U.S. PREMIUM BEEF, LLC

A Delaware Limited Liability Company

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

 

 

-- Includes Amendments Through December 9, 2009 --

 

                                                                                                                                                           

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U.S. PREMIUM BEEF, LLC

Amended and Restated Limited Liability Company Agreement

TABLE OF CONTENTS

 

 

Page

OPERATION, MANAGEMENT, AND INTERESTS IN THE COMPANY

1

ARTICLE 1. DEFINITIONS

1

Section 1.1.      Reference To Certain Terms

1

Section 1.2.      Definitions

1

ARTICLE 2. THE COMPANY: FORMATION, PURPOSES, LIMITED LIABILITY

5

Section 2.1.      Formation

5

Section 2.2.      Purpose; Powers

5

Section 2.3.      Name

5

Section 2.4.      Principal Place Of Business

5

Section 2.5.      Term

5

Section 2.6.      Filings; Agent For Service Of Process

5

Section 2.7.      Title To Property

6

Section 2.8.      No Payments Of Individual Obligations

6

Section 2.9.      Independent Non-Competitive Activities

6

Section 2.10.    Limited Liability

6

Section 2.11.    Members and Unitholders Bound Without Execution

7

ARTICLE 3. UNITS, UNITHOLDERS, FINANCIAL RIGHTS

7

Section 3.1.      Rights And Obligations Of Unitholders

7

Section 3.2.      Units

7

Section 3.3.      Capital Contributions

8

Section 3.4.      No Certificate For Units

9

Section 3.5.      Unit Ledger

9

Section 3.6.      Allocations And Distributions

9

Section 3.7.      Unitholder Conditions And Limitations

10

Section 3.8.      Restrictions On Transfers

12

ARTICLE 4. MEMBERS AND MEMBER VOTING

13

Section 4.1.      Rights And Obligations Of Members

13

Section 4.2.      Membership Requirements

15

Section 4.3.      Admission Of Members

15

Section 4.4.      Cattle Delivery Agreement

15

Section 4.5.      Member Voting

16

Section 4.6.      Member Meetings

17

Section 4.7.      Termination Of Membership

19

Section 4.8.      Resignation

20

Section 4.9.      Continuation Of The Company

20

 

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ARTICLE 5. MANAGEMENT OF COMPANY

20

Section 5.1.      Governance By Board, CEO

21

Section 5.2.      Actions By Board; Committees; Reliance On Authority

22

Section 5.3.      The Board

23

Section 5.4.      Board Meetings

24

Section 5.5.      Officers

26

Section 5.6.      Liability And Indemnification Of Directors And Officers

27

Section 5.7.      Contracts With Directors Or Their Affiliates

28

ARTICLE 6. AMENDMENTS

28

Section 6.1.      Amendments

28

ARTICLE 7. DISSOLUTION AND WINDING UP

29

Section 7.1.      Dissolution Commencement

29

Section 7.2.      Winding Up

29

Section 7.3.      Rights Of Unitholders

30

Section 7.4.      Notice Of Dissolution

30

Section 7.5.      Allocations During Period Of Liquidation

31

Section 7.6.      The Liquidator

31

Section 7.7.      Form Of Liquidating Distributions

31

ARTICLE 8. MISCELLANEOUS

31

Section 8.1.      Notices

32

Section 8.2.      Binding Effect

32

Section 8.3.      Construction

32

Section 8.4.      Time

32

Section 8.5.      Headings

32

Section 8.6.      Severability

32

Section 8.7.      Incorporation By Reference

33

Section 8.8.      Variation Of Terms

33

Section 8.9.      Governing Law

33

Section 8.10.    Specific Performance

33

Section 8.11.    Consent To Jurisdiction

33

Section 8.12.    Waiver Of Jury Trial

34

 

 

APPENDICES

 

Appendix A   Principal Place of Business of U.S. Premium Beef, LLC

A-1

       Appendix B   Agent for Service of Process of U.S. Premium Beef, LLC

B-1

       Appendix C   Unit Transfer Policy of U.S. Premium Beef, LLC

C-1

       Appendix D   Board of Directors of U.S. Premium Beef, LLC

D-1

       Appendix E   Allocations, Distributions, Tax Matters, and Accounting

E-1

 

                                                                    

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

 

 

 

U.S. PREMIUM BEEF, LLC

Amended and Restated Limited Liability Company Agreement

THIS LIMITED LIABILITY COMPANY AGREEMENT of U. S. Premium Beef LLC (the
“Company”) was adopted by U.S. Premium Beef, Inc. effective as of the completion
of the Restructuring (as defined below); this Agreement has been amended from
time to time after the Restructuring and all such amendments are hereby
incorporated into this Amended and Restated Limited Liability Company Agreement
effective as of January 7, 2010.

RECITALS

U.S. Premium Beef, Ltd. (the “Cooperative”) caused the Company to be formed to
acquire all of the business and assets of the Cooperative by merger of the
Cooperative with and into U. S. Premium Beef, Inc. (the “Corporation”) (the
“Merger”) and immediate and subsequent conversion under Delaware Law into the
Company (the entire process of the Merger and subsequent conversion of the
Corporation into the Company referred to as the “Restructuring”).  The
Cooperative as the sole shareholder of the Corporation prior to the Merger and
statutory conversion into the Company adopted this Agreement as the Limited
Liability Company Agreement of the Company and such Limited Liability Company
Agreement is hereby amended and restated to reflect all amendments adopted on or
prior to January 7, 2010. 

OPERATION, MANAGEMENT, AND INTERESTS
IN THE COMPANY

ARTICLE 1.
DEFINITIONS

Section 1.1. Reference To Certain Terms.

For purposes of this Agreement:  (1) references to “Articles” and “Sections” are
to those Articles and Sections appearing in this Agreement unless explicitly
indicated otherwise; and (2) references to statutes include all rules and
regulations under those statutes, and all amendments and successors to those
statutes.

Section 1.2. Definitions.

The definitions in this Section 1.2 (and the definitions in Section 1.10 of
Appendix E) apply throughout this Agreement unless the context requires
otherwise.

“Act” means the Delaware Limited Liability Company Act as set forth in the
Delaware Code (commencing with Section 18-101 of the Delaware Code), as amended
from time to time (or any corresponding provision or provisions of any
succeeding law).

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

“Affiliate” means, with respect to any Person:  (1) a Business Entity directly
or indirectly Controlling, Controlled by or under common Control with the
Person; (2) an officer, director, general partner, or trustee of a Person that
is a Business Entity; or (3) a Person or its representative who is an officer,
director, general partner, or trustee of the Business Entity described in
clauses (1) or (2) of this sentence.

“Agreement” means this Limited Liability Company Agreement, as amended, modified
or restated from time to time.

“Associate” means a Person approved by the Board as an “Associate” under Section
4.4(c).

“Board” or “Board of Directors” means the individuals who are named, appointed,
or elected as Directors of the Company under Section 5.3 acting collectively
pursuant to this Agreement.

“Business Entity” means a partnership (whether general or limited), limited
liability company, corporation, unincorporated association or entity,
governmental entity, trust, estate, cooperative, association, nominee or other
entity, including an individual acting as a sole proprietorship or as a
business.

“Cattle Delivery Agreement” means the Uniform Delivery and Marketing Agreement
to deliver cattle between a Class A Member and the Company.

“CEO” means the President and Chief Executive Officer of the Company, as
appointed by the Board.

“Certificate of Formation” means the certificate of formation of the Company as
amended or restated and filed with the Delaware Secretary of State pursuant to
the Act.

“Class” is the designated division of Interests as provided in Section 3.2(a).

“Class A Member” means a Person who holds Class A Units, meets the requirements
of Section 4.2(a), is admitted as a Class A Member and has not ceased to be a
Class A Member.  “Class A Members” mean all Persons who hold Class A Units, meet
the requirements of Section 4.2(a), are admitted as Class A Members and have not
ceased to be Class A Members.

“Class A Units” mean Units that are designated Class A Units pursuant to Section
3.2(a).

“Class B Member” means a Person who holds Class B Units, meets the requirements
of Section 4.2(b), is admitted as a Class B Member and has not ceased to be a
Class B Member.  “Class B Members” mean all Persons who hold Class B Units, meet
the requirements of Section 4.2(b), are admitted as Class B Members and have not
ceased to be Class B Members.

“Class B Units” mean Units that are designated as Class B Units pursuant to
Section 3.2(a).

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

“Company” means the limited liability company formed pursuant to the filing of
the Certificate of Formation and the limited liability company continuing the
business of this Company in the event of dissolution of the Company as provided
in this Agreement and the Act.

“Confidential Information” has the meaning given in Section 4.1(c).

“Control”, “Controlling”, “Controlled by” and “under common Control with” mean
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Business Entity, whether through
the ownership of voting securities, by contract, or otherwise, or the power to
elect at least fifty percent (50%) of the Board of Directors, or persons
exercising similar authority with respect to the Business Entity.

“Cooperative” is defined in the Recitals to this Agreement.

“Corporation” is defined in the Recitals to this Agreement.

“Director” means an individual serving on the Board of Directors of the
Company.  The Directors of the Company shall constitute the “managers” of the
Company for all purposes of the Act.

“Dissolution Event” has the meaning given in Section 7.1(a).

“Distribution” means a payment of cash or property to a Unitholder based on the
Unitholder’s Interest in the Company as provided in this Agreement.

“Effective Date” is the date the Restructuring is completed as provided in the
introductory paragraph of this Agreement.

“Event of Disassociation” has the meaning given in Section 4.7(a).

“Interest” means, collectively, the Unitholders’ financial rights to Profits,
Losses and other allocation items, and to receive Distributions and, with
respect to Members, the right of the Members to vote on matters and to receive
information concerning the business and affairs of the Company as provided for
in this Agreement. 

“Lien” means a security interest, lien or other encumbrance in Units pledged or
granted for the purpose of securing debt financing.

“Liquidator” has the meaning given in Section 7.6(a).

“Member” means a Person admitted as a Member under Section 4.3 who has not
ceased to be a Member.  “Members” mean all Persons who are Members.

“Merger” is defined in the Recitals.

“Other Class” means a Class other than Class A or Class B, designated by the
Board under Section 3.2(a).

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

“Patronage Notice” means a written notice of allocation within the meaning of
Section 1388(b) of the Code that was issued with respect to the patronage of
U.S. Premium Beef, Ltd., the Cooperative, was not redeemed by the Cooperative,
and continues as an obligation of the Company as provided in Section 3.6(c).

“Permitted Transfer” has the meaning given in Section 3.8(a).

“Person” means any individual natural person, or a Business Entity.

“Property” means all real and personal property acquired by the Company,
including cash, and any improvements to the Property, and includes both tangible
and intangible property.

“Quorum” as to meetings of Members has the meaning given in Section 4.6(f) and
as to meetings of the Board has the meaning given in Section 5.4(d).

“Restructuring” has the meaning given in the Recitals to this Agreement.

“Securities Act” means the Securities Act of 1933.

“Subsidiary” means, with respect to any Business Entity, any corporation,
partnership, joint venture, limited liability company, association or other
entity Controlled by the Business Entity.

“Transfer” means, as a noun, any voluntary or involuntary transfer, sale, or
other disposition, whether by operation of law (e.g., pursuant to a merger) or
otherwise, and, as a verb, voluntarily or involuntarily to convey, sell, or
otherwise dispose of, but does not include a pledge or grant of a Lien.

“Transfer Restrictions” means the restrictions on Transfer of Units in Section
3.8 and the Unit Transfer Policy.

“Unit” means the unit of measurement within a Class into which Interests in the
Company are divided as provided in Section 3.2(a).

“Unit Ledger” has the meaning given in Section 3.5.

“Unit Transfer Policy” is the policy for Transferring Units attached as Appendix
C.

“Unitholder” means a Person who holds Units, whether or not the Person is a
Member.  “Unitholders” mean all Persons holding Units.  Unitholders may be
designated with respect to specific types or classes of Units held.

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

ARTICLE 2.
THE COMPANY: FORMATION, PURPOSES, LIMITED LIABILITY

Section 2.1. Formation.

The Company has been formed as a Delaware limited liability company pursuant to
the Act.

SECTION 2.2. PURPOSE; POWERS.

(a) Purpose.  The business and purposes of the Company are to engage in any
business and investment purpose or activity in which a limited liability company
organized under the Act may lawfully be engaged, and to conduct any and all
activities related or incidental to that business and purpose.

(b) Powers.  The Company shall possess and may exercise all the powers and
privileges granted by the Act, by any other law, or by this Agreement, together
with any lawful powers incidental to those powers and privileges, including the
powers and privileges as are necessary or convenient to the conduct, promotion
or attainment of the business, purposes or activities of the Company.

Section 2.3. Name.

The name of the Company is stated in the Certificate of Formation, and all
business of the Company shall be conducted in that name or under other names as
the Board, without Member approval, may from time to time determine. The Board
may, without Member approval, change the name of the Company from time to time
in accordance with the Act.

Section 2.4. Principal Place Of Business.

The principal place of business of the Company shall be at the place or places
stated in the Principal Place of Business attached as Appendix A and
incorporated as part of this Agreement.  The Principal Place of Business may be
amended or changed by resolution of the Board without Member approval. The
records required by the Act shall be maintained at one of the Company’s
principal offices.

Section 2.5. Term.

The term of the Company shall continue until the winding up and liquidation of
the Company and its business is completed following a Dissolution Event as
provided in this Agreement.

Section 2.6. Filings; Agent For Service Of Process.

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

(a) Maintenance of Delaware Status.  The Board shall take any actions reasonably
necessary to perfect and maintain the status of the Company as a limited
liability company under the laws of the State of Delaware.  The Board shall
cause amendments to the Certificate of Formation to be filed whenever required
by the Act.

(b) Maintenance of Status in Other Jurisdictions.  The Board shall take any and
all other actions as may be reasonably necessary to perfect and maintain the
status of the Company as a limited liability company or similar type of entity
under the laws of any other jurisdictions in which the Company engages in
business.

(c) Agent For Service of Process.  The name and address of the agent for service
of process on the Company in the State of Delaware shall be stated in the Agent
for Service of Process attached as Appendix B and incorporated as part of this
Agreement which shall be amended by the Board, without Member approval, to
reflect the appointment of any successor.

(d) Filings Upon Dissolution.  Upon the dissolution and completion of the
winding up and liquidation of the Company, the Board shall cause to be filed a
Certificate of Cancellation in accordance with the Act and cause similar filings
as necessary to be made under the laws of any other jurisdictions.

Section 2.7. Title To Property.

All Property owned by the Company is owned by the Company as an entity, and a
Unitholder, Member, or Director does not have any ownership interest in the
Property in their individual name.  The Company shall hold title to all of its
Property in the name of the Company and not in the name of any Unitholder,
Member, or Director.

Section 2.8. No Payments Of Individual Obligations.

The Company’s credit and assets shall be used solely for the benefit of the
Company, and an asset of the Company shall not be Transferred or encumbered for,
or in payment of, any individual obligation of any Unitholder, Member, or
Director.

Section 2.9. Independent Non-Competitive Activities.

Neither this Agreement nor any activity under this Agreement shall prevent a
Unitholder, Member, or Director or any of their Affiliates, acting on their own
behalf, from engaging in whatever activities they choose, unless the activities
are competitive with the Company or the Company’s Affiliates as determined by
the Board.  Activities, other than activities that are competitive with the
Company or the Company’s Affiliates, may be undertaken by a Unitholder, Member,
or Director without having or incurring any obligation to: (1) offer any
interest in the activities to the Company or any other Unitholder or Member; or
(2) require the Unitholder, Member, or Director undertaking the activity to
allow the Company, the Company’s Affiliates, or other Unitholders, Members,
Directors, or their Affiliates to participate in any of those activities.  As a
material part of the consideration for becoming a Unitholder, Member, or
Director, each Unitholder, Member, or Director shall not have any right or claim
of participation in another Unitholder’s, Member’s or Director’s activities.

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

Section 2.10.  Limited Liability.

Except as otherwise expressly provided by the Act, this Agreement, or agreed to
under another written agreement, the debts, obligations, and liabilities of the
Company, whether arising in contract, tort or otherwise, are solely the debts,
obligations, and liabilities of the Company, and a Unitholder, Member, or
Director of the Company is not obligated personally for any debt, obligation, or
liability of the Company solely by reason of being a Unitholder or Member or by
acting as a Director of the Company.  The failure of the Company to observe any
formalities or requirements relating to the exercise of its powers or management
of its business or affairs under this Agreement or the Act shall not be grounds
for imposing liability on the Unitholders, Members, or Directors for any debt,
obligation, or liability of the Company.

