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EXHIBIT 10.8
AMENDED AND RESTATED
AGREEMENT
THIS AGREEMENT is executed as of the 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 (the "Company").
CKE desires to purchase from the Company and the Company desires to sell to
CKE and any distributors, licensees, franchisees or other persons designated
from time to time by CKE in writing (collectively, all such entities other than
CKE shall hereinafter be referred to as "Distributor") the products (the
"Products") described in the "Detailed Product Schedule" (the "DPS"), in
accordance with the terms and conditions hereof.
In consideration of the mutual promises contained herein the parties hereby
agree as follows:
1. PURCHASE AND SALE. CKE shall purchase from the Company and the Company
shall produce the Products in accordance with its proprietary formula (the
"Formula", attached as Exhibit A to the Amended and Restated Formula Development
Agreement of even date) and with CKE's Finished Product Specifications attached
to this Agreement and sell to CKE and Distributor the Products set forth in the
DPS, as amended from time to time, in the amounts set forth in the DPS.
2. DISTRIBUTOR AND RELATED PARTIES.
(a) This Agreement shall not to be construed in any manner to be
binding upon any Distributor of CKE or upon any affiliate, parent or subsidiary
corporation of CKE or any individual signing on behalf of CKE.
(b) It is expressly agreed and acknowledged that the Company has
entered into a certain Amended and Restated Agreement of even date effective
December 1, 2002 with HARDEE'S Food Systems, Inc. ("HARDEE'S"), which Agreement,
and any amendments and attachments thereto (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 this Agreement, the Amended and Restated Formula Development
Agreement, or any agreements delivered therewith.
(c) The parties hereto acknowledge that CKE designation of a
Distributor shall not constitute a representation by CKE regarding such
Distributor's ability to pay, and that the Company shall look solely to the
entity submitting a purchase order hereunder for payment. The Company reserves
the right to decline to provide goods and/or services to any Distributor it
reasonably determines is not credit worthy.
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3. VOLUME COMMITMENT.
(a) During each Contract Year (as defined below), CKE and/or
Distributor and HARDEE'S and/or HARDEE'S Distributor (as defined in the HARDEE'S
AGREEMENT) will together purchase in the aggregate from the Company and the
Company shall sell CKE and HARDEE'S, and/or their respective Distributors, ***
of the annual aggregate pound usage of the Products (as defined in this
Agreement and in the HARDEE'S Agreement) by CKE, HARDEE'S, and their respective
Distributors up to an aggregate total of *** pounds of total Product per
Contract Year (the "Volume Requirement"). Provided, if Company acquires (by
buying or building) an additional plant at a location satisfactory to CKE which
provides additional production capacity which is capable, in the reasonable
determination of HARDEE'S and CKE, of supplying all of their aggregate pound
usage of the Products, then the foregoing limitation of *** pounds shall be
disregarded. Notwithstanding the foregoing, however, the Volume Requirement
shall be pro-rated for any Contract Year consisting of less than 12 months (i.e.
if the final Contract Year consists of 7 months, then the Volume Requirement for
that Contract Year shall be 7/12ths of the original Volume Requirement).
It is expressly understood that non-compliance with the Volume Requirement
will be deemed a material breach of this Agreement even if the Purchase
Threshold is met under the Formula Development Agreement executed herewith.
(b) The Volume Requirement of the Products from the Company will be
reasonably allocated over the 12 month period of each Contract Year (or over the
actual number of calendar months in a Contract Year, if less than 12), to the
extent demand on CKE Product permits such allocation.
(c) At all times during the term of this Agreement and at no
additional cost to CKE, the Company will maintain a safety stock volume of up to
six (6) weeks of Product based on trailing six month period average for system
wide availability in the Company's Ohio storage facilities. CKE reserves the
right to arrange all freight carriers and to pick up Product at Company's
manufacturing facility and cold storage warehouses. Addresses for the storage
facilities are as follows:
CSI Brea Pierre Foods, Inc. Cincinnati Freezer
2750 Orbitor Avenue 9990 Princeton Road 2881 E. Sharon Road
Brea, California Cincinnati, Ohio 45246 Cincinnati, Ohio 45241
Attn: Maritza Jimenez Attn: Bill Kolb Attn: Don Lucas
714-993-3533 800-543-1604 513-771-3573
(d) The Company acknowledges that the annual anticipated purchase
volumes set forth in the DPS are estimates only, and are subject to adjustment
based on actual historical data, promotional forecasts and other information
furnished to the Company from time to time. CKE will provide the Company with a
quarterly forecast at least thirty (30) days prior to the start of each calendar
quarter. Said forecast is an estimate only.
