Document:

Exhibit 10.2

 

FORM OF

REGISTRATION
RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”)
is entered into as of                ,
2009 by and among National Beef, Inc., a Delaware corporation (the “National
Beef”), U.S. Premium Beef, LLC, a Delaware limited liability company (“USPB”),
TKK Investments, LLC, a Missouri limited liability company (“TKK”),
TMKCo, LLC, a Missouri limited liability company (“TMKCo”, and together
with TKK, the “Klein Entities”), and NBPCo Holdings, LLC, a South Dakota
limited liability company (“NBPCo” and together with USPB and the Klein
Entities, the “Founding Members”). National Beef and the Founding
Members are parties to the Amended and Restated Limited Liability Company
Agreement of National Beef Packing Company, LLC (“NBP LLC”), dated                  ,
2009 (the “NBP LLC Operating Agreement”).

 

The parties agree as follows:

 

1.     Defined Terms;
Interpretation.

 

(a) Defined Terms. The following
terms shall have the following meanings in this Agreement:

 

“Adverse Effect” has the meaning set
forth in Section 2(a)(vi) of this Agreement.

 

“Affiliate” has the meaning set forth
in the NBP LLC Operating Agreement.

 

“Agreement” has the meaning set forth
in the preamble of this Agreement.

 

“Board” means the Board of Directors
of National Beef.

 

“Business Day” means a day other than
a Saturday, Sunday, federal holiday or other day on which commercial banks in
New York, New York are authorized or required by law to close.

 

“CEO” means the Chief Executive
Officer of National Beef.

 

“CFO” means the Chief Financial
Officer of National Beef.

 

“Common Stock” shall mean National
Beef’s Class A Common Stock, par value $0.01 per share, and any securities
into which such shares may hereinafter be reclassified.

 

“Company” has the meaning set forth in
the preamble of this Agreement.

 

“Control” (including the terms “Controlled
by” and “under common Control with”), with respect to the relationship between
or among two or more Persons, means the possession, directly or indirectly, of
the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise.

 

“Demand Party” has the meaning set
forth in Section 2(a)(i) of this Agreement.

 

 

“Demand Registrable Securities” has
the meaning set forth in Section 2(a)(i)(1) of this Agreement.

 

“Director” means a member of the
Board.

 

“Exchange Act” means the Securities
and Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder, as the same may be amended from time to time.

 

“Exchange Agreement” means the
Exchange Agreement, dated as of                 ,
2009, among National Beef and each of the Founding Members pursuant to which
each Founding Member has the right to exchange its membership units in NBP LLC
for shares of Common Stock, cash or a combination thereof under certain
circumstances.

 

“FINRA” means the Financial Industry Regulatory
Authority, Inc.

 

“Founding Members” has the meaning set
forth in the preamble of this Agreement.

 

“Governmental Authority” means any
nation or government, any state or other political subdivision thereof, and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

 

“Group” has the meaning set forth in Section 13(d)(3) and
Rule 13d-5 of the Exchange Act.

 

“IPO” means an initial primary sale by
National Beef of shares of Common Stock to the public in an offering pursuant
to an effective registration statement (other than a registration statement on Form S-4
or S-8 or any similar or successor form) filed under the Securities Act, so
that after giving effect to such offering, such shares of Common Stock are
listed on one or more nationally recognized exchanges or quoted on one or more
automated quotation systems, including the NYSE or NASDAQ, respectively.

 

“Klein Entities” has the meaning set
forth in the preamble of this Agreement.

 

“LLC Act” means the Delaware Limited
Liability Company Act, 6 Del.C. §§ 18-101, et seq.,
as it may be amended from time to time, and any successor to such statute.

 

“Losses” has the meaning set forth in Section 2(f)(i) of
this Agreement.

 

“Member Registrable Securities” has
the meaning set forth in Section 2(a)(i)(2) of this Agreement.

 

“NASDAQ” has the meaning set forth in Section 2(c)(viii) of
this Agreement.

 

“NBP LLC” has the meaning set forth in
the preamble of this Agreement.

 

“NBP LLC Operating Agreement” has the
meaning set forth in the preamble of this Agreement.

 

“NBPCo” has the meaning set forth in
the preamble of this Agreement.

 

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“NYSE” has the meaning set forth in Section 2(c)(viii) of
this Agreement.

 

“Officer” means a person designated as
an officer of National Beef by the Board or the CEO.

 

“Other Holder Registrable Securities”
has the meaning set forth in Section 2(a)(i)(4) of this Agreement.

 

“Person” means any individual,
corporation, limited liability company, partnership, trust, joint stock
company, business trust, unincorporated association, joint venture,
Governmental Authority or other entity or organization of any nature whatsoever
or any Group of two or more of the foregoing.

 

“Registrable Securities” mean the
Shares. As to any particular Registrable Securities, such Shares shall cease to
be Registrable Securities when (i) a registration statement with respect
to the sale of such Shares shall have become effective under the Securities Act
and such Shares shall have been disposed of in accordance with such registration
statement, (ii) such Shares may be sold without restrictions (including
volume and manner of sale restrictions) pursuant to Rule 144, (iii) such
Shares are transferred and the subsequent disposition of such Shares do not
require registration under the Securities Act or (iv) such Shares shall
have ceased to be outstanding.

 

“Registration Expenses” means any and
all reasonable expenses of National Beef incident to performance of or
compliance with Sections 2(a), 2(b) and 2(c), including (i) all
SEC and stock exchange or automated quotation system or FINRA registration,
filing and listing fees, (ii) all fees and expenses of complying with
state securities or blue sky laws (including fees and disbursements of counsel
for the underwriters in connection with blue sky qualifications of the
Registrable Securities), (iii) all printing, word processing, duplication,
messenger and delivery expenses, (iv) all fees and expenses incurred in
connection with the listing of the Registrable Securities on any stock exchange
or automated quotation system pursuant to this Agreement, (v) the fees and
disbursements of counsel for National Beef, (vi) the reasonable fees and
disbursements of independent public accountants to National Beef, including the
expenses of any “cold comfort” letters required by or incident to the
transactions contemplated by this Agreement, and (vii) all reasonable
expenses incurred in connection with any road shows.

 

“Registration Indemnified Parties” has
the meaning set forth in Section 2(f)(i) of this Agreement.

 

“Rule 144” means Rule 144
(or any successor provision), as the same may be amended from time to time,
under the Securities Act.

 

“SEC” means the U.S. Securities and
Exchange Commission or any other federal agency then administering the Securities
Act or the Exchange Act and other federal securities law.

 

“Securities Act” means the Securities
Act of 1933, as amended, and the rules and regulations promulgated
thereunder, as the same may be amended from time to time.

 

“Shares” means the shares of Common
Stock issued to any Founding Member pursuant to the exercise by such Founding
Member of its exchange rights under the Exchange 

 

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Agreement, including any shares of Common Stock issued in connection
with a stock split, distribution, reclassification, recapitalization or
otherwise in respect of such shares.

 

“Subsidiary” means, with respect to
any Person, (i) a corporation a majority of whose capital stock with the
general voting power under ordinary circumstances to vote in the election of
directors of such corporation (irrespective of whether or not, at the time, any
other class or classes of securities shall have, or might have, voting power by
reason of the happening of any contingency) is at the time beneficially owned
by such Person, by one or more Subsidiaries of such Person or by such Person
and one or more Subsidiaries thereof or (ii) any other Person (other than
a corporation), including a joint venture, a general or limited partnership or
a limited liability company, in which such Person, one or more Subsidiaries
thereof or such Person and one or more Subsidiaries thereof, directly or
indirectly, at the date of determination thereof, beneficially own at least a
majority ownership interest entitled to vote in the election of directors,
managers or trustees thereof (or other Persons performing such functions) or
act as the general partner or managing member of such other Person.

