CONTRIBUTION AGREEMENT dated as of May 19, 2006 by and among BRAWLEY BEEF, LLC and NATIONAL BEEF CALIFORNIA, LP and NATIONAL BEEF PACKING COMPANY, LLC
dated as of
May 19, 2006
by and among
▇▇▇▇▇▇▇ BEEF, LLC
and
NATIONAL BEEF CALIFORNIA, LP
and
NATIONAL BEEF PACKING COMPANY, LLC
TABLE OF CONTENTS
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1.1 Certain Defined Terms. | 1 |
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2.1 Contributed Assets. | 9 |
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Article 6 - REPRESENTATIONS AND WARRANTIES OF NATIONAL AND NEWCO. |
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10.4 Severability. | 45 |
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Exhibit A |
Allocation |
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Exhibit B |
▇▇▇▇ of Sale |
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Exhibit C |
Assignment and Assumption Agreement |
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Exhibit D |
USPB Contribution Agreement |
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Exhibit E |
USPB Membership Agreements |
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Exhibit F |
Opinion Paragraphs of Brawley Counsel |
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Exhibit G |
Pledge Agreement |
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Exhibit H |
Opinion Paragraphs of Newco and National Counsel |
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Exhibit I |
National Guaranty |
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Exhibit 3.3(a) |
Consideration Adjustment Calculation |
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Schedule 1.1(bb) |
Guarantees |
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Schedule 2.1(b) |
Assumed Contracts |
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Schedule 2.1(c) |
Tangible Purchased Assets |
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Schedule 2.1(d) |
Vehicles |
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Schedule 2.2(a) |
Excluded Assets |
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Schedule 2.3(b) |
Indebtedness |
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Schedule 2.3(c) |
Current Liabilities |
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Schedule 2.4(d) |
Other Excluded Liabilities |
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Schedule 5.1 |
Capitalization and Ownership |
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Schedule 5.3 |
No Violation |
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Schedule 5.4 |
Financial Statements |
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Schedule 5.5 |
No Adverse Changes |
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Schedule 5.6 |
Absence of Certain Changes |
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Schedule 5.7 |
Books and Records |
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Schedule 5.8 |
Accounts Receivable |
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Schedule 5.9 |
Title to Purchased Assets; Condition |
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Schedule 5.10 |
Owned Real Estate |
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Schedule 5.11 |
Leases |
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Schedule 5.12 |
Intellectual Property |
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Schedule 5.13 |
Written Assumed Contracts |
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Schedule 5.14 |
Employees |
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Schedule 5.16 |
Litigation |
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Schedule 5.17(a) |
Compliance with Law |
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Schedule 5.17(b) |
Licenses and Permits |
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Schedule 5.18 |
Insurance |
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Schedule 5.19 |
Environmental Matters |
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Schedule 5.20 |
Occupational Safety and Health |
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Schedule 5.21 |
Employee Benefits |
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Schedule 5.22 |
Products |
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Schedule 8.1(e) |
Required Governmental Authorizations |
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Schedule 8.1(f) |
Required Third Party Consents |
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Schedule 9.3 |
Compliance Expenditures |
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Schedule 9.4 |
Employees of the Business |
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THIS CONTRIBUTION AGREEMENT (the "Agreement") is entered into as of this ___ day of May, 2006 by and between ▇▇▇▇▇▇▇ Beef, LLC, a California limited liability company ("Brawley"), and National Beef California, LP, a Delaware limited partnership ("Newco") and National Beef Packing Company, LLC ("National"), a Delaware limited liability company as guarantor.
WHEREAS, Brawley owns and operates a beef packing facility located at Brawley, California (the "Business"); and
WHEREAS, subject to the terms and conditions set forth herein, Brawley desires to contribute to Newco substantially all of the assets used in the Business (other than the Excluded Assets as hereinafter defined); and
WHEREAS, subject to the terms and conditions set forth herein, Newco will assume certain obligations and liabilities of Brawley without assuming liability for other obligations or liabilities of Brawley arising out of the operation of the Business prior to the Closing Date (as hereinafter defined) or the ownership prior to that date of the Contributed Assets (as hereinafter defined), and issue limited partnership units to Brawley; and
WHEREAS, National is the parent of National Carriers, Inc., the sole general partner of Newco.
NOW, THEREFORE, in consideration of the premises recited, of the covenants, agreements and provisions of this Agreement, and of other good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, the parties hereby agree as follows:
ARTICLE 1 - DEFINITIONS AND TERMS
1.1 Certain Defined Terms. As used in this Agreement and in any Schedules and exhibits hereto, the following terms have the following meanings:
(b) "Assumed Contracts" shall have the meaning set forth for such term in Section 2.1(b) hereof.
(c) "Assumed Liabilities" shall have the meaning set forth for such term in Section 2.3(c) hereof.
(d) "Balance Sheet Date" shall have the meaning set forth for such term in Section 5.4 hereof.
(e) "Brawley" shall have the meaning set forth for such term in the introductory paragraph.
(f) "▇▇▇▇▇▇▇'▇ Plans" means the employee benefit plans listed in Schedule 5.21 hereof.
(g) "Business" shall have the meaning set forth for such term in the first recital hereof.
(h) "Cal/OSHA" means the California Occupational Safety and Health Administration within the California Division of Occupational Safety and Health.
(i) "Cattle Supply Agreements" shall have the meaning set forth for such term in Section 4.2(i).
(l) "Closing Balance Sheet" and "Closing Statement" shall have the meanings set forth for such terms in Section 3.3(c) hereof.
(m) "Closing Working Capital" shall have the meaning as set forth in Section 3.3(c) hereof.
(p) "Consideration Adjustment" shall have the meaning set forth in Section 3.3(a) hereof.
(q) "Contributed Assets" shall have the meaning set forth for such term in Section 2.1 hereof.
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(r) "Employment Liability" means any obligation or liability of, or Loss incurred by or brought against, Brawley or ▇▇▇▇▇▇▇'▇ officers, managers, members, employees, or agents, and based upon, arising out of, or in any way related to: (i) ▇▇▇▇▇▇▇'▇ employment of its employees at the Business prior to the Closing Date; (ii) except as otherwise provided herein, any contract, agreement, or commitment between Brawley and any employee of Brawley employed by Brawley at the Business, or any former employee of Brawley employed by Brawley at the Business, or any independent contractor engaged by Brawley at the Business, relating to the terms or conditions of employment, compensation, deferred compensation, severance, vacation pay, sick leave, profit sharing, pension, retirement, or any other type of benefit or emolument of employment or any independent contractor relationship; (iii) any Collective Bargaining Agreement; (iv) except as otherwise provided herein, the termination of the employment by Brawley of any of ▇▇▇▇▇▇▇'▇ employees, or the termination of any independent contract relationship by Brawley; (v) ▇▇▇▇▇▇▇'▇ (or ▇▇▇▇▇▇▇'▇ officers', managers', members', employees', or agents') breach, violation, or failure to comply with any law, rule, regulation, statute, ordinance, or other authority or legal requirement governing the employment or independent contract relationship of ▇▇▇▇▇▇▇'▇ employees or independent contractors employed or located at the Business; or (vi) ▇▇▇▇▇▇▇'▇ Plans, or any "multi-employer plan" to which Brawley has or does contribute.
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(u) "Environmental Matter" means (i) any known or unknown violations of Environmental Law or actions or inactions forming the basis for any claim related to Environmental Law by Brawley that occurred or began in whole or in part at any time prior to the Closing Date in connection with any of the Contributed Assets or the Business, or (ii) the known or unknown presence or release of any Hazardous Substances at any time prior to the Closing Date to soil, sediment, surface water, groundwater or air at any Contributed Asset, including any migration of such Hazardous Substances from the Business or any Contributed Asset to any off-site location, or (iii) the presence of any Hazardous Substances or solid wastes generated by any of the Contributed Assets or the Business prior to the Closing Date at any location whether or not Brawley transported, disposed of, placed or arranged for the material to be transported, disposed of or placed in such location.
(w) "Excluded Assets" shall have the meaning set forth for such term in Section 2.2 hereof.
(x) "Excluded Liabilities" shall have the meaning set forth for such term in Section 2.4 hereof.
(y) "Facility" shall mean ▇▇▇▇▇▇▇'▇ cattle processing facility located in Brawley, California.
(z) "Financial Statements" shall have the meaning set forth for such term in Section 5.4 hereof.
(aa) "GAAP" means United States generally accepted accounting principles consistently applied with prior periods.
(dd) "Hired Employees" shall have the meaning set forth for such term in Section 9.4 hereof.
(ff) "Immigration Laws" shall have the meaning set forth for such term in Section 5.14(c) hereof.
(gg) "Indebtedness" shall have the meaning set forth for such term in Section 2.3(b) hereof.
(hh) "Indemnification Claim" shall have the meaning set forth for such term in Section 9.1(c) hereof.
(ii) "Indemnitee" shall have the meaning set forth for such term in Section 9.1 hereof.
(jj) "Indemnitor" shall have the meaning set forth for such term in Section 9.1(c) hereof.
(kk) "Initial Working Capital" shall have the meaning set forth for such term in Section 3.3(a) hereof.
(nn) "Knowledge" means the following: an individual will be deemed to have "Knowledge" of a particular fact or other matter if:
(i) that individual is actually aware of that fact or matter; or
(ii) a prudent individual could be expected to discover or otherwise become aware of that fact or matter in the course of conducting a reasonable investigation regarding the accuracy of any representation or warranty contained in this Agreement.
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An entity will be deemed to have Knowledge of a particular fact or other matter if any individual who is serving, as a director, officer, manager, or partner of that entity (or in any similar capacity) has Knowledge of that fact or other matter (as set forth in (i) and (ii) above), and any such individual (and any individual party to this Agreement) will be deemed to have conducted a reasonable investigation regarding the accuracy of the representations and warranties made herein by that entity or individual. With respect to Brawley, "Knowledge" shall include the Knowledge of its Members who have participated in the negotiation of this Agreement.
(oo) "Leases" shall have the meaning set forth for such term in Section 5.11 hereof.
(pp) "Loss" means any cost, damage, expense, liability, loss or obligation, including but not limited to, interest or carrying costs, penalties, legal, accounting, and other professional fees and expenses incurred in the collection, prosecution and defense of actions or claims and amounts paid in settlement by the specified person.
(qq) "Material Adverse Effect" means a material adverse effect on (i) the business, assets, properties, results of operations or financial condition of Brawley or of the Business; (ii) the value of the Contributed Assets or a material increase in the amount of Assumed Liabilities; (iii) the ability of Brawley to conduct the Business in the regular course of business;; or (iv) the ability of Brawley to consummate the transactions contemplated by this Agreement or perform its obligations under this Agreement.
(rr) "▇▇▇▇▇▇▇▇▇ Grain Company Loan" means that certain loan agreement dated February 5, 2002, between ▇▇▇▇▇▇▇▇▇ Grain Company and Farm Credit Services.
(ss) "Member Guaranty" shall have the meaning set forth for such term in Section 4.2(e) hereof.
(uu) "National" shall have the meaning set forth for such term in the introductory paragraph.
