Document:

Exhibit
10.5

 

July
9, 2009

 

Travelport
International, L.L.C.

Travelport
Global Distribution System B.V.

300
Galleria Parkway, N.W.

Atlanta,
GA 30339

 

Re:                                                                             Fourth Amendment
to Subscriber Services Agreement, dated as of July 23, 2007  (“Agreement”) between Travelport International,
L.L.C., (f/k/a Galileo International, L.L.C., hereinafter “Travelport”), Travelport
Global Distribution System B.V. (f/k/a Galileo Nederland B.V., hereinafter “TGDS”
and, together with Travelport, collectively, “Galileo”) and Orbitz Worldwide,
LLC (“Subscriber”)

 

Ladies and Gentlemen:

 

This
letter constitutes a Fourth Amendment (“Amendment”) to the Agreement referenced
above.  Capitalized terms used in this Amendment
and not otherwise defined shall be used as defined in the Agreement.  The Parties have previously entered into the
following amendments to the Agreement: (i) First Amendment, dated as of February
9, 2008; (ii) Second Amendment, dated as of April 4, 2008; and (iii) Third
Amendment, dated as of January 23, 2009.

 

Effective
as of July 8, 2009 (“Amendment Effective Date”), Galileo and Subscriber hereby
agree as follows:

 

1.                                      The Custom
Terms and Conditions Attachment (Galileo Services) — North America to the
Agreement is amended as set forth in Exhibit A.

 

2.                                      The Custom
Terms and Conditions Attachment (Worldspan Services) to the Agreement is amended
as set forth in Exhibit B.

 

3.                                      Notwithstanding
the provisions of Section 20 (Material Revenue Change) of the Agreement, the
parties agree that the Vendor identified in Paragraph 1 of Exhibit B (“Impacted Vendor”) will be deemed to be a Vendor to have
commenced participation in the Content Continuity Program subsequent to the
Contract Effective Date (for purposes of the Impacted Vendor’s Segments on
Worldspan) and as such,  the Impacted
Vendor’s change in its Participation Fee with respect to the Impacted Vendor’s
Segments generated on Worldspan effective on July 8, 2009 will not impact or
otherwise contribute to the calculation of a Fee Change pursuant to Section 20
of the Agreement.  For the avoidance of
doubt, the Participation Fees for the Impacted Vendor’s Segments on Worldspan
will be excluded from the calculation of Participation Fees in effect as of December
31, 2007 and from the calculation of a Fee Change on or after July 1, 2008.

 

4.                                      General.  This Amendment shall be binding upon and
inure to the benefit of and be enforceable by the Parties hereto or their
successors in interest, except as expressly 

 

 

provided
in the Agreement.  Each Party to this
Amendment agrees that, other than as expressly set out in this Amendment,
nothing in this Amendment is intended to alter the rights, duties and
obligations of the Parties under the Agreement, which shall remain in full
force and effect as amended hereby.  In
the event of a conflict between the terms and conditions of this Amendment and
the terms and conditions of the Agreement, the terms and conditions of this
Amendment shall govern.  This Amendment
may be executed by the Parties in separate counterparts and each counterpart
shall be deemed to be an original, but all such counterparts together shall
constitute one and the same instrument.

 

The
Parties have caused this Amendment to be executed by the signatures of their
respective authorized representatives.

 

	
  Orbitz Worldwide, LLC

  	
  Travelport International, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature:
  

  	
  /s/
  Stephen Praven

  	
   

  	
  Signature:
  

  	
  /s/
  Travis Christ

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:
  

  	
  Stephen
  Praven

  	
   

  	
  Name:
  

  	
  Travis
  Christ

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:
  

  	
  VP,
  Business Development

  	
   

  	
  Title:
  

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:
  

  	
  8/3/09

  	
   

  	
  Date:
  

  	
  July
  9, 2009

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Travelport
  Global Distribution System B.V.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature:
  

  	
  /s/
  Marco van Ieperen

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:
  

  	
  Marco
  van Ieperen

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:
  

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date: 

  	
  13 July 2009

  

 

2Exhibit 10.1

 

TAX RECEIVABLE AGREEMENT

 

among

 

NATIONAL BEEF, INC.,

U.S. PREMIUM BEEF, LLC,

TKK INVESTMENTS, LLC,

TMKCo, LLC,

and

NBPCo Holdings, LLC

 

DATED AS OF            ,
2009

 

1

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I
  DEFINITIONS

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Definitions

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE II
  DETERMINATION OF CERTAIN REALIZED TAX BENEFIT

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Basis Adjustment

  	
  13

  
	
  Section 2.2

  	
  Basis Schedule

  	
  14

  
	
  Section 2.3

  	
  Tax Benefit
  Schedule

  	
  14

  
	
  Section 2.4

  	
  Procedures,
  Amendments

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE III TAX
  BENEFIT PAYMENTS

  	
  16

  
	
   

  	
   

  
	
  Section 3.1

  	
  Payments

  	
  16

  
	
  Section 3.2

  	
  Lump Sum Payment

  	
  16

  
	
  Section 3.3

  	
  No Duplicative
  Payments

  	
  17

  
	
  Section 3.4

  	
  Pro Rata
  Payments

  	
  17

  
	
  Section 3.5

  	
  Coordination

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV
  TERMINATION

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Termination and
  Breach of Agreement

  	
  18

  
	
  Section 4.2

  	
  Termination
  Notice

  	
  19

  
	
  Section 4.3

  	
  Payment upon
  Termination

  	
  20

  
	
  Section 4.4

  	
  Unilateral
  Termination

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE V
  SUBORDINATION AND LATE PAYMENTS

  	
  21

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Subordination

  	
  21

  
	
  Section 5.2

  	
  Late Payments by
  National Beef

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI NO
  DISPUTES; CONSISTENCY; COOPERATION

  	
  21

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Election to be
  Filed

  	
  21

  
	
  Section 6.2

  	
  Participation in
  National Beef’s and NBP LLC’s Tax Matters

  	
  21

  
	
  Section 6.3

  	
  Consistency

  	
  22

  
	
  Section 6.4

  	
  Cooperation

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII
  MISCELLANEOUS

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Notices

  	
  22

  
	
  Section 7.2

  	
  Counterparts

  	
  23

  

 

2

 

	
  Section 7.3

  	
  Entire
  Agreement; No Third Party Beneficiaries

  	
  24

  
	
  Section 7.4

  	
  Governing Law

  	
  24

  
	
  Section 7.5

  	
  Severability

  	
  24

  
	
  Section 7.6

  	
  Successors;
  Assignment; Amendments; Waivers

  	
  24

  
	
  Section 7.7

  	
  Titles and
  Subtitles

  	
  25

  
	
  Section 7.8

  	
  Resolution of
  Disputes

  	
  25

  
	
  Section 7.9

  	
  Reconciliation

  	
  26

  
	
  Section 7.10

  	
  Withholding

  	
  26

  
	
  Section 7.11

  	
  Admission of
  National Beef into a Consolidated Group; Transfers of Corporate Assets

  	
  26

  
	
  Section 7.12

  	
  Confidentiality

  	
  27

  
	
  Section 7.13

  	
  Change in Law

  	
  28

  

 

3

 

TAX RECEIVABLE AGREEMENT

 

This
TAX RECEIVABLE AGREEMENT (this “Agreement”), dated as of                       ,
2009, is hereby entered into by and among National Beef, Inc., a Delaware
corporation (“National Beef”), each of the undersigned parties hereto
identified as Non-Corporate Members (as defined below), and each of the
successors and assigns thereto.

 

RECITALS

 

WHEREAS,
the Non-Corporate Members (as defined below) hold member interests (the “Units”)
in National Beef Packing Company, LLC, a Delaware limited liability company (“NBP
LLC”), which is treated as a partnership for United States federal income
tax purposes;

 

WHEREAS,
National Beef, NBP LLC, and the Non-Corporate Members (as defined below)
entered into a certain Unit Purchase Agreement dated as of                       ,
2009 (the “Purchase Agreement”) and a certain Exchange Agreement as of                       ,
2009 (the (“2009 Exchange Agreement”) and collectively the Purchase
Agreement and the 2009 Exchange Agreement, the “Exchange Agreement”);

 

WHEREAS,
pursuant to the Exchange Agreement and the LLC Agreement (as defined below),
certain Units held by U.S. Premium Beef, LLC, a Delaware limited liability
company (“USPB”), NBPCo Holdings, LLC, a South Dakota limited liability
company (“NBPCo”), TKK Investments, LLC, a Missouri limited liability
company (“TKK”), and TMKCo LLC, a Missouri limited liability company (“TMKCo”)
(so long as owning a Unit, or if no longer owning a Unit owed a payment under
this Agreement with respect to a Unit exchanged or sold to National Beef, a “Non-Corporate
Member”, and collectively, the “Non-Corporate Members”) will be sold
to National Beef in exchange for cash and the right to payments under this
Agreement (the “Original Sale”) and additional Units held by the Non-Corporate
Members may be exchanged over time for cash, Class A common stock (the “Class
A Shares”) of National Beef, or a combination of cash and Class A Shares,
and the right to payments under this Agreement (an “Exchange”);

 

WHEREAS,
contemporaneous with the Original Sale, National Beef will become the manager
of NBP LLC, and will hold, directly and/or indirectly, Units;

 