Section 2.11.  Members and Unitholders Bound Without Execution.

A Member or Unitholder who has Interests in the Company shall be bound by this
Agreement without the necessity of executing a physical copy of this Agreement.

ARTICLE 3.
UNITS, UNITHOLDERS, FINANCIAL RIGHTS

Section 3.1. Rights And Obligations Of Unitholders.

The respective rights and obligations of the Unitholders will be determined
pursuant to the Act and this Agreement.  To the extent that any right or
obligation of any Unitholder is different by reason of any provision of this
Agreement than it would be in the absence of that provision, this Agreement, to
the extent permitted by the Act, will control.

Section 3.2. Units.

(a) Unitholder Interests and Units.  The Interests of the Unitholders will be
divided into one or more classes (“Classes”), with the initial Classes
designated as Class A and Class B. Subsequent Classes may be established by the
Board and designated as Class C, Class D and sequentially lettered for Units of
each sequential Class (“Other Classes”).  Interests within each Class will be
divided into units (the “Units”) designated as Class A Units (with respect to
Class A), Class B Units (with respect to Class B), and sequentially lettered for
Units of each sequential Class.  With respect to subsequent Classes of Units,
the Board without Member approval is granted the express authority, by
resolution and conforming amendments to this Agreement, to fix and establish the
designations, powers, preferences, and governance and veto rights including
Member voting rights and rights to appoint or elect Directors to the Board,
qualifications, limitations or restrictions of each additional Class of Units
(and the corresponding obligation to fix and establish these designations,
powers, preferences, governance and other rights, qualifications, limitations
and restrictions whenever any additional Class is established).  The power of
the Board extends to and includes the express authority to create Classes and
Units (without Member approval) which have terms granting the additional Class
and the Units (and the holders of the Units) rights, powers, preferences, and
privileges greater than the rights, powers, preferences, and privileges
associated with any previously established and designated Classes or issued
Units.  The rights, powers, preferences and privileges are the same for all
Units within a Class except as expressly provided otherwise in this Agreement,
the Class designation approved by the Board, or the subscription or other
agreement regarding the Units approved by the Board.

 

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

(b) Class A and Class B Units Linked Together.  Class A Units and Class B Units
shall be issued, redeemed, and transferred together on a one for one basis until
the Board determines by resolution the extent and conditions under which Class A
Units and Class B Units may be issued, redeemed, and transferred separately. 
Until additional capital contributions are accepted and additional Units are
issued, profits and losses for any Fiscal Year shall be allocated ten percent
(10%) to Class A and then to Class A Unitholders in proportion to Class A Units
held, and ninety percent (90%) to Class B and then to Class B Unitholders in
proportion to Class B Units held, as provided in Article III of Appendix E.  The
resolution of the Board under this Section 3.2(b) amends this Agreement without
Member approval to effect the terms of the resolution.

(c) Additional Units.  The Board may issue additional Units, including Class A
Units and Class B Units, to existing or new Unitholders in exchange for Capital
Contributions as provided in Section 3.3(b).

(d) Adjustment of Books and Records and Amendment of this Agreement.  Upon
acceptance of Capital Contributions under Section 3.3, the issuance of
additional Units, or any change in Unitholders or Members, the Board shall cause
the books and records of the Company and the Unit Ledger to be appropriately
adjusted, and the Board shall amend this Agreement, without Member approval, to
reflect the terms and conditions of the Capital Contributions and the issuance
of Units, including changes to the percentages stated in Appendix E, Sections
3.1, 3.2, and 4.1 and Section 3.6 of this Agreement.

Section 3.3. Capital Contributions.

(a) By Unitholders Through the Restructuring.  Each Person who becomes a
Unitholder as a result of the Restructuring shall be deemed to have made a
Capital Contribution consisting of the Person’s share of the initial Gross Asset
Value (as defined in Appendix E, Section 1.10) of any Property that is owned by
the Company immediately after the effective time of the Restructuring.  Each
Person’s share of the initial Gross Asset Value shall be determined by
apportioning the aggregate initial Gross Asset Value entirely to the initial
holders of Class A Units in proportion to Class A Units acquired by each Person
in the Restructuring.  No portion of the initial Gross Asset Value shall be
apportioned to Class B Units in the Restructuring.

(b) By Unitholders For Additional Units.  Each Unitholder’s Capital
Contribution, if any, may be any consideration, whether in cash or a form other
than cash, (including past or future services), upon execution of any documents
and on any other terms and conditions (including, in the case of Units issued to
employees and consultants, any vesting and forfeiture provisions) as the Board
determines to be appropriate, without Member approval.

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

(c) Additional Contributions Not Required.  A Unitholder is not obligated to
make any additional Capital Contributions to the Company or to pay any
assessment to the Company, other than the unpaid portion of a Unitholder’s
written agreement to make Capital Contributions. Units and their holders are not
subject to any mandatory assessment, requests or demands for capital.

Section 3.4. No Certificate For Units.

The Units of the Company are not certificated Units unless otherwise determined
by the Board.  If the Board determines that the Units shall be certificated, the
Board shall have the power and authority to make rules and regulations, not
inconsistent with this Agreement or the Act, as the Board deems appropriate
relating to the issuance, Transfer, conversion, and registration of certificates
of the Company, including legend requirements or the appointment or designation
of one or more transfer agents and one or more registrars.  The Company may act
as its own transfer agent and registrar.

Section 3.5. Unit Ledger.

The Board shall prepare, amend, and supplement a Unit Ledger without approval of
the Members that states the Unitholders and the Class and number of Units held
by each Unitholder, the Capital Contribution of the Unitholder, and those
Unitholders who are Members of each Class.

Section 3.6. Allocations And Distributions.

(a) Generally.  The provisions relating to allocations of Profits, Losses, items
of profit and loss, and Distributions are provided in this Section 3.6 and
Article 7; Appendix C as to Transfers; and in Article III, Article IV, and
Article XII of Appendix E.  The provisions of this Section 3.6 may be amended by
the Board, without Member approval, to conform with Class designations under
Section 3.2(a).  Appendix E is attached and incorporated as part of this
Agreement.  Appendix E may be amended by the Board without Member approval.  As
provided in Appendix E, Distributions, other than Distributions upon
liquidation, generally will be made on a Class and unitary basis in proportion
to the Units held in any Class.

(b) Between Class A and Class B.

Distributions.  Generally, subject to the designations of any Other Class, the
issuance of additional units, and the provisions in Section 3.6(a), between
Class A Units collectively (“Class A”) and Class B Units collectively (“Class
B”):

(1)  ten percent (10%) of the allocations of Profits, Losses and other
allocation items and Distributions (other than liquidating Distributions) shall
be made to Class A, and then to Class A unitholders in proportion to Class A
Units held; and

(2)  ninety percent (90%) to Class B and then to Class B unitholders in
proportion to Class B Units held.

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

Liquidating Distributions.  Liquidating Distributions generally will be made to
the unitholders in accordance with their positive Capital Account balances,
subject to Section 3.6(a) after payment of any obligations, including Patronage
Notices.

(c) Patronage Notices.  All amounts standing on the books of this Company as
Patronage Notices shall carry the rights and obligations specified in this
Section and Section 7.2(2) and no other or additional rights and obligations. 
Subject to the provisions of this Section and Section 7.2(2), Patronage Notices
may be paid by paying to the holders of the Patronage Notices the face amount of
the Patronage Notices, without interest or other appreciation or increase. 
Other than as provided in Section 7.2(2) with respect to dissolution of this
Company, Patronage Notices shall be paid by the Company at the time and in the
amounts as may be determined by the Board in its sole and absolute discretion. 
In exercising its discretion, the Board may consider, among other factors to be
selected by the Board, the chronological order of issuance of the Patronage
Notices by U.S. Premium Beef, Ltd., a Kansas cooperative, the amount of all
outstanding Patronage Notices and the portion of the Patronage Notices issued in
a particular year and the death or age of the holders of any Patronage Notices.

(d) Offset.  The Company may offset any debts, liabilities, or amounts owed by a
Unitholder to the Company in amounts and at times determined by the Board in
their discretion against Distributions or other amounts owed or to be paid to a
Unitholder or against Patronage Notices held by the Unitholder.

Section 3.7. Unitholder Conditions And Limitations.

(a) Interests Are Personal Property.  The interests of a Unitholder (whether or
not a Member) in the Company are personal property for all purposes.

(b) No Compensation or Reimbursement.  Except as otherwise provided in a written
agreement or policy approved by the Board and except for compensation employees
receive as employees of the Company, a Unitholder, whether or not a Member, in
the status as Unitholder or Member shall not receive any salary, fee, or draw
for services rendered to or on behalf of the Company and shall not be reimbursed
for any expenses incurred by the Unitholder or Member on behalf of the Company.

(c) Advances to Company.  A Unitholder or Affiliate of the Unitholder may, with
the consent of the Board, lend or advance money to the Company.  If any
Unitholder or Affiliate of the Unitholder loans or advances money to the Company
on its behalf, the amount of any loan or advance shall not be treated as a
contribution to the capital of the Company but shall be a debt due from the
Company.  The amount of the loan or advance by a lending Unitholder or Affiliate
shall be repayable out of the Company’s cash and shall bear interest at a rate
agreed upon by the Board and the Unitholder.  The Unitholders or their
Affiliates are not obligated to make any loan or advance to the Company.

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

(d) No Return of Distributions.  Except as required by law, a Unitholder
(whether or not a Member) is not obligated by this Agreement to return any
Distribution to the Company or pay the amount of any Distribution for the
account of the Company or to any creditor of the Company; provided, however,
that if any court of competent jurisdiction holds that, notwithstanding this
Agreement, any Unitholder is obligated to return or pay any part of any
Distribution, the obligation will bind the Unitholder alone and not any other
Unitholder.  The provisions of the immediately preceding sentence are solely for
the benefit of the Unitholders and will not be construed as benefiting any third
party.  The amount of any Distribution returned to the Company by a Unitholder
or upon approval of the Board paid by a Unitholder for the account of the
Company or to a creditor of the Company will be added to the account or accounts
from which it was subtracted when it was distributed to the Unitholder.

 

(e) Redemption.  The Company, by resolution of the Board of Directors and
without the necessity of Member approval, may offer to redeem Class B Units from
any unitholder upon such terms and conditions as the Board of Directors deems
appropriate in its sole discretion (a “voluntary redemption.”)  An offer of
voluntary redemption by the Company may represent an offer to purchase Class B
Units at a fixed price determined by the Board of Directors or may include
procedures, including but not limited to the process commonly known as a “Dutch
Auction”, by which those unitholders who wish to accept the Company’s offer of
voluntary redemption of Class B Units determine the price of the Class B Units
to be redeemed by the Company.  In addition, subject to the terms and conditions
contained in this subpart (e), the Company, by resolution of the Board of
Directors and without the necessity of Member approval, may redeem Class B Units
from any Class B unitholder without the requirement of Class B unitholder
agreement (a “mandatory redemption”) upon such terms and conditions as the Board
of Directors deems appropriate in its sole discretion.  Notwithstanding the
previous sentence, the Board of Directors may authorize a mandatory redemption
only upon the following conditions:  i) such mandatory redemption occurs within
a reasonable time period following the Company’s disposition of a portion of its
ownership interest in National Beef Packing Company, LLC; ii) such mandatory
redemption is funded from the net proceeds of the Company’s disposition of a
portion of its ownership interest in National Beef Packing Company, LLC; iii)
such mandatory redemption shall, to the extent possible, result in a reduction
of the number of issued and outstanding Class B Units that is not less than
proportionate to the corresponding reduction of the Company’s ownership interest
in National Beef Packing Company, LLC that provides the funds for the mandatory
redemption; iv) the price paid by the Company for the redemption of the Class B
Units equals or exceeds the greater of a) the average price per Class B unit for
Class B Units that have been validly priced for transfer, as determined by the
Board of Directors in its sole discretion on a nonconditional transfer basis
during the 90 day period ending 5 days prior to the date of the redemption, and
b) the average price per Class B unit of the last nonconditional transfers of
3,000 units that have been authorized by the Board of Directors prior to the
redemption; and v) such mandatory redemption shall require the pro rata
redemption of Class B Units from each Class B unitholder, such that each Class B
unitholder’s percentage of ownership in the Company shall not be reduced or
increased. (With respect to subpart iv) of the preceding sentence, in the event
that no separate transfers of Class B Units have occurred prior to the date of
the redemption, the redemption price for the Class B units shall be ninety
percent (90%) of the price for “linked” Class A and Class B Units, determined in
accordance with subpart iv) of the prior sentence.)  The Company by resolution
of the Board, may redeem the units of a Class of a unitholder that are not held
by a Member of that Class in accordance with the provisions of Section 4.7 of
this Agreement, entitled “Termination of Membership.”  Unless otherwise provided
by resolution of the Board, a unitholder (whether or not a Member), or any
transferee of a unitholder, does not have a right: to demand, withdraw or
receive a return of the unitholder’s (or transferee’s) Capital Contributions or
Capital Account; to require the purchase or redemption of the unitholder’s (or
transferee’s) units or Interest, or to receive a Distribution in partial or
complete redemption of the fair value of the unitholder’s units or Interest in
the Company, (except in all cases a redemption authorized by the resolution of
the Board under this Section 3.7(e) or as provided in Appendix E, Article XII,
or Article 7 of this Agreement following a Dissolution Event), notwithstanding
any provisions of the Act or any other provision of law.  The other unitholders
and the Company do not have any obligation to purchase or redeem the units or
Interest of any unitholder or transferee.  Each unitholder (whether or not a
Member) as a condition of becoming a unitholder has no right to receive a
Distribution in partial or complete redemption of the fair value of the units or
Interest of any unitholder upon an Event of Disassociation or otherwise which,
in the absence of the provisions in this Agreement, it would otherwise be
afforded by Section 18-604 of the Act or any other provision of the Act.

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AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

(f) Rights of Unitholders Who Are Not Members.  Unless admitted as a Member
pursuant to Section 4.3, a Person who acquires Units, or a Person who holds
Units and ceases to be a Member, has only the rights of an “unadmitted assignee”
and is only entitled to allocations and Distributions with respect to the Units
in accordance with this Agreement, and does not have any right to any
information or accounting of the affairs of the Company, and is not entitled to
inspect the books or records of the Company, and does not have any of the rights
of a Member under the Act or this Agreement.  Units held by a Person who is not
a Member are subject to the Transfer Restrictions.

(g) Specific Limitations.  A Unitholder (whether or not a Member) does not have
the right, power or authority to: (1) reduce the Unitholder’s Capital Account,
except as a result of the dissolution of the Company or as otherwise provided by
law or in this Agreement; (2) make voluntary Capital Contributions to the
Company except when authorized by the Board; (3) bring an action for partition
against the Company or any Company assets; (4) cause the termination and
dissolution of the Company, except as set forth in this Agreement; (5) require
that any Distribution to the Unitholder be made in the form of property other
than cash; (6) (in the Unitholder’s capacity as a Unitholder or Member) take
part in or interfere in any manner with the management of the business and
affairs of the Company; (7) (in the Unitholder’s capacity as a Unitholder or
Member) act for or bind the Company notwithstanding Section 18-402 of the Act;
and (8) have any contractual appraisal rights under Section 18-210 of the Act. 
Each Unitholder (whether or not a Member) by becoming a Unitholder shall have
irrevocably waived each of the rights contained in clauses (1) through (8) of
this Section 3.7(g).

Section 3.8. Restrictions On Transfers.

(a) General Restrictions.  The Board shall not approve, and the Company shall
not recognize for any purpose, any purported Transfer of Units unless and until
the Transfer Restrictions, consisting of the provisions of this Section and the
Unit Transfer Policy, have been satisfied or the Board has by resolution
specifically waived any unsatisfied provision, condition or restriction.  A
Transfer of Units approved by the Board that satisfies the provisions and
conditions of the Transfer Restrictions (or if any unsatisfied condition is
waived), shall be referred to in this Agreement as a “Permitted Transfer”.

(b) Not Binding Until Entered in Company Books.  A Transfer of Units is not
binding on the Company without the approval of the Board and not until the
Transfer is entered in the books and records of the Company.

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

(c) Pledge of Units Allowed.  Notwithstanding the Transfer Restrictions, a
Unitholder may pledge, grant a Lien on all or any portion of its Units as
security for the payment of debt, provided that a subsequent foreclosure or
transfer to the secured party in lieu of foreclosure or otherwise shall be
considered a Transfer.

