EXHIBIT 10.9
AMENDED AND RESTATED
FORMULA DEVELOPMENT AGREEMENT
THIS FORMULA DEVELOPMENT AGREEMENT is executed this 21st day of May, 2004,
and made effective as of February 1, 2004, by and between XXXX XXXXXXX
ENTERPRISES, INC., a California corporation ("CKE") and PIERRE FOODS, INC., a
North Carolina corporation ("Vendor").
RECITALS
1. CKE 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 CKE 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 5.65 oz. Item #9598
2. Simultaneously with the execution of this Agreement, the parties
entered into 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 CKE, 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 CKE'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 CKE by Vendor, CKE, 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) any other products, recipes, formulas,
techniques, procedures, or processes of the Vendor and belonging to Vendor.
----------
Confidential information redacted and
Omitted portions are indicated by [***]. filed separately with the Commission.
4. CKE 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, except under the
HARDEE'S Agreement (as herein defined), 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 CKE (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 CKE" 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 CKE 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. CKE agrees as a condition of this Agreement that CKE will not contract
with more than two (2) other manufacturers (other than Vendor) at any one time
to manufacture and produce the Products for CKE, said other manufacturers to be
the same manufacturers as mutually agreed by CKE and HARDEE'S (herein defined)
and designated under the HARDEE'S Agreement. 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 under the HARDEE'S Agreement) 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 CKE. Provided,
notwithstanding the foregoing sentence, Vendor agrees that CKE may engage one or
two of the aforesaid designated manufacturers which Vendor will license to use
the Formula during the time period beginning as
----------
Confidential information redacted and
Omitted portions are indicated by [***]. filed separately with the Commission.
2
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 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
CKE 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 grant CKE 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 grant CKE the right of first refusal hereinafter
described. Upon the occurrence of any one of the following events, CKE 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 CKE within fourteen
(14) calendar days following the occurrence of any such event. CKE shall have
fourteen (14) calendar days after receiving the purchase price and purchase
terms notice within which to accept or decline Vendor's proposal. If CKE
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 CKE
without giving CKE 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 CKE or by a third party under this provision,
Vendor shall permit CKE, or any manufacturer designated by CKE, to produce the
Products for CKE 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 CKE and its then designated
manufacturers and any other temporary designated manufacturer appointed by CKE
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;
----------
Confidential information redacted and
Omitted portions are indicated by [***]. filed separately with the Commission.
3
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
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 CKE 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
California. The parties consent to the exclusive jurisdiction of the state and
federal courts of the State of California 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 CKE, any
provision of this Agreement.
12. There are no understandings, agreements, or representations,
express or implied, not specified herein. This Agreement amends, restates and
supercedes that certain Formula Development Agreement pertaining to the subject
matter hereof executed by the parties on February 1, 2004. This Agreement may
not be amended except in a writing signed by the parties.
----------
Confidential information redacted and
Omitted portions are indicated by [***]. filed separately with the Commission.
4
13. It is expressly agreed and acknowledged that Vendor has entered
into a certain Amended and Restated Agreement dated of even date and effective
December 1, 2002 with XXXXXX'X Food Systems, Inc. ("HARDEE'S"), which agreement,
and any amendments and attachments thereto including the Amended and Restated
Formula Development Agreement between HARDEE'S and the Vendor, dated of even
date and effective as of December 1, 2002 (all the "HARDEE'S Agreement), grant
to HARDEE'S the right to purchase products similar to the Products in accordance
with the terms and conditions therein. Notwithstanding anything herein to the
contrary, CKE acknowledges that the rights, privileges, and options of HARDEE'S
under the HARDEE'S Agreement, and the terms thereof, shall not be deemed a
violation of the Product Contract, this Agreement, or any agreements delivered
therewith.
Executed the 21st day of May, 2004 and effective as of February 1, 2004.
XXXX XXXXXXX ENTERPRISES, 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
----------
Confidential information redacted and
Omitted portions are indicated by [***]. filed separately with the Commission.
