MEMBERSHIP INTEREST

 

PURCHASE AGREEMENT

 

 

AMONG

 

 

LEUCADIA NATIONAL CORPORATION

 

NATIONAL BEEF PACKING COMPANY, LLC

 

U.S. PREMIUM BEEF, LLC

 

NBPCO HOLDINGS, LLC

 

TKK INVESTMENTS, LLC

 

TMKCO, LLC

 

AND

 

TMK HOLDINGS, LLC

 

DATED AS OF

 

 

December 5, 2011

 

Page

SCHEDULES

 

Schedule 1.2(d)

Sellers Disclosure Schedule

EXHIBITS

 

Exhibit A

Defined Terms

Exhibit B

Sellers’ National Interests

Exhibit C

Individuals and Entities Party to Non-Competition Agreements

Exhibit D

Escrow Agreement

Exhibit E

Tax Reporting Allocations

Exhibit F

Assignment of Membership Interests

Exhibit G

First Amended and Restated Limited Liability Company Agreement of National Beef Packing Company, LLC

Exhibit H

Cattle Purchase and Sale Agreement

Exhibit I

USPB Pledge Agreement

Exhibit J

Klein Pledge Agreement

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

INTRODUCTION

 

This MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “ Agreement ”) is entered into as of December 5, 2011, by and among Leucadia National Corporation, a New York corporation (“ Buyer ”), National Beef Packing Company, LLC, a Delaware limited liability company (“ National ”), U.S. Premium Beef, LLC, a Delaware limited liability company (“ USPB ”), NBPCo Holdings, LLC, a South Dakota limited liability company (“ NBPCo ”), TKK Investments, LLC, a Missouri limited liability company (“ TKK ”), TMKCo, LLC, a Missouri limited liability company (“ TMK ”), and TMK Holdings, LLC, a Missouri limited liability company (“ New Kleinco ”).  USPB, NBPCo, TKK and TMK are each at times referred to in this Agreement as a “ Seller ,” and collectively as the “ Sellers ”.  Buyer, each Seller and New Kleinco are referred to individually as a “ Party ” and collectively herein as the “ Parties ”.  Unless defined in this Agreement, capitalized terms used in this Agreement are defined in Exhibit A .

 

RECITALS

 

WHEREAS, Sellers in the aggregate own all of the membership interests in National (as to each Seller, its “ National Interest ” and collectively the “ National Interests ”);

 

WHEREAS, this Agreement contemplates a transaction among National, Buyer, Sellers and New Kleinco, in which (i) USPB and NBPCo will sell to Buyer the National Interests set forth opposite their respective names on Part I of Exhibit B in return for cash (the “ Sale ”), (ii) TKK and TMK both of which are controlled by Timothy M. Klein (“ Klein ”) will sell to National the National Interests set forth opposite their respective names on Part II of Exhibit B in return for cash and such National Interests shall thereafter be cancelled (the “ Put ”) and (iii) Buyer will sell to New Kleinco, which is controlled by Klein, a portion of the National Interests acquired in the Sale set forth opposite its name on Part III of Exhibit B in return for cash (the “ Klein Purchase ”).  The National Interests sold, purchased and retained after the consummation of each of the Sale, Put and Klein Purchase are shown on Exhibit B ;

 

WHEREAS, concurrently with the execution of this Agreement Klein has entered into an employment agreement with National (“ Klein Employment Agreement ”) to be effective upon the Closing;

 

WHEREAS, concurrently with the execution of this Agreement each of the individuals and entities set forth on Exhibit C has entered into a non-competition agreement with National (each, a “ Non-Competition Agreement ” and collectively, the “ Non-Competition Agreements ”); and

 

WHEREAS, concurrently with the execution of this Agreement, National, certain of its Subsidiaries and the lender parties thereto have entered into the Third Amendment to Amended and Restated Credit Agreement and Limited Consent (the “ Credit Agreement Consent ”).

 

NOW, THEREFORE, in consideration of the Recitals, the mutual representations, warranties, covenants, agreements and conditions contained in this Agreement, and in order to

 

set forth the terms and conditions of the transactions contemplated by this Agreement and the mode of carrying the same into effect, the Parties agree as follows:

 

ARTICLE I

 

THE TRANSACTIONS

 

1.1   Basic Transaction .

 

(a)   Sale .  On and subject to the terms and conditions of this Agreement, Buyer agrees to purchase from USPB and NBPCo, and each of USPB and NBPCo agrees to sell to Buyer, its respective National Interests listed in Part I of Exhibit B , free and clear of all Liens, for the consideration specified below in Section 1.2 .

 

(b)   Put .  Immediately after the consummation of the Sale, on and subject to the terms and conditions of this Agreement, National agrees to purchase from TKK and TMK, and each of TKK and TMK agrees to sell to National, its respective National Interests listed in Part II of Exhibit B , free and clear of all Liens, for the consideration specified below in Section 1.2 and such National Interests shall thereafter be cancelled.

 

(c)   Klein Purchase .  Immediately after the consummation of the Put, on and subject to the terms and conditions of this Agreement, New Kleinco agrees to purchase from Buyer, and Buyer agrees to sell to New Kleinco, a portion of the National Interests acquired in the Sale listed in Part III of Exhibit B , free and clear of all Liens, for the consideration specified below in Section 1.2 .

 

1.2   Purchase Price .

 

(a)   Purchase Price .

 

(1)   Sale .  Buyer agrees to pay to each of USPB and NBPCo at the Closing the purchase price reflected on Part I of Exhibit B for the issued and outstanding National Interests owned by each such Seller reflected on Part I of Exhibit B (the aggregate amount payable to USPB and NBPCo is referred to as the “ Purchase Price ”).  USPB and NBPCo will each sell its National Interests to Buyer for the portion of the Purchase Price set forth in Part I of Exhibit B , to be paid in cash.

 

(2)   Put .  National agrees to pay to each of TKK and TMK at the Closing the purchase price reflected on Part II of Exhibit B for the issued and outstanding National Interests owned by each such Seller reflected on Part II of Exhibit B (the aggregate amount payable to TKK and TMK is referred to as the “ Put Price ”).  TKK and TMK will each sell its National Interests to National for the portion of the Put Price set forth in Part II of Exhibit B , to be paid in cash.

 

(3)   Klein Purchase .  New Kleinco agrees to pay to Buyer at the Closing the purchase price reflected on Part III of Exhibit B for the issued and outstanding National Interests owned by Buyer reflected on Part III of Exhibit B (the aggregate amount payable to Buyer is referred to as the “ Klein Purchase Price ”).  Buyer will sell its National

 

Interests to New Kleinco for the Klein Purchase Price set forth in Part III of Exhibit B , to be paid in cash.

 

(b)   Escrow .  As set forth in Section 8.1(h) below, $50 million of the Purchase Price to be paid to USPB and NBPCo as set forth on Exhibit B (“ Escrow Fund ”) shall be deposited in an escrow account with the Escrow Agent to be held by the Escrow Agent in accordance with the terms of the Escrow Agreement attached hereto as Exhibit D .

 

(c)   Tax Reporting Allocations .  The Parties agree that, for tax purposes, including for purposes of determining the amount of money or the fair market value of property received by Sellers that is attributable to unrealized receivables of National or inventory of items of National pursuant to Code section 751(a) and for purposes of determining the new tax basis of National’s assets resulting from the transactions contemplated by this Agreement, the allocation principles and parameters set forth in Exhibit E shall be determinative, and that such allocation resulting therefrom will reflect the amount that National would have received for each of its assets had it sold all of its assets in a fully taxable transaction to an unrelated third party for cash in an amount equal to the fair market value of such assets immediately prior to the transfer by Sellers of their interests in National.  For all tax purposes, the Parties agree that the transactions contemplated in this Agreement shall be reported in a manner consistent with the terms of this Agreement, including the allocation principles and parameters set forth in Exhibit E , and that, except as otherwise required by Applicable Law none of them will take any position inconsistent therewith in any Tax Return, in any refund claim, in any litigation, or otherwise.

 

(d)   Agreement to Make Separate Purchases .  Buyer, Sellers and New Kleinco may enter agreements to purchase and/or restructure their ownership interests in (directly or through one or more designated wholly-owned Subsidiaries of Buyer) one or more Subsidiaries of National or assets of National in separate purchases or transactions to be effected as part of this Agreement, which transactions shall be set forth on Schedule 1.2(d) to this Agreement (the “ Schedule 1.2(d) Transactions ”).  In such event, the Purchase Price, the Put Price and the Klein Purchase Price shall be adjusted to take into account the purchase price for any such Schedule 1.2(d) Transaction, so that in total, the economics of the transactions contemplated by this Agreement are preserved, and further, in all cases, the operations of National are continued, regardless of any change in operating structure and Sellers retain an interest in those assets and Subsidiaries which maintain the same financial and governance rights of Sellers, reflecting their percentage ownership of the total value of the National Interests following the Sale, as if such Subsidiaries or assets (as applicable) had not been purchased separately or were not the subject of any restructuring transaction.  At Buyer’s election, some or all of the Schedule 1.2(d) Transactions may be effected after the Closing.  Sellers and New Kleinco shall cooperate with Buyer to implement such Schedule 1.2(d) Transactions.

 

1.3   Time and Place of Closing .  Unless otherwise agreed to by the Parties, the Closing will occur at 11 a.m. local time on the third Business Day after the date on which the conditions to Closing are satisfied or waived by the Party entitled to do so (other than conditions the fulfillment of which are to occur at the Closing but subject to the satisfaction or waiver of such conditions).  Each of Buyer, Sellers and New Kleinco shall notify the other Parties when all of their respective conditions to Closing are satisfied or waived.  The Closing shall take place at a location mutually agreed to by the Parties, but if there is no agreement, then at the offices of

 

Stoel Rives, LLP, Salt Lake City, Utah.  The date upon which the Closing actually occurs is referred to as the “ Closing Date ”.

 

1.4   Deliveries at the Closing .  At the Closing:

 

(a)   Each Seller will deliver to Buyer a duly executed assignment of its National Interests, free and clear of all Liens, in the form set forth in Exhibit F , and each of Sellers, New Kleinco and National will deliver to Buyer the various certificates, instruments, and documents referred to in Section 6.2 to be delivered at the Closing;

 

(b)   Buyer will deliver to Sellers the various certificates, instruments, and documents referred to in Section 6.3 to be delivered at the Closing; and

 

(c)   Buyer will deliver to each of USPB and NBPCo the payment specified in Section 1.2(a)(1) .

 

(d)   National will deliver to each of TKK and TMK the payment specified in Section 1.2(a)(2) .

 

(e)   New Kleinco will deliver to Buyer the payment specified in Section 1.2(a)(3) .

 

(f)   Buyer will deliver to New Kleinco a duly executed assignment of its National Interests, free and clear of all Liens, in the form set forth in Exhibit F .

 

1.5   Mechanics of Payments .  The cash payments under or pursuant to this Agreement shall be made by wire transfer of immediately available funds to one or more accounts designated by the payee not less than three (3) Business Days prior to the Closing.  The cash payments as contemplated by Section 1.2 shall be made only after delivery to the payor of an assignment of the applicable National Interests as contemplated by Section 1.4 .

 

1.6   Obligations of Sellers .  Unless expressly stated otherwise, any liability or obligation of the Sellers collectively arising out of this Agreement (including pursuant to Section 8.1 ) shall be several, not joint, and apportioned to each Seller according to the Seller’s Portion.

 

1.7   Supporting Agreements .  Contemporaneously with the execution of this Agreement, (i) the members of National shall approve the Restated LLC Agreement, which shall also be approved by Buyer as a condition to the Closing and which shall provide for, among other things, the reclassification of the Class A units and Class B units of National into one class, (ii) each of National and USPB shall approve the Cattle Purchase and Sale Agreement in the form attached hereto as Exhibit H (“ Cattle Purchase and Sale Agreement ”), (iii) each of National and USPB shall approve the Pledge Agreement in the form attached hereto as Exhibit I (“ USPB Pledge Agreement ”) pursuant to which USPB shall grant to National a perfected security interest in its National Interests in order to support the Cattle Purchase and Sale Agreement and (iv) each of New Kleinco and Buyer shall approve the Pledge Agreement in the form attached hereto as Exhibit J (“ Klein Pledge Agreement ”) pursuant to which New Kleinco shall grant to Buyer a perfected first priority security interest in its National Interests in order to support the indemnification obligations of TKK, TMK and New Kleinco hereunder; provided ,

 

however , that the Restated LLC Agreement, the Cattle Purchase and Sale Agreement, the USPB Pledge Agreement and the Klein Pledge Agreement referenced in this Section 1.7 shall not be effective until the Closing.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF SELLERS AND NEW KLEINCO

 

Except as set forth in the Sellers Disclosure Schedule, which may address and supplement any item in this Article II (subject to Section 8.18(b) ), each Seller and New Kleinco separately represents and warrants to Buyer, severally and not jointly, that the representations and warranties contained in this Article II are true and correct as to that Seller or New Kleinco, respectively, as of the date of this Agreement and as of the Closing Time.

 

2.1   Authorization of Sellers and New Kleinco .

 

(a)   Seller and New Kleinco Authorization .  Such Seller or New Kleinco, respectively, has full power and authority to:

 

(1)   execute and deliver this Agreement;

 

(2)   execute and deliver all other Transaction Documents to which such Seller or New Kleinco, respectively, is or will be a party; and

 

(3)   perform such Seller’s or New Kleinco’s respective obligations under this Agreement and the Transaction Documents.

 

(b)   Execution and Performance of Transaction Documents .  The execution, delivery and performance by such Seller or New Kleinco, respectively, of the Transaction Documents to which such Seller or New Kleinco, respectively, is a party, do not, and the consummation of the transactions contemplated by this Agreement will not, subject to obtaining the Consents, approvals, authorizations and permits and making the filings described in Section 3.5 conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a Lien or right of modification, termination, cancellation or acceleration of any obligation or loss of a benefit under, or require that any Consent be obtained or any notice be given with respect to:

 

(1)   such Seller’s or New Kleinco’s respective certificate of formation or operating agreement;

 

(2)   any contract of such Seller or New Kleinco, respectively, in existence as of the date of this Agreement; or

 

(3)   any order, writ, judgment, injunction, decree, statute, law, ordinance, rule or regulation of any Governmental Entity applicable to such Seller or New Kleinco, respectively, or by which or to which any portion of its respective properties or assets is bound or subject.

 

(c)   Other Seller or New Kleinco Action Not Necessary .  Each of NBPCo, TKK, TMK and New Kleinco represents that it has obtained approval by the requisite number of its members of this Agreement and the Transaction Documents, and no additional Consent is required by its member(s) in order to complete the transactions contemplated by this Agreement.  Each Seller represents that, except as provided in Section 2.1(d) , no other proceeding or action on the part of such Seller is necessary to approve and authorize, and New Kleinco represents that no other proceeding or action on its part is necessary to approve and authorize:

 

(1)   such Seller’s or New Kleinco’s execution and delivery of any other Transaction Document to which such Seller or New Kleinco, respectively, is or will be a party; or

 

(2)   the performance of such Seller’s or New Kleinco’s respective obligations under this Agreement or the Transaction Documents.

 

(d)   USPB Member Approval .  USPB represents that (i) subject to Section 5.11(b) and the provisions of Section 5.11 , the Board of Directors of USPB has unanimously approved this Agreement and will unanimously recommend approval of the transactions in this Agreement to the members of USPB and (ii) the approval by the members of USPB of this Agreement and the contemplated transactions has not been obtained as of the date on which this Agreement is executed and will be sought by USPB in accordance with Section 5.12 .

 

(e)   Binding and Enforceable Agreement of Seller or New Kleinco .  Except as provided in Section 2.1(d) , this Agreement and all other Transaction Documents to which such Seller or New Kleinco, respectively, is a party have been, or will be at Closing, duly executed and delivered by such Seller or New Kleinco, respectively, and will constitute the valid and binding agreements of such Seller or New Kleinco, respectively, enforceable against such Seller or New Kleinco, respectively, in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally and limitations on the availability of equitable remedies.

 

2.2   Ownership of National Interests .  Such Seller is the beneficial and record owner of the National Interests to be transferred by such Seller pursuant to the Sale or the Put, as the case may be, and such Seller’s ownership is, and immediately prior to the Closing Time will be, free and clear of all Liens, options, proxies, voting trusts or agreements and other restrictions, other than as expressly provided in the National Limited Liability Company Agreement.

 

2.3   No Knowledge of Misrepresentations or Omissions .

 

(a)   Each of the Sellers (other than NBPCo) represents that, as of the date of this Agreement and at Closing, to such Seller’s Knowledge, the representations and warranties or certificates of such Seller or National in this Agreement, the Sellers Disclosure Schedule and the National Disclosure Schedule (including updated schedules to the extent delivered hereunder) are not untrue or incorrect, individually or in the aggregate, in any material respect, and do not, individually or in the aggregate, contain material errors in, or material omissions from, the Sellers Disclosure Schedule or the National Disclosure Schedule to this Agreement which would result in a material misrepresentation to the Buyer.

 

(b)   New Kleinco represents that, as of the date of this Agreement and at Closing, to New Kleinco’s Knowledge, the representations and warranties of New Kleinco in this Agreement and the Sellers Disclosure Schedule are not untrue or incorrect, individually or in the aggregate, in any material respect, and do not, individually or in the aggregate, contain material errors in, or material omissions from, the Sellers Disclosure Schedule to this Agreement which would result in a material misrepresentation to the Buyer.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF NATIONAL

 

Except as set forth in the National Disclosure Schedule, which may address and supplement any item in this Article III (subject to Section 8.18(b) ) National represents and warrants to Buyer that the representations and warranties contained in this Article III are true and correct as of the date of this Agreement and as of the Closing Time.

 

3.1   Organization and Qualification .

 

(a)   Organization .  National and each of its Subsidiaries is duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation, organization or formation as set forth on National Disclosure Schedule 3.1 , and has all requisite limited liability company, corporate, partnership, trust or similar power and authority to own, lease and operate its assets and properties and to carry on its business as presently conducted.

 

(b)   Qualified, Good Standing .  National and each of its Subsidiaries is duly qualified or licensed as a foreign limited liability company or corporation, as the case may be, to transact business and is in good standing in each jurisdiction in which the nature of the business it is conducting, or the operation, ownership or leasing of its assets or properties, makes such qualification or licensing necessary, except where the failure to be so qualified or licensed and in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  The Data Room contains correct and complete copies of the certificate of formation, limited liability company agreement, operating agreement, certificate of incorporation, articles of incorporation, articles of organization, by-laws or other comparable organizational documents (“ Organizational Documents ”), as applicable, of National and each of its Subsidiaries as in effect on the date of this Agreement.

 

3.2   Authorization of Transaction .  National has full power and authority to execute and deliver this Agreement and all other Transaction Documents to which it is a party and to perform its obligations under this Agreement and the Transaction Documents.  No other proceedings or actions on the part of National are necessary to approve and authorize National’s execution and delivery of this Agreement or any other Transaction Documents to which it is or will be a party or the performance of its obligations under this Agreement or the Transaction Documents.  This Agreement constitutes, and each of the other Transaction Documents to which National is or will be a party will when executed constitute, a valid and binding obligation of National, enforceable against National in the United States in accordance with its terms, except

 

as such enforceability may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally and limitations on the availability of equitable remedies.

 

3.3   Capital Structure of National .

 

(a)   Set forth on National Disclosure Schedule 3.3(a) is a true and correct list of all issued and outstanding units representing National Interests as of the date of this Agreement and the owners of such units.

 

(b)   No Other Voting Rights .  No bonds, debentures, notes or other instruments or evidence of indebtedness having the right to vote (or convertible into, or exercisable or exchangeable for, securities having the right to vote) on any matters on which the holders of National Interests may vote are issued or outstanding.

 

(c)   Valid National Interests .  All outstanding National Interests have been duly authorized and validly issued, and are fully paid and non-assessable, and were not issued in violation of any preemptive or other similar rights.  There:

 

(1)   are no ownership interests or other voting or equity securities of National, issued or outstanding, or other contractual or other rights entitling any party to any form of equity, ownership, participation or beneficial interest in National;

 

(2)   are no securities of National or any Subsidiary of National convertible into, or exchangeable or exercisable for, ownership interests of National or other voting or equity securities of National or any Subsidiary of National;

 

(3)   are no voting trusts or similar agreements to which National or any Subsidiary of National is a party with respect to the voting of equity interests in National or any Subsidiary of National;

 

(4)   is no option, warrant, call, preemptive right, subscription or other right, agreement, arrangement, understanding or commitment of any character, relating to the issued or unissued ownership interests of National or any Subsidiary of National other than in the National Limited Liability Company Agreement obligating National or any Subsidiary of National to issue, transfer or sell or cause to be issued, transferred or sold any ownership interests or other equity interest in National or any Subsidiary of National, or securities convertible into or exchangeable for the interests, or obligating National or any Subsidiary of National to grant, extend or enter into any option, warrant, call, subscription or other right, commitment, arrangement or agreement; and

 

(5)   is no contractual obligation of National or any Subsidiary of National to repurchase, redeem or otherwise acquire any ownership interests of National or other equity interests in National or any Subsidiary or Affiliate of National or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Subsidiary of National or any other Person other than as provided in the National Limited Liability Company Agreement.

 

3.4   Capital Structure of Subsidiaries .

 

(a)   Capital Structure .  Each of National’s Subsidiaries is listed on National Disclosure Schedule 3.4(a) , which contains a true and correct list of each Subsidiary of National and all of the issued and outstanding equity of each such Subsidiary.

 

(b)   National Is Owner of All Subsidiaries’ Equity .

 

(1)   National directly or indirectly is the beneficial and record owner of all issued and outstanding equity of each Subsidiary and National’s ownership is free and clear of all Liens, options, proxies, voting trusts or agreements and other restrictions;

 

(2)   all equity of each Subsidiary has been duly authorized and validly issued and is fully paid and non-assessable;

 

(3)   no equity of any Subsidiary has been issued in violation of any preemptive or other similar rights;

 

(4)   no amounts of equity of any Subsidiary are reserved for issuance, and there are no contracts, agreements, commitments or arrangements obligating any Subsidiary to offer, sell, issue or grant any equity of, or any options, warrants, calls, preemptive rights, subscriptions or other rights, agreements, arrangements, understandings or commitments of any character, to acquire any equity of, or any securities that are convertible into or exchangeable or exercisable for any ownership interest of any Subsidiary or other voting or equity securities of such Subsidiary; and

 

(5)   National does not own, directly or indirectly, any capital stock of, or other voting securities or equity interests in, any corporation, partnership, joint venture, association or other entity.

 

3.5   Non-Contravention .

 

(a)   Execution and Performance of Transaction Documents .  The execution, delivery and performance by National of the Transaction Documents to which National is a party do not, and the consummation of the transactions contemplated by this Agreement and compliance with the terms of this Agreement will not, subject to obtaining the Consents, approvals, authorizations and permits and making the filings described in this Section 3.5 conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a Lien or right of modification, termination, cancellation or acceleration of any obligation or loss of a benefit under, or require that any Consent be obtained or any notice be given with respect to:

 

(1)   any of the Organizational Documents, as applicable, of National and each of its Subsidiaries as in effect on the date of this Agreement;

 

(2)   except for the Material Contracts set forth on National Disclosure Schedule 3.10 with an asterisk, if any, any Material Contract or Permit applicable to National or any of its Subsidiaries or their respective properties or assets;

 

(3)   any order, writ, judgment, injunction, decree, statute, law, rule or regulation of any Governmental Entity applicable to National or any of its Subsidiaries or by which or to which any portion of their respective properties or assets is bound or subject; or

 

(4)   any properties or assets of National or any Subsidiary of National

 

except, with respect to each of clauses (2) and (3), the violations, conflicts, breaches or defaults as would not reasonably be expected to have a Material Adverse Effect.

 

(b)   Governmental Consents .  No Consent of, or registration, declaration or filing with any Governmental Entity is required by National or any of its Subsidiaries in connection with the execution, delivery and performance by National of this Agreement and the other Transaction Documents to which it is a party or the consummation by National of the transactions contemplated by this Agreement, except:

 

(1)   the filing of a notification and report form by USPB under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“ HSR Act ”), and the expiration or termination of the applicable waiting period thereunder, and to the extent that the Antitrust Laws of applicable foreign jurisdictions may be applicable to the transactions contemplated by this Agreement, clearances, approvals, Consents or the expiration of a waiting period under such Antitrust Laws;

 

(2)   the other Consents, approvals, orders, authorizations, registrations, declarations, filings, notices or permits the failure of which to be obtained or made would not reasonably be expected have a Material Adverse Effect; and

 

(3)   as set forth on National Disclosure Schedule 3.5(b) .