(d) Unless Permitted, Transfers Void.  A purported Transfer of Units that is not
a Permitted Transfer is null and void and of no force or effect whatsoever;
provided that, if the Company is required to recognize a Transfer that is not a
Permitted Transfer (or if the Board, in its sole discretion, elects to recognize
a Transfer that is not a Permitted Transfer), the Units Transferred shall be
strictly limited to the transferor’s rights to allocations and Distributions as
provided by this Agreement with respect to the transferred Units, which
allocations and Distributions may be applied or set off against (without
limiting any other legal or equitable rights of the Company) to satisfy any
debts, obligations, or liabilities for damages that the transferor or transferee
of the Units may have to the Company.

(e) Indemnification of Company.  If a Transfer or attempted Transfer of Units is
not a Permitted Transfer, the Unitholder and the prospective transferee engaging
or attempting to engage in the Transfer is liable to and shall indemnify and
hold harmless the Company and the other Unitholders from all cost, liability,
and damage that the Company and any of the other Unitholders may incur
(including incremental tax liabilities, lawyers’ fees and expenses) as a result
of the Transfer or attempted Transfer and efforts to prohibit the transfer or
enforce the indemnity.

(f) Transferee Subject to Transfer Restrictions.  Units held by a transferee are
subject to the Transfer Restrictions.

(g) Unit Transfer Policy.  The Unit Transfer Policy shall be consistent with
this Agreement and impose conditions and restrictions on Transfers to: (1)
preserve the tax status of the Company; (2) comply with state or federal
securities laws; (3) require appropriate information from the transferor and
transferee regarding the transfer; (4) require representations from the
transferor and/or transferee regarding the Transfer; and (5) allow the Board to
determine whether or not the transferee is a competitor of the Company or the
Company’s Affiliates.  The Unit Transfer Policy also shall state the permitted
method and conventions that shall be used in allocating Profits, Losses, and
each item of Profits and Losses and all other items attributable between the
transferor and the transferee.  The Unit Transfer Policy is attached as Appendix
C, and incorporated as part of this Agreement.  The Unit Transfer Policy may be
amended by the Board without Member approval.

ARTICLE 4.
MEMBERS AND MEMBER VOTING

Section 4.1. Rights And Obligations Of Members.

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

(a) Authority.  The respective rights and obligations of Members will be
determined pursuant to the Act and this Agreement.  To the extent that the
rights or obligations of any Member are different by reason of any provision of
this Agreement than they would be in the absence of any provision of this
Agreement, to the extent permitted by the Act, this Agreement shall control.  A
Member, other than a Member acting in his or her capacity as an officer of the
Board or an officer of the Company pursuant to delegated authority, does not
have the power or authority to act for or on behalf of the Company, to bind the
Company by any act, or to incur any expenditures on behalf of the Company,
except with the prior consent of the Board. 

(b) Access to Records.  The Company shall provide to a Member upon written
request of the Member:  (1) the Class and Number of Units held by the Member;
(2) the percentage or share of annual Distributions to which the Member is
entitled based upon the Units held by the Member; (3) the voting rights of the
Member for each Class of Units held; (4) the most recent audited financial
statements of the Company; (5) copies or internet access to any annual,
quarterly, and special reports filed by the Company with the Securities and
Exchange Commission; and (6) for Class A Members, the number of cattle required
to be delivered by the Class A Member during the applicable delivery period, the
number of cattle delivered by the Class A Member or on the Class A Member’s
behalf, and the quality and pricing of the cattle delivered.  The Board shall
prescribe the form and format in which the information in clauses (1) to (6) is
transmitted to the Member.  For all other information, upon the request of a
Member for a proper purpose related to the Member's Interest as determined by
the Board, the Board will allow the Member and its designated representatives or
agents, upon at least ten (10) business days prior written notice to the Board
and during reasonable business hours, to examine the Company's books and records
to the extent required by the Act for the proper purpose at the Member's sole
cost and expense.  Each Member and Unitholder has an expectation of privacy that
information about them or their Interests in the Company will not be shared with
other Members for an improper purpose.  The Member’s request for information and
right to inspect information is subject to any reasonable standards as may be
established by the Board on a case by case basis or from time to time and the
inspection rights will be restricted by the Board to protect the rights of other
Members and the Company from damage from the requesting Member. The Board has
the authority and shall restrict access to and protect Confidential Information
of the Company in a manner consistent with this Section 4.1(b) and Section
4.1(c) as deemed appropriate by the Board.

(c) Nondisclosure.  Except as otherwise consented to by the Board, all
non-public information furnished to the Member pursuant to this Agreement or
otherwise regarding the Company or its business that is not generally available
to the public (“Confidential Information”) will be kept confidential and will
not be disclosed by the Member, or by any of the Member’s agents,
representatives or employees, in any manner, in whole or in part, except that:
(1) a Member will be permitted to disclose Confidential Information to those of
the Member’s agents, representatives and employees who need to be familiar with
the information in connection with the Member’s investment in the Company and
who are charged with an obligation of confidentiality and nondisclosure to other
Persons; (2) a Member will be permitted to disclose Confidential Information to
the Member’s partners and equity holders so long as they agree to keep the
information confidential on the terms set forth in this Agreement; (3) a Member
will be permitted to disclose Confidential Information to the extent required by
law, so long as the Member will have first provided the Company a reasonable
opportunity to contest the necessity of disclosing the information; and (4) a
Member will be permitted to disclose Confidential Information with prior written
notice to the Company regarding the Persons and the nature of and restrictions
on the Confidential Information to be disclosed, only to the Persons to the
extent necessary for the enforcement of any right of the Member arising under
this Agreement.

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

Section 4.2. Membership Requirements.

(a) Class A Members.  Class A Members must hold at least one hundred (100) Class
A Units and have a Cattle Delivery Agreement in effect with the Company as
provided in Section 4.4.

(b) Class B Members.  Class B Members must hold at least one hundred (100) Class
B Units.

(c) Other Classes.  A Unitholder must hold the minimum number of Units of any
Other Class, and meet the other requirements, if any, as stipulated in the
designations governing the Other Class.

Section 4.3. Admission Of Members.

(a) Members Through the Restructuring.  The Persons who held at least 100 shares
of common stock of the Cooperative and receive at least 100 Class A Units and
100 Class B Units through the Restructuring, are admitted as Class A Members and
Class B Members through the Restructuring without any further action of the
Board, the Members, or the Company.

(b) Additional Members.  Additional Persons may, upon the approval of the Board,
be admitted as Members of the Company with respect to any Class of Units: (1) by
meeting the requirements for membership with respect to any Class under Section
4.2 and otherwise under this Agreement including any subscription and payment
for Units as determined by the Board; (2) by submitting documents required by
the Board to evaluate membership approval; and (3) by submitting an executed
document approved by the Board agreeing to be bound by this Agreement.  A Person
is not admitted as a Member of any Class by the Board unless and until an
officer of the Company, acting under authority from the Board, has countersigned
the Person’s application, subscription agreement, or other document required by
the Board for admission as a Member of any Class.  The Board in its sole
discretion may refuse to admit any Person as a Member of any Class.

(c) Admission of Transferees as Members.  A transferee of Units will be admitted
as a Member with respect to a Class of Units (if not already a Member) if: (1)
the Transfer Restrictions are satisfied with respect to the applicable Transfer;
(2) the requirements of Section 4.2 are satisfied with respect to the transferee
and the Class of Units, (3) the Board approves the membership of the transferee
(which approval may be granted, delayed, considered or withheld in the sole
discretion of the Board); and (4) the transferee executes any instruments and
satisfies any other requirements that the Board deems reasonably necessary or
desirable for admission of the transferee as a Member. In the absence of
satisfying the foregoing requirements, the transferee will be a non-member
Unitholder with only the rights of an unadmitted assignee as provided in Section
3.7(f).

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

Section 4.4. Cattle Delivery Agreement.

(a) Requirement.  Each Class A Member shall at all times have a Cattle Delivery
Agreement in effect with the Company.  The Company will cause the transfer price
of the cattle delivered to be paid under the Cattle Delivery Agreement subject
to any offset for any debts or amounts owed under the Cattle Delivery Agreement
or by the Class A Member to the Company.  Patronage will not be paid by the
Company for delivery of cattle under the Cattle Delivery Agreement.  If the
Board determines by resolution that a Class A Member does not have a Cattle
Delivery Agreement in effect with the Company or is in breach of the Cattle
Delivery Agreement, then the Member shall forfeit voting rights with respect to
the Member’s Class A Units the Units shall become subject to repurchase by the
Company pursuant to Section 4.7(b), and the Member’s membership may be
terminated as provided in Section 4.7.

(b) Transfer of Cattle Delivery Obligations by Member.  Notwithstanding the
Transfer Restrictions for Transfer of Units, a Class A Member with a Cattle
Delivery Agreement in effect with the Company may Transfer any of the Member’s
rights to deliver cattle according to the Cattle Delivery Agreement, in whole or
in part, to a Person who is an Associate.  The Transfer of rights under the
Cattle Delivery Agreement does not constitute a Transfer of the Member’s Units
for purposes of this Agreement and does not release the Class A Member from
liability from the Company.  From and after the Transfer of rights under the
Cattle Delivery Agreement, the transferee Associate shall have the right to
perform all of the transferred portions of the transferor Member’s obligations
under the Cattle Delivery Agreement, but the transferor Member is liable to the
Company for performance of the obligations.

(c) Approval of Associates.  The Board (in its sole discretion and for the
period of time as the Board determines is appropriate in the circumstances) may
approve a Person (who may or may not be a Member) as an “Associate” eligible to
receive Transfers of the rights and obligations of a Class A Member under the
Class A Member’s Cattle Delivery Agreement.  The Board may impose a fee (annual
or otherwise) as a condition of being accepted as an Associate.  The status of
an Associate does not grant the Associate any of the rights of a Member or
Unitholder under the Act or this Agreement (including, without limitation, any
right to vote or to receive allocations and/or Distributions).

Section 4.5. Member Voting.

(a) Voting Rights Restricted.  A Member does not have any voting rights except
with respect to those matters requiring a Member vote or approval for:  (1) the
election and removal of Directors; (2) approval of certain mergers or
consolidations as provided in Section 5.1(c); (3) approval of certain
dispositions of all or substantially all of the assets of the Company under
Section 5.1(c); (4) approval of the dissolution of the Company under Article 7;
and (5) approval of certain amendments to this Agreement under Article 6, or as
specifically provided for in this Agreement.

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

(b) Class A Member Voting Rights.  Each Class A Member has one vote for any
matter in which Class A Members are entitled to vote.  Cumulative voting for
Class A Members is not permitted unless expressly authorized by the Board.

(c) Class B Members Voting Rights.  Other than matters as provided in Section
4.5(e) each Class B Member may cast one vote for each Class B Unit held on
matters in which Class B Members are entitled to vote.  Cumulative voting for
Class B Members is not permitted unless expressly authorized by the Board.

(d) Voting Method for Classes.  Subject to the governance rights of any Other
Class of Units, Members shall vote by Class, and the Members shall take action
by the affirmative vote of the majority of voting power of each Class authorized
to vote as provided in this Agreement for:  (1) approval of certain mergers or
consolidations as provided in Section 5.1(c); (2) approval of certain
dispositions of all or substantially all of the assets of the Company under
Sections 5.1(c); (3) approval of dissolution of the Company under Article 7; and
(4) approval of certain amendments of this Agreement under Article 6.  In the
election (or removal) of Directors by the Members under Section 5.3, Members
shall take action by the affirmative vote of a majority of the voting power of
the Class electing (or removing) the Director, present either in person, by
proxy, or by mail ballot, at a duly held meeting of the Members at which a
Quorum is present for the transaction of business.

(e) Voting on Procedural and Other Matters.  Except for Class voting matters in
Section 4.5(d), the Members shall take action at a Members meeting on procedural
and other matters determined by the Chair by the affirmative vote of the Members
(each Member with one vote), without regard to the Class or the Units held,
unless objected to by the majority of the voting power of any Class present at
the meeting.

Section 4.6. Member Meetings.

(a) Place and Manner of Meeting.  All meetings of Members shall be held at a
time and place, within or without the State of Delaware, as stated in the notice
of the meeting or in a duly executed waiver of notice.  Presence in person, or
by proxy or mail ballot, constitutes participation in a meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of business on the ground that the meeting is not lawfully convened.

(b) Conduct of Meetings.  The meetings of the Members shall be presided over by
the Chair and shall be conducted in general accordance with the most recent
edition of Roberts’ Rules of Order, or other rules and procedures as may be
determined by the Board in its discretion.  Resolutions to be voted on by the
Members shall be limited to those that have been approved by the Board for
presentation to the Members and contained in the notice of the meeting.

(c) Annual Meeting.  The annual meeting of the Members shall be held on a date
determined by the Board.  Failure to hold the annual meeting at the designated
time is not grounds for dissolution of the Company.

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

(d) Special Meetings.  Special meetings of the Members may be called at any time
by the Chair or the Board, or by the Secretary upon the request of thirty-three
percent (33%) of all Members (total Members without respect to Class) regardless
of the number of Units held by the requesting Members.  The special meeting
request shall state a proper purpose or purposes of the special meeting and the
matters if any proposed to be acted on at the special meeting.  Except as may be
required by applicable law, the Board in its discretion may determine whether a
special meeting request contains a proper purpose.  If the Board determines the
purpose is not proper, the Board shall notify the Person requesting the special
meeting in writing of the reasons that the requestor’s purpose was not proper,
and may either revise the purpose and proceed with the procedures to call a
special meeting or decline to call a special meeting until a proper purpose is
requested.

(e) Notice.  The Secretary shall cause a written or printed notice, reviewed by
the Company’s legal counsel, stating the place, day and time of the meeting and,
in the case of a special meeting, the proper purpose or purposes for which the
meeting is called.  The notice shall be delivered not less than ten (10) nor
more than sixty (60) days before the date of the meeting either personally or by
mail, to each Member entitled to vote at the meeting. If mailed, the notice
shall be deemed to be delivered when deposited in the United States mail
addressed to the Member at the Member’s address as it appears on the records of
the Company, with postage prepaid.  If the purpose of the meeting is to consider
any item requiring Class voting of Members under Section 4.5(d), the notice
shall be in a form that is approved by the Board and shall state the purpose,
identify the Director if the purpose is removal and a summary of the transaction
to be considered or a verbatim statement of the amendment to be considered must
accompany the notice.

(f) Quorum.  At any annual or special meeting of the Members, a Quorum necessary
for the transaction of business is present if:  (1) when the Board has
authorized the use of mail ballot or proxies, Members with twenty percent (20%)
or more of the voting power are present; and (2) in any other case, Members with
ten percent (10%) or more of the voting power are present.  If a vote of more
than one Class is required, the Quorum requirement will be applied to the
Members of each Class.  The Members present at a duly organized meeting at which
a Quorum is present may transact business until adjournment, notwithstanding the
departure or withdrawal of Members leaving less than a Quorum, provided however,
if the question of a Quorum is called and the Chair determines a Quorum is not
present, the meeting shall be adjourned.  The registration of Members eligible
to vote shall be verified by the Secretary and shall be reported in the minutes
of the meeting.

(g) Record Date.  For the purpose of determining Members entitled to notice of
or to vote at any meeting of Members or to make a determination of Members for
any other proper purpose, the Board may designate a record date or provide that
the record books shall be closed for a stated period not exceeding sixty (60)
days. If the record books shall be closed for the purpose of determining Members
entitled to notice of or to vote at a meeting of Members, the books shall be
closed for a period not exceeding the period immediately preceding the meeting
starting on the date when the notice is mailed or transmitted from the Company
and the date of the meeting.  In lieu of closing the record books, the Board may
fix in advance a date as the record date for determination of Members.  Unless
otherwise determined by the Board, if the record books are not closed and a
record date is not fixed for the determination of Members entitled to notice of
or to vote at a meeting of Members, the date on which notice of the meeting is
first mailed or transmitted from the Company, as the case may be, shall be the
record date for the determination of Members. When a determination of Members
entitled to vote at any meeting of Members has been made as provided in this
Section, the determination applies to the reconvening of an adjournment, except
where the determination has been made through the closing of record books and
the stated period of closing has expired.

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

(h) Ballots; Proxies.  If and to the extent authorized by the Board, a Member
may vote at a meeting of Members by alternative ballot (mail or otherwise) or by
proxy granted by the Member or by the Member’s duly authorized
attorney-in-fact.  If authorized by the Board, a proxy may be granted in
writing, by means of electronic transmission, or as otherwise permitted by
applicable law.  A proxy shall be filed with the Secretary of the Company before
the meeting is convened, as determined by the Board. A proxy shall be considered
filed with the Company when received by the Company at its executive offices or
other place designated by the Board, unless later revoked.  A proxy is not valid
after eleven months from the date of its execution, unless otherwise provided in
the proxy. A proxy is revocable at the discretion of the Member executing the
proxy.  While the right to vote can be exercised by proxy, only a Member has the
right to be recognized in a meeting of the Members unless otherwise determined
by the Chair in the Chair’s sole discretion.