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(e) In the event the Company cannot deliver the Products in the
amounts and on the dates required by CKE, CKE may obtain the Products from
alternate suppliers and test alternate products. Such alternative sources will
count towards the Volume Requirement as if purchased from the Company.
(f) The Company acknowledges and agrees that it is a non-exclusive
supplier of the Products to CKE and Distributor.
4. PRICING AND PAYMENT.
(a) Prices paid by CKE will be fixed for all pick-ups and deliveries
on a weekly basis, or, upon election by CKE, a monthly basis. Prices are
effective at time of shipment date. The fixed costs components of Total Labor
Cost, Total Packaging Cost, Total Overhead Cost, and Profit and Corporate
Overhead Cost in the prices paid by CKE will be fixed as shown on Exhibit I
through April 30, 2004 and thereafter as set forth on Exhibit I-A for all
purchases through the remainder of the Term.
(b) FORMULA PRICING. Pricing will be calculated in accordance with
Exhibits I, I-A, and II, which are incorporated herein by this reference. The
reference document for raw material pricing will be given to the Company by CKE
on a weekly basis, pursuant to CKE's agreement with its raw material supplier
designated from time to time by it (currently ***). The raw material pricing
shall be on a delivered basis and the Company agrees to accept the freight cost
set forth in HARDEE'S agreement with such raw material supplier for all raw
materials being delivered by such supplier to the Company. The cost basis for
Domestic Angus 85%, 80%, 50%, 73%, 65% and all Angus chucks shall be determined
pursuant to CKE's Agreement with ***. To the extent CKE approves imported or
other, alternative Angus trim, then the cost basis for the Angus trim or any
applicable Angus trim components shall be provided by CKE and/or by an
authorized agent of CKE. If CKE chooses to use least cost formulation, pricing
will be adjusted for raw materials and any effect on yields.
(c) PAYMENT TERMS. Unless specifically provided otherwise all payments
required herein to be made by Distributor to the Company shall be net 7 calendar
days from the date of invoice.
(d) VENDOR RETURN. The Company is responsible for the return of
rejected products due to non-compliance to specifications from CKE restaurants.
A handling fee in the amount of 11% of the product cost will be charged to the
Company ($10 minimum, $300 maximum). Any Company approved disposal costs
incurred by CKE will be billed to the Company at cost.
(e) FREIGHT RATE. All Domestic freight rates as noted in the DPS are
guaranteed through September 30, 2004 and reviewed thereafter, every six (6)
months based upon a mutually agreed-upon carrier price quotation for the
subsequent six-month period. Agreement must be made within ten (10) days or end
of each six-month period. If Distributor elects to have product(s) delivered to
the requested facility, freight will be handled FOB
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Destination and freight will be added to the price of each product. Should
Distributor pick up product(s) at the Company's facility, product(s) will be
purchased FOB Origin as noted on the DPS's.
(f) BOOKS AND RECORDS.
(i) INVOICE DISCREPANCIES. CKE will monitor the Company's
invoices and, in the event of continual pricing/invoicing errors, CKE may
assess an administrative charge on all incorrect invoices following notice.
(ii) MAINTENANCE OF BOOKS AND RECORDS. During the Term and for a
period of at least two (2) years thereafter, the Company shall maintain
such books and records (collectively, "Records") as are necessary to
substantiate that all invoices and other charges submitted to CKE for
payment hereunder were valid and proper. All Records shall be maintained in
accordance with generally accepted accounting principles consistently
applied. CKE and/or its representatives shall have the right at any time
during normal business hours, upon twenty-four (24) hours' notice, to
examine said Records. The provisions of this paragraph shall survive the
expiration or earlier termination of this Agreement.
5. DELIVERY.
(a) The Products purchased hereunder shall be delivered on a timely
basis to the locations designated by CKE or Distributor in the DPS, as amended
from time to time by CKE.
(b) In the event the Company cannot fulfill any order within the
delivery dates designated by CKE or Distributor (as applicable), CKE will
invoice the Company for and the Company shall pay CKE for all additional costs,
other than loss of sale costs, associated with the out of stock or late
delivery.
