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AMENDED AND RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT ( Term Loan – Tranche A and Tranche B )
by and between
COBANK, ACB, as Agent and as a Syndication Party,
and
U.S. PREMIUM BEEF, LLC.
Dated as of June 22, 2009
AMENDED AND RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT (Term Loan – Tranche A and Tranche B)
THIS AMENDED AND RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT (“Credit Agreement”) is entered into as of June 22, 2009, by and between COBANK, ACB a federally chartered instrumentality of the United States (“CoBank”) for its own benefit as a lender (in that capacity sometimes referred to as “CoBank”) and, as Agent Bank for the benefit of the present and future Syndication Parties (in that capacity “Agent”), and U.S. PREMIUM BEEF, LLC, a Delaware limited liability company (“Borrower”). Borrower and CoBank as Agent and, presently, the sole Syndication Party, are parties to the Credit Agreement dated November 25, 1997, as amended by the First through Ninth Amendments thereto (the "Prior Agreement" ) whereby CoBank (as the Agent and a Syndication Party), and the other Syndication Parties, agreed to make loans, advances, extensions of credit and/or other financial accommodations to or for the benefit of Borrower. Borrower has requested that the Prior Agreement be amended and restated to provide for the continuation of the existing loans, additional loans, advances, extensions of credit and/or other financial accommodations, and the Syndication Parties are willing to do so on the following terms and conditions. As used in this Credit Agreement, the following terms shall have the meanings set forth below (and such meaning shall be equally applicable to both the singular and plural form of the terms defined, as the context may require): Additional Cost s : shall have the meaning set forth in Section 17.12. Advance Payment : shall have the meaning set forth in Subsection 16.2. Aggregate Commitment : shall be in the initial amount of $15,316,763.34 (reducing with the reductions in the Tranche A Commitment and the Tranche B Commitment) comprised of: (a) a fully funded Tranche A Commitment in the initial amount of $2,316,763.34, and reducing with each payment of principal on the Tranche A Loan(s), and (b) a partially funded Tranche B Commitment in the initial amount of $13,000,000.00, and reducing to $10,000,000 on May 31, 2010.
Applicable Margin : (a) With respect to the Tranche A Loan(s), the rates per annum set forth below for the then applicable “Leverage Ratio” referenced in the first column below (each being called a “Leverage Ratio Level”):
The initial Leverage Ratio Level shall be Level 2 until after the National Beef Leverage Ratio Certificate as of the end of the current fiscal year of National Beef has been delivered. Each National Beef Leverage Ratio Certificate shall be delivered not later than 120 days after the end of each fiscal year of National Beef. The Base Rate Loans Applicable Margin and the LIBOR Rate Loans Applicable Margin shall be determined pursuant to the table above based on the National Beef Leverage Ratio, as of the end of each fiscal year of National Beef, with such Applicable Margins effective as of the fifth Business Day after Agent’s receipt of a certificate executed by National Beef’s chief financial officer setting forth the National Beef Leverage Ratio for such fiscal year and including the detailed calculation thereof and a copy of the audited financial statement of National Beef (“National Beef Leverage Ratio Certificate”) ( and it being expressly understood that the LIBOR Rate Loans Applicable Margin once set for a LIBOR Rate Loan will not change during the LIBOR Rate Interest Period); and
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(b) With respect to the Tranche B Loan(s), the rates per annum set forth below (subject to automatic amendment as set forth below) for the then applicable “Borrowing Base Availability Level” referenced in the first column below (each being called a “Borrowing Base Availability Level”):
The initial Borrowing Base Availability Level shall be Level 2 until the Borrowing Base Certificate is required to be delivered by National Beef in October 2009. The Agent will review National Beef’s Borrowing Base Certificates to determine the amount of Borrowing Base Availability on the Borrowing Base measurement date referenced in National Beef's current Borrowing Base Certificate. Any change in the Borrowing Base Availability will be effective five (5) days after receipt from National Beef of the relevant Borrowing Base Certificate; provided , however , that if National Beef’s Borrowing Base Certificate is not delivered on a timely basis in accordance with Section 9.1 of the National Beef Credit Agreement, the Agent may, at its option, deem the Borrowing Base Availability Level to be Level 3 until ten (10) Business Days after the Agent’s receipt from National Beef of such Borrowing Base Certificate. Notwithstanding the foregoing, if at any time while any Tranche B Loan(s) remains outstanding, any Borrowing Base Certificate, financial statement or compliance certificate delivered by National Beef is shown to be inaccurate, and such inaccuracy, if it had been corrected prior to such delivery, would have caused the application of a higher Applicable Margin for any period than the Applicable Margin that was actually applied for such period, then (i) within five (5) Business Days of discovery or notice of discovery of such inaccuracy National Beef shall deliver to the Agent for distribution to the Syndication Parties a corrected Borrowing Base Certificate, financial statement or compliance statement for such period, (ii) the Applicable Margin for such period shall be recalculated and applied as if the higher Applicable Margin had originally been applicable, and (iii) within five (5) Business Days of such recalculation the Borrower shall pay to the Agent the additional amount of interest and fees owed as a result of such higher Applicable Margin for such period to the extent accrued through the last applicable payment date, and any subsequent payments required to be made on any subsequent payment date shall be adjusted accordingly. Nothing contained in this paragraph shall limit or otherwise prejudice any of the other rights and remedies of the Agent or the Syndication Parties under this Credit Agreement. In the event that the National Beef Credit Agreement is amended to change the table set forth in the definition of Applicable Margin related to Line of Credit Loans, then the preceding table in this Agreement shall be deemed to be amended correspondingly, effective at the same time as such amendment to the National Beef Credit Agreement is effective. 3
Authorized Officer : shall have the meaning set forth in Subsection 11.1.5. Availability Period : shall have the meaning set forth in Section 4.1. Bank Debt : all amounts owing under any Note, fees, Borrower's obligations to purchase CoBank Equity Interests, Funding Losses and all interest, expenses, charges, and other amounts payable by Borrower pursuant to the Loan Documents. Base Rate : a rate per annum announced by the Agent on the first Business Day of each week, which shall be the higher of (a) 150 basis points (1.50 percent) greater than the higher of the one week or one month LIBOR Rate, (b) the Prime Rate; or (c) the Federal Funds Rate plus one half of one percent (0.5%). Base Rate Loans : Loans with respect to which the interest rate is determined by reference to the Base Rate. Borrowing Base Availability : at any time, an amount (if positive) equal to (a) the Borrowing Base, as determined in accordance with the National Beef Credit Agreement minus (b) the sum of (i) the aggregate outstanding principal amount of the Line of Credit Loans outstanding under the National Beef Credit Agreement, (ii) the aggregate outstanding amount of the LC Obligations outstanding under the National Beef Credit Agreement and (iii) the aggregate outstanding principal amount of the Swing Line Loans outstanding under the National Beef Credit Agreement. Borrowing Base Availability Level : shall have the meaning set forth in the definition of Applicable Margin. Borrowing Base Certificate : a certificate issued by National Beef in substantially the form set forth in the National Beef Credit Agreement, signed as indicated thereon, setting forth the amount of National Beef’s Borrowing Base as determined in accordance with the National Beef Credit Agreement. Borrower Benefit Plan : shall have the meaning set forth in Section 10.11.
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Borrower Pension Plan : a Borrower Benefit Plan that is an “employee pension benefit plan” as defined in Section 3(2) of ERISA that is intended to satisfy the requirements of Section 401(a) of the Code. Borrower’s Real Property : shall have the meaning set forth in Section 10.13. Business Day : any day of the year, other than a Saturday or Sunday, on which commercial banks in New York, New York and Denver, Colorado are not required or authorized to close and, if such day relates to any LIBOR Rate Loans, a day on which dealing in Dollar deposits is occurring among banks in the London interbank market. Cattle Purchase and Sale Agreement : The agreement entitled Cattle Purchase and Sale Agreement dated December 1, 1997 by and between Farmland National Beef Packing Company, L.P., a Delaware limited partnership (now National Beef) and U.S. Premium Beef, Ltd., a Kansas cooperative corporation (now Borrower) whereby National Beef agrees to purchase cattle from Borrower. Change in Law : shall have the meaning set forth in Subsection 5.2.2. Closing Date : the date of this Credit Agreement. CoBank Equity Interests : shall have the meaning set forth in Article 8 hereof. Code : shall have the meaning set forth in Section 10.11. Collateral : shall have the meaning set forth in Section 9.1. Compliance Certificate : a certificate of the treasurer of Borrower in form and substance reasonably acceptable to Agent. Contributing Syndication Parties : shall have the meaning set forth in Section 16.4.