5
EXHIBIT A
PRODUCT: Angus Beefsteak *** SPECIFICATION #:9598
Page 1 of 3 REVISIONS:01
(C) PIERRE FOODS, INC. 2004:
THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION AND TRADE SECRETS
PROPRIETARY TO PIERRE FOODS., INC. UNAUTHORIZED REPRODUCTION OR
DISCLOSURE IS STRICTLY PROHIBITED AND MAY RESULT IN SERIOUS LEGAL
CONSEQUENCES. RECEIPT OR POSSESSION OF THIS DOCUMENT DOES NOT GRANT
THE RIGHT TO REPRODUCE THIS DOCUMENT, TO DISCLOSE ITS CONTENTS OR TO
USE SUCH CONTENTS IN ANY WAY.
PIERRE FOODS, INC.
PRODUCT DEVELOPMENT DEPARTMENT
PRODUCT FORMULA AND SPECIFICATIONS
Product: Pierre Foods: Angus Beefsteak ***
Specification #: 9598
SUPERSEDES: None Page 1 of 3 EFFECTIVE DATE: 04/27/04
SUPPLEMENTS
- Regulatory HACCP Flow chart
- Application for Approval of Label
PRODUCT DESCRIPTION: Individually frozen, *** chopped Angus beefsteak
(chopped and formed) without grill marks. It is to be
thawed under refrigeration to a maximum of *** and
heated surface temperature to *** for a minimum of ***.
RAW MATERIALS:
Ingredients Angus Beef, Salt *** Sodium Phosphates, Spices
Angus Beef: Chemical Lean (CL) must be within +/- 2% fat of purchased and
slated label claim. Must be from Angus Cattle that complies with the
following USDA Schedules: *** and Raw Materials Spec, Beef Angus Trimmings,
boneless Combos/Fresh.
A) Frozen Angus Beef: ***:
1) Target fat content of *** +/- 2%.
2) ***.
3) Must be from USDA ***.
4) At time of receipt, frozen product must be 10 DEG. F or less.
5) Receiving: Frozen less than 90 days at time of our receipt.
B) *Fresh Angus Beef: ***.
1) Target Fat content +/- 2%.
2) ***.
3) At time of receipt, fresh product must be 40 DEG. F or less.
4) Receiving: Fresh less than *** days from bone date.
Omitted portions are indicated by [***]. Confidential information redacted and
732062 filed separately with the Commission.
EXHIBIT A
PRODUCT: Angus Beefsteak *** SPECIFICATION #:9598
Page 2 of 3 REVISIONS:01
C) *Fresh Angus Beef: ***.
1) Target Fat Content of +/- 2%.
2) ***.
3) At time of receipt, fresh product must be 40 DEG. F or less.
4) Receiving: Fresh less than *** days from bone date.
*Angus Beef will be combined to target *** fat content in the overall meat
mix.
NOTE: THE ABOVE RAW MATERIALS ARE NOT PROPRIETARY TO PIERRE FOODS.
NOTE: Applies to all of the above:
1) Regulatory HACCP Flow chart - attached.
2) ***
3) Blend fresh lean/frozen trim/fat meat.
4) Beef is ground, mixed with non-meat additives and chilled (Mix time ***
mins, +*** min. correction if necessary).
5) Mix is final ground through *** plate.
6) Meat mix is formed into 8.0 oz patties (temperature *** DEG. F +/- ***
DEG. F). The average xxxxx weights must equal or exceed stated labeled
weight.
7) Adjustments are made to produce patties with finished cooked target
weight of *** oz.
8) Patties are *** and ***
9) Patties are ***. Minimum char on bottom.
10) Patties run through ***
11) Patties are *** before entering *** The *** are *** (the width of the
xxxxx belt). Each *** has *** which *** in a *** The *** rate is ***
of *** The *** that are *** in different stages of the xxxxx
manufacturing process are *** to the patties, but help improve the
xxxxx ***
12) Patties are fully cooked in *** with *** respectively. When applicable,
patties may *** before and/or after *** to enhance ***.