 

“Third Party Holder” has the meaning
set forth in Section 2(b)(i) of this Agreement.

 

“TKK” has the meaning set forth in the
preamble of this Agreement.

 

“TMKCo” has the meaning set forth in
the preamble of this Agreement.

 

“Transaction Delay Notice” has the
meaning set forth in Section 2(a)(vii)(1) of this Agreement.

 

“Transfer” (including the term “Transferred”)
means, directly or indirectly, to sell, transfer, give, exchange, bequest,
assign, pledge, encumber, hypothecate or otherwise dispose of, either
voluntarily or involuntarily (including upon the foreclosure under any pledge
or hypothecation permitted below that results in a change in title), any Equity
Interests in National Beef or other assets beneficially owned by a Person or
any interest in any Equity Interests in National Beef or other assets
beneficially owned by a Person. Notwithstanding the foregoing: a bona fide
pledge of the Shares or other Equity Interests by any Member or its Affiliates
shall not be deemed to be a Transfer hereunder.

 

“USPB” has the meaning set forth in
the preamble of this Agreement.

 

(b) Other Definitional Provisions;
Interpretation.

 

(i) The words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement will refer to this
Agreement as a whole, including the Exhibits and Schedules attached hereto, and
not to any particular provision of this Agreement. Articles, section and
subsection references are to this Agreement unless otherwise specified.

 

(ii) The words “include” and “including”
and words of similar import when used in this Agreement shall be deemed to be
followed by the words “without limitation”.

 

(iii) The titles and headings in this
Agreement are included for convenience of reference only and will not limit or
otherwise affect the meaning or interpretation of this Agreement.

 

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(iv) The meanings given to capitalized
terms defined herein will be equally applicable to both the singular and plural
forms of such terms, Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms.

 

2.     Registration Rights and
Procedures.

 

(a) Registration on Request of
Founding Members.

 

(i) Request.  Subject to the terms and conditions of this
Agreement, at any time after the expiration of any underwriter lock-up period
applicable to the Founding Members in connection with the IPO, a Founding
Member (the “Demand Party”) may request in writing that National Beef
effect the registration for resale under the Securities Act of such Demand
Party’s Demand Registrable Securities. 
Any such request will specify (a) the number of Registrable
Securities proposed to be sold and (b) the intended method of disposition
thereof.  Subject to the other provisions
of this Section 2(a), National Beef shall promptly give written notice of
such requested registration to all other Founding Members, and thereupon will,
as expeditiously as reasonably practicable, use its reasonable best efforts to
effect the registration under the Securities Act of:

 

(1) the Registrable Securities which
National Beef has been so requested to register by the Demand Party (“Demand
Registrable Securities”);

 

(2) all other Registrable Securities
which National Beef has been requested to register by any other Founding Member
thereof on a pro rata basis by written request given to National Beef within
10 days after the giving of such written notice by National Beef (which
request shall specify the amount and intended method of disposition of such
Registrable Securities), all to the extent necessary to permit the disposition
(in accordance with the intended method thereof as aforesaid) of the
Registrable Securities so to be registered (“Member Registrable Securities”);
and

 

(3) any newly issued or treasury shares
of Common Stock which National Beef seeks to have included in such registration
(“Company Registrable Securities”)

 

(4) all shares of Common Stock which
have been requested to be included by holders of Common Stock other than the
Founding Members (“Other Holder Registrable Securities”).

 

(ii) Limits on Registration Requests.  In no event shall National Beef be required
to effect a registration pursuant to this Section 2(a) unless the
number of Demand Registrable Securities requested by the Demand Party
constitutes at least 5% of the aggregate number of membership units of NBP LLC
outstanding on the date hereof (including the membership units held by National
Beef and the membership units held by all Founding Members and taking into
account the effect of any stock or unit splits or similar distributions in
respect of the Shares or the membership units); provided, however, that in the
case of any request for registration by the Klein Entities, this condition
shall be satisfied if the number of Demand Registrable Securities requested by
the Klein Entities is the lesser of (x) 5% of such aggregate number of
membership units of NBP LLC or (y) all the Registrable Securities held by
the Klein Entities assuming that the Klein Entities had exchanged pursuant to
the Exchange Agreement all of the membership units of NBP LLC held by the Klein
Entities.  In addition, in no event shall
National Beef be 

 

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obligated to file a registration statement relating to any registration
request under this Section 2(a) within a period of 180 days after the
effective date of any other registration statement relating to any registration
request under this Section 2(a) or to any registration effected under
Section 2(b).  The Founding Members
shall be entitled to request no more than the following number of registrations
pursuant to Section 2(a)(i): the Klein Entities (one request), NBPCo (two
requests) and USPB (five requests).

 

(iii) Expenses.  National Beef will pay all Registration
Expenses in connection with registrations pursuant to this Section 2(a).

 

(iv) Effective Registration Statement.  A registration requested pursuant to this Section 2(a) will
not be deemed to have been effected:

 

(1) unless a registration statement with
respect thereto has become effective and remained effective in compliance with
the provisions of the Securities Act until the earlier of (x) such time as
all of such Registrable Securities have been disposed of in accordance with the
intended methods of disposition thereof set forth in such registration
statement or (y) 45 days after the effective date of such
registration statement; provided, however, that if the
failure of any such registration statement to become or remain effective in
compliance with this Section 2(a)(iv)(1) is due solely to acts or
omissions of the applicable Demand Party, such registration requested pursuant
to this Section 2(a) will be deemed to have been effected; or

 

(2) if, after it has become effective,
the registration statement is subject to any stop order, injunction or other
order or requirement of the SEC or other governmental agency or authority
prohibiting the sale of Demand Registrable Securities pursuant to such
registration statement, other than by reason of an act or omission on the part
of the Demand Party.

 

(v) Underwritten Offering.  At the election of the Demand Party, a
requested registration pursuant to this Section 2(a) may involve an
underwritten offering, and, in such case, the lead or managing underwriter or
underwriters shall be selected by the Demand Party in consultation with other
holders of Registrable Securities being included in such registration pursuant
to Section 2(a); provided, however, that such lead or
managing underwriter or underwriters shall be reasonably satisfactory to
National Beef.

 

(vi) Priority in Requested
Registrations.  If a requested
registration pursuant to this Section 2(a) involves an underwritten
offering and the lead or managing underwriter advises National Beef in writing
that, in its opinion, the number of securities to be included in such registration
would be likely to have an adverse effect on the price, timing or distribution
of the securities to be offered in such offering as contemplated by the
Founding Members (an “Adverse Effect”), then National Beef shall include
in such registration all Registrable Securities and shares of Common Stock that
the lead or managing underwriter believes can be sold in such offering without
having an Adverse Effect allocated in the following order of priority: (a) first,
all Demand Registrable Securities; (b) second, all Member
Registrable Securities, if any, held by any other Founding Member; (c) third,
all Company Registrable Securities; and (d) fourth, all Other
Holder Registrable Securities.  If such
lead or managing underwriter advises National Beef that only a portion of the
Registrable Securities or shares of Common Stock in any of clauses (a) through
(d) above may be included in such registration without such Adverse
Effect, National 

 

6

 

Beef shall include the Registrable Securities and shares of Common
Stock from the holders of Registrable Securities in such clause on a pro rata
basis based on the relative number of Registrable Securities then held by each
such holder who has requested that securities owned by them be so including in
a registration (provided that any such amount thereby allocated to any
such holder that exceeds such holder’s request shall be reallocated among the
remaining requesting holders in a like manner).