 

3.6   Financial Statements .

 

(a)   Delivery .  National has delivered to Buyer or otherwise made available to Buyer through filings with the SEC true, correct and complete copies of the audited consolidated balance sheets and the related consolidated statements of earnings, of member’s equity and of cash flows of National and its consolidated Subsidiaries for the fiscal years ended 2008, 2009, 2010 and 2011 and the notes thereto, accompanied by the audit opinion of KPMG, independent registered public accounting firm of National, for the fiscal years ended 2008, 2009, 2010 and 2011 (collectively, the “ Financial Statements ”).

 

(b)   Prepared In Accordance With GAAP .  The Financial Statements (in each case including the notes thereto) were prepared from the books and records of National and in accordance with GAAP applied on a consistent basis during the periods involved, except as otherwise noted therein or set forth on National Disclosure Schedule 3.6(b) .  The Financial Statements fairly present, in all material respects, the consolidated financial position and consolidated results of operations, cash flows and changes in financial position of National and its consolidated Subsidiaries as of the respective dates of the Financial Statements and for the periods then ended (subject in the case of unaudited interim financial statements, to normal year-end adjustments and the absence of complete footnotes).

 

(c)   No Unreported Liabilities .  National and its consolidated Subsidiaries do not have any material liability or obligation of any kind, whether absolute, accrued, asserted or unasserted, contingent or otherwise, required by GAAP to be set forth in a financial statement or in the notes thereto, except liabilities, obligations or contingencies that:

 

(1)   have been incurred in the ordinary course of business consistent with past practice since August 25, 2007;

 

(2)   are accrued or reserved against in the Latest Balance Sheet; or

 

(3)   as disclosed on National Disclosure Schedule 3.6(c) .

 

3.7   Certain Developments .  During the period from May 28, 2011 through the date hereof:

 

(a)   there has not occurred any event, change, occurrence or circumstance that, individually or in the aggregate with any such other events, changes, occurrences or circumstances, that to the Knowledge of National has had or would reasonably be expected to have a Material Adverse Effect;

 

(b)   the business of National and each of its Subsidiaries has been carried on and conducted in all material respects in the ordinary course of business consistent with past practice; and

 

(c)   neither National nor any of its Subsidiaries has:

 

(1)   experienced any damage, destruction or loss, whether or not covered by insurance, with respect to the property or assets of National or any of its Subsidiaries having a replacement cost of more than $500,000 for any single loss or $1,000,000 for all losses; or

 

(2)   taken, authorized any of, or committed, resolved or agreed to take, any action that would have been prohibited by Section 5.1 had this Agreement been in effect on May 28, 2011.

 

3.8   Real and Personal Property .

 

(a)   Title and Encumbrances .   National Disclosure Schedule 3.8(a) sets forth as of the date of this Agreement a list of all real property owned fee by National or its Subsidiaries (“ Owned Real Properties ”), all real property ground leased to National or its Subsidiaries (“ Ground Leased Real Properties ”; each Owned Real Property or Ground Leased Real Property sometimes is referred to as a “ Property ”; the Owned Real Properties and the Ground Leased Real Properties collectively are referred to as the “ Properties ”) and the existing title insurance policies and title reports given by a title insurance company for each Property (“ Title Reports ”).  To National’s Knowledge, National or a Subsidiary of National has, and will have on the Closing Date, the title in and to the Owned Real Properties, and a ground leasehold interest in and to the Ground Leased Real Properties together with an ownership interest in all

 

improvements constructed thereon, as disclosed in the Title Reports, free and clear of all Liens other than Permitted Encumbrances.

 

(b)   Material Improvements .  To the Knowledge of National:

 

(1)   the Leased Properties (as defined below) and the material improvements on the Properties have access to sewer, water, gas, electric, telephone and other utilities as are necessary to allow the business of National and each of its Subsidiaries operated on the Leased Properties and Properties, as applicable, to be operated in the ordinary course consistent with past practice as currently operated.

 

(2)   the material improvements located on the Properties are in sufficiently good condition (except for ordinary wear and tear) for all purposes for which they are presently being used, and to the Knowledge of National, they are in material compliance with all Applicable Laws.

 

(c)   Condemnation Proceedings .  As of the date of this Agreement, no condemnation proceeding is pending against any of the Properties, or, to the Knowledge of National, threatened.

 

(d)   Restrictive Covenants Not Violated .  To National’s Knowledge, the current use of the Properties by National and its Subsidiaries does not violate in any material respect any restrictive covenant identified in the Title Reports that affect any of the Properties.

 

(e)   Real Property Leases (Landlord or Sublandlord) .   National Disclosure Schedule 3.8(e) sets forth a list of all real property leases to which National or any of its Subsidiaries, as landlord or sublandlord, is a party as of the date of this Agreement.  Each lease set forth on National Disclosure Schedule 3.8(e) is a valid and binding obligation of National or a Subsidiary of National (subject to any of such leases being terminated in the ordinary course of business consistent with past practice and in accordance with the terms of the leases) and is in full force and effect.  To the Knowledge of National, neither National nor any of its Subsidiaries is, as of the date of this Agreement, in default in any material respect under any lease set forth on National Disclosure Schedule 3.8(e) .

 

(f)   Real Property Leases (Ground Leases) .   National Disclosure Schedule 3.8(f) sets forth a list of all real property ground leases to which National or any of its Subsidiaries, as tenant, is a party as of the date of this Agreement, including all amendments thereto.  Each ground lease set forth on National Disclosure Schedule 3.8(f) (each, a “ Ground Lease ”) is a valid and binding obligation of National or a Subsidiary of National and is in full force and effect.  True, correct and complete copies of all Ground Leases (including all amendments thereto) have been made available to Buyer.  To the Knowledge of National, neither National nor any of its Subsidiaries is, as of the date of this Agreement, in default in any material respect under any ground lease set forth on National Disclosure Schedule 3.8(f) .  There are no Material arrears of rent under any Ground Lease.  To the Knowledge of National each of the Ground Leases is valid, binding, in full force and effect and is unmodified as against National or its Subsidiaries and, to the Knowledge of National, as against the landlord thereunder.  National or a Subsidiary of National is in occupation of each of the Ground Leased Properties.

 

None of the Ground Leases have been assigned by National or the Subsidiaries in favor of any Person.  No rents have been paid more than one (1) month in advance.

 

(g)   Real Property Leases (Tenant or Subtenant) .   National Disclosure Schedule 3.8(g) sets forth a list of all real property leases (other than Ground Leases) to which National or any of its Subsidiaries, as tenant or subtenant, is a party as of the date of this Agreement, including all amendments thereto.  All properties leased by National or any of its Subsidiaries, as tenant or subtenant, other than through Ground Leases, hereinafter are referred to as “ Leased Properties ”.  To the Knowledge of National each lease set forth on National Disclosure Schedule 3.8(g) (each, a “ Lease ”) is a valid and binding obligation of National or a Subsidiary of National and is in full force and effect.  True, correct and complete copies of all Leases (including all amendments thereto) have been made available to Buyer.  To the Knowledge of National, neither National nor any of its Subsidiaries is, as of the date of this Agreement, in default in any material respect under any lease set forth on National Disclosure Schedule 3.8(g) .  There are no Material arrears of rent under any Lease.  As of the date of this Agreement, no condemnation proceeding is pending or, to the Knowledge of National, threatened by any Governmental Entity in writing, which would preclude or materially impair the use of the leased premises under that certain Office Lease by and between Kansas City, Missouri, as landlord, and National, as tenant, dated March 4, 2008 (as amended by First Amendment to Office Lease dated as of June 1, 2010, the “ Headquarters Lease ”) for the uses for which it is intended.  To the Knowledge of National, each of the Leases is valid, binding, in full force and effect and is unmodified as against National or its Subsidiaries and, to the Knowledge of National, as against the landlord thereunder.  National or a Subsidiary is in occupation of each of the Leased Properties.  None of the Leases have been assigned by National or the Subsidiaries in favor of any Person.

 

(h)   Personal Property .  National or its Subsidiaries have good title to, or hold pursuant to valid and enforceable leases, all the tangible properties and assets of National and its Subsidiaries (excluding Real Property) that are material to the conduct of the businesses of National and its Subsidiaries, with only the exceptions as constitute Permitted Encumbrances.

 

(i)   Taxes, Utility Bills .  All real and personal property taxes and assessments and all utility bills pertaining to the Properties have been, and will continue to be until Closing, paid in full on or before the date that such bills fall due, and there are no currently existing delinquencies with respect thereto and neither National nor any of its Subsidiaries has received any notice of proposed local improvement changes or special levies.  No real estate taxes are being contested.

 

(j)   Applicable Laws .  To the Knowledge of National, the Properties and Leased Properties are, and the current use of them is, in material compliance with all Applicable Laws, including, without limitation, zoning laws.  To the Knowledge of National, no written notice of violation of any Applicable Law or of any covenant, restriction or easement affecting the Properties or any part of them or with respect to the use or occupancy of the Properties or any part of them has been given by any Governmental Entity having jurisdiction over the Properties or by any other Person entitled to enforce the same.

 

(k)   No Encroachments .  To the Knowledge of National, except as shown on the Title Reports and surveys provided as part of due diligence, the improvements on the lands on which the Properties are situated (the “ Lands ”) are located wholly within the boundaries of the Lands and do not encroach upon any registered or unregistered easement or right-of-way affecting the Lands.  To the Knowledge of National, except as shown on the Title Reports and surveys provided as part of Due Diligence, there is no encroachment onto the Lands by buildings or improvements from any adjoining lands that would materially adversely affect the operations of National or its Subsidiaries at the Properties.

 

(l)   Access .  To the Knowledge of National, the Properties have full access to and from public highways, which access is sufficient for the purposes of the operation of the businesses of National and its Subsidiaries, and neither National nor the Subsidiaries have Knowledge of any fact or condition that would result in the interruption or termination of such access.

 

3.9   Taxes .  With respect to any and all tax years beginning on or after August 25, 2007:

 

(a)   Filed and Paid .  All Tax Returns required to be filed by or with respect to National or any of its Subsidiaries have been filed when due.  All such Tax Returns are true, correct and complete in all respects.  All Taxes due and owing by National or any of its Subsidiaries (whether or not shown or required to be shown on any Tax Return) have been timely paid.  All Tax withholding and deposit requirements imposed on or with respect to National or any of its Subsidiaries have been satisfied in all material respects.  There are no Liens on any of the assets of National or any of its Subsidiaries that arose in connection with any failure to pay any Tax other than Permitted Encumbrances.  All required estimated Tax payments sufficient to avoid any underpayment penalties or interest have been made by or on behalf of National and each of its Subsidiaries.

 

(b)   No Unpaid Taxes in Excess of Reserves .  The unpaid Taxes of National or its Subsidiaries:

 

(1)   do not exceed the reserve for Tax liability for National or its Subsidiaries, as the case may be, on the Latest Balance Sheet included in the Financial Statements (exclusive of any reserve for deferred Taxes established to reflect timing differences between book and Tax income); and

 

(2)   will not exceed the reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of National or its Subsidiaries, as the case may be.

 

(c)   No Arrangement Not Deductible Under § 280G or 162(m) .  There is no contract, agreement, plan or arrangement covering any Person that, individually or collectively, could give rise to the payment of any amount that would not be deductible by National or any Subsidiary of National as the case may be, by reason of:

 

(1)   Section 280G of the Code (or any corresponding provision of state, local or foreign tax law); or

 

(2)   Section 162(m) of the Code (or any corresponding provision of state, local or foreign tax law).

 

(d)   No Waivers or Extensions of Filing .  Neither National nor any of its Subsidiaries has granted (or is subject to) any waiver or extension that is currently in effect of the period of limitations for the assessment, collection or payment of any Tax or the filing of any Tax Return.

 

(e)   No Unpaid Assessments .  No material unpaid Tax assessment, deficiency or adjustment has been assessed against or with respect to National or any of its Subsidiaries by any Governmental Entity.  No Tax Return concerning or relating to National or any of its Subsidiaries or their respective operations has been audited or examined by any Governmental Entity for any period beginning after August 25, 2007, nor is any audit, claim, suit, investigation or examination in process or pending, and neither National nor any of its Subsidiaries has been notified of any (i) request for such an audit or other examination, or (ii) request for any information related to Tax matters.  Neither National nor any of its Subsidiaries reasonably expects any Governmental Entity to assess any additional Taxes for any period for which Tax Returns have been filed.  Neither National nor any of its Subsidiaries is a party to any action or proceeding for the assessment or collection of Taxes.  Each of National and its Subsidiaries has made available to Buyer correct and complete copies of all income and other material Tax Returns, examination reports and statements of deficiencies filed, assessed against or agreed to by National or its Subsidiaries, as the case may be, since August 25, 2007.

 

(f)   Partnership Status .  National and each of its Subsidiaries has at all times since its formation been treated and taxed as either a partnership or a disregarded entity for United States federal income tax purposes and neither National nor any of its Subsidiaries has ever been treated as a publicly traded partnership within the meaning of Section 7704 of the Code.   National Disclosure Schedule 3.9(f) currently identifies the status, for federal income tax purposes, of National and each of its Subsidiaries.

 

(g)   No Tax Group .  Neither National nor any of its Subsidiaries has ever been a member of a combined, consolidated, affiliated or unitary group for any Tax purposes, other than, with respect to any of the Subsidiaries of National, the group of which it currently is a member.

 

(h)   Amounts Accounted For In Periods .  Neither National nor any of its Subsidiaries has agreed to or will be required to include any amount in income for any taxable period ending after the Closing Date (i) as a result of a change in accounting method, whether pursuant to Section 481(a) of the Code or any similar provision of law or otherwise, for any taxable period ending on or before the Closing Date or (ii) pursuant to any agreement with any Governmental Entity with respect to any taxable period, and neither National nor any of its Subsidiaries will be required to make such an adjustment to its income as a result of the transactions contemplated by this Agreement. There is no application pending with any Governmental Entity by or on behalf of National or any of its Subsidiaries requesting permission for any change in any accounting methods for Tax purposes.  Neither National nor any of its Subsidiaries will be required to include in any period ending after the Closing Date any income that accrued in a prior period but was not recognized in any prior period as a result of the

 

installment method of accounting or otherwise, and no Governmental Entity has proposed any such adjustment or change in accounting period.

 

(i)   No Unresolved Governmental Tax Claims .  No written claim has ever been made by any Governmental Entity in any jurisdiction in which National or any of its Subsidiaries does not file Tax Returns that National or any of its Subsidiaries is or may be is subject to taxation by that jurisdiction and that has not been resolved.

 

(j)   No Tax Agreements .  Neither National nor any of its Subsidiaries is a party to or has any obligation under any Tax sharing, Tax indemnity, Tax allocation or similar agreement or arrangement (whether or not written).

 

(k)   No Closing Agreements, etc .  National and its Subsidiaries will not be required to include any amount in taxable income or exclude any item of deduction or loss from taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of (a) any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date, (b) any installment sale or open transaction disposition made on or prior to the Closing Date, or (c) any prepaid amount received on or prior to the Closing Date, nor has National or any of its Subsidiaries granted to any Person any power of attorney that is currently in force with respect to any Tax matter.

 

(l)   No Tax Shelters or Reportable Transactions .  Neither National nor any of its Subsidiaries has ever participated in a “potentially abusive tax shelter” transaction or a “reportable transaction” within the meaning of Treas. Reg. Section 1.6011 4 or any “tax shelter” within the meaning of Section 6662 of the Code.

 

(m)   No Code Section 355 or 361 Transactions .  Neither National nor any of its Subsidiaries has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction (i) that was purported or intended to be governed in whole or in part by Section 355 or Section 361 of the Code or (ii) that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated by this Agreement.

 

(n)   No CFC or PFIC Status .  None of National’s Subsidiaries is, or has been since its incorporation, a controlled foreign corporation within the meaning of Section 957 of the Code or a passive foreign investment company within the meaning of Section 1297 of the Code.

 

(o)   No USRPHC .  Neither National nor any of its Subsidiaries is, or has been, a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

 

(p)   Section 754 Elections .  A valid election under Section 754 of the Code has been made by or on behalf of National and each of its Subsidiaries that is treated as a partnership for U.S. federal income tax purposes.

 

3.10   Contracts and Commitments .

 

(a)   Material Contracts .   National Disclosure Schedule 3.10(a) sets forth as of the date of this Agreement all Material Contracts to which either National or any of its Subsidiaries is a party or by which any of them or their assets or properties are otherwise bound.  Each Material Contract is:

 

(1)   a legal, valid and binding obligation of National or its Subsidiaries and, to the Knowledge of National, a legal, valid and binding obligation of each other party thereto; and

 

(2)   in full force and effect and is enforceable in accordance with their respective terms (except as such enforceability may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally and limitations on the availability of equitable remedies).

 

(b)   Parties Have Performed Contracts .  Neither National nor any Subsidiary of National nor, to the Knowledge of National, any other party to the Material Contracts is in default under or in breach or violation of, nor in receipt of any claim of default or breach under, any Material Contract.  No party to any Material Contract has given National or any of its Subsidiaries written notice of its intention to cancel, terminate, change the scope of rights under, or not renew, any Material Contract.  Since May 26, 2010 as to each current Material Contract, there has not occurred any event or events that, with the lapse of time or the giving of notice or both, would constitute a default by National or any of its Subsidiaries (or to National’s Knowledge a default by any other party thereto) thereunder, or permit the termination of, any such Material Contract.

 

3.11   Proprietary Rights .

 

(a)   Registered Rights .   National Disclosure Schedule 3.11(a) sets forth all of the patents and patent applications, registered trademarks, and applications, material unregistered trademarks, and copyright registrations and applications owned by National and its Subsidiaries.

 

(b)   Rights To Use Intellectual Property .  As used herein, the term “ Intellectual Property ” means all of the following and similar intangible property and related proprietary rights, interests and protections related to: (i) trademarks, service marks, domain names, trade names, brand names, logos, trade dress and other proprietary indicia of goods and services and the goodwill associated therewith, whether registered, unregistered, or intent-to-use applications, and all issuances, extensions, renewals of such registrations and applications in the United States and any foreign country; (ii) all copyrights and copyrightable material fixed in a tangible medium whether or not formally registered or applied to be registered including advertisements, package designs, and software; (iii) confidential information, formulas, designs, devices, technology, know-how, research and development, methods, processes, customer lists, supplier lists, and other trade secrets whether or not patentable that are material to the operations of the business, of National and its Subsidiaries; and (iv) patents, pending patent applications, patentable subject matter whether or not included in a patent application, and all issuances, divisions, continuations, continuations-in-part, reissues, extensions, and renewals of such patents

 

and applications both in the United States and in any foreign country as well as the rights to sue and enforce against third parties for infringement for any of the foregoing, and to collect for past and present damages.   National Disclosure Schedule 3.11(a) denotes which registered (or pending applications for registration) Intellectual Property is owned by National and its Subsidiaries (“ Owned Intellectual Property ”) and which is licensed to National and its Subsidiaries (excluding off-the shelf third-party software) (“ Licensed Intellectual Property ”) (collectively, the Owned Intellectual Property and the Licensed Intellectual Property constituting “ National Intellectual Property ”).  National and its Subsidiaries have the right to enter into this Agreement to enable the National Intellectual Property to be used and owned after the Closing in the same manner as National did prior to the Closing.

 

(c)   Validity of Intellectual Property and Related Agreements .  To the Knowledge of National, all Owned Intellectual Property that is registered or has pending applications is valid and subsisting, and any agreements relating to the Owned Intellectual Property or the Licensed Intellectual Property (“ IP Agreements ”) are valid, binding, and enforceable between the parties thereto, and National and, to its Knowledge, the other parties thereto are in material compliance with the terms and conditions of such IP Agreements.  To the Knowledge of National, the execution and delivery or effectiveness of this Agreement or the performance or obligations under this Agreement will not cause National to be in breach of any IP Agreements and the consummation of the transactions contemplated by this Agreement will not result in the modification, cancellation, termination, suspension of, or acceleration of any payments with respect to such IP Agreements, or give any party to any IP Agreement the right to do any of the foregoing, except where such breach would not, individually or in the aggregate be reasonably expected to have a Material Adverse Effect.

 

(d)   No Infringement .  To the Knowledge of National, the use of the National Intellectual Property by National and its Subsidiaries does not infringe upon or misappropriate any Intellectual Property rights of any other Person and, since December 31, 2007, National has not received any demand, claim or notice from any Person with respect to the Intellectual Property which challenges the validity of any Owned Intellectual Property.  To the Knowledge of National as of the date of this Agreement, no other Person is infringing upon or misappropriating any Owned Intellectual Property and to the Knowledge of National there is no reasonable basis for such claims.  No registered trademark or service mark owned by National or its Subsidiaries is involved in the United States in any opposition, cancellation or equivalent proceeding, and, as of the date of this Agreement, to the Knowledge of National, no such action has been threatened.  To the Knowledge of National, no patent owned by National is involved in the United States in any interference, reissue, reexamination or equivalent proceeding.

 

(e)   No Licenses Granted to Others .  As of the date of this Agreement, National has not granted a license to any Person to use any Owned Intellectual Property other than such licenses granted to customers in the ordinary course of business.

 

(f)   Confidential Information.   To the Knowledge of National, National has taken all reasonable steps to protect and preserve the confidentiality of all confidential or trade secret information included in the National Intellectual Property that to the Knowledge of National would have a Material impact on the business of National.  National has complied with all Applicable Laws and National’s internal privacy policies relating to the use, collection,

 

storage, disclosure, and transfer of any personal information collected by National or by third parties having authorized access to the records of National.   National and its Subsidiaries have not transferred ownership of any Intellectual Property to any third party, or knowingly permitted National’s rights in any Intellectual Property to enter the public domain.

 

3.12   Litigation; Proceedings .  To the Knowledge of National there is no material pending claim, charge, complaint, grievance, action, suit, proceeding, hearing, or arbitration threatened against or involving National or any of its Subsidiaries, whether at law or in equity, whether civil or criminal in nature, by any Person or Governmental Entity before any arbitrator or Governmental Entity.  To the Knowledge of National as of the date of this Agreement, there are no material investigations relating to National or any of its Subsidiaries pending or threatened by or before any arbitrator or any Governmental Entity.

 

3.13   Employee Benefits .

 

(a)   As used herein, the term “ Employee Benefit Plan ” includes any pension, retirement, savings, disability, medical, dental, health, life, death benefit, group insurance, profit sharing, deferred compensation, stock option, bonus, incentive, vacation pay, tuition reimbursement, severance pay, or other employee benefit plan, trust, agreement, contract, policy or commitment (including, without limitation, any pension plan, as defined in Section 3(2) of ERISA (“ Pension Plan ”), and any welfare plan as defined in Section 3(1) of ERISA (“ Welfare Plan ”)), whether any of the foregoing is funded, insured or self-funded, written or oral, (i) sponsored or maintained by National, or any of its affiliates, to the extent such affiliate is described in Code Section 414(b), (c) or (m) and corresponding Treasury Regulations (each a “ Controlled Group Member ”) and covering any Controlled Group Member’s active or former employees (or their beneficiaries), (ii) to which any Controlled Group Member is a party or by which any Controlled Group Member (or any of the rights, properties or assets thereof) is bound, or (iii) with respect to which any Controlled Group Member has made any payments, contributions or commitments or may otherwise have any liability (whether or not such Controlled Group Member still maintains such Employee Benefit Plan).  Each Employee Benefit Plan is listed on National Disclosure Schedule 3.13 .

 

(b)   No Controlled Group Member sponsors, maintains or has established any Welfare Plan which provides for continuing benefits or coverage for any participant or any beneficiary of a participant after such participant’s termination of employment, except as may be required by Code Section 4980B or Section 601 ( et seq .) of ERISA (“ COBRA ”), or under any applicable state law, and at the expense of the participant or the beneficiary of the participant.