Section 4.7. Termination Of Membership.

(a) Termination Events.  Membership as to any Class may be terminated by the
Board upon a determination by the Board that the requirements to be a Member of
that Class are not met.  Membership in the Company (membership in all Classes)
is terminated if any of the following events occur (any of the events are
referred to as an “Event of Disassociation”):

(1) a Member does not meet the requirements to be a Member with regard to at
least one of the Classes of Units held by the Member as determined by the Board;

(2) a Class A Member breaches a Cattle Delivery Agreement or does not have a
Cattle Delivery Agreement in effect with the Company;

(3) a Member that is an individual dies, or a member that is not an individual
ceases to exist as a Business Entity, and leaves no successor qualified as
determined by the Board to be a Member;

(4) a Member Transfers all of the Member’s Units;

(5) the Member resigns as a Member with respect to all Classes of Units held
under Section 4.8; or

(6) the Board by resolution finds that a Member has:

(i)         intentionally or repeatedly violated any provision of this
Agreement;

 

(ii)        breached any agreement with or obligation to the Company;

 

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(iii)       taken actions that will impede the Company from accomplishing its
purposes;

 

(iv)       taken or propose or threaten to take actions that compete with the
Company or an Affiliate of the Company;

 

(v)        taken or threatened actions that adversely affect the interests of
the Company or Affiliates of the Company or its Members; or

 

(vi)       willfully obstructed any lawful purpose or activity of the Company.

 

(b) Company’s Right of Redemption.  Upon membership termination under clauses
(1), (2), (5) or (6) in Section 4.7(a), the Company may, at its option purchase
the terminated Member’s Units at eighty percent (80%) of the weighted average
trailing sale price of the Units for arms length transactions (as reasonably
determined by the Board), measured over the six (6) month period immediately
preceding the date the Board determines by resolution to purchase the terminated
Member’s Units.  The Company may exercise the right to purchase the terminated
Member’s Units at any time after the membership termination.  The Board by
resolution may waive the Company’s right to purchase the terminated Member’s
Units.

(c) Cancellation of Cattle Delivery Agreement.  If a Class A Member’s membership
is terminated, the Company has the right, but not the obligation, to cancel the
Cattle Delivery Agreement with the former Class A Member.

Section 4.8. Resignation.

A Member may resign as a Member of any Class or all Classes at any time.  A
resignation must be made in writing delivered to the Secretary of the Company,
and will take effect at the time specified in the resignation or, if no time is
specified, upon receipt.  The acceptance of a resignation will not be necessary
to make it effective, unless expressly so provided in the resignation.  The
resignation as a Member does not terminate or cancel any contractual or other
obligations of the resigning Member to the Company or obligate the Company to
make any distributions to the resigning Member under Section 18-604 of the Act
or otherwise, except as approved by resolution of the Board.

Section 4.9. Continuation Of The Company.

The occurrence of an Event of Disassociation or any other event which is deemed
to terminate the continued membership of a Member in one or all Classes, will
not dissolve the Company, the Company’s affairs shall not be required to be
wound up, and the Company shall continue without dissolution.

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ARTICLE 5.
MANAGEMENT OF COMPANY

Section 5.1. Governance By Board, CEO.

(a) General Authority.  As provided in this Agreement, the powers and privileges
of the Company shall be exercised by or under the authority of the Board, and
the business and affairs of the Company shall be governed by the Board, and
management of the Company shall be delegated to the CEO.  The Company shall not
be governed or managed by the Members, except those matters for which consent or
approval of the Members is required by this Agreement or any nonwaivable
provisions of the Act.  The Board by resolution and employment agreement shall
allocate and delegate governance and management of the Company between the Board
and the CEO.  Any delegation or allocation by the Board shall not cause the
individuals constituting the Board to cease to be “managers” of the Company for
purposes of the Act.

(b) Policies, Rules, Regulations.  The Board may adopt policies, rules, and
regulations and may take actions as it deems advisable in furtherance of the
purposes of the Company, provided that the Board shall not act in a manner
contrary to this Agreement.

(c) Board Actions Requiring Member Consent.  Notwithstanding any other provision
of this Agreement, the following actions will not be taken by the Company
without a resolution describing and authorizing the action that is approved by
the Board and is also approved by the Members:

(1) mergers or consolidations with or into any other Business Entity which is
not an Affiliate of the Company, whether or not the Company is the surviving
entity;

(2) dispositions (whether effected by merger, sale of assets, lease, equity
exchange or otherwise) of all or substantially all of the assets of the Company,
other than through a pledge, security, transfer to a subsidiary under the
control of the Company or transfer to effect a securitization of the Company’s
assets for purposes of debt financing;

(3) amendments of this Agreement requiring approval by the Members to the extent
provided in Article 6; and

(4) dissolution of the Company under Section 7.1.

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(d) Duty to the Company.  The Board shall cause the Company to conduct its
business and operations separate and apart from that of any Member, Director, or
any of their Affiliates.  The Board shall take all actions which may be
necessary or appropriate: (1) for the continuation of the Company’s valid
existence as a limited liability company under the laws of the State of Delaware
and each other jurisdiction in which the existence is necessary to protect the
limited liability of Members and Unitholders or to enable the Company to conduct
the business in which it is engaged; and (2) for the accomplishment of the
Company’s purposes, including the acquisition, development, maintenance,
preservation, and operation of Company property in accordance with the
provisions of this Agreement and applicable laws and regulations. Each Director
shall have the duty to discharge the foregoing duties in good faith, in a manner
the Director reasonably believes to be in the best interests of the Company, and
with the care an ordinarily prudent person in a like position would exercise
under similar circumstances.  A Director is not under any other duty to the
Company or the Members to conduct the affairs of the Company in a particular
manner.

(e) Duty of Care and Loyalty.  Without limiting the applicability of Section
5.1(d) or any other provision of this Agreement, the following provisions will
be applicable to the Board and to the Directors in their capacity as Directors:

(1) the Board and the Directors and the decisions of the Board will have the
benefit of the business judgment rule to the same extent as the Board, the
Directors and the decisions would have the benefit of the rule if the Board were
a board of directors of a Delaware corporation; and

(2) the Board and the Directors will have the same duties of care and loyalty as
they would have if they were a board of directors and directors of a Delaware
corporation but in no event will any member of the Board be liable for any
action or inaction for which this Agreement expressly waives liability for the
Director.

Section 5.2. Actions By Board; Committees; Reliance On Authority.

(a) Board Action.  In taking any action under this Agreement, the Directors
shall act:  (1) collectively through meetings of the Board held and conducted
pursuant to the provisions of this Agreement or by written action taken pursuant
to the provisions of this Agreement; (2) through committees established pursuant
to Section 5.2(b); and (3) through officers of the Board, and through the CEO by
resolutions of delegated and reserved authorities and employment agreement.  The
Board shall take action by the affirmative vote of the Directors present at a
duly held meeting of the Board at which a Quorum is present.

(b) Committees.   The Board, by resolution approved by the affirmative vote of a
majority of the Directors then holding office, may from time to time establish
one or more committees, each of which shall be comprised of one or more natural
persons who may but need not be Directors or Members, provided that a majority
of committee members on each committee must be a Director or Member.  Any
committee shall have and may only exercise the authority and duties to the
extent provided by the Board in the resolution establishing the committee,
subject at all times to the limitations set forth in the Act, this Agreement and
to the direction and control of the Board.  Unless otherwise provided by the
Board, the presence of a majority of the members of the committee constitutes a
Quorum for the transaction of business at a meeting of the committee, and the
committee shall act by the affirmative vote of a majority of committee members
present at a duly held meeting.  In other matters of procedure the provisions of
this Agreement shall apply to committees and their members to the same extent
they apply to the Board and Directors, including the provisions with respect to
meetings and notice, absent members, written actions, and valid acts.  Each
committee shall keep regular minutes of its proceedings and report the same to
the Board.  The Board may dissolve any committee at any time.

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(c) Reliance on Authority.  A Person dealing with the Company may rely on the
authority of an officer of the Board or an officer of the Company in taking an
action in the name of the Company without inquiry into the provisions of this
Agreement or compliance with this Agreement, regardless of whether the action is
actually taken in accordance with the provisions of this Agreement, unless the
Person dealing with the Company has actual knowledge that the officer lacks
authority to act or the Act establishes that the officer lacks authority to act.

Section 5.3. The Board.

(a) Director Election and Appointment.  The Board shall consist of individuals
appointed or elected under this Section (“Directors”) who are “managers” of the
Company for all purposes under the Act.  Directors shall be appointed by the
Board and Members, and elected by the Members at the times, in the manner, and
for the terms as prescribed by this Agreement.  The initial Directors comprising
the initial Board, who shall serve in the manner and as prescribed by this
Agreement consists of the individuals, terms, and classification as provided in
the Board attached as Appendix D and incorporated as part of this Agreement. 
Other than the initial appointment, Directors appointed by the Board or Members
shall have one year terms, and for Directors appointed by Members, shall be
appointed by Members at the Annual Meeting of Members, and for Directors
appointed by the Board, shall be appointed by the Board within 30 days after the
Annual Meeting of Members.  The Board may adopt written procedures for
determining the qualification and nomination of Directors.  The Board, without
Member approval, shall amend Appendix D to comply with any change in Directors. 
For purposes of this Agreement, the initial Directors in Appendix D shall be
deemed to have been elected by the Class A Members.

(b) Qualification.  Each Director elected by Class A Members must be a Member or
(in the case of a Member that is not a natural person) an elected or appointed
representative of a Member. This qualification only applies to Directors elected
by Class A Members.

(c) Term.  The elected Directors shall serve three-year terms and until their
successors are duly elected and qualified, or until their earlier death,
resignation or removal.  In order to preserve continuity of governance and the
harmonious transition of the initial Board to the elected or appointed Board,
the terms of the initial Directors shall be staggered as stated on Appendix D,
with all subsequent terms for elected Directors to be for a period of three
years.  The Board shall adopt nomination, reporting and other election
procedures and policies for the Company in its sole discretion and which may be
amended or modified by the Board in its sole discretion.

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(d) Number.  The board shall consist of not less than seven (7) Directors
elected by Members, as determined by the Board from time to time.  Seven (7) of
the Directors serving on the Board shall always be elected by the Class A
Members and any designations for the Directors elected by the Class A Members
shall be approved solely by the Class A Members taking action in the same manner
as provided for electing or removing Directors under Section 4.5(d).  Between
zero (0) and five (5) Directors shall represent the Class B Members as
determined by the Board from time to time, provided that no reduction in the
number of Directors shall shorten the term of a director previously elected. 
The Directors representing the Class B Members may (as determined by the
Board):  (1) be appointed by the Board; or (2) be appointed or elected by the
Class B Members.  The Board shall have the power to divide the Class B Units
into two or more subclasses, and allocate the right to elect or appoint
Directors among the Class B Members on the basis of the subclasses.  Members
holding any Units of any Other Class shall have the right to elect or appoint
Directors as provided in the designations governing the Class.

(e) Independent Non-Competitive Activities.  A Director is only required to
devote the time to the affairs of the Company as are necessary to govern the
business and affairs of the Company in accordance with this Agreement, and shall
be free to serve any other Business Entity or enterprise in any capacity that
the Director deems appropriate in his or her discretion, provided that the other
Business Entity or enterprise or one of their Affiliates is not a competitor of
the Company or one of the Company’s Affiliates as determined by the Board.

(f) Resignation.  A Director may resign at any time.  The resignation must be
made in writing and shall take effect at the time specified in the written
resignation or, if a time is not specified then at the time of its receipt by
the Chair or the Secretary of the Company.  The acceptance of a resignation is
not necessary to make it effective, unless expressly provided in the written
resignation.

(g) Removal.  A Director elected by Members may be removed for any reason at any
special meeting of Members by the affirmative vote of the majority of the voting
power of the Class of Members who elected the Director. A Director appointed by
the Board may be removed by the affirmative vote of two-thirds (2/3) of the
Directors excluding the Director to be removed.  A Director appointed by one or
more Members pursuant to a Class designation may be removed at any time by the
appointing Member or Members or as otherwise provided in the Class designation. 
A Director elected or appointed by the Members may be removed at any special
meeting of the Board by the affirmative vote of three-fourths (3/4) the
Directors who are not subject to removal for an act or failure to act in a
manner that constitutes any of the following: (1) a willful failure to deal
fairly with the Company or its Members in connection with a matter in which the
Director or officer has a material conflict of interest; (2) a violation of
criminal law, unless the Board determines the Director had reasonable cause to
believe that the Director’s or officer’s conduct was lawful or no reasonable
cause to believe that the conduct was unlawful; (3) a transaction from which the
Director derived an improper personal profit; or (4) willful misconduct.  The
notice of the meeting shall state that the removal will be discussed and acted
upon at the meeting, and must also be provided to the Director in question at
least 10 days in advance of the meeting.  The Director in question has a right
to be heard at the meeting.

(h) Vacancies.  A vacancy occurring on the Board (whether by reason of an
increase in the number of Directors or by reason of a vacancy in an existing
Director seat) may be filled by appointment through an affirmative vote of a
majority of the remaining Directors, though less than a Quorum.  A Director
appointed by the Board to fill a vacancy for an elected Director shall serve
until a successor is elected and qualified at the next annual or special meeting
of the Members held for the purpose of electing Directors.  At the next annual
meeting or special meeting of the Members called for the purpose of electing a
Director, the Members shall elect a Director to fill the unexpired term of the
vacant Director’s position.

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Section 5.4. Board Meetings.

(a) Meetings.  Regular meetings of the Board shall be held from time to time as
determined by the Board.  Special meetings of the Board shall be held upon the
call of the Chair or three (3) or more Directors.  Board meetings shall be held
at the principal office of the Company or at another place, either within or
without the State of Delaware, as designated by the person calling the meeting
and stated in the notice of the meeting or a duly executed waiver of notice of
the meeting.  Directors may participate in a Board meeting by means of video or
audio conferencing or similar communications equipment whereby all Directors
participating in the meeting can hear each other.

(b) Notice.  Notice of each meeting of the Board, stating the place, day and
hour of the meeting, shall be given to each Director at least three (3) days
before the day on which the meeting is to be held.  The notice may be given
orally, in writing, by facsimile transmission, by electronic mail or by any
other form or means of communication that provides reasonable assurances of
effective communication.  Except as expressly required in this Agreement, the
notice or waiver of notice of any special or regular meeting of the Board does
not need to specify the business to be transacted or the purpose of the meeting.

(c) Waiver.  Whenever a notice is required to be given to a Director under the
provisions of this Agreement, a waiver of the notice in writing signed by the
Director, whether before or after the meeting time stated in the notice, shall
be deemed equivalent to the giving of the notice.  Attendance of a Director at a
meeting of the Board constitutes a waiver of notice of the meeting by the
Director, except where the Director attends a meeting for the express purpose of
stating his or her objection to the transaction of any business because the
meeting is not lawfully called or convened.

(d) Quorum.  One-half of the Directors in office (provided that at least
one-half of the Directors present have been elected by the Class A Members)
constitute a Quorum necessary for the transaction of business at any regular or
special meeting of the Board.  If less than a Quorum is present, those Directors
present may adjourn the meeting from time to time until a Quorum shall be
present.

(e) Voting and Act of the Board.  Each Director has one (1) vote, without regard
to the Class or Class of Members that elected or appointed the Director, unless
otherwise provided in a Class designation.  The Board shall take action by the
affirmative vote of a majority of the Directors present at a duly held meeting
at which a Quorum is present.  Provided that a Quorum is present, there is no
requirement that any action of the Board be approved by Directors elected or
appointed by a certain Class of Members, unless otherwise provided in a Class
designation.

(f) Action Without a Meeting.  An action required or permitted to be taken at a
meeting of the Board may be taken by written action signed by the Directors with
a majority of the voting power of the Directors comprising the Board, unless
this Agreement prescribes a greater Director approval for the action to be
taken.

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(g) Compensation.  The Board may fix the compensation, if any, of Directors. 
Directors shall also be entitled to reimbursement for actual expenses incurred
in attending meetings of the Board or conducting other business of the Company.

Section 5.5. Officers.