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Debt : with respect to any Person and without duplication: (a) all obligations of such Person for borrowed money (including, without limitation, all notes payable and drafts accepted representing extensions of credit, all obligations evidenced by credit agreements, bonds, debentures, notes or other similar instruments and all obligations upon which interest charges are customarily paid); (b) any direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), banker’s acceptances, bank guaranties, surety bonds and similar instruments; (c) whether or not so included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable incurred in the ordinary course of the Borrower’s business), and indebtedness (excluding prepaid interest thereon and excluding operating leases) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; (d) capitalized leases and Synthetic Lease Obligations; and (e) all Guaranty Obligations of such Person in respect of any of the foregoing. Debt Service Coverage Ratio : for any consecutive four Fiscal Quarters (a) net income (i) plus depreciation and amortization, and (ii) plus cash distributions received from National Beef, (iii) less (A) the following, as permitted under Section 13.11 hereof: retirements of equity (in the form of the payment of patronage notices), and tax distributions, and (B) earnings from National Beef, (b) divided by the total scheduled principal payments made on all Debt during such period. For purposes of this definition, (x) cash distributions received from National Beef calculated for each Fiscal Quarter shall include, but without duplication in the following Fiscal Quarter, those cash distributions received from National Beef up to and including the last day of such Fiscal Quarter; and (y) the results of operations of National Beef shall not be included in any calculations required, notwithstanding any provision of GAAP to the contrary. Default Interest Rate : a rate of interest equal to 200 basis points in excess of the rate or rates of interest otherwise being charged on the Loans. Delinquency Interest : shall have the meaning set forth in Section 16.4. Delinquent Amount : shall have the meaning set forth in Section 16.4. Delinquent Syndication Party : shall have the meaning set forth in Section 16.4. Delivery Agreement(s) : the agreements entered into by and between Borrower and its producers whereby Borrower agrees to market, and the producer agrees to deliver, one head of cattle for each Class A unit owned by the producer at or during specified delivery periods, substantially in the form and substance of the documents designated “Uniform Cattle Delivery and Marketing Agreement (Even Slots)” and “Uniform Cattle Delivery and Marketing Agreement (Odd Slots)” and attached hereto as Exhibit 1.29(a) and Exhibit 1.29(b), respectively. Dollar(s) and $ : lawful currency of the United States of America
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EBITDA : for any period of determination, the consolidated net income of National Beef, before provision for income taxes, interest expense (including without limitation, implicit interest expense on capitalized leases), depreciation, amortization and other noncash expenses or charges, excluding (to the extent otherwise included): (a) nonoperating gains (including without limitation, extraordinary or nonrecurring gains, gains from discontinuance of operations and gains arising from the sale of assets other than inventory or property, plant and equipment) during the applicable period; and (b) similar nonoperating losses during such period. Payments made under the Water Services Agreement (as defined in the National Beef Credit Agreement) shall be treated as operating expenses for the purposes of calculating EBITDA. Environmental Laws : the Comprehensive Environmental Response, Compensation and Liability Act of 1980 as amended, 42 U.S.C. 9601-9657 (“ CERCLA ”) and the Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901-6987 (“ RCRA ”). Environmental Regulations : as defined in the definition of Hazardous Substances. ERISA : shall have the meaning set forth in Section 10.11. Event of Default : shall have the meaning set forth in Section 15.1. Fiscal Quarter : the period of approximately three months ending on the last Saturday in August, November, February and May of each calendar year and beginning on the following day. Fair Market Value : a valuation as determined in a written appraisal from an MAI certified appraiser or by such other method as shall be agreed upon by Borrower and Agent. Funded Debt: for any date of determination, the then outstanding principal amount of all of National Beef’s consolidated interest-bearing Debt (including without limitation, capitalized leases) plus the then undrawn amount of all outstanding letters of credit (including without limitation, the LCs); provided, however, that (i) LC’s or indemnity obligations issued to support other Debt shall not be included in Funded Debt to the extent that such other Debt is, itself, included in Funded Debt; (ii) National Beef’s Debt under the Water Services Agreement (as defined in the National Beef Credit Agreement) shall not be included in Funded Debt; (iii) National Beef’s Class A or Class B Units subject to redemption rights shall not be included in Funded Debt; and (iv) National Beef’s obligations under deferred compensation plans shall not be included in Funded Debt Funding Losses : shall have the meaning set forth in Subsection 7.1.1. GAAP : generally accepted accounting principles in the United States of America, applied consistently, as in effect from time to time.
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Guaranty Obligation : as to any Person, (a) any obligation, contingent or otherwise, of such Person guarantying or having the economic effect of guaranteeing any Debt or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Debt or other obligation of the payment or performance of such Debt or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Debt or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligees in respect of such Debt or other obligation of the payment or performance thereof or to protect such obligees against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Debt or other obligation of any other Person, whether or not such Debt or other obligation is assumed by such Person; provided , however , that the term “Guaranty Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guaranty Obligation shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guaranty Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. Hazardous Substances : dangerous, toxic or hazardous pollutants, contaminants, chemicals, wastes, materials or substances, as defined in or governed by the provisions of any Environmental Laws or any other federal, state or local law, statute, code, ordinance, regulation, requirement or rule relating thereto (“ Environmental Regulations ”), and also including urea formaldehyde, polychlorinated biphenyls, asbestos, asbestos-containing materials, nuclear fuel or waste, and petroleum products, or any other waste, material, substances, pollutant or contaminant which would subject an owner of property to any damages, penalties or liabilities under any applicable Environmental Regulations. Indemnified Agency Parties : shall have the meaning set forth in Section 16.19. Indemnified Parties : shall have the meaning set forth in Section 14.1. Interest Period : the period of time for which the LIBOR Rate shall be in effect as to any LIBOR Rate Loans and which shall be a one, two, three or six month period of time, commencing with the borrowing date of such LIBOR Rate Loans or the expiration date of the immediately preceding Interest Period, as the case may be, applicable to and ending on the effective date of any rate change or rate continuation made as provided herein as the Borrower may specify in a notice of borrowing or a notice of interest conversion; provided , however , that: (a) any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) no Interest Period shall extend beyond the applicable Maturity Date, and (c) there shall be no more than ten (10) Interest Periods for LIBOR Rate Loans outstanding at any one time.
