Exhibit 10.12
AMENDED AND RESTATED
FORMULA DEVELOPMENT AGREEMENT
THIS FORMULA DEVELOPMENT AGREEMENT is executed this 21st day of May, 2004,
and made effective as of December 1, 2002, by and between XXXXXX'X FOOD SYSTEMS,
INC., a North Carolina corporation ("HARDEE'S") and PIERRE FOODS, INC., a North
Carolina corporation ("Vendor").
RECITALS
1. HARDEE'S desires to introduce new products in its restaurant systems.
2. Vendor is in the business of developing formulations and producing and
manufacturing products of the type and kind contemplated by this Agreement.
3. VENDOR has developed a product which HARDEE'S desires to consider for
use in its restaurant systems.
NOW, THERFORE, in consideration of the mutual promises herein made, the
parties agree as follows:
1. Vendor has developed specifications and desired elements or
characteristics for the following products (individually each a "Product" and
collectively the "Products"):
Angus Beefsteak Xxxxx 4.10oz. Item #9561
Angus Beefsteak Xxxxx 5.65oz. Item #9598
2. Simultaneously with the execution of this Agreement, the parties
entered into a an Amended and Restated Agreement for the Products (the "Product
Contract").
3. So long as the Purchase Threshold (as defined herein) is met, Vendor
grants HARDEE'S, together with its parent, subsidiary and affiliate
corporations, an exclusive, right to purchase the Products. It is expressly
understood that Vendor will process and manufacture the Products utilizing
certain proprietary processes, methods, ingredients and formulas (collectively,
the "Formula") described on Exhibit A attached hereto and in accordance with
HARDEE'S Finished Product Specifications attached to the Product Contract. The
parties agree and acknowledge that Vendor has ownership of the Formula. Other
than for the rights granted herein to HARDEE'S by Vendor, HARDEE'S, together
with its parent, subsidiary and affiliate corporations, will not by virtue of
this relationship acquire or claim any proprietary interest in: (i) the Formula
of Vendor utilized in the manufacture and production of the Products, (ii) any
patents, patent applications, proprietary information, processes or methods
containing confidential information of Vendor and belonging to Vendor, (iii) any
software, trade secrets or other proprietary information, methods or processes
licensed by third parties to Vendor, or (iv)
Confidential information redacted and
Omitted portions are indicated by [***]. filed separately with the Commission.
any other products, recipes, formulas, techniques, procedures, or processes of
the Vendor and belonging to Vendor.
4. HARDEE'S acknowledges that it is aware that Vendor presently
manufactures various protein and sandwich products substantially similar to the
Products for third parties and for its own branded sandwiches. This Agreement
shall not limit the right of Vendor to continue the manufacture and sale of any
products and/or branded items as they are presently or hereafter may be
constituted or to develop and process other branded items or products for itself
or others; PROVIDED, HOWEVER, that notwithstanding the foregoing, so long as the
Purchase Threshold is met, Vendor may not:
(i) manufacture for or sell to any third party, other than Xxxx
Xxxxxxx Enterprises, Inc. ("CKE") pursuant to the CKE Agreement (as defined
herein), or for its own use any Angus Beef Burger Product that uses the same
proprietary spices in the Angus meat block formula used in the manufacture of
the Product, or
(ii) manufacture for or directly sell to any Competitor of HARDEE'S
(as defined herein) any Angus Beef Burger Product confusingly similar to a
Product. "Angus Beef Burger Product" means a beef xxxxx consisting of more than
51% of black cattle beef with a raw weight range and with respect to a Product
(so long as the Product is subject to the Product Contract) within .3oz., plus
or minus, of the raw weight of such Product.
5. For purposes of this Agreement, the term "Competitor of HARDEE'S"
shall mean any national or regional chain of "quick" service restaurants or food
shops with one hundred (100) or more restaurants or shops operated under the
same tradename in which food is prepared on-premises and sold at an inside
counter, table service or drive-thru window, intended for immediate on-premises,
off-premises, or in-vehicle consumption.