WHEREAS,
NBP LLC and each of its direct and indirect subsidiaries which are treated as a
partnership for United States federal income tax purposes (together with NBP
LLC and any direct or indirect subsidiary (owned through a chain of
pass-through entities) of NBP LLC that is treated as a disregarded entity for
United States federal income tax purposes, the “NBP LLC Group”)
currently have and will have in effect an election under section 754 of the
United States Internal Revenue Code of 1986, as amended (the “Code”),
and comparable elections under, foreign, state and local tax law for the
Taxable Year in which the Original Sale occurs and for each Taxable Year in
which an Exchange occurs, which election is intended to result in an adjustment
to the tax basis of the assets owned by the NBP LLC Group (solely with respect
to 

 

4

 

National Beef) at the
time (such time, the “Original Sale Date” or “Exchange Date”, as
applicable) of the Original Sale and an Exchange;

 

WHEREAS,
the income, gain, loss, expense and other Tax (as defined below) items of
National Beef may be affected by (i) the Basis Adjustments (as defined below)
and (ii) the Imputed Interest (as defined below);

 

WHEREAS,
the parties to this Agreement desire to make certain arrangements with respect
to the effect of the Basis Adjustments and Imputed Interest on the liability
for Taxes of National Beef;

 

NOW,
THEREFORE, in consideration of the foregoing and the respective covenants and
agreements set forth herein, and intending to be legally bound hereby, the
parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section
1.1 Definitions. As used in this Agreement, the terms set forth in this Article
I shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined).

 

“Affiliate”
means, with respect to any Person, any other Person that directly or
indirectly, through one or more intermediaries, Controls, is Controlled by, or
is under common Control with, such first Person.

 

“Agreed
Rate” means LIBOR plus 100 basis points.

 

“Agreement”
is defined in the Recitals of this Agreement.

 

“Amended
Schedule” is defined in Section 2.4(b) of this Agreement.

 

“Basis
Adjustment” means the adjustment to the tax basis of a Reference Asset under
sections 732, 734(b) and 1012 of the Code (in situations where, as a result of
one or more Exchanges, NBP LLC becomes an entity that is disregarded as
separate from its owner for tax purposes) or under sections 734(b), 743(b) and
754 of the Code (in situations where, following the Original Sale or an
Exchange, as applicable, NBP LLC remains in existence as an entity for United
States federal income tax purposes) and, in each case, comparable sections of
foreign, state and local income and franchise tax laws, as a result of the
Original Sale, any Exchange and payments under this Agreement. For the
avoidance of doubt, the amount of any Basis Adjustment resulting from the
Original Sale or an Exchange of one or more Units shall be determined without
regard to any Pre-Original Sale Transfer or Pre-Exchange Transfer, as
applicable, of such Units and as if any such Pre-Original Sale Transfer or
Pre-Exchange Transfer, as applicable, had not occurred.  For purposes of clarity, Basis Adjustment
shall not 

 

5

 

include any adjustment to
the tax basis of a Reference Asset attributable to a transaction which occurs
prior to the date of this Agreement.

 

A “Beneficial
Owner” of a security is a Person who directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares:
(i) voting power, which includes the power to vote, or to direct the voting of,
such security and/or (ii) investment power, which includes the power to dispose
of, or to direct the disposition of, such security. The terms “Beneficially Own”
and “Beneficial Ownership” shall have correlative meanings.

 

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

 

“Business
Day” means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States of America or the
State of Missouri shall not be regarded as a Business Day.

 

“Change
in Tax Law” is defined in Section 7.13(a) of this Agreement.

 

“Change
of Control” means the occurrence of any of the following events:

 

(i)            any
Person or any group of Persons acting together which would constitute a “group”
for purposes of Section 13(d) of the Securities and Exchange Act of 1934, or
any successor provisions thereto, excluding a group of Persons which includes
all Non-Corporate Members or their Affiliates, becomes the Beneficial Owner,
directly or indirectly, of securities of National Beef representing more than
50% of the combined voting power of National Beef’s then outstanding voting
securities;

 

(ii)           the
following individuals cease for any reason to constitute a majority of the
number of directors of National Beef then serving: individuals who, on the IPO
Date, constitute the Board and any new director whose appointment or election
by the Board or nomination for election by National Beef’s shareholders was
approved or recommended by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on the IPO Date or whose
appointment, election or nomination for election was previously so approved or
recommended by the directors referred to in this clause (ii);

 

(iii)         
there is consummated a merger or consolidation of National Beef with any other
corporation or other entity, and, immediately after the consummation of such
merger or consolidation, either (x) the Board immediately prior to the merger
or consolidation does not constitute at least a majority of the board of
directors of the company surviving the merger or, if the surviving company is a
Subsidiary, the ultimate parent thereof, or (y) the voting securities of
National Beef immediately prior to such merger or consolidation do not continue
to represent or are not converted into more than 50% of the combined voting
power of the then outstanding voting securities of the Person resulting from
such merger or consolidation or, if the surviving company is a Subsidiary, the
ultimate parent thereof; or

 

6

 

(iv)          the
shareholders of National Beef approve a plan of complete liquidation or
dissolution of National Beef or there is consummated an agreement or series of
related agreements for the sale or other disposition, directly or indirectly,
by National Beef of all or substantially all of National Beef’s assets, other
than such sale or other disposition by National Beef of all or substantially
all of National Beef’s assets to an entity, at least 50% of the combined voting
power of the voting securities of which are owned by shareholders of National
Beef in substantially the same proportions as their ownership of National Beef
immediately prior to such sale.

 

Notwithstanding the
foregoing, except with respect to clause (ii) and clause (iii)(x) above, a “Change
of Control” shall not be deemed to have occurred by virtue of the 351
transaction contemplated by Section 16 of the LLC Agreement or the consummation
of any transaction or series of integrated transactions immediately following
which the record holders of the shares of National Beef immediately prior to
such transaction or series of transactions continue to have substantially the
same proportionate ownership in, and own substantially all of the shares of, an
entity which owns all or substantially all of the assets of National Beef
immediately following such transaction or series of transactions.

 

“Change
of Control Termination Date” means the date of a Change of Control Termination
Notice for purposes of determining the Change of Control Termination Payment.

 

“Change
of Control Termination Effective Date” is defined in Section 4.2 of this
Agreement.

 

“Change
of Control Termination Notice” is defined in Section 4.2 of this Agreement.

 

“Change
of Control Termination Payment” is defined in Section 4.3(b) of this Agreement.

 

“Change
of Control Termination Schedule” is defined in Section 4.2 of this Agreement.

 

“Class
A Shares” is defined in the Recitals of this Agreement.

 

“Code”
is defined in the Recitals of this Agreement.

 

“Control”
means the possession, direct or indirect, 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.

 

“Covered
Taxable Year” means any Taxable Year of National Beef ending before or
including the due date of the Lump Sum Present Value payment or Unilateral
Termination Date, as applicable.

 

“Cumulative
Net Realized Tax Benefit” for a Taxable Year means with respect to each
Non-Corporate Member the cumulative amount of Realized Tax Benefits for all
Taxable Years of National Beef, up to and including such Taxable Year, net of
the cumulative amount of

 

7

 

Realized Tax Detriments
for the same period. The Realized Tax Benefit and Realized Tax Detriment for
each Taxable Year shall be determined based on the most recent Tax Benefit
Schedule or Amended Schedule, if any, in existence at the time of such
determination, or, if applicable, the Early Termination Schedule, Change of
Control Termination Schedule, or amendments thereto.

 

“Default
Rate” means LIBOR plus 500 basis points.

 

“Determination”
shall have the meaning ascribed to such term in section 1313(a) of the Code or
similar provision of foreign, state and local tax law, as applicable, or any
other event (including the execution of IRS Form 870-AD) that finally and
conclusively establishes the amount of any liability for Tax.

 

“Dispute”
has the meaning set forth in Section 7.8(a) of this Agreement.

 

“Early
Termination Date” means the date of an Early Termination Notice for purposes of
determining the Early Termination Payment.

 

“Early
Termination Effective Date” is defined in Section 4.2 of this Agreement.

 

“Early
Termination Notice” is defined in Section 4.2 of this Agreement.

 

“Early
Termination Schedule” is defined in Section 4.2 of this Agreement.

 

“Early
Termination Payment” is defined in Section 4.3(b) of this Agreement.

 

“Early
Termination Rate” means the lesser of (i) 6.5% per annum, compounded annually,
and (ii) LIBOR plus 100 basis points.

 

“Exchange”
is defined in the Recitals of this Agreement.

 

“Exchange
Agreement” is defined in the Recitals of this Agreement.

 

“Exchange
Basis Schedule” is defined in Section 2.2 of this Agreement.

 

“Exchange
Date” means the date of any Exchange.

 

“Expert”
is defined in Section 7.9 of this Agreement.

 

“Hypothetical
Tax Liability” means, with respect to any Taxable Year, the liability for Taxes
of (i) National Beef and (ii) without duplication, NBP LLC, but only with
respect to Taxes imposed on NBP LLC and allocable to National Beef or to the
other members of the consolidated group of which National Beef is the parent,
in each case using the same methods, elections, conventions and similar
practices used on the relevant National Beef Return, but (x) using the
Non-Stepped Up Tax Basis as reflected on the Original Sale Basis Schedule or an
Exchange Basis Schedule, as applicable, including amendments thereto for the
Taxable Year and

 

8

 

(y) excluding any
deduction attributable to Imputed Interest for the Taxable Year. For the
avoidance of doubt, Hypothetical Tax Liability shall be determined without
taking into account the carryover or carryback of any Tax item (or portions
thereof) that is attributable to the Basis Adjustment or Imputed Interest.