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Leverage Ratio : as of the end of any fiscal year of National Beef, the ratio of: (a) National Beef’s Funded Debt as of the end of the fiscal year, divided by (b) National Beef’s EBITDA during the fiscal year. LIBOR Rate : (a) with respect to each day during each Interest Period applicable to a LIBOR Rate Loan, the per annum rate for the Interest Period selected by Borrower, as quoted by the British Bankers' Association (or if such quotation source is unavailable, such other quotation source as may be reasonably selected by the Agent) for the purpose of displaying London Interbank Offered Rates for Dollar deposits, (which shall be the LIBOR rate in effect on the Business Day of the related LIBOR Rate Loan) rounded up to the 1/100th of 1% per annum, or (b) with respect to the determination of the Base Rate, the LIBOR rate, as quoted by the British Bankers' Association (or if such quotation source is unavailable, such other quotation source as may be reasonably selected by the Agent) for the purpose of displaying London Interbank Offered Rates for Dollar deposits, in each case divided by a percentage equal to 100% minus the stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves) applicable on such date to any member bank of the Federal Reserve System in respect of “Eurocurrency liabilities” as defined in Regulation D (or any successor category of liabilities under Regulation D). LIBOR Rate Loans : Loans with respect to which the interest rate is determined by reference to the LIBOR Rate. Licensing Laws : shall have the meaning set forth in Section 10.4. Loan s : shall have the meaning set forth in Section 2.1. Loan Advance Amount : shall have the meaning set forth in Section 16.3. Loan Documents : this Credit Agreement, the Notes, the Security Documents and other documents required to grant to Agent, for the benefit of the Syndication Parties, a perfected security interest in the Collateral. Loan Proceeds : shall have the meaning set forth in Section 3.1. Majority Lenders : shall have the meaning set forth in Section 16.8. Material Adverse Effect : means: (a) a material adverse effect on the financial condition, results of operation, business or property of Borrower; (b) a material adverse effect on the ability of Borrower to perform its obligations under this Credit Agreement and the other Loan Documents; or (c) a material adverse effect upon the ability of Agent to enforce its rights and remedies under the Loan Documents. Material Agreements : shall have the meaning set forth in Section 10.17.
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Maturity Date : the earliest of (i) July 1, 2011, (ii) the date on which the Commitments are terminated in whole pursuant to Section 15.1, or (iii) the date on which the Borrower voluntarily terminates the Tranche B Commitment in whole and pays the Bank Debt in full. For CoBank- $15,316,763.34 subject to pro rata reduction in accordance with the reduction of the Aggregate Commitment and subject to adjustment in the event of the sale of all or a portion of a Syndication Interest in accordance with Section 16.26 hereof. National Beef : National Beef Packing Company, LLC, a Delaware limited liability company. National Beef Credit Agreement : the Sixth Amended and Restated Credit Agreement made as of the 25th day of July, 2007, as amended by the First and Second Amendments thereto by and among National Beef, CoBank, and the other financial institutions signatory thereto. In the event there are subsequent amendments to the National Beef Credit Agreement that affect the references made herein to the terms of the National Beef Credit Agreement, then this Agreement shall be deemed to be amended correspondingly, effective at the same time as such amendment to the National Beef Credit Agreement is effective. In the event the National Beef Credit Agreement is terminated or is amended or restated in such a way that the terms of this Agreement cannot be rationally or logically conformed, or if the financing thereunder is refinanced under a new agreement with dissimilar terms, then the parties to this Agreement shall negotiate in good faith to amend or restate this Agreement so that this Agreement substantially corresponds to the intent of the parties expressed herein as applied to the new circumstances related to National Beef. NB Interest : the membership interests in National Beef held by Borrower. Net Worth : the amount of Borrower’s consolidated total assets (based on Borrower’s results as determined in accordance with GAAP) less Borrower’s total consolidated liabilities (based on Borrower’s results as determined in accordance with GAAP). For purposes of computing Net Worth, Borrower’s total consolidated liabilities shall not include minority interest in National Beef Packing Company, LLC and Kansas City Steak Company, LLC. Note or Notes : the promissory notes executed by Borrower pursuant to Section 6.1 hereof, and all amendments, renewals, substitutions and extensions thereof. Notice of Loan Advance : shall have the meaning set forth in Section 16.3.
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Organization Documents : in the case of a corporation, its articles or certificate of incorporation and bylaws; in the case of a partnership, its partnership agreement and certificate of limited partnership, if applicable; in the case of a limited liability company, its articles of organization and its operating agreement. Payment Account : shall have the meaning set forth in Section 16.10. Payment Distribution : shall have the meaning set forth in Section 16.10. Permitted Encumbrance : shall have the meaning set forth in Section 10.13. Person : any individual, corporation, limited liability company, association, partnership, trust, organization, government, governmental agency, or other entity. Potential Default : any event, other than an event described in Section 15.1(a) hereof, which with the giving of notice or lapse of time, or both, would become an Event of Default. Prime Rate : a rate of interest per annum equal to the “prime rate” as published from time to time in the Eastern Edition of the Wall Street Journal as the average prime lending rate for seventy-five percent (75%) of the United States’ thirty (30) largest commercial banks, or if the Wall Street Journal shall cease publication or cease publishing the “prime rate’’ on a regular basis, such other regularly published average prime rate applicable to such commercial banks as is acceptable to the Agent in its reasonable discretion. Purchase Agreement : the document entitled “Partnership Interest Purchase Agreement” dated as of July 31, 1997, by and between Borrower and the Sellers. Required License : shall have the meaning set forth in Section 10.10. Regulatory Change : shall have the meaning set forth in Section 17.12. Security Documents : the security agreements, mortgages, deeds of trust, financing statements, pledge agreements, leasehold assignment and consents, assignments and/or other security documents executed by Borrower in favor of Agent, for the benefit of the Syndication Parties, to secure Borrower's performance of its obligations under the Notes and other Loan Documents with a first lien (subject to Permitted Encumbrances) on all assets, real and personal, of Borrower, in form and substance acceptable to Agent. Sellers : the Persons from which Borrower acquired a portion of the NB Interest pursuant to the Purchase Agreement. Successor Agent : such Person as may be appointed as successor to the rights and duties of Agent as provided in Section 16.8 of this Credit Agreement.
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Syndication Acquisition Agreement : shall have the meaning set forth in Section 16.26. Syndication Interest : shall have the meaning set forth in Section 16.1. Syndication Parties : CoBank in its role as a lender hereunder, but not in its role as Agent hereunder and such Persons as shall from time to time execute a Syndication Acquisition Agreement substantially in the form of Exhibit 16.26 hereto signifying their election to purchase all or a portion of the Syndication Interest of any Syndication Party, in accordance with Section 16.26 hereof, and to become a Syndication Party hereunder. Syndication Party Advance Date : shall have the meaning set forth in Section 16.3. Syndication Share : shall mean: For CoBank 100% subject to adjustment (a) as provided in Section 16.4 hereof; and (b) for sales or transfers of Syndication Interests by any Syndication Party as provided in Section 16.26 hereof. Synthetic Lease Obligation : the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment). Tranche A Commitment : the portion of the Aggregate Commitment in the initial amount of $2,316,763.34, and reducing with each payment of principal on the Tranche A Loan(s). Tranche A Loan(s) : shall have the meaning set forth in Section 2.1. Tranche B Commitment : the portion of the Aggregate Commitment in the initial amount of $13,000,000.00, and reducing to $10,000,000 on May 31, 2010. Tranche B Loan(s) : shall have the meaning set forth in Section 2.1. Transfer : shall have the meaning set forth in Section 16.26. Type : with respect to any Loans, whether such Loans are Base Rate Loans or LIBOR Rate Loans. Wire Instructions : shall have the meaning set forth in Section 16.28.
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Working Capital : the excess of Borrower’s consolidated current assets (based on Borrower’s results as determined in accordance with GAAP) over Borrower’s consolidated current liabilities (based on Borrower’s results as determined in accordance with GAAP). For the purpose of determining Working Capital, current assets will include cash distributions reasonably expected to be received from National Beef during the quarterly reporting period that follows the date of determination of Working Capital. 2.1 Loan s . Borrower and the Syndication Parties acknowledge and agree that the Tranche A Commitment has been fully funded under the Prior Agreement (if held by one Syndication Party as one Type the “ Tranche A Loan ” and if held by more than one Syndication Party or if more than one Type, the “ Tranche A Loans ”). Amounts repaid on the Tranche A Loan(s) shall not be reborrowed. On the terms and conditions set forth in this Credit Agreement, the Syndication Parties agree, each as to their Syndication Share and to the extent of their Maximum Syndication Amount, to make loans to Borrower in an amount up to the Tranche B Commitment (if held by one Syndication Party as one Type the “ Tranche B Loan ” and if held by more than one Syndication Party or if more than one Type, the “ Tranche B Loans ”). Amounts repaid on the Tranche B Loan(s) may be reborrowed. Notwithstanding the foregoing, and other terms set forth in this Agreement, during at least 30 consecutive days during each calendar year the amount outstanding under the Tranche B Loan shall be $0. The Tranche A Loan(s) and the Tranche B Loan(s) are sometimes collectively referred to herein as the “ Loans ”. 3.1 Purpose . The proceeds of the Tranche B Loan(s) (“ Loan Proceeds ”) may be used by Borrower only for working capital, general corporate purposes related to the operation of its business as described in Section 13.2 hereof, and tax distributions, subject to the limitations of Section 13.11 hereof, and Borrower agrees to use the Loan Proceeds for such purposes only.