6. For the purposes of this Agreement, "Purchase Threshold" means the
purchase under the Product Contract by HARDEE'S and its parent, subsidiary, and
affiliate corporations of *** pounds aggregate of Products from Vendor during
each rolling twelve (12) month trailing period, the first test period ending
fourteen (14) months after the month in which first delivery of Products is made
under the Product Contract. If less than *** pounds is available in any such
period for sale by Vendor, then such lesser amount available shall be the
Purchase Threshold.
7. HARDEE'S agrees as a condition of this Agreement that HARDEE'S will
not contract with more than two (2) other manufacturers (other than Vendor) at
any one time to manufacture and produce the Products for HARDEE'S. Vendor agrees
that as a condition of this Agreement that Vendor so long as the Purchase
Threshold is met will enter into agreements without royalty or fee with such
other manufacturers (designated by HARDEE'S) to license the use of Vendor's
proprietary Formula for the Products to said manufacturers solely for the
purpose of manufacturing and producing the Products for HARDEE'S. Provided,
notwithstanding the foregoing sentence, Vendor agrees that HARDEE'S may engage
one or two designated manufacturers which Vendor will license to use the Formula
during the time period beginning as of the date of this Agreement until the
Purchase Threshold is first tested. Failure by Vendor to enter into a license
agreement with a designated manufacturer within a reasonable
2 Confidential information redacted and
Omitted portions are indicated by [***]. filed separately with the Commission.
time, through no fault of the designated manufacturer, shall constitute a
material default under this Agreement. It is expressly understood and agreed by
the parties that other than licensing the use of the Formula, Vendor shall have
no further role in the relationship between HARDEE'S and the other said
manufacturer.
8. Vendor represents and warrants that it owns the formulations and
specifications to manufacture the Products free and clear and has the right to
enter into this Agreement and xxxxx XXXXXX'X and its parent, subsidiary, and
affiliate corporations the exclusive right to purchase the Products pursuant to
Section 3 and the right to license its proprietary formulas and specifications
for the production and manufacture of the Products under Section 7.
9. It is expressly acknowledged that the Vendor in consideration of the
premises herein and other consideration received, the legal sufficiency of which
is acknowledged, does hereby xxxxx XXXXXX'X the right of first refusal
hereinafter described. Upon the occurrence of any one of the following events,
HARDEE'S upon written notice to Vendor shall have the right of first refusal to
purchase the Formula, and all rights of ownership thereto, from the Vendor for a
purchase price and purchase terms provided in writing by Vendor to HARDEE'S
within fourteen (14) calendar days following the occurrence of any such event.
HARDEE'S shall have in fourteen (14) calendar days after receiving the purchase
price and purchase terms notice within which to accept or decline Vendor's
proposal. If HARDEE'S declines to purchase the Formula during such time period,
then Vendor shall be free to contract with and sell to any third party the
Formula unencumbered without restriction, but not on different terms than those
offered to HARDEE'S without giving HARDEE'S a fourteen (14) day right of first
refusal concerning the same. From the date of the occurrence of any one of the
events until the date on which the Formula is purchased by HARDEE'S or by a
third party under this provision, Vendor shall permit HARDEE'S, or any
manufacturer designated by HARDEE'S, to produce the Products for HARDEE'S under
the terms of the standard license agreement set forth in Section 7 hereunder.