(vv) "National Units" shall have the meaning set forth for such term in Section 3.2(c) hereof.
(ww) "Newco" shall have the meaning set forth for such term in the introductory paragraph.
(xx) "OSHA" means the Occupational Safety and Health Administration of the U.S. Department of Labor.
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(yy) "OSH Act" means the Occupational Safety and Health Act of 1970, 29 U.S.C. 654 et seq.
(zz) "Ordinary Course of Business" means an action taken by an entity will be deemed to have been taken in the Ordinary Course of Business only if that action:
(i) is consistent in nature, scope and magnitude with the past practices of such entity and is taken in the ordinary course of the normal, day-to-day operations of such entity;
(ii) does not require authorization by the board of managers or members of such entity (or by any person or group of persons exercising similar authority) and does not require any other separate or special authorization of any nature; and
(iii) is similar in nature, scope and magnitude to actions customarily taken, without any separate or special authorization, in the ordinary course of the normal, day-to-day operations of other entities that are in the same line of business as such entity.
(aaa) "Owned Real Estate" shall mean the real property described on Schedule 1.1(aaa) hereto.
(ccc) "Permitted Encumbrances" means (i) statutory liens for current Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith by appropriate proceedings, provided an appropriate reserve has been established therefor in the Financial Statements in accordance with GAAP; (ii) mechanics', carriers', workers' and repairers' liens that do not, individually or in the aggregate, have a Material Adverse Effect and which if filed are being contested in a timely manner pursuant to applicable Law and are properly reserved against in ▇▇▇▇▇▇▇'▇ books and records in accordance with GAAP; (iii) zoning, entitlement and other land use and environmental regulations by any governmental body, provided that if such regulations have been violated, such violations, individually or in the aggregate, do not have a Material Adverse Effect; (iv) easements, covenants, restrictions and encumbrances which do not, individually or in the aggregate, have a Material Adverse Effect; and (v) liens and other encumbrances created in connection with the Indebtedness being assumed.
(ddd) "Pledge Agreement" means the Pledge Agreement described in Section 9.11.
(fff) "RCRA" shall have the meaning set forth for such term in this Section 1.1 within the definition of "Environmental Laws."
(ggg) "Required Governmental Authorizations" means those consents, approvals, permits, licenses and authorization of any government, governmental or regulatory body thereof, or political subdivision or agency thereof, required to be obtained to consummate the transactions contemplated hereby as identified on Schedule 8.1(e).
(hhh) "Required Third Party Consents" means those consents, approvals and authorizations of (i) counterparties to Assumed Contracts required to be obtained to assign such Assumed Contracts to Newco in accordance with this Agreement and (ii) labor unions to transfer the Hired Employees to Newco in accordance with this Agreement, in each case as identified on Schedule 8.1(f).
(iii) "Schedules" means those Schedules attached hereto and made a part hereof.
(lll) "Third Party Claim" shall have the meaning set forth for such term in Section 9.1(d) hereof.
(mmm) "USPB" means U.S. Premium Beef, LLC, a Delaware limited liability company.
(nnn) "USPB Units" shall have the meaning set forth for such term in Section 3.2 hereof.
(ppp) "Working Capital" shall have the meaning set forth in Section 3.3(a).
2.1 Contributed Assets. Except as otherwise provided below, on and subject to the terms established in this Agreement, Brawley hereby contributes, conveys, assigns, transfers and delivers to Newco, free and clear of all Encumbrances of any kind, except the Permitted Encumbrances, all of its right, title and interest of Brawley in and to all of its assets, business, properties, contract rights, water rights, goodwill, rights and claims (collectively, the "Contributed Assets"), including the following:
(a) the Owned Real Estate;
(b) the leases, contracts, licenses, guaranties, warranties and other items set forth on Schedule 2.1(b) (the "Assumed Contracts");
(c) the machinery, equipment, furniture, tools, computers, office equipment, business machines, and telephones located at the Facility and such assets used in the ordinary course of operation of the Business as set forth on Schedule 2.1(c);
(d) the vehicles used in connection with the Business as set forth on Schedule 2.1(d);
(e) all office supplies, production supplies and other miscellaneous supplies located at the Business on the Closing Date;
(f) all saleable Inventories of the Business;
(g) all Permits relating to operation of the Business to the extent transferable;
(h) all of ▇▇▇▇▇▇▇'▇ ownership, where applicable, and/or right, title and interest in and to Intellectual Property, together with all of such ▇▇▇▇▇▇▇'▇ rights to use all of the foregoing and all other rights in, to and under the foregoing; and all goodwill and going concern value of the Business;
(i) all accounts receivable, all records pertaining to customers and accounts, historical sales information by customer and product, personnel records, and all books, ledgers, files and business records relating to the Business;
(j) all assignable rights against third parties under any warranty, if any, with respect to any of the foregoing;
(k) all other similar property not referred to above which is used in ▇▇▇▇▇▇▇'▇ operation of the Business, wherever located, but specifically excluding the Excluded Assets and such property which has been sold or otherwise disposed of by Brawley in the Ordinary Course of Business;
(l) the unemployment tax account maintained with the State of California for the workers employed at the Facility, to the extent transferable to Newco.
(m) all cash, restricted cash, and cash equivalents;
(n) investment securities and other short- and medium-term investments of Brawley; and
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(o) all rights of Brawley relating to deposits and prepaid expenses, claims for refunds and rights to offset in respect thereof, except to the extent they relate to Excluded Assets or Excluded Liabilities.
2.2 Excluded Assets. Notwithstanding the foregoing, the parties agree that the following rights, properties and assets of ▇▇▇▇▇▇▇ are expressly excluded from this purchase and sale and are not included in the Contributed Assets (the "Excluded Assets"):
(a) all assets listed on Schedule 2.2(a);
(b) ▇▇▇▇▇▇▇'▇ rights under or pursuant to this Agreement and the other agreements with Newco or USPB contemplated hereby;
(c) all right, title and/or interest of ▇▇▇▇▇▇▇ in and to or existing under such ▇▇▇▇▇▇▇'▇ Tax records and Tax returns (including any right to Tax refunds), corporate charter, minute and stock record books, corporate seal, check books and cancelled checks all subject to the respective rights of ▇▇▇▇▇▇▇ and Newco under Section 9.9 hereof; and
(d) any and all claims or causes of action of ▇▇▇▇▇▇▇ with respect to any Member or former Member, their former or current officers, directors, managers or employees, of whatever nature, including, without limitation, any rights or claims relating to or arising out of the pending litigation between ▇▇▇▇▇▇▇ and its Members with Red Rock Feeding Co.
2.3 Assumed Liabilities. On and subject to the terms and conditions of this Agreement, Newco shall assume all obligations and liabilities of ▇▇▇▇▇▇▇ with respect to
(a) Assumed Contracts (excluding any liabilities identified in Section 2.4);
(b) all indebtedness as set forth on the attached Schedule 2.3(b) ("Indebtedness");
(c) the current liabilities of ▇▇▇▇▇▇▇ identified on attached Schedule 2.3(c);
(d) the ▇▇▇▇▇▇▇▇▇ Grain Company Loan; and
(e) any liability relating to the Business, to the extent unknown at the Closing Date and not included in the Excluded Liabilities and further providing that ▇▇▇▇▇▇▇ has disclosed all known information about the liability that is required to be disclosed under this Agreement, if any
(collectively, the "Assumed Liabilities").
2.4 Excluded Liabilities. Other than the Assumed Liabilities, Newco expressly does not assume any liability or obligation of ▇▇▇▇▇▇▇ including, but not limited to, any of the following liabilities and obligations (the "Excluded Liabilities"):
(a) any of ▇▇▇▇▇▇▇'▇ liabilities or obligations under this Agreement and the other agreements with Newco contemplated hereby;
(d) any liabilities or obligations identified on Schedule 2.4(d);
(e) any liability or obligation of ▇▇▇▇▇▇▇ which relates to the Excluded Assets;
(i) any liability under any debt instrument or security issued by ▇▇▇▇▇▇▇ to any present or former Member;
(j) any liability for any penalty, default interest, or prepayment penalty under any Assumed Liabilities; and
(k) any liability relating to or arising out of pending or threatened litigation, including but not limited to the litigation between ▇▇▇▇▇▇▇ and various Members with Red Rock Feeding Co., Inc.
▇▇▇▇▇▇▇ hereby acknowledges that it is retaining the Excluded Liabilities, and ▇▇▇▇▇▇▇ shall have the sole responsibility therefor.
2.5 Proration of Certain Taxes. All real and personal property Taxes and special assessments (but not including any transfer or sales Taxes), if any, which are applicable to the Contributed Assets for the year 2006 shall be prorated as of the Closing Date on the basis of the most recently available tax ▇▇▇▇. Newco shall be responsible for and shall pay any and all sales, use and transfer Taxes arising out of the transactions contemplated by this Agreement following the unit exchange described in Section 3.2 below.
ARTICLE 3 - CONSIDERATION
3.1 Consideration. On the terms and subject to the conditions set forth in this Agreement, on the Closing Date, upon acceptance of the Contributed Assets, Newco agrees to provide or cause to be delivered to ▇▇▇▇▇▇▇ the following consideration:
(a) Newco shall assume the Assumed Liabilities by executing the Assignment and Assumption Agreement.
(b) Newco shall deliver to ▇▇▇▇▇▇▇ 44,160 Newco limited partnership units (the "LP Units").
3.2 Unit Exchange. (a) On the Closing Date, immediately following the issuance of the LP Units to ▇▇▇▇▇▇▇, and upon execution of a USPB membership agreement, uniform cattle delivery and marketing agreement ("Even Slot"), and USPB contribution agreement by USPB and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ shall contribute the LP Units to USPB and USPB shall issue to ▇▇▇▇▇▇▇ one Class A Unit and one Class B Unit of USPB for each LP Unit contributed to USPB by ▇▇▇▇▇▇▇ (the " USPB Units").
(b) The transaction between USPB and ▇▇▇▇▇▇▇ in Section 3.2(a) is contingent upon the subsequent contribution of the LP Units from USPB to National and the issuance by National to USPB of Class A and Class B-1 National Units (the "National Units").
3.3 Consideration Adjustment. The Consideration will be adjusted by the following amounts:
(b) As promptly as practicable, but no later than sixty days after the Closing Date, Newco shall cause to be prepared and delivered to ▇▇▇▇▇▇▇ an unaudited balance sheet of ▇▇▇▇▇▇▇ as of the Closing Date (the "Closing Balance Sheet") and a closing statement (the "Closing Statement") and a certificate based on such Closing Statement setting forth Newco's calculation of Working Capital derived from the Closing Balance Sheet (the "Closing Working Capital"). The preparation of the Closing Statement shall be for the purpose of determining the difference between Initial Closing Working Capital and Closing Working Capital.
