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dated as of May 19, 2006 by and among BRAWLEY BEEF, LLC and NATIONAL BEEF CALIFORNIA, LP and NATIONAL BEEF PACKING COMPANY, LLC
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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: (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). (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.
(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.
(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 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. (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.
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. (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. (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.
(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 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; (d) any liabilities or obligations identified on Schedule 2.4(d) ; (e) any liability or obligation of Brawley which relates to the Excluded Assets; (i) any liability under any debt instrument or security issued by Brawley 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 Brawley and various Members with Red Rock Feeding Co., Inc. Brawley hereby acknowledges that it is retaining the Excluded Liabilities, and Brawley 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 bill. 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 Brawley the following consideration: (a) Newco shall assume the Assumed Liabilities by executing the Assignment and Assumption Agreement . (b) Newco shall deliver to Brawley 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 Brawley, and upon execution of a USPB membership agreement, uniform cattle delivery and marketing agreement ("Even Slot"), and USPB contribution agreement by USPB and Brawley, Brawley shall contribute the LP Units to USPB and USPB shall issue to Brawley one Class A Unit and one Class B Unit of USPB for each LP Unit contributed to USPB by Brawley (the " USPB Units"). (b) The transaction between USPB and Brawley 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 Brawley an unaudited balance sheet of Brawley 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 Brawley 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), Brawley 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 Brawley's calculation of such amounts. Any such notice of dispute or disagreement shall specify those items or amounts as to which Brawley disagrees, and Brawley 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 Brawley 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 Brawley's 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 Brawley 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 Brawley, 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 Brawley has disagreed. The Independent Accountant shall deliver to Newco and Brawley, 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 Brawley's calculation delivered pursuant to Section 3.3(c). Such report shall be final and binding upon Newco and Brawley. The fees, costs and expenses of the Independent Accountant's review and report shall be borne equally by Newco and Brawley. (e) Newco and Brawley 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 Brawley to an account specified by Brawley. If the Consideration Adjustment is positive, then it shall be paid by Brawley, 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, Brawley 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 Blackwell Sanders Peper Martin LLP located at 4801 Main Street, Kansas City, Missouri (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 Brawley's Closing Deliveries . At the Closing, Brawley 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 Bill of Sale in the form attached hereto as Exhibit B (the "Bill of Sale"), duly executed by Brawley; (b) an Assignment and Assumption Agreement in substantially the form attached hereto as Exhibit C (the "Assignment and Assumption Agreement"), duly executed by Brawley; (c) copies of all Required Third Party Consents, duly executed by the persons or entities whose consent is required;
(d) copies of all Required Governmental Authorizations; (i) executed cattle supply agreements between USPB and Brawley and between Newco and Brawley 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 Brawley 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 Brawley holds fee interests, in form acceptable to Newco, duly executed and acknowledged by Brawley and in recordable form; (n) certificates of title for certificated motor vehicles and other titled Contributed Assets, duly executed by Brawley 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 Brawley 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 Brawley): (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 Brawley; (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 Brawley 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 Brawley or Newco if the Closing shall not have occurred by the close of business on July 31, 2006 (the " Outside Date ");
(b) by mutual written consent of Brawley and Newco; (c) by Brawley 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 Brawley if either (i) any of the conditions precedent to Brawley's obligation to proceed with the Closing have become incapable of fulfillment through no fault of Brawley 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 Brawley 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) Brawley is in material breach of any representation, warranty or covenant in this Agreement (or if such representation, warranty or covenant is qualified by materiality, Brawley has breached the same) and such breach has continued for at least ten (10) days after delivery of written notice from Newco to Brawley 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 Brawley, 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 Brawley. 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 Brawley; 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 "Brawley Beef." Brawley 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 Brawley after the Closing that Brawley has changed its name. ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF BRAWLEY Brawley hereby represents and warrants to Newco as follows: 5.1 Organization and Power . Brawley 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. Brawley 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. Brawley has full power and authority to execute, deliver and perform this Agreement and the other agreements contemplated hereby. The membership of Brawley is as set forth in Schedule 5.1 . 5.2 Authorization . The execution, delivery and performance by Brawley of this Agreement and the other agreements contemplated hereby have been duly authorized by Brawley. This Agreement and the other agreements contemplated hereby, assuming their valid execution by Newco, constitute valid and binding obligations of Brawley, 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 Brawley 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 Brawley 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 Brawley or any indenture, mortgage, lease, loan agreement or other material agreement or instrument by which Brawley is bound or to which any of the Contributed Assets are subject, or, any law, statute, rule, regulation, judgment or decree to which Brawley 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 Brawley dated December 31, 2003 and audited financial statements of Brawley for the year ending January 1, 2005. Prior to the Closing Date, Brawley 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 Brawley's 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 , Brawley 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 . Brawley 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 , Brawley 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 Brawley, 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 Brawley, 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 Brawley, 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 Brawley, 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 Brawley 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 Brawley 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 Brawley, under any contract with any account debtor of an account receivable relating to the amount or validity of such account receivable.
(b) With respect to the Marubeni and IcresT (the "M/I Accounts") receivables described in Schedule 5.8(b) , Brawley 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. Brawley shall cooperate with Buyer as reasonably requested, and Buyer shall not settle the M/I Accounts without the prior approval of Brawley. Buyer shall provide Brawley with such information concerning collections on the accounts as Brawley may request. (c) On the date 180 days from the Closing Date, Buyer shall send a statement to Brawley 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. Brawley's 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 Brawley's 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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