 

(vii) Postponements in Requested
Registrations.

 

(1)  If, upon receipt of a registration
request, National Beef shall furnish to the Demand Party a certificate signed
by an Officer of National Beef (the “Transaction Delay Notice”) stating
that National Beef has pending or in process a material transaction or a
material development which National Beef has a bona fide business purpose in
keeping confidential and that the filing of a registration statement would
require disclosure of such material transaction or material development, then National
Beef shall not be required to comply with its obligations under Section 2(a)(i) until
180 days after the Demand Party’s receipt of such notice.

 

(2)  Notwithstanding the foregoing
provisions of this Section 2(a)(vii), National Beef shall be entitled to
serve only one Transaction Delay Notice within any period of 365 consecutive
days.

 

(viii)  No Shelf Registration
Statements.  National Beef shall not
be required, in response to any request for registration under Section 2(a) hereunder,
to file or maintain a shelf registration statement under Rule 415 under
the Securities Act, or any similar or successor provision.

 

(ix) Additional Rights. National
Beef shall not grant to any other holders of shares of Common Stock (or
securities that are convertible, exchangeable or exercisable into shares of
Common Stock) any rights to request National Beef to effect the registration
under the Securities Act of any such shares on terms more favorable to such
holders than the terms set forth in this Section 2(a).

 

(b) Incidental Registrations.

 

(i) Right to Piggyback.  If National Beef or any other Person that has
demand registration rights (a “Third Party Holder”) at any time after
the expiration of any underwriter lock-up period applicable to the IPO proposes
to register shares of Common Stock under the Securities Act (other than a
registration on Form S-4 or S-8, or any successor or other forms
promulgated for similar purposes), whether or not for sale for its own account,
in a manner which would permit registration of Registrable Securities for sale
to the public under the Securities Act, National Beef will, at each such time,
give prompt written notice to the Founding Members of its intention to do so
and of the Founding Members’ rights under this Agreement. Upon the written
request of any Founding Member made within 10 days after the receipt of
any such notice (which request shall specify the Registrable Securities
intended to be disposed of by such Founding Member), National Beef will use its
reasonable best efforts to effect the registration under the Securities Act of
all Registrable Securities which National Beef has been so requested to
register by the Founding Members; provided, however, that (a) if,
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, National Beef or such 

 

7

 

Third Party Holder shall determine for any reason not to proceed with
the proposed registration of the securities to be sold by it, National Beef
may, at its election, give written notice of such determination to each
Founding Member and, thereupon, shall be relieved of its obligation to register
any Registrable Securities in connection with such terminated registration, and
(b) if such registration involves an underwritten offering, all Founding
Members requesting to be included in National Beef’s or such Third Party Holder’s
registration shall enter into an agreement with the underwriters to sell their
Registrable Securities to the underwriters selected by National Beef or such
Third Party Holder on substantially the same terms and conditions as apply to
National Beef or such Third Party Holder, with such differences, including any
with respect to indemnification and liability insurance, as may be customary or
appropriate in combined primary and secondary offerings.  The registrations provided for in this Section 2(b) are
in addition to, and not in lieu of, registrations made in accordance with Section 2(a).

 

(ii) Expenses.  National Beef will pay all Registration
Expenses in connection with each registration of Registrable Securities
requested pursuant to this Section 2(b).

 

(iii) Priority in Incidental Registrations.  If a registration pursuant to this Section 2(b) involves
an underwritten offering and the lead or managing underwriter advises National
Beef in writing that, in its opinion, the number of Registrable Securities and
shares of Common Stock requested to be included in such registration would be
likely to have an Adverse Effect on such offering, then National Beef shall
include in such registration: (a) first, 100% of the securities
which National Beef or the Third Party Holder proposes to sell; (b) second,
the number of Registrable Securities which the Founding Members have requested
to be included in such registration; and (c) third, the number of
shares of Common Stock which any other holders of Common Stock have requested
to be included in the registration.  If
such lead or managing underwriter advises National Beef that only a portion of
such Registrable Securities or shares of Common Stock in clauses (b) or
(c) may be included in such registration without such Adverse Effect,
National Beef shall include Registrable Securities and shares of Common Stock
from the holders of such securities in such clauses on a pro rata basis based
on the relative amount of Registrable Securities or shares of Common Stock then
held by each such holder (provided, that any such amount thereby
allocated to any such holder that exceeds such holder’s request shall be
reallocated among the remaining requesting holders in like manner).

 

(c) Registration Procedures.  If and whenever National Beef is required to
use its reasonable best efforts to cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, National
Beef will, as expeditiously as reasonably practicable:

 

(i) (A) with respect to any
registration under Section 2(a), prepare and, in any event within
45 days of the date on which National Beef first received a request from a
Demand Party pursuant to Section 2(a)(i), file with the SEC a registration
statement with respect to such Registrable Securities and use its reasonable
best efforts to cause such registration statement to become effective within
120 days of the initial filing, and (B) with respect to any
registration under Section 2(b) and subject to National Beef’s rights
set forth in Section 2(b), use its reasonable best efforts to file with
the SEC a registration statement with respect to such Registrable Securities
and use its reasonable best efforts to cause such registration statement to
become effective within 120 days of the initial filing; provided, however,
that before filing a registration statement or prospectus or any amendments or
supplements thereto, National Beef 

 

8

 

will furnish to the holders holding Registrable Securities included in
such registration statement, the counsel for the holders of the Registrable
Securities being registered and the lead or managing underwriters, if any,
copies of all such documents proposed to be filed.  National Beef will not file any such
registration statement or amendment thereto or any prospectus or any supplement
thereto (excluding such documents that, upon filing, will be incorporated or
deemed to be incorporated by reference therein) without providing such holders,
such counsel and any such lead or managing underwriter a reasonable opportunity
to comment on such documents;

 

(ii) prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as National Beef may determine to be necessary to
keep such registration statement effective in accordance with Section 2(a) and
to comply with the provisions of the Securities Act and the Exchange Act; provided, however,
that before filing any amendments or supplements thereto in accordance with Section 2(c)(i) or
this Section 2(c)(ii), National Beef will furnish to counsel for the
holders of the Registrable Securities being registered copies of all documents
proposed to be filed and provide such counsel with a reasonable opportunity to
comment on such documents;

 

(iii) furnish to each holder of
Registrable Securities being registered such number of copies of the prospectus
included in such registration statement (including each preliminary
prospectus), in conformity with the requirements of the Securities Act, as such
seller may reasonably request in order to facilitate the disposition of the
Registrable Securities by such holder;

 

(iv) use its reasonable efforts to
register or qualify such Registrable Securities covered by such registration in
such jurisdictions as each holder of Registrable Securities being registered
shall reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
holder, except that National Beef shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
where, but for the requirements of this Section 2(c)(iv), it would not be
obligated to be so qualified, to subject itself to taxation in any such
jurisdiction or to consent to general service of process in any such
jurisdiction;

 

(v) notify each holder of any such
Registrable Securities covered by such registration statement, at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act, of National Beef’s becoming aware that the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing, and at the request of any such holder, prepare and
furnish to such holder a reasonable number of copies of an amended or
supplemental prospectus as may be necessary so that, as thereafter delivered to
the holders of such Registrable Securities, such prospectus shall not include
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;