(a) Qualification; Election.  Officers of the Board, and the CEO must be natural
persons, and shall be elected or appointed by the Board.  The officers of the
Company shall consist of the following persons:

(1) officers of the Board, elected on an annual basis, who shall consist of a
Chair and a Vice Chair, who must be Directors, and a Secretary who need not be a
Director and may be appointed by the Board;

(2) the CEO who shall be appointed by the Board; and

(3) a chief financial officer for the Company and other officers and assistant
officers of the Company, who shall be appointed by the CEO.

(b) Bonds and Insurance.  The Board may require all officers, agents and
employees charged by this Company with responsibility for the custody of its
funds or property to give bonds.  Bonds shall be furnished by a responsible
bonding company and approved by the Board, and the cost shall be paid by the
Company.  The Board shall cause the Company to provide for insurance of the
property of the Company, or property which may be in the possession of the
Company and not otherwise adequately insured by the owner of the property.  In
addition, the Board shall cause the Company to provide for insurance covering
liability of the Company to all employees and the public, in a commercially
reasonable amount as is customary for businesses similar to the Company.

(c) Term of Office.  An officer appointed by the Board other than the CEO shall
hold office for a term of one year and until a successor is duly elected or
appointed, unless prior to the end of the term the officer has resigned,
deceased or has been removed from office. 

(d) Removal and Vacancies.  Any officer elected or appointed by the Board may be
removed, with or without cause, at any time by a resolution of the Board;
provided that the removal is subject to the termination procedures of any
written employment agreement with the Company.  A vacancy in an office of the
Board or the CEO shall be filled by a resolution of the Board.  The CEO may
remove any officer appointed by the CEO.  An officer may resign at any time by
giving written notice to the Company.  The resignation is effective without
acceptance when the notice is given to the Company, unless a later effective
date is specified in the notice.

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(e) Chief Executive Officer.  The CEO shall have direct and general charge and
supervision of all business and administrative operations of the Company and all
other duties, responsibilities, authorities and privileges as are set forth in
the CEO’s employment agreement, if any, as amended from time to time, in
addition to those duties, responsibilities, authorities and privileges as are
delegated to the CEO by the Board by resolution, or that a CEO of a Delaware
corporation would have in respect of a Delaware corporation in the absence of a
specific delegation of the duties, responsibilities, authorities and
privileges.  The CEO may be an officer of any Business Entity in which the
Company owns an interest.  The CEO shall also perform other duties that may be
assigned by the Board to the extent consistent with this Agreement and the CEO’s
employment agreement, if any, as amended from time to time.

(f) Duties of Other Officers.  Unless provided otherwise by a resolution adopted
by the Board, the officers of the Company, other than the CEO, shall have the
duties as are customarily associated with their respective offices and shall
perform other duties as may from time to time be prescribed by any officer to
whom the officer reports.

(g) Delegation.  Unless prohibited by a resolution of the Board, an officer
elected or appointed by the Board may delegate in writing some or all of the
duties and powers of the person’s management position to other persons.  An
officer who delegates the duties or powers of an office remains subject to the
standard of conduct for an officer with respect to the discharge of all duties
and powers so delegated.

Section 5.6. Liability And Indemnification Of Directors And Officers.

(a) Liability Limitation.  A Director or officer of the Company is not
personally liable to the Company or its Members for monetary damages for a
breach of fiduciary duty by the Director or officer; provided that this
provision does not eliminate or limit the liability of a Director or officer for
an act or failure to act in a manner that constitutes any of the following: (1)
a willful failure to deal fairly with the Company or its Members in connection
with a matter in which the Director or officer has a material conflict of
interest; (2) a violation of criminal law, unless the Director had reasonable
cause to believe that the Director’s or officer’s conduct was lawful and had no
reasonable cause to believe that the conduct was unlawful; (3) a transaction
from which the Director derived an improper personal benefit or profit; or (4)
willful misconduct.

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(b) Indemnification.  To the fullest extent permitted or required by law, the
Company, its receiver, or its trustee (in the case of its receiver or trustee,
to the extent of Company Property) shall indemnify, defend, save harmless, and
pay all judgments and claims against, and reasonable expenses of, each present
and former Director or officer relating to any liability or damage or reasonable
expenses incurred with respect to a proceeding if the Director or officer (or
former Director or officer) was a party to the proceeding as a result of or in
connection with (1) his or her capacity as a Director or officer of the Company
(which reasonable expenses including reasonable attorneys’ fees may be paid as
incurred); or (2) his or her service of any other Person at the request of the
Company. Notwithstanding the foregoing provisions, the Company shall not
indemnify, defend, save harmless, or pay any portion of any judgments or claims
against, or any expenses of, a Director or officer (or former Director or
officer) under the foregoing provisions where the judgments and claims or
proceedings arise out of or are related to an act or failure to act of the
Director or officer in a manner that constitutes any of the following:  (1) a
willful failure to deal fairly with the Company or its Members in connection
with a matter in which the Director or officer has a material conflict of
interest; (2) a violation of criminal law, unless the Director or officer had
reasonable cause to believe that the Director’s conduct was lawful or no
reasonable cause to believe that the conduct was unlawful; (3) a transaction
from which the Director or officer derived an improper personal profit; or (4)
willful misconduct.

(c) Insurance.  The Company may purchase and maintain insurance on behalf of a
person in the person’s official capacity against any liability or expense
asserted against or incurred by the person in or arising from that capacity,
whether or not the Company would be required to indemnify the person against the
liability.

Section 5.7. Contracts With Directors Or Their Affiliates.

(a) Material Financial Interest in Contracts or Transactions.  A contract or
transaction between the Company or an Affiliate of the Company and a Director or
the Director’s Affiliate or between the Company and the Company’s Affiliate and
any other entity in which a Director or the Director’s Affiliate has a material
financial interest, is not void or voidable and does not require the Director to
account to the Company and hold as trustee for the Company any profit or benefit
derived from the contract or transaction solely for this reason, or solely
because the Director is present at or participates in the Board meeting at which
the contract or transaction is authorized, if: (1) the material facts of the
Director’s material financial interest are disclosed to the Board; and (2) the
contract or transaction is authorized or approved by two-thirds of all of the
disinterested Directors.  The presence of the interested Director may be counted
in determining the presence of a Quorum at the meeting at which the contract or
transaction is authorized but the interested Director’s presence or vote may not
be counted in determining the authorization or approval of the contract or
transaction by the necessary two-thirds quantum of consent.

(b) Cattle Delivery Contracts.  A contract or transaction involving the sale or
delivery of cattle, between the Company and a Director or the Director’s
Affiliate or between the Company and any other entity in which a Director or the
Director’s Affiliate has a material financial interest, is not void or voidable
and does not require the Director to account to the Company and hold as trustee
for the Company any profit or benefit derived from the contract or transaction
solely for this reason, or solely because the Director is present at or
participates in the Board meeting at which or pursuant to which the contract or
transaction is authorized or approved, notwithstanding the fact that the
standard of Section 5.7(a) was not met, provided that the terms of the contract
or transaction are or were no less favorable to the Company than could be or
could have been obtained between disinterested parties negotiating at an
arms-length basis at the time the contract or transaction was entered into (and
without the benefit of hindsight).

ARTICLE 6.
AMENDMENTS.

Section 6.1. Amendments.

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(a) Procedure For Amendments.  Other than amendments by the Board under Section
6.1(b), amendments to this Agreement shall be proposed solely by the Board and
approved by the Members.  Following the Board’s approval of any proposed
amendment, the Board shall submit to the Members a verbatim statement of the
proposed amendment, providing that counsel for the Company has approved of the
amendment in writing as to form.  The Board shall include in any submission to
the Members a recommendation as to the proposed amendment. The Board shall seek
the approval of the Members on the proposed amendment by consent (written or
electronic affirmation as determined by the Board) of the required number of
Members or shall call a meeting of the Members to vote on the proposed amendment
and to transact any other business deemed appropriate. A proposed amendment is
adopted and is effective as an amendment of this Agreement if the amendment is
approved by Members of each Class entitled to vote on the amendment.  The Board
shall incorporate any amendment as a restated Agreement effective as of the
effective date of the amendment.

(b) Amendments By Board.  This Agreement may be amended by the Board, without
Member approval, to the extent provided in: Section 2.4 for the Principal Place
of Business; Section 2.6(c) for the Agent for Service of Process; Section
3.2(a), 3.2(b) and Section 3.2(c) for designations of Classes and issuance of
Units; Section 3.6 as to Class designations under Section 3.2(a) and Appendix E;
Section 3.8(g) for the Unit Transfer Policy; Section 5.3 as to the change in
Directors and Section 7.2 as to liquidating Distributions conforming to Class
designations under Section 3.2(a) and Appendix E; which includes the authority
of the Board to amend Appendices A, B, C, D, and E without Member approval.

(c) Amendments Of Sections By Specified Percentage.  A provision of this
Agreement that requires the approval or consent of a specified percentage or
number in interest of the Members or any Class of Members may not be amended
without the affirmative vote of Members holding at least the specified
percentage or number of voting rights of all of the Members or of the specified
Class.

(d) Amendment Of This Section.  This Section shall not be amended without the
approval or consent of at least two-thirds (2/3) of the voting power of Members
holding each Class of Units.

ARTICLE 7.
DISSOLUTION AND WINDING UP

Section 7.1. Dissolution Commencement.

(a) Dissolution Event.  The Company shall dissolve and shall commence winding up
and liquidating upon the first to occur of either of the following (each a
“Dissolution Event”):  (1) the affirmative vote of the Board and a majority of
the voting power of each class of Members to dissolve, wind up, and liquidate
the Company; or (2) the entry of a decree of judicial dissolution pursuant to
the Act.

(b) No Dissolution Prior To Dissolution Event.  The Members agree that,
notwithstanding any provision of the Act, the Company shall not dissolve prior
to the occurrence of a Dissolution Event.

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

Section 7.2. Winding Up.

Upon the occurrence of a Dissolution Event, the Company shall continue solely
for the purposes of winding up its affairs in an orderly manner, liquidating its
assets, and satisfying the claims of its creditors, Unitholders and Members, and
no Unitholder or Member shall take any action that is inconsistent with, or not
necessary to or appropriate for, the winding up of the Company’s business and
affairs, provided that all covenants contained in this Agreement and obligations
provided for in this Agreement shall continue to be fully binding upon the
Unitholders and Members until the time as the Property has been distributed
pursuant to this Section and the Certificate of Formation has been canceled
pursuant to the Act. The Liquidator shall be responsible for overseeing the
prompt and orderly winding up and dissolution of the Company. The Liquidator
appointed under Section 7.6 shall take full account of the Company’s liabilities
and Property and shall cause the Property or the proceeds from the sale of the
Property, to be applied and distributed, to the maximum extent permitted by law,
in the following order (subject to any priority Distributions applicable to
Units of any specific Class or Classes and Appendix E):

(1) first, to creditors (including Directors, Members, and Unitholders and
Affiliates of Unitholders and Members, who are creditors, to the extent
otherwise permitted by law) in satisfaction of all of the Company’s debts,
obligations and liabilities (whether by payment or making of reasonable
provision for payment of the liabilities), other than debts, obligations and
liabilities for which reasonable provision for payment has been made and those
described in Section 7.2(2);

(2) second, the excess of the amounts paid in Section 7.2(1) above, to each
holder of Patronage Notices in the amount of the Company’s remaining obligation
with respect to the holder’s Patronage Notices on the books of the Company, as
adjusted from time to time, or if the excess is inadequate to pay the Company’s
total  remaining obligation, then, the excess in proportion to each holder’s
share of the Company’s remaining obligation; and

(3) third, the excess of the amounts paid in Sections 7.2(1) and 7.2(2) above,
subject to any priorities in the designation of Unit Classes, to the Unitholders
in accordance with the positive balance in their Capital Accounts after giving
effect to all Capital Contributions, Distributions and allocations for all
periods.

Section 7.3. Rights Of Unitholders.

Except as otherwise provided in this Agreement, in winding up under Section 7.2
each Unitholder shall look solely to the Property of the Company for any
Distribution and has no right or power to demand or receive Property other than
cash from the Company.  If the assets of the Company remaining after payment or
discharge of the debts, obligations and liabilities of the Company are
insufficient to return the Capital Contributions, the Unitholders shall have no
recourse against the Company or any other Unitholder or Unitholders.

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AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

Section 7.4. Notice Of Dissolution.

(a) Notice to Unitholders and Claimants.  Within thirty (30) days after the
occurrence of a Dissolution Event, the Board shall provide written notice of the
Dissolution Event to each of the Members and any Unitholders who are not Members
and the Board may notify its known claimants and/or publish notice as further
provided in the Act.

(b) Certificate of Cancellation.  Upon completion of the distribution of the
Company’s Property as provided in this Article 7, the Company shall be
terminated, and the Liquidator shall cause the filing of a Certificate of
Cancellation in accordance with the Act and shall take all other actions as may
be necessary to terminate the Company.

Section 7.5. Allocations During Period Of Liquidation.

During the period commencing on the first day of the Fiscal Year during which a
Dissolution Event occurs and ending on the date on which all of the assets of
the Company have been distributed to the Unitholders pursuant to Section 7.2
(the “Liquidation Period”), the Unitholders shall continue to share Profits,
Losses, gain, loss, and other items of Company income, gain, loss or deduction
in the manner provided in Article 3 and Appendix E.

Section 7.6. The Liquidator.

(a) Definition.  The “Liquidator” shall mean a Person appointed by the Board to
oversee the liquidation of the Company.  The Liquidator may be the Board or a
committee of three or more Directors appointed by the Board.

(b) Fees.  The Company is authorized to pay a reasonable fee to the Liquidator
for its services performed pursuant to this Article 7 and to reimburse the
Liquidator for its reasonable costs and expenses incurred in performing those
services.

(c) Indemnification.  The Company shall indemnify, save harmless, and pay all
judgments and claims against the Liquidator or any officers, directors, agents
or employees of the Liquidator relating to any liability or damage incurred by
reason of any act performed or omitted to be performed by the Liquidator, or any
officers, directors, agents or employees of the Liquidator in connection with
the liquidation of the Company, including reasonable attorneys’ fees incurred by
the Liquidator, officer, director, agent or employee in connection with the
defense of any action based on any act or omission, which attorneys’ fees may be
paid as incurred, except to the extent the liability or damage is caused by the
fraud, intentional misconduct of, or a knowing violation of the laws by the
Liquidator which was material to the cause of action.

Section 7.7. Form Of Liquidating Distributions.

For purposes of making Distributions required by Section 7.2, the Liquidator may
determine whether to distribute all or any portion of the Property in kind or to
sell all or any portion of the Property and distribute the proceeds from the
sale.

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

ARTICLE 8.
MISCELLANEOUS

Section 8.1. Notices.

A notice, payment, demand, or communication required or permitted to be given by
any provision of this Agreement shall be in writing, facsimile or electronic
communication, as determined by the Board, and shall be deemed to have been
delivered, given, and received for all purposes: (1) if delivered personally to
the Person or to an officer of the Business Entity to whom the same is directed;
or (2) when the same is actually delivered to the recipient’s address on record
with the Company.  Notices, payments and demands shall be transmitted or sent:
(1) if to the Company, to the address determined pursuant to Section 2.4; and
(2) if to the Unitholders or Members, to the address of the Unitholder or Member
on record with the Company.

Section 8.2. Binding Effect.

Except as otherwise provided in this Agreement, every covenant, term, and
provision of this Agreement shall be binding upon and inure to the benefit of
the Members and Unitholders and their respective successors, transferees, and
assigns, without the necessity of physical execution of this Agreement.

Section 8.3. Construction.

Every covenant, term, and provision of this Agreement shall be construed simply
according to its fair meaning and not strictly for or against any Member or
Unitholder.

Section 8.4. Time.

In computing any period of time pursuant to this Agreement, the day of the act,
event or default from which the designated period of time begins to run shall
not be included, but the time shall begin to run on the next succeeding day. The
last day of the period so computed shall be included, unless it is a Saturday,
Sunday or legal holiday, in which event the period shall run until the end of
the next day which is not a Saturday, Sunday or legal holiday.

Section 8.5. Headings.

Section and other headings contained in this Agreement are for reference
purposes only and are not intended to describe, interpret, define, or limit the
scope, extent, or intent of this Agreement or any provision of this Agreement.

Section 8.6. Severability.

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AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

 

 

Every provision of this Agreement is intended to be severable, and, if any term
or provision of this Agreement is illegal or invalid for any reason whatsoever,
the illegality or invalidity shall not affect the validity or legality of the
remainder of this Agreement. Notwithstanding the foregoing, if the illegality or
invalidity would be to cause the Members to lose the material benefit of their
economic bargain, then the Members agree to negotiate in good faith to amend
this Agreement in order to restore the lost material benefit.