(c) The Company is responsible for reasonable on-time delivery of
orders to CKE and Distributor. In case of late delivery by the Company or its
carriers in excess of 10% of all deliveries during the preceding quarter, CKE
will assess a charge of $26/hour for administrative and receiving labor on all
late deliveries.
6. INDIVIDUAL ORDER TERMINATION. CKE and/or Distributor may at any time by
written notice terminate any individual order in whole or in part if the Company
(i) fails to comply with any of the applicable terms and conditions of the
order; (ii) fails to perform within the time specified (or if no time is
specified, within a reasonable time); (iii) delivers any item that is not as
specified; or (iv) so fails to make progress as to endanger performance of the
order in accordance with its terms. If individual orders are terminated in whole
or in part because of the Company's failure to deliver acceptable products in
accordance with the requirements and terms hereof, a mutually agreed upon
arrangement would be made by both parties to ensure continued supply of order at
no additional cost to CKE or Distributor, as applicable.
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7. QUALITY CONTROL/MICRO TESTING. The Company will establish and
maintain a product safety plan ("Safety Program") and a products quality program
("Quality Control Program"). Copies of the Quality Control Program and Safety
Program will be submitted to CKE's Quality Assurance Department for approval.
The Safety Program will include, without limitation, safety controls,
monitoring, corrective action and verification steps to insure that potential
risks are controlled. The Quality Control Program will include the necessary
controls to assure that all products shipped to CKE's Distribution Center or
directly to restaurants, meet the current finished product specifications,
including a hold for release microbiological program to insure that all
microbiological test results meet standards prior to its release. CKE agrees to
accept the Company's pathogen results for product from the Company plant's test
and hold program. Auditing forms, lab reports and other verification data will
be maintained by the Company and made available to CKE upon request. CKE may
monitor the Company's production and/or inspect the Company's facilities at any
reasonable time during the Company's operating hours. The Company will submit a
manifest of code dates with the corresponding number of cases on all products
shipped to CKE. The Company shall reimburse CKE for all reasonable costs
associated with the Company's failure to deliver acceptable product in
accordance with the product specifications. In such event, or pursuant to the
Company's request to transfer production to an unapproved plant, the Company
shall reimburse CKE for all reasonable costs associated with approving an
alternate or secondary plant or location, unless approval of the alternate or
secondary plant or location is initiated solely by CKE for the sole purpose of
providing a lesser cost. Any deviation from CKE's approved specifications,
including formulation and packaging changes, will require PRIOR approval from
CKE's quality assurance department. On a monthly basis the Company shall
complete and submit to the CKE's quality assurance department specification
summary reports. The Company shall submit biannually to CKE's quality assurance
department an independent food safety and GMP systems audit from a CKE's
approved third party auditor. Based on CKE's product compliance testing program,
the Company's products will be sampled from approved distribution centers or
from individual restaurants by an independent auditor or by CKE's personnel for
required analysis at supplier's expense. Provided, the cost assessed to the
Company with respect to the two foregoing sentences shall not exceed $30,000 in
the aggregate for such expenses arising out of this Section 7 and Section 7 of
the HARDEE'S Agreement per calendar year. When and if quality problems occur,
the Company shall implement a temperature tracking and recording program for
temperature sensitive products that are delivered with a radius greater than two
(2) hours or one hundred (100) miles from the nearest distribution center.
8. COMPLETE AGREEMENT.
(a) The following attachments (the "Attachments") are incorporated
herein by this reference and are part of this Agreement and a breach of any
terms thereunder shall constitute a breach hereunder: (i) CKE Items #9598
Formula Pricing Exhibits I and I-A, (ii) *** Angus Formula Pricing and Freight
Costs for Pierre Foods Exhibit II, (iii) Detailed Product Schedule (DPS), (iv)
CKE Quality Assurance Department Finished Product Specification, QA approved
label, Mold Plate Data Sheet, Visual Standards, and CKE's Label/Case Printing
Requirements, (v) CKE Microbiological Testing Program, (vi) Amended and Restated
Formula Development Agreement, and (vii) Amended and Restated Confidentiality
Agreement. By
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execution of this Agreement, the Company and CKE acknowledge receipt and
acceptance of all Attachments.