 

“Imputed
Interest” shall mean any interest imputed under section 1272, 1274 or 483 or
other provision of the Code and any similar provision of foreign, state, and
local tax law, as applicable, with respect to National Beef’s payment
obligations under this Agreement.

 

“Independent
Director” means any member of the Board who is not affiliated with any of the
Non-Corporate Members, the principal stockholders of National Beef and is
neither a current officer nor a former officer of National Beef or any of its
Subsidiaries.

 

“Interest
Amount” is defined in Section 3.1(b) of this Agreement.

 

“IPO”
means the initial public offering of Class A Shares by National Beef.

 

“IPO
Date” means the closing date of the IPO.

 

“IRS”
means the United States Internal Revenue Service.

 

“LIBOR”
means during any period, an interest rate per annum equal to the one-year LIBOR
reported, on the date two days prior to the first day of such period, on the
Telerate Page 3750 (or if such screen shall cease to be publicly available, as
reported on Reuters Screen page “LIBOR01” or by any other publicly available
source of such market rate) for London interbank offered rates for United
States dollar deposits for such period.

 

“LLC
Agreement” means, with respect to NBP LLC, the Amended and Restated Limited
Liability Company Agreement of NBP LLC.

 

“Lump
Sum Election Notice” is defined in Section 3.2(a) of this Agreement.

 

“Lump
Sum Present Value” shall have the meaning set forth in Section 3.2(a) hereof.

 

“Market
Value” shall mean the closing price of the Class A Shares on the applicable
Original Sale Date or Exchange Date, or deemed Exchange Date, on the national
securities exchange or interdealer quotation system on which such Class A
Shares are then traded or listed, as reported by the Wall Street Journal;
provided, that if the closing price is not reported by the Wall Street Journal
for the applicable Exchange Date, then the “Market Value” shall mean the
closing price of the Class A Shares on the Business Day immediately preceding
such Exchange Date, or deemed Exchange Date, on the national securities
exchange or interdealer quotation system on which such Class A Shares are then
traded or listed, as reported by the Wall Street Journal; provided, further,
that if the Class A Shares are not then listed on a national securities
exchange or interdealer quotation system, “Market Value” shall mean the cash
consideration paid for Class A Shares, or the fair market value of the other
property delivered for Class A Shares, as determined by the Board in good
faith.

 

9

 

“Material
Objection Notice” has the meaning set forth in Section 4.2 of this Agreement.

 

“Members”
means the Non-Corporate Members, and shall not include National Beef and NBP
LLC and successors and assigns thereto.

 

“National
Beef” is defined in the Recitals of this Agreement.

 

“National
Beef Return” means the United States federal, and/or foreign, and/or state
and/or local Tax Return, as applicable, of National Beef filed with respect to
Taxes of any Taxable Year.

 

“NBP
LLC Group” is defined in the Recitals of this Agreement.

 

“Net
Tax Benefit” is defined in Section 3.1(b) of this Agreement.

 

“Non-Corporate
Member” is defined in the Recitals of this Agreement.

 

“Non-Corporate
Members” is defined in the Recitals of this Agreement, and includes each other
Person who from time to time executes a Joinder Agreement in the form attached
hereto as Exhibit A, other than National Beef and NBP LLC and the successors
and assigns thereto.

 

“Non-Stepped
Up Tax Basis” means, with respect to any Reference Asset at any time, the tax
basis that such asset would have had at such time if no Basis Adjustments had
been made.

 

“Objection
Notice” has the meaning set forth in Section 2.4(a) of this Agreement.

 

“Original
Sale” is defined in the Recitals of this Agreement.

 

“Original
Sale Basis Schedule” is defined in Section 2.2 of this Agreement.

 

“Original
Sale Date” is defined in the Recitals of this Agreement.

 

“Payment
Date” means any date on which a payment is required to be made pursuant to this
Agreement.

 

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

 

“Pre-Exchange
Transfer” means any transfer (including upon the death of a Member) or
distribution in respect of one or more Units (i) that occurs prior to an
Exchange of such Units, and (ii) to which section 743(b) or 734(b) of the Code
applies.

 

10

 

“Pre-Original
Sale Transfer” means any transfer (including upon the death of a Member) or
distribution in respect of one or more Units (i) that occurs prior to Units
sold in the Original Sale, and (ii) to which section 743(b) or 734(b) of the
Code applies.

 

“Purchase
Agreement” is defined in the Recitals of this Agreement.

 

“Qualified
Tax Advisor” means
                                      ,
or any other law or accounting firm that is nationally recognized as being
expert in Tax matters and that is reasonably acceptable to National Beef.

 

“Realized
Tax Benefit” means, for a Taxable Year, the excess, if any, of (A) the
Hypothetical Tax Liability over (B) the actual liability for Taxes of (i) National
Beef and (ii) without duplication, NBP LLC, but only with respect to Taxes
imposed on NBP LLC that are allocable to National Beef or to the other members
of the consolidated group of which National Beef is the parent for such Taxable
Year.  If all or a portion of the actual
liability for such Taxes for the Taxable Year arises as a result of an audit by
a Taxing Authority of any Taxable Year, such liability shall not be included in
determining the Realized Tax Benefit unless and until there has been a
Determination.

 

“Realized
Tax Detriment” means, for a Taxable Year, the excess, if any, of (A) the actual
liability for Taxes of (i) National Beef and (ii) without duplication, NBP LLC,
but only with respect to Taxes imposed on NBP LLC that are allocable to
National Beef or to the other members of the consolidated group of which
National Beef is the parent for such Taxable Year, over (B) the Hypothetical
Tax Liability for such Taxable Year. If all or a portion of the actual
liability for such Taxes for the Taxable Year arises as a result of an audit by
a Taxing Authority of any Taxable Year, such liability shall not be included in
determining the Realized Tax Detriment unless and until there has been a
Determination.

 

“Reconciliation
Dispute” has the meaning set forth in Section 7.9 of this Agreement.

 

“Reconciliation
Procedures” has the meaning set forth in Section 2.4(a) of this Agreement.

 

“Reference
Asset” means an asset that is held by any member of the NBP LLC Group, at the
time of the Original Sale or an Exchange, as applicable.  A Reference Asset also includes any asset
that is “substituted basis property” under section 7701(a)(42) of the Code with
respect to a Reference Asset.

 

“Schedule”
means any of the following: (i) an Original Sale Basis Schedule, (ii) an
Exchange Basis Schedule, (iii) a Tax Benefit Schedule, (iv) the Early
Termination Schedule, or (v) the Change of Control Termination Schedule.

 

“Senior
Obligations” is defined in Section 5.1 of this Agreement.

 

“Subsidiaries”
means, with respect to any Person, as of any date of determination, any other
Person as to which such Person owns, directly or indirectly, or otherwise controls
more

 

11

 

than 50% of the voting
power or other similar interests or the sole general partner interest or
managing member or similar interest of such Person.

 

“Tax
Benefit Payment” is defined in Section 3.1(b) of this Agreement.

 

“Tax
Benefit Schedule” is defined in Section 2.3 of this Agreement.

 

“Tax
Return” means any return, declaration, report or similar statement required to
be filed with respect to Taxes (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return
and declaration of estimated Tax.

 

“Taxable
Year” means a taxable year of National Beef as defined in Section 441(b) of the
Code or comparable section of foreign, state or local tax law, as applicable
(and, therefore, for the avoidance of doubt, may include a period of less than
12 months for which a Tax Return is made), ending on or after the IPO Date or
on or after the Original Sale Date, whichever occurs earlier.

 

“Taxes”
means any and all United States federal, foreign, state and local taxes,
assessments or similar charges that are based on or measured with respect to
net income or profits, franchise taxes of such governmental entities, and any
interest related to such Tax.

 

“Taxing
Authority” shall mean any domestic, federal, national, foreign, state, county
or municipal or other local government, any subdivision, agency, commission or
authority thereof, or any quasi-governmental body exercising any taxing
authority or any other authority exercising Tax regulatory authority.

 

“Treasury
Regulations” means the final, temporary and proposed regulations under the Code
promulgated from time to time (including corresponding provisions and
succeeding provisions) as in effect for the relevant taxable period.

 

“Unilateral
Termination Date” is defined in Section 4.4 of this Agreement.

 

“Unilateral
Termination Notice” is defined in Section 4.4 of this Agreement.

 

“Units”
is defined in the Recitals of this Agreement.