13) Patties are *** a *** after the ***
14) Patties are individually quick frozen, and packaged. Will meet Pierre
Foods HACCP/USDA regulations.
NOTE: THE BOLD STATEMENTS IN (2) THROUGH (10) AND (14) ABOVE ARE GENERAL
PROCESSING OPERATIONS AND ARE NOT PROPRIETARY TO PIERRE FOODS.
Salt: Sodium Chloride ***
***
1)***
2)***
3)***
4)***
5)***
6) Appearance: ***
7) Particle size: ***
8) Kosher certified. ***
Sodium Phosphate:
Xxxxx-Xxxxxxx Food Ingredient: Cravis 350.
1) A blend of Sodium Tripolyphosphate, Sodium Hexametaphosphate, and
Sodium Acid Pyrophosphate.
2) Physical Characteristics: A white granular material that is
essentially free of lumps, foreign matter, and odor.
3) Grade: Food: Components meet Food Chemical Codex Specification.
4) Kosher: Certified by OU.
Omitted portions are indicated by [***]. Confidential information redacted and
732062 filed separately with the Commission.
EXHIBIT A
PRODUCT: Angus Beefsteak *** SPECIFICATION #:9598
Page 3 of 3 REVISIONS:01
Spice ***
***
1) ***
2) Flavor Characteristic: ***
3) Physical Characteristic: ***
OR
***
1) Processed from ***
2) Flavor/Odor: ***
3) Physical Characteristic: ***
FORMULATION:
INGREDIENT PERCENT
---------- -------
*Frozen Angus Beef *** .......................... ***
Fresh: Angus Beef *** ........................... ***
Salt ............................................ ***
Sodium Phosphates................................ ***
Spice ........................................... ***
Total ........................................... 100.00%
*Angus Beef will be combined based on fat content to target *** fat
content in overall meat mix using the approved formulated meats.
Salt ***
ACKNOWLEDGE AND AGREE:
Xxxx Xxxxxxx Enterprises, 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
DISTRIBUTION:
Q.A. Department: Anaheim, St. Louis, Santa Xxxxxxx, Manteca.
Omitted portions are indicated by [***]. Confidential information redacted and
732062 filed separately with the Commission.
Effective: 12/12/2003 Cincinnati, OH
Replaces: [ILLEGIBLE]
REGULATORY HACCP: RECEIVING
MEAT INGREDIENTS
[FLOWCHART]
RETURNED GOODS
[FLOWCHART]
PACKAGING MATERIALS
[FLOWCHART]
NON-MEAT INGREDIENTS
[FLOWCHART]
CONFIDENTIAL, PROPRIETARY
TRADE SECRET OF PIERRE FOODS
Omitted portions are indicated by [***]. Confidential information redacted and
filed separately with the Commission.
Effective: 12/12/2003 Cincinnati, OH
Replaces: 2/13/2002
REGULATORY HACCP:
Charbroil Process
***
CONFIDENTIAL, PROPRIETARY
TRADE SECRET OF PIERRE FOODS
Omitted portions are indicated by [***]. Confidential information redacted and
filed separately with the Commission.
According to the Paperwork Reduction Act of 1995, and agency may not conduct or
sponsor, and a person is not required to respond to, a collection of information
unless it displays a valid OMB control number. The valid OMB control number for
this information collection is 0583-0092. The time required to complete this
information collection is estimated to average 15 minutes per response,
including the time for reviewing instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and reviewing the
collection of information. This form has been approved by OMB for web
distribution.
PAGE ______of______
U.S. DEPARTMENT OF AGRICULTURE 1. AGENT NAME, ADDRESS, 2. FOR USDA USE ONLY 3. FOR USDA USE ONLY 4. ESTABLISHMENT NO./
FOOD SAFETY AND INSPECTION SERVICE TELEPHONE NO. (IF USING AN FOREIGN COUNTRY
AGENT, COMPLETE THIS BLOCK, CONFIDENTIAL: This document contains trade (IF APPLICABLE)
APPLICATION FOR OTHERWISE LEAVE BLANK) secrets proprietary to Pierre Foods, Inc.