(b) This Agreement together with all Attachments hereto, shall
constitute the complete agreement between CKE and the Company and shall
supersede all prior or contemporaneous proposals, representations,
understandings, and other communications between the parties concerning the
matters addressed in this Agreement and the Attachments, whether oral or
written, unless specifically incorporated herein by reference.
(c) The issuance of information, advice, approvals, or instructions by
a party's technical personnel or other representatives shall be deemed
expressions of personal opinions only and shall be of no force or effect and
shall not affect such party's rights and obligations hereunder, unless the same
is in writing and signed by an authorized officer of such party and delivered to
the other party.
9. TERM AND RENEWAL.
(a) The term of this Agreement shall commence as of February 1, 2004
and unless sooner terminated in accordance with the provisions hereof, shall
expire at 12:00 midnight Eastern time on July 31, 2007 (the "Term").
(b) CKE and the Company agree that prior to six (6) months before
expiration of the Term, the parties shall negotiate in good faith for a one (1)
year renewal (the "Renewal Term") of this Agreement; provided, in the event the
parties are unable to mutually agree upon the terms and conditions for the
Renewal Term at least one hundred and fifty (150) calendar days prior to the
expiration of this Agreement, this Agreement shall expire as of the original
Term, unless terminated earlier. For the purposes of this Agreement, the term
"Term" shall be deemed to include any Renewal Term.
(c) Every consecutive twelve (12) calendar month period commencing on
February 1 during the Term shall be referred to as a "Contract Year" with the
final period beginning on February 1 and ending on July 31 (whether or not the
Renewal Term is included pursuant to Section 9(b)) also being considered a
Contract Year except that the Volume Requirement shall be adjusted pursuant to
Section 3(a) above.
10. TERMINATION OF AGREEMENT.
(a) Either party may terminate this Agreement at any time, effective
upon the other party's receipt of termination notice, without prejudice to any
other legal rights to which the terminating party may be entitled, upon the
occurrence of any one of the following:
(i) Upon ten (10) days written notice to the breaching party
describing with detailed specificity a material breach of this Agreement
that is not cured to the non-breaching party's satisfaction within such ten
(10) days period.
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(ii) upon a default by a party in the payment of any monetary
obligation payable to the other hereunder and such default continues for
ten (10) days after the payee party gives the payor party written notice of
such non-payment.
(iii) If any of the representations or warranties made by the
other party in this Agreement or any of the Attachments shall prove to be
untrue or inaccurate in any material respect.
(iv) The other party (i) ceases to conduct its operations in the
normal course of business; (ii) is unable to meet its obligations as they
mature; (iii) makes an assignment for the benefit of creditors, or has
proceedings in bankruptcy or insolvency brought against it; or (iv) applies
for or suffers the appointment of a receiver.
(v) A party provides a sixty (60) days written notice to the
other party, in the event CKE makes significant specification changes to,
or deletes from the menu of its CKE restaurants all of the items listed in
the DPS. In the event of significant specification changes, CKE will allow
the Company a reasonable opportunity to become an approved supplier of the
newly defined item(s) upon mutually agreeable terms. Significant
specification changes do not include size, shape, weight (provided no raw
cost increase without mutual pricing adjustment), minor formulation or
minor production procedure changes; provided, such change does not require
the Company to incur material re-tooling or line/machine set up costs.
(b) If, within a reasonable time after having received a written
notice describing with specificity the failure to comply with product
specifications, the Company continues to fail to comply with product
specifications, CKE may terminate this Agreement by providing the Company thirty
(30) days written notice. Following such notice of termination, CKE may return
goods in inventory which fail to comply with product specifications for full
reimbursement, due and payable by the Company within seven (7) days of the date
of such return.
(c) Termination of this Agreement for any reason provided herein shall
not relieve either party from its obligation to perform up to the effective date
of termination or to perform such obligations that may survive termination.
(d) Promptly following the date of termination, the Company will
return to CKE and CKE will purchase at cost any unused packaging and labeling
supplies and raw materials on hand, and all finished products on hand complying
with the specification; provided, the Company shall not be required to return
and CKE shall not be responsible for purchasing more than sixty (60) days worth
of raw materials (including packaging) and finished products, as determined by
the forecast submitted by CKE, unless specifically directed by CKE in writing to
increase inventory levels. The purchased raw materials and unused packaging and
labeling supplies shall be at the Company's cost and the purchased finished
products shall be at the price set forth herein, all with payment within seven
(7) days after return.
