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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 CARL KARCHER
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
Patty 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.
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Confidential information redacted and
Omitted portions are indicated by [***].
filed separately
with the Commission.
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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 patty 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
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Confidential information redacted and
Omitted portions are indicated by [***].
filed separately
with the Commission.
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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;
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Confidential information redacted and
Omitted portions are indicated by [***].
filed separately
with the Commission.
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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 fi