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4.1 Availability . The Loan Proceeds will be made available to Borrower provided that the applicable conditions set forth in Article 11 hereof are satisfied and until the Maturity Date (“ Availability Period ”). Unless otherwise agreed, the Loan Proceeds will be made available on any Business Day during the Availability Period by wire transfer of immediately available funds in accordance with written wire transfer instructions to be furnished by Borrower on a form supplied by Agent. Any request by the Borrower for Loan Proceeds hereunder must be given by the Borrower in accordance with Section 11.2.1 not later than 11:00 a.m. (Denver time) on the Business Day on which any proposed LIBOR Rate Loan and not later than 11:00 a.m. (Denver time) on the Business Day on which any proposed Base Rate Loan, is proposed to be made. Each request for Loan Proceeds hereunder shall be irrevocable and shall be deemed to be a representation by the Borrower that on the date the Loan Proceeds are requested and after giving effect to the requested Loan Proceeds the applicable conditions specified in Article 11 have been and will be satisfied. Each request for Loan Proceeds hereunder, in addition to meeting the applicable requirements of Section 4.2, shall specify (i) the requested date thereof, (ii) the aggregate amount of the Loan Proceeds to be made on such date, which shall be in a minimum amount of $25,000 and an integral multiple of $25,000, (iii) whether such Loan Proceeds are to be funded as a Base Rate Loans or LIBOR Rate Loans and (iv) in the case of LIBOR Rate Loans, the duration of the initial Interest Period applicable thereto. Promptly upon receipt of such notice, the Agent shall advise each Syndication Party of the requested Loan Proceeds and of such Syndication Parties’ ratable share of such Loans. At or before 1:00 p.m. (Denver time) on the date of the requested Loan Proceeds, each relevant Syndication Party shall provide the Agent at the Agent’s principal office in Denver with immediately available funds covering such Syndication Parties’ Syndication Share of the requested Loans. Unless the Agent determines that any applicable condition specified in Article 11 has not been satisfied or waived, the Agent will make available to the Borrower at the Agent’s principal office in Denver, Colorado in immediately available funds not later than 2:30 p.m. (Denver time) on the date the Loan Proceeds are requested the amount of the requested Loan Proceeds to the extent received by the Agent. 4.2 Conversion of Loans . With respect to Loans, the Borrower may, upon written notice given by the Borrower to the Agent not later than 11:00 a.m. (Denver time) on the Business Day of any proposed interest conversion or roll over, (a) convert Loans of one Type into Loans of another Type, or (b) continue or roll over existing LIBOR Rate Loans; provided , however , that (i) with respect to any conversion into or roll over of LIBOR Rate Loans, no Event of Default shall have occurred and be continuing, (ii) with respect to any facsimile notice of interest conversion, the Borrower shall promptly confirm such notice by sending the original notice to the Agent and (iii) any continuation or roll over of LIBOR Rate Loans for the same or a different Interest Period or into Base Rate Loans, shall be made on, and only on, the last day of an Interest Period for such LIBOR Rate Loans. Each such notice of interest conversion shall specify therein the requested (x) date of such conversion, (y) the Loans to be converted and whether such Loans constitute LIBOR Rate Loans, and (z) if such interest conversion is into LIBOR Rate Loans, the duration of the Interest Period for such Loans. The Agent shall promptly deliver a copy thereof to each Syndication Party. Each such notice shall be irrevocable and binding on the Borrower. If the Borrower shall fail to give a notice of interest conversion with respect to any LIBOR Rate Loans as set forth above, such Loans shall automatically convert to Base Rate Loans on the last day of the Interest Period with respect thereto. The provisions of this Section 4.2 shall also apply to initial Loans made as LIBOR Rate Loans. Written notice of requests for Loan Proceeds or conversions or continuations of Loans shall be in substantially the form of Exhibit 4.2 attached hereto.
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ARTICLE 5. INTEREST AND FEES . 5.1 Interest Calculation and Payment . The Borrower shall pay interest on the unpaid principal amount of the Loans made by each Syndication Party from the date of such Loans until such principal amount shall be paid in full, at the times and at the rates per annum set forth below: (a) Base Rate Loans, so long as no Event of Default has occurred and is continuing, shall bear interest at a rate per annum equal to the sum of the Base Rate in effect from time to time plus the then Applicable Margin (calculated according to the Leverage Ratio Level or Borrowing Base Availability Level, as the case may be). Such interest shall be payable monthly in arrears on the twentieth day of each month and on the Maturity Date applicable thereto. (b) LIBOR Rate Loans, so long as no Event of Default has occurred and is continuing, shall bear interest at a rate per annum during each day of each Interest Period for such Loans equal to the sum of the LIBOR Rate for such Interest Period for such Loans plus the then Applicable Margin (calculated according to the Leverage Ratio Level or Borrowing Base Availability Level, as the case may be). Such interest shall be payable in arrears on the last day of the relevant Interest Period, and, if such Interest Period exceeds three months, the day which is three months after the date on which the relevant LIBOR Rate Loans were disbursed. (c) After the occurrence of an Event of Default and for so long as such Event of Default is continuing, the Agent may (upon the direction of the Majority Lenders) notify the Borrower that any and all amounts due hereunder, under the Notes or under any other Loan Document, whether for principal, interest (to the extent permitted by applicable law), fees, expenses or otherwise, shall bear interest, from the date of such notice by the Agent and for so long as such Event Default continues, payable on demand, at the Default Interest Rate. (d) All computations of interest shall be made by the Agent, by reference to the actual number of days elapsed based on a year of 360 days (in the case of fees and of LIBOR Rate Loans) or 365 or 366 days (in the case of Base Rate Loans), as applicable. Each determination of an interest rate by the Agent shall be conclusive and binding for all purposes, absent manifest error. Any accrued interest unpaid on the Maturity Date shall be due and payable on the Maturity Date. 5.2 Additional Provisions for LIBOR Rate Loans .