 

(c)   Each Employee Benefit Plan sponsored by a Controlled Group Member complies in all material respects with the applicable requirements of ERISA, the Code and any other Applicable Law governing such Employee Benefit Plan, and each Employee Benefit Plan sponsored by a Controlled Group Member has at all times been properly administered in all material respects in accordance with all such requirements of Applicable Law, and in accordance with its terms and the terms of any applicable collective bargaining agreement to the extent consistent with all such requirements of Applicable Law.  Each Employee Benefit Plan sponsored by a Controlled Group Member which is intended to be qualified is qualified under Code section 401(a), has received a favorable determination letter from the Internal Revenue

 

Service (“ IRS ”) stating that such Employee Benefit Plan meets the requirements of Code section 401(a) and that the trust associated with such Employee Benefit Plan is tax-exempt under Code section 501(a) and to the Knowledge of National no event has occurred which would jeopardize the qualified status of any such plan or the tax exempt status of any such trust under Sections 401(a) and 501(a) of the Code, respectively.  To the Knowledge of National no lawsuits, claims or complaints to, or by, any person or governmental entity have been filed or are pending and, to the Knowledge of National, there are no facts or contemplated events which could be expected to give rise to any such lawsuit, claim (other than routine claims for benefits) or complaint with respect to any Employee Benefit Plan.  There are, and have been, no audits by any governmental agency with respect to any Employee Benefit Plan.  Without limiting the foregoing, the following are true with respect to each Employee Benefit Plan:

 

(1)   all Controlled Group Members have filed or caused to be filed every material return, report statement, notice, declaration and other document required by any law or governmental agency, federal, state and local (including, without limitation, the IRS and the Department of Labor) with respect to each such Employee Benefit Plan (except where failure to file in combination with any other failures described in this Section 3.13(c) would not reasonably be expected to be Material), each of such filings has been complete and accurate in all material respects and no Controlled Group Member has incurred any liability in connection with such filings in all cases is a Member that would be Material;

 

(2)   all Controlled Group Members have delivered or caused to be delivered to every participant, beneficiary and other party entitled to such material, all Material plan descriptions, returns, reports, schedules, notices, statements and similar materials, including, without limitation, summary plan descriptions and summary annual reports, as are required under Title I of ERISA, the Code, or both (except where failure to deliver in combination with any other failures described in this Section 3.13(c) would not reasonably be expected to be Material), and no Controlled Group Member has incurred any Material liability in connection with such requirements;

 

(3)   no Controlled Group Member is delinquent in making contributions or payments to or in respect of any such Employee Benefit Plan as to which such Controlled Group Member is obligated to make contributions or payments (without regard to any waiver granted by the IRS under Code section 412), nor has any Controlled Group Member failed to pay any assessments made with respect to any such Employee Benefit Plan (except where such delinquency or failure in combination with any other failures described in this Section 3.13(c) would not reasonably be expected to be Material).  All contributions and  payments (including salary deferral contributions elected by employees) with respect to such Employee Benefit Plans that are due and owing or required to be made by a Controlled Group Member with respect to periods ending on or before the Closing Date (including periods from the first day of the current plan year or policy year to the Closing Date) have been, or will be, made before the Closing Date in accordance with the appropriate plan document, actuarial report, collective bargaining agreements or insurance contracts or arrangements or as otherwise required by ERISA or the Code; and

 

(4)   with respect to each such Employee Benefit Plan, to the extent applicable, National has made available though the Data Room or otherwise to Buyer true and

 

complete copies of (a) all plan documents, or any and all other documents that establish the existence of the plan, trust, arrangement, contract, policy or commitment and all amendments thereto, (b) the most recent determination letter, if any, received from the IRS and the application filed with respect thereto, (c) the three (3) most recent Form 5500 Annual Report (and all schedules and reports relating thereto) and actuarial reports, and (d) all related trust agreements, insurance contracts or other funding agreements that implement each such Employee Benefit Plan.

 

(d)   With respect to each Employee Benefit Plan sponsored by any Controlled Group Member, there has not occurred, and no person or entity is contractually bound to enter into, any “prohibited transaction” within the meaning of Section 4975(c) of the Code or Section 406 of ERISA, which transaction is not exempt under Section 4975(d) of the Code or Section 408 of ERISA.  Each Employee Benefit Plan that is a “group health plan” (as defined in ERISA section 607(1) or Code section 5001(b)(1)) has been operated at all times in material compliance with COBRA, the Health Insurance Portability and Accountability Act of 1996 and any related regulation or applicable similar state law.

 

(e)   To the Knowledge of National there has not been any “Reportable Event,” as described in Section 4043 of ERISA, with respect to any Employee Benefit Plan sponsored by a Controlled Group Member (other than such events for which the thirty (30) day notification period has been waived by the Pension Benefit Guaranty Corporation (“ PBGC ”)) subject to Title IV of ERISA.

 

(f)   No Controlled Group Member has incurred: (i) any liability to the PBGC or to a trust (for plan terminations instituted prior to December 18, 1987) described in Section 4049 of ERISA (prior to its repeal), (ii) any multiemployer plan (as defined in Section 4001(a)(3) of ERISA (“ Multiemployer Plan ”)) withdrawal liability (and no event has occurred which, with the giving of the notice under Section 4219 of ERISA, would result in such liability) under Section 4201 of ERISA as a result of a complete or partial withdrawal (within the meaning of Sections 4203 or 4205 of ERISA, respectively) from, or on behalf of, a Multiemployer Plan, or (iii) any other liability under Title IV of ERISA.

 

(g)   No Controlled Group Member or any organization which is a successor or parent corporation of such entities, within the meaning of ERISA Section 4069(b), has engaged in a transaction described in ERISA Section 4069.

 

(h)   With respect to each Employee Benefit Plan maintained by any Controlled Group Member, such plan permits the plan sponsor to amend or terminate the plan at any time and without any liability, subject to the applicable requirements of ERISA and the Code for plan termination.

 

(i)   No assets of, and no assets managed by, National constitute “plan assets” as defined in 29 C.F.R. Section 2510.3-101, and none of the transactions contemplated by this Agreement (including those transactions occurring after the Closing) will constitute a “prohibited transaction” within the meaning of Section 4975(c) of the Code or Section 406 of ERISA, which transaction is not exempt under Section 4975(d) of the Code or Section 408 of ERISA.

 

(j)   The consummation of the transactions contemplated by this Agreement will not: (i) entitle any current or former employee of National to severance pay, unemployment compensation or any similar payment; (ii) accelerate the time of payment or vesting, or increase the amount of any compensation due to, or in respect of, any current or former employee of National; or (iii) result in or satisfy a condition to the payment of compensation that would, in combination with any other payment, result in an “excess parachute payment” within the meaning of Code section 280(G).

 

(k)   Each Employee Benefit Plan that is a nonqualified deferred compensation plan (as defined under Section 409A of the Code) has been operated and administered in good faith compliance with Section 409A of the Code.

 

(l)   No payments to be made to any executive or individual in connection with, or as a result of, the transactions contemplated by this Agreement will be non-deductible or result in an excise tax payment under Section 280G of the Code.

 

3.14   Securities Laws .

 

(a)   Each of the reports, schedules, forms, statements and other documents filed by National with the SEC in the last 12 months (“ National SEC Documents ”), as amended prior to the date of this Agreement, complied as to form in all material respects with, to the extent in effect at the time of filing, the requirements of the Securities Act or the Exchange Act, as the case may be, applicable to such National SEC Documents, and none of the National SEC Documents when filed or, if amended prior to the date hereof, as of the date of such amendment, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, which individually or in the aggregate would require an amendment, supplement or correction to such National SEC Documents;

 

(b)   National maintains disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) to ensure that material information relating to National and its Subsidiaries is made known to its principal executive officer, principal financial officer and principal accounting officer.  Each of the financial statements (including the related notes) of National included in the National SEC Documents complied at the time it was filed as to form in all material respects with the published rules and regulations of the SEC with respect thereto in effect at the time of such filing;

 

(c)   Neither National nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar contract or arrangement (including any contract or arrangement relating to any transaction or relationship between or among National and any of its Subsidiaries, on the one hand, and any unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand), or any “off-balance sheet arrangement” (as defined in Item 303(a) of Regulation S-K of the SEC), where the result, purpose or effect of such contract or arrangement is to avoid disclosure of any Material transaction involving, or Material liabilities of, National or any of its Subsidiaries in National’s or such Subsidiary’s published financial statements or other National SEC Documents; and

 

(d)   None of the Subsidiaries of National are, or have at any time in the last 12 months been, subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act.

 

3.15   Compliance with Laws .  Since August 25, 2007:

 

(a)   each of National and its Subsidiaries has complied with, is in compliance with and has operated its business and maintained its assets in compliance with, all Applicable Laws in all respects, except where such non-compliance would not, individually or in the aggregate be reasonably expected to have a material impact on the business of National and its Subsidiaries taken as a whole;

 

(b)   each of National and its Subsidiaries holds all permits, licenses, variances, exemptions, orders, franchises and approvals of all Governmental Entities used or necessary for the lawful conduct of its respective business as presently conducted, except for such permits, licenses, variances, exemptions, orders, franchises and approvals the failure of which to hold would not, individually or in the aggregate be reasonably expected to have a material impact on the business of National and its Subsidiaries (the “ National Permits ”).  The National Permits are valid and in full force and effect, and National and each of its Subsidiaries are in all material respects in compliance with the terms of the National Permits.  Set forth on National Disclosure Schedule 3.15(b) is a list of all Material National Permits; and

 

(c)   neither National nor any of its Subsidiaries has received written notice to the effect that a Governmental Entity (i) claimed or alleged that National or any of its Subsidiaries was not in compliance with any Applicable Laws applicable to National or any Subsidiary of National or any of their respective assets or business operations, or (ii) was considering the amendment, termination, revocation or cancellation of any material National Permit except , in each case, where such notice would not reasonably be expected to have a Material Adverse Effect.  The consummation of the transactions contemplated by this Agreement will not cause the revocation or cancellation of any National Permit.

 

3.16   Environmental Matters .  The representations and warranties in this Section 3.16 are to the Knowledge of National.

 

(a)   The real property and facilities owned, leased or operated by National and its Subsidiaries and the operations of National and its Subsidiaries are and have been in compliance with applicable Environmental Laws, except where noncompliance would not result in National or any Subsidiary of National incurring Material liabilities.

 

(b)   No judicial or administrative proceeding has been instituted that is currently pending, nor has a Governmental Entity or any person threatened by written notice to bring a proceeding against National or any Subsidiary alleging the violation of, or liability under, any Environmental Law, that is reasonably likely to result in National or any Subsidiary of National incurring Material liabilities.

 

(c)   All permits required to conduct the operations of National pursuant to Environmental Laws have been duly obtained or an application has been made and the subject permit has been administratively extended pending the new permit issuance, and National and

 

each of its Subsidiaries is in compliance with such permits except to the extent that failure to obtain a permit or comply with a permit would not reasonably be likely to result in National or any Subsidiary of National incurring Material liabilities.

 

(d)   Neither National nor any of its Subsidiaries has stored, disposed of, arranged for or allowed the disposal of, transported or handled any Hazardous Materials in a manner that would reasonably be likely to result in National or any Subsidiary of National incurring Material liabilities under applicable Environmental Laws.

 

(e)   Hazardous Materials are not present at any real property or facilities currently or formerly owned, leased or operated by National or any of its Subsidiaries in a condition that violates any applicable Environmental Law, and in a manner that would reasonably be likely to result in National or any Subsidiary of National incurring Material liabilities.

 

(f)   National has provided in the Data Room all material non-privileged documents in National’s or any of its Subsidiaries’ possession or reasonable control relating to (A) the environmental condition of real property currently or formerly owned, leased or operated by National or any of its Subsidiaries and (B) any actual or potential material liabilities or obligations of National or any of its Subsidiaries arising under or related to Environmental Laws.

 

(g)   Neither National nor any Subsidiary has received any written notification from any Governmental Entity directing National or such Subsidiary that:

 

(1)   it is a potentially responsible party under the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. sections 9601 et. seq. ; and

 

(2)   any real property or facility currently or formerly owned, leased or operated by National or any Subsidiary is identified or proposed for listing as a federal National Priorities List pursuant to the Comprehensive Environmental Response, Compensation and Liability Act.

 

(h)   Neither National nor any Subsidiary has been requested to share in the costs of upgrades or expansions of publicly-owned treatment works beyond fees charged to National or any Subsidiary by the publicly-owned treatment works, except as provided in National Disclosure Schedule 3.16(h) .

 

(i)   Neither National nor any Subsidiary has expressly and contractually assumed the liabilities of any other Person that reasonably could result in National or any Subsidiary incurring material liabilities under or pursuant to any applicable Environmental Law.

 

(j)   The transactions contemplated by this Agreement do not require the consent of any Governmental Entity under or pursuant to any applicable Environmental Law, except as provided in National Disclosure Schedule 3.16(j) .

 

(k)   National and each Subsidiary has obtained adequate supplies of water necessary to carry on its business as presently conducted, and as presently proposed to be

 

conducted and there are no pending or threatened claims or proceedings seeking to curtail or revoke such rights.

 

(l)   “ Environmental Laws ” means: (i) all federal, state and local laws (including common law), statutes, codes, ordinances, rules, and regulations and (ii) all permits, orders, decrees, determinations, judgments or binding agreements issued, promulgated or entered into by or between National or a Subsidiary and any Governmental Entity or issued by any Governmental Entity to National or to any Subsidiary, in each case relating to pollution, the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) and natural resources, including laws and regulations relating to exposure to, Releases or threatened Releases of Hazardous Materials, or otherwise relating to the generation, manufacture, processing, distribution, use, treatment, storage, transport, handling of or exposure to Hazardous Materials.  Environmental Laws include the Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendments and Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Federal Water Pollution Control Act, the Oil Pollution Act, the Safe Drinking Water Act, the Hazardous Material Transportation Act, the Toxic Substances Control Act, and the Federal Insecticide Fungicide and Rodenticide Act.

 

(m)   “ Hazardous Materials ” means any substance, material or waste defined as, or otherwise characterized as, “toxic,” “hazardous,” a “pollutant,” a “contaminant” or words of similar meaning or effect under any applicable Environmental Law, including, without limitation, petroleum or any fraction thereof.

 

(n)   “ Release ” means any release as that term is defined at 42 U.S.C. 9601(22).

 

3.17   Employees .

 

(a)   Wage and Employment Laws .  To the Knowledge of National each of National and its Subsidiaries is in compliance in all material respects with all Applicable Laws relating to the employment of personnel and labor, including provisions thereof relating to wages and hours, equal opportunity, collective bargaining, plant closing and mass layoff, health and safety, immigration and the payment of social security and other taxes, except where noncompliance with any Applicable Law by National or its Subsidiaries would not reasonably be expected to have a Material Adverse Effect.

 

(b)   Labor Unions .   National Disclosure Schedule 3.17(b) lists each collective bargaining agreement or other collective labor contract or industrial instrument to which National or any Subsidiary is a party.  To the Knowledge of National all of the collective bargaining agreements or other collective labor contracts or industrial instruments set forth on National Disclosure Schedule 3.17(b) have, since August 6, 2003, been duly ratified, certified or approved by the parties having authority to ratify, certify or approve of the collective agreements or other collective labor contracts or industrial instruments.  To the Knowledge of National, except for those unions which are parties to one or more of the listed collective bargaining agreements:

 

(1)   neither National nor any of its Subsidiaries has agreed to recognize any union or other collective bargaining representative; and

 

(2)   as of the date of this Agreement, no union or other collective bargaining representative has been certified as the exclusive bargaining representative of any of its employees.

 

All employees covered by the collective bargaining agreements or other collective labor contracts or industrial instruments listed on National Disclosure Schedule 3.17(b) are employees of National or its Subsidiaries as of the date of this Agreement.

 

(c)   No Strikes, Proceedings and Complaints .  Except as set forth on National Disclosure Schedule 3.17(c) , as of the date of this Agreement, to National’s Knowledge there are no pending (including current) or threatened in writing by a Governmental Entity against or affecting National or any Subsidiary:

 

(1)   labor strikes, slowdowns, lockouts, representation or certification campaigns, or work stoppages with respect to employees of National or any of its Subsidiaries;

 

(2)   material grievance or arbitration proceedings, written decisions, letter agreements or settlement agreements arising out of collective bargaining agreements to which National or any of its Subsidiaries is a party;

 

(3)   material unfair labor practices or unfair labor practice charges or complaints before the National Labor Relations Board or other Governmental Entity responsible for regulating labor relations; or

 

(4)   charges, complaints or proceedings before the Equal Employment Opportunity Commission, Department of Labor or any other Governmental Entity responsible for regulating employment practices that would reasonably be expected to have a Material Adverse Effect.

 

(d)   No Plant Closings and Layoffs .  Since August 28, 2010, there have not been any plant closings, mass layoffs or other terminations of employees of National or any of its Subsidiaries which would create any liabilities for National or any of its Subsidiaries under the WARN Act or similar Applicable Laws.

 

3.18   No Brokers .  No broker, finder, financial advisor, investment banker or other Person is entitled to any investment banking, brokerage, finder’s, financial advisor’s or other similar payment in connection with the origination, negotiation or consummation of the transactions contemplated by this Agreement that will be the obligation of National or any of its Subsidiaries.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Except as set forth in the Buyer Disclosure Schedule, which may address and supplement any item in this Article IV (subject to Section 8.18(e) ) Buyer represents and warrants to Sellers and New Kleinco that the representations and warranties contained in this Article IV are true and correct as of the date of this Agreement and as of the Closing Time.

 

4.1   Organization and Power .  Buyer is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation, and has all requisite power and authority to carry on its business as presently conducted and as presently proposed to be conducted by it.  Buyer is duly qualified or licensed as a foreign corporation to transact business and is in good standing in each jurisdiction in which the nature of the business it is conducting, or the operation, ownership or leasing of its assets or properties, makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so qualified or licensed and in good standing would not, individually or in the aggregate, reasonably be expected to materially adversely affect the ability of Buyer to timely consummate any of the transactions contemplated under this Agreement or perform its obligations under this Agreement.

 

4.2   Authorization of Transaction .  Buyer has full power and authority to execute and deliver this Agreement and all other Transaction Documents to which it is a party and to perform its obligations under this Agreement and the Transaction Documents.  No other proceedings or actions on the part of Buyer are necessary to approve and authorize Buyer’s execution and delivery of this Agreement or any other Transaction Documents to which it is or will be a party or the performance of its obligations under this Agreement or the Transaction Documents.  This Agreement constitutes, and each of the other Transaction Documents to which Buyer is or will be a party will when executed constitute, a valid and binding obligation of Buyer, enforceable against Buyer in the United States in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally and limitations on the availability of equitable remedies.

 

4.3   Absence of Conflicts .  The execution, delivery and performance by Buyer of the Transaction Documents to which Buyer is a party do not, and the consummation of the transactions contemplated by this Agreement and compliance with the terms of this Agreement will not, subject to obtaining the Consents, approvals, authorizations and permits and making the filings described in Section 4.4 conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a Lien or right of modification, termination, cancellation or acceleration of any obligation or loss of a benefit under, or require that any Consent be obtained or any notice be given with respect to:

 

(a)   any of the terms, conditions or provisions of Buyer’s certificate of incorporation or bylaws;

 

(b)   any order, writ, judgment, injunction, decree, statute, law, rule or regulation of any Governmental Entity applicable to Buyer or by which or to which any portion of its respective properties or assets is bound or subject;

 

(c)   any material agreement of Buyer; or

 

(d)   any properties or assets of Buyer;

 

except, with respect to each of clauses (a), (b), (c) and (d), the violations, conflicts, breaches or defaults as would not reasonably be expected to materially adversely affect the ability of Buyer to timely consummate any of the transactions contemplated under this Agreement or perform its obligations under this Agreement.

 

4.4   No Consents .  No Consent, registration, declaration, or filing with any Governmental Entity or any other Person is required by Buyer in connection with the execution, delivery and performance by Buyer of this Agreement and the other Transaction Documents to which either of them is a party or the consummation by Buyer of the contemplated transactions, except for:

 

(a)   the filings required under the HSR Act and the Antitrust Laws of applicable foreign jurisdictions; and

 

(b)   other Consents, approvals, orders, authorizations, registrations, declarations, filings, notices or permits the failure of which to be obtained or made would not reasonably be expected to materially adversely affect the ability of Buyer to timely consummate any of the transactions contemplated under this Agreement or perform its obligations under this Agreement.

 

4.5   Litigation .  As of the date of this Agreement, there are no actions, suits, proceedings, orders or investigations pending (or, to Buyer’s Knowledge, threatened) against or affecting Buyer at law or in equity, or before or by any Governmental Entity, which could reasonably be expected to materially adversely affect the ability of Buyer to timely consummate any of the transactions contemplated under this Agreement or perform its obligations under this Agreement.

 

4.6   Financial Ability .  Buyer has the financial ability to consummate the transactions contemplated by this Agreement using Buyer’s financial resources without delay or restriction.

 

4.7   No Knowledge of Misrepresentations or Omissions .  As of the date of this Agreement and at Closing, Buyer has had the opportunity and has reviewed all due diligence information of National, Sellers and New Kleinco in the Data Room and otherwise disclosed to Buyer and Buyer is not aware that any of the representations and warranties or certificates of Sellers, New Kleinco and National in this Agreement, Sellers Disclosure Schedule and National Disclosure Schedule (including updated schedules to the extent delivered hereunder) are untrue or incorrect, individually or in the aggregate, in any respect, and do, individually or in the aggregate, contain any material errors in, or material omissions from, the National Disclosure Schedule to this Agreement which would result in a material misrepresentation to Buyer;

 

provided , however , that Buyer shall have no responsibility for the accuracy of such due diligence information, representations or warranties; and provided, further, that such due diligence information shall not affect Buyer’s right to terminate this Agreement pursuant to Section 7.1(c) .

 

ARTICLE V

 

COVENANTS

 

5.1   Conduct of Business .  Except as required by Applicable Laws or as contemplated by or otherwise permitted or required under this Agreement or in National Disclosure Schedule 5.1 or to the extent that Buyer shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), from and after the date of this Agreement until the Closing, National shall not (and shall not permit any of its Subsidiaries to):

 

(a)   Ordinary Course of Business .  Fail to act in the ordinary course of business consistent with past practice to:

 

(1)   preserve intact National’s and each of its Subsidiaries’ business organizations in all material respects; and

 

(2)   preserve each of its goodwill, relationships and rights with employees, agents, independent contractors, creditors, business partners, customers, suppliers and others dealings with it;

 

(b)   Maintenance of Assets .  Fail to maintain the properties and assets of National and each of its Subsidiaries in good working condition except for ordinary wear and tear, or fail to maintain supplies in quantities consistent with historical practices;

 

(c)   Amendments of Material Contracts .  Except for amendments, terminations or non-renewals in the ordinary course of business consistent with past practice, modify or amend in any material respect, terminate or fail to renew any Material Contract, or waive, release or assign any material rights or material claims thereunder or enter into any contract that would be a Material Contract if it were in effect on the date of this Agreement;

 

(d)   Restructuring Plans .  Adopt or effect a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization, reclassification or other reorganization of National or any of its material Subsidiaries;

 

(e)   Officer, Director, Employee Compensation .  (i) Make or offer to make any change in the compensation (or benefits) payable or to become payable to any of its officers, directors, employees, agents or consultants or to Persons providing management services, other than with respect to non-officer employees in the ordinary course of business consistent with past practice; (ii) enter into, adopt, amend or terminate any employment, severance, Tax gross-up, consulting, termination, collective bargaining, bonus, profit-sharing, compensation, indemnification, stock option, pension, retirement, vacation, deferred compensation or other agreement or Employee Benefit Plan; (iii) make any loans to any of its officers, directors, employees, Affiliates, agents or consultants or make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons pursuant to an Employee Benefit

 

Plan or otherwise; or (iv) take any action to accelerate any rights or benefits, or make any determinations not in the ordinary course of business consistent with past practice, under any Employee Benefit Plan;

 

(f)   Transfer of Assets .  Sell, lease, license, exchange or otherwise transfer (by merger or otherwise) or dispose of, or voluntarily mortgage, pledge or subject to any Lien, other than Permitted Encumbrances, any of the properties or assets of National or any of its Subsidiaries other than in the ordinary course of business, consistent with past practice;

 

(g)   Benefit Plans .  Except pursuant to the terms of the Employee Benefit Plans or other agreement in effect as of the date of this Agreement: (i) pay any pension or retirement allowance to any officer, director, employee of National or any of its Subsidiaries or (ii) pay, offer to pay or agree to pay or make any arrangement for payment to any officers, directors or employees of National or any of its Subsidiaries of any amount relating to unused vacation days (except payments and accruals made in the ordinary course of business consistent with past practice);

 

(h)   Intellectual Property Rights .  (i) Transfer or grant any rights or licenses under, or (ii) enter into any settlement regarding the breach or infringement of, any United States or foreign license of any Intellectual Property, or (iii) modify any existing rights with respect thereto or (iv) enter into any licensing or similar agreements or arrangements other than with respect to clause (iv), in the ordinary course of business consistent with past practice;

 

(i)   Accounting Principles .  Except as required by GAAP, change any of the accounting methods, principles or practices used by National or any of its Subsidiaries that would impact the financial statements of National or any of its Subsidiaries;

 

(j)   Billing and Collection Practices .  Change, in any general way, any of its practices, policies, procedures or timing of the collection of accounts receivable, billing of its customers, payment terms, cash collections, cash payments, or terms with vendors, which shall not restrict National’s ability to deal with any individual customer or vendor in the ordinary course of business consistent with past practice;

 

(k)   Claim Settlement .  Pay, discharge or satisfy any material claims, liabilities or obligations (whether absolute, accrued, asserted or unasserted, contingent or otherwise) (i) related to products, that individually exceeds $500,000, or in the aggregate exceed $7,000,000 or (ii) not related to products, that individually exceeds $750,000;

 

(l)   Distributions .  Make any distributions to its Members, other than a distribution that is (i) required to be made pursuant to Section 5.2.1 (Tax Distributions) and Section 5.2.2 (Priority Return Distributions) of the National Limited Liability Company Agreement, which, in the case of any year end distribution or interim period true up distribution, shall be as determined from the taxable income calculation determined by National’s outside tax preparer, (ii) consistent with past practice, and (iii) permitted under the Credit Agreement;

 

(m)   Securities .  (i) Offer, issue, sell, transfer, pledge, dispose of, encumber or grant rights with respect to (whether through the issuance or granting of any options, warrants, commitments, subscriptions, rights to purchase or otherwise) any member interests of any class

 

or any securities convertible into or exercisable or exchangeable for member interests of any class (except for pledges of capital stock or securities under the Credit Agreement and other than the issuance of certificates in replacement of lost certificates); (ii) adjust or reclassify any of its equity securities or issue new equity securities or any right, option, warrant or right of any kind to acquire any equity securities of National;

 

(n)   Redemptions .  Other than the Put, redeem or otherwise acquire any of its respective ownership interests or securities, as applicable;

 

(o)   Organizational Documents .  Change or amend its Organizational Documents; provided, that National may amend the National Limited Liability Company Agreement by the adoption of the Restated LLC Agreement;

 

(p)   Indebtedness .  Except (i) under the Credit Agreement in the ordinary course of business consistent with past practice and (ii) for current liabilities within the meaning of GAAP incurred in the ordinary course of business consistent with past practice, incur or assume any indebtedness for borrowed money, assume, guarantee, endorse or otherwise become liable or responsible for the obligations of any other Person (other than endorsements of checks in the ordinary course of business consistent with past practice) or make any loans, advances or capital contributions to, or investments in, any Person (other than among National and its Subsidiaries and among such Subsidiaries, in the ordinary course of business consistent with past practice);

 

(q)   Tax Matters .  Make any settlement of or compromise any Tax liability, consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes, enter into any closing agreement pursuant to Section 7121 of the Code (or any similar provision of state, local or foreign Tax law), change in any material respect any Tax election or Tax method of accounting, make any new Tax election (other than pursuant to Section 6.2(i) ), or adopt any new Tax method of accounting;

 

(r)   Capital Expenditures .  Make any capital expenditure or enter into any capital expenditure commitment other than (i) as set forth in the budget dated July 6, 2011 previously provided to Buyer and set forth on National Disclosure Schedule 5.1(r) (the “ Capital Expenditure Budget ”) or (ii) any commitment not reflected in the Capital Expenditure Budget and not in excess of (x) for maintenance purposes, $5,000,000 individually, (y) for regulatory purposes, $2,000,000 individually or (z) for growth or expansion purposes, $1,000,000 individually or $5,000,000 in the aggregate; and

 

(s)   Authorization of Above Actions .  Authorize any of, or commit or agree to take any of, the foregoing actions.

