venture.

 

                  (D)    Transfer
of Assets.  Sell, transfer, lease, or otherwise dispose of any of its
assets, except in the ordinary course of business, provided that the Company
shall not sell worn out or obsolete equipment having an aggregate fair market
value in excess of $200,000 in any calendar year.  

 

                  (E)    Loans
and Investments.  Make any loan or advance to any person or entity, or
purchase any capital stock, obligations or other securities of, make any
capital contribution to, or otherwise invest in any person or entity, or form
or create any partnerships or joint ventures except:  (1) trade credit
extended in the ordinary course of business; (2) 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; (3) 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; (4) 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; (5) 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; (6) the Company’s
membership interests in National Beef Packing Company, LLC; (7) investments in
CoBank’s cash investment program.

 

 

 

 

	

Master Loan Agreement RI0992

U.S PREMIUM BEEF, LLC

Kansas City , Missouri

			
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                  (F)    Contingent
Liabilities.  Assume, guarantee, become liable as a surety, endorse,
contingently agree to purchase, or otherwise be or become liable, directly or
indirectly (including, but not limited to, by means of a maintenance agreement,
an asset or stock purchase agreement, or any other agreement designed to ensure
any creditor against loss), for or on account of the obligation of any person
or entity, except
by the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of the Company’s business.

 

                  (G)    Change
in Business.  Engage in any business activities or operations substantially
different from or unrelated to the Company’s present business activities or
operations.

 

                  (H)    Distributions.  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 the Company may, so long as the Company 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 the
Company’s taxable income, provided that the Company delivers to CoBank 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 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 the Company’s taxable income
multiplied by the maximum applicable state and federal income tax.

 

            SECTION
10. Financial Covenants.  Unless otherwise agreed to in writing, while this agreement
is in effect:

   

                   Net
Worth.  The Company will have at the end of each fiscal quarter of the Company an excess of total assets over
total liabilities (both as determined
in accordance with GAAP consistently applied) of not less than $70,000,000.00
as calculated in the manner that "Total capital share and equities"
is calculated on the balance sheet of the Company attached hereto as Exhibit
B, which final net worth calculation shall be reported pursuant to Section
8(H)(7) above.

 

            SECTION
11. Events of Default.  Each of the following shall constitute an “Event of
Default” under this agreement:

 

                  (A)    Payment
Default.  The Company should fail to make any payment to, or to purchase
any equity in, CoBank when due.

 

 

 

 

	

Master Loan Agreement RI0992

U.S PREMIUM BEEF, LLC

Kansas City , Missouri

			
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                  (B)    Representations
and Warranties.  Any representation or warranty made or deemed made by the
Company herein or in any Supplement, application, agreement, certificate, or
other document related to or furnished in connection with this agreement or any
Supplement, shall prove to have been false or misleading in any material
respect on or as of the date made or deemed made.

 

                  (C)    Certain
Affirmative Covenants.  The Company should fail to perform or comply with Sections
8(A) through 8(H)(2), 8(H)(6),  and 8(H)(7) or any reporting covenant set forth in any Supplement
hereto, and such failure continues for 15 days after written notice thereof
shall have been delivered by CoBank to the Company.

 

                  (D)    Other
Covenants and Agreements.  The Company should fail to perform or comply
with any other covenant or agreement contained herein or in any other Loan
Document or shall use the proceeds of any loan for an unauthorized purpose.

 

                  (E)    Cross-Default. 
The Company should, after any applicable grace period, breach or be in default
under the terms of any other agreement between the Company and CoBank, or
between the Company and any affiliate of CoBank, including without limitation
Farm Credit Leasing Services Corporation.

 

                  (F)    Other
Indebtedness.  The Company should fail to pay when due any indebtedness to
any other person or entity for borrowed money or any long-term obligation for
the deferred purchase price of property (including any capitalized lease), or
any other event occurs which, under any agreement or instrument relating to
such indebtedness or obligation, has the effect of accelerating or permitting
the acceleration of such indebtedness or obligation, whether or not such
indebtedness or obligation is actually accelerated or the right to accelerate
is conditioned on the giving of notice, the passage of time, or otherwise.

 

                  (G)    Judgments. 
A judgment, decree, or order for the payment of money shall be rendered against
the Company and either:  (1) enforcement proceedings shall have been commenced;
(2) a Lien prohibited under Section 9(B) hereof shall have been obtained; or
(3) such judgment, decree, or order shall continue unsatisfied and in effect
for a period of 20 consecutive days without being vacated, discharged,
satisfied, or stayed pending appeal.

