EXHIBIT 10.2
U.S. PREMIUM BEEF, LTD.
UNIFORM DELIVERY
AND MARKETING AGREEMENT
EVEN SLOTS
Exhibit 10.2
U.S. PREMIUM BEEF, LTD. EVEN SLOTS DELIVERY AGREEMENT
FOR PROCESSING AT NATIONAL BEEF
MEMBER NO.______
U.S. PREMIUM BEEF, LTD.
P.O. BOX 20103
KANSAS CITY, MO 64195
PHONE: 866-877-2525 FAX: 816-713-8810
UNIFORM DELIVERY AND MARKETING AGREEMENT
FOR CATTLE DELIVERY TO USPB
FOR PROCESSING AT NATIONAL BEEF PACKING COMPANY, LLC.
"EVEN SLOTS"
THIS AGREEMENT, effective as of December 1, 1997 is between
U.S. Premium Beef, Ltd. (a Kansas cooperative association, referred to as the
"Cooperative"), and the undersigned contracting producer (referred to as
"Producer") who is a member of the Cooperative. Delivery of cattle to U.S.
Premium Beef, Ltd. is not due until delivery schedules are provided to the
Producer by the Cooperative. The Cooperative desires to protect its interests by
ensuring that it will have access to an adequate supply of cattle for its cattle
processing project; and the Producer desires to supply cattle to the
Cooperative. The Cooperative and the Producer agree that the Producer must own,
control, or associate with others so that beneficial changes can be made in
cattle breeding and production to meet processing and beef consumer preference
demands. Subject to the terms, conditions, and obligations of the Cooperative
and Producer in this Agreement, similar obligations of other cattle producers
contracting with the Cooperative, and in accordance with the Articles of
Incorporation and Bylaws of the Cooperative, the Producer and the Cooperative
agree as follows:
1. COMMITMENT TO SUPPLY CATTLE TO THE COOPERATIVE. The
Producer agrees to deliver and supply to the Cooperative and the Cooperative
agrees to buy and receive one head of cattle from the Producer for each share of
common stock owned by the Producer (subject to assignment as provided below and
as provided in Paragraph 15) each year during the term of this Agreement except
that the Board of Directors may reduce this amount by giving advance written
notice if the Board determines in its sole discretion that the actual processing
capacity will be a lesser amount. The Board of Directors may, by resolution,
allow a small deviation from the above delivery requirement to allow for
production variances. The Board of Directors may approve the assignment of
delivery rights under this Agreement to another member or associate member of
the Cooperative, however, the Producer remains liable for any underdeliveries.
The Cooperative and Producer agree that this Uniform Delivery and Marketing
Agreement is a cooperative marketing agreement subject to Kansas Statutes,
Section 17-1616.
2. DELIVERY OF CATTLE. The cattle committed to the
Cooperative under paragraph 1 must be delivered to the Cooperative on an equal
four week basis as determined by the Cooperative. A uniform delivery schedule
shall be prepared by the Cooperative and given to the Producer on a regular
basis. The Producer agrees to supply the cattle in accordance with the delivery
schedule and agrees the risk of loss for the cattle shall remain with the
Producer until the cattle are delivered to the Cooperative at a location
designated by the Cooperative.
U.S. PREMIUM BEEF, LTD. EVEN SLOTS DELIVERY AGREEMENT
FOR PROCESSING AT NATIONAL BEEF
3. APPOINTMENT OF COOPERATIVE AS PURCHASING AGENT. The Producer
appoints and designates the Cooperative to act as his or her sole agent in the
sale and marketing or utilization of cattle committed to the Cooperative under
this Agreement and any extensions, renewals or amendments of this Agreement.
If a Producer is unable to supply the required amount of cattle, the
Producer must obtain the cattle from any other source and deliver the cattle to
the Cooperative, just as if the cattle had been produced by the Producer. If the
Producer does not deliver the cattle as stated, the Producer agrees that the
Cooperative, at its option, may act as Producer's agent for the purpose of
obtaining cattle in the name of the Producer and may charge to the Producer all
expenses, including, but not limited to, the price of the cattle, shipping,
reasonable attorneys' fees, and all incidental costs.
If the Producer is a feedlot only and does not own or control cow/calf
operations, Producer is encouraged to make fifty percent (50%) of the delivery
rights and obligation of this Agreement available to be transferred to cow/calf
operations supplying the feedlot for at least two years. The Cooperative agrees
to make any additional delivery rights available on a first come basis to
Producers with feedlots who have transferred delivery rights to cow/calf
operations as stated above.
The Cooperative shall have no obligation to accept for marketing or
processing any cattle in an amount greater than that specified above, regardless
of whether the Producer's total cattle production has increased.