(c) If ▇▇▇▇▇▇▇ disagrees with the amounts reflected on the Closing Balance Sheet or Newco's calculation of Closing Working Capital delivered pursuant to Section 3.3(b), ▇▇▇▇▇▇▇ may, within thirty (30) days after delivery of the Closing Statement, deliver a notice to Newco disputing such amounts reflected on the Closing Balance Sheet and/or disagreeing with such calculation of Closing Working Capital and setting forth ▇▇▇▇▇▇▇'▇ calculation of such amounts. Any such notice of dispute or disagreement shall specify those items or amounts as to which ▇▇▇▇▇▇▇ disagrees, and ▇▇▇▇▇▇▇ shall be deemed to have agreed with all other items and amounts contained in the Closing Balance Sheet, the Closing Statement and the calculation of Closing Working Capital delivered pursuant to Section 3.3(b).
(d) If a notice of disagreement shall be duly delivered pursuant to Section 3.3(c), Newco and ▇▇▇▇▇▇▇ shall, during the thirty (30) days following such delivery, use their commercially reasonable efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the proper amounts set forth on the Closing Balance Sheet and the amount of Closing Working Capital, which amount shall not be less than the amount thereof shown in Newco's calculation delivered pursuant to Section 3.3(b) nor more than the amount thereof shown in ▇▇▇▇▇▇▇'▇ calculation delivered pursuant to Section 3.3(c). If the parties so resolve all disputes, the Closing Balance Sheet and the computation of Closing Working Capital, as amended to the extent necessary to reflect the resolution of the dispute, shall be conclusive and binding on the parties. If during such period, Newco and ▇▇▇▇▇▇▇ are unable to reach an agreement, they shall promptly thereafter cause, an independent nationally recognized accounting firm to be mutually agreed upon by Newco and ▇▇▇▇▇▇▇, in either such case, the "Independent Accountant") to review this Agreement and the disputed items or amounts for the purpose of determining the proper amounts on the Closing Balance Sheet and calculating Closing Working Capital (it being understood that in making such determination and calculation, the Independent Accountant shall be functioning as an expert and not as an arbitrator). In making such determination and calculation, the Independent Accountant shall consider only those items or amounts in the Closing Balance Sheet, the Closing Statement and Newco's calculation of Closing Working Capital as to which ▇▇▇▇▇▇▇ has disagreed. The Independent Accountant shall deliver to Newco and ▇▇▇▇▇▇▇, as promptly as practicable (but in any case no later than thirty days from the date of engagement of the Independent Accountant), a report setting forth such determination and calculation, which amount shall not be less than the amount thereof shown in Newco's calculation delivered pursuant to Section 3.3(b) nor more than the amount thereof shown in ▇▇▇▇▇▇▇'▇ calculation delivered pursuant to Section 3.3(c). Such report shall be final and binding upon Newco and ▇▇▇▇▇▇▇. The fees, costs and expenses of the Independent Accountant's review and report shall be borne equally by Newco and ▇▇▇▇▇▇▇.
(e) Newco and ▇▇▇▇▇▇▇ shall, and shall cause their respective representatives to, cooperate and assist in the preparation of the Closing Balance Sheet, the Closing Statement and the calculation of Closing Working Capital and in the conduct of the review referred to in this Section 3.3, including the making available to the extent necessary of books, records, work papers and personnel.
3.4 Payment of Consideration Adjustment. The Consideration Adjustment will be payable five (5) days after the calculation under Section 3.3(d) has become final. If the Consideration Adjustment is negative, it shall be paid by Newco by wire transfer to ▇▇▇▇▇▇▇ to an account specified by ▇▇▇▇▇▇▇. If the Consideration Adjustment is positive, then it shall be paid by ▇▇▇▇▇▇▇, by wire transfer to a bank account designated by Newco.
3.5 Allocation. The Contributed Assets shall be allocated in accordance with Exhibit A. After the Closing, the parties shall make consistent use of the allocation, fair market value and useful lives specified in Exhibit A for all Tax purposes and in all filings, declarations and reports with the IRS in respect thereof. In any proceeding related to the determination of any Tax, none of USPB, Newco, ▇▇▇▇▇▇▇ or Members shall contend or represent that such allocation is not a correct allocation.
ARTICLE 4 - CLOSING AND TERMINATION
4.1 Closing Date. Subject to the satisfaction of the conditions set forth in Sections 8.1 and 8.2 (or the waiver thereof by the party entitled to waive that condition), the consummation of the contribution of the Contributed Assets and the assumption of the Assumed Liabilities provided for in Article 2 (the "Closing") shall take place at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ LLP located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ (or at such other place as the parties may agree) at 10:00 a.m. (Kansas City, Missouri time) on a date to be specified by the parties, which date shall be no later than the second business day after the satisfaction or waiver of each condition to the Closing set forth in Article 8 (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), unless another date is agreed to in writing by the parties hereto. The date on which the Closing occurs is referred to in this Agreement as the "Closing Date."
4.2 ▇▇▇▇▇▇▇'▇ Closing Deliveries. At the Closing, ▇▇▇▇▇▇▇ shall deliver (or cause to be delivered) to Newco the following (documents for which there is no form attached as an Exhibit to this Agreement shall be in such form as is reasonably acceptable to Newco):
(a) a ▇▇▇▇ of Sale in the form attached hereto as Exhibit B (the "▇▇▇▇ of Sale"), duly executed by ▇▇▇▇▇▇▇;
(b) an Assignment and Assumption Agreement in substantially the form attached hereto as Exhibit C (the "Assignment and Assumption Agreement"), duly executed by ▇▇▇▇▇▇▇;
(c) copies of all Required Third Party Consents, duly executed by the persons or entities whose consent is required;
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(d) copies of all Required Governmental Authorizations;
(i) executed cattle supply agreements between USPB and ▇▇▇▇▇▇▇ and between Newco and ▇▇▇▇▇▇▇ upon terms reasonably satisfactory to USPB and Newco respectively (collectively the "Cattle Supply Agreements");
(j) the executed USPB Contribution Agreement to contribute the LP units to USPB and for USPB to issue USPB to issue the USPB Units to ▇▇▇▇▇▇▇ in substantially the form as attached as Exhibit D;
(k) the executed USPB Membership Agreements in substantially the form as attached as Exhibit E.
(l) Opinions of counsel as to matters identified in Exhibit F in form and substance satisfactory to National and Newco;
(m) one or more deeds of conveyance for the Owned Real Property with respect to which ▇▇▇▇▇▇▇ holds fee interests, in form acceptable to Newco, duly executed and acknowledged by ▇▇▇▇▇▇▇ and in recordable form;
(n) certificates of title for certificated motor vehicles and other titled Contributed Assets, duly executed by ▇▇▇▇▇▇▇ as may be required for transfer of such titles to Newco pursuant to this Agreement;
(o) such other instruments of assignment or conveyance as may be reasonably requested by Newco in connection with the transfer of the Contributed Assets; and
(p) a Pledge Agreement in substantially the form attached hereto as Exhibit G.
4.3 Newco's Closing Deliveries. At the Closing, Newco shall deliver (or cause to be delivered) to ▇▇▇▇▇▇▇ the following (documents for which there is no form attached as an Exhibit to this Agreement shall be in such form as is reasonably acceptable to ▇▇▇▇▇▇▇):
(b) the Assignment and Assumption Agreement, duly executed by Newco;
(f) opinions of counsel to National and Newco as to matters identified in Exhibit H in form and substance reasonably satisfactory to ▇▇▇▇▇▇▇;
(g) the executed Cattle Supply Agreement;
(h) the executed USPB Contribution Agreement; and
(i) the executed USPB Membership Agreement.
4.4 USPB's Closing Deliveries. At the Closing USPB shall deliver (or cause to be delivered) to ▇▇▇▇▇▇▇ the USPB Units.
4.5 Simultaneous Delivery. All documents, LP Units, USPB Units, National Units, and funds to be delivered pursuant to Sections 4.2, 4.3 and 4.4 shall be regarded as having been delivered simultaneously but sequentially, as one transaction without any interruption so that no part of the transaction may occur without the entire transaction being completed; and no document or funds will be regarded as having been delivered, and the Closing shall not be deemed to have occurred, until all such documents and funds have been delivered.
4.6 Termination of Agreement. This Agreement may be terminated prior to the Closing only as follows:
(a) by ▇▇▇▇▇▇▇ or Newco if the Closing shall not have occurred by the close of business on July 31, 2006 (the "Outside Date");
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(b) by mutual written consent of ▇▇▇▇▇▇▇ and Newco;
(c) by ▇▇▇▇▇▇▇ or Newco if there shall be in effect a final nonappealable order of a governmental body of competent jurisdiction permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; it being agreed that the parties hereto shall promptly appeal any adverse determination that is appealable (and pursue such appeal with reasonable diligence);
(d) by ▇▇▇▇▇▇▇ if either (i) any of the conditions precedent to ▇▇▇▇▇▇▇'▇ obligation to proceed with the Closing have become incapable of fulfillment through no fault of ▇▇▇▇▇▇▇ or (ii) Newco is in material breach of any representation, warranty or covenant in this Agreement (or if such representation, warranty or covenant is qualified by materiality, Newco has breached the same) and such breach has continued for at least ten (10) days after delivery of written notice from ▇▇▇▇▇▇▇ to Newco specifying the breach; and
(e) by Newco if either (i) any of the conditions precedent to Newco's obligation to proceed with the Closing have become incapable of fulfillment through no fault of Newco or (ii) ▇▇▇▇▇▇▇ is in material breach of any representation, warranty or covenant in this Agreement (or if such representation, warranty or covenant is qualified by materiality, ▇▇▇▇▇▇▇ has breached the same) and such breach has continued for at least ten (10) days after delivery of written notice from Newco to ▇▇▇▇▇▇▇ specifying the breach, and in each case Newco has not waived such condition or breach.
4.7 Procedure Upon Termination. In the event of termination by Newco or ▇▇▇▇▇▇▇, or both, pursuant to Section 4.6, written notice thereof shall forthwith be given to the other party, and this Agreement shall terminate, and the purchase of the Contributed Assets and the assumption of the Assumed Liabilities hereunder shall be abandoned, without further action by Newco or ▇▇▇▇▇▇▇.
4.8 Effect of Termination. In the event that this Agreement is validly terminated pursuant to Section 4.6, then each of the parties shall be relieved of their duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to Newco or ▇▇▇▇▇▇▇; provided, however, that no such termination shall relieve any party hereto from liability for any breach that occurred prior to the termination or for wrongful termination, and in such case the provisions of Article 9 hereof shall survive termination solely for purposes of Indemnification Claims arising out of or in respect of such breach.
4.9 Change of Name. Following the Closing, Newco shall own the exclusive right to the name "▇▇▇▇▇▇▇ Beef." ▇▇▇▇▇▇▇ agrees to change its name within 45 days following the Closing Date to one sufficiently dissimilar to avoid any confusion and will inform all persons and entities doing business with ▇▇▇▇▇▇▇ after the Closing that ▇▇▇▇▇▇▇ has changed its name.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ hereby represents and warrants to Newco as follows:
5.1 Organization and Power. ▇▇▇▇▇▇▇ is a limited liability company duly organized, validly existing and in good standing under the laws of the State of California and has the power and authority to carry on its business as now being conducted and to own and operate the properties and assets now owned and being operated by it. ▇▇▇▇▇▇▇ is qualified for the transaction of business and is in good standing under the laws of each jurisdiction in which it owns or leases properties or conducts any business which to its knowledge requires such qualification, except such jurisdictions where the failure to qualify will not have a Material Adverse Effect. ▇▇▇▇▇▇▇ has full power and authority to execute, deliver and perform this Agreement and the other agreements contemplated hereby. The membership of ▇▇▇▇▇▇▇ is as set forth in Schedule 5.1.
