CONTRIBUTION AGREEMENT

 

 

 

 

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

 

 

 

 

 

TABLE OF CONTENTS

Article 1 - DEFINITIONS AND TERMS.		1
	1.1       Certain Defined Terms.	1
Article 2 - CONTRIBUTION.		8
	2.1       Contributed Assets.	9
	2.2       Excluded Assets.	10
	2.3       Assumed Liabilities.	10
	2.4       Excluded Liabilities.	10
	2.5       Proration of Certain Taxes.	12
Article 3 - CONSIDERATION.		12
	3.1       Consideration.	12
	3.2       Unit Exchange.	12
	3.3       Consideration Adjustment	12
	3.4       Payment of Consideration Adjustment	14
	3.5       Allocation.	14
Article 4 - CLOSING AND TERMINATION.		14
	4.1       Closing Date.	14
	4.2       Brawley's Closing Deliveries.	14
	4.3       Newco's Closing Deliveries.	16
	4.4       USPB's Closing Deliveries.	16
	4.5       Simultaneous Delivery.	16
	4.6       Termination of Agreement	16
	4.7       Procedure Upon Termination.	17
	4.8       Effect of Termination.	17
	4.9       Change of Name.	17
Article 5 - REPRESENTATIONS AND WARRANTIES OF BRAWLEY.		17
	5.1       Organization and Power.	18
	5.2       Authorization.	18
	5.3       No Violation.	18
	5.4       Financial Statements.	18
	5.5       No Adverse Changes.	19
	5.6       Absence of Certain Changes.	19
	5.7       Books and Records.	19
	5.8       Accounts Receivable.	19
	5.9       Title to Contributed Assets; Condition.	20
	5.10     Owned Real Estate.	20
	5.11     Leases.	21
	5.12     Intellectual Property.	22
	5.13     Written Assumed Contracts.	22
	5.14     Employees.	22
	5.15     Taxes.	23
	5.16     Litigation.	23
	5.17     Compliance with Law; Licenses and Permits.	23
	5.18     Insurance.	24

i

 

	5.19     Environmental Matters.	24
	5.20     Occupational Safety and Health.	26
	5.21     Employee Benefit Plans.	26
	5.22     Products.	28
	5.23     Brokers and Finders.	28
	5.24     Statements True and Correct.	28
Article 6 - REPRESENTATIONS AND WARRANTIES OF NATIONAL AND NEWCO.		29
	6.1       Organization and Power.	29
	6.2       Authorization.	29
	6.3       No Violation.	29
	6.4       Capitalization.	29
	6.5       Litigation.	29
	6.6       Brokers and Finders.	30
	6.7       No Authorization Required.	30
	6.8       Financial Ability.	30
	6.9       Statements True and Correct	30
Article 7 - PRE-CLOSING COVENANTS.		30
	7.1       Satisfaction of Closing Conditions.	30
	7.2       Access to Information.	31
	7.3       Operation of the Business of Brawley.	31
	7.4       Required Consents.	32
	7.5       Regulatory Approvals.	32
	7.6       No Negotiation.	33
	7.7       Supplementation and Amendment of Schedules.	33
Article 8 - CONDITIONS TO CLOSING.		34
	8.1       Conditions Precedent to Obligations of Newco.	34
	8.2       Conditions Precedent to Obligations of Brawley.	35
	8.3       Frustration of Closing Conditions.	36
Article 9 - ADDITIONAL AGREEMENTS.		36
	9.1       Indemnification.	36
	9.2       Payment of Brawley Indemnification Claims.	39
	9.3       Capital Expenditures.	40
	9.4       Employees of the Business.	40
	9.5       Continuing Assistance.	42
	9.6       Cooperation in Litigation.	42
	9.7       Expenses.	42
	9.8       Press Releases and Announcements.	43
	9.9       Continuing Access to Records.	43
	9.10     Bulk Sales.	43
	9.11     Pledge Agreement.	43
	9.12     National Guaranty.	43
	9.13     Post Closing Covenants.	43
Article 10 - MISCELLANEOUS.		44
	10.1     Amendment and Waiver.	44
	10.2     Notices.	44
	10.3     Assignment.	45

 

ii

 

 

	10.4     Severability.	45
	10.5     No Strict Construction.	45
	10.6     Section Headings.	46
	10.7     Complete Agreement.	46
	10.8     Governing Law.	46
	10.9     Counterparts.	46

 

