Exhibit 10.5


 


MANAGEMENT SERVICES
AGREEMENT


 


THIS MANAGEMENT SERVICES
AGREEMENT (this “Agreement”) is made and entered into as of
                        ,
2009 (the “Effective Date”), between NATIONAL BEEF PACKING COMPANY, LLC,
a Delaware limited liability company (“NBP LLC”), and NATIONAL BEEF,
INC., a Delaware corporation (“NBI “).


 


RECITALS


 


A.            As contemplated by the terms of the Amended and Restated
Limited Liability Company Agreement of NBP LLC dated as of
                        ,
2009 (the “LLC Agreement”), the members of NBP LLC have appointed NBI as
sole manager (the “Manager”) of NBP LLC and approved this Management
Services Agreement.


 


B.            To facilitate the operation of the business of NBP LLC,
NBP LLC and NBI desire for NBI to provide certain management services to NBP
LLC supplemental to NBI’s role under the LLC Agreement and memorialize certain
responsibilities of NBI in managing NBP LLC on the terms and subject to the
conditions specified in this Agreement.


 


C.            To facilitate NBI’s provision of management services, NBP
LLC and NBI desire for NBP LLC to provide certain administrative services,
facilities and other resources to NBI on the terms and subject to the
conditions specified in this Agreement.


 


AGREEMENT


 


In consideration of the
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
NBP LLC and NBI agree as follows:


 


1.                                       Definitions.


 


The following terms shall
have the indicated meaning:


 


“Affiliate” means
with respect to a Person, any other Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, such Person.  As used in
this definition, the word “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise.


 


“Aggregate Employee
Costs” means, with respect to any month, the aggregate amount of
Attributable Employee Costs.


 


“Agreement” is
defined in the introductory paragraph.


 


“Attributable Employee
Costs” means, with respect to each Service Employee, the monthly Employee
Costs attributed to such Service Employee.


 


“Board” is defined
in Section 2.1.


 

















 


“Effective Date”
is defined in the introductory paragraph.


 


“Employee Costs”
means the direct out-of-pocket costs or reasonable allocated costs of NBI (i) for
gross wages, salaries, bonuses, incentive compensation, equity compensation and
payroll taxes of the Service Employees, plus (ii) for
workers’ compensation insurance incurred by NBI with respect to the Service
Employees, plus (iii) for employee benefit
plans attributable to any Service Employees, including pension, savings,
medical, dental, vision, disability and life insurance, plus
(iv) for other benefits directly attributable to the Service Employees,
including fringe benefits, or other similar incentive programs, executive
programs, severance pay, employee assistance programs, cafeteria plan benefits,
dependent care and health care flexible spending accounts, sick leave, legal
assistance, and educational assistance, plus (v) related
to the employee benefit plans or programs, including incremental costs of
charges or premiums, employee participation, actuarial reports, accounting, or
legal fees.


 


“Health and Welfare
Plans” is defined in Section 4.3(d).


 


“Law” or “Laws”
means all applicable federal, state, tribal and local laws (statutory or
common), rules, ordinances, regulations, grants, concessions, franchises,
licenses, orders, directives, judgments, decrees, restrictions and other
similar requirements, whether legislative, municipal, administrative or
judicial in nature.


 


“LLC Agreement” is
defined in the Recitals.


 


“Loss” is defined
in Section 5.1.


 


“Management Services”
means all services performed by Service Employees, whether the provision of
such services by NBI is required or contemplated by the LLC Agreement or is
supplemental to the services to be provided by NBI to NBP LLC under the LLC
Agreement, relating to the management and operation of the business of NBP LLC,
including executive oversight, sales, marketing, advertisement production,
recruiting, training, distribution, finance, accounting support and reporting,
legal support and other services and activities as are customarily performed by
persons holding the positions set forth on Exhibit B hereto.


 


“NBI” is defined
in the introductory paragraph.


 


“NBI Indemnified
Parties” is defined in Section 5.2.


 


“NBP LLC” is
defined in the introductory paragraph.


 


“NBP LLC Indemnified
Parties” is defined in Section 5.3.


 


“Person” means an
individual, corporation, joint venture, partnership, limited partnership,
limited liability company, trust, estate, business trust, association,
governmental authority or any other entity.