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11. MODIFICATION. This Agreement may be modified only by a written
agreement signed by both parties. This Agreement amends, restates and supercedes
that certain Agreement pertaining to the subject matter hereof executed by the
parties on February 1, 2004.
12. INDEMNIFICATION. Company shall indemnify, defend and hold harmless CKE,
and its parents, affiliates, subsidiaries, and all of their respective officers,
directors, employees, agents, representatives and stockholders, and any designee
or customer of CKE (collectively, the "Indemnified Parties") from and against
any and all losses, claims, actions, damages, expenses or liabilities,
including, without limitation defense costs and attorneys' fees, resulting from,
arising out of or connected with any or all claims arising from (i) the use of
the products supplied by Company and/or services provided hereunder, including,
but not limited to, any claim for death or personal injury or damage or loss of
property which shall have been caused or alleged to have been caused, in whole
or in part, by any action or failure to act on the part of Company, its
shareholder, directors, officers, employees, contractors or agents, any defect
in the materials or workmanship used to manufacture the products, or any claim
under a theory of strict liability, and (ii) the breach by Company of any
representation, warranty, covenant or obligation of Company hereunder. In the
event any third party asserts any claim with respect to any matters as to which
any guarantee or indemnity in this Agreement (or given pursuant to this
Agreement) relate, the Indemnified Party or Parties shall give prompt notice
written to Company, and Company shall have the right at its election to take
over the defense or settlement of the third party claim at its own expense by
giving prompt notice to the Indemnified Party(ies). If Company does not give
such notice and does not proceed diligently so to defend the third party claim
within 30 days after receipt of the notice of the third party claim, Company
shall be bound by any defense or settlement that the Indemnified Party(ies) may
make to those claims and shall reimburse the Indemnified Party(ies) for its
expenses related to the defense or settlement of the third party claim. Nothing
in this Agreement shall be construed to hold Company liable for any losses,
claims, damages, expenses or liabilities including, without limitation, defense
costs and attorneys' fees, to the extent such loss, claim, damage, expense or
liability results from or arises out of CKE's or Distributor's misconduct or
negligence.
13. INSURANCE. The Company shall furnish to CKE a current certificate of
insurance, which shall include a thirty (30) day written notice of cancellation
to CKE evidencing the Company has automobile, comprehensive general liability,
products liability and workers' compensation insurance or an equivalent. With
the exception of workers' compensation, all policies shall include CKE, its
parent, affiliates, subsidiaries and franchisees as additional insureds and
shall include a contractual liability endorsement to cover the Company's
indemnification obligations hereunder. Such policies shall state that coverage
as it pertains to CKE shall be primary regardless of any other coverage which
may be available to CKE and shall be an occurrence rather than a claims made
basis.
(a) COMPREHENSIVE AUTOMOBILE LIABILITY, INCLUDING OWNED AND NON-OWNED
AUTOS; BODILY INJURY, AND PROPERTY DAMAGE: $3,000,000 per occurrence
(aggregate primary and umbrella coverage).
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(b) COMPREHENSIVE GENERAL LIABILITY, WITH BROAD FORM PROPERTY DAMAGE,
COMPLETED OPERATIONS, PERSONAL INJURY, INDEPENDENT CONTRACTORS AND
CONTRACTUAL LIABILITY: $3,000,000 per occurrence (aggregate primary and
umbrella coverage).
(c) WORKERS' COMPENSATION: AT STATUTORY LIMITS WITH EMPLOYERS'
LIABILITY: $1,000,000 per occurrence.
(d) The Company must provide to CKE the workers' compensation policy
number prior to commencing any work for CKE. It is the responsibility of
the Company to notify CKE of any changes and/or renewals to the Workers'
Compensation policy number. The Company shall require all subcontractors to
maintain the required insurance. No work hereunder shall commence until
above insurance is obtained, a certificate is provided to CKE and CKE has
approved the certificate in writing.
(e) PRODUCTS LIABILITY INSURANCE: $3,000,000 per occurrence (aggregate
primary and umbrella coverage).
14. ASSIGNMENT. No assignment or subcontract hereof shall be made by either
party without the prior written consent of the other party, and no delegation of
any obligation or of the performance of any obligation by the Company shall be
made without the prior written consent of CKE. Any attempted assignment or
delegation shall be void and ineffective for all purposes unless made in
conformity with this paragraph. The terms shall inure to the benefit of, and be
binding on, the successors and assigns of the parties.