5.2 Authorization. The execution, delivery and performance by ▇▇▇▇▇▇▇ of this Agreement and the other agreements contemplated hereby have been duly authorized by ▇▇▇▇▇▇▇. This Agreement and the other agreements contemplated hereby, assuming their valid execution by Newco, constitute valid and binding obligations of ▇▇▇▇▇▇▇, enforceable in accordance with their terms except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights and any equitable principles relating to or limiting creditors' rights generally and the right to obtain specific enforcement of any obligations of such ▇▇▇▇▇▇▇ and by general principles of equity regardless of whether they are considered in a proceeding at law or in equity.
5.3 No Violation. Except as set forth in Schedule 5.3, the execution, delivery and performance of this Agreement and the other agreements contemplated hereby by ▇▇▇▇▇▇▇ and the consummation of the transactions contemplated hereby and thereby do not and will not (a) conflict with or result in any material breach of any of, (b) constitute a material default under, (c) result in a material violation of, (d) result in the creation of any Encumbrance upon the Contributed Assets under, (e) give any third party the right to accelerate any material obligation under, or (f) require any authorization, consent, approval, exemption or other action by any court, other governmental body, or other third party (except for consents required under any Assumed Contracts) under the provisions of the articles of organization or operating agreement of ▇▇▇▇▇▇▇ or any indenture, mortgage, lease, loan agreement or other material agreement or instrument by which ▇▇▇▇▇▇▇ is bound or to which any of the Contributed Assets are subject, or, any law, statute, rule, regulation, judgment or decree to which ▇▇▇▇▇▇▇ is subject other than the approvals or consents to be obtained as contemplated hereunder.
5.4 Financial Statements. Schedule 5.4 contains the audited balance sheet for ▇▇▇▇▇▇▇ dated December 31, 2003 and audited financial statements of ▇▇▇▇▇▇▇ for the year ending January 1, 2005. Prior to the Closing Date, ▇▇▇▇▇▇▇ will deliver audited financial statements for the year ending December 31, 2005, and unaudited financial statements for the year to date through the last Saturday in April (together with the financial information in Schedule 5.4, the "Financial Statements"). The Financial Statements fairly present, the financial position and results of operations of the Business as of such date in accordance with ▇▇▇▇▇▇▇'▇ accounting practices consistently applied for the period covered thereby. December 31, 2005 is sometimes referred to herein as the "Balance Sheet Date." Except as set forth in Schedule 5.4, ▇▇▇▇▇▇▇ has no liabilities except for liabilities reflected or reserved against in the Financial Statements and current liabilities incurred in the Ordinary Course of Business.
5.5 No Adverse Changes. Since the Balance Sheet Date, except as set forth in Schedule 5.5. ▇▇▇▇▇▇▇ has conducted the Business only in the ordinary course and in conformity with past practice, and there has been no change in the assets, or employee, customer or supplier relations of the Business which would, individually or in the aggregate, have a Material Adverse Effect.
5.6 Absence of Certain Changes. Since the Balance Sheet Date, other than in the Ordinary Course of Business and except as set forth in Schedule 5.6, ▇▇▇▇▇▇▇ has not, with respect to the Business: (a) sold, assigned, pledged, hypothecated or otherwise transferred any of the Contributed Assets, or imposed, suffered the imposition of, or permitted to exist, any Encumbrance on any of the Contributed Assets; (b) terminated or materially amended any Assumed Contract; (c) suffered any damage, destruction or other casualty loss (whether or not covered by insurance) which would have a Material Adverse Effect; (d) materially increased the compensation payable or to become payable to any of the employees of the Business, materially increased any bonus, insurance, pension or other employee benefit plan, payment or arrangement made by ▇▇▇▇▇▇▇, for or with any such employees, or entered into or amended any employment or severance agreement with any employee of the Business; or (e) entered into an agreement to do any of the foregoing.
5.7 Books and Records. Except as set forth in Schedule 5.7, the books of account and other records of ▇▇▇▇▇▇▇, all of which have been made available to Newco, are complete and correct and represent actual, bona fide transactions and have been maintained in accordance with sound business practices, including the maintenance of an adequate system of internal controls given the history, nature and operations of the Business. The minute books of ▇▇▇▇▇▇▇, all of which have been made available to Newco, contain accurate and complete records of all meetings held of, and action taken by, the members, the board of managers and committees of the board of managers of ▇▇▇▇▇▇▇, and no meeting of any such members, board of managers or committee has been held for which minutes have not been prepared or are not contained in such minute books.
5.8 Accounts Receivable.
(a) All accounts receivable that are reflected on the accounting records of ▇▇▇▇▇▇▇ as of the Closing Date (but excluding any Excluded Assets) represent or will represent valid obligations arising from sales actually made or services actually performed by ▇▇▇▇▇▇▇ in the Ordinary Course of Business. Except to the extent paid prior to the Closing Date, such accounts receivable are or will be as of the Closing Date current and collectible net of the respective reserves shown on Schedule 5.8(a). Subject to such reserves, each of such accounts receivable either has been or will be collected in full, without any setoff, within ninety (90) days after the day on which it first becomes due and payable. There is no contest, claim, defense or right of setoff, other than returns in the Ordinary Course of Business of ▇▇▇▇▇▇▇, under any contract with any account debtor of an account receivable relating to the amount or validity of such account receivable.
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(b) With respect to the Marubeni and IcresT (the "M/I Accounts") receivables described in Schedule 5.8(b), ▇▇▇▇▇▇▇ makes no representation other than that they represent valid obligations arising from sales actually made. The M/I Accounts will be treated provisionally as having a value equal to 100% of the amounts shown on Schedule 5.8(b). Buyer will use commercially reasonable efforts to collect the M/I Accounts. ▇▇▇▇▇▇▇ shall cooperate with Buyer as reasonably requested, and Buyer shall not settle the M/I Accounts without the prior approval of ▇▇▇▇▇▇▇. Buyer shall provide ▇▇▇▇▇▇▇ with such information concerning collections on the accounts as ▇▇▇▇▇▇▇ may request.
(c) On the date 180 days from the Closing Date, Buyer shall send a statement to ▇▇▇▇▇▇▇ requesting payment of an amount equal to the difference between (x) the amounts of the M/I Accounts shown on Schedule 5.8(b), minus the sum of (y) 75% of any amounts collected by Buyer on the M/I Accounts (net of reasonable collection expenses) and (z) any remaining reserve shown on Schedule 5.8(b) which as of the date of calculation has not been applied to uncollectible accounts. Upon payment of the statement, Buyer shall convey to Brawley any remaining interest it may have in the M/I Accounts. ▇▇▇▇▇▇▇'▇ obligation to pay the amount provided in this Section 5.8(c) shall not be subject to, or taken into account under, the provisions of Section 9.2.
5.9 Title to Contributed Assets; Condition.
5.10 Owned Real Estate. With respect to the Owned Real Estate:
(a) Except as set forth in Schedule 5.10, Brawley has good and marketable fee simple title to the Owned Real Estate, free and clear of all mortgages, pledges, security interests, encumbrances, covenants charges or other liens, easements and other restrictions, other than the Permitted Encumbrances.
(b) There are no (A) pending or, to ▇▇▇▇▇▇▇'▇ Knowledge, threatened condemnation proceedings relating to the Owned Real Estate, or (B) pending or threatened litigation or administrative actions relating to the Owned Real Estate.
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(c) Except as set forth on Schedule 5.10, Brawley is not a party to any leases, subleases, licenses, concessions or other agreements, written or oral, granting to any party or parties the right of use or occupancy of any portion of the Owned Real Estate.
(d) Except as set forth in Schedule 5.10 Brawley is not a party to any outstanding options or rights of first refusal to purchase the Owned Real Estate, or any portion thereof or interest therein.
(e) Except as set forth on Schedule 5.10, there are no parties (other than Brawley) in possession of the parcel of Owned Real Estate.
(f) The Owned Real Estate and the real estate leases identified in Schedule 5.11 comprise all of the real property currently used by the Brawley in connection with the Business.
5.11 Leases. Schedule 5.11 hereto contains a complete and accurate list of all material leases of real and personal property used exclusively in the Business to which Brawley is a party (the "Leases"). Brawley has delivered to Newco true and complete copies of all such Leases. With respect to each such Lease:
(b) No amount payable thereunder by Brawley thereunder is past due.
5.12 Intellectual Property. Schedule 5.12 is a list of all Intellectual Property. Brawley has not received any written notice from any other person challenging or questioning the right of Brawley to use any of the Intellectual Property in the operation of the Business which, if resolved, other than pursuant to this Agreement, adversely to Brawley, would have a Material Adverse Effect. Brawley has not granted any license or has entered into any other agreement relating in whole or in part to any of the Intellectual Property. To ▇▇▇▇▇▇▇'▇ Knowledge, there is no infringement or other adverse claim against the rights of Brawley with respect to any of the Intellectual Property, other than pursuant to this Agreement. Brawley has not been charged with, nor to its Knowledge is it threatened to be charged with or, to ▇▇▇▇▇▇▇'▇ Knowledge is there any basis for any charge of, infringement or other violation of any unexpired patent, trademark, trademark registration, trade name, service ▇▇▇▇, copyright, copyright registration or other proprietary right of any third party in connection with ▇▇▇▇▇▇▇'▇ operation of the Business as of the Closing Date. To ▇▇▇▇▇▇▇'▇ Knowledge, Newco is receiving all Intellectual Property necessary to operate the Business.
5.13 Written Assumed Contracts. Each Assumed Contract has been reduced to writing and is listed on Schedule 5.13 hereto. Correct and complete copies of all such Assumed Contracts have been delivered to Newco. Any Assumed Contract between Brawley and a Member or an affiliate of a Member has been identified on Schedule 5.13. Except as set forth in Schedule 5.13: (x) all such Assumed Contracts are in full force and effect and are valid, binding and enforceable in accordance with their terms, except to the extent such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting the enforcement of creditors' rights generally or by general equitable principles; (y) Brawley is not, and, to the Knowledge of Brawley, no other party to any such Assumed Contract is, in breach of any provision of, in violation of, or in default under the terms of any such Assumed Contract; and (z) no event has occurred which, after the giving of notice or passage of time or otherwise, would constitute a material default under or result in the material breach of any such Assumed Contracts by Brawley, or to the Knowledge of Brawley, by any other party.