 


“Reimbursable Costs”
shall mean all of the reasonable out-of-pocket costs and expenses directly
incurred by NBI in connection with the providing of the Management Services,
including the following:


 


2

















 


(a)           all supplies and equipment purchased
on behalf of NBP LLC or its customers in order to provide the Management
Services;


 


(b)           reasonable meals, travel, hotel
accommodations, and entertainment expenses incurred in connection with the
performance of the Management Services;


 


(c)           legal, accounting, health and safety,
environmental, and other third party advisors and consultants incurred in
connection with the performance of the Management Services;


 


(d)           directors’ and officers’ insurance
policies, employee practices liability insurance policies and any
indemnification of directors or officers of NBI; and


 


(e)           bank accounts maintained by NBI on
behalf of NBP LLC.


 


“Service Employees”
means those employees of NBI who devote all or a portion of their working time
to the performance of the Management Services. 
Service Employees include and will include any former Service Employee
to whom NBI has ongoing obligations.


 


“Services Fee” is
defined in Section 3.1.


 


“Supporting
Documentation” is defined in Section 2.6(a).


 


2.                                       Performance of Management
Services.


 


2.1           Initial Transfer
of Employees.  Upon the Effective
Date, NBP LLC shall transfer to NBI all employees identified in Exhibit A
and related agreements of such employees, and NBI shall adopt, honor, and
continue all obligations and commitments related to such employees,
specifically including, without limitation, salary and benefit agreements.


 


2.2           Management
Services.  From and after the
Effective Date, NBI agrees to provide the Management Services on the terms and
conditions set forth in this Agreement and in compliance with the policies and
programs established by the Board of Directors of NBI (the “Board”).


 


2.3           Subcontractors.  NBI may subcontract with third parties,
including Affiliates of NBI, to assist in the performance of the Management
Services; provided, however, that NBI shall not be
relieved of any obligation under this Agreement or the LLC Agreement as a
result of any subcontract entered into pursuant to this Section 2.3; and
further provided, that NBI, at all times, will manage, supervise and monitor
such parties.


 


2.4           Compliance with
Laws.  NBI shall perform the
Management Services in compliance with all applicable Laws.


 


3





















 


2.5           Supporting
Documentation.


 


(a)           NBI shall keep reasonable supporting
documentation of all the Services Fees and Reimbursable Costs (the “Supporting
Documentation”).  NBI shall maintain
and retain the Supporting Documentation in a manner consistent with NBI’s
record retention policies.


 


(b)           NBP LLC, upon reasonable notice to
NBI, shall have the right to inspect and audit, during normal business hours
and using reasonable commercial efforts not to disrupt the normal business operations
of NBI, the Supporting Documentation to the extent reasonably necessary to
verify any information regarding the Services Fees or Reimbursable Costs with
respect to any year within the twelve month period following the end of such
year.  The costs of any such inspection
or audit shall be borne by NBP LLC.


 


2.6           Employee Matters.  All Service Employees shall be employees of
NBI, and not NBP LLC provided that NBI may direct a Service Employee to report
to officers or employees of NBP LLC as the parties may from time to time
agree.  NBI shall recruit, select,
employ, promote, terminate, supervise, direct, train and assign the duties of
all Service Employees, and may change or replace any such Service Employee at
any time in each case in NBI’s sole discretion. 
To the extent practicable, NBI shall notify NBP LLC before terminating
any Service Employee, but all such termination decisions shall be made by NBI
in its sole discretion.


 


2.7           No Partnership.  Nothing contained in this Agreement or in the
relationship between NBI and NBP LLC constitutes, or may be construed to be or
to create, a partnership or joint venture between NBI and NBP LLC.


 


2.8           LLC Manager.  Nothing contained in this Agreement shall
alter NBI’s rights and obligations as Manager of NBP LLC, as set forth in the
LLC Agreement and applicable law.


 


3.                                       Management Services Fee and
Payment.


 


3.1           Services Fee.  During the term of this Agreement, NBP LLC
shall pay NBI a monthly fee (the “Services Fee”) for performance of the
Management Services equal to the Aggregate Employee Costs for such month.


 


3.2           Reimbursable
Costs.  During the term of this
Agreement, NBP LLC shall pay NBI the amount of the Reimbursable Costs on a
monthly basis.


 


3.3           Billing and
Payments.  On the Effective Date, NBP
LLC shall pay NBI the estimated Services Fee for the remaining portion of the
then current month and for the following month, as set forth on Exhibit B.  Each month after the Effective Date, NBI will
invoice NBP LLC for the estimated Services Fee for the following month and the
Reimbursable Costs for the preceding month. 
The invoice shall also include any adjustment in the amount owed by NBP
LLC based on any difference between the prior estimated Services Fees and
actual Services Fees that have been accounted for in the preceding month.  NBP LLC shall pay NBI the Services Fee and
Reimbursable Costs set forth in the invoice in immediately available funds
within [10] days following receipt of such invoice.