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5.2.1 Inapplicability or Unavailability of LIBOR Rate . If Agent at any time shall determine that for any reason adequate and reasonable means do not exist for ascertaining the LIBOR Rate, then Agent shall promptly give notice thereof to Borrower. If such notice is given and until such notice has been withdrawn by Agent, then any portion of the outstanding principal balance hereof which bears interest determined in relation to the LIBOR Rate shall, subsequent to the end of the Interest Period applicable thereto, bear interest at the Base Rate (“ Base Rate Loans ”). 5.2.2 Change in Law; LIBOR Rate Loans Unlawful . If any law, treaty, rule, regulation or determination of a court or governmental authority or any change therein or in the interpretation or application thereof (each, a “ Change in Law ”) shall make it unlawful for any of the Syndication Parties to (a) advance its Syndication Share of any LIBOR Rate Loans or (b) maintain its Syndication Share of all or any portion of the LIBOR Rate Loans, each such Syndication Party shall promptly, by telephone or facsimile, notify Agent thereof, and of the reasons therefor and Agent shall promptly notify Borrower thereof and if the notice from such Syndication Party is in writing, Agent shall provide a copy of such notice to Borrower. In the former event, any obligation of any such Syndication Party to make available its Syndication Share of any future LIBOR Rate Loans shall immediately be canceled (and, in lieu thereof shall be made as Base Rate Loans), and in the latter event, any such unlawful LIBOR Rate Loans or portions thereof then outstanding shall be converted, at the option of such Syndication Party, to Base Rate Loans; provided, however, that if any such Change in Law shall permit the LIBOR Rate to remain in effect until the expiration of the Interest Period applicable to any such unlawful LIBOR Rate Loans, then such LIBOR Rate Loans shall continue in effect until the expiration of such Interest Period. Upon the occurrence of any of the foregoing events on account of any change in any law, treaty, rule, regulation or determination of a court or governmental authority or in the interpretation or application thereof , Borrower shall pay to Agent immediately upon demand such amounts as may be necessary to compensate any such Syndication Party for any fines, fees, charges, penalties or other costs incurred or payable by such Syndication Party as a result thereof and which are attributable to any LIBOR Rate Loans made available to Borrower hereunder, and any reasonable allocation made by any such Syndication Party among its operations shall be conclusive and binding upon Borrower absent manifest error. 5.3 Fees . Borrower shall pay or cause to be paid the following fees: 5.3.1 Non-Use Fee . Borrower agrees to pay to the Agent for distribution to the Syndication Parties (based on their applicable respective Syndication Shares) a quarterly non-use fee on the daily average unused amount of Tranche B Loans at the rate per annum of one quarter of one percent (0.25%) (the “ Non-Use Fee ”). The Non-Use Fee for each calendar quarter shall be due and payable in arrears on the first Business Day of each January, April, July and October hereafter through the Maturity Date applicable to the Tranche B Loans. A pro-rated non-use fee shall be due and payable on the first Business Day of the quarter following the date of this Agreement and on the Maturity Date applicable to the Tranche B Loans. Each Non-Use Fee shall be earned as it accrues. 5.4 This Section Intentionally Omitted .
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6.1 Promissory Notes . Each Syndication Party's Syndication Interest in the Loans shall be evidenced by a promissory note, payable to the order of such Syndication Party in the face amount equal to such Syndication Party's Maximum Syndication Amount, in the form attached hereto as Exhibit 6.1 (each a “ Note ” and collectively, the “ Notes ”). 6.2 Principal Payments . Principal owing under the Tranche A Loan(s) shall be payable in equal quarterly installments of $257, 418.14, commencing on July 1, 2009 and on the first day of each succeeding October, January, April and July (or on the next succeeding Business Day in the event the date specified is not a Business Day) to and including the Maturity Date, at which time the entire amount of principal shall be due and payable in full. Principal owing under the Tranche B Loan(s) shall be payable as follows: (a) on May 31, 2010 in such amount, if any, as is necessary to reduce the outstanding principal balance to an amount not more than $10,000,000, and (b) on the Maturity Date, the entire amount of any principal outstanding shall be due and payable in full. 6.3 Interest Payments . Interest shall be payable as set forth in Section 5.1, with any accrued and unpaid interest payable on the Maturity Date. 6.4 Application of Payments . Provided that an Event of Default or Potential Default has not occurred and is continuing, payments shall be applied as directed by Borrower. Upon the occurrence and during the continuance of an Event of Default or Potential Default, all amounts paid to Agent shall be applied, as Agent in its sole discretion shall determine, to fees, interest, principal or to any other Bank Debt. The amount of Loan Proceeds advanced and other Bank Debt, and all payments by or on behalf of Borrower, of such amounts, shall be entered on the books of the Agent and/or the Syndication Parties and such entries shall be presumptive evidence of the unpaid amounts outstanding from time to time under the Notes and other Loan Documents. 6.5 Manner of Payment . All payments, including prepayments, that Borrower is required or permitted to make under the terms of this Credit Agreement shall be made to Agent (a) in immediately available federal funds, to be received no later than 12:00 noon Central Time of the Business Day on which such payment is due by wire transfer to such account as Agent may designate by notice; and (b) without setoff or counterclaim and free and clear of and without deduction for any taxes, levies, impost, duties, charges, fees, deductions, withholding, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein unless Borrower is required by law to make such deduction or withholding. 6.6 This Section Intentionally Omitted . 17
7.1 Voluntary Prepayments . Borrower shall have the right to prepay all or any part of the outstanding principal balance under the Loans at any time in integral multiples of $250,000.00 (or the entire outstanding balance, if less), with at least three Business Days prior notice and upon payment of all Funding Losses calculated as provided in Subsection 7.1.1 hereof. 7.1.1 Funding Losses . “ Funding Losses ” shall be applicable only to payment or prepayment of LIBOR Rate Loans and shall be determined by the Agent for the purposes of this Credit Agreement as follows: (a) Determine the difference between: (i) the LIBOR Rate in effect for the first day of the Interest Period during which the prepayment occurs for the LIBOR Rate Loans being prepaid, minus (ii) the LIBOR Rate in effect on the day on which the prepayment occurs, provided the amount shall not be less than zero. (b) Then divide the amount so determined by 360 and multiply the result (i) by the amount being prepaid, and (ii) by the number of days remaining in the Interest Period of the LIBOR Rate Loans being prepaid. 7.2 This Section Intentionally Omitted . 7.3 This Section Intentionally Omitted . So long as CoBank is a Syndication Party under this Agreement, the Borrower will acquire equity in CoBank (“ CoBank Equity Interests ”) in such amounts and at such times as CoBank may require in accordance with CoBank’s Bylaws and Capital Plan (as each may be amended from time to time), except that the maximum amount of equity that the Borrower may be required to purchase in CoBank in connection with the Loans made by CoBank under this Agreement shall not exceed the maximum amount permitted by CoBank’s Bylaws as of the date of this Agreement. The rights and obligations of the parties with respect to such equity and any distributions made on account thereof or on account of the Borrower’s patronage with CoBank shall be governed by CoBank’s Bylaws, except that if CoBank sells a participation in a portion of any Loans due to CoBank, such portion of the Loans due to CoBank shall not be entitled to patronage distributions. A sale of a participation interest may include certain voting rights of the participants regarding the loans hereunder (including without limitation the administration, servicing and enforcement thereof). The Borrower hereby consents and agrees that the amount of any distributions with respect to the Borrower’s patronage with CoBank that are made in qualified written notices of allocation (as defined in 26 U.S.C. § 1388) and that are received by the Borrower from CoBank will be taken into account by the Borrower at the stated Dollar amounts whether the distribution is evidenced by a stock certificate or other form of written notice that such distribution has been made and recorded in the Borrower’s name on CoBank’s records. The Loans due to CoBank under this Agreement and other Debt due to CoBank hereunder shall be secured by a statutory first Lien on all equity that the Borrower may now own or hereafter acquire in CoBank. Such equity shall not, however, constitute security for Debt due to any other Syndication Party under this Agreement. CoBank shall not be obligated to set off or otherwise apply such equities to the Borrower’s Debt to CoBank. 18