4. MINIMUM QUALITY STANDARDS. All cattle delivered by the Producer to
the Cooperative shall meet the minimum quality standards of the industry for
cattle to be processed. Cattle of substandard quality, as determined by the
Cooperative, shall be either: (1) rejected and returned to the Producer with all
costs relating to the rejection and return charged to the Producer; or (2)
accepted and handled or disposed in a manner customary in the industry with any
necessary costs charged to the Producer. If, in the sole opinion of the
Cooperative, the Producer continually fails to deliver cattle that meet minimum
quality standards, the Cooperative may terminate this Agreement and the
Producer's membership in the Cooperative.
5. POOLING ARRANGEMENT. The Cooperative may pool the Producer's cattle
for sale to various markets or for processing.
6. PRODUCER IS PRODUCER OF LIVESTOCK. The Producer warrants to the
Cooperative that the Producer is a producer of livestock, as defined in Kansas
Statutes, Section 17-1606, under this Agreement.
7. PAYMENT TO PRODUCER. The Cooperative shall market, process and
utilize the cattle and products from the cattle in a manner it deems to be in
the best interest of the Cooperative and all of the producers. The Cooperative
agrees to pay the Producer according to a Pricing Schedule determined by the
Board of Directors which shall include the following methods:
U.S. PREMIUM BEEF, LTD. EVEN SLOTS DELIVERY AGREEMENT
FOR PROCESSING AT NATIONAL BEEF
(a) Cattle Payments. For delivery and transfer of cattle to
the Cooperative, market based purchase price plus consumer, market and processor
based quality incentives as determined by the Board and to the extent possible
as determined by the Board of Directors the Cooperative will base payments on a
quality grid pricing guide for cattle delivered to the Cooperative;
(b) Patronage Dividends. In addition to the above payments for
cattle, the Producer shall be entitled to payments from earnings of the
Cooperative as patronage dividends in accordance with the Bylaws of the
Cooperative.
8. TEN YEAR AGREEMENT.
The term of this Agreement shall be ten years commencing on
the date of first delivery.
9. LIQUIDATED DAMAGES AND INJUNCTIVE RELIEF. The Cooperative shall be
entitled to relief under Kansas Statutes, Section 17-1616 including injunctive
relief or a decree of specific performance in the event of any breach of this
Agreement. It is further agreed that in the event of any breach of this
Agreement, because of the impossibility of ascertaining with accuracy the
damages resulting from such a breach, the Cooperative shall be entitled, as
liquidated damages, to an amount equal to twenty dollars ($20) per head of
cattle or twenty-five percent (25%) of the market value of the cattle which the
Producer has failed to deliver or improperly furnished under the terms of this
Agreement, provided however the Board may by resolution exempt from breach and
liquidated damages a certain amount or percentage of the cattle required to be
delivered based on accepted production losses. The greater amount of liquidated
damages applies if the Board of Directors determines the breach is willful, the
reason of the breach was to take advantage of higher markets elsewhere, or the
Producer is abandoning the Member's contractual duties to the Cooperative and
other members of the Cooperative. Should the non-performance by the Producer of
his or her obligations under this Agreement result in the termination of his or
her membership in the Cooperative, the Producer agrees that, in addition to any
other remedies available to the Cooperative, the amount of damages as he or she
may become obligated to pay the Cooperative shall be credited to the Cooperative
against the Producer's stock or other evidences of equity. The Producer agrees
to pay all reasonable legal costs and expenses, including attorneys' fees and
court costs, incurred by the Cooperative in any action brought by the
Cooperative against the Producer for any breach or threatened breach of this
Agreement.
10. COMPLIANCE WITH THE COOPERATIVE'S GOVERNING INSTRUMENTS AND CONSENT
TO TAKE DISTRIBUTIONS INTO INCOME. The Producer accepts and agrees to conform to
and abide by the provisions of the Articles of Incorporation and Bylaws of the
Cooperative and all amendments thereto during the term of this Agreement. In
addition, the Producer agrees that this Agreement shall constitute written
consent that: (1) the amount of any distributions with respect to his or her
patronage during a year in which he or she patronized the Cooperative on the
basis of cattle delivered to the Cooperative, made by qualified written notices
of allocation as defined in Subchapter T of the Internal Revenue Code of 1986
(hereinafter cited by Section number only), and received by him or her from the
Cooperative, will be taken into account by him or her at its stated dollar
amount in the manner provided in Section 1385 in the taxable year in which such
qualified written notice of allocation is received by him or her; and (2) upon a
determination by the Board of Directors that a unit retain is to constitute a
qualified per unit retain (as defined in Subchapter T of the Internal Revenue
Code of 1986, as amended), he or she
U.S. PREMIUM BEEF, LTD. EVEN SLOTS DELIVERY AGREEMENT
FOR PROCESSING AT NATIONAL BEEF
will take the per unit retain certificate issued to him or her in connection
therewith into account at its stated dollar amount in the manner provided in
Section 1388 in the taxable year in which the per unit retain certificate is
received by him or her.
11. SECURITY INTERESTS. If the Producer grants a security interest in
any of his or her cattle marketed to the Cooperative during the term of this
Agreement, the Cooperative shall have the right, but not the obligation, after
acceptance of the cattle by the Cooperative, to pay off all or part of the
obligation underlying the security interest. The payment shall be for the
account of the Producer and shall be charged against the amount owing to the
Producer by the Cooperative.