 

5.2   Information .

 

(a)   Protected Information .  National and the Sellers shall (i) afford to Buyer and its officers, directors and such of its employees, accountants, consultants, legal counsel, agents and other representatives as are assisting Buyer in connection with the transactions contemplated by this Agreement, reasonable access to the officers, employees, accountants, consultants, agents, representatives, properties, offices and facilities of National and its

 

Subsidiaries and to their respective books and records all of which shall be subject to the approval of the CEO of National, which shall not be unreasonably withheld, (ii) permit Buyer, subject to the approval of the CEO of National, which shall not be unreasonably withheld, to make such inspections (including non-invasive environmental site assessments) as it may request and (iii) cooperate with Buyer and its representatives in connection therewith.  Prior to the Closing Date, neither National nor any of its Subsidiaries shall be required to grant access or furnish information to Buyer, its Affiliates or any of their respective representatives to the extent that the access or the furnishing of the information is prohibited by Applicable Laws.  Further access shall not be given to the proprietary business strategy and monitoring formula and process developed by the management of National.

 

(b)   All information provided pursuant to this Section 5.2 shall remain subject in all respects to the Confidentiality Agreement.  The Confidentiality Agreement as to information of National shall terminate upon Closing, provided that all information about the Sellers shall remain subject to the Confidentiality Agreement.

 

5.3   Consents .  After the date of this Agreement and prior to the Closing, National shall use its reasonable best efforts, but excluding making any expenditures or payments to any third party, to obtain the Consent, in form and substance reasonably satisfactory to Buyer, from each party to a Material Contract to the extent that it is required to be obtained by National in connection with the execution, delivery and performance of this Agreement and the other Transaction Documents, and transactions contemplated by the Transaction Documents in order for such Material Contracts to remain in full force and effect following the Closing.

 

5.4   Notification by National of Certain Matters .

 

(a)   Prompt Notice .  National, each Seller and New Kleinco shall give prompt written notice to Buyer of:

 

(1)   the occurrence, or failure to occur, of any event of which it has Knowledge that would, individually or in the aggregate, be reasonably likely to cause any representation or warranty of National, such Seller or New Kleinco contained in this Agreement including any disclosures allowed under this Agreement, as provided under paragraph (b) below or in any other Transaction Document to be untrue or inaccurate in any material respect at any time from the date of this Agreement to the Closing determined as if such representation or warranty were made at such time or to such Seller’s, New Kleinco’s or National’s Knowledge, would give rise to the failure of a condition set forth in Section 6.2 ;

 

(2)   the failure of National, such Seller or New Kleinco to comply with or satisfy in any material respect any covenant or condition to be complied with by it hereunder;

 

(3)   any written notice or other written communication from any Person alleging that the Consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

 

(4)   any written notice or other written communication from any Governmental Entity in connection with the transactions contemplated by this Agreement; and

 

(5)   any capital expenditure or capital expenditure commitment not reflected in the Capital Expenditure Budget that is in excess of $1,000,000 regardless of whether Buyer’s consent is required for such expenditure or commitment under Section 5.1 .

 

(b)   Effect of Notification .  No notification under paragraph (a) above, and no access, inspection or investigation, or information or notice received, pursuant to this Agreement, shall affect the representations or warranties of the Parties or the conditions to their respective obligations under this Agreement, except as specifically provided in this Agreement, including whether a party has Knowledge.  Sellers, New Kleinco and National shall be entitled to make notification in the form of updates and/or modifications to Sellers’ Disclosure Schedule or National Disclosure Schedule and the notification shall amend and supplement the appropriate schedules previously delivered.  The updated Sellers’ Disclosure Schedule and National Disclosure Schedule shall not affect the determination of satisfaction of the conditions to Closing set forth in Section 6.2(a) or 6.2(b) , but is incorporated as part of Sellers’ Disclosure Schedule and the National Disclosure Schedule, as applicable, for purposes of Section 5.10(b) (Limitations of Representations and Warranties) and Section 8.1 (Indemnification) in the determination of whether there has been any misrepresentation or breach of warranty that otherwise might have existed hereunder by reason of the variance or inaccuracy.

 

5.5   Notification by Buyer of Certain Matters .  Buyer shall give to Sellers prompt written notice of:

 

 

(a)   the occurrence, or failure to occur, of any event of which Buyer has Knowledge that would be reasonably likely to cause any representation or warranty of Buyer contained in this Agreement or in any other Transaction Document to be untrue or inaccurate in any material respect at any time until the Closing determined as if such representation or warranty were made at that time or to Buyer’s Knowledge would give rise to the failure of a condition set forth in Section 6.3 or Buyer’s Knowledge of information for which Buyer would reasonably have a right to indemnification under Sections 8.1(a) , 8.1(b), 8.1(c) or 8.1(d) and of which none of Sellers or National is not already aware;

 

(b)   the failure of Buyer to comply with or satisfy in any material respect any covenant or condition to Closing to be complied with by it hereunder;

 

(c)   any written notice or other written communication from any Person alleging that the Consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

 

(d)   any written notice or other written communication from any Governmental Entity in connection with the transactions contemplated by this Agreement; and

 

(e)   any occurrence or event to Buyer’s Knowledge which would materially delay or prevent the Closing from occurring including Buyer’s Knowledge or determination of a condition or event that would give rise to the failure of a condition set forth in Section 6.2 or Section 6.3 or be reasonably expected to give Buyer a right to terminate this Agreement under Article VII , in each case, of which none of Sellers or National is not already aware;

 

provided , however , that notification under this Section 5.5 shall not affect the representations or warranties of the Parties or the conditions to their respective obligations under this Agreement.

 

5.6   Other Agreements .  Sellers, New Kleinco and National shall cause each of the Transaction Documents, which shall be mutually agreed to by Sellers, New Kleinco, National and Buyer, as applicable, to be executed and delivered by each Person contemplated to be party thereto (other than Buyer), and Buyer shall execute each of the Transaction Documents to which it is contemplated to be a party thereto, in each case, as of the Closing.

 

5.7   Access to Information.   Following the Closing, National shall, and Buyer shall cause National to, hold, consistent with its past practice with respect to record retention, the books and records of National and each Subsidiary of National existing on the Closing Date and not destroy or dispose of any of such books or records for a period of seven (7) years from the Closing, and thereafter, if it desires to destroy or dispose of the books and records, offer first in writing the other Parties at least thirty (30) days prior to the destruction or disposal to surrender them to other Parties or their representatives.  During that seven (7) year period, National shall, and Buyer shall cause National to, during normal business hours, and upon reasonable notice, and subject to Applicable Laws and reasonable requirements to confirm confidentiality and/or applicable legal privileges are maintained, make available to the Sellers, New Kleinco and their respective representatives (including counsel and independent auditors) access to the information, files, documents and records (written and computer) that are not otherwise protected by legal privilege relating to National and its Subsidiaries or any of their businesses or operations for any and all periods prior to the Closing Date that they may require with respect to any reasonable purpose not adverse to National (including, without limitation, any Tax matter) in connection with any claim, dispute, action, cause of action, investigation or proceeding of any kind by or against any Person, and shall cooperate reasonably with Sellers, New Kleinco and their respective representatives (including counsel and independent auditors) in connection with the foregoing, at the sole cost and expense of Sellers or New Kleinco, including, without limitation, by making tax, accounting and financial personnel and other appropriate employees and officers of National and each of its Subsidiaries available to Sellers, New Kleinco and their respective representatives (including counsel and independent auditors), with regard to the reasonable purpose, during normal business hours and provided the foregoing does not interfere with business operations of National or its Subsidiaries.

 

5.8   Governmental Consents .

 

(a)   HSR Filing .  Promptly following the execution of this Agreement, the Parties shall file, or cause to be filed by their respective “ultimate parent entities,” with the FTC and the DOJ the notifications and other information (if any) required to be filed under the HSR Act with respect to the transactions contemplated in the Transaction Documents.

 

(b)   Other Governmental Entities .  In addition, the Parties shall promptly proceed to prepare and file with the appropriate Governmental Entities such additional requests, reports or notifications as may be required or, in the opinion of Buyer or Sellers, advisable, in connection with this Agreement including under the Antitrust Laws of applicable foreign jurisdictions.

 

(c)   Cooperation .  With respect to each of the above filings, and any other requests from Governmental Entities, the Parties shall, subject to the other terms of this Agreement, diligently and expeditiously prosecute and use commercially reasonable efforts to obtain any clearance under the Antitrust Laws for the transactions contemplated by this Agreement and to resolve any objections as may be asserted by any Governmental Entity with respect to the transactions contemplated by this Agreement, and cooperate fully with each other in the prosecution of, such matters including, subject to Applicable Law, by permitting counsel for the other Party to review in advance (to the extent possible), and consider in good faith the views of the other Party in connection with, any such filing or any proposed oral or written communication with any Governmental Entity and by providing counsel for the other Party with copies of all filings and submissions made by such Party and all correspondence between such Party (and its advisors) with any Governmental Entity and any other information supplied by such Party and such Party’s Subsidiaries to a Governmental Entity or received from such a Governmental Entity in connection with the transactions contemplated by this Agreement.  Any competitively sensitive information that is disclosed pursuant to this Section 5.8(c) will be limited to each of Buyer’s and National’s respective outside counsel and economists pursuant to a separate customary confidentiality agreement.  Each of Buyer and National shall furnish to the other such necessary information and reasonable assistance as the other may reasonably request in connection with its preparation of any such filing or submission.

 

(d)   Status .  Buyer, National, New Kleinco and each Seller shall keep each other apprised of the status of any communications with, and any inquiries or requests for additional information from, the FTC, the DOJ, any other Governmental Entity or any third party with respect to the transactions contemplated by this Agreement.

 

(e)   Strategy .  Buyer shall not require National or National’s parent, USPB, to, and USPB shall not be required to, take any action with respect to satisfying any Antitrust Laws that would bind National or its Subsidiaries in the event the Closing does not occur.  Neither National, nor any Seller, nor New Kleinco, shall take any action with respect to satisfying any Antitrust Laws that would bind National or its Subsidiaries after the Closing without the prior written consent of Buyer.

 

5.9   Antitrust Laws; Commercially Reasonable Efforts; Further Assurances .

 

(a)   Subject to other terms of this Agreement, including Section 5.9(c) , from the date of this Agreement through the date clearance is obtained from all of the relevant foreign and domestic antitrust authorities or the date of termination of the required waiting period under the HSR Act and the antitrust laws of applicable foreign jurisdictions, respectively, neither Buyer nor Sellers, New Kleinco or National shall take, or cause their respective Affiliates to take, any action that could reasonably be expected to hinder or delay the obtaining of clearance or the expiration of the required waiting period under the HSR Act or any other applicable Antitrust Law.  Nothing in this Section 5.9(a) shall be understood to contradict the duties of the Parties outlined in Section 5.9(c) .

 

(b)   Take Actions To Consummate Transaction .  Subject to Section 5.9(c) , upon the terms and subject to the conditions set forth in this Agreement, (i) Buyer, National, Sellers and New Kleinco shall use their respective commercially reasonable efforts to take, or

 

cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable (subject to any Applicable Laws) to consummate the transactions contemplated by this Agreement and make effective the contemplated transactions as promptly as practicable, including all actions necessary to satisfy the conditions to Closing and (ii) no Party shall take any action after the date of this Agreement to materially delay the obtaining of, or result in not obtaining, any Consent from any Governmental Entity necessary to be obtained prior to Closing.

 

(c)   Limitations .  Notwithstanding any other provision of this Agreement, (i) without Buyer’s prior written consent, National shall not, and Sellers shall not permit National or any of its Subsidiaries to, commit to any divestiture transaction or agree to any restriction on the businesses of National or any of its Subsidiaries, and (ii) nothing in Section 5.8 or this Section 5.9 shall (A) limit any applicable rights a Party may have to terminate this Agreement pursuant to Section 7.1 so long as such party has up to then complied in all material respects with its obligations under Section 5.8 and this Section 5.9 , or (B) require Buyer to litigate or threaten any litigation or to offer, accept or agree to (1) dispose or hold separate any part of its, National’s or any of their respective Affiliate’s businesses, operations, assets or product lines, (2) not compete in any geographic area or line of business, (3) restrict the manner in which, or whether, Buyer, National or any of their respective Affiliates may carry on business in any part of the world, and/or (4) any limitations with respect to Buyer’s or its Affiliates’ ownership or voting of any equity interests in National or any of its Subsidiaries.

 

(d)   After the date hereof, National and Sellers shall use their respective commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable (subject to any Applicable Laws) to obtain all Consents necessary to provide Buyer with any collective bargaining agreement or other collective labor contract or industrial instrument referred to in National Disclosure Schedule 3.17(b) that has not previously been made available to Buyer.  Sellers shall provide each such collective bargaining agreement or other collective labor contract or industrial instrument to Buyer as soon as reasonably practical after the date hereof.

 

5.10   Investigation and Agreement by Buyer; No Other Representations or Warranties .

 

(a)   Independent Investigation .  Buyer acknowledges and agrees that it has made its own inquiry and investigation into, and, based on its inquiry and investigation and the representations and warranties in this Agreement and the Transaction Documents, has formed an independent judgment concerning, National and its Subsidiaries and their businesses and operations, and Buyer has been furnished with or given access to the information about National and its Subsidiaries and their businesses and operations as it requested in determining whether to enter into this Agreement.  Buyer acknowledges and agrees that it has had an opportunity to ask all questions of and receive answers from National in determining whether to enter into this Agreement.  In connection with Buyer’s investigation of National and its Subsidiaries and their businesses and operations, Buyer and its respective representatives have received from National or its representatives certain projections and other forecasts for National and its Subsidiaries and certain estimates, plans and budget information, which National shall have prepared in good faith.  Buyer acknowledges that: (1) there are uncertainties inherent in attempting to make such projections, forecasts, estimates, plans and budgets; and (2) Buyer has not been authorized by

 

National to rely upon the estimates, projections, forecasts, plans and budgets as to future results so furnished to it or its representatives.

 

(b)   Limitation of Representations and Warranties .  Buyer agrees that, except for the representations and warranties made by Sellers, New Kleinco and National that are expressly set forth in Article II and Article III of this Agreement and in the Sellers Disclosure Schedule (as amended and supplemented through Closing), the National Disclosure Schedule (as amended and supplemented through Closing) and the Transaction Documents, neither Seller nor New Kleinco nor National nor any of their respective Affiliates or representatives has made and shall not be deemed to have made to Buyer or to any of its representatives any representation or warranty of any kind.  Except as expressly set forth in this Agreement, no Person has been authorized by any Seller or New Kleinco or by National to make any representation or warranty relating to National or any Subsidiary of National or their respective businesses or operations, or otherwise in connection with the transactions contemplated by this Agreement and, if made, the representation or warranty may not be relied upon.  Without limiting the generality of the foregoing, except as set forth in Article II and Article III of this Agreement and in the Sellers Disclosure Schedule, National Disclosure Schedule and Transaction Documents, Buyer agrees that none of the Sellers, New Kleinco or National, any of their Affiliates or any other Person makes or has made any representation or warranty to Buyer or to any of its representatives with respect to:

 

(1)   any projections, forecasts, estimates, plans or budgets of future revenues, expenses or expenditures, future results of operations (or any component thereof), future cash flows (or any component thereof) or future financial condition (or any component thereof) of National or any of its Subsidiaries or the future business, operations or affairs of National or any of its Subsidiaries heretofore or hereafter delivered to or made available to Buyer or its representatives; or

 

(2)   any other information, statements or documents heretofore or hereafter delivered to or made available to Buyer or its representatives, including the information in the on line Data Room with respect to National or any of its Subsidiaries or the business, operations or affairs of National or any of its Subsidiaries, except to the extent and as expressly covered by a representation and warranty contained in Article II or Article III of this Agreement or the Sellers Disclosure Schedule, National Disclosure Schedule or Transaction Documents, which representations and warranties are the only representations and warranties that Buyer is relying on in connection with its execution of this Agreement (other than that any of the foregoing were prepared in good faith by Sellers, New Kleinco or National).

 

5.11   Other Acquisition Proposals .

 

(a)   No Solicitation .  Subject to Section 5.11(b) , neither any Seller, nor New Kleinco, nor National nor any of its Subsidiaries will, nor shall any Seller, New Kleinco or National authorize or encourage any investment bankers, consultants or other advisors to any Seller, New Kleinco, National or National Subsidiaries to, or permit any officer, director, employee, agent or other representative of any Seller, New Kleinco, National or any National Subsidiary to, solicit, initiate, or encourage (including by way of furnishing non-public information) the submission of any proposal or offer from any Person (or participate in any

 

negotiations of any proposal or offer with any Person or group other than Buyer and its Affiliates) relating to any (i) acquisition of assets of National and its Subsidiaries (including securities of such Subsidiaries) equal to 15% or more of National’s consolidated assets or to which 15% or more of National’s revenues or earnings on a consolidated basis are attributable, (ii) acquisition of beneficial ownership of any National Interests or of 15% or more of the membership interests of National, any of its Subsidiaries or USPB or (iii) any merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving National, any of its Subsidiaries or USPB (any such proposal or offer an “ Acquisition Proposal ”).  For purposes of clarity, in response to any inquiry or other communication regarding an Acquisition Proposal any Seller, New Kleinco or National may refer the Person making the Acquisition Proposal to this Section 5.11 and state that Sellers, New Kleinco and National are subject to the requirements of this Section 5.11 , which referral shall not be a breach of this Section 5.11 .

 

(b)   Superior Proposal .  If, after the date of this Agreement, but prior to receipt of USPB Member Approval: (i) any Seller, New Kleinco or National receives a bona fide written Acquisition Proposal, which was unsolicited and not involving a breach of Section 5.11(a) , and, in accordance with the provisions of Section 5.11 , Sellers, New Kleinco or National, as applicable, shall promptly disclose to Buyer the material terms and conditions of the Acquisition Proposal and the identity of the Person making such Acquisition Proposal; and (ii) the Board of Directors of USPB, having received the advice of outside legal counsel and an outside financial advisor, reasonably determines in good faith that such Acquisition Proposal is or is reasonably likely to lead to a Superior Proposal (after taking into account any written offer by Buyer to improve the terms of this Agreement in response to such Acquisition Proposal), Sellers, New Kleinco, National and their Representatives (after providing Buyer not less than 24 hours written notice of its intention to take the action in clauses (1) and (2) below and prior to receipt of USPB Member Approval) may:

 

(1)   furnish information (including non-public information) with respect to National and Sellers to the Person making the Acquisition Proposal (and its representatives) pursuant to a customary confidentiality agreement (provided that (A) such confidentiality agreement shall not restrict Buyer’s rights to information under any provision of this Agreement and shall contain provisions that are no less restrictive with respect to the conduct of the Person to whom information is disclosed than those contained in the Confidentiality Agreement and the Indication of Interest (other than provisions relating to exclusivity), (B) USPB and National shall provide Buyer with a correct and complete copy of each such confidentiality agreement or other agreement providing access to information of National and Sellers within 24 hours of the execution thereof by both parties, and (C) all non-public information that is provided to such Person (and/or its representatives) shall concurrently also be provided, if not previously provided, to the Buyer);

 

(2)   participate in discussions or negotiations with the Person making the Acquisition Proposal (and its representatives) regarding the Acquisition Proposal; and

 

(3)   during the period when the Board of Directors is determining pursuant to clause (b)(ii) of this Section 5.11 if an Acquisition Proposal is or is reasonably likely to lead to a Superior Proposal and during any period while Sellers, New Kleinco, National and

 

their Representatives are participating in discussions or negotiations regarding an Acquisition Proposal pursuant to clause (b)(2) of this Section 5.11 , postpone any meeting of the USPB Members for a period of time equal to the sum of the periods of time required to complete the activities contemplated by clauses (b)(ii) and (b)(2) of this Section 5.11 (the “ Determination Period ”); provided, that any such Determination Period shall not exceed ten (10) days, subject to any additional extension of up to twenty (20) days, with the total Determination Period not to exceed a total of thirty (30) days, and such extension only upon advice of outside legal counsel to USPB that such extension is necessary for the USPB Board to fulfill its fiduciary duties under Delaware law.  USPB’s obligations to seek USPB Member Approval shall be tolled for the Determination Period.  If, at the end of the Determination Period, this Agreement has not been terminated pursuant to Section 7.1(g) , the time period for seeking USPB Member Approval specified in Section 5.12 shall resume and continue for the remainder of such period, without any portion of the Determination Period being considered a portion of the time periods specified in Section 5.12 .

 

The Parties further acknowledge and agree that any activities of any Seller, New Kleinco, National, any of their Subsidiaries, investment bankers, consultants, other advisors, officers, directors, employees, agents or other representatives pursuant to this Section 5.11(b) or pursuant to Section 5.11(d) below shall not constitute, or be deemed to constitute a breach of this Section 5.11 , or of any other provision of this Agreement.

 

(c)   Recommendation of this Agreement .  Subject to Sections 5.11(b) and 5.11(d) , USPB agrees that neither its Board of Directors nor any committee of the Board of Directions shall:

 

(1)   (i) withdraw (or modify in a manner adverse to Buyer), or propose to withdraw (or modify in a manner adverse to Buyer), the recommendation or declaration of advisability by the Board of Directors or any committee thereof of the Sale to Buyer and the other transactions contemplated by this Agreement or (ii) recommend, adopt or approve, or propose publicly to recommend, adopt or approve, any Acquisition Proposal; or

 

(2)   approve or recommend, or propose to approve or recommend, or execute or enter into, permit National or any of its Subsidiaries to execute or enter into, any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement, option agreement, joint venture agreement, partnership agreement or other similar agreement constituting or related to any Acquisition Proposal (other than a confidentiality agreement pursuant to Section 5.11(b)(1) ) (a “ Competing Transaction Agreement ”).

