| U.S. Premium Beef, LLC | **Limited Liability Company Agreement** |
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|                   | **Appendix C**                          |

 

 

Appendix C

Amended as of March 27, 2008 

UNIT TRANSFER POLICYOF  U.S. PREMIUM BEEF, LLC

 

Section 1.1. Definitions, Applicability.

(a)        Definitions.  Thedefinitions of the Limited Liability Company Agreement (the “Agreement”) ofU.S. Premium Beef, LLC (the “Company”) and Appendix E of the Agreement apply tothis Unit Transfer Policy (the “Policy”).

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

(c)        Intent of Policy.  It isthe intent of this Policy as it relates to any Transfers that: (1) the taxstatus of the Company is the same as for a partnership; (2) this Companypreserve its partnership tax status by complying with Regulations, Section1.7704-1, et seq., and any amendments; and (3) to the extent possible, thisPolicy shall be read and interpreted to prohibit the free transferability ofUnits.

Section 2.1. Complete Prohibition On Certain Transfers Of Units.

Notwithstanding any other provisions of this Policy, thefollowing Transfers will be prohibited and the Board of Directors will have noauthority to approve any of the following Transfers: 

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

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

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

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

Section 2.2. Class A And Class B Units May Not Be TransferredSeparately.

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| U.S. Premium Beef, LLC | **Limited Liability Company Agreement** |
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|                   | **Appendix C**                          |

 

 

 

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

Section 3.1. Conditions To Permitted Transfers.

**(a)        Requirement.**  A Transfershall not be treated as a Permitted Transfer unless and until the conditions inthis Section are satisfied.

**(b)        Conveyance Documents.** Except in the case of a Transfer involuntarily by operation of law, thetransferor and transferee shall execute and deliver to the Company documentsand instruments of conveyance as may be necessary or appropriate in the opinionof legal counsel to the Company to effect such Transfer, including fortransfers after February 29, 2008 that may receive distributions or allocationsunder Section 3.2(b), a Unit Transfer Agreement in a form approved by legalcounsel to the Company.  In the case of a Transfer of Units involuntarily byoperation of law, the Transfer shall be confirmed by presentation to theCompany of legal evidence of the Transfer, in form and substance satisfactoryto legal counsel to the Company, which may include documents and agreementswith the Company to make the transfer effective. In all cases, the Companyshall be reimbursed by the transferor and/or transferee for all costs andexpenses that it reasonably incurs in connection with the Transfer.

**(c)        Tax Information.**  Thetransferor and transferee shall furnish the Company with the transferee’staxpayer identification number, sufficient information to determine thetransferee’s initial tax basis in the Units transferred, and any otherinformation reasonably necessary to permit the Company to file all requiredfederal and state tax returns and other legally required information statementsor returns. In addition, the transferee must consent to the use of the methodand convention of allocating Profits and Losses for the year of the transferthat is specified in the Unit Transfer Policy.  Without limiting the generalityof the foregoing, the Company shall not be required to make any Distributionotherwise provided for in the Agreement with respect to any Transferred Unitsuntil 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 anyapplicable state securities laws, or (2) if requested by the Board of Directorsin its discretion, the transferor provides an opinion of legal counsel, whichopinion and legal counsel shall be reasonably satisfactory to the Board ofDirectors, to the effect that the Transfer is exempt from all applicableregistration requirements and that the Transfer will not violate any applicablelaws regulating the Transfer of securities.

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

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| U.S. Premium Beef, LLC | **Limited Liability Company Agreement** |
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|                   | **Appendix C**                          |

 

 

 

 

**(f)        Does Not Cause Company To BePublicly Traded Partnership. ** Except in the case of a Transfer of Unitsinvoluntarily by operation of law, if requested by the Board of Directors inits discretion, the transferor shall provide an opinion of legal counsel, whichopinion and legal counsel shall be reasonably satisfactory to the Board ofDirectors, to the effect that such Transfer will not cause the Company to bedeemed to be a “publicly-traded limited partnership” under applicableprovisions of the Code.

**(g)        Transferee Is Not A Competitor OfThe Company.**  Except in the case of a Transfer of Units involuntarily byoperation of law, the Board must determine (in its sole discretion) that thetransferee is not a competitor of the Company or the Company’s Affiliates, or anAffiliate of a competitor of the Company or a Person who as a Unitholder orMember would or may be detrimental to the interests of the Company.  TheUnitholder and proposed transferee shall submit information requested by theBoard to make the determination.