APPROVAL OF LABELS, Unauthorized reproduction or disclosure is
MARKING OR DEVICE Prime Label Consultants, Inc. strictly prohibited and may result in 2132
000 Xxxxxxx Xxxxxx XX serious legal consequences. Receipt or
FSIS has determined that XX Xxx 00000 possession of this document does not grant
information provided in items 8, Xxxxxxxxxx, XX 00000-0000 the right to reproduce the document, to
9, and 10 is exempt from (000) 000-0000 disclose is contents, or to use such
mandatory disclosure under the FAX (000) 000-0000 contents in any way.
Freedom of Information Act 5
U.S.C. 552(b)(4).
APPLICANT: SEE PAGE 2 FOR
INSTRUCTIONS.
5b. HACCP PROCESS
CATEGORY
5a. NAME OF PRODUCT Fully Cooked Ground Beef Steaks Fully cooked--not
chopped & formed 9598 shelf stable
6a. TYPE OF APPROVAL REQUESTED 6b. WAS THE 7a. AREA OF PRINCIPAL DISPLAY PANEL
/X/ SKETCH / / TEMPORARY LABEL / / YES -> Date of approval:_________ (SQUARE INCHES):
PREVIOUSLY Prior approval
/ / EXTENSION OF TEMPORARY APPROVED? /X/ NO number: _________ n/a
Number of labels
on hand: _________ 7b. TOTAL AVAILABLE LABELING SPACE FOR
Number of days ENTIRE PACKAGE (SQUARE INCHES):
requested: _________
8. PRODUCT FORMULA / / PCT /X/ WEIGHT 9. PROCESSING PROCEDURES
(NO FRACTIONS) (APPROVAL OF THE SKETCH DOES NOT CONVEY
APPROVAL OF THE PROCESSING PROCEDURES)
ANGUS BEEF 1. GRIND ALL BEEF.
*** *** 2. MIX NON-MEAT INGREDIENTS.
3. ***
SODIUM PHOSPHATES 4. GRIND OUT.
SPICES 5. FORM INTO MINIMUM 1/2 POUND (8.0 OZ)
*** XXXXX SHAPE.
6. *** AND XXXX TO MINIMUM INTERNAL
TEMPERATURE OF 151 F FOR 41 SECONDS.
(PER 9 CFR 318.23 TABLE A)
7. FREEZE AND PACKAGE.
TOTAL (PERCENT MUST TOTAL 100%) 100.00 EZ Form(tm) v2004, 103
10. NAME AND ADDRESS OF FIRM (BELOW AND BETWEEN DOTS) 11. SIGNATURE OF APPLICANT OR AGENT DATE:
- - /s/ [ILLEGIBLE] 4-29-2004
PIERRE FOODS, INC
*** 12. CONDITIONS APPLYING TO USE OF LABELS OR DEVICE (FOR USDA
PRODUCT DEVELOPMENT MANAGER USE ONLY)
0000 XXXXXXXXX XX
XXXXXXXXXX, XX 00000
- -
FSIS FORM 7234-1 (10/03/2002) REPLACES FSIS FORM 7234-1 (11/87), WHICH IS OBSOLETE. DESIGNED IN FORMFLOW SOFTWARE.
Omitted portions are indicated by (***). Confidential information redacted and
filed separately with the Commission.
[ILLEGIBLE]
[ILLEGIBLE]
chopped & formed 9598
PRODUCT FORMULATION
ANGUS BEEF ***
***
SODIUM PHOSPHATES
SPICE
------
*** TOTAL (lbs.) 100.00
CONFIDENTIAL: This document contains trade secrets proprietary to
Pierre Foods, Inc. Unauthorized reproduction or disclosure is strictly
prohibited and may result in serious legal consequences. Receipt or
possession of this document does not grant the right to reproduce the
document, to disclose its contents, or to use such contents in any
way.
Printed at 3:03 p.m. on 29-Apr-04 EZ Form v2004.1
Omitted portions are indicated by (***). Confidential information redacted and
filed separately with the Commission.