Exhibit A	Allocation
Exhibit B	Bill of Sale
Exhibit C	Assignment and Assumption Agreement
Exhibit D	USPB Contribution Agreement
Exhibit E	USPB Membership Agreements
Exhibit F	Opinion Paragraphs of Brawley Counsel
Exhibit G	Pledge Agreement
Exhibit H	Opinion Paragraphs of Newco and National Counsel
Exhibit I	National Guaranty
Exhibit 3.3(a)	Consideration Adjustment Calculation
Schedule 1.1(bb)	Guarantees
Schedule 2.1(b)	Assumed Contracts
Schedule 2.1(c)	Tangible Purchased Assets
Schedule 2.1(d)	Vehicles
Schedule 2.2(a)	Excluded Assets
Schedule 2.3(b)	Indebtedness
Schedule 2.3(c)	Current Liabilities
Schedule 2.4(d)	Other Excluded Liabilities
Schedule 5.1	Capitalization and Ownership
Schedule 5.3	No Violation
Schedule 5.4	Financial Statements
Schedule 5.5	No Adverse Changes
Schedule 5.6	Absence of Certain Changes
Schedule 5.7	Books and Records
Schedule 5.8	Accounts Receivable
Schedule 5.9	Title to Purchased Assets; Condition
Schedule 5.10	Owned Real Estate
Schedule 5.11	Leases
Schedule 5.12	Intellectual Property
Schedule 5.13	Written Assumed Contracts
Schedule 5.14	Employees
Schedule 5.16	Litigation
Schedule 5.17(a)	Compliance with Law
Schedule 5.17(b)	Licenses and Permits
Schedule 5.18	Insurance
Schedule 5.19	Environmental Matters
Schedule 5.20	Occupational Safety and Health
Schedule 5.21	Employee Benefits

 

Schedule 5.22	Products
Schedule 8.1(e)	Required Governmental Authorizations
Schedule 8.1(f)	Required Third Party Consents
Schedule 9.3	Compliance Expenditures
Schedule 9.4	Employees of the Business

 

 

CONTRIBUTION AGREEMENT

THIS CONTRIBUTION AGREEMENT (the "Agreement") is entered into as of this ___ day of May, 2006 by and between Brawley 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:

(a)                "Applicable Interest Bearing Debt" means those items of Assumed Indebtedness set forth on Schedule 2.3(b) for which changes in the principal balance from November 30, 2005 to Closing are subject to the "Consideration Adjustment."  The items of Applicable Interest Bearing Debt had a principal balance of $54,250,000 at November 30, 2005. 

(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)                 "Brawley's 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).

(j)                 "CERCLA" shall have the meaning set forth for such term in this Section 1.1 within the definition of "Environmental Law."

(k)               "Closing" and "Closing Date" shall have the meaning set forth for such terms in Section 4.1 hereof.

(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.

(n)               "Code" means the Internal Revenue Code of 1986 (or any successor(s) thereto), as amended from time to time, and all rules and regulations promulgated thereunder.

(o)               "Collective Bargaining Agreement" means any collective bargaining agreement of Brawley and any labor organization representing all or any portion of the Brawley's employees employed in the Business, including but not limited to the collective bargaining agreements listed on Schedule 5.14.

(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.

 

(r)                 "Employment Liability" means any obligation or liability of, or Loss incurred by or brought against, Brawley or Brawley's officers, managers, members, employees, or agents, and based upon, arising out of, or in any way related to:  (i) Brawley's 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 Brawley's employees, or the termination of any independent contract relationship by Brawley; (v) Brawley's (or Brawley's 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 Brawley's employees or independent contractors employed or located at the Business; or (vi) Brawley's Plans, or any "multi-employer plan" to which Brawley has or does contribute.

(s)                "Encumbrances" means any lien, charge, encumbrance, security interest, option, or restriction on the Contributed Assets.

(t)                 "Environmental Law" means any law, rule, regulation, statute, ordinance or other authority and all principles of common law applicable to operations of the Business and existing prior to or as of the Closing Date governing the regulation and protection of the environment and natural resources, including, but not limited to, any law relating to Hazardous Substances, drinking water, surface water, groundwater, wetlands, soil, landfills, open dumps, storage tanks, underground storage tanks, solid waste, hazardous waste, oil or hazardous substance handling, waste water, waste water run-off, storm water run-off, odors, air emissions, waste emissions, lagoons, land application areas or wells and treatment, storage, disposal or transportation, or arranging therefor, of any materials of any nature.  Without limiting the generality of the foregoing, "Environmental Law" shall encompass each of the following statutes and the regulations duly promulgated thereunder, and any similar applicable state or local laws, (i) the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), (ii) the Solid Waste Disposal Act ("SWDA"), (iii) the Hazardous Materials Transportation Act ("HMTA"), (iv) the Toxic Substances Control Act, (v) the Clean Water Act, (vi) the Clean Air Act, (vii) the Safe Drinking Water Act, (viii) the National Environmental Policy Act of 1969 and (ix) the Federal Insecticide, Fungicide and Rodenticide Act, the Resource Conservation and Recovery Act ("RCRA").

 

 

 

(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. 

(v)                "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time and all regulations promulgated thereunder.

(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 Brawley's 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.