a. The Vendor ceases to manufacture or is unable to manufacture the
Product for any reason for a period of thirty (30) consecutive calendar days
excepting a Force Majeure (as defined in the Product Contract) provided Vendor
shall cooperate in good faith in such event with HARDEE'S and its then
designated manufacturers and any other temporary designated manufacturer
appointed by HARDEE'S to ensure appropriate supply of Products until Vendor can
resume production and supply of the Products as contemplated under the Product
Contract, at which point the rights and obligations of the parties under the
Product Contract shall resume. In such a Force Majeure event, until Vendor is
able to resume its supply obligations under the Product Contract, the Purchase
Threshold and Volume Requirements (as defined in the Product Contract) shall be
waived;
b. Excepting by reason of delay or default of persons outside the
control of Vendor, the Vendor fails to perform or observe any portion of its
obligations under Section 7 herein at any time;
c. The Vendor ceases to do business as a manufacturer of beef
products for any reason; and
3 Confidential information redacted and
Omitted portions are indicated by [***]. filed separately with the Commission.
d. The Vendor (i) voluntarily commences any proceeding or file any
petition seeking relief under any Federal, state or foreign bankruptcy,
insolvency, receivership, liquidation or similar law, (ii) consents to the
institution of, or fails to contravene in a timely and appropriate manner, any
such proceeding or the involuntary filing of any such petition, (iii) applies
for or consents to the appointment of a receiver, trustee, custodian, or similar
official of itself or of a substantial part of its property, (iv) files an
answer admitting the material allegations of a petition filed against it in any
voluntary or involuntary bankruptcy proceeding, (v) makes a general assignment
for the benefit of creditors, (vi) becomes unable, admits in writing its
inability or fails generally to pay its debts as they become due or (vii) takes
any corporate or other action for the purpose of effecting any of the foregoing.
Provided in the event of a Chapter 11 reorganization, if the trustee affirms the
Product Contract and the associated agreements, and the Vendor affirmatively
shows its ability to produce and supply, and so long as it does so, the Products
in accordance with the Product Contract, such event so long as in Chapter 11
status, or a complete discharge therefrom, shall not be deemed an event under
this subsection (d).
10. The parties recognize the unique nature of this Agreement due to the
uniqueness of the Product, the health and liability issues integral to the
Product and the effect of the Product on the reputation of HARDEE'S and Vendor.
Accordingly, the parties agree that this Agreement is personal in nature and
that neither party may assign or otherwise transfer its rights and obligations
under this Agreement to another party without the express prior written consent
of the non-transferring party which consent will not be unreasonably withheld.
This Agreement shall be binding on and inure to the benefit of the parties
hereunder and their respective approved successors and assigns.
11. This Agreement shall be governed by the laws of the State of Missouri.
The parties consent to the exclusive jurisdiction of the state and federal
courts of the State of Missouri for the adjudication of matters arising out of
this Agreement; and neither party will assert FORUM NON CONVENIENS with respect
to such venue. This Agreement, and all Exhibits, are only valid if and when duly
signed by authorized representatives of both parties. No third party is
authorized to amend or waive, on behalf of HARDEE'S, any provision of this
Agreement.
12. There are no understandings, agreements, or representations, express
or implied, not specified herein. This Agreement may not be amended except in a
writing signed by the parties.
13. It is expressly agreed and acknowledged that Vendor has entered into a
certain Amended and Restated Agreement dated of even date and effective February
1, 2004, with CKE which Agreement and the attachments thereto (the "CKE
Agreement") grant CKE the right to purchase products similar to the Products in
accordance with the terms and conditions therein. Notwithstanding anything
herein to the contrary, HARDEE'S acknowledges and agrees that the rights,
privileges, and options of CKE under the CKE Agreement, and the terms thereof,
shall not be deemed a violation of the Product Contract, this Agreement, or the
Attachments (as defined in the Product Contract).
4 Confidential information redacted and
Omitted portions are indicated by [***]. filed separately with the Commission.
Executed the day and year first above written and effective as of December
1, 2002.
XXXXXX'X FOOD SYSTEMS, INC. PIERRE FOODS, INC.
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------ -------------------------------
Xxxx Xxxxxx Xxxxxx X. Xxxxxx
Executive Vice President Senior Vice President-Sales
5 Confidential information redacted and
Omitted portions are indicated by [***]. filed separately with the Commission.