 

“Valuation
Assumptions” shall mean, as of an Early Termination Date, Change of Control
Termination Date, or date applicable for calculation of the Lump Sum Present
Value payment under Section 3.2 or payment upon Change in Tax Law under Section
7.13, the assumptions that:

 

(1)           in
each Taxable Year ending on or after such Early Termination Date, National Beef
will have taxable income sufficient to fully utilize the deductions arising
from the Basis Adjustments and the Imputed Interest during such Taxable Year or
future Taxable Years (including, for the avoidance of doubt, Basis Adjustments
and Imputed Interest that would result from future Tax Benefit Payments that
would be paid in 

 

12

 

accordance
with the Valuation Assumptions) in which such deductions would become
available;

 

(2)           the
United States federal income tax rates, and any foreign, state and local income
tax rates that will be in effect for each such Taxable Year will be those
specified for each such Taxable Year by the Code and other law as in effect on
such date;

 

(3)           all
taxable income of National Beef will be subject to the maximum applicable Tax
rates throughout the relevant period;

 

(4)           any
loss carryovers generated by any Basis Adjustment or Imputed Interest and
available as of the date of an applicable Schedule will be utilized by National
Beef in the taxable year of the Early Termination Date or otherwise on a pro
rata basis from the date of the such schedule through the scheduled expiration
date of such loss carryovers;

 

(5)           any
non-amortizable assets will be disposed of on the fifteenth anniversary of the
applicable Basis Adjustment; provided, that in the event of a Change of
Control, such non-amortizable assets shall be deemed disposed of at the time of
sale of the relevant asset (if earlier than such fifteenth anniversary); and

 

(6)           if,
as of such date, there are Units that were not sold in the Original Sale and
have not been Exchanged, then each such Unit shall be deemed to be Exchanged
for the Market Value of the Class A Shares and the amount of cash that would be
transferred if the Exchange occurred on the Early Termination Date.

 

“2009
Exchange Agreement” is defined in the Recitals of this Agreement.

 

ARTICLE II

 

DETERMINATION OF CERTAIN REALIZED TAX BENEFITS

 

Section
2.1 Basis Adjustment.  The parties
hereto acknowledge that National Beef’s share of the basis in the Reference
Assets shall be increased by the excess, if any, of (A) the sum of (x) the
Market Value of cash, Class A Shares or other consideration transferred to
Non-Corporate Members pursuant to the Original Sale or an Exchange as payments
for Units, (y) the amount of payments made pursuant to this Agreement with
respect to such Original Sale or Exchange, and (z) the amount of liabilities
allocated to the Units acquired pursuant to the Original Sale or Exchange, over
(B) National Beef’s proportionate share of the basis of the Reference Assets
immediately after the Original Sale or Exchange attributable to the Units
exchanged, determined as if each member of the NBP LLC Group remains in
existence as an entity for tax purposes and no member of the NBP LLC Group made
the election provided by section 754 of the Code.  For the avoidance of doubt, payments made
under this Agreement shall not be treated as resulting in a Basis Adjustment to
the extent such payments are treated as Imputed Interest.

 

13

 

Section
2.2 Basis Schedule.  Within
forty-five (45) calendar days after the filing of the United States federal
income tax return of National Beef for each Taxable Year in which the Original
Sale or any Exchange has been effected, National Beef shall deliver to each
Non-Corporate Member a schedule (the “Original Sale Basis Schedule” or “Exchange
Basis Schedule”, as applicable) that shows, in reasonable detail necessary
to perform the calculations required by this Agreement, including with respect
to each such Non-Corporate Member, for purposes of Taxes, (i) the Non-Stepped
Up Tax Basis of the Reference Assets as of each Original Sale Date or Exchange
Date, (ii) the Basis Adjustment with respect to the Reference Assets as a
result of the Original Sale and any Exchanges effected in such Taxable Year,
calculated in the aggregate, (iii) the period (or periods) over which the Reference
Assets are amortizable and/or depreciable and (iv) the period (or periods) over
which each Basis Adjustment is amortizable and/or depreciable.  The Original Basis Schedule and an Exchange
Basis Schedule will become final as provided in Section 2.4(a) and may be
amended as provided in Section 2.4(b) (subject to the procedures set forth in Section
2.4(b)).

 

Section
2.3 Tax Benefit Schedule. (a) Tax Benefit Schedule. Within
forty-five (45) calendar days after the filing of the United States federal income
tax return of National Beef for any Taxable Year in which there is a Realized
Tax Benefit or Realized Tax Detriment, National Beef shall provide to each
Non-Corporate Member a schedule showing, in reasonable detail and, at the
request of a Non-Corporate Member, with respect to the Original Sale and each
separate Exchange, the calculation of the Realized Tax Benefit or Realized Tax
Detriment for such Taxable Year (a “Tax Benefit Schedule”). The Tax
Benefit Schedule will become final as provided in Section 2.4(a) and may be
amended as provided in Section 2.4(b) (subject to the procedures set forth in Section
2.4(b)).

 

(b) Applicable
Principles.  Subject to Sections 3.4
and 3.5 of this Agreement, the Realized Tax Benefit or Realized Tax Detriment
for each Taxable Year is intended to measure the decrease or increase in the
actual liability for Taxes of National Beef for such Taxable Year attributable
to the Basis Adjustments and Imputed Interest, determined using a “with and
without” methodology.  For the avoidance
of doubt, the actual liability for Taxes will take into account the deduction
of the portion of the Tax Benefit Payment that must be accounted for as
interest under the Code based upon the characterization of Tax Benefit Payments
as additional consideration payable by National Beef for the Units acquired in
the Original Sale or an Exchange. Carryovers or carrybacks of any Tax item
attributable to the Basis Adjustment and Imputed Interest shall be considered
to be subject to the rules of the Code and the Treasury Regulations or the
appropriate provisions of foreign, state and local income and franchise tax
law, as applicable, governing the use, limitation and expiration of carryovers
or carrybacks of the relevant type.  If a
carryover or carryback of any Tax item includes a portion that is attributable
to the Basis Adjustment or Imputed Interest and another portion that is not,
such portions shall be considered to be used in accordance with the “with and
without” methodology.  The parties agree
that (i) all Tax Benefit Payments (other than amounts accounted for as interest
under the Code) will (A) be treated as subsequent upward purchase price
adjustments that give rise to further Basis Adjustments to Reference Assets for
National Beef and (B) have the effect of creating additional Basis Adjustments
to Reference Assets for National Beef in the year of payment, and (ii) as a
result, such additional Basis Adjustments will be incorporated into the current
year calculation and into future year calculations, as appropriate.

 

14

 

Section
2.4 Procedures, Amendments. (a) Procedure.  Every time National Beef delivers to a
Non-Corporate Member an applicable Schedule under this Agreement, including any
Amended Schedule delivered pursuant to Section 2.4(b), but excluding any Early
Termination Schedule, Change of Control Termination Schedule, amended Early
Termination Schedule, or amended Change of Control Termination Schedule,
National Beef shall also (x) deliver to the Non-Corporate Member schedules and
work papers, as determined by National Beef or requested by the Non-Corporate
Member, providing reasonable detail regarding the preparation of the Schedule
and (y) allow the Non-Corporate Member reasonable access at no cost to the
appropriate representatives at National Beef, as determined by National Beef or
requested by the Non-Corporate Member, in connection with a review of such
Schedule.  Without limiting the
application of the preceding sentence, each time National Beef delivers to a
Non-Corporate Member a Tax Benefit Schedule, in addition to the Tax Benefit
Schedule duly completed, National Beef shall deliver to the Non-Corporate
Member the National Beef Return, the reasonably detailed calculation by
National Beef of the Hypothetical Tax Liability, the reasonably detailed
calculation by National Beef of the actual Tax liability, as well as any other
work papers as determined by National Beef or requested by the Non-Corporate
Member.  An applicable Schedule or
amendment thereto shall become final and binding on National Beef and a
Non-Corporate Member thirty (30) calendar days from the first date on which a
Non-Corporate Member received the applicable Schedule or amendment thereto
unless the Non-Corporate Member (i) within 30 calendar days after receiving an
applicable Schedule or amendment thereto, provides National Beef with notice of
a material objection to such Schedule (“Objection Notice”) made in good
faith or (ii) provides a written waiver of such right of any Objection Notice
within the period described in clause (i) above, in which case such Schedule or
amendment thereto becomes binding on the date the waiver is received by
National Beef.  If the parties, for any
reason, are unable to successfully resolve the issues raised in the Objection
Notice within 30 calendar days after receipt by National Beef of an Objection
Notice, National Beef and the Non-Corporate Member shall employ the
reconciliation procedures as described in Section 7.9 of this Agreement (the “Reconciliation
Procedures”).

 

(b) Amended
Schedule.  The applicable Schedule
for any Taxable Year may be amended from time to time by National Beef (i) in
connection with a Determination affecting such Schedule, (ii) to correct
inaccuracies in the Schedule identified as a result of the receipt of
additional factual information relating to a Taxable Year after the date the
Schedule was provided to the Non-Corporate Member, (iii) to comply with the
Expert’s determination under the Reconciliation Procedures, (iv) to reflect a
change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable
Year attributable to a carryback or carryforward of a loss or other Tax item to
such Taxable Year, (v) to reflect a change in the Realized Tax Benefit or
Realized Tax Detriment for such Taxable Year attributable to an amended Tax
Return filed for such Taxable Year, or (vi) to adjust the Original Basis
Schedule or an Exchange Basis Schedule to take into account payments made
pursuant to this Agreement (any such Schedule, an “Amended Schedule”).