So long as CoBank is a Syndication Party under this Agreement, the Borrower will acquire equity in CoBank (“ CoBank Equity Interests ”) in such amounts and at such times as CoBank may require in accordance with CoBank’s Bylaws and Capital Plan (as each may be amended from time to time), except that the maximum amount of equity that the Borrower may be required to purchase in CoBank in connection with the Loans made by CoBank under this Agreement shall not exceed the maximum amount permitted by CoBank’s Bylaws as of the date of this Agreement. The rights and obligations of the parties with respect to such equity and any distributions made on account thereof or on account of the Borrower’s patronage with CoBank shall be governed by CoBank’s Bylaws, except that if CoBank sells a participation in a portion of any Loans due to CoBank, such portion of the Loans due to CoBank shall not be entitled to patronage distributions. A sale of a participation interest may include certain voting rights of the participants regarding the loans hereunder (including without limitation the administration, servicing and enforcement thereof). The Borrower hereby consents and agrees that the amount of any distributions with respect to the Borrower’s patronage with CoBank that are made in qualified written notices of allocation (as defined in 26 U.S.C. § 1388) and that are received by the Borrower from CoBank will be taken into account by the Borrower at the stated Dollar amounts whether the distribution is evidenced by a stock certificate or other form of written notice that such distribution has been made and recorded in the Borrower’s name on CoBank’s records. The Loans due to CoBank under this Agreement and other Debt due to CoBank hereunder shall be secured by a statutory first Lien on all equity that the Borrower may now own or hereafter acquire in CoBank. Such equity shall not, however, constitute security for Debt due to any other Syndication Party under this Agreement. CoBank shall not be obligated to set off or otherwise apply such equities to the Borrower’s Debt to CoBank. 9.1 Borrower's Assets . To secure the payment and performance of the Bank Debt, Borrower hereby grants to the Agent for the ratable benefit of the Syndication Parties a continuing security interest in all property and interests in property of Borrower, whether now owned or existing or hereafter acquired or arising and wheresoever located, including but not limited to: all Accounts, Inventory, Equipment, Farm Products, Goods, General Intangibles, Payment Intangibles, Commercial Tort Claims (specifically described as those Commercial Tort Claims which are proceeds of any of the other herein described collateral), Deposit Accounts, Margin Accounts, Commodity Accounts, Commodity Contracts, Securities Accounts, Investment Property, Instruments, Letter of Credit Rights, Documents, Chattel Paper, Electronic Chattel Paper, Tangible Chattel Paper, Investor Notes and Investor Loan Documents, all accessions to, substitutions for, and all replacements, products and proceeds of the foregoing (including without limitation, proceeds of insurance policies insuring any of the foregoing), all books and records pertaining to any of the foregoing (including without limitation, customer lists, credit files, computer programs, printouts and other computer materials and records), and all insurance policies insuring any of the foregoing, including, without limitation, the NB Interest, all cattle, all feed, all accounts, Borrower’s rights under the Purchase Agreement (including indemnification rights), the Cattle Purchase and Sale Agreement, and the Delivery Agreements (“ Collateral ”); provided that none of the Syndication Parties other than CoBank shall have a lien on the CoBank Equity Interests. Borrower shall execute and deliver to Agent, for the benefit of the Syndication Parties, a Pledge Agreement to evidence the security interest of Agent, for the benefit of the Syndication Parties, in the NB Interest. Borrower shall deliver the originals of any certificates representing the NB Interest to Agent, for the benefit of all present and future Syndication Parties. Borrower shall also execute such further security agreements, mortgages, deeds of trust, financing statements, assignments or other documents as Agent shall reasonably request, in form and substance as Agent shall specify, to establish, confirm, perfect or provide notice of Agent's security interest (for the benefit of all Syndication Parties) in the Collateral. If requested by Agent: (a) Borrower and Agent shall place a legend on any chattel paper included in the Collateral showing Agent's security interest therein; and (b) Borrower shall deliver to Agent possession of any chattel paper, instruments and securities included in the Collateral (duly endorsed to Agent's reasonable satisfaction).
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9.2 This Section Intentionally Omitted . ARTICLE 10. REPRESENTATIONS AND WARRANTIES . To induce the Syndication Parties to make the Loans, and recognizing that the Syndication Parties are relying thereon, Borrower represents and warrants as follows: 10.1 Organization, Good Standing, Etc. . Borrower: (a) is duly organized, validly existing, and in good standing under the laws of its state of organization; (b) qualifies as a limited liability company under the laws of its state of organization; (c) is duly qualified to do business and is in good standing in each jurisdiction in which the transaction of its business makes such qualification necessary; and (d) has all requisite corporate and legal power (i) to own and operate its assets and to carry on its business, and (ii) to enter into and perform the Loan Documents to which it is a party. 10.2 Corporate Authority, Due Authorization; Consents . Borrower has full power and authority (a) to conduct its business as contemplated to be operated from and after the Closing Date; and (b) to execute, deliver and perform under (i) this Credit Agreement, (ii) the Notes, (iii) all other Loan Documents (iv) all other documents and agreements as contemplated by this Credit Agreement, (v) the Delivery Agreements, and (vi) the Cattle Purchase and Sale Agreement. All consents or approvals of any Person which are necessary for, or are required as a condition of the execution, delivery and performance of the Loan Documents, the Delivery Agreements, and the Cattle Purchase and Sale Agreement have been obtained. 10.3 Litigation . Except as described on Exhibit 10.3 hereto, there are, no pending legal or governmental actions, proceedings or investigations to which Borrower is a party or to which any property of Borrower is subject which might result in any Material Adverse Effect and, to Borrower's knowledge, no such actions or proceedings are threatened or contemplated by any federal, state, county, or city (or similar unit) governmental agency or any other Person. 10.4 No Violations . The execution, delivery and performance of the Loan Documents, the Delivery Agreements, and the Cattle Purchase and Sale Agreement will not: (a) violate any provision of Borrower's articles of organization or operating agreement, or any law, rule, regulation, judgment, order or ruling of any court or governmental agency; (b) violate, conflict with, result in a breach of, constitute a default under, or with the giving of notice or the expiration of time or both, constitute a default under, any existing real estate mortgage, indenture, lease, security agreement, contract, note, instrument or any other agreements or documents binding on Borrower or affecting its property; or (c) violate, conflict with, result in a breach of, constitute a default under, or result in the loss of, or restriction of rights under, any Required License or any order, law, rule, or regulation under or pursuant to which any Required License was issued or is maintained (“ Licensing Laws ”). 20
10.5 Binding Agreement . Each of the Loan Documents to which Borrower is a party is, or when executed and delivered, will be, the legal, valid and binding obligation of Borrower, enforceable in accordance with its terms, subject only to limitations on enforceability imposed by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors' rights generally and by general principles of equity. 10.6 Compliance with Laws . Borrower is in compliance with all federal, state, and local laws, rules, regulations, ordinances, codes and orders, including without limitation all Environmental Laws and all Licensing Laws, with respect to which noncompliance would result in a Material Adverse Effect. 10.7 Principal Place of Business . Borrower's place of business, or chief executive office if it has more than one place of business, and the place where the records required by Section 12.1 hereof are kept, is located at the place(s) shown on Exhibit 10.7 hereto. 10.8 This Section Intentionally Omitted . 10.9 Payment of Taxes . Borrower has filed all required federal, state and local tax returns and has paid all taxes as shown on such returns as they have become due. Borrower has paid when due all other taxes, assessments or impositions levied or assessed against Borrower or its business or properties. 10.10 Licenses and Approvals . Borrower has ownership of, or license to use, or has been issued, all trademarks, patents, copyrights, franchises, certificates, approvals, permits, authorities, agreements, and licenses which are used or necessary to permit it to own its properties and to conduct the business as presently being conducted (“ Required Licenses ”). Exhibit 10.10 lists all Required Licenses presently in existence with respect to Borrower. Each Required License is in full force and effect, and there is no outstanding notice of cancellation or termination or, to Borrower's knowledge, any threatened cancellation or termination in connection therewith, nor has an event occurred with respect to any Required License which, with the giving of notice or passage of time or both, could result in the revocation or termination thereof or otherwise in any impairment of Borrower's rights with respect thereto, which impairment could reasonably be expected to have a Material Adverse Effect. No consent, permission, authorization, order, or license of any governmental authority, is necessary in connection with the: (a) execution, delivery, performance, or enforcement of and under the Loan Documents to which Borrower is a party; or (b) the execution, delivery, and performance of and under the Delivery Agreements or the Cattle Purchase and Sale Agreement, except such as have been obtained and are in full force and effect and as are described on Exhibit 10.10 . 21