(bb)             "Guarantees" means those existing individual guarantees executed by the Members, as shown in Schedule 1.1(bb);

(cc)             "Hazardous Substance(s)" means each and every element, compound, chemical, chemical mixture, contaminant, pollutant, material, waste or other substance that is defined, determined or identified as hazardous or toxic under any Environmental Law or the release, generation, handling, transportation, storage, treatment, disposal, release, discharge or emission of which is regulated or prohibited under any Environmental Law.  Without limiting the generality of the foregoing, the term shall include (i) "hazardous substances" as defined in the CERCLA, and regulations promulgated thereunder, (ii) "hazardous waste" or "solid waste" as defined in the SWDA and regulations promulgated thereunder, (iii) "hazardous materials" as defined in HMTA and regulations duly promulgated thereunder, (iv) "hazardous substances" and "pollutants" as defined in the Clean Water Act, and regulations promulgated thereunder, (v) any pollutant regulated under the Clean Air Act, and regulations promulgated thereunder, (vi) petroleum and petroleum products and byproducts, (vi) asbestos or asbestos-containing materials and (vii) polychlorinated biphenyls.

(dd)            "Hired Employees" shall have the meaning set forth for such term in Section 9.4 hereof.

(ee)             "HMTA" shall have the meaning set forth for such term in this Section 1.1 within the definition of "Environmental Laws."

 

 

(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.

(ll)                "Intellectual Property" shall mean the following, including those items listed on Schedule 5.12:  (i) the trademarks, service marks, domain names and trade names listed on Schedule 5.12 hereto, (ii) the Brawley Beef trademark, (iii) the copyrights and applications for issuance or registration of any of the foregoing and any goodwill associated therewith, and (iv) the trade secrets, products codes and other confidential, nonpublic, or similar information used in the running of the Business as the same is presently conducted (including, without limitation, ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, copyrightable works and customer and supplier lists and information).  Specific items of "Intellectual Property" that are not being transferred from Brawley to Newco shall also be listed on Schedule 5.12, but shall not be deemed to be included in the "Intellectual Property" that is being transferred to Newco for purposes of this Agreement.

(mm)          "Inventories" means all of Brawley's inventories of raw materials and products existing as of the Closing Date, including without limitation all boxes, labels, packaging, live animals, carcasses, meat products, meat-related items or finished goods (including meat and offal).

(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.

 

 

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)              "McElhaney Grain Company Loan" means that certain loan agreement dated February 5, 2002, between McElhaney Grain Company and Farm Credit Services.

(ss)             "Member Guaranty" shall have the meaning set forth for such term in Section 4.2(e) hereof.

(tt)              "Members" means the members of Brawley, including Oden Family Cattle Company, LLC; William L. Brandt; Mesquite Cattle Feeders, Inc.; Moiola Brothers Cattle Feeders, Ltd.; Bill Wiest Ranches, Inc.; Dominique Antchango; and Cattlemen's Feed & Milling d/b/a Meloland Cattle Co. and Red Rock Feeding Co.

(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.

 

 

(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.

(bbb)       "Permits" shall mean Brawley's governmental licenses, permits, certificates and other public, governmental and private third party authorizations necessary to operate the Business as presently conducted.

(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 Brawley's 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.

(eee)         "Products" means any products manufactured, sold or delivered by Brawley from the Business prior to the Closing Date, excluding the Inventories.

 

 

(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.

(jjj)             "SWDA" shall have the meaning set forth for such term in this Section 1.1 within the definition of "Environmental Laws."

(kkk)         "Tax" or "Taxes" shall mean any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add‑on minimum, estimated or other tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not.

(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.

(ooo)          "WARN Act" means the Worker Adjustment and Retraining Notification Act, as amended, 29 U.S.C. §2101 et seq.

(ppp)          "Working Capital" shall have the meaning set forth in Section 3.3(a).

ARTICLE 2 - CONTRIBUTION

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 Brawley's ownership, where applicable, and/or right, title and interest in and to Intellectual Property, together with all of such Brawley's 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 Brawley's 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

(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 Brawley 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)                Brawley's 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 Brawley in and to or existing under such Brawley's 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 Brawley and Newco under Section 9.9 hereof; and

(d)                any and all claims or causes of action of Brawley 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 Brawley 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 Brawley 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 Brawley identified on attached Schedule 2.3(c);

(d)               the McElhaney 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 Brawley 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 Brawley including, but not limited to, any of the following liabilities and obligations (the "Excluded Liabilities"):

(a)                any of Brawley's liabilities or obligations under this Agreement and the other agreements with Newco contemplated hereby;

(b)               any liabilities or obligations of Brawley for expenses or fees incident to or arising out of the negotiation, preparation, approval, or authorization of this Agreement or the consummation (or preparation for the consummation) of the transactions contemplated hereby, including without limitation, attorneys', accountants' and brokers' fees;

(c)                except as specifically set forth in the schedules to Section 2.3, any liability or obligation of Brawley with respect to Taxes for any period or partial period occurring prior to the Closing Date and any liabilities for interest, penalties or additions to any Taxes, it being understood that Newco shall not be deemed to be Brawley's transferee with respect to any Tax liability;

(d)               any liabilities or obligations identified on Schedule 2.4(d);

(e)                any liability or obligation of Brawley which relates to the Excluded Assets;

(f)                 any liability arising out of a breach by Brawley prior to the Closing Date of any Assumed Contract;

(g)       &