 


4














 


4.                                       Performance of Administrative
Services.


 


4.1           Administrative Services.  From and after the Effective Date, NBP LLC
agrees to provide reasonable office facilities, equipment, supplies and
administrative and other support services to NBI as are reasonably required by
NBI to perform the Management Services and at a level no less than NBP LLC has
historically provided such services to support the work of its executive
officers.


 


4.2           Payroll Accounting and Financial
Reporting and Other Support Services. 
From and after the Effective Date, NBP LLC agrees to provide payroll,
accounting and financial reporting and other support services for NBI


 


(a)           Payroll.  NBP LLC shall perform all payroll functions
for payment of NBP LLC and NBI employees. 
NBP LLC shall be designated as the common paymaster for NBP LLC and NBI
and shall be responsible for payroll tax withholding, remission and payroll tax
reporting of compensation for NBP LLC and NBI employees.  NBP LLC and NBI shall take such action as may
be reasonably necessary or appropriate in order to minimize liabilities related
to payroll taxes in connection with the transfer of Service Employees from NBP
LLC to NBI


 


(b)           Accounting and Financial Reporting.  NBP LLC shall provide accounting and
financial reporting services as reasonably required by NBI, operations.


 


(c)           Other Support Services.  NBP LLC shall provide other reasonable
supporting services for NBI including: 
management, sales, marketing, advertisement production, distribution,
information technology, human resources, and legal supporting services on the
same or similar terms as such services are provided to NBP LLC.


 


4.3           Employee Benefits.  From and after the Effective Date, NBP LLC
agrees that NBI employees shall be eligible to actively participate in the NBP
LLC group employee benefit plans and, to the extent applicable, NBI shall be a
participating employer in any NBP LLC group employee benefit plan.  NBI agrees that employees of NBP LLC and its
subsidiaries may be eligible to receive awards under the NBI Equity Incentive
Plan.


 


(a)           Service Recognition.  NBP LLC shall cause the NBP LLC group
employee benefit plans with respect to which service is a relevant factor to
credit Service Employees who are employed by NBP LLC immediately prior to a
transfer of employment to NBI with service before the effective date of the
transfer, except to the extent duplication of benefits would result.


 


(b)           NBI Equity Incentive Plan.  NBP LLC shall provide administrative
supporting services with respect to operation, administration and required
reporting for the NBI Equity Incentive Plan. 
Section 3.3(c) of the LLC Agreement shall govern the terms and
conditions relating to authorization and issuance of additional units of NBP
LLC in connection with equity compensation awards under the NBI Equity
Incentive Plan to employees and other service providers of NBI and NBP
LLC.  The Board or a committee of the
Board shall approve equity awards made under the plan.


 


5

















 


(c)           401(k) Plan.  NBP LLC and NBI shall take all actions
required or appropriate to provide that NBI shall adopt the National Beef
Packing Company, LLC 401(k) Profit Sharing Plan, or its successor, so that
NBI will become a participating employer or alternatively NBP LLC will adopt a
plan with identical benefits to provide for participation by eligible NBI
employees.


 


(d)           Health and Welfare Plans.  NBP LLC and NBI shall take all actions
required or appropriate to provide that NBI shall adopt, as a participating
employer, the health and welfare benefit plans and other fringe benefits
sponsored by NBP LLC for its employees (the “Health and Welfare Plans”)
to permit eligible NBI employees and their covered dependents to participate in
the Health and Welfare Plans.  NBP LLC
shall take appropriate action with respect to Service Employees transferred to
NBI to (i) waive any pre-existing condition limitation on benefits for
Service Employees enrolled in a NBP LLC Health and Welfare Plan, (ii) take
into account and credit any out-of-pocket annual maximums and deductibles for
the calendar year during which service is provided to both NBP LLC and NBI , (iii) take
into account prior claim experience under the NBP LLC Health and Welfare Plans
with respect to aggregate lifetime maximum benefits available to the Service
Employee, and (iv) credit any health care reimbursement account
accumulated for the calendar year in which service is provided to both NBP LLC
and NBI  NBP LLC shall be responsible for
administering compliance with the health care continuation requirements of
COBRA, the certificate of creditable coverage requirements of HIPAA, the
corresponding provisions of the NBP LLC Health and Welfare plans with respect
to NBP LLC and NBI employees and their covered dependents.  NBP LLC and NBI agree that the transfer of
Service Employees to NBI shall not constitute a COBRA qualifying event.