(b) Except as set forth in Schedule 5.14, Brawley has complied with its obligations related to, is not in default under, and the transactions contemplated hereby will not affect any of the foregoing. Brawley has delivered to Newco a true and complete list of the name, position and present rate of compensation of each employee of the Business as of a recent date. All payments (including benefits) to employees of the Business which would have been paid in the Ordinary Course of Business on or before the Closing Date shall have been paid or accrued as of the Closing. Except as and to the extent set forth in Schedule 5.14, (i) Brawley is not a party to any Collective Bargaining Agreement and, to ▇▇▇▇▇▇▇'▇ Knowledge, no attempt to organize any of the employees of the Business has been made, proposed or threatened and there are no grievances pending and no scheduled arbitrations in relation to any Collective Bargaining Agreement, (ii) since December 31, 2005, Brawley has not had any Equal Employment Opportunity Commission charges or other claims of employment discrimination made against it by any of the employees of the Business, (iii) since December 31, 2005, to ▇▇▇▇▇▇▇'▇ Knowledge, no Wage and Hour Department investigations have ever been made of Brawley with respect to employees of the Business, (iv) no labor strike, dispute, slowdown, stoppage or lockout is pending or, to ▇▇▇▇▇▇▇'▇ Knowledge, threatened against or affecting the Contributed Assets or the Business and since December 31, 2005, there has not been any such action, (v) no unfair labor practice charge or complaint against Brawley is pending or, to ▇▇▇▇▇▇▇'▇ Knowledge, threatened before the National Labor Relations Board or any similar governmental authority with respect to employees of the Business, and (vi) Brawley has not received any notice that any management employees of the Business will terminate or contemplates terminating his or her employment currently or at any time within sixty (60) days after the Closing Date.
5.15 Taxes. With respect to the Facility, the Contributed Assets, all employees of the Business and otherwise regarding the operation of the Business, all federal, state and other Tax returns, reports and declarations of every nature required to be filed by or on behalf of Brawley (either separately or as part of a consolidated group) prior to the Closing have been timely filed or extensions have been obtained. All Taxes (whether or not shown on any Tax return) for all periods ending on or before the Closing Date have been fully paid or appropriate accruals have been made therefor. All Taxes and other assessments and levies which Brawley is required by law to withhold or to collect for payment have been duly withheld and collected.
5.16 Litigation.Except as set forth in Schedule 5.16 hereto, there are no actions, suits, proceedings, orders or investigations pending or, to ▇▇▇▇▇▇▇'▇ Knowledge, threatened against or affecting Brawley (with respect to the Business), the Business or the Contributed Assets, at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which might materially adversely affect the Contributed Assets, the Business or ▇▇▇▇▇▇▇'▇ performance under this Agreement or the consummation of the transactions contemplated hereby. Except as set forth in Schedule 5.16, Brawley is not currently subject to any judgment, consent decree, binding arbitration or regulatory order not generally applicable to similar businesses, which affects the Business or any of the Contributed Assets.
5.17 Compliance with Law; Licenses and Permits.
(b) Schedule 5.17(b) hereto lists all Permits necessary to conduct the Business. Except as set forth in Schedule 5.17(b), all Permits have been complied with except where non-compliance would not have a Material Adverse Effect.
5.18 Insurance. Brawley has insurance policies in full force and effect (a) for such amounts as are sufficient for all requirements of law and all agreements to which Brawley is a party or by which it is bound and (b) which are in such amounts, with such deductibles and against such risks and losses, as are reasonable for the business, assets and properties of Brawley. Set forth in Schedule 5.18 is a list of all insurance policies and all fidelity bonds held by or applicable to Brawley setting forth, in respect of each such policy, the policy name, policy number, carrier, term, type and amount of coverage, annual premium, and deductibles, whether the policies may be terminated upon consummation of the transactions contemplated hereby and if and to what extent events being notified to the insurer after the Closing Date are generally excluded from the scope of the respective policy. Excluding insurance policies that have expired and been replaced in the Ordinary Course of Business, no insurance policy has been cancelled within the last two years and, to the Knowledge of Brawley, no threat has been made to cancel any insurance policy of Brawley during such period. Except as noted on Schedule 5.18, all such insurance will remain in full force and effect and all such insurance is assignable or transferable to Newco. No event has occurred, including the failure by Brawley to give any notice of information, or Brawley giving any inaccurate or erroneous notice or information, which limits or impairs the rights of Brawley under any such insurance policies.
5.19 Environmental Matters. Except as set forth in Schedule 5.19 attached hereto:
(c) No claim is pending or, to the Knowledge of Brawley, threatened against Brawley, alleging, with respect to the Business, that Brawley may be in violation of any Environmental Law or any environmental Permit or may have any liability under any Environmental Law including, but not limited to, claims relating to noise or odors, or disposal of waste from the Business, other than such claims that are routine in nature and would not, individually or in the aggregate, result in the Business incurring material environmental costs and liabilities.
(g) There has been no release or, to the Knowledge of Brawley, threat of release, of any oil or Hazardous Substance at or from the Business or at any other location where any oil or Hazardous Substances were generated, manufactured, refined, transferred, produced, imported, used, or processed from or by the Business, or from any other property or asset (whether real, personal or mixed) in which Brawley has or had an interest, or to the Knowledge of Brawley any adjoining property, whether by Brawley or any other person.
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(j) Prior to Closing, Brawley will use commercially reasonable efforts to take all measures necessary to remediate and correct all instances of noncompliance with Environmental Law and OSHA prior to Closing, including but not limited to the preparation and filing of any required reports or notices with governmental agencies, installation of equipment, posting of required notices, and development of required programs with costs to be allocated between the parties in accordance with Section 9.3.
5.20 Occupational Safety and Health. Except as set forth on Schedule 5.20 attached hereto:
(a) The operations of Brawley, with respect to the Business, are and have been in compliance with respect to OSHA standards, OSH Act, Cal/OSHA Standards, and the California Occupational Safety and Health Act of 1973.
(b) With respect to the Business, Brawley is not the subject of any outstanding citations under OSHA standards, OSH Act, Cal/OSHA Standards, or the California Occupational Safety and Health Act of 1973.
(c) No claim is pending, or to the Knowledge of Brawley, threatened against Brawley, alleging, with respect to the Business, that Brawley may be in violation of OSHA standards, OSH Act, Cal/OSHA Standards, or the California Occupational Safety and Health Act of 1973.
(d) Except as described as in Section 9.3, to the Knowledge of Brawley, no facts circumstances or conditions exist with respect to the Business that could reasonably be expected to result in the Business incurring unbudgeted material costs to comply with OSHA standards, OSH Act, Cal/OSHA Standards, or the California Occupational Safety and Health Act of 1973.
(e) To the Knowledge of Brawley there are no investigations of the Business which could reasonably lead to the imposition of any material costs or liabilities associated with OSHA standards, OSH Act, Cal/OSHA Standards, or the California Occupational Safety and Health Act of 1973.
(f) To the Knowledge of Brawley there are no violations of OSHA or Cal/OSHA Standards, OSH Act, or the California Occupational Safety and Health Act of 1973 at the Facility.
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(a) Except as set forth in Schedule 5.21, neither Brawley nor any Affiliates (as defined below) has established, sponsored, maintained, or made any contributions to, or been parties to any contract or other arrangement or been subject to any statute or rule requiring it to establish, maintain, sponsor, or make any contribution to, (i) any "employee pension benefit plan" (as defined in Section 3(2) of ERISA) ("Pension Plan"); (ii) any "employee welfare benefit plan" (as defined in Section 3(l) of ERISA) ("Welfare Plan"); or (iii) any deferred compensation agreement, plan or arrangement; bonus plan or arrangement; stock option or stock purchase plan; incentive award plan or arrangement; personnel policy; vacation policy; severance pay plan, policy, program or agreement; retiree benefit plan or arrangement; fringe benefit program or practice (whether or not taxable); employee loan; consulting agreement; employment agreement; and each other employee benefit plan, agreement, arrangement, program, practice or understanding which is not described above as a Pension Plan or Welfare Plan, and any insurance contracts relating thereto ("Other Plan"). Brawley and the Affiliates have no obligations or liabilities (whether accrued, absolute, contingent, or unliquidated, and whether due or to become due) with respect to any Pension Plan, Welfare Benefit or Other Plan that arises other than in the ordinary course of plan sponsorship or administration that is not listed in Schedule 5.21. For purposes of this Section 5.21 only, the term "Affiliate" shall include all persons under common control with Brawley within the meaning of Sections 4001(a)(14) or (b)(1) of ERISA or any regulations promulgated thereunder, or Sections 414(b), (c), (m) or (o) of the Code.
(b) Each plan or arrangement listed in Schedule 5.21 (and any related trust, insurance contract, or other vehicle pursuant to which benefits under such plans or arrangements are funded or paid) has been administered in all material respects in compliance with its terms and is in compliance in all material respects, in both form and operation, with applicable provisions of ERISA, the Code, the Consolidated Omnibus Budget Reconciliation Act ("COBRA") and other applicable law, except as noted on Schedule 5.21. All required governmental filings relating to such plans or arrangements have been accurately and timely filed (taking into account permissible filing extensions). Each Pension Plan listed in Schedule 5.21 has been determined by the Internal Revenue Service to be qualified under Section 401(a) and, if applicable, Section 401(k) of the Code, and nothing has occurred or been omitted since the date of the last such determination that resulted or will result in the revocation of such determination. Brawley and the Affiliates have made all required contributions or payments to or under each plan or arrangement listed in Schedule 5.21 on a timely basis and have made adequate provision for reserves to meet contributions and payments, which arise as a result of actions or omissions prior to Closing, under such plans or arrangements that have not been made because they are not yet due. Neither Brawley nor any of its Affiliates have contributed to, nor do they have any past or present obligation to contribute to, any multiemployer plan as such term is defined in Section 3(37) of ERISA or any other plan subject to Title IV of ERISA. Neither Brawley nor any of its Affiliates have any obligation to provide life or medical benefits to former retired employees or beneficiaries thereof, other than such benefits as Brawley or its Affiliates are obligated to provide under COBRA.
(c) There are no pending. or, to the Knowledge of Brawley, threatened or anticipated claims, suits or other proceedings (including but not limited to any audit, enforcement action or similar proceeding conducted by any federal or state agency) with respect to any plan or arrangement listed in Schedule 5.21 other than ordinary claims by participants and beneficiaries thereunder.
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(d) Neither Brawley nor, to its Knowledge, its Affiliates, nor any of director, officer, employee or agent of either, or any "party in interest" or "disqualified person" (as such terms are defined in Section 3 of ERISA and Section 4975 of the Code) has, with respect to any plan or arrangement listed in Schedule 5.21, engaged in or been a party to any non-exempt "prohibited transaction" (as such term is defined in Section 406 of ERISA and Section 4975 of the Code) in connection with which, directly or indirectly, Newco or National or any such plan or arrangement could be subject to either a material penalty assessed pursuant to Section 502(i) of ERISA or a material tax imposed under Section 4975 of the Code.
5.23 Brokers and Finders. Brawley has not employed any broker, finder, consultant or intermediary in connection with the transactions contemplated by this Agreement who would be entitled to a broker's, finder's or similar fee or commission in connection therewith or upon the consummation thereof, if the Closing does not occur. Brawley agrees to bear all costs it incurs in connection with the transactions contemplated by this Agreement unless otherwise expressly provided herein.