10.11 Employee Benefit Plans . Borrower does not presently maintain or participate in, and has not in the past maintained or participated in, and is not obligated to contribute to, any of the following (each a “ Borrower Benefit Plan ” and collectively “ Borrower Benefit Plans ”): (a) any funded “employee welfare benefit plan,” as that term is defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder (“ ERISA ”); (b) any “multiemployer plans,” as defined in Section 3(37) of ERISA; (c) any “employee pension benefit plan” as defined in Section 3(2) of ERISA; (d) any “employee benefit plan”, as such term is defined in Section 3(3) of ERISA; (e) any “multiple employer plan” within the meaning of Section 413 of the Internal Revenue Code of 1986, as amended from time to time (“ Code ”); (f) any “multiple employer welfare arrangement” within the meaning of Section 3(40) of ERISA; (g) a “voluntary employees’ beneficiary association” within the meaning of Section 501(a)(9) of the Code; (h) a “welfare benefit fund” within the meaning of Section 419 of the Code; or (i) any employee welfare benefit plan within the meaning of Section 3(1) of ERISA for the benefit of retired or former employees. 10.12 Equity Investments . Borrower does not now own any stock or other voting or equity interest, directly or indirectly, in any Person other than: (a) the NB Interest, (b) the CoBank Equity Interests, and (c) as set forth on Exhibit 10.12 . 10.13 Real Property; Title to Real and Personal Property . Borrower: (a) has all real property interests, including without limitation, fee interests, leasehold interests, easements, licenses and rights of way which are necessary for the conduct of Borrower's business; and (b) does not own any fee interest or leasehold interest, or any other interest, including without limitation any easements, rights of way or licenses, in real property, other than as set forth on Exhibit 10.13 hereto (“ Borrower’s Real Property ”). Borrower holds good and marketable title to all of Borrower’s Real Property (other than rights of way, easements and similar interests in real property which in the aggregate are not material), owns all of its personal property, and holds all of its leases, free and clear of any lien, pledge, restriction, or encumbrance, except as specifically identified in Exhibit 10.13 attached hereto or as permitted by Section 13.3 hereof (“ Permitted Encumbrances ”). All of Borrower's leases which constitute Material Agreements are in full force and effect and afford Borrower peaceful and undisturbed possession of the subject matter thereof. 10.14 Personal Property . Borrower has all tangible personal property necessary for the conduct of Borrower's business as it is being conducted; all such property is in good operating condition and repair, reasonable wear and tear excepted, and suitable in all material respects for the uses for which it is being utilized; and all such property (other than titled motor vehicles) is described in one or more of the Security Documents. 10.15 Environmental Compliance . Without limiting the provisions of Section 10.6 above, all property owned or leased by Borrower and all operations conducted by it are in compliance in all material respects with all Laws relating to environmental protection, with respect to which the failure to comply would have a Material Adverse Effect. 10.16 Fiscal Year . Each fiscal year of Borrower ends on the last Saturday in August of each calendar year and begins on the following day. 22
10.17 Material Agreements . That Exhibit 10.17 attached hereto sets forth all agreements of Borrower, the termination or breach of which, based upon Borrower's knowledge as of the date of making any representation with respect thereto, would have a Material Adverse Effect (“ Material Agreements ”). Neither Borrower nor, to Borrower's knowledge, any other party to any Material Agreement, is in default thereunder, and no facts exist which with the giving of notice or the passage of time, or both, would constitute such a default. 10.18 Regulations T, U and X . No portion of any Loans will be used for the purpose of purchasing, carrying, or making loans to finance the purchase of, any “margin security” or “margin stock” as such terms are used in Regulations T, U or X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 207, 221, and 224. 10.19 Trademarks, Trade Names, etc. Borrower has ownership or the lawful right to use all trade names, trademarks, and other intellectual property which it utilizes in its business as presently being conducted and as anticipated to be conducted, and all such property or property rights are described on Exhibit 10.19 hereto. 10.20 This Section Intentionally Omitted . 10.21 This Section Intentionally Omitted . 10.22 Disclosure . The representations and warranties contained in this Article 10 and in the other Loan Documents or in any financial statements or projections provided to CoBank do not contain any untrue statement of a material fact or omit to state a material fact necessary to make such representations or warranties not misleading. ARTICLE 11. CONDITIONS TO ADVANCES . 11.1 Conditions to Closing . The obligation of the Syndication Parties to make the Loans thereunder is subject to satisfaction, in Agent's sole discretion, of each of the following conditions precedent: 11.1.1 Loan Documents . Agent shall have received duly executed originals of the Loan Documents. 23
11.1.2 Searches; UCC Filings . Agent shall have received: searches of appropriate filing offices dated no more than fourteen (14) days prior to the Closing Date showing that (a) no state or federal tax liens have been filed which remain in effect against Borrower, (b) except with respect to Permitted Encumbrances no financing statements have been filed by any Person except to perfect the security interests required by this Credit Agreement, which remain in effect against Borrower or any of its assets, and (c) all financing statements necessary to perfect the security interests granted to Agent (for the benefit of the Syndication Parties) under the Loan Documents have been filed or recorded, to the extent such security interests are capable of being perfected by such filing. 11.1.3 This Section Intentionally Omitted . 11.1.4 Organizational Documents . Agent shall have received: (a) good standing certificates, dated no more than thirty (30) days prior to the Closing Date, for Borrower, from each state where its operations require qualification or authorization to transact business; (b) a copy of the Articles of Organization of Borrower; and (c) a copy of the Operating Agreement of Borrower. 11.1.5 Evidence of Corporate Action . Agent shall have received in form and substance satisfactory to Agent, documents evidencing all corporate action taken by Borrower to authorize (including the specific names and titles of the persons authorized to so act (“ Authorized Officers ”)) the execution, delivery and performance of the Loan Documents to which it is a party. 11.1.6 This Section Intentionally Omitted . 11.1.7 Evidence of Insurance . Borrower shall have provided Agent with insurance certificates and such other evidence, in form and substance satisfactory to Agent, of all insurance required to be maintained by it under the Loan Documents. 11.1.8 This Section Intentionally Omitted . 11.1.9 This Section Intentionally Omitted . 11.1.10 Material Agreements . Agent shall have received copies of those Material Agreements as Agent may request in its sole discretion. 11.1.11 This Section Intentionally Omitted . 11.1.12 No Material Change . No change shall have occurred in the condition or operations of Borrower since the Closing Date which could result in a Material Adverse Effect. 11.1.13 Fees and Expenses . Borrower shall have paid Agent, by wire transfer of immediately available federal funds all expenses owing pursuant to Section 17.1 hereof. 11.1.14 CoBank Equity Interest Purchase Obligation . Borrower shall have purchased such CoBank Equity Interests as CoBank may require pursuant to Article 8 hereof. 11.1.15 This Section Intentionally Omitted . 11.1.16 This Section Intentionally Omitted . 24
11.1.17 This Section Intentionally Omitted . 11.1.18 This Section Intentionally Omitted . 11.1.19 This Section Intentionally Omitted . 11.1.20 This Section Intentionally Omitted . 11.1.21 This Section Intentionally Omitted . 11.1.22 This Section Intentionally Omitted . 11.1.23 Further Assurances . Borrower shall have provided and/or executed and delivered to Agent such further assignments, documents or financing statements, in form and substance satisfactory to Agent, that Borrower is to execute and/or deliver pursuant to the terms of the Loan Documents or as Agent may reasonably request. 11.2 Conditions to Loans . The Syndication Parties’ obligation to fund Loans is subject to the satisfaction, in Agent’s sole discretion, of each of the following conditions precedent, as well as those set forth in Section 11.1 hereof: 11.2.1 Request For Loan Proceeds . Agent shall have received from Borrower (including by facsimile transmission) prior to the date Borrower requests Loan Proceeds: (a) a duly completed request in the form prescribed by the Agent which has been signed by an Authorized Officer; and (b) such other information or documentation as Agent may request; provided that the request for Loan Proceeds shall not be deemed to have been received by Agent until it is satisfactory to Agent and includes all information and documentation that Agent may request. The request for Loan Proceeds shall be irrevocable. 11.2.2 Possession of Documents . Agent shall have received possession of all instruments or securities, if any, representing the NB Interest, in form and substance satisfactory to Agent. 1 1.2.3 This Section Intentionally Omitted 11.2.4 This Section Intentionally Omitted . 11.2.5 This Section Intentionally Omitted . 11.2.6 National Beef Acknowledgment, Consent and Agreement . Borrower shall have provided Agent with the written and executed acknowledgment, consent and agreement of National Beef in form and substance satisfactory to Agent in its discretion regarding Borrower’s pledge of a security interest in the NB Interest to Agent and the Syndication Parties as required hereunder and the rights arising on account of such pledge.