 

(d)   Notwithstanding anything in Section 5.11(a) or Section 5.11(c) to the contrary, prior to the receipt of USPB Member Approval:

 

(1)   in order to comply with its fiduciary duties, the Board of Directors of USPB or any of its committees may withdraw or modify its recommendation of the Sale to Buyer and the other transactions contemplated by this Agreement (a “ Change of Recommendation ”), cancel or postpone any meeting of the USPB Members, and otherwise communicate with the USPB Members as the Board of Directors or any committee thereof deems necessary or appropriate in response to a material event or development with respect to

 

National, other than any Acquisition Proposal, that was not known to the Board of Directors on the date of this Agreement, which event or development becomes known to such Board of Directors prior to receipt of USPB Member Approval, if such Board of Directors reasonably determines in good faith, after consultation with outside legal counsel, that the failure to make such Change of Recommendation would constitute a breach of the USPB directors’ fiduciary duties to the members of USPB under applicable Delaware law; and

 

(2)   in response to a Superior Proposal that did not result from a breach of any provision of this Section 5.11 , the Board of Directors of USPB may make a Change of Recommendation with respect to such Superior Proposal, cancel or postpone any meeting of the USPB Members, and otherwise communicate with the USPB Members as the Board of Directors or any committee thereof deems necessary or appropriate and a Competing Transaction Agreement providing for such Superior Proposal may be entered into, executed and delivered, if, but only if, (A) USPB Member Approval had not yet been obtained, (B) the Termination Fee pursuant to Section 7.2(b)(1)(ii) is paid to Buyer and (C) this Agreement is terminated pursuant to Section 7.1(g) ;

 

provided , however , that no Change of Recommendation, entry into any Competing Transaction Agreement and/or termination of this Agreement pursuant to Section 7.1(g) shall be made until after the fifth Business Day following Buyer’s receipt of written notice from USPB (a “ 5.11 Notice ”) advising Buyer that the Board of Directors of USPB intends to make such Change of Recommendation, or that such Competing Transaction Agreement and/or termination of this Agreement is proposed, and specifying either (i) in the case of clause (1) the material event or development giving rise to the Change of Recommendation or (ii) in the case of clause (2), the terms and conditions of (and the identity of the Person or group of Persons making) the Superior Proposal and including copies of all materials and forms of agreements relating thereto (it being understood and agreed that any amendment to the financial terms or other material terms or conditions of such Superior Proposal shall require a new 5.11 Notice and a new five (5) Business Day period whether in response to a written offer from Buyer or otherwise and any such five (5) Business Day period shall toll any other time periods requiring action by USPB or Sellers unless the five (5) Business Day time period is waived by Buyer in writing and delivered to Sellers); and during such period, if requested by Buyer, the Sellers shall engage in good faith negotiations with Buyer to amend this Agreement to make such Change of Recommendation, entry into any Competing Transaction Agreement and/or termination of this Agreement unnecessary.

 

(e)   Superior Proposal .  “ Superior Proposal ” means a bona fide written Acquisition Proposal made by any Person or group other than Buyer and its Affiliates to USPB or National after the date of this Agreement and not involving a breach of this Section 5.11 , and is otherwise on terms and conditions which the Board of Directors of USPB determines (after consultation with outside legal counsel and an outside financial advisor) in good faith are more favorable to Sellers than those set forth in this Agreement taking into account all the terms and conditions of such Acquisition Proposal and this Agreement (including any changes to the terms of this Agreement offered in writing by Buyer and specifically the Board of Directors of USPB may consider whether Buyer’s written offer is binding or not in its determination).

 

5.12   Member Approval .  USPB shall give all required notices and take all action necessary to notify its members of a meeting to seek approval of the Sale and consummation of

 

the other transactions contemplated by this Agreement by the affirmative vote of the majority of voting power of each class of interests in USPB authorized to vote as provided in the Limited Liability Company Agreement of USPB (“ USPB Member Approval ”) and mail to its members information relevant to their vote and as required under Applicable Laws.  The Board of Directors of USPB shall:

 

(a)   promptly and duly call, give notice of, convene and hold a meeting of its members within thirty (30) days after the date of this Agreement for the purpose of obtaining USPB Member Approval, subject to the tolling of such thirty (30) day period during any Determination Period arising pursuant to Section 5.11(b) and Section 5.11(d) , during any period described in Section 5.11(d) and during any period (which shall not be more than ten (10) days) required for securities or other filings by USPB and distribution of modified disclosure to USPB’s Members as a result of any amendment or other modification of this Agreement;

 

(b)   recommend to its members that they grant USPB Member Approval (and include such recommendation in all materials disseminated to members, subject to any Change of Recommendation pursuant to Section 5.11(d) );

 

(c)   pursuant to this Section 5.12 , take all commercially reasonable action to solicit and use commercially reasonable efforts to obtain USPB Member Approval (including, without limitation, by providing on the proxy or similar card that a properly completed, signed and returned proxy or similar card that does not specify the USPB member’s vote when received by USPB will be voted in favor of USPB Member Approval), subject, however, to (i) Section 5.11(b) (including during any Determination Period described in that Section); (ii) Section 5.11(d) ; (iii) Section 5.12(a) (including during any period described in such Section); and (iv) Section 5.12(c) ; and

 

(d)   promptly notify Buyer of the results of the USPB member meeting held in accordance with this Section 5.12 .

 

Without limiting the generality of the foregoing, USPB shall cause soliciting, proxy and recommendation materials contemplated by this Section 5.12 to be prepared, filed and disseminated in accordance with Applicable Laws.  USPB shall (A) provide Buyer with a reasonable opportunity to review and comment on such documents and any amendments or supplements thereto prior to their dissemination recognizing that if Buyer has not commented on such documents, amendments or supplements within two (2) Business Days after receiving such documents, amendments or supplements, any additional time request by Buyer, if granted by USPB, shall further toll the 30-day period in Section 5.12(a) and (B) provide Buyer with such other reasonable information with respect to the solicitation of the approvals contemplated by this Section 5.12 as Buyer may reasonably request.

 

5.13   Non-Competition Agreement .

 

(a)   Commencing on the Closing Date and continuing for so long as USPB and its Affiliates own or Control any Ownership Interests of National but in any event not less than ten (10) years after the Closing Date, USPB shall not, directly or indirectly, singularly or in the aggregate, own or Control any Ownership Interests of, or otherwise run, manage, operate, direct,

 

Control or participate in the ownership, management, operation or Control of, any Competing Business or any Competing Facility other than an Ownership Interest of not more than two percent (2.0%) in the aggregate in any publicly traded entity that is a Competing Business or that owns or Controls a Competing Business or a Competing Facility.

 

(b)   NBPCo Holdings shall be subject to the non-competition and other restrictive covenants set forth in Section 6.7(b) of the Restated LLC Agreement in the form attached hereto as Exhibit G, which Section 6.7(b) is incorporated herein by reference.

 

(c)   Each Seller and New Kleinco shall not (and shall cause their respective Affiliates not to), directly or indirectly, cause, solicit, induce or encourage any officers or key employees of National to leave such employment or hire, employ or otherwise engage any such individual or cause, induce or encourage any material actual or prospective client, customer, supplier, landlord, lessor or licensor of National or any of its Subsidiaries to terminate or modify any such actual or prospective relationship; provided, however, that, with respect to NBPCo, (i) NBPCo and its Affiliates shall not be prohibited from hiring any such officers or key employees of National if such individual contacts NBPCo or its Affiliates on his or her own initiative or in response to a published general solicitation not specifically targeted at such individual, in each case, without any direct or indirect solicitation by NBPCo or its Affiliates, (ii) nothing in this Section 5.13(c) shall limit the right of NBPCo or its Affiliates to take any action that would otherwise be permitted under Section 6.7(b)(ii) of the Restated LLC Agreement in the form attached hereto as Exhibit G, which Section 6.7(b)(ii) is incorporated herein by reference, and (iii) NBPCo’s covenants and obligations under this Section 5.13(c) shall expire and be of no further force and effect at such time as NBPCo and its Affiliates cease to own or Control any Ownership Interests of National.

 

(d)   Each of the Sellers and New Kleinco agrees that such Seller or New Kleinco, as applicable, shall be liable for any breach or violation of the provisions of this Section 5.13 by any of Seller’s or New Kleinco’s respective Subsidiaries or any officer or director of any Seller or New Kleinco or any of such Party’s respective Subsidiaries.  The covenants and undertakings contained in this Section 5.13 relate to matters which are of a special, unique and extraordinary character and a violation of any of the terms of this Section 5.13 will cause irreparable injury to Buyer, the amount of which will be impossible to estimate or determine and which cannot be adequately compensated.  Accordingly, the remedy at law for any breach of this Section 5.13 may be inadequate.  Therefore, notwithstanding anything to the contrary, Buyer shall be entitled to an injunction, restraining order or other equitable relief from any court of competent jurisdiction in the event of any breach of any provision of this Section 5.13 without the necessity of proving actual damages or posting any bond whatsoever.  The rights and remedies provided by this Section 5.13 are cumulative and in addition to any other rights and remedies which Buyer may have hereunder or at law or in equity.  In the event that Buyer were to seek damages for any breach of this Section 5.13 , any portion of the Purchase Price which is allocated by the Parties to the foregoing covenants shall not be considered a measure of or limit on such damages.  If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 5.13 is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability will have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and

 

enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement will be enforceable as so modified after the expiration of the time within which the judgment may be appealed.

 

5.14   No Exercise of Transfer Rights .  From the Signing Date until Closing or termination of this Agreement under Article VII , each of the Sellers agrees that such Seller shall not exercise any of the transfer rights set forth in any of Section 12.1 , 12.2 , 12.3 , 12.5 or 12.6 of the National Limited Liability Company Agreement; provided , however , that this Section 5.14 shall not prohibit the Put by TKK and TMK.

 

ARTICLE VI

 

CONDITIONS PRECEDENT

 

6.1   Conditions to Each Party’s Obligation .  The respective obligations of Sellers, New Kleinco and Buyer to effect the Closing contemplated under this Agreement are subject to the satisfaction, on or prior to the Closing Date, of the following conditions:

 

(a)   the waiting period (and any extension thereof) under any Antitrust Laws, including the HSR Act, applicable to the transactions contemplated under this Agreement shall have been terminated or shall have expired, and all clearances, approvals, or Consents under any Antitrust Laws, including under the Antitrust Laws of applicable foreign jurisdictions, shall have been obtained or expired, as the case may be;

 

(b)   no temporary restraining order, preliminary or permanent injunction or other order issued by any Government Entity preventing the consummation of the transactions contemplated by the Transaction Documents shall be in effect;

 

(c)   no action shall have been taken nor any statute, rule or regulation shall have been enacted or promulgated by any Governmental Entity that prohibits consummation of the transactions contemplated by this Agreement; and

 

(d)   USPB Member Approval shall have been obtained.

 

6.2   Conditions to Obligation of Buyer .  The obligation of Buyer to effect the Closing contemplated hereby is subject to the satisfaction, on or prior to the Closing Date, of the following conditions unless waived, in whole or in part, by Buyer:

 

(a)   each of the representations and warranties of Sellers, New Kleinco and National (i) set forth in Sections 2.1 , 2.2 , 3.1 , 3.2 , 3.3 , 3.4 , 3.6(a) and 3.6(b) of this Agreement shall (without giving effect to any supplements to the Sellers Disclosure Schedule or the National Disclosure Schedule) be true and correct in all respects as of the date of this Agreement and shall be true and correct in all respects as of the Closing Date as though made on and as of such time (other than such representations and warranties that are expressly made as of another date, which shall be true and correct as of such date), (ii) set forth in Sections 3.6(c) , 3.7 , 3.9 and 3.18 of this Agreement (together with the representations set forth in clause (i), the “ Specified Representations ”) shall (without giving effect to any supplements to the Sellers Disclosure Schedule or the National Disclosure Schedule) be true and correct in all material respects as of

 

the date of this Agreement and shall be true and correct in all material respects as of the Closing Date as though made on and as of such time (other than such representations and warranties that are expressly made as of another date, which shall be true and correct as of such date) and (iii) set forth in this Agreement other than the Specified Representations (considered without regard to any qualification by or reference to materiality, Material or Material Adverse Effect set forth therein, and without giving effect to any supplements to the Sellers Disclosure Schedule or the National Disclosure Schedule), shall be true and correct in all respects as of the date of this Agreement and shall be true and correct in all respects as of the Closing Date, provided , however , that the condition in this clause (iii) (but not in clause (i) or clause (ii)) shall be deemed to have been satisfied unless the individual or aggregate impact of all inaccuracies of such representations and warranties has or would reasonably be expected to have a Material Adverse Effect; and, if the condition in this clause (a) is satisfied, Buyer shall have received certificates signed on behalf of National by an executive officer of National, by each of the Sellers and by New Kleinco, as applicable to such respective party’s own representations and warranties, to the effect of this Section 6.2(a) , which certificates shall be qualified by the Knowledge of such respective party;

 

(b)   National, the Sellers and New Kleinco shall (without giving effect to any supplements to the Sellers Disclosure Schedule or the National Disclosure Schedule) have performed and complied in all material respects with all their obligations and covenants under this Agreement and the other Transaction Documents; and, if the condition in this clause (b) is satisfied, Buyer shall have received a certificate signed on behalf of National by an executive officer of National, and by each of the Sellers and New Kleinco, as applicable to such respective party’s own representations and warranties, to the effect of this Section 6.2(b) , which certificates shall be qualified by the Knowledge of such respective party;

 

(c)   each Seller shall have delivered to Buyer a duly executed and acknowledged certificate, in compliance with the Code and Treasury Regulations, certifying such facts as to establish that the Seller’s sale of its National Interests and any other transactions contemplated by this Agreement are exempt from withholding pursuant to Section 1445 of the Code;

 

(d)   all documents, instruments, certificates or other items required to be delivered at the Closing by National, Sellers or New Kleinco pursuant to this Agreement or otherwise reasonably requested by Buyer shall have been delivered (including evidence that all Liens related to the National Interests being delivered to Buyer have been released);

 

(e)   each Seller shall have executed and delivered an assignment of the applicable National Interests in the form attached hereto as Exhibit F ;

 

(f)   the Consents listed on National Disclosure Schedule 6.2(f) shall have been obtained in a form reasonably satisfactory to Buyer; provided , however , that, for the avoidance of doubt, if National and Sellers have otherwise complied with their covenants and obligations under Sections 5.3 and 5.9(b) , with respect to such Consents, the failure of National, Sellers or New Kleinco to obtain or cause the delivery to Buyer of such Consents shall not be considered a breach of this Agreement;

 

(g)   no action or proceeding shall have been instituted or overtly threatened, or claim or demand made or overtly threatened, in each case, by or before a Governmental Entity, with respect to which the Governmental Entity pursuing such action or proceeding or making such claim or demand is reasonably seeking to restrain or prohibit, or to obtain damages with respect to, the consummation of the transactions contemplated by this Agreement or any Transaction Document;

 

(h)   there shall not have occurred any event, change, occurrence or circumstance that, individually or in the aggregate with any such events, changes, occurrences or circumstances, has had or would reasonably be expected to have a Material Adverse Effect; and, if the condition in this clause (h) is satisfied, Buyer shall have received certificates signed on behalf of National by an executive officer of National, and by each of the Sellers, as applicable, to the effect of this Section 6.2(h) , which certificates shall be qualified by the Knowledge of such respective party;

 

(i)   on or prior to the Closing Date, Sellers shall cause, or shall have caused, National and each of its Subsidiaries to, make a valid protective election under Section 754 of the Code for National and each of its Subsidiaries that is treated as a partnership for United States federal income tax purposes; and

 

(j)   there shall not have occurred any change in Applicable Laws or interpretation thereof by a Governmental Entity generally affecting the Industry that is or would reasonably be expected to be materially adverse to the business, operations or financial condition of National and its Subsidiaries, taken as a whole;

 

(k)   each of the following agreements shall have been executed by National, each Seller and New Kleinco to the extent a party thereto and shall be in full force and effect:

 

(1)   Restated LLC Agreement;

 

(2)   Escrow Agreement;

 

(3)   Cattle Purchase and Sale Agreement;

 

(4)   USPB Pledge Agreement; and

 

(5)   Klein Pledge Agreement.

 

(l)   The Schedule 1.2(d) Transactions shall have occurred or been provided for and Sellers and New Kleinco shall have consented thereto or agreed to cooperate in connection therewith; and

 

(m)   The Credit Agreement Consent shall be in full force and effect;

 

(n)   The Klein Employment Agreement and each of the Non-Competition Agreements are in full force and effect; and

 

(o)   Sellers shall have delivered to Buyer all collective bargaining agreements, other collective labor contracts and industrial instruments referenced on National Disclosure Schedule 3.17(b) that were not previously made available to Buyer prior to the Signing Date and Buyer, in its reasonable discretion, is satisfied with the terms and conditions of each such collective bargaining agreement, collective labor contract and industrial instrument; provided that, for the avoidance of doubt, if National and Sellers have otherwise complied with their covenants and obligations under Sections 5.9(b) and 5.9(d) with respect to such collective bargaining agreement, collective labor contract and industrial instrument, the failure of National or Sellers to cause the delivery to Buyer of such collective bargaining agreement, collective labor contract and industrial instrument shall not be considered a breach of this Agreement.

 

6.3   Conditions to Obligations of Sellers .  The obligations of Sellers and New Kleinco to effect the Closing contemplated under this Agreement is subject to the satisfaction, on or prior to the Closing Date, of the following conditions unless waived, in whole or in part, by Sellers and New Kleinco:

 

(a)   each of the representations and warranties of Buyer set forth in this Agreement shall be true and correct in all material respects both as of the date of this Agreement and as of the Closing Date as though made on and as of the time (other than the representations and warranties that are made as of another date, which shall be so true and correct as of that date); provided , however , that this condition shall be deemed to have been satisfied unless the individual or aggregate impact of all inaccuracies of such representations and warranties materially adversely affect the ability of Buyer to timely consummate the Sale or any of the other transactions contemplated by this Agreement, and Sellers shall have received a certificate signed on behalf of Buyer by an executive officer of Buyer acknowledging the condition in this clause (a) are true;

 

(b)   Buyer shall have performed or complied in all material respects with all obligations and covenants required to have been performed or complied with by it under this Agreement and the other Transaction Documents at or prior to the Closing Date, and Sellers shall have received a certificate signed on behalf of Buyer by an executive officer of Buyer, acknowledging the condition in this clause (b) is true;

 

(c)   all documents, instruments, certificates or other items (including, without limitation, the payments to be made at the Closing) required to be delivered at the Closing by Buyer pursuant to this Agreement or otherwise reasonably requested by Sellers shall have been delivered; and

 

(d)   the Restated LLC Agreement shall have been executed by the Buyer and shall be in full force and effect.

 

ARTICLE VII

 

TERMINATION, AMENDMENT AND WAIVER

 

7.1   Termination .  This Agreement and the transactions contemplated by this Agreement may be terminated prior to the Closing and the transactions contemplated by this Agreement may be abandoned at any time prior to the Closing Time:

 

(a)   Mutual Consent .  By mutual written consent of Buyer and Sellers.

 

(b)   By Sellers: Breach .  By Sellers, if there shall have been any breach by Buyer, of any covenant or agreement set forth in this Agreement, which breach:

 

(1)   would give rise to the failure of a condition to the Closing (testing each Closing condition as it pertains to the breach as if the date of termination were the Closing Date) in the favor of the terminating Party; and

 

(2)   cannot be cured by Buyer, or has not been cured by Buyer, within twenty (20) days following receipt by Buyer of written notice of such breach, or if there are less than twenty (20) days from the receipt of such written notice until the Termination Date, within such shorter period (“ Cure Period ”); provided, however , that the right to terminate this Agreement under this Section 7.1(b)(2) shall not be available to Sellers if any Seller or National shall have failed to perform or observe in any respect any covenant or obligation contained in this Agreement where such breach or failure to perform at the time of the exercise of the termination right would give rise to the failure of a condition set forth in Section 6.2 (testing the Closing condition as it pertains to the breach or failure to perform as if the date of the exercise of the termination right were the Closing Date).

 

(c)   By Buyer: Breach .  By Buyer if there shall have been any breach by National, Sellers or New Kleinco of any covenant or agreement set forth in this Agreement, which breach:

 

(1)   (i) would give rise to the failure of a condition to the Closing (testing each such Closing condition as it pertains to such breach as if the date of termination were the Closing Date) in the favor of Buyer; and (ii) cannot be cured by National, Sellers or New Kleinco, or has not been cured by National, Sellers or New Kleinco, within the Cure Period following receipt by National of written notice of such breach, provided, however , that the right to terminate this Agreement under this Section 7.1(c)(1) shall not be available to Buyer if Buyer has failed to perform or observe in any respect any covenant or obligation contained in this Agreement where such breach or failure to perform at the time of the exercise of the termination right would give rise to the failure of a condition set forth in Section 6.3 (testing each such Closing condition as it pertains to such breach or failure to perform as if the date of the exercise of the termination right were the Closing Date); and

 

(2)   there is a an incorrect representation or warranty given by National, a Seller or New Kleinco under Article II or Article III which would give rise to the failure of a condition to the Closing (testing each such Closing condition as it pertains to such breach as if the date of termination were the Closing Date) in the favor of Buyer.

 

(d)   Either Party: Failure of USPB Member Approval .  Buyer or Sellers may terminate this Agreement if a meeting is held in accordance with Section 5.12 for the purpose of obtaining such USPB Member Approval and such USPB Member Approval is not obtained and notice of the termination is given within five (5) Business Days after (i) in the case of Sellers, the meeting for USPB Member Approval has been held and (ii) in the case of Buyer, receipt of notice to Buyer from USPB that USPB Member Approval was not received at the meeting; provided, however , that the right to terminate this Agreement under this Section 7.1(d) shall not be available to Sellers if a Seller or National has failed to perform or observe in any material respect any covenant or obligation contained in Section 5.11 or 5.12 .

 

(e)   Either Party: Court Order .  By either Buyer or Sellers if a court of competent jurisdiction or other Governmental Entity shall have issued an order, decree or ruling or taken any other action, in each case permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement or the Transaction Documents and such order, decree, ruling or other action shall have become final and nonappealable, or there shall be any statute, rule or regulation enacted or promulgated by any Governmental Entity which prohibits the consummation of the transactions contemplated by this Agreement or the Transaction Documents.

 

(f)   Either Party: Failure To Close Before Expiration .  By either Buyer or Sellers if the Closing shall not have occurred for any reason on or before the date 90 days after the date of execution of this Agreement (the “ Termination Date ”); provided, however , that the right to terminate this Agreement under this Section 7.1(f) shall not be available to Buyer if Buyer’s failure, or to Sellers if any Seller’s, New Kleinco’s or National’s failure, to perform or observe in any material respect any covenant or obligation contained in this Agreement has been the cause of or resulted in the failure of the Closing of the transactions contemplated by this Agreement to occur on or before the Termination Date and further provided that the Termination Date shall be extended to permit Sellers, New Kleinco, National and Buyer to comply with the provisions of Section 5.11 .

 

(g)   Sellers’ Change of Recommendation .  By Sellers, prior to receipt of USPB Member Approval, to the extent permitted by Section 5.11(d)(2) , if at any time prior to the receipt of USPB Member Approval both of the following conditions are met:

 

(1)   (i) the Board of Directors of USPB makes a Change of Recommendation in compliance with Section 5.11(d) , and (ii) Sellers notify Buyer in writing of the Change of Recommendation; and

 

(2)   concurrently with such termination, Sellers shall have paid (or caused to be paid) to Buyer the Termination Fee by wire transfer of immediately available funds to an account designated by Buyer.

 

(h)   Change of Recommendation; Breach of No Solicitation; Failure to Hold Meeting .  By Buyer, if:

 

(1)   (i) a Change of Recommendation shall have occurred and (ii) Buyer notifies Sellers in writing of such termination within fifteen (15) days after receipt of written notice of such Change of Recommendation; or

 

(2)   Sellers or New Kleinco shall have breached their obligations under Section 5.11 in any material respect; or

 

(3)   USPB shall not have held the membership vote contemplated by Section 5.12(a) by the 75th day after the date hereof.

 

(i)   Either Party: Any Other Reason .  By either Buyer or Sellers for any reason other than as set forth in Sections 7.1(a) through 7.1(h) above.

 

(j)   Notice of Termination .  Any termination pursuant to this Section 7.1 (other than a termination pursuant to Section 7.1(a) ) shall be effected by written notice from the Party so terminating to the other Parties, which notice shall specify the Section pursuant to which this Agreement is being terminated.

 

7.2   Effect of Termination .

 

(a)   Survival and Liability .  In the event of the termination of this Agreement by either Buyer or Sellers as provided for in and in compliance with Section 7.1 , this Agreement shall immediately become void and of no further force or effect with no liability or obligation under this Agreement on the part of Buyer, National, Sellers, New Kleinco or their respective Affiliates, officers, directors, employees, stockholders or members; provided , however , that this Section 7.2 and Articles VII and VIII (except Sections 8.1 , 8.2 , 8.12 and 8.20 ) and Exhibit A shall survive the termination; and

 

(b)   Certain Fees .