5.24 Statements True and Correct. No representation or warranty of Brawley in this Agreement and no exhibit, document, statement, certificate or Schedule furnished or to be furnished to Newco pursuant hereto, or in connection with the transactions contemplated hereby, contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statement or facts contained herein or therein not misleading or necessary to provide Newco with adequate and complete information as to Brawley, the Business and the Contributed Assets. Brawley does not have Knowledge of any fact that has specific application to Brawley (other than general economic or industry conditions) and that may materially adversely affect the assets, business, prospects, financial condition or results of operations of Brawley that has not been set forth in this Agreement.
ARTICLE 6 - REPRESENTATIONS AND
WARRANTIES OF NATIONAL
AND NEWCO
National and Newco hereby represent and warrant to Brawley as follows:
6.1 Organization and Power. Newco is a limited partnership organized, validly existing and in good standing under the laws of the State of Delaware. National is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Each of National and Newco has full power and authority to execute, deliver and perform this Agreement and the other agreements contemplated hereby. Each of National and Newco is qualified for the transaction of business and is in good standing under the laws of each jurisdiction in which it owns or leases properties or conducts any business which to its knowledge required such qualification, except such jurisdictions where the failure to qualify will not have a Material Adverse Effect. Each of National and Newco has full power and authority to execute, deliver and perform this Agreement and the other agreements contemplated hereby.
6.2 Authorization. The execution, delivery and performance by National and Newco of this Agreement and the other agreements contemplated hereby have been duly authorized by National and Newco. This Agreement and the other agreements contemplated hereby, assuming their valid execution by Brawley, constitute valid and binding obligations of National and Newco, enforceable in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights and any equitable principles relating to or limiting creditors' rights generally and the right to obtain specific enforcement of any obligations of Newco and by general principles of equity regardless of whether they are considered in a proceeding at law or in equity.
6.3 No Violation. The execution, delivery and performance of this Agreement and the other agreements contemplated hereby by National or Newco and the consummation of the transactions contemplated hereby or thereby do not and will not (a) conflict with or result in any breach of, (b) constitute a default under, (c) result in a violation of, or (d) give any third party the right to accelerate any obligation under the provisions of National's or Newco's limited liability company operating agreement or limited partnership agreement or any indenture, mortgage, lease, loan agreement or other agreement or instrument to which Newco is bound or affected, or any law, statute, rule, regulation, judgment or decree to which National or Newco is subject.
6.4 Capitalization. The LP Units issued to ▇▇▇▇▇▇▇ on the Closing date will be (i) duly and validly issued, (ii) fully paid and non-assessable, and (iii) free of liens, encumbrances and restriction.
6.5 Litigation. There are no actions, suits, proceedings, orders or investigations pending or, to the knowledge of National or Newco, threatened against or affecting National or Newco at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which is reasonably likely to materially and adversely affect National's or Newco's performance under this Agreement or the consummation of the transactions contemplated hereby.
6.6 Brokers and Finders. Neither National nor Newco has employed any broker, finder, consultant or intermediary in connection with the transactions contemplated by this Agreement who would be entitled to a broker's, finder's or similar fee or commission in connection therewith or upon the consummation thereof, if the Closing does not occur other than ▇▇▇▇▇▇▇▇▇▇▇▇▇ Collet & Company, Inc. ("CCCO"). National and Newco agree to bear all costs they incur in connection with the transactions contemplated, including any fees of CCCO by this Agreement unless otherwise expressly provided herein.
6.7 No Authorization Required. Except as described in Section 8.1, no consent, authorization or approval of, or exemption by, or filings with, any governmental, public or self-regulatory body or authority or any third party is required in connection with the execution, delivery and performance of this Agreement by Newco or National except as contemplated by this Agreement.
6.8 Financial Ability. Newco shall have as of the Closing the financial capability and status to assume, pay and discharge the Assumed Liabilities, as such liabilities become due, and to consummate the transactions contemplated by this Agreement.
6.9 Statements True and Correct. No representation or warranty of Newco or National in this Agreement and no exhibit, document, statement, certificate or Schedule furnished or to be furnished to ▇▇▇▇▇▇▇ pursuant hereto, or in connection with the transactions contemplated hereby, contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statement or facts contained herein or therein not misleading or necessary to provide ▇▇▇▇▇▇▇ with adequate and complete information as to Newco and National. Neither Newco or National have Knowledge of any fact that has specific application to either Newco or National (other than general economic or industry conditions) that would materially adversely affect their ability to perform their obligations hereunder and has not been disclosed in the filings made by National with the Securities and Exchange Commission.
ARTICLE 7 - PRE-CLOSING COVENANTS
7.1 Satisfaction of Closing Conditions. Prior to the Closing, (i) Newco shall use commercially reasonable efforts to satisfy, or cause to be satisfied, those closing conditions set forth in Section 8.1 that are reasonably within Newco's control; and (ii) ▇▇▇▇▇▇▇ shall use commercially reasonable efforts to satisfy, or cause to be satisfied, those closing conditions set forth in Section 8.2 that are reasonably within ▇▇▇▇▇▇▇'▇ control. For purposes of this Section 7.1, unless compliance with or performance of a covenant expressly or inherently requires the expenditure of money (where compliance with or performance of such covenant is a closing condition), the use of "commercially reasonable efforts" shall not require either party to expend money.
7.2 Access to Information. Prior to the Closing Date, Newco shall be entitled, through its officers, employees and representatives (including its legal advisors and accountants), to make such investigation of the Contributed Assets and such examination of the ▇▇▇▇▇▇▇'▇ books, records and other documents as it reasonably requests. Any such investigation and examination shall be conducted during regular business hours, upon reasonable advance request and under commercially reasonable circumstances and shall be subject to restrictions under applicable Law. ▇▇▇▇▇▇▇ shall, and shall cause its officers, employees, consultants, agents, accountants, attorneys and other representatives of ▇▇▇▇▇▇▇ to, cooperate with Newco and Newco's representatives in connection with such investigation and examination, and Newco and its representatives shall cooperate with ▇▇▇▇▇▇▇ and its representatives and shall use their commercially reasonable efforts to minimize any disruption to the business of ▇▇▇▇▇▇▇. Newco agrees to abide by any safety rules or rules of conduct reasonably imposed by ▇▇▇▇▇▇▇ or the operator of such properties, as the case may be, with respect to Newco's access and any information furnished to Newco or its representatives pursuant to this Section 7.2.
7.3 Operation of the Business of ▇▇▇▇▇▇▇. Between the date of this Agreement and the Closing, ▇▇▇▇▇▇▇ shall:
(a) conduct its business only in the Ordinary Course of Business;
(b) except as otherwise directed by Newco in writing, and without making any commitment on Newco's behalf, use its commercially reasonable efforts to preserve intact its current business organization, keep available the services of its officers, employees and agents and maintain its relations and good will with suppliers, customers, landlords, creditors, employees, agents and others having business relationships with it;
(c) confer with Newco prior to implementing operational decisions of a material nature;
(d) otherwise report periodically to Newco concerning the status of its business, operations and finances;
(e) make no material changes in management personnel without prior consultation with Newco;
(f) maintain the Contributed Assets in a state of repair and condition that complies with legal requirements and is consistent with the requirements and normal conduct of the Business and refrain from any sale or transfer of Contributed Assets except in the Ordinary Course of Business;
(g) keep in full force and effect, without amendment, all material rights relating to the Business, including all Permits and other authorizations or licenses needed for the operation of the Business and refrain from any modifications thereof without Newco's prior written consent;
(h) comply with all applicable material legal requirements and contractual obligations applicable to the operations of the Business;
(i) continue in full force and effect the insurance coverage under the policies set forth in Schedule 5.18 or substantially equivalent policies;
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(j) except as required to comply with ERISA or to maintain qualification under Section 401(a) of the Code, not amend, modify or terminate any ▇▇▇▇▇▇▇'▇ Plan without the express written consent of Newco, and except as required under the provisions of any Plan, not make any contributions to or with respect to a ▇▇▇▇▇▇▇'▇ Plan without the express written consent of Newco, provided that ▇▇▇▇▇▇▇ shall contribute that amount of cash to each Plan necessary to fully fund all of the benefit liabilities of such ▇▇▇▇▇▇▇'▇ Plan on a plan-termination basis as of the Closing Date;
(k) cooperate with Newco and assist Newco in identifying the Required Governmental Authorizations needed by Newco to operate the Business from and after the Closing Date and either transferring existing governmental authorizations of ▇▇▇▇▇▇▇ to Newco, where permissible, or obtaining new governmental authorizations for Newco;
(l) maintain all books and records of ▇▇▇▇▇▇▇ relating to the Business in the Ordinary Course of Business;
(m) deliver to Newco such additional information regarding the Business as Newco may reasonably request from time to time.
7.4 Required Consents. Each of ▇▇▇▇▇▇▇ and Newco shall use commercially reasonable efforts to obtain the Required Third Party Consents prior to the Closing.
(b) Any party may, as it deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other parties under this Section 7.5 as "outside counsel only." Such materials and the information contained therein shall be given only to the outside legal counsel of the recipient, and the recipient shall cause such outside counsel not to disclose such materials or information to any employees, officers, directors or other representatives of the recipient or their affiliates, unless express written permission is obtained in advance from the source of the materials. Each such party shall promptly inform the other party hereto of any oral communication with, and provide copies of written communications with, any governmental body regarding any such filings or any such transaction. No party hereto shall independently participate in any formal meeting with any governmental body in respect of any such filings, investigation, or other inquiry without giving the other party hereto prior notice of the meeting and, to the extent permitted by such governmental body, the opportunity to attend and/or participate. Subject to applicable law, the parties hereto will consult and cooperate with one another in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party hereto relating to proceedings under applicable laws.
7.6 No Negotiation. Until such time as this Agreement shall be terminated pursuant to Section 4.6, neither ▇▇▇▇▇▇▇ nor any Member on its behalf shall directly or indirectly solicit, initiate, encourage or entertain any inquiries or proposals from, discuss or negotiate with, provide any nonpublic information to or consider the merits of any inquiries or proposals from any person (other than Newco, National or USPB) relating to any business combination transaction involving ▇▇▇▇▇▇▇, including the sale by Members of ▇▇▇▇▇▇▇'▇ membership units, the merger or consolidation of ▇▇▇▇▇▇▇ or the sale of the Business or any of the Contributed Assets (other than in the Ordinary Course of Business). ▇▇▇▇▇▇▇ and Members shall notify Newco of any such inquiry or proposal within twenty-four (24) hours of receipt or awareness of the same.
7.7 Supplementation and Amendment of Schedules. From time to time prior to the Closing, ▇▇▇▇▇▇▇ shall have the right to supplement or amend the Schedules in Article 5 with respect to any matter hereafter arising or discovered after the delivery of the Schedules pursuant to this Agreement; provided, however, no such supplement or amendment shall have any effect on the satisfaction of the condition to Closing set forth in Section 8.1(a).
ARTICLE 8 - CONDITIONS TO CLOSING
8.1 Conditions Precedent to Obligations of Newco. The obligation of Newco to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Newco in whole or in part to the extent permitted by applicable law):
(f) All Required Third Party Consents identified in Schedule 8.1(f) have been obtained.