 

15

 

ARTICLE III

 

TAX BENEFIT PAYMENTS

 

Section 3.1 Payments.  (a) Payments.  Within five (5) calendar days after a
Tax Benefit Schedule delivered to a Non-Corporate Member becomes final in
accordance with Section 2.4(a), National Beef shall pay to the Non-Corporate
Member for such Taxable Year the Tax Benefit Payment determined pursuant to Section 3.1(b).  Each such Tax Benefit Payment shall be made
by wire transfer of immediately available funds to the bank account previously
designated by the Non-Corporate Member to National Beef or as otherwise agreed
by National Beef and the Non-Corporate Member. 
For the avoidance of doubt, no Tax Benefit Payment shall be made in
respect of estimated tax payments, including, without limitation, federal
estimated income tax payments.

 

(b)  A “Tax Benefit Payment” means with
respect to each Non-Corporate Member an amount, not less than zero, equal to
the sum of the Net Tax Benefit and the Interest Amount.  For the avoidance of doubt, for Tax purposes,
the Interest Amount shall not be treated as interest but instead shall be
treated as additional consideration for the acquisition of Units in Exchanges,
unless otherwise required by law. 
Subject to Sections 3.4 and 3.5, the “Net Tax Benefit” for a
Taxable Year shall be an amount equal to the excess, if any, of 85% of the
Cumulative Net Realized Tax Benefit for such Taxable Year over the total amount
of payments previously made under this Section 3.1 (excluding payments
attributable to Interest Amounts).  The “Interest
Amount” shall equal the interest on the Net Tax Benefit calculated at the
Agreed Rate from the due date (without extensions) for filing a National Beef
Return with respect to Taxes for such Taxable Year until the Payment Date.  For the avoidance of doubt, the Non-Corporate
Members shall have no obligation to make any payment to National Beef, or to
reimburse National Beef for amounts previously paid, pursuant to this
Agreement, except as provided in Section 7.9.

 

Section 3.2 Lump Sum Payment. (a) At
any time that (1) the present value of the remaining payments under Section 3.1
for each Covered Taxable Year beginning after the last Covered Taxable Year for
which a payment was made pursuant to Section 3.1, based upon the Valuation
Assumptions and using a discount rate of the Early Termination Rate, (the “Lump
Sum Present Value”) is equal to or less than $1 million (as computed
assuming that all Non-Corporate Members make an election under this Section 3.2),
and (2) the Non-Corporate Members are record owners of less than 10% of
the outstanding Units, a Non-Corporate Member may elect to require National
Beef to pay to the Non-Corporate Member its proportionate share of the Lump Sum
Present Value (in accordance with the next paragraph), by giving National Beef
a notice (the “Lump Sum Election Notice”) stating that such
Non-Corporate Member is electing its right to receive the Lump Sum Present
Value payment under this Section 3.2 and showing in reasonable detail its
calculation of the Lump Sum Present Value (as of the date of the Lump Sum
Election Notice) and its ownership in NBP LLC.

 

(b)  National Beef shall pay the portion of the
Lump Sum Present Value attributable to such electing Non-Corporate Member in
cash.  National Beef shall pay such
portion of the Lump Sum Present Value attributable to an electing Non-Corporate
Member within ten (10) business days of receiving the Lump Sum Election
Notice or within ten (10) business days of the resolution of a dispute
undertaken pursuant to Section 3.2(d) (or such other date as may be
agreed upon by such electing Non-Corporate Member and National Beef).  The Lump Sum Present Value shall be
calculated as of the date that such Lump Sum Election Notice is received

 

16

 

by National Beef.  A
Non-Corporate Member electing pursuant to Section 3.2(a) shall be
entitled to the portion of the Lump Sum Present Value payment as separately
computed for such Non-Corporate Member.

 

(c) If a Non-Corporate Member elects to receive
the Lump Sum Present Value payment, and such Lump Sum Present Value payment is
paid in full in accordance with the provisions of this Section 3.2, then
National Beef shall have no further obligations to make any further payments
under Section 3.1 in respect of any Covered Taxable Year included in the
present value calculation under which the Lump Sum Present Value payment was
made with respect to such Non-Corporate Member. 
Differences in actual events after the date of the present value calculation
from those used in the present value calculation, including, without
limitation, in the assumptions, amounts of taxable income or other facts used
in the present value calculation, shall not affect, or require any adjustment
or reimbursement of, the Lump Sum Present Value once such amount has been paid
in full.

 

(d)  National Beef shall, within five (5) calendar
days of a request by a Non-Corporate Member, prepare its estimate of the Lump
Sum Present Value as of the date of such request, together with reasonable
supporting detail showing the basis of its calculations.  In the event National Beef’s estimate of the
Lump Sum Present Value does not equal the Non-Corporate Member’s estimate set
forth in the Lump Sum Election Notice, procedures similar to those set forth in
Section 2.4(a) shall apply. 
Upon payment of the Non-Corporate Member’s share of the Lump Sum Present
Value payment by National Beef, National Beef shall not have any further
payment obligations under this Agreement with respect to such Non-Corporate
Member, other than for any (a) Tax Benefit Payment agreed to by National
Beef and the Non-Corporate Member as due and payable but unpaid as of the Lump
Sum Election Notice and (b) Tax Benefit Payment due for the Taxable Year
ending with or including the date of the Lump Sum Election Notice (except to
the extent that the amount described in clause (b) is included in the
Non-Corporate Member’s share of the Lump Sum Present Value payment). If an
Exchange occurs by such Non-Corporate Member after National Beef makes such
payment, National Beef shall have no obligations under this Agreement with
respect to such Exchange.

 

Section 3.3 No Duplicative Payments. It is
intended that the provisions of this Agreement will not result in duplicative
payment of any amount (including interest) required under this Agreement.  It is also intended that the provisions of
this Agreement provide that Tax Benefit Payments are paid to Non-Corporate
Members pursuant to this Agreement.  The
provisions of this Agreement shall be construed in the appropriate manner to
ensure such intentions are realized.

 

Section 3.4 Pro Rata Payments.  Notwithstanding anything in Section 3.1
to the contrary, and subject to Section 3.5 hereof, to the extent that the
aggregate tax benefit of National Beef’s deduction with respect to the Basis
Adjustments or Imputed Interest under this Agreement is limited in a particular
Taxable Year because National Beef does not have sufficient taxable income or
to the extent that National Beef lacks sufficient funds to satisfy its obligations
to make all Tax Benefit Payments due with respect to a particular Taxable Year,
the limitation on the tax benefit for National Beef, or the payments under this
Agreement that may be made, as the case may be, shall be taken into account or
made for each applicable Non-Corporate Member on a pro

 

17

 

rata basis for the Non-Corporate Members by comparing the amount of
such Non-Corporate Member’s share of the tax benefits or amounts payable (as
the case may be) with respect to the applicable Taxable Year to the aggregate
amount of the tax benefits or amounts payable to all Non-Corporate Members with
respect to the applicable Taxable Year.

 

Section 3.5 Coordination.  If for any reason National Beef does not
fully satisfy its obligations to make all payments due under this Agreement in
respect of a particular Taxable Year, then no payments shall be made under this
Agreement in respect of any Taxable Year until all payments in respect of prior
Taxable Years have been made in full, including any additional amounts due
under Section 5.2 of this Agreement.

 

ARTICLE IV

 

TERMINATION

 

Section 4.1 Termination and Breach of
Agreement. (a)  With the written approval of a majority of the
Independent Directors, National Beef may terminate this Agreement with respect
to all amounts payable to the Non-Corporate Members at any time by paying to
them the Early Termination Payment; provided, however, that this Agreement only
terminates under this Section 4.1(a) upon the receipt of the Early
Termination Payment by the Non-Corporate Members, and provided, further, that
National Beef may withdraw any notice to execute its termination rights under
this Section 4.1(a) prior to the time at which any Early Termination
Payment has been paid.  Upon payment of
the Early Termination Payment by National Beef, National Beef shall not have
any further payment obligations under this Agreement, other than for any (a) Tax
Benefit Payment agreed to by National Beef and the Non-Corporate Members as due
and payable but unpaid as of the Early Termination Notice and (b) Tax
Benefit Payment due for the Taxable Year ending with or including the date of
the Early Termination Notice (except to the extent that the amount described in
clause (b) is included in the Early Termination Payment). If an Exchange
occurs after National Beef makes such payment, National Beef shall have no
obligations under this Agreement with respect to such Exchange.

 

(b) Upon the occurrence of a Change of Control,
National Beef shall be obligated to terminate this Agreement effective as of
the Change of Control Termination Date by paying to the Non-Corporate Members
the Change of Control Termination Payment, substituting Change of Control
Termination Date for Early Termination Date each time Early Termination Date
appears in the definition of Valuation Assumptions and substituting Change of
Control Termination Schedule for Early Termination Schedule each time Early
Termination Schedule appears in the definition of Valuation Assumptions, and following
the procedures set forth in Sections 4.2 and 4.3, as applicable to a Change of
Control; provided, however, that this Agreement shall terminate under this Section 4.1(b) only
upon the receipt of the Change of Control Termination Payment by the Non-Corporate
Members.  Upon payment of the Change of
Control Termination Payment by National Beef, National Beef shall have no
further payment obligations under this Agreement, other than for any (a) Tax
Benefit Payment agreed to by National Beef and the Non-Corporate Members as due
and payable but unpaid as of the Change of Control Termination Notice and (b) Tax
Benefit Payment due for the Taxable Year ending with or including the date of
the Change of Control Termination Notice (except to the extent that

 

18

 

the amount described in clause (b) is included in the Change of
Control Termination Payment).  If an
Exchange occurs by a Non-Corporate Member after National Beef makes such
payment to the Non-Corporate Member, National Beef shall have no obligations
under this Agreement with respect to such Exchange.