Section 8.7. Incorporation By Reference.

Every exhibit, schedule, and other appendix attached to this Agreement and
referred to in this Agreement is not incorporated in this Agreement by reference
unless this Agreement expressly provides that the exhibit, schedule or appendix
is to be incorporated as part of this Agreement.

Section 8.8. Variation Of Terms.

All terms and any variations of the terms shall be deemed to refer to masculine,
feminine, or neuter, singular or plural, as the identity of the term may
require.

Section 8.9. Governing Law.

The laws of the State of Delaware shall govern the validity of this Agreement,
the construction of its terms, and the interpretation of the rights and duties
arising under this Agreement.

Section 8.10. Specific Performance.

Each Member and Unitholder agrees that the other Members and Unitholders would
be irreparably damaged if any of the provisions of this Agreement are not
performed in accordance with their specific terms and that monetary damages
would not provide an adequate remedy. Accordingly, it is agreed that, in
addition to any other remedy to which the Company on behalf of the nonbreaching
Members may be entitled, at law or in equity, the Company on behalf of the
nonbreaching Members shall be entitled to injunctive relief to prevent breaches
of the provisions of this Agreement and specifically to enforce the terms and
provisions of this Agreement in any action instituted in any court of the United
States or any state having subject matter jurisdiction.

Section 8.11. Consent To Jurisdiction.

All actions, suits or proceedings arising out of or based upon this Agreement or
the subject matter of this Agreement if brought by a person other than the
Company shall be brought and maintained exclusively in the federal courts
located in the State of Missouri, provided that upon determination by the Board
of Directors, the Company has the right to bring, maintain, or remove any
action, suit, or proceeding arising out of or based on this Agreement or the
subject matter of this Agreement to any state or federal court located in the
State of Delaware.  Each of the Unitholders and Members: (1) shall irrevocably
be subject to the jurisdiction of the federal courts located in the State of
Missouri (or Delaware as applicable) for the purpose of any action, suit or
proceeding arising out of or based upon this Agreement or the subject matter of
this Agreement; and (2) waives to the extent not prohibited by applicable law,
and shall not be entitled to assert, by way of motion, as a defense or
otherwise, in any action, suit or proceeding, any claim that he, she, or it is
not subject personally to the jurisdiction of one of the above-named courts,
that he, she, or it is immune from extraterritorial injunctive relief or other
injunctive relief, that he, she, or its property is exempt or immune from
attachment or execution, that any action, suit or proceeding may not be brought
or maintained in one of the above-named courts should be dismissed on the
grounds of forum non conveniens, should be transferred to any court other than
one of the above-named courts, should be stayed by virtue of the pendency of any
other action, suit or proceeding in any court other than one of the above-named
courts, or that this Agreement or the subject matter of this Agreement may not
be enforced in or by any one of the above-named courts.  Each Unitholder,
Member, or other party to this Agreement shall be subject to service of process
in any suit, action or proceeding in any manner permitted by the laws of the
State of Missouri (or Delaware as applicable), shall be subject to service of
process by registered or certified mail, return receipt requested, at the
address specified in or pursuant to this Agreement on the records of the Company
(on grounds that it is reasonably calculated to give actual notice) and waives
and shall not be entitled to assert by way of motion, as a defense or otherwise,
in any action, suit or proceeding any claim that service of process made in
accordance with this Agreement does not constitute good and sufficient service
of process.  The provisions of this Section shall not restrict the ability of
any party to enforce in any court any judgment obtained in the federal courts
located in the states of Missouri or Delaware.

 

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U.S. Premium Beef, LLC

AMENDED AND RESTATED LLC AGREEMENT

                                                                                                                                                                                                               

 

Section 8.12. Waiver Of Jury Trial.

To the extent not prohibited by applicable law which cannot be waived, the
Company and each of the Unitholders and Members waive and shall not be entitled
to 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 out of or based upon this Agreement or the subject matter of this
Agreement, whether now existing or arising later and whether sounding in tort or
contract or otherwise.

 

[REMAINING PART OF THIS PAGE IS

INTENTIONALLY LEFT BLANK]

 

 

 

 

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX A

 

Appendix A

PRINCIPAL PLACE OF BUSINESS
OF
U.S. PREMIUM BEEF, LLC

 

The principal place of business of U.S. Premium Beef, LLC is 12200 North
Ambassador Drive, Suite 501, Kansas City, Missouri 64163 and other places as
determined by the Board of Directors of U.S. Premium Beef, LLC.

 

 

 

 

 

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX B 

 

Appendix B

AGENT FOR SERVICE
OF PROCESS
OF
U.S. PREMIUM BEEF, LLC

 

The name and address of the agent for service of process on U.S. Premium Beef,
LLC in the State of Delaware is Corporation Trust Center, 1209 Orange Street,
City of Wilmington, County of New Castle, Delaware 19801.

 

 

 

 

 

 

 

 

 

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX C

 

Appendix C

Amended as of December 9, 2009

UNIT TRANSFER POLICY
OF
U.S. PREMIUM BEEF, LLC

 

Section 1.1. Definitions, Applicability.

(a)        Definitions.  The definitions of the Limited Liability Company
Agreement (the “Agreement”) of U.S. Premium Beef, LLC (the “Company”) and
Appendix E of the Agreement apply to this Unit Transfer Policy (the “Policy”).

(b)        Applicability.  This Policy and Section 3.8 of the Agreement and the
other applicable provisions of the Agreement apply to all Transfers of Units of
the Company.

(c)        Intent of Policy.  It is the intent of this Policy as it relates to
any Transfers that: (1) the tax status of the Company is the same as for a
partnership; (2) this Company preserve its partnership tax status by complying
with Regulations, Section 1.7704-1, et seq., and any amendments; and (3) to the
extent possible, this Policy shall be read and interpreted to prohibit the free
transferability of Units.

Section 2.1. Complete Prohibition On Certain Transfers Of Units.

Notwithstanding any other provisions of this Policy, the following Transfers
will be prohibited and the Board of Directors will have no authority to approve
any of the following Transfers:

(1) a Transfer in violation of the Securities Act or any state securities or
blue sky laws applicable to the Company or the Interest to be transferred;

(2) a Transfer that would cause the Company to be considered a publicly traded
partnership under Section 7704(b) of the Code;

(3) a Transfer that would cause the Company to lose its status as a partnership
for federal income tax purposes; or

(4) a Transfer that would cause a termination of the Company for federal income
tax purposes.

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX C

 

Section 2.2. Class A And Class B Units May Not Be Transferred Separately.

For the period when Class A and Class B Units must be Transferred together under
Section 3.2(b) of the Agreement, a Class A Unit may not be Transferred
separately from a Class B Unit and a Class B Unit may not be transferred
separately from a Class A Unit.

Section 3.1. Conditions To Permitted Transfers.

(a)        Requirement.  A Transfer shall not be treated as a Permitted Transfer
unless and until the conditions in this Section are satisfied.

(b)        Conveyance Documents.  Except in the case of a Transfer involuntarily
by operation of law, the transferor and transferee shall execute and deliver to
the Company documents and instruments of conveyance as may be necessary or
appropriate in the opinion of legal counsel to the Company to effect such
Transfer, including for transfers after February 29, 2008 that may receive
distributions or allocations under Section 3.2(b), a Unit Transfer Agreement in
a form approved by legal counsel to the Company.  In the case of a Transfer of
Units involuntarily by operation of law, the Transfer shall be confirmed by
presentation to the Company of legal evidence of the Transfer, in form and
substance satisfactory to legal counsel to the Company, which may include
documents and agreements with the Company to make the transfer effective. In all
cases, the Company shall be reimbursed by the transferor and/or transferee for
all costs and expenses that it reasonably incurs in connection with the
Transfer.

(c)        Tax Information.  The transferor and transferee shall furnish the
Company with the transferee’s taxpayer identification number, sufficient
information to determine the transferee’s initial tax basis in the Units
transferred, and any other information reasonably necessary to permit the
Company to file all required federal and state tax returns and other legally
required information statements or returns. In addition, the transferee must
consent to the use of the method and convention of allocating Profits and Losses
for the year of the transfer that is specified in the Unit Transfer Policy. 
Without limiting the generality of the foregoing, the Company shall not be
required to make any Distribution otherwise provided for in the Agreement with
respect to any Transferred Units until it has received this information.

(d)        Securities Compliance.  Except in the case of a Transfer of Units
involuntarily by operation of law, either (1) the Units are registered under the
Securities Act, and any applicable state securities laws, or (2) if requested by
the Board of Directors in its discretion, the transferor provides an opinion of
legal counsel, which opinion and legal counsel shall be reasonably satisfactory
to the Board of Directors, to the effect that the Transfer is exempt from all
applicable registration requirements and that the Transfer will not violate any
applicable laws regulating the Transfer of securities.

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX C

 

 

(e)        Does Not Cause Company To Be Investment Company.  Except in the case
of a Transfer of Units involuntarily by operation of law, if requested by the
Board of Directors in its sole discretion, the transferor shall provide an
opinion of legal counsel, which opinion and legal counsel shall be reasonably
satisfactory to the Board of Directors, to the effect that the Transfer will not
cause the Company to be deemed to be an “investment company” under the
Investment Company Act of 1940.

(f)        Does Not Cause Company To Be Publicly Traded Partnership.  Except in
the case of a Transfer of Units involuntarily by operation of law, if requested
by the Board of Directors in its discretion, the transferor shall provide an
opinion of legal counsel, which opinion and legal counsel shall be reasonably
satisfactory to the Board of Directors, to the effect that such Transfer will
not cause the Company to be deemed to be a “publicly-traded limited partnership”
under applicable provisions of the Code.

(g)        Transferee Is Not A Competitor Of The Company.  Except in the case of
a Transfer of Units involuntarily by operation of law, the Board must determine
(in its sole discretion) that the transferee is not a competitor of the Company
or the Company’s Affiliates, or an Affiliate of a competitor of the Company or a
Person who as a Unitholder or Member would or may be detrimental to the
interests of the Company.  The Unitholder and proposed transferee shall submit
information requested by the Board to make the determination.

(h)        Tax Status Compliance.  Unless otherwise approved by the Board of
Directors, a Transfer of Units shall not be made except upon terms which would
not, in the opinion of legal counsel chosen by and mutually acceptable to the
Board and the transferor, result in the termination of the Company within the
meaning of Section 708 of the Code or cause the application of the rules of
Sections 168(g)(1)(B) and 168(h) of the Code or similar rules to apply to the
Company.  In determining whether a particular proposed Transfer will result in a
termination of the Company, legal counsel to the Company shall take into account
the existence of prior written commitments to Transfer and the commitments shall
always be given precedence over subsequent proposed Transfers.

(i)         Suspension Of Transfers After Dissolution Event.  No notice or
request initiating the procedures contemplated by this Section may be given by
Unitholder after a Dissolution Event has occurred.

(j)         Board May Waive Conditions.  Subject to Section 2.1 of this Policy,
the Board of Directors shall have the authority to waive any legal opinion or
other condition required in this Section.

Section 3.2. Distributions And Allocations In Respect To Transferred Units.

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX C

 

 

(a)        General Rule.  Except for distributions and allocations in Section
3.2(b), if any Unit is transferred in compliance with the Transfer Restrictions,
then Profits and Losses, each item thereof, and all other items attributable to
the Units for the fiscal year of the Transfer shall be divided and allocated
between the transferor and the transferee by taking into account their varying
interests during the fiscal year in accordance with Code Section 706(d).  Solely
for purposes of making the allocations, the Company shall use a method and
convention that divides and allocates the Profits, Losses and items between the
transferor and transferee based on the portion of the 52-53 week taxable year
that has elapsed prior to the Transfer determined by recognizing the Transfer as
of the first day of the 52-53 week taxable quarter during which the notice,
documentation and information and approval requirements of the Transfer have
been substantially complied with.  For this calculation, Profits, Losses and
items thereof for the 52-53 week taxable year shall be apportioned to the first
three quarters on the basis of taxable income estimates used in determining
Distributions made during the following quarter and any remaining amount shall
be apportioned to the fourth quarter.  Solely for purposes of determining
whether the transferor or transferee is entitled to a Distribution, all
Distributions made on or before the last day of the 52-53 week taxable quarter
during which the requirements have been substantially complied with shall be
made to the transferor and all Distributions thereafter shall be made to the
transferee.  The purpose of this method and convention is that Distributions are
likely to be based on the estimated taxable income of the previous quarter and
the Board believes that allocations will be better and more equitably aligned
with Distributions.  The Board shall have the power and authority to adopt
another reasonable method and/or convention with respect to the allocations and
Distributions by resolution or by amending this Section; provided, that
reasonable notice of any change is given to the Unitholders in advance of the
change.  Neither the Company, the Board, any Director nor any Unitholder shall
incur any liability for making allocations and Distributions in accordance with
the provisions of this Section, whether or not the Board or any Director or the
Company or any Unitholder has knowledge of any Transfer of ownership of any
interest in the Company.  The Unitholders acknowledge that the method and
convention designated in this Section 3.2 constitutes an “agreement among the
partners” within the meaning of Regulations, Section 1.706-1.

(b)        Distributions and Allocations Related To Sale of NBP Interests. 
Notwithstanding the general provisions in Section 3.2(a), for any allocations or
Distributions attributable to the transactions under the Membership Interest
Purchase Agreement dated February 29, 2008 entered into by and between JBS S.A.
and the Company and other members of National Beef Packing Company (“MIPA”), the
allocation of profits and losses and Distributions of proceeds from those MIPA
transactions shall be made to the transferee of unit transfer transactions
approved by the Board after February 29, 2008 and prior to the allocation or
Distribution.

Section 3.3. Other Rules Regarding Transfers.

(a) Market Of Units Not Made.  A Unitholder may not: (1) make a market in Units;
(2) Transfer its Units on an established securities market, a secondary market
(or the substantial equivalent of those markets) within the meaning of Code
Section 7704(b) (and any Regulations, proposed Regulations, revenue rulings, or
other official pronouncements of the Internal Revenue Service or Treasury
Department that may be promulgated or published); and (3) in the event the
Regulations, revenue rulings, or other pronouncements treat any or all
arrangements which facilitate the selling of Company interests and which are
commonly referred to as “matching services” as being a secondary market or
substantial equivalent of a secondary market, Transfer any Units through a
matching service that is not approved in advance by the Company.  A Unitholder
may not Transfer any Units to any Person unless the Person agrees to be bound by
the Transfer Restrictions and to Transfer the Units only to Persons who agree to
be similarly bound.

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX C

 

 

(b) Units Acquired For Unitholder’s Account.  The acquisition of Units by a
Unitholder shall be deemed to be a representation and warranty to the Company
and the other Unitholders, that the Unitholder’s acquisition of Units is made as
principal for the Unitholder’s own account and not for resale or distribution of
the Units to others in violation of securities laws as determined by the Company
and its legal counsel.

 

 

 

 

 

 

 

 

 

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX D

 

Appendix D

BOARD OF DIRECTORS
OF
U.S. PREMIUM BEEF, LLC

 

Director

 

Term
Expires

 

       Position

Mark Gardiner

 

2010

 

       Chair

Duane Ramsey

 

2012

 

       Vice Chair

Joe Morgan

 

2010

 

       Secretary

Doug Laue

 

2010

 

 

Rex McCloy

 

2011

 

 

Jerald Bohn

 

2012

 

 

Jeff Sternberger

 

2011

 

 

 

 

 

 

 

 

 

 

 

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

APPENDIX E

ALLOCATIONS, DISTRIBUTIONS, TAX MATTERS,
AND ACCOUNTING

CONTENTS

ARTICLE I. THE COMPANY

E-2

Section 1.10.    Definitions

E-2

ARTICLE II. CAPITAL AND INTERESTS

E-5

Section 2.4.      Capital Accounts

E-6

ARTICLE III. ALLOCATIONS

E-7

Section 3.1.      Profits

E-7

Section 3.2.      Losses

E-7

Section 3.3.      Special Allocations

E-7

Section 3.4.      Curative Allocations

E-9

Section 3.5.      Loss Limitation

E-9

Section 3.6.      Other Allocation Rules

E-9

Section 3.7.      Tax Allocations: Code Section 704(c)

E-10

ARTICLE IV. DISTRIBUTIONS

E-11

Section 4.1.      Net Cash Flow

E-11

Section 4.2.      Amounts Withheld

E-11

Section 4.3.      Limitations Of Distributions

E-11

ARTICLE V. [RESERVED]

E-11

ARTICLE VI. [RESERVED]

E-11

ARTICLE VII. [RESERVED]

E-11

ARTICLE VIII. ACCOUNTING, BOOKS AND RECORDS

E-12

Section 8.1.      Accounting, Books And Records

E-12

Section 8.2.      Reports

E-12

Section 8.3.      Tax Matters

E-13

ARTICLE IX. [RESERVED]

E-14

ARTICLE X. [RESERVED]

E-14

ARTICLE XI. [RESERVED]

E-14

ARTICLE XII. DISSOLUTION AND WINDING UP

E-14

Section 12.1.    Compliance With Certain Requirements Of Regulations; Deficit
Capital Accounts

E-14

Section 12.2.    Deemed Distribution And Recontribution

E-14

Section 12.3.    Character Of Liquidating Distributions

E-15

 

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

ALLOCATIONS, DISTRIBUTIONS, TAX MATTERS,
AND ACCOUNTING

The Sections in this Appendix E relate to allocations, distributions, tax
matters, accounting, dissolution and other related matters.  The numbering of
the Sections is not sequential but the Sections are numbered to reflect the
numbering conventions of certain forms.