(g) The transactions contemplated by this Agreement shall have been approved by the general partner of Newco, the board of managers of USPB, and the lenders and members of National Beef.
(h) The total amount of Indebtedness comprising Assumed Liabilities shall not exceed $54,250,000; provided, that this limit may be increased to the extent that (i) outstanding borrowings under ▇▇▇▇▇▇▇'▇ existing revolving line of credit at the Closing Date exceed $11,581,000; and (ii) the amount in clause (i) is matched by a corresponding increase in Working Capital in excess of $19,786,000.
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(i) The total amount of Assumed Liabilities shall not exceed $68,970,000, subject to (i) any increase in Indebtedness comprising Assumed Liabilities as described in Section 8.1(h); and (ii) any increase in current liabilities (but excluding the bank line of credit and the current portion of long-term indebtedness) matched by a corresponding increase in current assets, based on the November 30, 2005 normalized balance sheet of ▇▇▇▇▇▇▇ attached as Exhibit 3.3(a).
(j) Newco shall have received confirmation, satisfactory to it in its sole discretion, that it will be able to access economically freshwater and wastewater treatment necessary for anticipated future production levels.
(k) Newco shall have received releases of all Encumbrances on the Contributed Assets, other than Permitted Encumbrances.
(l) Newco and its representatives shall have completed their due diligence investigation of the Contributed Assets and the Business and related matters, and the results of such diligence shall be satisfactory to Newco in its sole and absolute discretion, including without limitation, in respect to environmental matters.
(m) ▇▇▇▇▇▇▇ shall have delivered (or shall stand ready to deliver) all documents required to be delivered by it at Closing, as more specifically set forth in Section 4.2.
(n) Newco shall have received from ▇▇▇▇▇▇▇ the audited financial statements for the year ending December 31, 2005 at least five (5) days prior to the Closing.
8.2 Conditions Precedent to Obligations of ▇▇▇▇▇▇▇. The obligations of ▇▇▇▇▇▇▇ to consummate the transactions contemplated by this Agreement are subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions (any or all of which may be waived by ▇▇▇▇▇▇▇ in whole or in part to the extent permitted by applicable law):
(e) All Required Governmental Authorizations have been obtained.
(g) USPB shall stand ready to deliver the USPB Units.
8.3 Frustration of Closing Conditions. Neither Newco nor ▇▇▇▇▇▇▇ may rely on the failure of any condition set forth in Sections 8.1 or 8.2, as the case may be, if such failure was caused by such party's breach of any provision of this Agreement.
ARTICLE 9 - ADDITIONAL AGREEMENTS
(c) Procedure for Indemnification.
(i) Any claim for indemnification under this Section 9.1 (an "Indemnification Claim") shall be made by the party claiming indemnification (the "Indemnitee") by delivery of a written notice to the party against whom indemnification is claimed (the "Indemnitor") requesting indemnification and specifying the basis on which indemnification is sought and the amount of asserted Losses and, in the case of a Third Party Claim (as defined below), containing (by attachment or otherwise) such other information as such Indemnitee shall have concerning such Third Party Claim.
(ii) If the Indemnification Claim involves a Third Party Claim the procedures set forth in Section 9.1(d) shall be observed by the Indemnitee and the Indemnitor.
(iii) If the Indemnification Claim involves a matter other than a Third Party Claim, the Indemnitor shall have thirty (30) days to object to such Indemnification Claim by delivery of a written notice of such objection to such Indemnitee specifying in reasonable detail the basis for such objection. Failure to timely so object shall constitute a final and binding acceptance of the Indemnification Claim by the Indemnitor, and the Indemnification Claim shall be paid in accordance with subsection (iv) hereof.
(iv) Upon determination of the amount of an Indemnification Claim, whether by agreement between the Indemnitor and the Indemnitee or by final adjudication, the Indemnitor shall pay the amount of such Indemnification Claim within ten (10) days of the date such amount is determined.
(i) For purposes of this Agreement, "Third Party Claim" means any action, arbitration, cause of action, claim, complaint, criminal prosecution, injunctions or other actions in equity, governmental or other examination or investigation, hearing, administrative or other proceeding (including, without limitation, an audit by any taxing authority) that is instituted against an Indemnitee by a person other than an Indemnitor and which, if prosecuted successfully, would result in losses for which such Indemnitee is entitled to indemnification hereunder.
(ii) The obligations and liabilities of the parties hereunder with respect to a Third Party Claim shall be subject to the following terms and conditions:
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(A) The Indemnitee shall give the Indemnitor written notice of a Third Party Claim promptly after receipt by the Indemnitee of notice thereof, and the Indemnitor may undertake the defense, compromise and settlement thereof by representatives of its own choosing reasonably acceptable to the Indemnitee. The failure of the Indemnitee to notify the Indemnitor of such claim shall not relieve the Indemnitor of any liability that it may have with respect to such claim except to the extent the Indemnitor demonstrates that the defense of such claim is prejudiced by such failure. The assumption of the defense, compromise and settlement of any such Third Party Claim by the Indemnitor shall be an acknowledgment of the obligation of the Indemnitor to indemnify the Indemnitee with respect to such claim hereunder. If the Indemnitee desires to participate in, but not control, any such defense, compromise and settlement, it may do so at its sole cost and expense. If, however, the Indemnitor fails or refuses to undertake the defense of such Third Party Claim within thirty (30) days after written notice of such claim has been given to the Indemnitor by the Indemnitee, the Indemnitee shall have the right to undertake the defense, compromise and settlement of such claim with counsel of its own choosing. In the circumstances described in the preceding sentence, the Indemnitee shall, promptly upon its assumption of the defense of such claim, make an Indemnification Claim as specified in Section 9.1(c) which shall be deemed an Indemnification Claim that is not a Third Party Claim for the purposes of the procedures set forth herein.
(B) No settlement of a Third Party Claim involving the asserted liability of the Indemnitors under this Section 9.1 shall be made without the prior written consent by or on behalf of the Indemnitor, which consent shall not be unreasonably withheld or delayed. Consent shall be presumed in the case of settlements of $25,000 or less where the Indemnitor has not responded within ten (10) days of notice of a proposed settlement. If the Indemnitor assumes the defense of such a Third Party Claim, a compromise or settlement thereof may be effected by the Indemnitor without the Indemnitee's consent if the sole relief provided is monetary damages that are paid in full by the Indemnitors; provided, however, if the Indemnitee reasonably believes on a good faith basis that the Indemnitor's monetary settlement of such Third Party Claim would have a continuing material adverse effect on the Indemnitee's operation of the Business then, upon written notice to the Indemnitor, the Indemnitee may so notify Indemnitor, in which event the Indemnitor's sole liability to the Indemnitee with respect to the Third Party Claim shall be limited to the amount for which the Indemnitor could have settled such Third Party Claim.
(e) Survival. Subject to the provisions of subsection (f) hereinbelow, all representations, warranties and agreements contained in this Agreement or in any certificate delivered pursuant to this Agreement shall survive the Closing. A party's right to indemnification as provided in this Section 9.1 shall not be eliminated, reduced or modified in any way as a result of the fact that it has notice of a breach or inaccuracy of any representation, warranty or covenant contained herein.
(f) Time Limitations. ▇▇▇▇▇▇▇ shall have no liability to Newco under Section 9.1 unless written notice asserting an Indemnification Claim based thereon is given to ▇▇▇▇▇▇▇ prior to the second anniversary of the Closing Date, provided, that, the foregoing notwithstanding, no time limitation shall apply with respect to any Losses arising from or related to Excluded Liabilities or a breach of the representations or warranties set forth in Sections 5.1, or 5.2; ▇▇▇▇▇▇▇'▇ liability for any breach of representation or warranty under Sections 5.9, 5.13, or 5.15 shall terminate upon the expiration of the applicable statutes of limitation, and ▇▇▇▇▇▇▇'▇ liability for any breach of representation or warranty under Section 5.19 shall terminate upon the expiration of the earlier of five (5) years or the applicable statute of limitations.
(g) Subrogation. Upon payment in full of any Indemnification Claim, or the payment of any judgment or settlement with respect to a Third Party Claim, the Indemnitor shall be subrogated to the extent of such payment to the rights of the Indemnitee against any person or entity with respect to the subject matter of such Indemnification Claim or Third Party Claim.
(i) Claims for Losses under Section 9.1(a)(i) or (a)(ii) must first exceed in the aggregate Five Hundred Thousand Dollars ($500,000).
(ii) Claims for Losses under Section 9.1(a)(i) or (a)(ii) that do not arise from Environmental Matters or OSHA Standards, OSH Act, Cal/OSHA Standards or the California Occupational Safety and Health Act of 1973 shall be subject to an aggregate limit of Three Million Dollars ($3,000,000).
(iii) Claims for Losses under Section 9.1(a)(i) or (a)(ii) that do arise from Environmental Matters or OSHA Standards, OSH Act, Cal/OSHA Standards, or the California Occupational Safety and Health Act of 1973 shall be subject to an aggregate limit of Ten Million Dollars ($10,000,000).
(iv) The maximum dollar amount for indemnification obligations under Section 9.1(a)(i) and (a)(ii) shall not exceed Ten Million Dollars ($10,000,000) in the aggregate.
(v) The limitations in this subsection (i) do not apply to other claims payable under this Agreement including but not limited to claims relating to Excluded Liabilities, Section 3.4, Section 5.8(b) or Section 9.3.
(j) Mitigation. The Indemnitee will use commercially reasonable efforts to mitigate the losses, costs, expenses and damages to which it may become entitled to indemnification hereunder.
9.2 Payment of ▇▇▇▇▇▇▇ Indemnification Claims.
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(a) Manner of Payment. With respect to any payment by ▇▇▇▇▇▇▇ of indemnification claims under Section 9.1(a)(i) and (a)(ii), ▇▇▇▇▇▇▇ may at its option elect to make payment by any of the following methods:
(i) by cash or immediately available funds;
(ii) by deductions from payments to be made by Newco under its Cattle Supply Agreement with ▇▇▇▇▇▇▇ (provided that such deductions may be made only against payments for Member supplied cattle sold by ▇▇▇▇▇▇▇);
(iii) by surrender of USPB units held under the Pledge Agreement; for purposes of payment of indemnification claims under Section 9.1(a)(i) and (a)(ii), each Class A and Class B Unit of USPB shall be deemed to have a collective value of $165.
(b) Timing of Payment.
(i) Provided ▇▇▇▇▇▇▇ is not otherwise in breach of this Agreement or the Cattle Supply Agreements, ▇▇▇▇▇▇▇ may elect to schedule its indemnification payments over a period of up to three years, in equal monthly installments of principal and interest, with interest to accrue upon the unpaid amount of the claim at the rate of eight percent (8%) per annum, compounded monthly.
(ii) In the event the Cattle Supply Agreements between ▇▇▇▇▇▇▇ and Newco shall terminate or otherwise cease to be in effect, then any amounts owing for indemnification claims shall become immediately due and payable.