 

                  (H)    Insolvency,
Etc.  The Company shall:  (1) become insolvent or shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they
come due; or (2) suspend its business operations or a material part thereof or
make an assignment for the benefit of creditors; or (3) apply for, consent to,
or acquiesce in the appointment of a trustee, receiver, or other custodian for
it or any of its property or, in the absence of such application, consent, or
acquiescence, a trustee, receiver, or other custodian is so appointed; or (4)
commence or have commenced against it any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution, or liquidation
Law of any jurisdiction.

 

 

 

	

Master Loan Agreement RI0992

U.S PREMIUM BEEF, LLC

Kansas City , Missouri

			
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                  (I)     Material
Adverse Change.  Any material adverse change occurs, as reasonably
determined by CoBank, in the Company’s financial condition, results of
operation, or ability to perform its obligations hereunder or under any
instrument or document contemplated hereby.

 

                  (J)     Revocation
of Guaranty.  Any guaranty, suretyship, subordination agreement,
maintenance agreement, or other agreement furnished in connection with the
Company’s obligations hereunder and under any Supplement shall, at any time,
cease to be in full force and effect, or shall be revoked or declared null and
void, or the validity or enforceability thereof shall be contested by the
guarantor, surety or other maker thereof (the “Guarantor”), or the Guarantor
shall deny any further liability or obligation thereunder, or shall fail to
perform its obligations thereunder, or any representation or warranty set forth
therein shall be breached, or the Guarantor shall breach or be in default under
the terms of any other agreement with CoBank (including any loan agreement or
security agreement), or a default set forth in Subsections (F) through (H)
hereof shall occur with respect to the Guarantor.

 

            SECTION
12. Remedies.  Upon the occurrence and during the continuance of an Event
of Default or any Potential Default, CoBank shall have no obligation to
continue to extend credit to the Company and may discontinue doing so at any
time without prior notice.  For all purposes hereof, the term “Potential
Default” means the occurrence of any event which, with the passage of time or
the giving of notice or both would become an Event of Default.  In addition,
upon the occurrence and during the continuance of any Event of Default, CoBank
may, upon notice to the Company, terminate any commitment and declare the
entire unpaid principal balance of the loans, all accrued interest thereon, and
all other amounts payable under this agreement, all Supplements, and the other
Loan Documents to be immediately due and payable.  Upon such a declaration, the
unpaid principal balance of the loans and all such other amounts shall become
immediately due and payable, without protest, presentment, demand, or further
notice of any kind, all of which are hereby expressly waived by the Company. 
In addition, upon such an acceleration:

 

                  (A)    Enforcement. 
CoBank may proceed to protect, exercise, and enforce such rights and remedies
as may be provided by this agreement, any other Loan Document or under Law. 
Each and every one of such rights and remedies shall be cumulative and may be
exercised from time to time, and no failure on the part of CoBank to exercise,
and no delay in exercising, any right or remedy shall operate as a waiver
thereof, and no single or partial exercise of any right or remedy shall
preclude any other or future exercise thereof, or the exercise of any other
right.  Without limiting the foregoing, CoBank may hold and/or set off and
apply against the Company’s obligation to CoBank the proceeds of any equity in
CoBank, any cash collateral held by CoBank, or any balances held by CoBank for
the Company’s account (whether or not such balances are then due).

 

                  (B)    Application
of Funds.  CoBank may apply all payments received by it to the Company’s
obligations to CoBank in such order and manner as CoBank may elect in its sole
discretion.

 

In
addition to the rights and remedies set forth above:  (1) upon the occurrence
and during the continuance of an Event of Default, then at CoBank’s option in
each instance, the entire indebtedness outstanding hereunder and under all
Supplements shall bear interest from the date of such Event of Default until
such Event of Default shall have been waived or cured in a manner satisfactory
to CoBank at 2.00% per annum in excess of the rate(s) of interest that would
otherwise be in effect on that loan; and (2) after the maturity of any
loan (whether as a result of acceleration or otherwise), the unpaid principal
balance of such loan (including without limitation, principal, interest, fees
and expenses) shall automatically bear interest at 2.00% per annum in excess of
the rate(s) of interest that would otherwise be in effect on that loan.  All
interest provided for herein shall be payable on demand and shall be calculated
on the basis of a year consisting of 360 days.