 

(vi) otherwise use its reasonable best
efforts to comply with all applicable rules and regulations of the SEC and
make available to its security holders, as soon as reasonably 

 

9

 

practicable (but not more than 18 months) after the effective date
of the registration statement, an earnings statement which shall satisfy the
provisions of Section 11(a) of the Securities Act;

 

(vii) use its reasonable best efforts to
cause all Registrable Securities covered by such registration statement to be (a) listed
on each stock exchange or automated quotation system, if any, on which
securities issued by National Beef of the same class are then listed or, if no
such securities issued by National Beef are then so listed, on the New York
Stock Exchange (the “NYSE”) or another nationally stock exchange, if the
securities qualify to be so listed or (b) on the Nasdaq Stock Market of
the Nasdaq National Market (“NASDAQ”) or another nationally recognized
automated quotation system, if the securities qualify to be so quoted;

 

(viii) enter into such customary agreements
(including an underwriting agreement in customary form), which may include
indemnification provisions in favor of underwriters and other Persons in
addition to or in substitution for the provisions of Section 2(f) hereof,
and take such other customary actions as sellers of a majority of shares of
such Registrable Securities or the underwriters, if any, reasonably request in
order to expedite or facilitate the disposition of such Registrable Securities;

 

(ix) use reasonable best efforts to
obtain a “cold comfort” letter or letters from National Beef’s independent
public accountants in customary form and covering matters of the type
customarily covered by “cold comfort” letters as the holders of a majority of
shares of such Registrable Securities shall reasonably request;

 

(x) make available for inspection by any
holder of such Registrable Securities covered by such registration statement,
by any underwriter participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other agent
retained by any such holder or any such underwriter, any pertinent financial
and other records, pertinent corporate documents and properties of National
Beef as reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with customary due diligence performed for a
public offering of such Registrable Securities;

 

(xi) promptly notify counsel for the holders
of Registrable Securities included in such registration statement and the managing
underwriter (a) when the registration statement, or any post-effective
amendment to the registration statement, shall have become effective, or any
supplement to the prospectus or any amendment to the prospectus shall have been
filed, (b) of the receipt of any comments from the SEC relating to such
registration statement, (c) of any request of the SEC to amend the
registration statement or amend or supplement the prospectus and (d) of
the issuance by the SEC of any stop order suspending the effectiveness of the
registration statement or of any order preventing or suspending the use of any
prospectus, or of the suspension of the qualification of the registration
statement for offering or sale in any jurisdiction, or of the institution or
threatening of any proceedings for any of such purposes;

 

(xii) cooperate with the holders of
Registrable Securities covered by the registration statement and the managing
underwriter if any, to facilitate the timely preparation and delivery of any
certificates representing securities to be sold under the registration
statement, and enable such securities to be in such denominations and
registered in such names as the managing underwriter or agent, if any, or such
holders may request;

 

10

 

(xiii) use its reasonable best efforts to
obtain for delivery to the holders of Registrable Securities being registered
and to the underwriter an opinion or opinions from counsel for National Beef in
customary form and in form, substance and scope reasonably satisfactory to such
holders, underwriters or agents and their counsel; and

 

(xiv) cooperate with each holder of
Registrable Securities being registered and each underwriter participating in
the disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the NYSE, NASDAQ or any
other stock exchange or automated quotation system and FINRA.

 

(d) Information Supplied.  National Beef may require each holder of
Registrable Securities being registered to furnish National Beef with such
information regarding such holder and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as
National Beef may from time to time reasonably request in writing.  National Beef shall not be required to
include in any registration statement any Registrable Securities of any holder
which does not provide such information.

 

(e) Restrictions on Disposition.  Each Founding Member agrees that, upon
receipt of any notice from National Beef of the happening of any event of the
kind described in Section 2(c)(v), such Founding Member will forthwith
discontinue disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such Founding Member’s
receipt of any copies of the supplemented or amended prospectus contemplated by
Section 2(c)(v), and, if so directed by National Beef, such Founding
Member will deliver to National Beef (at National Beef’s expense) all copies,
other than permanent file copies then in such Founding Member’s possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice.

 

(f) Indemnification.

 

(i) In the event of any registration of
any securities of National Beef under the Securities Act pursuant to this Section 2,
National Beef shall indemnify and hold harmless the holder of any Registrable
Securities covered by such registration statement, its directors, officers and
employees, each Person who participates as an underwriter in the offering or
sale of such securities and each other Person, if any, who Controls such holder
or any such underwriter within the meaning of the Securities Act (collectively,
the “Registration Indemnified Parties”), against any and all losses,
claims, damages or liabilities, joint or several, actions or proceedings
(whether commenced or threatened) in respect thereof and expenses (including
reasonable attorney’s fees and reasonable expenses of investigation) to which
such Registration Indemnified Party may become subject under the Securities Act
(“Losses”), state law or otherwise, insofar as such Losses arise out of,
relate to or are based upon (a) any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such securities were registered under the Securities Act, any preliminary
or final prospectus contained therein, or any amendment or supplement thereto,
or (b) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of a prospectus, in light of the circumstances under which they were
made) not misleading; provided, that National Beef shall not be liable
to any Registration Indemnified Party in any such case to the extent, but only
to the extent, that any such Losses or expenses arise out of, relate to or are
based upon any untrue statement or alleged untrue statement or omission or
alleged 

 

11

 

omission made in such registration statement or amendment or supplement
thereto or in any such preliminary or final prospectus in reliance upon and in
conformity with written information furnished to National Beef by or on behalf
of such holder, underwriter or other Person specifically for use in the
preparation thereof; and, provided, further, that National Beef
will not be liable in any such case to the extent, but only to the extent, that
the foregoing indemnity with respect to any untrue statement contained in or
omitted from a registration statement or the prospectus shall not inure to the
benefit of any party (or any Person Controlling such party) who is obligated to
deliver a prospectus in transactions in a security as to which a registration
statement has been filed pursuant to the Securities Act and from whom the
Person asserting any such Losses purchased any of the Registrable Securities to
the extent that it is finally judicially determined that Losses resulted from the
fact that such party sold Registrable Securities to a Person to whom there was
not sent or given, at or prior to the written confirmation of such sale, a copy
of the registration statement or the prospectus, as amended or supplemented,
and (x) National Beef shall have previously and timely furnished
sufficient copies of the registration statement or prospectus, as so amended or
supplemented if required under the Securities Act, to such party in accordance
with this Agreement and (y) the registration statement or prospectus, as
so amended or supplemented, would have corrected such untrue statement or
omission of a material fact. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any Registration
Indemnified Party and shall survive the Transfer of securities by any holder.

 

(ii) National Beef may require, as a
condition to participating in the sale of any Registrable Securities in any
registration statement filed in accordance with Sections 2(a) or 2(b) herein,
that it shall have receive an undertaking reasonably satisfactory to it from
the selling holder of such Registrable Securities and any underwriter to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 2(f)(i)) National Beef and all other selling holders or
any underwriter, as the case may be, with respect to any untrue statement or
alleged untrue statement in or omission or alleged omission from such
registration statement, any preliminary or final prospectus contained therein,
or any amendment or supplement thereto, if such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to National Beef by or on
behalf of such selling holder or such underwriter specifically for inclusion in
such registration statement, preliminary or final prospectus or amendment or
supplement.  Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf
of National Beef, any of the selling holders or any underwriter and shall
survive the transfer of securities by any holder.