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11.2.7 This Section Intentionally Omitted . 11.2.8 This Section Intentionally Omitted . 11.2.9 Default . As of the date of a request for Loan Proceeds no Event of Default or Potential Default shall have occurred and be continuing, and the disbursing of the amount of the Loan Proceeds requested in the Advance Request shall not result in an Event of Default or Potential Default. 11.2.10 Representations and Warranties . The representations and warranties of Borrower contained in each of the Loan Documents to which it is a party, shall be true and correct in all material respects on and as of the date on which each of the Loans are to be made as though made on such date. Borrower shall have paid Agent, by wire transfer of immediately available U.S. funds all expenses owing pursuant to Section 17.1 hereof. 11.3 Additional Disbursement Conditions . At no time and in no event shall the Syndication Parties collectively be obligated to make Loans: (a) in an amount which, when added to all prior Loans, would be in excess of the Aggregate Commitment; (b) other than during the Availability Period; or (c) after the enactment of any law by any governmental authority having jurisdiction over any Syndication Party which would make it unlawful in any respect for such Syndication Party to make the Loans or maintain its Syndication Share of the Loans. ARTICLE 12. AFFIRMATIVE COVENANTS . From and after the date of this Credit Agreement and until the Bank Debt is indefeasibly paid in full and the Syndication Parties have no obligation to make any Loans hereunder, Borrower agrees that it will observe and comply with, the following covenants for the benefit of Agent and the Syndication Parties: 12.1 Books and Records . Borrower shall at all times keep proper books of record and account, in which correct and complete entries shall be made of all its dealings, in accordance with GAAP. 12.2 Reports and Notices . Borrower shall provide to Agent the following reports, information and notices:
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12.2.1 Annual Financial Statements . As soon as available, but in no event later than one hundred and twenty (120) days after the end of any fiscal year of Borrower occurring during the term hereof the Borrower’s annual report prepared in accordance with GAAP consistently applied which shall: (a) be audited by independent certified public accountants selected by Borrower which are reasonably acceptable to Agent; (b) be accompanied by a report of such accountants containing an opinion reasonably acceptable to Agent; (c) be accompanied by a Compliance Certificate; (d) be prepared in reasonable detail and in comparative form; and (e) include a balance sheet, a statement of operations, a statement of cash flows, a statement of capital shares and equities, and all notes and schedules relating thereto. 12.2.2 Quarterly Financial Statements . As soon as available but in no event more than sixty (60) days after the end of each Fiscal Quarter the following consolidating financial statements or other information concerning Borrower's operations, prepared in accordance with GAAP consistently applied: (a) a balance sheet, (b) a statement of operations, and (c) a statement of cash flows, for such Fiscal Quarter and for the year to date and (g) such other quarterly statements as Agent may reasonably request, which quarterly statements requested under this clause (g) shall include any and all notes and schedules thereto. Such quarterly financial statements required pursuant to this Subsection shall be accompanied by a Compliance Certificate. 12.2.3 Notice of Suit, Adverse Change or Default . The Borrower shall, as soon as possible, and in any event within ten (10) Business Days after either the Borrower learns of the following, give written notice to the Agent of (a) any proceeding being instituted or threatened to be instituted by or against either the Borrower in any federal, state, local or foreign court or before any commission or other regulatory body (federal, state, local or foreign) for which claimed damages exceed $2,000,000, (b) any material adverse change in the business, assets or condition, financial or otherwise, of either the Borrower, and (c) the occurrence of any Potential Default or Event of Default. Within three (3) Business Days after the Agent’s receipt of such written notice, the Agent shall forward such notice to the Syndication Parties. 12.2.4 Notice of Certain Changes . Borrower shall: (a) notify Agent at least ten (10) Business Days prior to the occurrence of any change in the name or business form of Borrower; and (b) take all actions necessary or reasonably requested by Agent in order to maintain the perfected status of Agent's first lien and security interest (subject only to Permitted Encumbrances) in the Collateral. 12.2.5 This Section Intentionally Omitted . 12.2.6 This Section Intentionally Omitted . 12.2.7 Notice of Environmental Litigation . Promptly after Borrower's receipt thereof, notice of the receipt of all pleadings, orders, complaints, indictments, or other communication alleging a condition that may require Borrower to undertake or to contribute to a cleanup or other response under Environmental Regulations, or which seeks penalties, damages, injunctive relief, or criminal sanctions related to alleged violations of such laws, or which claims personal injury or property damage to any person as a result of environmental factors or conditions or which, if adversely determined, could have a Material Adverse Effect.
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12.2.8 Regulatory and Other Notices . Promptly after Borrower's receipt thereof, copies of any notices or other communications received from any governmental authority with respect to any matter or proceeding the effect of which could reasonably be expected to have a Material Adverse Effect. 12.2.9 Adverse Action Regarding Required Licenses . In the event Borrower learns that any petition, action, investigation, notice of violation or apparent liability, notice of forfeiture, order to show cause, complaint or proceeding is pending, or, to the best of Borrower's knowledge, threatened, to seek to revoke, cancel, suspend, modify, or limit any of the Required Licenses, Borrower shall provide Agent with prompt written notice thereof and shall take, or cause to be taken, all reasonable measures to contest such action in good faith. 12.2.10 Default Under Delivery Agreements or Cattle Purchase and Sale Agreement . As soon as the existence of any event of default or occurrence becomes known to Borrower which, with the giving of notice or the lapse of time, or both, would become an event of default under (a) any of the Delivery Agreements or (b) the Cattle Purchase and Sale Agreement, Borrower shall promptly give Agent written notice of such event of default or occurrence, the nature and status thereof, and the action being taken or proposed to be taken with respect thereto; provided that no report shall be required under subpart (a) of this Subsection so long as the total number of cattle as to which all such events of default or occurrence which, with the giving of notice or the lapse of time, or both, would become an event of default exist does not at any time exceed, in the aggregate, twenty-five percent (25%) of the number of cattle which Borrower is required, at such time, to be delivered under the Cattle Purchase and Sale Agreement. 12.2.11 Additional Information . With reasonable promptness: (a) copies of all communications which Borrower receives or initiates from or to any counterparty which in any way discuss or relate to nonperformance of any such counterparty to (i) any of the Delivery Agreements or (ii) the Cattle Purchase and Sale Agreement; (b) such additional financial information or other documentation as Agent may reasonably request; and (c) all financial statements, business reports, projections or forecasts, notices of distributions, or notices of capital calls received by Borrower with respect to National Beef; provided that no report shall be required under subpart (a)(i) of this Subsection so long as the total number of cattle subject to those Delivery Agreements as to which such communications relate does not at any time exceed, in the aggregate, twenty-five percent (25%) of the number of cattle which Borrower is required, at such time, to be delivered under the Cattle Purchase and Sale Agreement. 12.3 Eligibility . Borrower shall maintain its membership base so that not less than fifty percent (50%) of its equity interest is owned by Persons engaged in the business of raising and feeding cattle or producing other agricultural products.
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12.4 Maintenance of Existence and Qualification . Borrower shall maintain its corporate existence in good standing under the laws of the state of Delaware. Borrower will qualify and remain qualified as a foreign limited liability company in each jurisdiction in which such qualification is necessary or desirable in view of its business, operations and properties. 12.5 Compliance with Legal Requirements and Agreements . Borrower shall: (a) comply with all laws, rules, regulations and orders applicable to Borrower or its business; and (b) comply with all agreements, indentures, mortgages, and other instruments to which it is a party or by which it or any of its property is bound; provided, however, that the failure of Borrower to comply with this sentence in any instance not directly involving Agent or a Syndication Party shall not constitute an Event of Default unless such failure would have a Material Adverse Effect. 12.6 Compliance with Environmental Laws . Without limiting the provisions of Section 12.5 of this Credit Agreement, Borro |
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