 

(c) In the event that National Beef breaches any
of its material obligations under this Agreement, whether as a result of
failure to make any payment when due, failure to honor any other material
obligation required hereunder or by operation of law as a result of the
rejection of this Agreement in a case commenced under the Bankruptcy Code or
otherwise, then all obligations hereunder shall be accelerated and such
obligations shall be calculated as if an Early Termination Notice had been
delivered on the date of such breach and shall include, but not be limited to, (1) the
Early Termination Payment calculated as if an Early Termination Notice had been
delivered on the date of a breach, (2) any Tax Benefit Payment agreed to
by National Beef and the Non-Corporate Members as due and payable but unpaid as
of the date of a breach, and (3) any Tax Benefit Payment due for the
Taxable Year ending with or including the date of a breach.  Notwithstanding the foregoing, in the event
that National Beef breaches this Agreement, the Non-Corporate Members shall be
entitled to elect to receive the amounts set forth in clauses (1), (2) and
(3) above or to seek specific performance of the terms hereof.  The parties agree that the failure to make
any payment due pursuant to this Agreement within three months after the date
such payment is due shall be deemed to be a breach of a material obligation
under this Agreement for all purposes of this Agreement, and that it will not
be considered to be a breach of a material obligation under this Agreement to
make a payment due pursuant to this Agreement within three months after the
date such payment is due.

 

Section 4.2 Termination Notice. If
National Beef chooses to exercise its right of early termination under Section 4.1
above, or within 30 days of a Change of Control, National Beef shall deliver to
the Non-Corporate Members notice of such intention to exercise such right or of
such occurrence (“Early Termination Notice” or “Change of Control
Termination Notice”, as applicable) and a schedule (the “Early
Termination Schedule” or “Change of Control Termination Schedule”,
as applicable) specifying National Beef’s intention to exercise such right or
of such occurrence and showing in reasonable detail the calculation of the
Early Termination Payment or the Change of Control Termination Payment, as
applicable, for the Non-Corporate Members. 
National Beef shall, along with such notice and schedule, (x) deliver
to the Non-Corporate Members schedules and work papers, as determined by
National Beef or requested by a Non-Corporate Member, providing reasonable
detail regarding the preparation of the Schedule and (y) allow the
Non-Corporate Members reasonable access at no cost to the appropriate
representatives at National Beef, as determined by National Beef or requested
by a Non-Corporate Member, in connection with a review of such schedule.  The Early Termination Schedule or Change of
Control Termination Schedule, as applicable, shall become final and binding on
National Beef and a Non-Corporate Member 30 calendar days from the first date
on which the Non-Corporate Member received such schedule or amendment thereto
unless the Non-Corporate Member (i) within 30 calendar days after
receiving such schedule, provides National Beef with notice of a material
objection to such schedule made in good faith (“Material Objection Notice”)
or (ii) provides a written waiver of such right of a Material Objection
Notice within the period described in clause (i) above, in which case such
schedule becomes binding on the date the waiver is received by National Beef
(the “Early Termination Effective Date” or

 

19

 

“Change of Control Termination Effective Date”).  If the parties, for any reason, are unable to
successfully resolve the issues raised in such notice within 30 calendar days
after receipt by National Beef of the Material Objection Notice, National Beef
and the Non-Corporate Member shall employ the Reconciliation Procedures.

 

Section 4.3 Payment upon Termination. (a) Within
three (3) calendar days after the Early Termination Effective Date
National Beef shall pay to the Non-Corporate Members an amount equal to the
Early Termination Payment, which amount shall be allocated among the
Non-Corporate Members as if such amount was separately computed for each such
Non-Corporate Member.  Within three
calendar days after the Change of Control Termination Effective Date, National
Beef shall pay to the Non-Corporate Members an amount equal to the Change of
Control Termination Payment.  Such
payments shall be made by wire transfer of immediately available funds to a
bank account or accounts designated by the Non-Corporate Members or as
otherwise agreed by National Beef and the Non-Corporate Members.  A payment pursuant to this Section 4.3
shall be allocated among the Non-Corporate Members pro rata based upon such
Non-Corporate Member’s computed payment to the aggregate computed payment for
all Non-Corporate Members.

 

(b) “Early Termination Payment” shall
equal the present value, discounted at the Early Termination Rate as of the
Early Termination Effective Date, of all Tax Benefit Payments that would be
required to be paid by National Beef to the Non-Corporate Members beginning
from the Early Termination Date and assuming that the Valuation Assumptions are
applied.  “Change of Control
Termination Payment” shall equal the present value, discounted at the Early
Termination Rate as of the Change of Control Termination Effective Date, of all
Tax Benefit Payments that would be required to be paid by National Beef to the
Non-Corporate Members beginning as of the Change of Control Termination Date
and assuming that the Valuation Assumptions are applied, as amended by Section 4.1(b).  Each of the Early Termination Payment and the
Change of Control Termination Payment shall be computed with respect to each
Non-Corporate Member separately and such payments shall be the aggregate for
all of the Non-Corporate Members.

 

Section 4.4 Unilateral Termination.  At any time, by providing notice (the “Unilateral
Termination Notice”) to National Beef, a Non-Corporate Member may elect to
terminate this Agreement with respect to such Non-Corporate Member effective as
of the date designated by the Non-Corporate Member in such notice (the “Unilateral
Termination Date”).  Upon receipt of
the Unilateral Termination Notice, National Beef shall have no further payment
obligations under this Agreement with respect to such Non-Corporate Member,
other than for a (i) Tax Benefit Payment agreed to by National Beef
through a majority vote of its Independent Directors and the Non-Corporate
Member as due and payable but unpaid as of the Unilateral Termination Date and (ii) Tax
Benefit Payment due for the Covered Taxable Year ending with or including the
Unilateral Termination Date (except to the extent that the amount described in
clause (ii) is attributable to Units exchanged after the Unilateral
Termination Date).

 

20

 

ARTICLE V

 

SUBORDINATION AND LATE PAYMENTS

 

Section 5.1 Subordination. Notwithstanding
any other provision of this Agreement to the contrary, any payment required to
be made by National Beef to a Non-Corporate Member under this Agreement shall
rank subordinate and junior in right of payment to any principal, interest or
other amounts due and payable in respect of any obligations in respect of
indebtedness for borrowed money of National Beef and its Subsidiaries (“Senior
Obligations”) and shall rank pari passu with all current or future
unsecured obligations of National Beef that are not Senior Obligations.

 

Section 5.2 Late Payments by National Beef.
The amount of all or any portion of any payment not made to a Non-Corporate
Member when due under the terms of this Agreement shall be payable together
with any interest thereon, computed at the Default Rate and commencing from the
date on which such payment was due.

 

ARTICLE VI

 

NO DISPUTES; CONSISTENCY;
COOPERATION

 

Section 6.1 Election to be Filed. As
managing member of NBP LLC, National Beef shall cause NBP LLC and each NBP LLC
Group member that is treated as a partnership for United States federal income
tax purposes to file an election under Section 754 of the Code commencing
with its Taxable Year in which the Original Sale occurs, unless such entity
already has a Section 754 election in effect, and shall not cause any such
entity to revoke such election until this Agreement is no longer in effect for
any Non-Corporate Member.  If NBP LLC
acquires an interest in an entity that is treated as a partnership for United
States federal income tax purposes, National Beef shall use its best efforts to
cause such entity to file an election under Section 754 of the Code and
comparable elections under foreign, state and local tax law effective for each
such entity’s Taxable Year in which such acquisition occurs, unless such entity
already has an election under Section 754 of the Code and comparable
elections under foreign, state and local tax law in effect, and shall not cause
such entity to revoke such election until this Agreement is no longer in
effect.

 

Section 6.2 Participation in National Beef’s
and NBP LLC’s Tax Matters. Except as otherwise provided herein, National
Beef shall have full responsibility for, and sole discretion over, all Tax
matters concerning National Beef and NBP LLC, including without limitation the
preparation, filing and amending of any Tax Return and defending, contesting
and settling any issue pertaining to Taxes. Notwithstanding the foregoing,
National Beef shall notify a Non-Corporate Member, and keep a Non-Corporate
Member reasonably informed with respect to, the portion of any audit of
National Beef and NBP LLC by a Taxing Authority the outcome of which is
reasonably expected to affect the rights and obligations of the Non-Corporate
Member under this Agreement, and shall provide to the Non-Corporate Member
reasonable opportunity to provide information and other input to National Beef,
NBP LLC and their respective advisors concerning the conduct of any such
portion of such audit; provided, however, that National Beef and NBP LLC shall
not be required to take any action that is inconsistent with any provision of
the LLC Agreement.

 

21

 

Section 6.3 Consistency. National Beef and
the Non-Corporate Members agree to report and cause to be reported for all
purposes, including federal, foreign, state and local Tax purposes and
financial reporting purposes, all Tax-related items (including, without
limitation, the Basis Adjustments and each Tax Benefit Payment) in a manner
consistent with that specified by National Beef in any Schedule required to be
provided by or on behalf of National Beef under this Agreement unless otherwise
required by law.