 

(iii) Promptly after receipt by a
Registration Indemnified Party hereunder of written notice of the commencement
of any action or proceeding with respect to which a claim for indemnification
may be made pursuant to this Section 2(f), such Registration Indemnified
Party will, if a claim in respect thereof is to be made against National Beef,
give written notice to National Beef of the commencement of such action or
proceeding; provided, however, that the failure of the
Registration Indemnified Party to give notice as provided herein shall not
relieve National Beef of its obligations under this Section 2(f), except to
the extent that National Beef is materially prejudiced by such failure to give
notice.  In case any such action or
proceeding is brought against a Registration Indemnified Party, unless in such
Registration Indemnified Party’s reasonable judgment (after consultation with
legal counsel) a bona fide conflict of interest 

 

12

 

between such Registration Indemnified Party and National Beef may exist
in respect of such action or proceeding, National Beef will be entitled to
participate in and to assume the defense thereof (at its expense) with counsel
reasonably satisfactory to such Registration Indemnified Party, and after
notice from National Beef to such Registration Indemnified Party of its
election so to assume the defense thereof, National Beef will not be liable to
such Registration Indemnified Party for any legal or other expenses
subsequently incurred by the Registration Indemnified Party in connection with
the defense thereof other than reasonable costs of investigation; provided,
however, in the event National Beef declines or fails to assume the
defense of the action or proceeding or to employ counsel reasonably
satisfactory to the Registration Indemnified Party or if a court of competent
jurisdiction determines that National Beef is not vigorously defending such
action or proceeding, or if there is a bona fide conflict of interest between
National Beef and the Registration Indemnified Party, then such Registration
Indemnified Party may employ counsel to represent or defend it in any such
action or proceeding and National Beef shall pay the reasonable fees and
disbursements of such counsel or other representative as incurred; provided,
further, however, that National Beef shall not be required to pay
the fees and disbursements of more than one counsel for all Registration
Indemnified Parties in any jurisdiction in any single action or
proceeding.  National Beef will not
settle any such action or proceeding or consent to the entry of any judgment
without the prior written consent of the Registration Indemnified Party, unless
such settlement or judgment (a) includes as an unconditional term thereof
the giving by the claimant or plaintiff of a release to such Registration
Indemnified Party from all liability in respect of such action or proceeding
and (b) does not involve the imposition of equitable remedies.  No Registration Indemnified Party will settle
any such action or proceeding or consent to the entry of any judgment without
the prior written consent of National Beef (such consent not to be unreasonably
withheld).

 

(iv) (1) If the indemnification
provided for in this Section 2(f) is unavailable to National Beef or
to a Registration Indemnified Party hereunder in respect of any Losses or
expenses referred to herein, then National Beef and the Registration
Indemnified Parties, in lieu of such indemnification, shall contribute to the
amount paid or payable by National Beef or such Registration Indemnified Party
as a result of such Losses or expenses in such proportion as is appropriate to
reflect the relative fault of National Beef and Registration Indemnified Party
in connection with the actions or proceedings which resulted in such Losses or
expenses, as well as any other relevant equitable considerations.  The relative fault of National Beef and
Registration Indemnified Party shall be determined by reference to, among other
things, whether any action or proceeding in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
National Beef or Registration Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such action or proceeding.  The amount
paid or payable by a party under this Section 2(f)(iv) as a result of
the Losses and expenses referred to above shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in connection with
any action or proceeding.

 

(2) The parties hereto agree that it
would not be just and equitable if contribution pursuant to this Section 2(f)(iv) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in Section 2(f)(iv)(1).  No Person guilty of fraudulent
misrepresentation (within the meaning 

 

13

 

of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of similar fraudulent
misrepresentation.

 

(v) The obligations of the parties under
this Section 2(f) shall be in addition to any liability which any
party may otherwise have to any other party and shall survive until the
expiration of the applicable statutes of limitations (including any waivers or
extensions thereof) with respect to any such registrations made hereunder.

 

(g) Required Reports.  National Beef covenants that it will timely
file the reports required to be filed by it under the Securities Act and the
Exchange Act, and it will take such further action as any Founding Member may
reasonably request, all to the extent required from time to time to enable such
Founding Member to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.

 

(h) Holdback Agreement.  If any registration under Sections 2(a) or
2(b) hereof or any sale of securities in connection with a registration
under Section 2(a) hereof shall be in connection with an underwritten
public offering, each holder of Registrable Securities included in such
registration agrees to enter into customary agreements with the underwriters to
not effect any sale or distribution, including any sale pursuant to Rule 144,
of any equity interests of National Beef (in each case, other than as part of
such underwritten public offering), within 30 days before, or 90 days
after (or such lesser period as the managing underwriters may permit or such
longer periods as required by applicable law) such offering.

 

(i) Termination of Rights.  Except for indemnification rights provided in
Section 2(f), the rights granted to a Founding Member in this Agreement
shall terminate and forthwith become null and void in full on the earliest date
that such Founding Member no longer beneficially owns any Registrable
Securities.

 

3.     Miscellaneous.

 

(a) Agreement to Cooperate; Further
Assurances.  In case at any time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors and each Founding Member and their
respective Affiliates shall execute such further documents and shall take such
further action as shall be reasonably necessary to carry out the purposes of
this Agreement, in each case to the extent not inconsistent with applicable
law.

 

(b) Amendments.  Except as otherwise expressly provided in
this Agreement, amendments to this Agreement shall require approval of National
Beef and each Founding Member.

 

(c) Injunctive Relief.  National Beef and each Founding Member
acknowledge and agree that a violation of any of the terms of this Agreement
may cause the other Founding Members and National Beef, as the case may be,
irreparable injury for which an adequate remedy at law is not available.  Accordingly, it is agreed that each of the
Founding Members and National Beef will be entitled to seek an injunction,
restraining order or other equitable relief to prevent breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of competent jurisdiction, in addition to any
other remedy to which they may be entitled at law or, equity.  Nothing stated herein shall limit any other
remedies provided under this Agreement or available to the parties at law or in
equity.

 

14

 

(d) Successors.  The provisions of this Agreement will be
binding upon and will inure to the benefit of the parties hereto and their respective
successors, and nothing in this Agreement, express or implied, is intended to
or shall confer upon any other Person, including but not limited to any
creditor of National Beef or its Subsidiaries, any right, benefit, or remedy of
any nature by reason of this Agreement. 
An assignment of the rights, interests or obligations hereunder,
including but not limited to an assignment by operation of law, shall be null
and void unless a provision of this Agreement specifically provides otherwise
or National Beef gives its prior written consent therefor.

 

(e) Notices.  Any written notice required or permitted to
be delivered pursuant to this Agreement shall be in writing and shall be deemed
delivered: (a) upon delivery if delivered in person; (b) upon
transmission if sent via telecopier, with electronic confirmation of receipt; (c) one
Business Day after deposit with a nationally recognized overnight courier
service, provided that confirmation of such overnight delivery is
received by the sender; and (d) upon transmission if sent via e-mail, with
a confirmation copy sent via telecopier on the same day with electronic
confirmation of receipt.  Notices to
National Beef or any Founding Member shall be delivered to National Beef or
such Founding Member as set forth in Exhibit A, as it may be
revised from time to time.  Any party may
change its address for notices by giving written notice of the new address to
the other parties in accordance with this section, but any element of such
party’s address that is not newly provided in such notice shall be deemed not
to have changed.