The Producer shall inform the Cooperative of all security interests he
or she has granted by disclosing all security interests as provided by state or
federal law, and if not provided, then Producers shall provide disclosure
separately in writing. The Producer shall notify the Cooperative prior to
granting any security interest.
12. INABILITY OF COOPERATIVE TO PERFORM. In case of fire, explosions,
interruption of power, strikes or other labor disturbances, lack of
transportation facilities, shortage of labor supplies, floods, action of the
elements, riot, interference of civil or military authorities, enactment of
legislation or any unavoidable casualty or cause beyond the control of the
Cooperative affecting the conduct of the Cooperative's business to the extent of
preventing or unreasonably restricting the receiving, handling, processing,
marketing, or other operations, the Cooperative shall be excused for performance
during the period that the Cooperative's business or operations are so affected.
The Cooperative in its judgment may, during such period, operate on a limited
basis and accept such portion of cattle as the Cooperative has informed the
Producer it can economically handle.
The Cooperative shall give written notice to the Producer of the
Cooperative's inability to perform and the specific cause or causes for the
non-performance. In any event, the Cooperative shall pay, pursuant to this
Agreement, for all cattle accepted by the Cooperative.
13. CONTINGENCIES. Notwithstanding the provisions of this Agreement to
the contrary, the rights and obligations of the Cooperative and the Producer
shall be subject to and contingent upon:
(1) the Producer completing the requirements of being a member
of the Cooperative;
(2) commitment of a total of 600,000 or more head of cattle to
the Cooperative under similar uniform delivery and marketing agreements;
(3) determination by the Cooperative's Board of Directors that
a processing facility is available to process cattle delivered to the
Cooperative by the Producers collectively;
(4) the execution of agreements to provide processing and
marketing of the Producers' cattle and cattle products; and
(5) securing adequate capitalization through member share
equity offerings, debt financing and other commitments.
U.S. PREMIUM BEEF, LTD. EVEN SLOTS DELIVERY AGREEMENT
FOR PROCESSING AT NATIONAL BEEF
In the event any of the contingencies under (1) to (5) above are not
fulfilled, then neither the Cooperative nor the Producer shall have any
obligations under this Agreement.
14. COMPLETE AGREEMENT. The Cooperative and Producer agree that there
are no oral or other conditions, promises, representations or inducements in
addition to or in variance with any of the terms of this Agreement, and that
this Agreement fully and completely represents the voluntary and clear
understanding of both parties.
15. ASSIGNMENT. The Producer may only assign or transfer his or her
delivery rights under this Agreement, to a member or associate member of the
Cooperative. No assignment or transfer may occur without the prior written
consent of the Cooperative, and then only to a producer who is a member or
associate member. The Cooperative may not assign its obligations under this
Agreement without the prior written consent of Producer.
16. WAIVER OF BREACH. No waiver of a breach of any of the provisions
contained in this Agreement shall be construed to be a waiver of any subsequent
breach of the same or of any other provision of this Agreement.
17. CONSTRUCTION OF TERMS OF AGREEMENT. The language and all parts of
this Agreement shall be construed as a whole and not strictly for or against any
party. In the event any term, covenant or condition of this Agreement is held to
be invalid or void by a court, the invalidity of any such term, covenant or
condition shall in no way affect any other term, covenant or condition of this
Agreement. This Agreement shall be interpreted under Kansas law.
18. SUCCESSORS AND ASSIGNS. Subject to the other provisions of this
Agreement, all of the terms, covenants and conditions of this Agreement shall
inure to the benefit of and shall bind the parties and their successors and
permitted assigns.
19. TERMINATION OF ANY PRIOR MARKETING AGREEMENT. The Cooperative and
the Member agree that this Agreement terminates, supersedes, and replaces any
prior Marketing Agreements between the Cooperative and the Member on the
effective date of this Agreement.
PRODUCER U.S. PREMIUM BEEF, LTD.
By By
------------------------------------ ---------------------------------
Terry Ryan
------------------------------ Its Chair
U.S. PREMIUM BEEF, LTD. EVEN SLOTS DELIVERY AGREEMENT
FOR PROCESSING AT NATIONAL BEEF
Address ATTEST:
By
- ------------------------------------ ---------------------------------
John Fairleigh
- ------------------------------------ Its Secretary
Date: Date:
------------------------------ ------------------------------
U.S. PREMIUM BEEF, LTD. EVEN SLOTS DELIVERY AGREEMENT
FOR PROCESSING AT NATIONAL BEEF
U.S. PREMIUM BEEF, LTD.
UNIFORM DELIVERY
AND MARKETING AGREEMENT
FOR CATTLE DELIVERY TO USPB
FOR PROCESSING AT FARMLAND NATIONAL
BEEF PACKING COMPANY, L.P.
EVEN SLOTS