 


(e)           Vacation.  NBI shall assume and honor all unused
vacation and other time-off earned or accrued by Service Employees for service
with NBP LLC prior to the Effective Date (which shall be reimbursable as
Employee Costs).


 


(f)            Other.  NBI and NBP LLC shall take all actions
required or appropriate to ensure that the employee benefits provided to NBI
employees are in the aggregate no less than the employee benefits available to
continuing employees of NBP LLC.


 


5.                                       Limitation on Liability;
Indemnification.


 


5.1           Exculpation of NBI.  Neither NBI nor its officers, directors,
agents and employees shall be liable to NBP LLC for any claims, actions,
losses, damages, liabilities, causes of action, fines, costs and expenses
(including reasonable investigation costs and reasonable attorneys’, experts’
and consultants’ fees) (“Losses”) suffered or incurred by NBP LLC,
directly or indirectly, in connection with the performance of the Management
Services, except to the extent such Losses are caused by willful misconduct or
gross negligence of NBI.  No party hereto
shall be liable to the other party for, and the term Losses shall not include,
any lost profits, lost sales, business interruption, decline in value, lost
business opportunities, or consequential, incidental, punitive or exemplary
damages; provided, however, that this waiver
shall not limit a party’s right to indemnification for liabilities incurred by
such party to a third party (other than the members of NBP LLC and their
Affiliates) claiming such items as damages.


 


6

















 


5.2           NBP LLC Indemnification of NBI.  NBP LLC shall indemnify, defend and hold
harmless NBI and its Affiliates, directors, officers, members, managers,
agents, and employees (the “NBI Indemnified Parties”) from and against
all Losses arising from the claims of any third party to the extent such claims
arise directly or indirectly out of NBI’s performance of the Management
Services, including any Losses arising out of or otherwise related to NBI’s
employment of the Service Employees and the furnishing of such Service
Employees to NBP LLC; provided, however,
NBP LLC shall not be responsible for indemnifying or defending any of the NBI
Indemnified Parties or otherwise be liable to any of the NBI Indemnified
Parties with respect to any Losses arising from NBI’s willful misconduct or
gross negligence.  This right to
indemnification is non-exclusive, and does not limit any right an NBI
Indemnified Party may have under the NBP LLC Limited Liability Company
Agreement.


 


5.3           NBI Indemnification of NBP LLC.  NBI shall indemnify, defend and hold harmless
NBP LLC, its members and employees and directors, officers and agents of the
members (the “NBP LLC Indemnified Parties”) from and against all Losses
resulting directly or indirectly from any act or omission by NBI that
constitutes willful misconduct or gross negligence; provided,
however, NBI shall not be responsible for indemnifying or defending
any of the NBP LLC Indemnified Parties or otherwise be liable to any of the NBP
LLC Indemnified Parties with respect to any Losses for which NBP LLC is
obligated to indemnify NBI as provided in Section 5.2.


 


5.4           Special Indemnification Provisions.  The indemnification obligations of NBP LLC
under Section 5.2 and NBI under Section 5.3 shall in each case be
conditioned upon (a) prompt notice from the other party hereto after such
Person learns of any claim or basis therefor which is covered by such indemnity
(except to the extent that the failure to provide prompt notice does not
prejudice the indemnifying party), (b) such party’s not taking any steps
which would bar NBP LLC or NBI, as the case may be, from obtaining recovery under
applicable insurance policies or would prejudice the defense of the claim in
question and (c) such party’s taking of all reasonably necessary steps
which if not taken would result in NBP LLC or NBI, as the case may be, being
barred from obtaining recovery under applicable insurance policies or would
prejudice the defense of the claim in question.


 


6.                                       Term; Termination; Default.


 


6.1           Term.  This Agreement shall become effective on the
Effective Date and shall continue until terminated as provided in Section 6.2.


 


6.2           Termination.  This Agreement shall terminate, with no
further action necessary by either NBP LLC or NBI, on the date that NBI ceases
to be the Manager of NBP LLC pursuant to the terms of the LLC Agreement.


 


6.3           Surrender.  Upon the termination of this Agreement, NBP
LLC and NBI shall deliver any property belonging to the other party hereto.


 


6.4           Payment of Expenses After
Termination; Accrued Obligations.


 


(a)           Neither party hereto shall be
relieved from any obligations or liabilities accruing prior to the effective
date of termination, including in the case of NBP LLC, its 


 


7





















 


obligation to make payment to NBI of all sums due NBI
under this Agreement in respect of the performance of the Management Services
prior to the date of termination.  After
termination of this Agreement, NBI shall provide NBP LLC a final invoice
showing any prorated amount of the Services Fee to be returned to NBI and the
outstanding Reimbursable Costs due to NBI. 
The balance owed to NBI or NBP LLC, as applicable, shall be paid by the
other party within [15] days following receipt of the final invoice.