 

(f) Integration.  This Agreement contains the exclusive, entire
and final understanding of the parties with respect to the subject matter
hereof.  There are no agreements,
representations, warranties, covenants or undertakings with respect to the
subject matter hereof other than those expressly set forth herein.  Except as expressly set forth herein, this
Agreement supersedes all other prior agreements, discussions, negotiations,
communications and understandings between the parties with respect to such
subject matter hereof.  No party has
relied on any statement, representation, warranty, or promise not expressly
contained in this Agreement in connection with this transaction.

 

(g) Severability.  If one or more of the provisions, paragraphs,
words, clauses, phrases or sentences contained herein, or the application
thereof in any circumstances, is held invalid, illegal or unenforceable in any
respect for any reason, then such provision, paragraph, word, clause, phrase or
sentence shall be deemed restated to reflect the original intention of the
parties as nearly as possible in accordance with applicable law and the
remainder of this Agreement. The legality and enforceability of any such
provision, paragraph, word, clause, phrase or sentence in every other respect
and of the remaining provisions, paragraphs, words, clauses, phrases or
sentences hereof will not be in any way impaired, it being intended that all
obligations, rights, powers and privileges of National Beef and the Founding
Members will be enforceable to the fullest extent permitted by law.  Upon such determination of invalidity,
illegality or unenforceability, National Beef and the Founding Members shall
negotiate in good faith to amend this Agreement to effect the original intent
of the Founding Members.

 

(h) Counterparts.  This Agreement may be executed in one or more
counterparts and by different parties on separate counterparts, each of which
will be deemed an original, but all of which will constitute one and the same
instrument.  The parties agree that this
Agreement shall be legally binding upon the electronic transmission, including
by facsimile or email, by each party of a signed signature page hereof to
the other party.

 

15

 

(i) Governing Law; Submission to
Jurisdiction.

 

(i) This Agreement is to be construed in
accordance with and governed by the internal laws of the State of Delaware
without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the
State of Delaware to the rights and duties of the parties.

 

(ii) Each party hereto agrees that any
legal action or other legal proceeding relating to this Agreement or the
enforcement of any provision of this Agreement shall be brought or otherwise
commenced exclusively in any state or federal court located in Delaware.

 

[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

16

 

IN WITNESS WHEREOF, each of the undersigned
has executed this Agreement or caused this Agreement to be executed on its
behalf as of the date first written above.

 

 

	
  National
  Beef:

  	
  NATIONAL
  BEEF, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  The
  Founding Members:

  	
  U.S.
  PREMIUM BEEF, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NBPCO
  HOLDINGS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TKK
  INVESTMENTS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TMKCO,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

17

 

Exhibit A

 

Members

 

	
  If to National Beef:

  	
   

  	
  If to USPB: 

  
	
   

  	
   

  	
   

  
	
  National Beef, Inc.

  	
   

  	
  U.S. Premium Beef, LLC 

  
	
  12200 N. Ambassador Drive,
  Suite 500

  	
   

  	
  12200 N. Ambassador Drive,
  Suite 501

  
	
  Kansas City, Missouri
  64163

  	
   

  	
  Kansas City, Missouri
  64163

  
	
  Facsimile: (816) 713-8889

  	
   

  	
  Facsimile: (816) 713-8810

  
	
  Attention: Bret G. Wilson

  	
   

  	
  Attention: Steven D. Hunt

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
  Sidley Austin LLP

  	
   

  	
  Stoel Rives LLP 

  
	
  One South Dearborn Street

  	
   

  	
  33 South Sixth Street,
  Suite 4200

  
	
  Chicago, Illinois 60603 

  	
   

  	
  Minneapolis, Minnesota
  55402

  
	
  Facsimile: (312) 853-7036

  	
   

  	
  Facsimile: (612) 373-8881

  
	
  Attention: 

  	
  Paul L. Choi 

  	
   

  	
  Attention: Mark J. Hanson

  
	
   

  	
  John J. Sabl

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to NBPCo:

  	
   

  	
  If to the Klein Entities:

  
	
   

  	
   

  	
   

  
	
  NBPCo Holdings, LLC

  	
   

  	
  TKK Investments, LLC 

  
	
  891 Two Rivers Drive 

  	
   

  	
  TMKCo, LLC 

  
	
  Dakota Dunes, South Dakota
  57040 

  	
   

  	
  10217 Hwy 92

  
	
  Facsimile: (605) 217-8001 

  	
   

  	
  Kearney, Missouri 64060 

  
	
  Attention: Rich Jochum

  	
   

  	
  Facsimile: (816) 713-8852

  
	
   

  	
   

  	
  Attention: Timothy M.
  Klein

  
	
  with a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Koley Jessen P.C., LLO

  	
   

  	
   

  
	
  1125 S. 103rd Street, Suite 800 

  	
   

  	
   

  
	
  Omaha, Nebraska 68124 

  	
   

  	
   

  
	
  Facsimile: (402) 390-9005 

  	
   

  	
   

  
	
  Attention: 

  	
  Michael M. Hupp 

  	
   

  	
   

  
	
   

  	
  Matthew D. Maser

  	
   

  	
   

  

 

18Exhibit 10.3

 

FORM OF
EXCHANGE AGREEMENT

 

This Exchange Agreement (this “Agreement”) is
dated as of                               ,
2009, by and among National Beef, Inc., a Delaware corporation (“National
Beef”), U.S. Premium Beef, LLC, a Delaware limited liability company (“USPB”),
NBPCo Holdings, LLC, a South Dakota limited liability company (“NBPCo
Holdings”), TKK Investments, LLC, a Missouri limited liability company (“TKK”),
and TMKCo, LLC, a Missouri limited liability company (“TMKCo”, and
together with TKK, the “Klein Entities”).

 

WHEREAS, National Beef intends to consummate an
initial public offering (the “IPO”) of shares of its Class A common
stock (the “Class A Common Stock”);

 

WHEREAS, in connection with the IPO, National Beef
will purchase from National Beef Packing Company, LLC, a Delaware limited
liability company (“NBP LLC”), and the Members of NBP LLC, units of NBP
LLC;

 

WHEREAS, USPB, NBPCo Holdings, and the Klein Entities
(collectively, the “Members”) will own the balance of the outstanding
units of NBP LLC;

 

WHEREAS, National Beef believes that it is in its best
interests to increase its ownership of units of NBP LLC over time and agrees to
permit the Members to transfer their units of NBP LLC to National Beef from
time to time in exchange for the consideration specified herein;

 

WHEREAS, the parties hereto desire that this Agreement
govern the terms and conditions for the exchange of certain NBP LLC units (the “NBP
LLC Units”) for Class A Common Stock, cash, or a combination of both,
on the terms and subject to the conditions set forth herein;

 

NOW, THEREFORE, in consideration of the mutual
covenants and undertakings contained herein and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:

 

ARTICLE I 

DEFINITIONS

 

Section 1.1.           Definitions.

 

The following definitions shall be for all purposes,
unless otherwise clearly indicated to the contrary, applied to the terms used
in this Agreement.

 

“Business Day” means each day that is not a
Saturday, Sunday or other day on which banking institutions in Kansas City,
Missouri are authorized or required by law to close.

 

“Fair Market Value” means, with respect to the Class A
Common Stock, the average per share closing price of the Class A Common
Stock for the ten (10) days on which the relevant market was open for
trading immediately preceding the Quarterly Exchange Date on the national
securities exchange or interdealer quotation system on which such Class A
Common Stock is then traded or listed, as reported by the Wall Street
Journal.  If the per share closing price
of the 

 

 

Class A Common Stock cannot be ascertained in accordance with the
preceding sentence, then the Fair Market Value shall be determined by an independent
third party appraisal firm selected by the National Beef Audit Committee (or
another committee of National Beef consisting solely of independent directors).