 

Section 6.4 Cooperation. A Non-Corporate
Member shall (a) furnish to National Beef in a timely manner such
information, documents and other materials as National Beef may reasonably
request for purposes of making any determination or computation necessary or
appropriate under this Agreement, preparing any Tax Return or contesting or
defending any audit, examination or controversy with any Taxing Authority, (b) make
itself available to National Beef and its representatives to provide
explanations of documents and materials and such other information as National
Beef or its representatives may reasonably request in connection with any of
the matters described in clause (a) above, and (c) reasonably
cooperate in connection with any such matter, and National Beef shall reimburse
the Non-Corporate Member for any reasonable third-party costs and expenses
incurred pursuant to this Section.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.1 Notices. All notices,
requests, claims, demands and other communications hereunder shall be in
writing and shall be deemed duly given and received (a) on the date of
delivery if delivered personally, or by facsimile upon confirmation of
transmission by the sender’s fax machine if sent on a Business Day (or otherwise
on the next Business Day) or (b) on the first Business Day following the
date of dispatch if delivered by a recognized next-day courier service. All
notices hereunder shall be delivered as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive such
notice:

 

	
  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 (which shall not constitute notice to
  National Beef) to:

  
	
   

  	
   

  
	
   

  	
  Sidley Austin LLP

  
	
   

  	
  One South Dearborn Street

  
	
   

  	
  Chicago, IL 60603

  
	
   

  	
  Attention: John Sabl and Paul Choi

  
	
   

  	
  Fax: (312) 853-7036

  

 

22

 

	
  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

  
	
   

  	
   

  
	
  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:

  	
  Michael M. Hupp

  
	
   

  	
  Attention: Koley Jessen P.C., LLO

  
	
   

  	
  1125 S 103rd Street, Suite 800

  
	
   

  	
  Omaha, NE 68124

  
	
   

  	
  Fax: (402) 390-9005

  
	
   

  	
   

  
	
  If to TKK, to:

  	
  TKK Investments, LLC

  
	
   

  	
  10217 Hwy 92

  
	
   

  	
  Kearney, MO 64060

  
	
   

  	
  Attention: Timothy M. Klein

  
	
   

  	
  Fax: (816) 713-8852

  
	
   

  	
   

  
	
  If to TMKCo, to:

  	
  TMKCo, LLC

  
	
   

  	
  10217 Hwy 92

  
	
   

  	
  Kearney, MO 64060

  
	
   

  	
  Attention: Timothy M. Klein

  
	
   

  	
  Fax: (816) 713-8852

  

 

Any party may change its address or fax number by giving the other
parties written notice of its new address or fax number in the manner set forth
above.

 

Section 7.2 Counterparts. 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
parties, it being understood that all parties need not sign the same
counterpart. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Agreement.

 

23

 

Section 7.3 Entire
Agreement; No Third Party Beneficiaries. This Agreement constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter
hereof.  This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and their respective
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 7.4 Governing
Law. This Agreement shall be governed by, and construed in accordance with,
the law of the State of Missouri, without regard to the conflicts of laws principles
thereof that would mandate the application of the laws of another jurisdiction.

 

Section 7.5 Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
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 an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.

 

Section 7.6 Successors;
Assignment; Amendments; Waivers. (a) A Non-Corporate Member may assign
any of its rights under this Agreement to any Person as long as such transferee
has executed and delivered, or, in connection with such transfer, executes and
delivers, a joinder to this Agreement, in form and substance reasonably
satisfactory to National Beef, agreeing to become a Non-Corporate Member for
all purposes of this Agreement, except as otherwise provided in such joinder.

 

(b) No provision of
this Agreement may be amended unless such amendment is approved in writing by
both National Beef and the Non-Corporate Members; provided, that, the
definition of Change of Control cannot be amended without the written approval
of a majority of the Independent Directors. No provision of this Agreement may
be waived unless such waiver is in writing and signed by the party against whom
the waiver is to be effective.

 

(c) All of the terms
and provisions of this Agreement shall be binding upon, shall inure to the
benefit of and shall be enforceable by the parties hereto and their respective
successors, assigns, heirs, executors, administrators and legal
representatives. National Beef shall require and cause any direct or indirect
successor (whether by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of National Beef, by written
agreement, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that National Beef would be required to perform
if no such succession had taken place.

 

24

 

Section 7.7 Titles
and Subtitles. The titles of the sections and subsections of this Agreement
are for convenience of reference only and are not to be considered in
construing this Agreement.

 

Section 7.8 Resolution
of Disputes. (a) Any and all disputes which cannot be settled
amicably, including any ancillary claims of any party, arising out of, relating
to or in connection with the validity, negotiation, execution, interpretation,
performance or non-performance of this Agreement (including the validity, scope
and enforceability of this arbitration provision) (each a “Dispute”)
shall be finally settled by arbitration conducted by a single arbitrator in
Missouri in accordance with the then-existing Rules of Arbitration of the
International Chamber of Commerce.  If
the parties to the Dispute fail to agree on the selection of an arbitrator
within ten (10) days of the receipt of the request for arbitration, the
International Chamber of Commerce shall make the appointment. The arbitrator
shall be a lawyer admitted to the practice of law in the State of Missouri and
shall conduct the proceedings in the English language. Performance under this
Agreement shall continue if reasonably possible during any arbitration
proceedings.

 

(b) Notwithstanding
the provisions of paragraph (a), National Beef may bring an action or special
proceeding in any court of competent jurisdiction for the purpose of compelling
a party to arbitrate, seeking temporary or preliminary relief in aid of an
arbitration hereunder, and/or enforcing an arbitration award and, for the
purposes of this paragraph (b), the Non-Corporate Members (i) expressly
consent to the application of paragraph (c) of this Section 7.8 to
any such action or proceeding, (ii) agree that proof shall not be required
that monetary damages for breach of the provisions of this Agreement would be
difficult to calculate and that remedies at law would be inadequate, and (iii) irrevocably
appoint National Beef as agent of the Non-Corporate Members for service of
process in connection with any such action or proceeding and agree that service
of process upon such agent, who shall promptly advise the Non-Corporate Members
of any such service of process, shall be deemed in every respect effective
service of process upon the Non-Corporate Members in any such action or
proceeding.

 

(c) (i) EACH
PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN
KANSAS CITY, MISSOURI FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN
ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.8, OR ANY JUDICIAL PROCEEDING
ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT OF OR
RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial proceedings
include any suit, action or proceeding to compel arbitration, to obtain
temporary or preliminary judicial relief in aid of arbitration, or to confirm
an arbitration award. The parties acknowledge that the fora designated by this
paragraph (c) have a reasonable relation to this Agreement, and to the
parties’ relationship with one another; and

 

(ii) The parties
hereby waive, to the fullest extent permitted by applicable law, any objection
which they now or hereafter may have to personal jurisdiction or to the laying
of venue of any such ancillary suit, action or proceeding brought in any court
referred to in the preceding paragraph of this Section 7.8 and such
parties agree not to plead or claim the same.

 

25

 

Section 7.9 Reconciliation.
In the event that National Beef and a Non-Corporate Member are unable to
resolve a disagreement with respect to the matters governed by Sections 2.4,
4.2 and 6.3 within the relevant period designated in this Agreement (“Reconciliation
Dispute”), the Reconciliation Dispute shall be submitted for determination
to a nationally recognized expert (the “Expert”) in the particular area
of disagreement mutually acceptable to both parties. The Expert shall be a
partner or principal in a nationally recognized accounting or law firm, and
unless National Beef and the Non-Corporate Member agree otherwise, the Expert
shall not, and the firm that employs the Expert shall not, have any material
relationship with National Beef or the Non-Corporate Member or other actual or
potential conflict of interest.  If the
parties are unable to agree on an Expert within fifteen (15) days of receipt by
the respondent(s) of written notice of a Reconciliation Dispute, the
Expert shall be appointed by the International Chamber of Commerce Centre for
Expertise.  The Expert shall resolve any
matter relating to the Original Basis Schedule, or an amendment thereto, an
Exchange Basis Schedule, or an amendment thereto, the Early Termination
Schedule, or an amendment thereto, or the Change of Control Termination
Schedule, or an amendment thereto, 
within 30 calendar days and shall resolve any matter relating to a Tax
Benefit Schedule or an amendment thereto within 15 calendar days or as soon
thereafter as is reasonably practicable, in each case after the matter has been
submitted to the Expert for resolution. 
Notwithstanding the preceding sentence, if the matter is not resolved
before any payment that is the subject of a disagreement would be due (in the
absence of such disagreement) or any Tax Return reflecting the subject of a
disagreement is due, the undisputed amount shall be paid on the date prescribed
by this Agreement and such Tax Return may be filed as prepared by National
Beef, subject to adjustment or amendment upon resolution.  The costs and expenses relating to the engagement
of such Expert or amending any Tax Return shall be borne by National Beef
except as provided in the next sentence. 
National Beef and a Non-Corporate Member shall bear their own costs and
expenses of such proceeding, unless (i) the Expert adopts the
Non-Corporate Member’s position, in which case National Beef shall reimburse
the Non-Corporate Member for any reasonable out-of-pocket costs and expenses in
such proceeding, or (ii) the Expert adopts National Beef’s position, in
which case the Non-Corporate Member shall reimburse National Beef for any
reasonable out-of-pocket costs and expenses in such proceeding.  Any dispute as to whether a dispute is a
Reconciliation Dispute within the meaning of this Section 7.9 shall be
decided by the Expert.  The Expert shall
finally determine any Reconciliation Dispute and the determinations of the
Expert pursuant to this Section 7.9 shall be binding on National Beef and
a Non-Corporate Member which is a party to such Dispute and may be entered and
enforced in any court having jurisdiction.