 

 

 

	

Master Loan Agreement RI0992

U.S PREMIUM BEEF, LLC

Kansas City , Missouri

			
		-11-

 

 

 

            SECTION
13. Broken Funding Surcharge.  Notwithstanding any provision contained in
any Supplement giving the Company the right to repay any loan prior to the date
it would otherwise be due and payable, the Company agrees to provide three
Business Days’ prior written notice for any prepayment of a fixed rate balance
and that in the event it repays any fixed rate balance prior to its scheduled
due date or prior to the last day of the fixed rate period applicable thereto
(whether such payment is made voluntarily, as a result of an acceleration, or
otherwise), the Company will pay to CoBank a surcharge in an amount equal to
the greater of:  (A) an amount which would result in CoBank being made whole
(on a present value basis) for the actual or imputed funding losses incurred by
CoBank as a result thereof; or (B) $300.00.  Notwithstanding the foregoing, in
the event any fixed rate balance is repaid as a result of the Company
refinancing the loan with another lender or by other means, then in lieu of the
foregoing, the Company shall pay to CoBank a surcharge in an amount sufficient
(on a present value basis) to enable CoBank to maintain the yield it would have
earned during the fixed rate period on the amount repaid.  Such surcharges will
be calculated in accordance with methodology established by CoBank (a copy of
which will be made available to the Company upon request).

 

            SECTION
14. Complete Agreement, Amendments.  This agreement, all Supplements, and
all other instruments and documents contemplated hereby and thereby, are
intended by the parties to be a complete and final expression of their
agreement.  No amendment, modification, or waiver of any provision hereof or
thereof, and no consent to any departure by the Company herefrom or therefrom,
shall be effective unless approved by CoBank and contained in a writing signed
by or on behalf of CoBank, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.  In
the event this agreement is amended or restated, each such amendment or
restatement shall be applicable to all Supplements hereto.

 

            SECTION
15. Other Types of Credit.  From time to time, CoBank may issue letters of
credit or extend other types of credit to or for the account of the Company. 
In the event the parties desire to do so under the terms of this agreement,
such extensions of credit may be set forth in any Supplement hereto and this
agreement shall be applicable thereto.

 

            SECTION
16. Applicable Law.  Without giving effect to the principles of conflict of
laws and except to the extent governed by federal law, the Laws of the State of
Colorado, without reference to choice of law doctrine, shall govern this
agreement, each Supplement and any other Loan Documents for which Colorado is
specified as the applicable law, and all disputes and matters between the
parties to this agreement, including all disputes and matters whatsoever arising
under, in connection with or incident to the lending and/or leasing or other
business relationship between the parties, and the rights and obligations of
the parties to this agreement or any other Loan Documents by and between the
parties for which Colorado is specified as the applicable law.

 

 

 

	

Master Loan Agreement RI0992

U.S PREMIUM BEEF, LLC

Kansas City , Missouri

			
		-12-

 

 

 

            SECTION
17. Notices.  All notices hereunder shall be in writing and shall be deemed
to be duly given upon delivery if personally delivered or sent by telegram or
facsimile transmission, or three days after mailing if sent by express,
certified or registered mail, to the parties at the following addresses (or
such other address for a party as shall be specified by like notice):

 

	
  If to
  CoBank, as follows:

   

  For
  general correspondence purposes:

  P.O.
    Box 5110

  Denver, Colorado  80217-5110

   

  For
  direct delivery purposes, when desired:

  5500
    South Quebec Street

  Greenwood Village, Colorado  80111-1914

   

  Attention:  Credit Information Services 

  Fax
  No.:  (303) 224-6101

  	
  If to
  the Company, as follows:

   

  U.S. Premium
  Beef, LLC

  P.O.
  Box 20103

  Kansas
  City, MO 64195

   

   

   

   

   

  Attention: 
  Scott Miller, CFO

  Fax
  No.:  (816) 713-8810

  

 

            SECTION
18. Taxes and Expenses.  To the extent allowed by law, the Company agrees
to pay all reasonable out-of-pocket costs and expenses (including the fees and
expenses of counsel retained or employed by CoBank) incurred by CoBank and any
participants from CoBank in connection with the origination, administration,
collection, and enforcement of this agreement and the other Loan Documents,
including, without limitation, all costs and expenses incurred in perfecting,
maintaining, determining the priority of, and releasing any security for the
Company’s obligations to CoBank, and any stamp, intangible, transfer, or like
tax payable in connection with this agreement or any other Loan Document.

 

            SECTION
19. Effectiveness and Severability.  This agreement shall continue in
effect until:  (A) all indebtedness and obligations of the Company under
this agreement, all Supplements, and all other Loan Documents shall have been
paid or satisfied; (B) CoBank has no commitment to extend credit to or for the
account of the Company under any Supplement; and (C) either party sends written
notice to the other terminating this agreement.  Any provision of this
agreement or any other Loan Document which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or thereof.