 

“Person” means an individual, corporation,
limited liability company, partnership, joint venture, trust, estate,
unincorporated organization, association (including any group, organization,
co-tenancy, plan, board, council or committee), government (including a
country, state, county, or any other governmental or political subdivision,
agency or instrumentality thereof) or other entity (or series thereof).

 

“Quarter” means, unless the context requires
otherwise, a fiscal quarter of National Beef.

 

“Quarterly Exchange Date” means the date that
is the first day of any Quarter.

 

“Transfer Agent” means such bank, trust company
or other Person as shall be appointed from time to time by National Beef to act
as registrar and transfer agent for the Class A Common Stock.

 

ARTICLE II 

EXCHANGE OF NBP LLC UNITS

 

Section 2.1.           Exchange of NBP LLC Units.

 

(a)           Beginning
with the first Quarter following the date that is one hundred eighty (180) days
after the date of this Agreement, and subject to adjustment as provided in this
Agreement, each Member shall be entitled on any Quarterly Exchange Date to
surrender  all or a portion of the
NBP LLC Units held by it in exchange for either (at the option of National Beef):
(i) the delivery by National Beef of a number of shares of Class A
Common Stock equal to the number of NBP LLC Units surrendered (with such 1 to 1
exchange ratio subject to adjustment pursuant to Section 2.3 below); (ii) cash
in an amount equal to the Fair Market Value of the Class A Common Stock a
Member would receive pursuant to (i) above; or (iii) a combination of
Class A Common Stock and cash (any such exchange, an “Exchange”);
provided that, any such Exchange must be for a minimum of the lesser of (I) 100
NBP LLC Units; or (II) all of the NBP LLC Units held by such Member.

 

(b)           On
the Quarterly Exchange Date (and in accordance with the terms of this
Agreement): (i) the relevant NBP LLC Units shall be surrendered for
Exchange; (ii) all rights of the transferring Member as holder of such NBP
LLC Units shall cease; (iii) such Member shall be treated for all purposes
as having become the record holder of the issued Class A Common Stock, if
any; (iv) the Member’s right to receive cash, if any, shall vest with the
Member; and (v) the relevant shares of the Member’s Class B Common
Stock shall be surrendered to National Beef.

 

Section 2.2.           Exchange Procedures.

 

(a)           A
Member may exercise the right to Exchange NBP LLC Units set forth in Section 2.1(a) above
by providing to National Beef a written notice of Exchange, substantially 

 

2

 

in
the form of Exhibit A hereto (the “Exchange Notice”), at
least ten (10) days prior to the Quarterly Exchange Date for the
applicable Quarter or within such shorter period of time as may be agreed by
National Beef and the exchanging Member. 
The Exchange Notice shall be duly executed by such Member and delivered
in accordance with Section 3.2 of this Agreement.  At
least three (3) Business Days prior to the Quarterly Exchange Date,
National Beef shall give written notice (the “Option Notice”) to the
exchanging Member of its intended settlement method; provided that, if National
Beef does not timely deliver an Option Notice, National Beef shall be deemed to
have elected to pay the consideration entirely in Class A Common
Stock.  The exchanging Member may retract
its Exchange Notice by giving written notice (the “Retraction Notice”)
to National Beef within two (2) Business Days after delivery of the Option
Notice (or, if no Option Notice is delivered, one (1) Business Day prior
to the Exchange Date).  The timely
delivery of a Retraction Notice shall terminate all of the exchanging Member’s
and National Beef’s rights and obligations under this Agreement arising from
the Exchange Notice and the NBP LLC Units subject to such retracted Exchange
shall remain beneficially owned by such Member and subject to the terms and
conditions of this Agreement.

 

(b)           Each
Member beneficially owning the NBP LLC Units that are subject to Exchange
pursuant to Section 2.1(a) above shall execute and deliver on or
before the Quarterly Exchange Date a written assignment and acceptance
agreement with respect to such NBP LLC Units, in a form reasonably acceptable
to National Beef.

 

(c)           In addition to the NBP LLC Units
exchanged pursuant to this Agreement, each exchanging Member shall surrender to
National Beef, for no additional consideration, a number of shares of National
Beef ‘s class B common stock (the “Class B Common Stock”) equal to
the number of NBP LLC Units transferred by the Member on such Quarterly
Exchange Date, all subject to adjustment consistent with Section 2.3; provided
that, if an Exchange occurs after the termination of the Stockholders’
Agreement of even date herewith between National Beef and the Members, then an
exchanging Member shall surrender one (1) share of Class B Common
Stock (for no additional consideration) for every ten (10) NBP LLC Units
(subject to adjustment consistent with Section 2.3 of this Agreement)
transferred by the Member on such Quarterly Exchange Date; and provided
further that, if such Exchange is in connection with an Internal Revenue
Code Section 351 transaction, then this subsection (c) shall not
apply.  To effect such surrender, the
exchanging Member shall execute and
deliver on or before the Quarterly Exchange Date a written stock power in a form reasonably acceptable
to National Beef surrendering such Class B Common Stock.

 

(d)           As
promptly as practicable following the surrender for Exchange of NBP LLC Units,
National Beef shall deliver or cause to be delivered, as applicable: (i) to
the exchanging Member, or to the office of the Transfer Agent, the number of
shares of Class A Common Stock issuable upon such Exchange, issued in the
name of the exchanging Member; and (ii) to the exchanging Member, the cash
due pursuant to this Agreement.

 

(e)           Each
certificate of Class A Common Stock issued pursuant to this Agreement
shall be imprinted with a legend in substantially the following form:

 

3

 

“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.”

 

(f)            The parties hereto acknowledge and
agree that National Beef’s determination hereunder of the settlement method
(i.e., stock, cash or a combination thereof) for the Exchange shall be made by
the Audit Committee of National Beef (or another committee of National Beef consisting
solely of independent directors).

 

Section 2.3.           Splits, Distributions and
Reclassifications.   The exchange ratio set
forth in Section 2.1(a) shall be adjusted accordingly if there is: (1) any
subdivision (by split, distribution, reclassification, recapitalization or
otherwise) or combination (by reverse split, reclassification, recapitalization
or otherwise) of the NBP LLC Units that is not accompanied by an identical
subdivision or combination of the Class A Common Stock; or (2) any
subdivision (by split, distribution, dividend, reclassification,
recapitalization or otherwise) or combination (by reverse split,
reclassification, recapitalization or otherwise) of the Class A Common
Stock that is not accompanied by an identical subdivision or combination of the
NBP LLC Units.

 

Section 2.4.           Class A Common Stock to be
Issued.   National Beef shall use commercially
reasonable efforts to list the Class A Common Stock required to be
delivered upon Exchange prior to such delivery upon each national securities
exchange or inter-dealer quotation system upon which the outstanding Class A
Common Stock may be listed or traded at the time of such delivery. Nothing
contained herein shall be construed to preclude National Beef from satisfying
its obligations in respect of the Exchange of the NBP LLC Units by delivery of Class A
Common Stock which is held in the treasury of National Beef.

 

Section 2.5.           Tax Matters.  The delivery of Class A
Common Stock upon Exchange of NBP LLC Units shall be made without charge to the
exchanging Member for any stamp or other similar tax in respect of such
issuance.  The
parties shall report an Exchange consummated pursuant to this Agreement as a
taxable sale of NBP LLC Units by the exchanging Member to National Beef and no
party shall take a contrary position on any tax return.  At the time of an Exchange, the consideration
paid for the exchanged NBP LLC Units shall be allocated among the assets of NBP
LLC (and any subsidiary of NBP LLC that is a flow-thru or disregarded entity
for U.S. federal income tax purposes) in accordance with Sections 755 and 743(b) of
the Code and the Treasury Regulations promulgated thereunder, as reasonably
determined by the manager of NBP LLC.