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

**(i)         Suspension Of Transfers AfterDissolution Event.**  No notice or request initiating the procedurescontemplated by this Section may be given by Unitholder after a DissolutionEvent has occurred.

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

Section 3.2. Distributions And Allocations In Respect To TransferredUnits.

 

 

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| U.S. Premium Beef, LLC | **Limited Liability Company Agreement** |
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|                   | **Appendix C**                          |

 

 

 

 

**(a)        General Rule.**  Except fordistributions and allocations in Section 3.2(b), if any Unit is transferred incompliance with the Transfer Restrictions, then Profits and Losses, each itemthereof, and all other items attributable to the Units for the fiscal year ofthe Transfer shall be divided and allocated between the transferor and thetransferee by taking into account their varying interests during the fiscal yearin accordance with Code Section 706(d).  Solely for purposes of making theallocations, the Company shall use a method and convention that divides andallocates the Profits, Losses and items between the transferor and transfereebased on the portion of the 52-53 week taxable year that has elapsed prior tothe Transfer determined by recognizing the Transfer as of the first day of the52-53 week taxable quarter during which the notice, documentation andinformation and approval requirements of the Transfer have been substantiallycomplied with.  For this calculation, Profits, Losses and items thereof forthe 52-53 week taxable year shall be apportioned to the first three quarters onthe basis of taxable income estimates used in determining Distributions madeduring the following quarter and any remaining amount shall be apportioned tothe fourth quarter.  Solely for purposes of determining whether thetransferor or transferee is entitled to a Distribution, all Distributions madeon or before the last day of the 52-53 week taxable quarter during which therequirements have been substantially complied with shall be made to thetransferor and all Distributions thereafter shall be made to the transferee. The purpose of this method and convention is that Distributions are likely to bebased on the estimated taxable income of the previous quarter and the Boardbelieves that allocations will be better and more equitably aligned withDistributions.  The Board shall have the power and authority to adoptanother reasonable method and/or convention with respect to the allocations andDistributions by resolution or by amending this Section; provided, thatreasonable notice of any change is given to the Unitholders in advance of thechange.  Neither the Company, the Board, any Director nor any Unitholdershall incur any liability for making allocations and Distributions in accordancewith the provisions of this Section, whether or not the Board or any Director orthe Company or any Unitholder has knowledge of any Transfer of ownership of anyinterest in the Company.  The Unitholders acknowledge that the method andconvention designated in this Section 3.2 constitutes an “agreement among thepartners” 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), forany allocations or Distributions attributable to the transactions under theMembership Interest Purchase Agreement dated February 29, 2008 entered into byand between JBS S.A. and the Company and other members of National Beef PackingCompany (“MIPA”), the allocation of profits and losses and Distributions ofproceeds from those MIPA transactions shall be made to the transferee of unittransfer transactions approved by the Board after February 29, 2008 and priorto 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 anestablished securities market, a secondary market (or the substantialequivalent of those markets) within the meaning of Code Section 7704(b) (andany Regulations, proposed Regulations, revenue rulings, or other officialpronouncements of the Internal Revenue Service or Treasury Department that maybe promulgated or published); and (3) in the event the Regulations, revenuerulings, or other pronouncements treat any or all arrangements which facilitatethe selling of Company interests and which are commonly referred to as“matching services” as being a secondary market or substantial equivalent of asecondary market, Transfer any Units through a matching service that is notapproved in advance by the Company.  A Unitholder may not Transfer any Units toany Person unless the Person agrees to be bound by the Transfer Restrictionsand to Transfer the Units only to Persons who agree to be similarly bound.

**(b) Units Acquired For Unitholder’s Account. **The acquisition of Units by a Unitholder shall be deemed to be a representationand warranty to the Company and the other Unitholders, that the Unitholder’sacquisition of Units is made as principal for the Unitholder’s own account andnot for resale or distribution of the Units to others in violation ofsecurities laws as determined by the Company and its legal counsel.

 

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| U.S. Premium Beef, LLC | **Limited Liability Company Agreement** |
|------------------------|-----------------------------------------|
|                   | **Appendix C**                          |

 

 

 

 

**1STAmendment To Section 3.2   Approved   September 29, 2004**

**2NDAmendment To Section 3.2   Approved   March 27, 2008**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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