 

Section 7.10 Withholding.
National Beef shall be entitled to deduct and withhold from any payment payable
pursuant to this Agreement such amounts as National Beef is required to deduct
and withhold with respect to the making of such payment under the Code or any
provision of state, local or foreign Tax law. 
To the extent that amounts are so withheld and paid over to the
appropriate Taxing Authority by National Beef, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the applicable
Non-Corporate Member.

 

Section 7.11 Admission
of National Beef into a Consolidated Group; Transfers of Corporate Assets. (a) If
National Beef is or becomes a member of an affiliated or consolidated group of
corporations that files a consolidated income tax return pursuant to Sections
1501 et

 

26

 

seq. of the Code or any corresponding provisions of state or local law,
then: (i) the provisions of this Agreement shall be applied with respect
to the group as a whole; and (ii) Tax Benefit Payments, Early Termination
Payments, Change of Control Termination Payments, Lump Sum Present Value
payments, and other applicable items hereunder shall be computed with reference
to the consolidated taxable income of the group as a whole.

 

(b) If any entity
that is obligated to make a Tax Benefit Payment, Early Termination Payment,
Change of Control Termination Payment, or Lump Sum Present Value payment,
hereunder transfers one or more assets to a corporation (or a Person classified
as a corporation for United States federal income tax purposes) with which such
entity does not file a consolidated tax return pursuant to Section 1501 of
the Code, such entity, for purposes of calculating the amount of any Tax
Benefit Payment, Early Termination Payment, Change of Control Termination
Payment, or Lump Sum Present Value payment (e.g., calculating the gross income
of the entity and determining the Realized Tax Benefit of such entity) due
hereunder, shall be treated as having disposed of such asset in a fully taxable
transaction on the date of such transfer. The consideration deemed to be
received by such entity shall be equal to the fair market value of the
transferred asset. For purposes of this Section 7.11, a transfer of a
partnership interest shall be treated as a transfer of the transferring partner’s
share of each of the assets and liabilities of that partnership.

 

Section 7.12 Confidentiality.
The Non-Corporate Members and each of their assignees acknowledge and agree
that the information of National Beef is confidential and, except in the course
of performing any duties as necessary for National Beef and its Affiliates, as
required by law or legal process or to enforce the terms of this Agreement,
such person shall keep and retain in the strictest confidence and not disclose
to any Person any confidential matters, acquired pursuant to this Agreement, of
National Beef and its Affiliates and successors, concerning NBP LLC and its
Affiliates and successors or the Members, learned by the Non-Corporate Members
heretofore or hereafter. This Section 7.12 shall not apply to (i) any
information that has been made publicly available by National Beef or any of
its Affiliates, becomes public knowledge (except as a result of an act of a
Non-Corporate Member in violation of this Agreement) or is generally known to
the business community and (ii) the disclosure of information to the
extent necessary for the Non-Corporate Members to prepare and file their Tax
Returns, to respond to any inquiries regarding the same from any Taxing
Authority or to prosecute or defend any action, proceeding or audit by any
taxing authority with respect to such returns. 
Notwithstanding anything to the contrary herein, the Non-Corporate
Members and each of their assignees (and each employee, representative or other
agent of the Non-Corporate Members or their assignees, as applicable) may
disclose to any and all Persons, without limitation of any kind, the tax
treatment and tax structure of National Beef, NBP LLC, the Members and their
Affiliates, and any of their transactions, and all materials of any kind
(including opinions or other tax analyses) that are provided to the
Non-Corporate Members relating to such tax treatment and tax structure.

 

If a Non-Corporate Member
or an assignee of a Non-Corporate Member commits a breach, or threatens to
commit a breach, of any of the provisions of this Section 7.12, National
Beef shall have the right and remedy to have the provisions of this Section 7.12
specifically enforced by injunctive relief or otherwise by any court of
competent jurisdiction without the need to post any bond or other security, it
being acknowledged and agreed that any such breach

 

27

 

or threatened breach shall cause irreparable injury to National Beef or
any of its Subsidiaries and the accounts and funds managed by National Beef and
that money damages alone shall not provide an adequate remedy to such Persons.
Such rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available at law or in equity.

 

Section 7.13 Change
in Law. (a) Notwithstanding anything herein to the contrary, if, in
connection with an actual or proposed change in law, a Non-Corporate Member
reasonably believes that the existence of this Agreement could cause income
(other than income arising from receipt of a payment under this Agreement)
recognized by any member affiliated with the Non-Corporate Member (or direct or
indirect equity holders in such member) upon the IPO, Original Sale or any
Exchange to be treated as ordinary income rather than capital gain (or
otherwise taxed at ordinary income rates) for United States federal income tax
purposes or would have other material adverse tax consequences to the
Non-Corporate Member or any direct or indirect owner of the Non-Corporate
Member (a “Change in Tax Law”), then at the election of the
Non-Corporate Member and to the extent specified by such Non-Corporate Member,
this Agreement (i) shall cease to have further effect with respect to such
Non-Corporate Member, (ii) shall not apply to an Exchange by such
Non-Corporate Member occurring after a date specified by the Non-Corporate
Member, or (iii) shall otherwise be amended in a manner determined by such
Non-Corporate Member provided that such amendment shall not result in an
increase in payments under this Agreement at any time as compared to the
amounts and times of payments that would have been due in the absence of such
amendment (assuming that no payment is due under Section 7.13(b)).

 

(b) If a
Non-Corporate Member delivers to National Beef a notice of acceleration
accompanied by an opinion of a Qualified Tax Advisor to the effect that based
upon such Change in Tax Law (taking into account any applicable administrative
pronouncements or rulings, formal or informal Congressional actions or
statements, or otherwise) (i) the existence of this Agreement will more
likely than not cause income (other than income arising from receipt of a
payment under this Agreement) recognized by the Non-Corporate Member (or direct
or indirect equity holders in such Member) upon the Original Sale or any
Exchange to be treated as ordinary income rather than capital gain (or
otherwise taxed at ordinary income rates) for United States federal income tax
purposes or would have other material adverse tax consequences to the
Non-Corporate Member (or any direct or indirect owner thereof), and (ii) substantially
all of such income described in Section 7.13(b)(i) above would be
more likely than not taxable at capital gain rates or such other material
adverse tax consequences would be avoided as a result of making the election
described in this Section 7.13(b), then the Non-Corporate Member may elect
to cause National Beef to make the Non-Corporate Member’s share of a lump sum
payment to the Non-Corporate Member in lieu of the Tax Benefit Payments
otherwise provided in this Agreement for the Non-Corporate Member in accordance
with the procedures described in Article IV.  The lump sum payment is in an amount equal to
the sum of the present values of all such Tax Benefits Payments, substituting
in each case “70%” for “85%” in the calculation of Net Tax Benefit, discounted
at the Early Termination Rate as of the effective date specified in the notice
of acceleration, and assuming the Valuation Assumptions (1) through (5) are
applied (substituting the effective date specified in the notice of
acceleration for the Early Termination Date each time Early Termination Date
appears in the Valuation Assumptions definition); provided, that no amount
shall be payable under this Section 7.13(b) unless, with respect to
at

 

28

 

least 50% of the Units held by the Non-Corporate Member at the time of
execution of this Agreement, all rights to payments under this Agreement shall
have been terminated pursuant to Section 7.13(a) (and for the
avoidance of doubt, no payments pursuant to this Section 7.13(b) shall
be made in respect of such Units); provided, further, that if such payment
would be due on or after the effective date of the applicable Change in Tax
Law, at the election of the Non-Corporate Member, such payment shall to the
extent reasonably practicable instead be made no later than the date prior to
the effective date of the applicable Change in Tax Law (using the best
available estimates and information at such time).

 

(c) National Beef
shall have the right to satisfy its obligation to make a lump sum payment under
Section 7.13(b) by issuing a subordinated debt instrument of National
Beef, with a maturity date seven years after issuance, with interest payment
required to be made quarterly, and bearing interest at a rate equal to the
lesser of (i) 6% per annum and (ii) LIBOR plus 200 basis points.

 

(d) Notwithstanding
anything herein to the contrary, Section 3.5 of this Agreement shall not
apply to payments made by National Beef pursuant to this Section 7.13.

 

[The remainder of this page is
intentionally left blank.  Signature page to
follow.]

 

29

 

IN WITNESS WHEREOF,
National Beef and the Non-Corporate Members have duly executed this Agreement
as of the date first written 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:

  

 

 

Signature Page to
Tax Receivable Agreement

 

30

 

Exhibit A

 

Form of Joinder
Agreement

 

[                                         ]
does hereby agree to the terms and conditions of the Tax Receivable Agreement,
dated as of [            ],
2009, a copy of which is attached hereto, and shall be and hereby is a
Non-Corporate Member, as defined in such Agreement, and is bound by its terms
and conditions.

 

Effective [                    ].

 

 

	
   

  	
  National Beef, Inc.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                                        ]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

31

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