 

Section 2.6.           Consideration for Exchange. 
The parties hereto acknowledge and agree that the consideration paid by
National Beef to the Members pursuant to the Tax Receivable Agreement by and
among National Beef and the Members  shall serve as
a portion of the consideration for the Exchanges contemplated hereunder.

 

Section 2.7.           Member Representations.  Each Member issued Class A Common Stock pursuant
to this Agreement hereby severally represents and warrants that, as of each
Quarterly Exchange Date upon which a Member is issued Class A Common
Stock, that: (a) it is acquiring the Class A Common Stock issued in
accordance with this Agreement for its own account with the present intention
of holding such stock for purposes of investment, and that it has no 

 

4

 

intention of selling such
stock in a public distribution in violation of any federal or state securities
laws; (b) it is a sophisticated party for purposes of applicable federal
and state securities laws and regulations; (c) it believes that it has
such knowledge and experience in financial and business matters that such
Member is capable of evaluating the merits and risks of an investment in
National Beef; (d) it is able to bear the economic risks of an investment
in the Class A Common Stock and could afford a complete loss of such
investment; (e) the execution, delivery and performance of this Agreement
by such Member does not and will not conflict with, violate or cause a breach
of any agreement, contract or instrument to which such Member is subject; and (f) the
NBP LLC Units surrendered in connection with such Exchange are owned by the
Exchanging Member, free and clear from all liens and encumbrances.

 

ARTICLE III 

GENERAL PROVISIONS

 

Section 3.1.           Amendment. 
The provisions of this Agreement may be amended by the affirmative vote
or written consent of each of the parties hereto.

 

Section 3.2.           Addresses and Notices.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
recognized overnight delivery service, by courier service, by fax, by
electronic mail (delivery receipt requested) or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be as
specified in a notice given in accordance with this Section 3.2):

 

	
  (a)

  	
   

  	
  If to National Beef, to:

  	
   

  	
  National Beef, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  12200 Ambassador Drive, 5th Floor

  
	
   

  	
   

  	
   

  	
   

  	
  Kansas City, MO 64163

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
   

  	
   

  	
  Fax: (816) 713-8889

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Sidley Austin LLP

  
	
   

  	
   

  	
   

  	
   

  	
  One South Dearborn Street

  
	
   

  	
   

  	
   

  	
   

  	
  Chicago, IL 60603

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: John Sabl and Paul Choi

  
	
   

  	
   

  	
   

  	
   

  	
  Fax: (312) 853-7036

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  If to USPB, to:

  	
   

  	
  U.S. Premium Beef, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  P.O. Box 20103

  
	
   

  	
   

  	
   

  	
   

  	
  Kansas City, MO 64195

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: Steven D. Hunt

  
	
   

  	
   

  	
   

  	
   

  	
  Fax: (816) 713-8810

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Stoel Rives LLP

  
	
   

  	
   

  	
   

  	
   

  	
  33 South Sixth Street, Suite 4200

  
	
   

  	
   

  	
   

  	
   

  	
  Minneapolis, MN 55402

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: Mark J. Hanson

  
	
   

  	
   

  	
   

  	
   

  	
  Fax: (612) 373-8881

  

 

5

 

	
  (c)

  	
   

  	
  If to NBPCo, to:

  	
   

  	
  NBPCo Holdings, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  891 Two Rivers Drive

  
	
   

  	
   

  	
   

  	
   

  	
  Dakota Dunes, SD 57049

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: Rich Jochum

  
	
   

  	
   

  	
   

  	
   

  	
  Fax: (605) 217-8001

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Koley Jessen P.C., LLO

  
	
   

  	
   

  	
   

  	
   

  	
  1125 S 103rd Street,
  Suite 800

  
	
   

  	
   

  	
   

  	
   

  	
  Omaha, NE 68124

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: Michael M. Hupp and

  
	
   

  	
   

  	
   

  	
   

  	
  Matthew Maser

  
	
   

  	
   

  	
   

  	
   

  	
  Fax: (402) 390-9005

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  If to the Klein Entities, to:

  	
   

  	
  TKK Investments, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  TMKCo, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  10217 Hwy 92

  
	
   

  	
   

  	
   

  	
   

  	
  Kearney, MO 64060

  
	
   

  	
   

  	
   

  	
   

  	
  Attention: Timothy M. Klein

  
	
   

  	
   

  	
   

  	
   

  	
  Fax: (816) 713-8852

  

 

Section 3.3.           Further Action. 
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.

 

Section 3.4.           Binding Effect. 
This Agreement shall be binding upon and inure to the benefit of all of
the parties and their successors, executors, administrators, heirs, legal
representatives and assigns. Other than as expressly provided herein, nothing
in this Agreement will be construed to give any person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement.

 

Section 3.5.           Severability. 
If any term or other provision of this Agreement is held to be invalid,
illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions is not affected in any manner materially adverse
to any party. Upon a determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the transactions contemplated hereby be consummated as originally contemplated
to the fullest extent possible.

 

Section 3.6.           Integration. 
This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.

 

6

 

Section 3.7.           Waiver. 
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach of any other covenant, duty, agreement or condition.

 

Section 3.8.           Counterparts. 
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement. Copies of executed counterparts transmitted by telecopy
or other electronic transmission service shall be considered original executed
counterparts for purposes of this Section 3.8.

 

Section 3.9.           Applicable Law. 
This Agreement shall be governed by, and construed in accordance with,
the law of the State of Delaware.

 

[Signature Page Follows]

 

7

 

IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and delivered, all as of the date first set forth
above.

 

	
   

  	
  NATIONAL BEEF, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S. PREMIUM BEEF, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NBPCO HOLDINGS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TKK INVESTMENTS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TMKCo, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

8

 

EXHIBIT A

 

FORM OF

NOTICE OF EXCHANGE

 

National Beef, Inc.

12200 Ambassador Drive, 5th Floor

Kansas City, MO  64163

Attention:  General Counsel

Fax:  (816) 713-8889

 

Reference is hereby made to the Exchange Agreement,
dated as of                                 ,
2009 (the “Exchange Agreement”), among National Beef, Inc., U.S.
Premium Beef, LLC, NBPCo Holdings, LLC, and TKK Investments, LLC, and TMKCo,
LLC, as amended from time to time.  Capitalized terms used but not defined
herein shall have the meanings given to them in the Exchange Agreement.

 

(the “Exchanging
Member”) desires to Exchange the number of NBP LLC Units set forth below.

 

Number of NBP LLC Units to be Exchanged:

 

The Exchanging Member hereby: (1) affirms and gives the
representations set forth in Section 2.7 of the Exchange Agreement; (2) gives
notice of its desire to Exchange such NBP LLC Units for [Class A Common
Stock] as set forth in the Exchange Agreement, (3) irrevocably constitutes
and appoints any officer of National Beef as its attorney, with full power of
substitution, to Exchange said NBP LLC Units on the books of NBP LLC for [Class A
Common Stock on the books of National Beef], with full power of substitution in
the premises.

 

IN WITNESS WHEREOF the undersigned, by authority duly
given, has caused this Notice of Exchange to be executed and delivered by the
undersigned.

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

1

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