 

(1)   Upon termination of this Agreement, a fee of $35 million (the “Termination Fee”) may be due and payable in accordance with the provisions of this Section 7.2(b) .  Notwithstanding any other provisions of this Agreement, no Termination Fee shall be payable if:

 

(i)   this Agreement is terminated pursuant to Section 7.1(a) (Mutual Consent); or

 

(ii)   either Buyer or Sellers terminate this Agreement pursuant to Section 7.1(e) (Court Order).

 

(2)   Upon the termination of this Agreement, National shall pay the Termination Fee to Buyer if:

 

(i)   Buyer terminates this Agreement pursuant to Section 7.1(c) (Breach by Sellers or National); or

 

(ii)   Sellers terminate this Agreement pursuant to Section 7.1(f) (Failure to Close Before Expiration Date) and at the time of such termination Buyer could have terminated this Agreement pursuant to Section 7.1(c ) (Breach by Sellers or National), and prior to Sellers’ termination of this Agreement, Buyer has notified Sellers of the breach or breaches giving rise to such termination right;

 

(iii)   Sellers terminate this Agreement pursuant to Section 7.1(g) (Sellers’ Change of Recommendation);

 

(iv)   Buyer terminates this Agreement pursuant to Section 7.1(h) (Change of Recommendation, Breach of No Solicitation; Failure to Hold Meeting); or

 

(v)   Sellers terminate this Agreement pursuant to Section 7.1(i) (Any Other Reason).

 

The payment of the Termination Fee shall be made (i) if such termination of the Agreement was by Buyer, within two (2) Business Days of such termination and (ii) if such termination of the Agreement was by Sellers, concurrently with, and as a condition precedent to, such termination.

 

(3)   Upon the termination of this Agreement, Buyer shall pay the Termination Fee to National if:

 

(i)   (A) all of Buyer’s conditions to Closing set forth in Section 6.1 and Section 6.2 of this Agreement have been satisfied or waived by Buyer, (B) Buyer fails to consummate the transactions contemplated by this Agreement within two (2) Business Days following the date the Closing should have occurred pursuant to Section 1.3 of this Agreement and (C) Sellers terminate this Agreement pursuant to Section 7.1(b) (Breach by Buyer); or

 

(ii)   Buyer terminates this Agreement pursuant to Section 7.1(i) (Any Other Reason).

 

The payment of the Termination Fee shall be made (i) if such termination of the Agreement was by Sellers, within two (2) Business Days of such termination and (ii) if such termination of the Agreement was by Buyer, concurrently with, and as a condition precedent to, such termination.

 

(4)   National shall pay the Termination Fee to Buyer if (A) either Buyer or Sellers terminate this Agreement pursuant to Section 7.1(d) (Failure of USPB Member Approval) or Section 7.1(f) (Failure to Close Before Expiration Date), (B) after the date hereof and prior to such termination, a Person or group other than Buyer and its Affiliates has made an Acquisition Proposal to National or Sellers or has otherwise publicly disclosed or proposed an Acquisition Proposal of which National or Sellers is aware or has been informed, and (C) within twelve (12) months following the date of such termination, National or Sellers announce or enter into a written agreement with respect to, or consummate a transaction relating to any Acquisition Proposal.  Such payment shall be made within two (2) Business Days after the announcement of or entry into a written agreement with respect to, or if earlier, the consummation of such Acquisition Proposal.  The Parties agree that (x) no Termination Fee shall be due under this

 

Section 7.2(b)(4) if National has previously paid a Termination Fee to Buyer pursuant to Section 7.2(b)(2) and (y) if a Termination Fee is paid under this Section 7.2(b)(4) , National shall be entitled to a credit against payment of such Termination Fee in respect of any fee previously paid pursuant to Section 7.2(b)(5) below.  For the avoidance of doubt, for purposes of this Section 7.2(b)(4) , Acquisition Proposal shall not include any initial public offering for the securities of National or any of its Subsidiaries so long as one or more third parties does not obtain Control of National or any of its Subsidiaries as a result of such initial public offering.

 

(5)   National shall pay Buyer an amount equal to Buyer’s reasonable costs related to the investigation, negotiation and implementation of the transactions under this Agreement, including costs of legal counsel, consultants, advisors, due diligence, and printing, such amount not to exceed $2,500,000, if either Buyer or Sellers terminate this Agreement pursuant to Section 7.1(d) (Failure of USPB Member Approval) and neither Buyer nor Sellers are receiving a Termination Fee, such payment to be made (i) if such termination is by Sellers, concurrently with, and as a condition precedent to, such termination, or (ii) if such termination is by Buyer, within two (2) Business Days of such termination.

 

(6)   All amounts payable pursuant to this Section 7.2(b) shall be paid by wire transfer of immediately available funds to an account to be designated by the payee.  If the amounts payable pursuant to this Section 7.2(b) shall not be received by the payee when due pursuant to this Agreement, such amounts shall accrue interest for the period commencing on the day next following the date when due any such amount became past due, at a rate equal to (x) the prime lending rate as published in The Wall Street Journal in effect on the date such payment was required to be made plus (y) 3%.  In addition, if the amounts payable pursuant to this Section 7.2(b) shall not be received by the payee when due pursuant to this Agreement, the payor shall also pay to the payee all of such payee’s attorneys’ fees and other costs and expenses in connection with efforts to collect such amounts.  Sellers shall guarantee all payments required to be made by National pursuant to this Section 7.2 .

 

(7)   If this Agreement is terminated, the sole and exclusive remedy (whether at law, in equity, in contract, in tort or otherwise) for a Party for any breach, Loss or damage shall be to receive the amounts payable pursuant to this Section 7.2(b) , if any, including the right to enforce payment of the fees under this Section 7.2(b) and upon payment of such amount, if any, no Person shall have any rights or claims against any Party or any of their Affiliates under this Agreement or otherwise, whether at law, in equity, in contract, in tort or otherwise, and no Party or any of their Affiliates shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated by this Agreement.  In the event of a termination of this Agreement in accordance with Article VII , the provisions of this Section 7.2(b)(7) shall control, notwithstanding any other provision of this Agreement providing for any other remedies.

 

7.3   Return of Documentation .  Following termination of this Agreement in accordance with Section 7.1 , Buyer shall return or destroy all agreements, documents, contracts, instruments, books, records, materials and all other information regarding National or any of its Subsidiaries or other Affiliates provided to Buyer or any representatives of Buyer in connection with the transactions contemplated by this Agreement or the other Transaction Documents.

 

Nothing in this Section 7.3 shall diminish any obligations of Buyer under the Confidentiality Agreement.

 

ARTICLE VIII

 

MISCELLANEOUS

 

8.1   Indemnification .

 

(a)   Indemnification for Breach of National Representation or Warranty .  USPB and NBPCo hereby agree, severally and not jointly, to indemnify, hold harmless and defend Buyer and its Affiliates, successors and assigns (“ Buyer Indemnified Persons ”) from and against, and to reimburse the Buyer Indemnified Persons with respect to, any and all Losses incurred by a Buyer Indemnified Person by reason of or arising out of or in connection with (i) any breach or inaccuracy of any representation or warranty of National made in Article III of this Agreement or the Schedules or Exhibits to this Agreement or any certificate delivered by National pursuant to this Agreement (without giving effect to any materiality, Material or Material Adverse Effect qualifications in the representations and warranties in this Agreement other than in Section 3.7(a) ) and (ii) any breach or failure of any covenant or agreement by National in this Agreement or the Schedules or Exhibits executed or provided by National under this Agreement.

 

(b)   Indemnification for Breach of Seller or New Kleinco Representation or Warranty .  Each of Sellers and New Kleinco hereby agrees to indemnify, hold harmless and defend the Buyer Indemnified Persons from and against, and to reimburse the Buyer Indemnified Persons with respect to, any and all Losses incurred by a Buyer Indemnified Person by reason of or arising out of or in connection with (i) any breach or inaccuracy of any representation or warranty made by such Seller or New Kleinco, as applicable, in Article II of this Agreement or by such Seller in the Sellers Disclosure Schedule or any certificate delivered by such Seller or New Kleinco, as applicable, pursuant to this Agreement and (ii) any breach or failure of any covenant or agreement by such Seller or New Kleinco, as applicable, in this Agreement or the Schedules or Exhibits executed or provided by such Seller or New Kleinco, as applicable, under this Agreement.

 

(c)   Environmental Indemnification .  Notwithstanding any other provision limiting USPB’s and NBPCo’s indemnification obligations, except the limitations set forth in Section 8.1(g)(i) , USPB and NBPCo hereby agree to indemnify and reimburse National and/or the Buyer Indemnified Persons with respect to fifty percent (50%) of any and all Losses incurred by National and/or a Buyer Indemnified Person that are, in the aggregate, in excess of $1,000,000 and that arise out of or are in connection with the obligation to investigate, remediate, monitor or otherwise respond to the presence of the Hazardous Materials (“ Remedial Activities ”) at, on, under or migrating from the National facility all as set forth on National Disclosure Schedule 8.1(c) (the “ Site ”) discovered as a result of or in furtherance of bona fide construction activities currently scheduled to be undertaken at the Site; provided that such Seller shall have no obligations hereunder if Remedial Activities are not required by, or necessary to comply with, Environmental Laws.  The specific Hazardous Materials site, discovery period, and scheduled construction activities shall be specified on National Disclosure Schedule 8.1(c) .

 

(d)   Solicitation Materials Indemnification .  Notwithstanding any other provision limiting USPB’s indemnification obligations, including the limitations set forth in Section 8.1(g) , USPB hereby agrees to indemnify and reimburse National and/or the Buyer Indemnified Persons with respect to one hundred percent (100%) of any and all Losses incurred by National and/or a Buyer Indemnified Person that arise out of or are in connection with the obligation of USPB to prepare, file and disseminate the soliciting, proxy and recommendation materials in accordance with Applicable Laws as contemplated in Section 5.12 ; provided that USPB shall have no obligations hereunder with respect to information or statements made or incorporated by reference in such soliciting, proxy and recommendation materials that are provided by Buyer or its representatives for inclusion in such materials.

 

(e)   Definitions .  As used in this Section 8.1 , the term “ Losses ”:

 

(1)   Includes all losses, damages, diminution of value, lost profits, costs and expenses, including interest from the date of any such loss is actually incurred to the time of payment, and penalties reasonably relating to the claim;

 

(2)   Includes reasonable out-of-pocket costs relating to a valid claim including reasonable expenses of investigation relating to the claim, reasonable attorneys’ fees (at trial, on appeal, in connection with any petition for review and in any agency proceedings) and reasonable consulting, expert and accounting fees incurred in investigating, defending or prosecuting any claim;

 

(3)   Shall be calculated net of the amount of any insurance proceeds in respect of that loss and payment by National of any deductibles at the levels that are in place for both insurance and deductibles as of the date this Agreement is entered into; and

 

(4)   Shall be reduced by any amounts National failed to mitigate in a commercially reasonable manner after the Closing.

 

(f)   Reserves/Accruals .  Notwithstanding anything in this Agreement to the contrary, in no event shall any Loss in respect of Taxes be offset or reduced by the amount of any reserve or accrual unless the Purchase Price has been reduced by such amount.

 

(g)   Limitations on Indemnification .

 

(1)   Notwithstanding the foregoing, (i) the maximum aggregate liability of USPB and NBPCo under Section 8.1(a)(i) and Section 8.1(c) together shall be limited to $50,000,000 (the “ Cap ”); (ii) USPB and NBPCo shall not be responsible for indemnification of Losses pursuant to Section 8.1(a)(i) until such time as all such Losses pursuant to Section 8.1(a) shall aggregate to more than $5,000,000 (the “ Tipping Basket ”), at which point USPB and NBPCo shall become liable for Losses back to the first dollar; and (iii) USPB and NBPCo shall not be responsible for indemnification of a Loss pursuant to Section 8.1(a)(i) if such Loss individually (or in the aggregate arising from the same factual circumstances) is less than $1,000,000 and such Loss shall not be included for purposes of determining whether the Tipping Basket has been reached. The limitation on liability in this Section 8.1(g)(1) shall not apply to any representation, warranty or schedule (x) that is a misrepresentation or omission by National, Seller or New Kleinco constituting actual and knowing fraud by National, Seller or New Kleinco

 

in the context in which it was given, or (y) in respect of Sections 3.1 , 3.2 , 3.3 , 3.4 , and 3.18 , and Section 3.9 for taxes to be paid by the members of National for profits and losses occurring prior to Closing.

 

(2)   In addition to Section 8.1(g)(1) , (i) the maximum aggregate liability of NBPCo under (A) Section 8.1(a)(i) , other than with respect to (x) Section 3.9 for taxes to be paid by the members of National for profits and losses occurring prior to Closing or (y) a misrepresentation or omission by NBPCo constituting actual and knowing fraud by NBPCo in the context in which it was given, (B) Section 8.1(a)(ii) and (C) Section 8.1(c) , shall be limited to NBPCo’s portion of the Purchase Price and (ii) the maximum aggregate liability of TKK, TMK and New Kleinco under Section 8.1(b) shall be limited to the value of the National Interests owned by New Kleinco as set forth on Exhibit 3.1 of the Restated LLC Agreement.  The limit of NBPCo’s indemnification obligation for those items described in the preceding sentence is referred to as the “ NBPCo Limit .”

 

(h)   Escrow .

 

(1)   Any obligation of USPB and/or NBPCo pursuant to this Article VIII shall first be satisfied from the Escrow Fund, to the extent that there is any amount remaining in the Escrow Fund, by release of funds to the relevant Buyer Indemnified Person by the Escrow Agent.

 

(2)   If, on the one year anniversary of the Closing, there shall not have been any claims for indemnification pursuant to this Section 8.1 properly made on or prior to such one year anniversary, then $20 million of the Escrow Fund shall be released to USPB and NBPCo in accordance with the provisions of the Escrow Agreement.

 

(3)   On the two year anniversary of the Closing (“ Release Date ”), the difference, if positive, obtained by subtracting from the remaining amount of the Escrow Fund an amount equal to the aggregate amount of unsatisfied claims for damages of Buyer Indemnified Persons properly made on or prior to the Release Date shall be released to USPB and NBPCo in accordance with the provisions of the Escrow Agreement.  Further, from and after the Release Date, to the extent that (a) any amounts have been withheld in respect of unsatisfied claims and (b) the applicable underlying claims are resolved in favor of USPB and NBPCo, such amounts shall be promptly released to USPB and NBPCo in accordance with the terms of the Escrow Agreement.  For the avoidance of doubt, the release of funds from the Escrow Fund shall not affect any obligation of USPB or NBPCo under this Section 8.1 .

 

(i)   Seller’s and New Kleinco’s Obligations .  The obligations of the various Sellers and New Kleinco under this Agreement shall be several and not joint.  The maximum amount of USPB’s and NBPCo’s obligation to indemnify Buyer under Section 8.1(a) or Section 8.1(c) (in each case, subject to Section 8.1(g) ) is limited to such Seller’s Portion of the total amount payable to Buyer under Section 8.1(a) or Section 8.1(c) (in each case, subject to Section 8.1(g) ); provided , however , (i) for the avoidance of doubt, NBPCo’s indemnification obligations with respect to items subject to the NBPCo Limit shall terminate once the NBPCo Limit is reached; and (ii) with respect to items subject to the NBPCo Limit, after the NBPCo Limit is reached, USPB’s indemnification obligation under Section 8.1(a) and Section 8.1(c) (in each

 

case, subject to Section 8.1(g) ) shall continue for the entire amount of such obligations without being limited to USPB’s Seller’s Portion of the total amount payable to Buyer under Section 8.1(a) or Section 8.1(c) (in each case, subject to Section 8.1(g) ).  Each Seller shall not be liable for the indemnification obligations of any other Seller.  The amount for each Seller’s or New Kleinco’s indemnification obligation is defined as the “ Obligation Amount ”.  Sellers and New Kleinco agree that, after the Closing, they shall not seek indemnification from National pursuant to any indemnification provision, whether contractual or otherwise, for any indemnification liability hereunder.

 

(j)   Procedure for Claims by Buyer .  If a Buyer Indemnified Person intends to seek indemnification under this Section 8.1 , such Buyer Indemnified Person shall provide to each of the Sellers or New Kleinco, as applicable, from whom indemnification is sought written notice of the existence of such claim as soon as practicable but in all cases within the appropriate Claim Period under Section 8.2(a) , Section 8.2(b) , and Section 8.2(c) including reasonably specific and reasonably detailed information regarding the alleged breach or inaccuracy and information supporting the amount of the Losses; provided that the failure of any Buyer Indemnified Person to give timely notice hereunder shall not affect rights to indemnification hereunder (i) unless, and then only to the extent that, such Seller or New Kleinco, as applicable, demonstrates actual material damage caused by such failure, and then only to the extent thereof or (ii) unless such notice is given after the expiration of the appropriate Claim Period.  A claim for indemnification by a Buyer Indemnified Person must be made in the appropriate Claim Period and a claim for indemnification by a Buyer Indemnified Person from Sellers or New Kleinco outside of the appropriate Claim Period is not valid (for clarity, expiration of Claim Period shall not affect any claim for indemnification asserted prior to expiration of the Claim Period and the applicable representations and warranties shall survive the expiration of the Claim Period solely for the purpose of resolving any claim properly made within the Claim Period until such claim is finally resolved).  Each of Sellers and New Kleinco shall have a period of sixty (60) days in which to review the written notice and related information provided by Buyer to it and to request reasonable additional information from National or Buyer regarding Buyer’s claim for indemnification, which additional information Buyer shall promptly provide or cause, whether through action of National’s board of managers or otherwise, to be provided.  Within fifteen (15) Business Days following the end of the sixty (60) day review period specified above, either each Seller and/or New Kleinco, as applicable, shall pay Buyer the applicable Obligation Amount, or such Seller or New Kleinco, as applicable, shall reject Buyer’s claim for indemnification by written notice to Buyer (the “ Rejection Notice ”).  If, at the end of such fifteen (15) Business Day period such Seller or New Kleinco, as applicable, has not either paid the applicable Obligation Amount or delivered a Rejection Notice, then such Seller or New Kleinco, as applicable, shall be conclusively obligated to pay Buyer the applicable Obligation Amount.  In the event a Seller or New Kleinco delivers a Rejection Notice, (x) Buyer shall have all rights and remedies under law to pursue the claim subject to the limitations on liability in this Agreement and such Seller or New Kleinco, as applicable, shall have all defenses available to it under law and (y) such Seller or New Kleinco, as applicable, shall not have an indemnification obligation unless and until there is an adjudication or other final determination that such Seller or New Kleinco, as applicable, has an obligation to Buyer.

 

(k)   Sole Remedy .  From and after the Closing, except for any representation, warranty, or schedule that is a misrepresentation or omission by Sellers, New Kleinco or

 

National constituting actual and knowing fraud by such Party in the context it was given, the Parties acknowledge and agree that, the sole and exclusive remedy for any breach or inaccuracy, or alleged breach or inaccuracy, of any representation or warranty or certificates delivered by Sellers, New Kleinco or National to Buyer under this Agreement will be indemnification in accordance with this Section 8.1 . In furtherance of the foregoing, Buyer hereby waives, to the fullest extent permitted by Applicable Law, any and all other rights, claims, and causes of action (including rights of contributions, if any) that may be based upon, arise out of, or relate to a misrepresentation by National in this Agreement (including any tort or breach of contract claim or cause of action based upon, arising out of, or related to any representation or warranty made by Sellers, New Kleinco or National in or in connection with this Agreement or as an inducement to enter into this Agreement), known or unknown, foreseen or unforeseen, which exist or may arise in the future, that it may have against the other arising under or based upon any Applicable Law (including any such Applicable Law under or relating to environmental matters), common law, or otherwise.  Subject to Section 7.2(b)(6) , the foregoing shall not limit Buyer’s ability to seek specific performance, injunctive relief or other non-monetary equitable remedies as may be required to enforce covenants or other agreements (including Section 5.13 ), or to seek any remedy in connection with other Transaction Documents.

 

(l)   Investigation .  Except as set forth in Section 5.4(b) , the right to indemnification under this Section 8.1 or any other remedy based on representations, warranties, covenants and agreements of Sellers, New Kleinco or National in this Agreement shall not be affected by any investigation conducted at any time, or any knowledge acquired (or capable of being acquired) by Buyer at any time, whether before or after the execution and delivery of this Agreement or the Closing Date.

 

(m)   Right of Offset .  In the event (a) any Seller or New Kleinco (“ Indemnitor ”)   becomes obligated to make any payments to Buyer (which for purposes of this Section 8.1(m) shall include Buyer’s wholly owned, direct or indirect Subsidiaries) under this Agreement, (b) after taking into account all amounts in the Escrow Fund which shall first be used to satisfy an indemnification obligation of USPB and/or NBPCo covered by the Escrow Fund, there remains unpaid any portion of the indemnification obligation (the “ Indemnification Shortfall ”) and (c) a period of at least five (5) Business Days has elapsed since Buyer has provided written notice of such Indemnification Shortfall, the Indemnitor hereby authorizes and directs that upon notice to National by Buyer, with a copy to the Indemnitor, Buyer may require National to pay to Buyer any and all payments or distributions under the Restated LLC Agreement that National would, but for this provision, make to the Indemnitor or any of its Permitted Transferees (as such term is defined in the Restated LLC Agreement) to pay such Indemnification Shortfall in full.  Sellers and New Kleinco agree that they will cooperate (and cause each of their Permitted Transferees to cooperate) with National and Buyer to effectuate this provision, including providing any consents or written directions to National confirming such payments and that any transfer of membership interests in National by a Seller or New Kleinco to a Permitted Transferee shall be subject to this obligation.

 

8.2   Limited Survival of Representations, Warranties .

 

(a)   Sellers .  The representations and warranties of each Seller and New Kleinco and any certificate delivered by any Seller or New Kleinco pursuant to this Agreement

 

are made as of the execution of this Agreement and as of the Closing Date and shall survive the Closing Date until the expiration of the Claim Period applicable thereto.  The Claim Period for a Buyer Indemnified Person to make a claim against any Seller (other than TKK and TMK) for a breach of any of such Seller’s representations, warranties or certificates delivered by such Seller pursuant to this Agreement as well as for a failure of such Seller to perform any agreement, covenant or obligation in this Agreement required to be performed on or prior to the Closing is until the two year anniversary of the Closing; provided, that (1) the Claim Period for a claim related to any of such Seller’s representations, warranties or certificates delivered by such Seller pursuant to this Agreement with respect to Sections 2.1(a) , 2.1(b) , 2.1(c) , 2.1(e) and 2.2 shall be indefinitely and (2) the Claim Period for a claim pursuant to Section 8.1(c) shall be until sixty (60) days following the expiration of the applicable statute of limitations with respect to the particular matter that is the subject matter thereof (including all applicable periods of extension).  The Claim Period for a Buyer Indemnified Person to make a claim against TKK, TMK or New Kleinco for a breach of the representations and warranties of TKK, TMK or New Kleinco or certificates delivered by TKK, TMK or New Kleinco pursuant to this Agreement as well as for a failure of TKK, TMK or New Kleinco to perform any agreement, covenant or obligation in this Agreement required to be performed on or prior to the Closing is until the eighteen month anniversary of the Closing.

 

(b)   National Representations and Warranties .  National’s representations, warranties, covenants, and any certificates delivered by National or an officer of National are made as of the execution of this Agreement and as of the Closing Date and shall survive the Closing Date until the expiration of the Claim Period applicable thereto.  The Claim Period for a Buyer Indemnified Person to make a claim against Sellers for a breach of any of National’s representations, warranties, covenants or certificates delivered by National pursuant to this Agreement as well as for a failure of National to perform any agreement, covenant or obligation in this Agreement required to be performed on or prior to the Closing is until the two year anniversary of the Closing; provided, that (1) the Claim Period for a claim related to any of National’s representations, warranties or certificates delivered by National pursuant to this Agreement with respect to Sections 3.1 , 3.2 , 3.3 , 3.4 and 3.18 shall be indefinitely, and (2) the Claim Period for a claim related to any of National’s representations, warranties or certificates delivered by National pursuant to this Agreement with respect to Section 3.9 shall be until sixty (60) days following the expiration of the applicable statute of limitations with respect to the particular matter that is the subject matter thereof (including all applicable periods of extension).

 

(c)   No Limitation .  Other than the representations, warranties and certificates referred to in Section 8.2(a) and 8.2(b) , this Section 8.2 shall not limit any covenant or agreement of the Parties which by its terms contemplates performance, or creates rights or remedies, after: (1) the Closing Time, including without limitation, those contained in Article I and this Article VIII , and Section 5.7 , 5.8 and 5.13 ; or (2) the termination of this Agreement, pursuant to Article VII .  The Claim Period for any such covenant or agreement shall be until such covenant or agreement is fully performed or until such covenant or agreement expires in accordance with its terms.