9.3 Compliance Expenditures. Schedule 9.3 lists certain operating deficiencies of the Business (each a "Correction Item") for which the parties acknowledge that expenditures must be made to in order to bring the Business into compliance with the representations and warranties of this Agreement. Following the Closing, the parties shall cooperate in taking such measures as are necessary to address each Correction Item and agree to share the aggregate expenses as follows:
(a) Newco shall be responsible for the first $750,000 in aggregate expenses.
(b) ▇▇▇▇▇▇▇ shall be responsible for the next $250,000 in aggregate expenses.
(c) Newco and ▇▇▇▇▇▇▇ shall share equally in the next $2,000,000 of aggregate expenses.
(d) Newco shall be responsible for any additional expenses over and above $3,000,000.
9.4 Employees of the Business.
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(i) Prior to the Closing Date, ▇▇▇▇▇▇▇ shall have provided Newco a schedule that sets forth, as of the date of this Agreement, the names of all employees of ▇▇▇▇▇▇▇. Such schedule shall be updated up to the Closing Date as necessary to reflect new hires or other personnel changes. Schedule 9.4 lists all employees of ▇▇▇▇▇▇▇ at the Facility whose employment has been terminated within the ninety (90) days prior to Closing and the dates of termination for each such employee, except employees who voluntarily terminated their employment with ▇▇▇▇▇▇▇ and employees who were terminated by ▇▇▇▇▇▇▇ for cause.
(ii) Prior to (as well as on or immediately after) the Closing Date, Newco shall offer immediate employment to all or substantially all of ▇▇▇▇▇▇▇'▇ employees at the Facility such that there shall be no break in service by the employees in connection with the Business. Newco shall assume all liabilities arising out of the Collective Bargaining Agreements disclosed in Schedule 5.14. All such persons who accept Newco's offer of employment shall be referred to as the "Hired Employees." The Hired Employees shall become employees of Newco effective as of the Closing Date. Notwithstanding the foregoing, Newco shall retain the right at any time after the Closing Date to terminate the employment of any Hired Employee and to change the terms and conditions of their employment (including compensation and employee benefits provided to them).
(c) Employee Benefits. Except as set forth in Schedule 9.4, neither Newco nor National shall assume, maintain or continue any Pension Plan, Welfare Plan or Other Plan of ▇▇▇▇▇▇▇ following Closing. With respect to any Pension Plan, Welfare Plan or Other Plan assumed by Buyer or National following Closing as set forth in Schedule 9.4 (the "Assumed Plans"), the parties acknowledge and agree that (i) Newco or National shall only perform the duties and obligations of the employer-sponsor and plan administrator following the Closing and that ▇▇▇▇▇▇▇ shall remain liable following Closing for any violations of applicable law or breaches of fiduciary duty or other obligations that occurred (irrespective of when Known) with respect to such plans prior to Closing; and (ii) neither the Members nor ▇▇▇▇▇▇▇ assume any liability, and neither the Members nor ▇▇▇▇▇▇▇ shall be deemed to assume any liability, following Closing for any benefits or coverage or for any violations of applicable law or breaches of fiduciary duty or other obligations that occur (irrespective of when Known) with respect to such plans on or after Closing.
(d) Other Matters.
(i) All rights and obligations created by this Agreement are solely between the parties hereto. The parties intend that there are no third party beneficiaries under this Agreement. Without limiting the foregoing, nothing in this Agreement is intended to confer upon any employee of ▇▇▇▇▇▇▇ or such employee's legal representatives, heirs or beneficiaries any rights as a third party beneficiary or any remedies of any kind whatsoever under or by reason of this Agreement, or the transactions contemplated hereby or thereby, including any rights of employment or continued employment.
(ii) ▇▇▇▇▇▇▇ warrants that, to its Knowledge, it has no oral contracts with any of its employees at the Business or any independent contractors performing services at the Business other than as previously disclosed to Newco.
(iii) To ▇▇▇▇▇▇▇'▇ Knowledge, it has no formal independent contractor relationship with any third party performing services at the Business other than as previously disclosed to Newco.
9.5 Continuing Assistance. At any time and from time to time after the Closing, at Newco's request and without further consideration or compensation whatsoever, ▇▇▇▇▇▇▇ will execute and deliver such other instruments of sale, transfer, conveyance, assignment and confirmation and take such action as Newco may reasonably deem necessary or desirable in order to more effectively transfer, convey and assign to Newco, and to confirm Newco's title to, all of the Contributed Assets. Subsequent to the Closing, ▇▇▇▇▇▇▇ will refer all customer, supplier, and other inquires relating to the Business to Newco. At any time and from time to time after the Closing, at ▇▇▇▇▇▇▇'▇ request and without further consideration or compensation whatsoever, Newco will execute and deliver such other instruments of assignment and assumption and take such action as ▇▇▇▇▇▇▇ may reasonably deem necessary or desirable in order to more effectively evidence the assumption by Newco of the Assumed Liabilities.
9.6 Cooperation in Litigation. Newco and ▇▇▇▇▇▇▇ shall reasonably cooperate with each other, at the requesting party's expense, in the prosecution or defense of any dispute or litigation or other proceeding arising from their respective operation of the Business and involving one or more third parties, including but not limited to making available employees, employee or other business records, and other information pertinent to the litigation.
9.7 Expenses. Except as otherwise expressly provided herein, each party will pay all of its expenses, including attorneys', accountants' and brokers' fees, in connection with the negotiation of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated by this Agreement. All state, county or local sales or use taxes and any transfer taxes shall be paid by Newco following the unit exchange described in Section 3.2 and without detriment to ▇▇▇▇▇▇▇.
9.8 Press Releases and Announcements. No press releases, announcements or other disclosure related to this Agreement, the transactions contemplated herein or the consideration paid hereunder or pursuant to any agreement ancillary hereto will be issued by any party hereto without the joint approval of Newco and ▇▇▇▇▇▇▇, except for any public disclosure which any party hereto in good faith believes is required by law. In particular the parties acknowledge that National and Newco will be required to disclose certain information under the federal securities laws. Newco and ▇▇▇▇▇▇▇ shall be liable for any breaches of this provision by any of their respective affiliates, employees or representatives.
9.9 Continuing Access to Records. For a period of not less than three (3) years from the Closing Date (plus any additional time during which a party has been advised that (a) there is an ongoing tax audit with respect to periods prior to the Closing Date, or (b) such period is otherwise open to assessment) Newco agrees to give ▇▇▇▇▇▇▇ reasonable cooperation, access and staff assistance, as needed, during normal business hours with respect to books and records and other financial data delivered to Newco hereunder, and ▇▇▇▇▇▇▇ agree to give Newco reasonable cooperation, access, and staff assistance, as needed, during normal business hours with respect to books and records and other financial data relating solely to the Business or the Contributed Assets retained by ▇▇▇▇▇▇▇, as may be necessary for the defense, compromise or settlement of any Third Party Claim or for general business purposes, including, without limitation for (x) the preparation of tax return and financial statements and (y) the management and handling of tax audits, to an extent as will not unreasonably interfere with a party's conduct of its business, and to keep such materials reasonably accessible. Notwithstanding the foregoing, for as long as Newco is prosecuting or defending any claims (or reasonably anticipates any claims) involving any third party (including any appeal or right to appeal), upon written notice to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ shall preserve all records and other information identified by Newco as pertinent to the litigation, or, at the mutual option by Newco and ▇▇▇▇▇▇▇, shall transfer such materials to Newco at Newco's expense.
9.10 Bulk Sales. Newco hereby waives compliance by ▇▇▇▇▇▇▇ with respect to any Bulk Sales or similar laws of the State of California and any jurisdiction in connection with the sale of the Contributed Assets to Newco.
9.11 Pledge Agreement. To support ▇▇▇▇▇▇▇'▇ obligations to indemnify Newco under Section 9.1, ▇▇▇▇▇▇▇ and Newco will execute a pledge agreement (the "Pledge Agreement") in substantially the form attached hereto as Exhibit G.
9.12 National Guaranty. National will guaranty to ▇▇▇▇▇▇▇ the full and punctual payment and performance, by Newco, of all obligations, liabilities, and covenants hereunder, by executing a guaranty agreement in substantially the form attached hereto as Exhibit H.
(a) M/I Accounts. Newco will use commercially reasonable efforts to collect the M/I Accounts after the Closing. ▇▇▇▇▇▇▇ shall cooperate with Newco as reasonably requested, and Newco shall not settle the M/I Accounts without the prior approval of ▇▇▇▇▇▇▇. Newco shall provide ▇▇▇▇▇▇▇ with such information concerning collections on the accounts as ▇▇▇▇▇▇▇ may request.
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(b) Guarantees. Subsequent to the Closing, Newco will use its best efforts to have all guarantees of the Members made in connection with Assumed Contracts removed and terminated as soon as reasonably possible.
10.2 Notices. Except as otherwise expressly set forth in this Agreement, all notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when delivered personally, or by documented overnight delivery service, or sent by telecopy or telefax, provided a confirmation copy is also sent no later than the next business day by first class mail, return receipt requested. Notices, demands and communications to Newco or ▇▇▇▇▇▇▇ will, unless another address is specified in writing, be sent to the address indicated below:
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If to ▇▇▇▇▇▇▇, to: |
c/▇ ▇▇▇▇ Family Cattle Co.,
LLC |
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With a copy to: |
▇▇▇▇, Forward, ▇▇▇▇▇▇▇▇
& Scripps LLP |
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If to Newco, to: |
c/o National Beef Packing Company, LLC |
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With copies to: |
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. |
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ LLC |
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If to National, to: |
National Beef Packing Company, LLC |
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With copies to: |
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. |
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ LLC |
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10.3 Assignment. This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, except that neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by either party without prior written consent of the other party; provided, however, that Newco may assign its rights, in whole or in part, hereunder to National or any subsidiary of National, and any party may assign its rights as collateral to its lenders.
10.4 Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provisions will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
10.5 No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any person.
10.6 Section Headings. The headings of sections contained in this Agreement are provided for convenience only. They form no part of this Agreement and shall not affect its construction or interpretation. All references to sections or subsections refer to the corresponding sections and subsections of this Agreement. All words used herein shall be construed to be of such gender or number as the circumstances require. This "Agreement" shall mean this Agreement as a whole and as the same may, from time to time hereafter, be amended, supplemented or modified. The words "herein," "hereby," "hereof," "hereinabove" and "hereinbelow," and words of similar import, refer to this Agreement as a whole and not to any particular section, subsection, paragraph, clause or other subdivision hereof, unless otherwise specifically noted.
10.7 Complete Agreement. This document and the documents referred to herein or attached hereto contain the complete Agreement between the parties and supersede any prior understandings, agreements or representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way.
10.8 Governing Law. The substantive law (and not the law of conflicts) of the State of Kansas will govern all questions concerning the construction, validity and interpretation of this Agreement and the performance of the obligations imposed by this Agreement.
10.9 Counterparts.This Agreement may be executed in one or more counterparts (including by means of faxed signature pages), any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.
▇▇▇▇▇▇▇ BEEF, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman of Members Committee
NATIONAL BEEF CALIFORNIA, LP
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
NATIONAL BEEF PACKING COMPANY, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
Consented to:
U.S. PREMIUM BEEF, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
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