ARTICLE I.
THE COMPANY

Section 1.10.        Definitions.

The definitions in this section (and the definitions in Section 1.2 of the
Agreement) apply to this Appendix E.  References to Articles and Sections refer
to Articles and Sections in this Appendix E unless the context implies or it is
stated otherwise.

“Adjusted Capital Account Deficit” means, with respect to any Unitholder, the
deficit balance, if any, in the Unitholder’s Capital Account as of the end of
the relevant Fiscal Year, after giving effect to the following adjustments:

(a) Credit to the Capital Account any amounts which the Unitholder is deemed to
be obligated to restore pursuant to the next to the last sentences in
Regulations, Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

(b) Debit to the Capital Account the items described in Regulations, Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).

The foregoing definition is intended to comply and shall be interpreted
consistently with the provisions of Regulations, Section 1.704-1(b)(2)(ii)(d).

“Capital Account” means the capital account maintained for each Unitholder in
accordance with Section 2.4.

“Capital Contributions” means, with respect to any Unitholder, the amount of
cash, property, services rendered, or a promissory note or other obligation to
contribute cash or property or to perform services contributed to the Company
with respect to the Units in the Company held or purchased by the Unitholder.

“Code” means the United States Internal Revenue Code of 1986, as amended from
time to time.

“Company Minimum Gain” has the meaning given the term “partnership minimum gain”
in Regulations, Sections 1.704-2(b)(2) and 1.704-2(d).

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

 

“Depreciation” means, for each Fiscal Year, an amount equal to the depreciation,
amortization, or other cost recovery deduction allowable with respect to an
asset for the Fiscal Year, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at the beginning
of the Fiscal Year, Depreciation shall be an amount which bears the same ratio
to the beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for the Fiscal Year bears to the
beginning adjusted tax basis; provided, however, that if the adjusted basis for
federal income tax purposes of an asset at the beginning of the Fiscal Year is
zero, Depreciation shall be determined with reference to the beginning Gross
Asset Value using any reasonable method selected by the Board.

“Fiscal Year” means, subject to a change in Fiscal Year pursuant to Section
8.1(b), the fiscal year of the Company, which shall be the Company’s taxable
year as determined under Regulations, Section 1.441-1 or Section 1.441-2 and the
Regulations under Section 706 of the Code or, if the context requires, any
portion of a fiscal year for which an allocation of Profits, Losses or other
allocation items or a Distribution is to be made; provided that the Board may
designate a different fiscal year for GAAP reporting purposes but that
designation shall not affect the taxable year of the Company or the provisions
of this Agreement relating to Capital Accounts, allocations of Profits, Losses
or other allocation items, or Distributions.

“GAAP” means generally accepted accounting principles in effect in the United
States of America from time to time.

“Gross Asset Value” means with respect to any asset, the asset’s adjusted basis
for federal income tax purposes, except as follows:

(a) The initial Gross Asset Value of any asset contributed by a Unitholder to
the Company shall be the gross fair market value of such asset, as determined by
the Board, provided that Property owned by the Company immediately after the
effective time of the Restructuring shall be deemed to have been accepted by the
Company as a Capital Contribution of Property having an aggregate gross fair
market value, net of minority interest and marketability discounts to be
determined by appraisal to be obtained by the Cooperative and approved by the
Board shortly before the Restructuring;

(b) The Gross Asset Values of all Company assets shall be adjusted to equal
their respective gross fair market values (taking Code Section 7701(g) into
account) as determined by the Board as of the following times: (i) the
acquisition of an additional interest in the Company by any new or existing
Unitholder in exchange for more than a de minimis Capital Contribution; (ii) the
Distribution by the Company to a Unitholder of more than a de minimis amount of
Company property as consideration for an interest in the Company; (iii) the
liquidation of the Company within the meaning of Regulations, Section
1.704-1(b)(2)(ii)(g); and (iv) other times as the Regulations may permit;
provided that an adjustment described in clauses (i), (ii), and (iv) of this
subparagraph shall be made only if the Board determines that such adjustment is
necessary to reflect the relative economic interests of the Unitholders in the
Company;

(c) The Gross Asset Value of any item of Company assets distributed to any
Unitholder shall be adjusted to equal the gross fair market value (taking Code
Section 7701(g) into account) of such asset on the date of Distribution as
determined by the Board; and

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

 

(d) The Gross Asset Values of Company assets shall be increased (or decreased)
to reflect any adjustments to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts pursuant to
Regulations, Section 1.704-1(b)(2)(iv)(m) and subparagraph (d) of the definition
of “Profits” and “Losses” or Section 3.3(g); provided, however, that Gross Asset
Values shall not be adjusted pursuant to this subparagraph (d) to the extent
that an adjustment pursuant to subparagraph (b) is required in connection with a
transaction that would otherwise result in an adjustment pursuant to this
subparagraph (d).

If the Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraph (b) or (d), the Gross Asset Value shall thereafter be adjusted by
the Depreciation taken into account with respect to such asset, for purposes of
computing Profits, Losses and other allocation items.

“Liquidation Period” has the meaning set forth in Section 7.5 of the Agreement.

“Liquidation Provisions” means the provisions of Article XII of this Appendix E
and Article 7 of the Agreement.

“Liquidator” has the meaning set forth in Section 7.6 of the Agreement.

“Losses” has the meaning set forth in the definition of “Profits” and “Losses.”

“Net Cash Flow” means the gross cash proceeds of the Company less the portion
thereof used to pay or establish reserves for all Company expenses, debts,
obligations and liabilities of the Company, including Patronage Notices, capital
improvements, replacements, and contingencies, all as reasonably determined by
the Board. “Net Cash Flow” shall not be reduced by depreciation, amortization,
cost recovery deductions, or similar allowances, but shall be increased by any
reductions of reserves previously established.

“Nonrecourse Deductions” has the meaning set forth in Regulations, Sections
1.704-2(b)(1) and 1.704-2(c).

“Nonrecourse Liability” has the meaning in Regulations, Section 1.704-2(b)(3).

“Profits” and “Losses” mean, for each Fiscal Year, an amount equal to the
Company’s taxable income or loss for the Fiscal Year, determined in accordance
with Code Section 703(a) (for this purpose, all items of income, gain, loss, or
deduction required to be stated separately pursuant to Code Section 703(a)(1)
shall be included in taxable income or loss), with the following adjustments
(without duplication):

(a) Any income of the Company that is exempt from federal income tax and not
otherwise taken into account in computing Profits or Losses pursuant to this
definition of “Profits” and “Losses” shall be added to the taxable income or
loss;

(b) Any expenditures of the Company described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations,
Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing
Profits or Losses pursuant to this definition of “Profits” and “Losses” shall be
subtracted from the taxable income or loss;

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

 

(c) In the event the Gross Asset Value of any Company asset is adjusted pursuant
to subparagraphs (b) or (c) of the definition of Gross Asset Value, the amount
of the adjustment shall be treated as an item of gain (if the adjustment
increases the Gross Asset Value of the asset) or an item of loss (if the
adjustment decreases the Gross Asset Value of the asset) from the disposition of
the asset and shall be taken into account for purposes of computing Profits or
Losses;

(d) Gain or loss resulting from any disposition of Property with respect to
which gain or loss is recognized for federal income tax purposes shall be
computed by reference to the Gross Asset Value of the Property disposed of,
notwithstanding that the adjusted tax basis of the Property differs from its
Gross Asset Value;

(e) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such Fiscal Year, computed in
accordance with the definition of Depreciation;

(f) To the extent an adjustment to the adjusted tax basis of any Company asset
pursuant to Code Section 734(b) is required, pursuant to Regulations, Section
1.704-(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts
as a result of a Distribution other than in liquidation of a Unitholder’s
interest in the Company, the amount of the adjustment shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) from the disposition of the asset and shall
be taken into account for purposes of computing Profits or Losses; and

(g) Notwithstanding any other provision of this definition, any items which are
specially allocated pursuant to Section 3.3 and Section 3.4 shall not be taken
into account in computing Profits or Losses.

The amounts of the items of Company income, gain, loss or deduction available to
be specially allocated pursuant to Sections 3.3 and Section 3.4 shall be
determined by applying rules analogous to those set forth in subparagraphs (a)
through (f) above.

“Regulations” means the Income Tax Regulations, including Temporary Regulations,
promulgated under the Code, as the regulations are amended from time to time.

“Regulatory Allocations” has the meaning set forth in Section 3.4.

“Unitholder Nonrecourse Debt” has the same meaning as the term “partner
nonrecourse debt” in Regulations, Section 1.704-2(b)(4).

“Unitholder Nonrecourse Debt Minimum Gain” means an amount, with respect to each
Unitholder Nonrecourse Debt, equal to the Company Minimum Gain that would result
if such Unitholder Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations, Section 1.704-2(i)(3).

“Unitholder Nonrecourse Deductions” has the same meaning as the term “partner
nonrecourse deductions” in Regulations, Sections 1.704-2(i)(1) and
1.704-2(i)(2).

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

ARTICLE II.
CAPITAL AND INTERESTS

Section 2.4. Capital Accounts.

A Capital Account shall be maintained for each Unitholder in accordance with the
following provisions.  To facilitate the accounting for acquisitions, ownership
and transfers of more than one Class of Units by a Unitholder, each Unitholder’s
Capital Account shall be subdivided into separate Capital Accounts for each
Class of Units owned, and the following adjustments to Capital Accounts shall be
made by reference to Units of each Class of Units owned:

(a) To each Unitholder’s Capital Account there shall be credited (i) the initial
Gross Asset Value of any Property, including money contributed to the Company as
a Capital Contribution with respect to the Units in the Company held by the
Unitholder, (ii) the Unitholder’s distributive share of Profits and any items in
the nature of income or gain which are specially allocated pursuant to Section
3.3 and Section 3.4, and (iii) the amount of any Company liabilities assumed by
the Unitholder or which are secured by any Property distributed to the
Unitholder. The principal amount of a promissory note which is not readily
traded on an established securities market and which is contributed to the
Company by the maker of the note (or a Unitholder related to the maker of the
note within the meaning of Regulations, Section 1.704-1(b)(2)(ii)(c)) shall not
be included in the Capital Account of any Unitholder until the Company makes a
taxable disposition of the note or until (and to the extent) principal payments
are made on the note, all in accordance with Regulations, Section
1.704-1(b)(2)(iv)(d)(2);

(b) To each Unitholder’s Capital Account there shall be debited (i) the Gross
Asset Value of any Property including money distributed to the Unitholder
pursuant to any provision of this Agreement, (ii) the Unitholder’s distributive
share of Losses and any items in the nature of expenses or losses which are
specially allocated pursuant to Section 3.3 and Section 3.4, and (iii) the
amount of any liabilities of the Unitholder assumed by the Company or which are
secured by any Property contributed by the Unitholder to the Company including
the Unitholder’s share, determined in proportion to Class A Units issued in the
Restructuring, of liabilities for which the Company is obligated immediately
after the effective time of the Restructuring, including the obligation
represented by Patronage Notices to the extent of their fair market value as
determined by an appraisal to be obtained by the Cooperative shortly before the
Restructuring;

(c) In the event Units are Transferred in accordance with the terms of Article 3
of the Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the Transferred Units; and

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

 

(d) In determining the amount of any liability for purposes of subparagraphs (a)
and (b) above there shall be taken into account Code Section 752(c) and any
other applicable provisions of the Code and Regulations; provided, that the
amount of the liability for Patronage Notices for which the Company is obligated
immediately after the effective time of the Restructuring shall be the aggregate
amount by which the gain or loss recognized by the shareholders of the
Cooperative in the Restructuring is adjusted to take into account the payment
obligation represented by the Patronage Notices.

The foregoing provisions and the other provisions of this Agreement relating to
allocation of Profits, Losses and other allocation items, nonliquidating
Distributions, liquidating Distributions, and the maintenance of Capital
Accounts, including and subject to Section 12.1 of this Appendix E, are intended
to comply with Regulations, Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with the Regulations.  In the event the Board
shall determine that it is prudent, the Board may modify the manner in which the
Capital Accounts, or any debits or credits thereto (including debits or credits
relating to liabilities which are secured by contributed or distributed property
or which are assumed by the Company or any Unitholders), are computed in order
to comply with the Regulations.  The Board also shall (i) make any adjustments
that are necessary or appropriate to maintain equality between the Capital
Accounts of the Unitholders and the amount of capital reflected on the Company’s
balance sheet, as computed for book purposes, in accordance with Regulations,
Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the
event unanticipated events might otherwise cause the Agreement not to comply
with Regulations, Section 1.704-1(b).

ARTICLE III.
ALLOCATIONS

Section 3.1. Profits.

After giving effect to the special allocations in Section 3.3 and Section 3.4 of
this Appendix E, Profits for any Fiscal Year shall be allocated ten percent
(10%) to Class A and then to Class A unitholders in proportion to Class A Units
held, and ninety percent (90%) to Class B and then to Class B unitholders in
proportion to Class B Units held.  The stated percentages are subject to change
if the Company issues additional units pursuant to Section 3.2(c) of the
Agreement.

Section 3.2. Losses.

After giving effect to the special allocations in Section 3.3 and Section 3.4 of
this Appendix E, and except as otherwise provided in Section 3.5 of this
Appendix E, Losses for any Fiscal Year shall be allocated ten percent (10%) to
Class A and then to Class A unitholders in proportion to Class A Units held, and
ninety percent (90%) to the Class B and then to Class B unitholders in
proportion to Class B Units held.  The stated percentages are subject to change
if the Company issues additional units pursuant to Section 3.2(c) of the
Agreement.

Section 3.3. Special Allocations.

The following special allocations shall be made in the following order:

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

 

(a) Minimum Gain Chargeback.  Except as otherwise provided in Section 1.704-2(f)
of the Regulations, notwithstanding any other provision of this Article III, if
there is a net decrease in Company Minimum Gain during any Fiscal Year, each
Unitholder shall be specially allocated items of Company income and gain for the
Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to
the Unitholder’s share of the net decrease in Company Minimum Gain, determined
in accordance with Regulations, Section 1.704-2(g).  Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts required
to be allocated to each Unitholder pursuant thereto. The items to be so
allocated shall be determined in accordance with Regulations, Sections
1.704-2(f)(6) and 1.704-2(j)(2).  This Section 3.3(a) is intended to comply with
the minimum gain chargeback requirement in Regulations, Section 1.704-2(f) and
shall be interpreted consistently therewith.

(b) Unitholder Minimum Gain Chargeback. Except as otherwise provided in
Regulations, Section 1.704-2(i)(4), notwithstanding any other provision of this
Section, if there is a net decrease in Unitholder Nonrecourse Debt Minimum Gain
attributable to a Unitholder Nonrecourse Debt during any Fiscal Year, each
Unitholder who has a share of the Unitholder Nonrecourse Debt Minimum Gain
attributable to the Unitholder Nonrecourse Debt, determined in accordance with
Regulations, Section 1.704-2(i)(5), shall be specially allocated items of
Company income and gain for the Fiscal Year (and, if necessary, subsequent
Fiscal Years) in an amount equal to the Unitholder’s share of the net decrease
in Unitholder Nonrecourse Debt, determined in accordance with Regulations,
Section 1.704-2(i)(4).  Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Unitholder pursuant thereto.  The items to be so allocated shall be determined
in accordance with Regulations, Sections 1.704-2(i)(4) and 1.704-2(j)(2). This
Section 3.3(b) is intended to comply and shall be interpreted consistently with
the minimum gain chargeback requirement in Regulations, Section 1.704-2(i)(4).