 

8.3   Amendment and Waiver .  This Agreement may only be amended if the amendment is set forth in a writing executed by the Parties.  No waiver of any provision of this Agreement shall be binding unless the waiver is in writing and signed by the Party against whom

 

such waiver is to be enforced.  No failure by any Party to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy with respect to a breach of this Agreement shall constitute a waiver of any breach or any other covenant, duty, agreement, or condition.

 

8.4   Notices .  All notices, demands, and other communications given or delivered under this Agreement will be in writing and will be deemed to have been given when personally delivered or sent by facsimile transmission, or other electronic means of transmitting written documents, or sent to the Parties at the respective addresses indicated below by registered or certified U.S. mail, return receipt requested and postage prepaid or by private overnight mail courier service.  Notices, demands, and communications sent by facsimile transmission or other electronic means must also be sent by regular U.S. mail or by private overnight mail courier service to the Parties in order for the notice to be effective.  Notices, demands, and communications to the National, Sellers, New Kleinco or Buyer, must, unless another address is specified in writing, be sent to the address indicated below:

 

If to Buyer:

Leucadia National Corporation

315 Park Avenue South

New York, NY  10010

Attention: President

Fax: (212) 598-3245

 

with a copy (which copy shall not constitute notice to Buyer) to:

 

Andrea A. Bernstein (andrea.bernstein@weil.com)

Matthew J. Gilroy (matthew.gilroy@weil.com)

Weil, Gotshal and Manges LLP

767 Fifth Avenue

New York, NY  10153

Fax: (212) 310-8007

 

If to National:

National Beef Packing Company, LLC

12200 Ambassador Drive, 5 th Floor

Kansas City, MO  64163

Attention:  General Counsel

Fax:  (816) 713-8889

 

with a copy (which copy shall not constitute notice to National) to:

 

Husch Blackwell, LLP

4801 Main Street, Suite 1000

Kansas City, MO  64112

Attention:  John Brungardt

(john.brungardt@huschblackwell.com)

Fax:  (816) 983-8080

 

If to Sellers:

U.S. Premium Beef, LLC

P.O. Box 20103

Kansas City, MO  64195

Attention:  Steven D. Hunt, CEO

Fax:  (816) 713-8810

with a copy (which copy shall not constitute notice to USPB) to:

Mark J. Hanson (mjhanson@stoel.com)

Ronald D. McFall (rdmcfall@stoel.com)

Stoel Rives LLP

33 South Sixth Street, Suite 4200

Minneapolis, MN  55402

Fax:  (612) 373-8881

NBPCo Holdings, LLC

891 Two Rivers Drive

Dakota Dunes, SD  57049

Attention:  Rich Jochum

Fax:  (605) 217-8001

with a copy (which copy shall not constitute notice to NBPCo):

Michael M. Hupp

Koley Jessen P.C., L.L.O.

1125 S. 103rd Street, Suite 800

Omaha, NE  68124

Fax:           (402) 390-9500

 

TKK Investments, LLC

5964 N. Cosby Ave.

Kansas City, MO  64151

Attention:  Timothy M. Klein

 

TMKCo, LLC

5964 N. Cosby Ave.

Kansas City, MO  64151

Attention:  Timothy M. Klein

 

If to New Kleinco:

TMK Holdings, LLC

5964 N. Cosby Ave.

Kansas City, MO  64151

Attention:  Timothy M. Klein

 

Any of the above addresses may be changed at any time by notice given as provided above; provided , however , that the notice of change of address shall be effective only upon receipt.

 

8.5   Binding Agreement; Assignment .  Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned by any of the Parties, whether by operation of law or otherwise, without the written consent of the other Parties and any purported assignment without such consent shall be void; provided , however , that Buyer may assign, in its sole discretion, any or all of its rights, interests, and obligations under this Agreement in whole or in part to one or more Subsidiaries or to any Affiliate of Buyer; provided , however , that no such assignment shall effect a release of Buyer from its obligations under this Agreement and Buyer shall remain fully liable for all its obligations under this Agreement. Subject to the foregoing, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.

 

8.6   Severability .  Whenever possible, each provision of this Agreement will be interpreted in a manner as to be effective and valid under Applicable Laws, but if any provision of this Agreement is held to be prohibited by or invalid under Applicable Laws, the provision will be ineffective only to the extent of the prohibition or invalidity, without invalidating the remainder of the provision or the remaining provisions of this Agreement.

 

8.7   Other Definitional Provisions .  The terms “hereof,” “herein” and “hereunder” and terms of similar import will refer to this Agreement as a whole and not to any particular provision of this Agreement.  Article, Section, paragraph, clause, subsection, Exhibit and Schedule references contained in this Agreement are references to Articles, Sections, clauses, subsections, Exhibits and Schedules in or attached to this Agreement, unless otherwise specified.  Each defined term used in this Agreement has a comparable meaning when used in its plural or singular form.  Each gender specific term used in this Agreement has a comparable meaning whether used in a masculine, feminine or gender neutral form.  Whenever the terms “include” or “including” are used in this Agreement (whether or not such terms are followed by the phrase “but not limited to” or “without limitation” or words of similar effect) in connection with a listing of items within a particular classification, that listing will be interpreted to be illustrative only and will not be interpreted as a limitation on, or an exclusive listing of, the items within that classification.  Each reference in this Agreement to any Applicable Laws will be deemed to include such Applicable Laws as they hereafter may be amended, supplemented or modified from time to time and any successor thereto, unless such treatment would be contrary to the express terms of this Agreement.  Any term used but not defined in this Agreement shall have the meaning given to the term in Exhibit A , which Exhibit A is incorporated into this Agreement by reference.  Whenever any amount is stated in this Agreement in “Dollars” or by reference to the “$” symbol, such amount shall be United States dollars (unless a contrary intention appears) and will, when the context allows, include equivalent amounts in other currencies.

 

8.8   Captions .  The captions used in this Agreement are for convenience of reference only and do not constitute a part of this Agreement and will not be deemed to limit, characterize, or in any way affect any provision of this Agreement, and all provisions of this Agreement will be enforced and construed as if no caption had been used in this Agreement.

 

8.9   Entire Agreement .  This Agreement (including the Exhibits, Schedules and certificates delivered pursuant to this Agreement), the Transaction Documents and the Confidentiality Agreement contain the entire agreement between the Parties and supersede any

 

prior understandings, agreements or representations by or between the Parties, written or oral, which may have related to the subject matter in any way.

 

8.10   Counterparts and Facsimile Signatures .  This Agreement may be executed and delivered (including by facsimile transmission) in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties, it being understood that all Parties need not sign the same counterpart.

 

8.11   Waiver of Jury Trial .  TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAWS, EACH OF THE PARTIES IRREVOCABLY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING IN WHOLE OR IN PART UNDER, RELATED TO, BASED ON OR IN CONNECTION WITH THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN TORT OR CONTRACT OR OTHERWISE.  ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 8.11 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

 

8.12   Public Announcements .  Prior to the Closing, no Party shall issue any press release or make any public statement with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other Parties (which consent shall not be unreasonably withheld or delayed), except that any Party may make any disclosure required by Applicable Laws (including federal securities laws) or applicable stock exchange rules if it determines in good faith that it, or any Subsidiary or parent company thereof, is required to do so.  A Party, with respect to the each such disclosure, shall provide the other Parties with prior notice and a reasonable opportunity to review the disclosure.

 

8.13   Jurisdiction .  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, THE PARTIES AGREE THAT ANY SUIT, ACTION OR PROCEEDING SEEKING TO ENFORCE ANY PROVISION OF, OR BASED ON ANY MATTER ARISING OUT OF OR IN CONNECTION WITH, THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THIS AGREEMENT SHALL BE BROUGHT IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE (OR, IN THE CASE OF ANY CLAIM AS TO WHICH THE FEDERAL COURTS HAVE EXCLUSIVE SUBJECT MATTER JURISDICTION, THE FEDERAL COURT OF THE UNITED STATES OF AMERICA) SITTING IN THE STATE OF DELAWARE, AND EACH OF THE PARTIES CONSENTS TO THE EXCLUSIVE JURISDICTION OF THOSE COURTS (AND OF THE APPROPRIATE APPELLATE COURTS) IN ANY SUIT, ACTION OR PROCEEDING AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING IN ANY OF THOSE COURTS OR THAT ANY SUIT, ACTION OR PROCEEDING WHICH IS BROUGHT IN ANY OF THOSE COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  PROCESS IN ANY SUIT, ACTION OR

 

PROCEEDING MAY BE SERVED ON ANY PARTY ANYWHERE IN THE WORLD, WHETHER WITHIN OR WITHOUT THE JURISDICTION OF ANY OF THE NAMED COURTS.  WITHOUT LIMITING THE FOREGOING, EACH PARTY AGREES THAT SERVICE OF PROCESS ON IT BY NOTICE AS PROVIDED IN SECTION 8.4 SHALL BE DEEMED EFFECTIVE SERVICE OF PROCESS.

 

8.14   Governing Law .  ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAW OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.

 

8.15   Attorneys’ Fees .  In any action or proceeding instituted by a Party arising in whole or in part under, related to, based on or in connection with this Agreement or the subject matter of this Agreement, the prevailing Party shall be entitled to receive from the losing Party reasonable attorneys’ fees, costs and expenses incurred in connection with the action or proceeding, including any appeals from the action or proceeding.

 

8.16   Parties in Interest .  This Agreement shall be binding upon and inure solely to the benefit of each Party and its successors and permitted assigns.  Nothing in this Agreement is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement except as expressly set forth in this Agreement.

 

8.17   Expenses .

 

(a)   Fees for Agreement .  Each Seller will pay the Seller’s Portion of the fees and expenses incurred by Sellers and (except as provided in Section 8.17(c) below) National in connection with the drafting of this Agreement.

 

(b)   Fees for Proxy Statement .  USPB will pay for all fees and expenses incurred for the proxy statement in connection with the transactions contemplated under this Agreement.

 

(c)   Fees for Due Diligence Review .  National will bear all fees and expenses incurred for the due diligence review (including the establishment of the Data Room and the preparation of the Schedules hereto).

 

(d)   Other Fees .  Except as otherwise expressly provided in this Agreement (including Section 7.2(b) ), the Parties shall each pay all of their own fees, costs, and expenses (including fees, costs, and expenses of legal counsel, investment bankers, advisors, accountants, brokers, or other representatives and consultants and appraisal fees, costs, and expenses) incurred by the Person in connection with the preparation, negotiation, execution, and delivery of this Agreement and the other Transaction Documents, the performance of their respective obligations under this Agreement, and the consummation of the transactions contemplated by this Agreement.

 

8.18   Rules of Construction .

 

(a)   Representation By Counsel .  Each of the Parties acknowledges that it has been represented by independent counsel of its choice throughout all negotiations that have preceded the execution of this Agreement.  Each Party and its counsel cooperated in the drafting and preparation of this Agreement and the documents referred to in this Agreement, and any and all drafts relating to this Agreement shall be deemed the work product of the Parties and may not be construed against any Party by reason of its preparation.  Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any Party that drafted it is of no application and is expressly waived.

 

(b)   Limited Purpose of Disclosure Schedule .  The inclusion of any information in the Sellers Disclosure Schedule or the National Disclosure Schedule shall not be deemed an admission or acknowledgment, in and of itself and solely by virtue of the inclusion of the information in the National SEC Documents, the Sellers Disclosure Schedule or the National Disclosure Schedule, that the information is required to be listed in the Sellers Disclosure Schedule or the National Disclosure Schedule or that the items are material to National.  The headings, if any, of the individual sections of the Sellers Disclosure Schedule and the National Disclosure Schedule are inserted for convenience only and shall not be deemed to constitute a part of the section or a part of this Agreement.  The Seller Disclosure Schedule and the National Disclosure Schedule are each arranged in sections corresponding to those contained in Article II or Article III , as the case may be, merely for convenience, and the disclosure of an item in one section of the Sellers Disclosure Schedule or the National Disclosure Schedule as an exception to a particular representation or warranty shall be deemed adequately disclosed as an exception with respect to all other representations or warranties contained in Article II or Article III , as the case may be, to the extent that the relevance of the item as an exception or as contemplated under Section 5.4 hereof a supplement to such other representations or warranties is reasonably apparent on the face of the item, notwithstanding the presence or absence of an appropriate section of the Sellers Disclosure Schedule or the National Disclosure Schedule with respect to other representations or warranties or a reference to the other representations or warranties in either the Sellers Disclosure Schedule or the National Disclosure Schedule or in the particular representation or warranty in Article II or Article III , as the case may be.

 

(c)   Dollar Amounts Not An Admission of Materiality .  The specification of any dollar amount in the representations and warranties or otherwise in this Agreement or in the National SEC Documents, the Sellers Disclosure Schedule or the National Disclosure Schedule is not intended and shall not be deemed to be an admission or acknowledgment of the materiality of those amounts or items, nor shall the same be used in any dispute or controversy between the Parties to determine whether any obligation, item or matter (whether or not described herein or included in any Schedule) is or is not material for purposes of this Agreement (other than with respect to any representation, warranty or provision of this Agreement in which such specification occurs).

 

(d)   U.S. Dollar .  The term “dollar”, “U.S. dollar”, “United States dollar”, “$”, “USD” and like expressions means United States dollars or (as relevant) an equivalent amount in another currency.  For purposes of this Agreement, any Debt, amount, liability, or

 

obligation that is expressed in a foreign currency pursuant to the underlying agreement or transaction shall be converted into United States dollars:

 

(1)   pursuant to the terms of the underlying agreement or transaction if the conversion is expressly addressed in that agreement or transaction; or

 

(2)   if clause (1) is not applicable based on the 12 noon rate for customs purposes as quoted by the Federal Reserve Bank of New York on the last Business Day that is immediately prior to the date that the determination of the conversion is required under this Agreement or any successor rate quoted by the Federal Reserve Bank of New York.

 

(e)   Buyer Disclosure Schedule Not Admission .  The inclusion of any information in the Buyer Disclosure Schedule shall not be deemed an admission or acknowledgment, in and of itself and solely by virtue of the inclusion of the information in the Buyer Disclosure Schedule, that the information is required to be listed in the Buyer Disclosure Schedule or that the items are material to Buyer.  The headings, if any, of the individual sections of each of the Buyer Disclosure Schedules are inserted for convenience only and shall not be deemed to constitute a part of the Buyer Disclosure Schedules or a part of this Agreement.  The Buyer Disclosure Schedule is arranged in sections corresponding to those contained in Article IV merely for convenience, and the disclosure of an item in one section of the Buyer Disclosure Schedule as an exception to a particular representation or warranty shall be deemed adequately disclosed as an exception with respect to all other representations or warranties contained in Article IV to the extent that the relevance of the item to the representations or warranties is reasonably apparent on the face of the item, notwithstanding the presence or absence of an appropriate section of the Buyer Disclosure Schedule with respect to other representations or warranties or a reference to the other representations or warranties in either the Buyer Disclosure Schedule or in the particular representation or warranty in Article IV .

 

8.19   Enforcement .  The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms on a timely basis or were otherwise breached.  It is accordingly agreed that prior to termination of this Agreement in accordance with Article VII , the Parties shall be entitled to an injunction or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court identified in Section 8.13 , this being in addition to any other remedy to which they are entitled at law or in equity.

 

8.20   Tax Matters .

 

(a)   Tax Returns .  The Parties agree that Buyer’s purchase of the National Interests will result in a termination of National for Federal income tax purposes under Code Section 708.  Sellers shall control the preparation and filing, in a manner consistent with the past practice of National or any of its Subsidiaries, as applicable, all Tax Returns in respect of National or any its Subsidiaries that are required to be prepared and filed prior to the Closing Date; provided , however , that to the extent that any item on any such Tax Returns would reasonably be expected to have an adverse effect on Buyer, National, or any of its Subsidiaries, Sellers shall provide a copy of such Tax Returns to Buyer at least fifteen (15) days prior to the due date for filing such Tax Returns and Sellers shall not file such Tax Returns without Buyer’s

 

consent (which shall not be unreasonably withheld, conditioned, or delayed).  Buyer shall control the preparation and filing (including through direction and oversight of National) all other Tax Returns in respect of National and its Subsidiaries (including any Tax Return for any Pre-Closing Tax Period and required to be filed after the Closing Date); provided , however , that in the case of any such Tax Return for a Pre-Closing Tax Period, such Tax Return will be prepared in a manner consistent with prior tax accounting practices and methods used by National or any of its Subsidiaries, as applicable, except as otherwise required by Applicable Law, and Buyer shall provide a copy of any such Tax Return to Sellers for their review and comment at least fifteen (15) days prior to the due date for filing such Tax Returns and shall attempt in good faith to address all reasonable comments made by the Sellers; provided , however , that to the extent that Sellers would be reasonably expected to have material liability for any item on such Tax Returns pursuant to this Agreement, Buyer shall not file such Tax Returns without Sellers’ consent (which shall not be unreasonably withheld, conditioned, or delayed).

 

(b)   Straddle Periods .  To the extent permitted by Applicable Law, the Parties agree to cause the taxable period of National and each of its Subsidiaries to close on the Closing Date.  In the case of Taxes of National or any of its Subsidiaries that are payable with respect to a taxable period beginning on or prior to and ending after the Closing Date (a “ Straddle Period ”), the portion of any such Tax that is allocable to the portion of the Straddle Period ending on the Closing Date shall be borne and paid by Sellers, and such portion shall be determined as follows:

 

(1)   in the case of Taxes that are (A) based upon or related to income or receipts, (B) imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible), or (C) not described in clauses (1)(A), (1)(B), or (2) of this Section 8.20(b) , deemed equal to the amount that would be payable if the taxable period ended on the Closing Date; and

 

(2)   in the case of Taxes imposed on a periodic basis with respect to one or more assets or otherwise measured by the level of any item, deemed to be the amount of such Taxes for the entire period, multiplied by a fraction the numerator of which is the number of calendar days in the period ending on the Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period.

 

(c)   Tax Matters Information .  After the Closing, the Parties shall (1) provide, and shall cause each of their Affiliates to provide, to the other Parties and their Affiliates (at the expense of the requesting Party) such information relating to National as the Parties may reasonably request with respect to Tax matters; (2) (A) retain, in a manner in compliance with Section 6001 of the Code, all books and records of National and each of its Subsidiaries with respect to Tax matters pertinent to National or any of its Subsidiaries relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Buyer, National, or any of its Subsidiaries, any extensions thereof) of each respective taxable period, and to abide by all record retention agreements entered into with any taxing authority, and (B) give the other Parties reasonable written notice prior to transferring, destroying or discarding any such books and records and, if any other Party so requests, Buyer, National, or a Subsidiary, as the case may be, shall allow the requesting Party to take possession

 

of such books and records; and (3) cooperate with each other in (A) the conduct of any audit or other proceeding with respect to any Tax relating to National or any of its Subsidiaries for each taxable period or portion of such period ending on or prior to the Closing Date until the expiration of the applicable statute of limitations taking into account any and all extensions or waivers and (B) the structuring of any Schedule 1.2(d) Transaction following the Closing Date and the consummation and execution of any agreement in furtherance thereof.

 

(d)   Taxing Authority Notice .  If Buyer or any of its Affiliates (including National) receives any written notice from any taxing authority proposing any adjustment to any income tax return relating to any Pre-Closing Tax Period, Buyer shall provide Sellers prompt written notice of such taxing authority notice.  Sellers shall have the right to control, at their own expense, any audit relating solely to a Pre-Closing Tax Period and for which a Seller has financial responsibility pursuant to this Agreement or by law, and Buyer shall have the right to control, at its own expense, all other audits; provided , however , that neither Buyer nor Sellers (or their respective Affiliates) shall have the right to take a position that would have a Material Adverse Effect on the other Party or Parties without the written consent of such other Party (which consent shall not be unreasonably withheld, conditioned or delayed).

 

(e)   Post Closing Distributions .

 

(1)   Notwithstanding anything in this Agreement to the contrary, with respect to the period between National’s most recent distributions and the Closing, upon completion of the Federal, state and local income tax returns described above, National shall make a priority return distribution under Section 5.2.2 of the National Limited Liability Company Agreement and a tax distribution to each Seller in an amount equal to forty-eight percent (48%) of the taxable income of National reported on the Tax Returns described in Section 8.20(a) and allocated to that Seller (collectively for each Seller, the “ Final Pre-Closing Tax Distribution ”), in both cases reduced by any prior tax distributions made to the Seller with respect to such income under Section 5.2.1 of the National Limited Liability Company Agreement.  If the amount of the Final Pre-Closing Tax Distribution for a Seller shall be less than the aggregate amount actually distributed to such Seller in respect of the taxable year ending on the Closing Date, such Seller shall pay to National the amount of such excess distribution.

 

(2)   Sellers shall, and shall cause National and any of its Subsidiaries (as applicable) to, consent to any distribution necessary to undertake any Schedule 1.2(d) Transaction hereof in connection with the transactions contemplated by this Agreement.

 

(f)   Transfer Taxes .  All transfer, documentary, registration, stamp, and other similar Taxes (including, charges for or in connection with the recording of any instrument or document as provided in this Agreement) payable in connection with the Sale and the other transactions contemplated by this Agreement (“ Transfer Taxes ”) will be borne one-half by Buyer, on the one hand, and one-half by the Sellers (in accordance with their percentage ownership of the total value of the National Interests), on the other hand, with such Transfer Taxes to be timely paid by each such party.

 

ARTICLE IX

 

NEW KLEINCO GUARANTEE

 

9.1   New Kleinco Guarantee .  New Kleinco hereby unconditionally and irrevocably, as a primary obligor and not only a surety, guarantees to Buyer and the other Buyer Indemnified Persons, and their respective successors, transferees and permitted assigns, the prompt and complete payment and performance by TKK and TMK when due of their indemnification obligations under Section 8.1 (the “ Klein Guaranteed Obligations ”).  This guarantee shall remain in full force and effect until all of the Klein Guaranteed Obligations shall have been paid in full.  New Kleinco waives (i) any and all notice of the creation, renewal, extension or accrual of any of the Klein Guaranteed Obligations and (ii) diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon TKK or TMK with respect to the Klein Guaranteed Obligations.

 

Remainder of Page Intentionally Left Blank

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

 

 

SELLERS:                                                                U.S. Premium Beef , LLC

 

 

NBPC o Holdings , LLC

 

TKK Investments , LLC

 

TMKCo, LLC

 

NEW KLEINCO:                                                                  TMK Holdings, LLC

 

 

BUYER:                                                                  Leucadia National Corporation

 

 

NATIONAL:                                                                  National Beef Packing Company , LLC

 

 

SCHEDULE 1.2(D)

At the request of Buyer, the Parties shall cause the following transactions to occur:

1.	At or prior to the Closing, National shall form a direct, wholly owned Delaware limited liability company (“ NewSub ”).

2.

National shall transfer, and shall cause its Subsidiaries to transfer, all of the tangible and intangible assets of National and its Subsidiaries located in Pennsylvania to NewSub in exchange for all of the membership interests in NewSub.  In connection with this transfer, NewSub and National shall take all necessary steps to substantially continue all benefits available to all employees located in Pennsylvania prior to their transfer to NewSub.

3.	Following the Closing, National shall declare and make a pro rata dividend of all of the membership interests in NewSub to the members of National.

4.

Simultaneously with Step 3, (i) the Parties that receive the membership interests in NewSub shall enter into the NewSub limited liability company agreement set forth on Exhibit I hereto and (ii) the members of National shall enter into the National limited liability company agreement set forth on Exhibit II hereto.

5.	NewSub and National (or one or more designated Subsidiaries of National) shall enter into one or more agreements to memorialize the on-going business relationship between NewSub and National (e.g., management services agreement, loan agreement, trademark license agreement, etc.).

EXHIBIT I

NEWSUB LIMITED LIABILITY COMPANY AGREEMENT

EXHIBIT II

 

NATIONAL LIMITED LIABILITY COMPANY AGREEMENT

 

 

EXHIBIT A

 

DEFINED TERMS

 

As used in the Membership Interest Purchase Agreement to which this Exhibit A is attached and incorporated by reference therein, the following terms will have the meanings specified:

 

“ 5.11 Notice ” has the meaning set forth in Section 5.11(d) .

 

“ Acquisition Proposal ” has the meaning set forth in Section 5.11(a) .

 

“ Affiliate ” of a Person means a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first mentioned Person.

 

“ Agreement ” has the meaning set forth in the Introduction.

 

“ Antitrust Laws ” means collectively the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, or any other federal, state or foreign law or regulation or decree or an order designed to prohibit, restrict or regulate actions for the purpose or effect of foreign ownership, monopolization or restraint of trade.

 

“ Applicable Laws ” means all applicable federal, state, provincial, local or foreign laws, statutes, rules, regulations, ordinances, directives, judgments, order (judicial or administrative), decrees, injunctions and writs of any Governmental Entity or any similar provisions having the force or effect of law.