 

            SECTION
20. Successors and Assigns.  This agreement, each Supplement, and the other
Loan Documents shall be binding upon and inure to the benefit of the Company
and CoBank and their respective successors and assigns, except that the Company
may not assign or transfer its rights or obligations under this agreement, any
Supplement or any other Loan Document without the prior written consent of
CoBank.

 

            SECTION
21. Participations, Etc.  From time to time, CoBank may sell to one or more
banks, financial institutions, or other lenders a participation in one or more
of the loans or other extensions of credit made pursuant to this agreement. 
However, no such participation shall relieve CoBank of any commitment made to
the Company hereunder.  In connection with the foregoing, CoBank may disclose
information concerning the Company and its subsidiaries, if any, to any
participant or prospective participant, provided that such participant or
prospective participant agrees to keep such information confidential. 
Patronage distributions in the event of a sale of a participation interest
shall be governed by CoBank’s Bylaws and Capital Plan (as each may be amended
from time to time).  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). 
CoBank agrees to give written notification to the Company of any sale of a
participation interest.

 

 

 

	

Master Loan Agreement RI0992

U.S PREMIUM BEEF, LLC

Kansas City , Missouri

			
		-13-

 

 

            IN
WITNESS WHEREOF, the parties have caused this agreement to be executed by
their duly authorized officers as of the date shown above.

 

	
  CoBANK,
  ACB

  	
  U.S. PREMIUM BEEF, LLC, a

  Delaware limited liability company

  
	
   

  	
   

  
	
  By:

  	
   

  	
     By:

  	
   

  
	
   	
   	
   	
   
	
  Title:	
   	
    
  Title:Exhibit 10.2

 

 

Loan No. RI0992T01

 

 

REVOLVING TERM
LOAN SUPPLEMENT

 

 

            THIS SUPPLEMENT
to the Master Loan Agreement dated July 26, 2011 (the “MLA”), is entered into
as of July 26, 2011
between CoBANK, ACB (“CoBank”) and U.S.
PREMIUM BEEF, LLC, Kansas City, Missouri  (the “Company”). and amends and restates the Supplement dated June 23, 2009.

 

            SECTION 1.  The Revolving Term Loan Commitment.  On the terms and conditions set forth in the MLA and this
Supplement, CoBank agrees to make loans to the Company from the date hereof, up
to and including June 30, 2014, in
an aggregate principal amount not to exceed, at any one time outstanding, $15,000,000.00
(the “Commitment”).  Within the limits
of the Commitment, the Company may borrow, repay, and reborrow.  Notwithstanding the foregoing, for a minimum of 30 consecutive days annually, no loans may be outstanding
under the Commitment.

 

            SECTION 2.   Purpose. 
The purpose of the Commitment is to provide working capital
to the Company.

 

            SECTION 3.   Term. 
Intentionally Omitted.

 

            SECTION 4.   Interest. 
The Company agrees to pay interest on the unpaid balance of
the loan(s) in accordance with one or more of the following interest rate
options, as selected by the Company:

 

                  (A)    CoBank
Base Rate.  At a rate per annum
equal at all times to the rate of interest then charged on Base Rate Advances
(as defined in the National Beef Credit Agreement) under that certain Amended
and Restated Credit Agreement dated June 4, 2010, by and among National Beef
Packing Company, LLC, certain of its subsidiaries, various issuers and lenders,
Coöperatieve Centrale Raiffeisen Boerenleenbank B.A., "Rabobank
Nederland", New York Branch, and U.S Bank National Association, as
Documentation Agents, Bank of America, N.A., and Bank of Montreal, as
Syndication Agents, and CoBank, as Lead Arranger, Sole Bookrunner, Swing Line
Lender and Administrative Agent, as the same may be amended from time to time
(the "National Beef Credit Agreement").  

 

                  (B)    LIBOR.  At a
fixed rate per annum equal to the rate of interest then charged on LIBOR Rate
Advances (as defined in the National Beef Credit Agreement) under the National
Beef Credit Agreement.   Under this option: 
(1) rates may be fixed for "Interest Periods" (as hereinafter
defined) of 1, 2, 3, 6, 9, or 12 months, as selected by the Company; (2) amounts
may be fixed in increments of $25,000.00 or multiples thereof; (3) the
maximum number of fixes in place at any one time shall be ten; and (4) rates
may only be fixed on a "Banking Day" (as hereinafter defined) on
three Banking Days’ prior written notice.  For purposes hereof: 
(a) "Banking Day" shall mean a day on which CoBank is open for
business, dealings in U.S. dollar deposits are being carried out in the London
interbank market, and banks are open for business in New York City and London,
England; and (b) "Interest Period" shall mean a period
commencing on the date this option is to take effect and ending on the
numerically corresponding day in the next calendar month or the month that is
2, 3, 6, 9, or 12 months thereafter, as the case may be; provided, however,
that:  (i) in the event such ending day is not a Banking Day, such period
shall be extended to the next Banking Day unless such next Banking Day falls in
the next calendar month, in which case it shall end on the preceding Banking
Day; and (ii) if there is no numerically corresponding day in the month,
then such period shall end on the last Banking Day in the relevant month.