(c) Qualified Income Offset. In the event any Unitholder unexpectedly receives
any adjustments, allocations, or Distributions described in Regulations,
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Company income and gain shall be specially
allocated to the Unitholder in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, the Adjusted Capital Account Deficit of
the Unitholder as quickly as possible, provided that an allocation pursuant to
this Section 3.3(c) shall be made only if and to the extent that the Unitholder
would have an Adjusted Capital Account Deficit after all other allocations
provided for in this Article III have been tentatively made as if this Section
3.3(c) were not in this Appendix E.

(d) Gross Income Allocation.  In the event any Unitholder has a deficit Capital
Account at the end of any Fiscal Year which is in excess of the sum of (i) the
amount such Unitholder is obligated to restore pursuant to the penultimate
sentences of Regulations, Sections 1.704-2(g)(1) and 1.704-2(i)(5), each
Unitholder shall be specially allocated items of Company income and gain in the
amount of the excess as quickly as possible, provided that an allocation
pursuant to this Section 3.3(d) shall be made only if and to the extent that
such Unitholder would have a deficit Capital Account in excess of such sum after
all other allocations provided for in this Article III have been made as if
Section 3.3(c) and this Section 3.3(d) were not in this Appendix E.

(e) Nonrecourse Deductions.  Nonrecourse Deductions for any Fiscal Year shall be
specially allocated to the Unitholders in the manner which Profits would be
allocated under Section 3.1 determined without regard to the other provisions of
this Article III.

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

 

(f) Unitholder Nonrecourse Deductions. Any Unitholder Nonrecourse Deductions for
any Fiscal Year shall be specially allocated to the Unitholder who bears the
economic risk of loss with respect to the Unitholder Nonrecourse Debt to which
such Unitholder Nonrecourse Deductions are attributable in accordance with
Regulations, Section 1.704-2(i)(1).

(g) Section 754 Adjustments. To the extent an adjustment to the adjusted tax
basis of any Company asset, pursuant to Code Section 734(b) or Code Section
743(b) is required, pursuant to Regulations, Section 1.704-1(b)(2)(iv)(m)(2) or
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a Distribution to a Unitholder in complete liquidation
of the Unitholder’s interest in the Company, the amount of the adjustment to
Capital Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases such
basis) and such gain or loss shall be specially allocated to the Unitholders in
accordance with their interests in the Company in the event Regulations, Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Unitholder to whom the Distribution
was made in the event Regulations, Section 1.704-1(b)(2)(iv)(m)(4) applies.

(h) Issuance of a Capital Interest for Services.  If the Company issues Units in
consideration of services that would entitle the recipient to share in
liquidation proceeds if the Company were hypothetically liquidated immediately
following the issuance (a capital interest for federal income tax purposes),
gross receipts of the Company shall be specially allocated to the recipient in
the amount of the entitlement.

Section 3.4. Curative Allocations.

The allocations set forth in Sections 3.3(a) through (g) and 3.5 (the
“Regulatory Allocations”) are intended to comply with certain requirements of
the Regulations. It is the intent that, to the extent possible, all Regulatory
Allocations shall be offset either with other Regulatory Allocations or with
special allocations of other items of Company income, gain, loss or deduction
pursuant to this Section 3.4. Therefore, notwithstanding any other provision of
this Article III (other than the Regulatory Allocations), the Board shall make
the offsetting special allocations of Company income, gain, loss or deduction in
whatever manner it determines appropriate so that, after the offsetting
allocations are made, each Unitholder’s Capital Account balance is, to the
extent possible, equal to the Capital Account balance such Unitholder would have
had if the Regulatory Allocations were not part of the Agreement.

Section 3.5. Loss Limitation.

Losses allocated pursuant to Section 3.2 shall not exceed the maximum amount of
Losses that can be allocated without causing any Unitholder to have an Adjusted
Capital Account Deficit at the end of any Fiscal Year.  In the event some but
not all of the Unitholders would have Adjusted Capital Account Deficits as a
consequence of an allocation of Losses pursuant to Section 3.2, the limitation
set forth in this Section 3.5 shall be applied on a Unitholder by Unitholder
basis among the Units, so as to allocate the maximum permissible Losses to each
Unitholder under Regulations, Section 1.704-1(b)(2)(ii)(d).

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

 

Section 3.6. Other Allocation Rules.

(a) For purposes of determining the Profits, Losses, or any other items
allocable to any period, Profits, Losses, and any such other items shall be
determined by the Board using any permissible method under Code Section 706 and
the Regulations under Code Section 706.

(b) If additional Units are issued pursuant to Section 3.2(c) of the Agreement
during a Fiscal Year, the Profits, Losses and other items allocated with respect
to the Class of Units issued for that Fiscal Year will be allocated among the
Unitholders of that Class in a manner that takes into account their varying
interests in the Company during the Fiscal Year using any permissible methods
under Code Section 706 and the Regulations under Code Section 706 and any
conventions permitted by law as may be specified in the terms governing the
issuance of the Units or, if not specified, as directed by the Board.

(c) The Unitholders agree to be bound by the provisions of this Article III in
reporting their shares of Company income and loss for income tax purposes.

(d) Solely for purposes of determining a Unitholder’s proportionate share of the
“excess nonrecourse liabilities” of the Company within the meaning of
Regulations, Section 1.752-3(a) (3), the Unitholders’ aggregate interests in
Company profits shall be deemed to be as provided in the capital accounts.

(e) To the extent permitted by Regulations, Section 1.704-2(h) (3), the
Unitholders shall endeavor to treat Distributions as having been made from the
proceeds of a Nonrecourse Liability or a Unitholder Nonrecourse Debt only to the
extent that the Distributions would cause or increase an Adjusted Capital
Account Deficit for any Unitholder.

Section 3.7. Tax Allocations: Code Section 704(c).

(a) In accordance with Code Section 704(c) and the Regulations under Section
704(c), income, gain, loss, and deduction with respect to any Property
contributed to the capital of the Company shall, solely for tax purposes, be
allocated among the Unitholders so as to take into account any variation between
the adjusted basis of such Property to the Company for federal income tax
purposes and its initial Gross Asset Value (computed in accordance with the
definition of Gross Asset Value).

(b) In the event the Gross Asset Value of any Company asset is adjusted pursuant
to subparagraph (b) (ii) of the definition of Gross Asset Value, subsequent
allocations of income, gain, loss, and deduction with respect to such asset
shall take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as
under Code Section 704(c) and the Regulations under Code Section 704(c).

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

 

(c) Allocations pursuant to this Section shall be made as required or permitted
by Regulations, Section 1.704-3 pursuant to such method provided therein as may
reasonably be designated by the Board. Any elections or other decisions relating
to allocations under this Section will be made in any manner that the Board
reasonably determines to reflect the purpose and intention of this Agreement.
Allocations under this Section are solely for purposes of federal, state and
local taxes and shall not affect, or in any way be taken into account in
computing, any Unitholder’s Capital Account or share of Profits, Losses and
other allocation items or Distributions under any provision of this Appendix E
or the Agreement.

ARTICLE IV.
DISTRIBUTIONS

Section 4.1. Net Cash Flow.

The Board may make Distributions of Net Cash Flow at times and in aggregate
amounts determined by the Board in its sole discretion.  When the Board
determines that a Distribution is to be made, except as otherwise provided in
the Liquidation Provisions, Net Cash Flow, if any, shall be distributed: (1) ten
percent (10%) to Class A and then to Class A unitholders in proportion to Class
A Units held; and (2) ninety percent (90%) to Class B and then to Class B
unitholders in proportion to Class B Units held.  The stated percentages are
subject to change if additional units are issued pursuant to Section 3.2(c) of
the Agreement.

Section 4.2. Amounts Withheld.

All amounts withheld pursuant to the Code or any provision of any state, local
or foreign tax law with respect to any payment, Distribution or allocation to
the Company or the Unitholders shall be treated as amounts paid or distributed,
as the case may be, to the Unitholders with respect to which the amount was
withheld pursuant to this Section for all purposes under this Agreement. The
Company is authorized to withhold from payments and Distributions, or with
respect to allocations to the Unitholders, and to pay over to any federal, state
and local government or any foreign government, any amounts required to be so
withheld pursuant to the Code or any provisions of any other federal, state or
local law or any foreign law, and shall allocate any such amounts to the
Unitholders with respect to which such amount was withheld.

Section 4.3. Limitations Of Distributions.

(a) The Company shall make no Distributions to the Unitholders except as
provided in this Article IV, Article XII, Article 7 of the Agreement, and
Section 3.6 of the Agreement.

(b) A Unitholder may not receive a Distribution from the Company to the extent
that, after giving effect to the Distribution, all liabilities of the Company,
other than liability to Unitholders on account of their Capital Contributions,
would exceed the Gross Asset Value of the Company’s assets.

ARTICLE V.
[RESERVED]

ARTICLE VI.
[RESERVED]

ARTICLE VII.
[RESERVED]

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

 

ARTICLE VIII.
ACCOUNTING, BOOKS AND RECORDS

Section 8.1. Accounting, Books And Records.

(a) The books and records of the Company shall be kept, and the financial
position and the results of its operations recorded, in accordance with GAAP,
consistently applied; provided, that the financial provisions in the Agreement
relating to Capital Contributions, Profits, Losses and other allocation items,
Distributions and Capital Accounts shall be construed and determined in
accordance with this Agreement without regard to whether such provisions are
inconsistent with GAAP.  The books and records shall reflect all the Company’s
transactions and shall be appropriate and adequate for the Company’s business. 
The Company shall maintain all of the following:

(i)         a current list of the full name and last known business or residence
address of each Unitholder set forth in alphabetical order, together with the
Capital Contributions, Capital Account and Units of each Unitholder;

(ii)        the full name and business address of each Director;

(iii)       a copy of the Certificate of Formation and any and all amendments
thereto together with executed copies of any powers of attorney pursuant to
which the Certificate of Formation or any amendments thereto have been executed;

(iv)       copies of the Company’s federal, state, and local income tax or
information returns and reports, if any, for the six most recent taxable years;

(v)        a copy of this Agreement and any and all amendments thereto together
with executed copies of any powers of attorney pursuant to which this Agreement
or any amendments thereto have been executed;

(vi)       copies of the financial statements of the Company, if any, for the
six most recent Fiscal Years; and

(vii)      the Company’s books and records as they relate to the internal
affairs of the Company for at least the current and past four Fiscal Years.

(b) The Company shall use the accrual method of accounting in preparing its
financial reports and for tax purposes and shall keep its books and records
accordingly. The Board may, without any further consent of the Unitholders
(except as specifically required by the Code), apply for IRS consent to, and
otherwise effect a change in, the Company’s Fiscal Year.

Section 8.2. Reports.

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

 

(a) In General. The chief financial officer of the Company (or other officer
determined by the Board or the CEO) shall be responsible for causing the
preparation of financial reports of the Company and the coordination of
financial matters of the Company with the Company’s accountants.

(b) Financial Statements. The Company shall maintain the financial statements
listed in clauses (i) and (ii) below, prepared, in each case (other than with
respect to Unitholder’s Capital Accounts, which shall be prepared in accordance
with this Agreement) in accordance with GAAP consistently applied (and file with
the Securities and Exchange Commission, if required, for purposes of reporting
under the Securities Exchange Act of 1934, Regulation S-X).

(i)         As soon as practicable following the end of each GAAP Fiscal Year
(and in any event not later than one hundred and twenty (120) days after the end
of the GAAP Fiscal Year) and at the time as Distributions are made to the
Unitholders pursuant to the Liquidation Provisions following the occurrence of a
Dissolution Event, a balance sheet of the Company as of the end of the GAAP
Fiscal Year and the related statements of operations, statement of Unitholders’
Capital and changes therein, and cash flows for the GAAP Fiscal Year, together
with appropriate notes to the financial statements and supporting schedules, all
of which shall be audited and certified by the Company’s accountants, and in
each case, to the extent the Company was in existence, setting forth in
comparative form the corresponding figures for the immediately preceding GAAP
Fiscal Year end (in the case of the balance sheet) and the two (2) immediately
preceding GAAP Fiscal Years (in the case of the statements).

(ii)        If required by the Securities and Exchange Commission, as soon as
practicable following the end of the first three quarters of each GAAP Fiscal
Year (and in any event not later than forty-five (45) days after the end of such
quarter), an unaudited balance sheet of the Company as of the end of such
quarter and the related unaudited statements of operations and cash flows for
such GAAP Fiscal Quarter and for the GAAP Fiscal Year to date, in each case, to
the extent the Company was in existence, setting forth in comparative form the
corresponding figures for the prior GAAP Fiscal Year’s quarter and the quarter
just completed.

Section 8.3. Tax Matters.

(a) Generally.  The Board shall have the power and authority, without any
further consent of the Members being required: (i) to cause the Company to make
or revoke any and all elections for federal, state, local, and foreign tax
purposes including an election pursuant to Code Section 754; (ii) to extend the
statute of limitations for assessment of tax deficiencies against the
Unitholders with respect to adjustments to the Company’s federal, state, local
or foreign tax returns; (iii) to the extent provided in Code Sections 6221
through 6231 and similar provisions of federal, state, local, or foreign law, to
represent the Company and the Unitholders before taxing authorities or courts of
competent jurisdiction in tax matters affecting the Company or the Unitholders
in their capacities as Unitholders; and (iv) to file or amend any tax returns
and execute any agreements or other documents relating to or affecting tax
matters, including agreements or other documents that bind the Unitholders with
respect to tax matters.  The Board shall designate a qualifying Member to act as
the tax matters partner within the meaning of and pursuant to Regulations,
Sections 301.6231(a)(7)-1 and -2 or any similar provision under state or local
law.

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

 

(b) Tax Information.  Necessary tax information shall be delivered to each
Unitholder as soon as practicable after the end of each Fiscal Year of the
Company but not later than five (5) months after the end of each Fiscal Year.

ARTICLE IX.
[RESERVED]

ARTICLE X.
[RESERVED]

ARTICLE XI.
[RESERVED]

ARTICLE XII.
DISSOLUTION AND WINDING UP

Section 12.1. Compliance With Certain Requirements Of Regulations; Deficit
Capital Accounts.

In the event the Company is “liquidated” within the meaning of Regulations,
Section 1.704-1(b)(2)(ii)(g), Distributions shall be made pursuant to the
Liquidation Provisions to the Unitholders who have positive Capital Accounts in
compliance with Regulations, Section 1.704-1(b)(2)(ii)(b)(2). If any Unitholder
has a deficit balance in his Capital Account (after giving effect to all Capital
Contributions, Distributions and allocations of Profits, Losses and other
allocation items for all Fiscal Years, including the Fiscal Year during which
such liquidation occurs), such Unitholder shall have no obligation to make any
contribution to the capital of the Company with respect to such deficit, and
such deficit shall not be considered a debt owed to the Company or to any other
Person for any purpose whatsoever.  In the discretion of the Liquidator, a pro
rata portion of the Distributions that would otherwise be made to the
Unitholders pursuant to the Liquidation Provisions may be:

(a) Distributed to a trust established for the benefit of the Unitholders for
the purposes of liquidating Company assets, collecting amounts owed to the
Company, and paying any contingent or unforeseen liabilities or obligations of
the Company. The assets of any such trust shall be distributed to the
Unitholders from time to time, in the reasonable discretion of the Liquidator,
in the same proportions as the amount distributed to the trust by the Company
would otherwise have been distributed to the Unitholders pursuant to Section 7.2
of the Agreement; or

(b) Withheld to provide a reasonable reserve for Company liabilities (contingent
or otherwise) and to reflect the unrealized portion of any installment
obligations owed to the Company, provided that the withheld amounts shall be
distributed to the Unitholders as soon as practicable.

Section 12.2. Deemed Distribution And Recontribution.

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U.S. Premium Beef, LLC 

 Limited Liability Company Agreement

 

APPENDIX E

 

 

Notwithstanding any other provision of the Liquidation Provisions, in the event
the Company is liquidated within the meaning of Regulations, Section
1.704-1(b)(2)(ii)(g) but no Dissolution Event has occurred, the Property shall
not be liquidated, the debts, obligations and liabilities of the Company shall
not be paid or discharged, and the Company’s affairs shall not be wound up.
Instead, solely for federal income tax purposes, the Company shall be deemed to
have contributed all of its Property and liabilities to a new limited liability
company in exchange for an interest in the new company, and immediately
thereafter, the Company will be deemed to liquidate by distributing the interest
in the new company to the Unitholders.

Section 12.3. Character Of Liquidating Distributions.

All payments made in liquidation of the interest of a Unitholder in the Company
shall be made in exchange for the interest of such Unitholder in Property
pursuant to Section 736(b)(1) of the Code, including the interest of the
Unitholder in Company goodwill.

 

 

 

 

 

 

 

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