 

“ Business Day ” means any day other than: (a) a Saturday, Sunday or federal holiday or (b) a day on which commercial banks in New York, New York are authorized or required to be closed.

 

“ Buyer ” has the meaning set forth in the Introduction.

 

“ Buyer Disclosure Schedule ” means that certain disclosure schedule of even date with this Agreement from Buyer to Sellers delivered concurrently with the execution and delivery of this Agreement.  For purposes of this Agreement, the Buyer Disclosure Schedule shall be deemed to include all information disclosed in the reports, schedules, forms, statements and other documents filed by Buyer with the SEC for the 12 months prior to the date of this Agreement with respect to information that is reasonably apparent on its face relevant to the representations and warranties contained in Article IV , excluding any disclosures contained therein in any risk factor section, in any section relating to forward looking statements or any other disclosures to the extent that they are cautionary, predictive or forward looking in nature.

 

“ Buyer Indemnified Persons ” has the meaning set forth in Section 8.1(a) .

 

“ Capital Expenditure Budget ” has the meaning set forth in Section 5.1(r) .

 

“ Cattle Purchase and Sale Agreement ” has the meaning set forth in Section 1.7 .

 

“ Change of Recommendation ” has the meaning set forth in Section 5.11(d)(1) .

 

“ Claim Period ” means the respective periods set forth in Section 8.2(a) or 8.2(b) , during which a claim against any Seller or New Kleinco for a breach of any of Sellers’ or New Kleinco’s representations, warranties or certificates, as the case may be, may be asserted.

 

“ Closing ” means the consummation of the transactions contemplated by this Agreement and the other Transaction Documents.

 

“ Closing Date ” has the meaning set forth in Section 1.3 .

 

“ Closing Time ” means the time at which the Closing is effective.

 

“ COBRA ” has the meaning set forth in Section 3.13(b) .

 

“ Code ” means the Internal Revenue Code of 1986, as amended (including, where applicable, the Internal Revenue Code of 1954, as amended).

 

“ Competing Transaction Agreement ” has the meaning set forth in Section 5.11(c)(2) .

 

“ Competing Business ” means any business, whether in corporate, proprietorship or partnership form or otherwise, that is engaged, directly or indirectly, anywhere in the world in one or more of the following businesses: cattle slaughter, beef processing and/or packaging, including for the case ready and portioned beef market, retail and/or wholesale marketing of beef and hide tanning.

 

“ Competing Facility ” means any cattle slaughtering facility, any beef processing and/or packaging facility, any retail and/or wholesale beef marketing operation or any hide tanning facility owned by a Competing Business anywhere in the world.

 

“ Confidentiality Agreement ” means the confidentiality agreement between Buyer and National signed April 4, 2011.

 

“ Consent ” means any consent, order, approval, authorization, ratification or other action of, or any filing with or notice to or other action with respect to, any Governmental Entity or any other Person which is required for any of the execution, delivery or performance of the Agreement or any other Transaction Document or the consummation of transactions contemplated hereby or thereby, whether such requirement arises pursuant to any Applicable Laws, contract or agreement, including any of the foregoing which is required in order to prevent a breach of or a default under or a termination or modification of any contract or agreement, which right of breach, default, termination or modification results from the execution, delivery or consummation of the transaction contemplated under the Agreement.

 

“ Control ” (including the terms “ Controlling ”, “ Controlled by ” and “ under common Control with ”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

 

“ Controlled Group Member ” has the meaning set forth in Section 3.13(a) .

 

“ Credit Agreement ” means the Amended and Restated Credit Agreement, by and between National and the various issuers and lenders parties thereto dated as of June 4, 2010, as amended by the First Amendment dated June 10, 2011.

 

“ Credit Agreement Consent ” has the meaning set forth in the recitals hereto.

 

“ Cure Period ” has the meaning set forth in Section 7.1(b)(2) .

 

“ Data Room ” means the data site established by Merrill for review of documents and information by the Parties to this Agreement.

 

“ Debt ” means, without duplication, as of immediately prior to the Closing, the aggregate amount of:

 

(1)   all indebtedness of National and its Subsidiaries (including the principal amount thereof or, if applicable, the accreted amount thereof and the amount of accrued and unpaid interest thereon), whether or not represented by bonds, debentures, notes or other securities, for the repayment of money borrowed;

 

(2)   all deferred indebtedness of National and its Subsidiaries for the payment of the purchase price of property or assets purchased;

 

(3)   all obligations of National and its Subsidiaries to pay rent or other payment amounts under a lease of real or personal property which is classified as a capital lease on the face of the Latest Balance Sheet;

 

(4)   any outstanding reimbursement obligation of National and its Subsidiaries with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of National or its Subsidiaries pursuant to which the applicable bank or similar entity has paid thereunder obligations for which National or its Subsidiaries is required to repay;

 

(5)   any payment obligation of National and its Subsidiaries under any interest rate swap agreement, forward rate agreement, interest rate cap or collar agreement or other financial agreements or arrangements entered into for the purpose of limiting or managing interest rate risks;

 

(6)   all indebtedness for borrowed money secured by any Lien existing on property owned by National or its Subsidiaries, whether or not indebtedness secured by the indebtedness shall have been assumed;

 

(7)   all guaranties, endorsements, assumptions and other contingent obligations of National and its Subsidiaries in respect of, or to purchase or to otherwise acquire, indebtedness for borrowed money of others the repayment of which is guaranteed by National or its Subsidiaries; and

 

(8)   all other short-term and long-term liabilities of National and its Subsidiaries for borrowed money.

 

“ Determination Period ” has the meaning set forth in Section 5.11(b)(3) .

 

“ DOJ ” means the United States Department of Justice.

 

“ Employee Benefit Plan ” has the meaning set forth in Section 3.13(a) .

 

“ Environmental Laws ” has the meaning set forth in Section 3.16(l) .

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ Escrow Fund ” has the meaning set forth in Section 1.2(b) .

 

“ Exchange Act ” means the Securities and Exchange Act of 1934, as amended.

 

“ Final Pre-Closing Tax Distribution ” has the meaning set forth in Section 8.20(e)(1) .

 

“ Financial Statements ” has the meaning set forth in Section 3.6(a) .

 

“ FTC ” means the United States Federal Trade Commission.

 

“ GAAP ” means United States generally accepted accounting principles, applied on a consistent basis.

 

“ Governmental Entity ” means any government, governmental department, commission (including industrial development board authority), board, bureau, agency, court, administrative or executive branch, judicial branch, legislative branch or other instrumentality, whether foreign or domestic, of any country, nation, republic, federation or similar entity or any state, province, county, parish or municipality, jurisdiction or other political subdivision thereof.

 

“ Ground Lease ” has the meaning set forth in Section 3.8(f) .

 

“ Ground Leased Real Properties ” has the meaning set forth in Section 3.8(a) .

 

“ Hazardous Materials ” has the meaning set forth in Section 3.16(m) .

 

“ Headquarters Lease ” has the meaning set forth in Section 3.8(g) .

 

“ HSR Act ” has the meaning set forth in Section 3.5(b)(1) .

 

“ Indemnification Shortfall ” has the meaning set forth in Section 8.1(m) .

 

“ Indemnitor ” has the meaning set forth in Section 8.1(m) .

 

“ Indication of Interest ” means the non-binding indication of interest letter dated as of May 26, 2011 between Buyer, National and Sellers.

 

“ Industry ” means the cattle slaughter & processing, retail and wholesale marketing of beef and hide tanning industries in the United States in which National and its Subsidiaries conduct their business.

 

“ Intellectual Property ” has the meaning set forth in Section 3.11(b) .

 

“ IP Agreements ” has the meaning set forth in Section 3.11(c) .

 

“ IRS ” has the meaning set forth in Section 3.13(c) .

 

“ Klein Employment Agreement ” has the meaning set forth in the recitals hereto.

 

“ Klein Guaranteed Obligations ” has the meaning set forth in Section 9.1 .

 

“ Klein Pledge Agreement ” has the meaning set forth in Section 1.7 .

 

“ Klein Purchase ” has the meaning set forth in the recitals hereto.

 

“ Klein Purchase Price ” has the meaning set forth in Section 1.2(a)(3) .

 

“ Knowledge ” means, (i) in the case of Buyer, only the current, actual knowledge and awareness (and shall not include any deemed or constructive knowledge or awareness), after reasonable inquiry given the subject of the knowledge, of Justin R. Wheeler, Joseph A. Orlando, Ian M. Cumming and Joseph S. Steinberg; (ii) in the case of National, only the current, actual knowledge and awareness (and shall not include any deemed or constructive knowledge or awareness), after reasonable inquiry given the subject of the knowledge, of Timothy M. Klein, Terry Wilkerson, Simon McGee, David Grosenheider, Monte Lowe, Jay D. Nielsen, Bret Wilson, Steven D. Hunt, William Ludwig, David Kalscheur, Michael Eckman, Art Wagner, Richard Rees, Edward Scavuzzo and Rich Jochum and (iii) in the case of (a) USPB, only the current, actual knowledge and awareness (and shall not include any deemed or constructive knowledge or awareness) of Steven D. Hunt, (b) NBPCo, only the current, actual knowledge and awareness (and shall not include any deemed or constructive knowledge or awareness) of Rich Jochum and Eldon Roth and (c) TKK, TMK or New Kleinco, only the current, actual knowledge and awareness (and shall not include any deemed or constructive knowledge or awareness) of Timothy M. Klein.  For the avoidance of doubt, the Knowledge of each Seller shall not be imparted to the other separate Sellers.

 

“ Lands ” has the meaning set forth in Section 3.8(k) .

 

“ Latest Balance Sheet ” means the unaudited consolidated balance sheet of National dated as of May 28, 2011 filed with the SEC on July 8, 2011.

 

“ Leased Properties ” has the meaning set forth in Section 3.8(g) .

 

“ Licensed Intellectual Property ” has the meaning set forth in Section 3.11(b) .

 

“ Lien ” means any mortgage, pledge, hypothecation, lien (statutory or otherwise), preference, priority, security agreement, easement, covenant, restriction or other encumbrance of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any lease having substantially the same effect as any of the foregoing and any assignment or deposit arrangement in the nature of a security device).

 

“ Losses ” has the meaning set forth in Section 8.1(e) .

 

“ Material ” means as to a single event or occurrence, an impact and significance of more than $1,000,000 or, with respect to Section 3.13 only, $50,000.

 

“ Material Adverse Effect ” means any effect, change, development, occurrence, event or state of facts that is or would reasonably be expected to be materially adverse to the business, operations, financial condition, results of operations or prospects of National and its Subsidiaries, taken as a whole and generally an impact of more than $5,000,000; provided , however , that, in determining whether there has been a Material Adverse Effect or whether a Material Adverse Effect would reasonably be expected to occur, this definition shall exclude any material adverse effect to the extent arising out of, attributable to or resulting from:

 

(1)    any generally applicable change in Applicable Laws or GAAP or interpretation of any thereof by a Governmental Entity;

 

(2)    (i) any public announcement prior to the date of this Agreement of discussions among the Parties regarding the contemplated transactions, (ii) the announcement of this Agreement or (iii) the pendency of the consummation of the Sale or the transactions contemplated under this Agreement;

 

(3)   actions taken by National or its Subsidiaries after the date of this Agreement as required by and in accordance with this Agreement;

 

(4)   changes in conditions generally affecting the Industry;

 

(5)   changes in general economic, political or financial market conditions in the United States;

 

(6)   any outbreak or escalation of international hostilities (including, without limitation, any declaration of war by the U.S. Congress) or acts of terrorism;

 

(7)   any failure by National to meet internal projections or forecasts; provided, that the underlying cause of any such failure may be taken into consideration in making the determination of whether there has been a Material Adverse Effect or whether a Material Adverse Effect would reasonably be expected to occur;

 

provided, however , that: (A) matters referred to in clauses (1), (4), (5) and (6) of this definition may constitute (and may be taken into account in determining whether there has been or there would reasonably be expected to be) a Material Adverse Effect if they adversely affect National and its Subsidiaries in a disproportionate manner relative to other participants in the Industry; and (B) clause (2) of this definition shall not apply with respect to Sections 2.1(b) and 3.4 .

 

“ Material Contract ” means the following contracts, agreements or commitments to which National or any of its Subsidiaries is a party or otherwise bound:

 

(1)   each contract, agreement or commitment with respect to which the transactions contemplated by this Agreement gives rise to a right of termination, modification, cancellation or acceleration of any obligation or loss of benefits under, such contract, agreement or commitment;

 

(2)   each contract, agreement or commitment other than those entered into in the ordinary course of business consistent with past practice, that, regardless of the contract amount, is material to National or its Subsidiaries;

 

(3)   each contract, agreement or commitment (other than normal and routine purchase orders or similar agreements with vendors or customers entered into in the ordinary course of business consistent with the past practice of National or its Subsidiaries) that involves expenditures or receipts of National or its Subsidiaries after the date hereof in excess of $1,000,000 per annum, or that is reasonably likely to involve the payment, in one transaction or a series of related transactions, to or by National or any of its Subsidiaries of more than $1,000,000 per annum;

 

(4)   each lease, rental or occupancy agreement, installment and conditional sale agreement, and any other contract or agreement affecting the ownership of, leasing of, title to or use of any real property other than an agreement the unexpired term of which is less than three months or a month-to-month arrangement;

 

(5)   each contract or agreement to which National or any of its Subsidiaries is a party or otherwise bound with respect to patents and patent applications, trademarks, service marks, trade names and registrations, copyrights or other Intellectual Property, including license agreements, development agreements, distribution agreements, settlement agreements and consent to use agreements, material contracts or agreements with current or former employees, consultants or contractors regarding the appropriation or the non-disclosure of any Intellectual Property;

 

(6)   each collective bargaining agreement, including amendments and side letter agreements thereto, and any other contract or agreement with any labor union or other employee representative of a group of employees;

 

(7)   each joint venture, partnership, franchise, joint research and development and joint marketing agreement or any other similar contract or agreement (including a sharing of profits, losses, costs or liabilities by National or its Subsidiaries with any other Person);

 

(8)   each contract, agreement or commitment containing covenants that in any way purport to (i) restrict or prohibit the business activity of National or its Subsidiaries or limit the freedom of National or its Subsidiaries to engage in any line of business, market or geographic area or to compete with any Person or (ii) grant “most favored nations” pricing, exclusive sales, distribution, marketing or other exclusive rights, rights of refusal, rights of first negotiation or similar rights and/or terms to any Person;

 

(9)   each contract or agreement with any consultant, advisor, agent, employee, or Affiliate of National or any Subsidiary thereof providing for the payment of more than $500,000;

 

(10)   any indenture, mortgage, promissory note, loan or credit agreement or guarantees of borrowed money, letters of credit or other agreement or commitment evidencing indebtedness for borrowed money or pursuant to which indebtedness for borrowed money may be incurred or is guaranteed by National or its Subsidiaries or permitting for the creation of any charge, security interest, encumbrance or Lien upon any of the assets of National or any of its Subsidiaries (other than Permitted Encumbrances) having a value in excess of $5,000,000;

 

(11)   all contracts, agreements or commitments (other than normal and routine purchase orders or similar agreements with customers entered into in the ordinary course of business consistent with the past practice of National or its Subsidiaries) with customers of National or any of its Subsidiaries involving amounts in excess of $1,000,000 per annum;

 

(12)   any contract, agreement or commitment of guarantee, support, indemnification or warranty, assumption, or any similar commitment with respect to, liabilities, obligations of Indebtedness of any other Person involving any amount in excess of $1,000,000, but not including any of the following to the extent the same are entered into in the ordinary course of business consistent with the past practice of National or its Subsidiaries, and provided that Sellers have described generally on the Sellers Disclosure Schedule any such indemnification or similar obligations of National or its Subsidiaries with respect to any standard form or similar type agreements utilized for each of the following categories: (i) normal and routine contracts, agreements or commitments for routine maintenance of the personal property or real property of National or its Subsidiaries; and (ii) purchase orders or similar agreements with vendors, suppliers or customers;

 

(13)   any material contract, agreement or commitment with any Governmental Entity, not made in the ordinary course of business consistent with past practice, involving amounts in excess of $500,000 per annum;

 

(14)   any confidentiality, non-disclosure or secrecy contract, agreement or commitment not made in the ordinary course of business consistent with past practice;

 

(15)   any settlement agreement entered into by National or any Subsidiary of National in the last five years or under which National or a Subsidiary has continuing obligations as of the date hereof;

 

(16)   any employment, change of control, retention or severance agreement; and

 

(17)   any contract, agreement or commitment pursuant to which any rights of any third party are triggered or become exercisable that would reasonably be expected to materially adversely affect National or any of its Subsidiaries as a result of the transactions contemplated by this Agreement.

 

“ Multiemployer Plan ” has the meaning set forth in Section 3.13(f) .

 

“ National ” has the meaning set forth in the Introduction.

 

“ National Disclosure Schedule ” means that certain disclosure schedule of even date with this Agreement from National to Buyer delivered concurrently with the execution and delivery of this Agreement.  For purposes of this Agreement, the National Disclosure Schedule shall be deemed to include all information disclosed in the National SEC Documents filed with the SEC for the 12 months prior to the date of this Agreement with respect to information that is reasonably apparent on its face relevant to the representations and warranties contained in Article III , excluding any disclosures contained therein in any risk factor section, in any section relating to forward looking statements or any other disclosures to the extent that they are cautionary, predictive or forward looking in nature.

 

“ National Intellectual Property ” has the meaning set forth in Section 3.11(b) .

 

“ National Interest ” means, with respect to a member of National, the entire interest of such member, as a member, in National.

 

“ National Limited Liability Company Agreement ” means the Limited Liability Company Agreement of National Beef Packing Company, LLC, as amended through the date hereof.

 

“ National Permits ” has the meaning set forth in Section 3.15(a)(2) .

 

“ National SEC Documents ” has the meaning set forth in Section 3.14(a) .

 

“ NBPCo ” has the meaning set forth in the Introduction.

 

“ NBPCo Limit ” has the meaning set forth in Section 8.1(g)(2) .

 

“ New Kleinco ” has the meaning set forth in the Introduction.

 

“ Non-Competition Agreements ” has the meaning set forth in the recitals hereto.

 

“ Obligation Amount ” has the meaning set forth in Section 8.1(i) .

 

“ Organizational Documents ” has the meaning set forth in Section 3.1(b) .

 

“ Owned Intellectual Property ” has the meaning set forth in Section 3.11(b) .

 

“ Owned Real Property ” has the meaning set forth in Section 3.8(a) .

 

“ Ownership Interest ” means any capital stock, share, partnership interest, membership interest, unit of participation, joint venture interest of any kind or other similar interest (however designated) in any Person and any option, warrant, purchase right, conversion right, exchange rights or other contractual obligation which would entitle any Person to acquire any such interest in such Person or otherwise entitle any Person to share in the equity, profit, earnings, losses or gains of such Person (including stock appreciation, phantom stock, profit participation or other similar rights).

 

“ Party ” and “ Parties ” has the meaning given in the Introduction.

 

“ PBGC ” has the meaning set forth in Section 3.13(e) .

 

“ Pension Plan ” has the meaning set forth in Section 3.13(a) .

 

“ Permitted Encumbrances ” means:

 

(1)   statutory Liens for current Taxes not yet due and payable or being contested in good faith by appropriate proceedings and, in each case, for which there are adequate and properly maintained reserves on the books of a Person;

 

(2)   mechanics’, carriers’, workers’, repairers’ and other similar liens imposed by law arising or incurred in the ordinary course of business consistent with past practice for obligations that are not overdue;

 

(3)   in the case of leases of vehicles, rolling stock and other personal property, encumbrances that do not materially impair the operation of the business at the facility at which such leased equipment or other personal property is located;

 

(4)   other immaterial Liens that were not incurred in connection with the borrowing of money or the advance of credit and that do not interfere with the conduct of the business conducted by National and its Subsidiaries;

 

(5)   leases of real property described in National Disclosure Schedule 3.8(e) ;

 

(6)   pledges or deposits made in the ordinary course of business consistent with past practice in connection with workers’ compensation, unemployment insurance and other types of social security;

 

(7)   deposits to secure the performance of bids, contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business consistent with past practice;

 

(8)   zoning regulations and restrictive covenants and easements of record that do not detract in any material respect from the value of the property and do not materially and adversely affect, impair or interfere with the use of any property affected thereby;

 

(9)   public utility easements of record, in customary form; and

 

(10)   Liens securing all or any portion of the existing Debt and additional Debt which may be incurred without breach of this Agreement.

 

“ Person ” means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or any Governmental Entity, or any other entity.

 

“ Pre-Closing Tax Period ” means any taxable year or other taxable period, and the portion of any Straddle Period, that ends prior to or on the Closing Date.

 

“ Property ” and “ Properties ” has the meaning set forth in Section 3.8(a) .

 

“ Purchase Price ” has the meaning set forth in Section 1.2(a)(1) .

 

“ Put ” has the meaning set forth in the recitals hereto.

 

“ Put Price ” has the meaning set forth in Section 1.2(a)(2) .

 

“ Rejection Notice ” has the meaning set forth in Section 8.1(j) .

 

“ Release ” has the meaning set forth in Section 3.16(n) .

 

“ Release Date ” has the meaning set forth in Section 8.1(h)(3) .

 

“ Remedial Activities ” has the meaning set forth in Section 8.1(c) .

 

“ Restated LLC Agreement ” means the First Amended and Restated Limited Liability Company Agreement of National Beef Packing Company, LLC in the form annexed hereto as Exhibit G .

 

“ Sale ” has the meaning set forth in the recitals hereto.

 

“ Schedule 1.2(d) Transactions ” has the meaning set forth in Section 1.2(d) .

 

“ Schedules ” means the National Disclosure Schedule and the Sellers Disclosure Schedule to this Agreement.

 

“ SEC ” means the U.S. Securities and Exchange Commission.

 

“ Securities Act ” means the Securities Act of 1933, as amended.

 

“ Seller ” and “ Sellers ” has the meaning set forth in the Introduction.

 

“ Seller’s Portion ” means the percentage of the Seller’s total Purchase Price to the total Purchase Price paid to USPB and NBPCo reflected on Exhibit B .

 

“ Sellers Disclosure Schedule ” means the sellers disclosure schedule referenced in Article II of this Agreement.

 

“ Signing Date ” means the date of this Agreement in the introduction paragraph of this Agreement.

 

“ Site ” has the meaning set forth in Section 8.1(c) .

 

“ Specified Representations ” has the meaning set forth in Section 6.2(a) .

 

“ Straddle Period ” has the meaning set forth in Section 8.20(b) .

 

“ Subsidiary ” of a Person means any corporation or other legal entity of which such Person (either alone or through or together with any other Subsidiary or Subsidiaries) is the general partner or managing entity or of which at least a majority of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or others performing similar functions of such corporation or other legal entity is directly or indirectly owned or controlled by such Person (either alone or through or together with any other Subsidiary or Subsidiaries).

 

“ Superior Proposal ” has the meaning set forth in Section 5.11(e) .

 

“ Tax ” (and, with correlative meaning, “ Taxes ” and “ Taxable ”) means any and all taxes payable to any Governmental Entity, including (1) federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add on minimum, sales, use, transfer, registration, value added, goods and services, capital gains, fringe benefits, excise, natural resources, severance, stamp, occupation, premium, windfall profits, environmental (including under Section 59A of the Code), customs, duties, real property, real property gains, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other tax or similar governmental fee, charge, or assessment of any kind whatsoever, (2) any interest, penalties or additions to tax or additional amounts imposed by any Governmental Entity in connection with any item described in clause (1), (3) liability of any Person for the payment of any amounts of the type described in clauses (1) or (2) arising as a result of being (or ceasing to be) a member of any “affiliated group” (as that term is defined in Section 1504(a) of the Code) or any combined, consolidated or unitary group under any similar provision of state or local law (or being included in any Tax Return relating thereto); and (4) liability for the payment of any amounts of the type described in clauses (1), (2) or (3) as a transferee or as a result of any express or implied obligation to indemnify or otherwise assume or succeed to the liability of any other Person, whether pursuant to any contract, operation of law, assumption, transferability, Treasury Regulations Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under law) or otherwise.

 

“ Tax Return ” means any return, declaration, report, claim for refund or credit, information return or other document’ (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination assessment or collection of Taxes or the administration of any Applicable Law relating to any Taxes including any amendment thereof and, where permitted or required, combined, consolidated, or unitary returns for any group of entities that includes National or any of its Subsidiaries.

 

“ Termination Date ” has the meaning set forth in Section 7.1(f) .

 

“ Termination Fee ” has the meaning set forth in Section 7.2(b)(1) .

 

“ Tipping Basket ” has the meaning set forth in Section 8.1(g)(1) .

 

“ Title Reports ” has the meaning set forth in Section 3.8(a) .