 


(b)           Upon termination of this Agreement,
all employment agreements then in effect, including any employment agreements
with former Service Employees pursuant to which NBI has ongoing obligations,
shall be assigned by NBI to NBP LLC, effective as of termination, and NBP LLC
shall assume all obligations under such agreements.


 


6.5           Survival.  The provisions set forth in Sections 5, 6.3,
6.4 and 7.1 shall survive the termination of this Agreement.


 


7.                                       Miscellaneous.


 


7.1           Governing Law.  This Agreement shall be governed by and
construed in all respects in accordance with the laws of the State of Kansas
without giving effect to principles of conflicts of law.


 


7.2           Notices.  All notices, demands or other communications
to be given under or by reason of this Agreement shall be in writing and shall
be deemed to have been received when delivered personally, or when transmitted
by overnight delivery service, addressed as follows:


 


	
  If to NBI:

  	
   

  	
  12200 Ambassador Drive, 5th Floor

  
	
   

  	
   

  	
  Kansas City, MO 64163

  
	
   

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
  Fax: (816) 713-8889

  
	
   

  	
   

  	
   

  
	
  If to NBP LLC:

  	
   

  	
  12200 Ambassador Drive, 5th Floor

  
	
   

  	
   

  	
  Kansas City, MO 64163

  
	
   

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
  Fax: (816) 713-8889

  



 


Either party hereto may
change its address for notices, demands and other communications under this
Agreement by giving notice of such change to the other party hereto in
accordance with this Section 7.2.


 


7.3           Benefit of Parties; Assignment.  This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors, legal representatives and permitted assigns.  This Agreement may not be assigned by either
NBI or NBP LLC except with the prior written consent of the other party.  With the exception of the rights of the NBI
Indemnified Parties under Section 5.2 and the rights of the NBP LLC
Indemnified Parties under Section 4.3, nothing herein contained shall
confer or is intended to confer on any third party or entity that is not a
party to this Agreement any rights under this Agreement.


 


8





















 


7.4           Amendment.  This Agreement may not be amended, modified,
altered or supplemented except by means of a written instrument executed on
behalf of each of NBI and NBP LLC and approved as provided in Section 6.6
of the LLC Agreement.


 


7.5           Waiver.  No failure on the part of either party hereto
to exercise any power, right, privilege or remedy under this Agreement, and no
delay on the part of either party hereto in exercising any power, right,
privilege or remedy under this Agreement, shall operate as a waiver thereof;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy.


 


7.6           Severability.  If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect.  Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.


 


7.7           Entire Agreement.  This Agreement sets forth the entire
understanding of parries hereto and supersedes all other agreements and
understandings between the parties hereto relating to the subject matter
hereof.


 


7.8           Counterparts and Facsimiles.  This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other. 
The parties hereto may execute the signature pages hereof and
exchange such signature pages by facsimile transmission.


 


7.9           Interpretation of Agreement.


 


(a)           As used in this Agreement, the words “include”
and “including,” and variations thereof, shall not be deemed to be terms of
limitation, and shall be deemed to be followed by the words “without
limitation.”


 


(b)           Unless otherwise specified,
references in this Agreement to “Sections” and “Exhibits” are intended to refer
to Sections of and Exhibits to this Agreement.


 


(c)           The Section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.


 


(d)           Each party hereto and its counsel
cooperated in drafting and preparation of this Agreement and the documents
referred to in this Agreement.  Any rule of
law or any legal decision that would require interpretation of any ambiguities
in this Agreement against the party that drafted it is of no application and is
hereby expressly waived.


 


[Signature page to
follow]


 


9





















 


IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed on the day and year
first above written.


 


	
   

  	
  NBP LLC:

  
	
   

  	
   

  
	
   

  	
  NATIONAL BEEF PACKING COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  NBI:

  
	
   

  	
   

  
	
   

  	
  NATIONAL BEEF, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


[Signature page of
Management Services Agreement]


 





















 


Exhibit A


 


Transferred Employees


 


	
  Name

  	
   

  	
  Job Title(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


A-1

















 


Exhibit B


 


Initial Services Fee
Payment


 


	
  Estimated
  Services Fee for
                                
  2009 (prorated for          days):

  	
   

  	
  $

  	
   

  
	
  Estimated
  Services Fee for
                                
  2009:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL:

  	
   

  	
  $

  	
   

  



 


B-1