 

 

 

Revolving Term Loan Supplement RI0992T01

U.S. PREMIUM BEEF, LLC

Kansas City, Missouri 

 

 

The Company shall select the applicable rate option at the
time it requests a loan hereunder and may, subject to the limitations set forth
above, elect to convert balances bearing interest at the variable rate option
to one of the fixed rate options.  Upon the expiration of any fixed rate
period, interest shall automatically accrue at the variable rate option unless
the amount fixed is repaid or fixed for an additional period in accordance with
the terms hereof.  Notwithstanding the foregoing, rates may not be fixed for
periods expiring after the maturity date of the loans and rates may not be
fixed in such a manner as to cause the Company to have to break any fixed rate
balance in order to pay any installment of principal.  All elections provided
for herein shall be made electronically (if applicable), telephonically or in
writing and must be received by CoBank not later than 12:00 Noon Company's
local time in order to be considered to have been received on that day;
provided, however, that in the case of LIBOR rate loans, all such elections
must be confirmed in writing upon CoBank’s request.  Interest shall be
calculated on the actual number of days each loan is outstanding on the basis
of a year consisting of 360 days and shall be payable quarterly in arrears
by the 20th day of the following month or on such other day in such month as
CoBank shall require in a written notice to the Company; provided, however, in
the event the Company elects to fix all or a portion of the indebtedness
outstanding under the LIBOR interest rate option above, at CoBank’s option upon
written notice to the Company, interest shall be payable at the maturity of the
Interest Period and if the LIBOR interest rate fix is for a period longer than
three months, interest on that portion of the indebtedness outstanding shall be
payable quarterly in arrears on each three-month anniversary of the
commencement date of such Interest Period, and at maturity.

  

If the
National Beef Credit Agreement terminates for any reason, the interest rates
under Sections 4(A) and 4(B) above shall equal the last interest rates charged
on Base Rate Advances and LIBOR Rate Advances (as defined in the National Beef
Credit Agreement), as the case may be, immediately prior to such termination.             

  

            SECTION 5.   Promissory
Note.  The Company promises to repay the loans that are outstanding at the time the Commitment expires on June 30, 2014. 
If any installment due date is not a day on which CoBank is open for business,
then such payment shall be made on the next day on which CoBank is open for
business.  In addition to the above, the Company promises to pay interest on
the unpaid principal balance hereof at the times and in accordance with the
provisions set forth in Section 4 hereof.

  

            SECTION 6.   Security.  The Company’s obligations hereunder and, to the extent
related hereto, the MLA, including without limitation any future advances under
any existing mortgage or deed of trust, shall be secured as provided in the
Security Section of the MLA.

  

            SECTION
7.    Loan Origination Fee.  In consideration of the Commitment, the Company agrees to
pay to CoBank on the execution hereof a loan origination fee in the amount of $10,000.00.

 

 

 

 

 

 

             SECTION
8.    Commitment
Fee.  In consideration of the
Commitment, the Company agrees to pay to CoBank a commitment fee on the average
daily unused portion of the Commitment
at the rate then charged under the National Beef Credit Agreement (calculated
on a 360-day basis), payable quarterly in arrears
by the 20th day following each calendar quarter. 
Such fee shall be payable for each quarter (or portion
thereof) occurring during the original or any extended term of the Commitment.  If the National Beef Credit Agreement terminates for any
reason, the commitment fee rate under this Section shall equal the last
commitment fee rate under the National Beef Credit Agreement immediately prior
to its termination. 

            

 

            IN WITNESS
WHEREOF, the parties have caused this Supplement to be executed by their
duly authorized officers as of the date shown above.

 

	
  CoBANK,
  ACB

  	
  U.S.
  PREMIUM BEEF, LLC, a Delaware limited
  liability company

  
	
   

  	
   

  
	
  By:

  	
   

  	
     By:

  	
   

  
	
   	
   	
   	
   
	
  Title:	
   	
    
  Title:

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