15. CAPTIONS. Captions and titles of paragraphs contained herein are
for convenience only, and shall not be construed to limit, expand or otherwise
change the meaning of any provision hereof.
16. FORCE MAJEURE. Either party is excused from performance hereunder if
such non-performance results from any acts of God, war, riots, acts of
governmental authorities, or any other cause outside the reasonable control of
the non-performing party. Both parties shall use their best efforts to terminate
or cause the expiration of any Force Majeure as soon as practical following its
occurrence. If the Company cannot deliver the Products in the amounts and on the
dates required by CKE during such Force Majeure event, then CKE may obtain the
Products from the alternate vendors ("FDA Vendors") set forth in Section 7 of
the Formula Development Agreement between the parties dated as of even date
herewith. If such FDA Vendors are unable to deliver the Products in the amounts
and on the dates required by CKE during such Force Majeure event, then CKE may
obtain Products from and Company shall license and work with alternate suppliers
and test alternate products. CKE's purchases from the FDA Vendors and such
alternate sources during the Force Majeure event will count towards the Volume
Requirement as if purchased from the Company.
17. GOVERNING LAW. This contract and all Purchase Orders that may be issued
hereunder shall be construed in accordance with, and governed by, the laws of
the State of California, including the Uniform Commercial Code, without
reference to laws or principles regarding choice of laws. The parties consent to
the exclusive jurisdiction of the state and
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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.
18. LAWS AND REGULATIONS. The Company shall comply with all applicable
laws, ordinances, rules and regulations including federal, state and local
authorities and departments relating to or affecting the Company and/or the
manufacture, sale or use of the goods or services to be rendered hereunder,
including without limitation Title VII of the Civil Rights Act, as amended from
time to time, and shall secure and obtain any and all permits, licenses and
consents as may be necessary in connection therewith.
19. PATENT, TRADEMARK AND COPYRIGHT PROTECTION. The Company shall defend
and indemnify CKE, Distributor and their parents, affiliates and subsidiaries,
and all of their directors, officers and employees and hold them harmless with
respect to all patent, trademark and copyright infringement liability or
expenses arising out of the use or sale of the goods covered hereunder, or any
part(s) thereof, and after notice appear and defend at its own expense any such
suits in law or equity, except such trademarks or copyrights as may be furnished
to the Company by CKE for use in connection with the packaging of products
pursuant to this Agreement. If CKE is enjoined from use of the goods by reason
of infringement of any patent, trademark or copyright furnished by the Company,
the Company shall, at CKE's option, either procure for CKE the right to continue
using the goods, replace said goods with non-infringing goods or parts thereof,
modify the goods so as to be non-infringing or, if CKE elects, repurchase the
goods at the contract price or terminate the order without further liability to
the Company.
20. SEVERABILITY AND CONSTRUCTION. Any provision used herein which is held
invalid or unenforceable by any authority of competent jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability without
invalidation or rendering unenforceable the remaining provisions hereof;
provided, however, that if such modification would cause this Agreement to fail
in its essential purpose or purposes, it shall be deemed terminated by mutual
agreement of the parties. If this Agreement is terminated pursuant to this
provision, payment shall be made only to the extent of a party's performance to
and including the date of termination, and any payments which shall have been
made and which are applicable to future time periods shall be refunded pro rata
to the effective date of termination. The language used herein shall be deemed
to be the language chosen by the parties hereto to express their mutual intent,
and no rule of strict construction shall be applied against either party.
21. SUBSTITUTIONS. No substitution of, nor alteration in any goods,
component parts thereof, tooling, processes, or manufacturing sites may be made
without the prior written, or FAX, consent from CKE.
22. SURVIVAL. All warranties, representations, covenants and obligations of
the parties hereunder shall survive the termination or expiration of this
Agreement.
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23. USE OF LOGOS AND MARKS. The Company shall not use, in any manner
whatsoever, any of the logos, trademarks, or service marks owned by CKE or
associated with CKE'S restaurant system without the prior written consent of
CKE. The Company expressly acknowledges CKE's exclusive right, title and
interest in and to such logos and marks, and agrees not to represent in any
manner that the Company has any ownership in CKE's logos or marks.
24. WARRANTY AND REGULATORY COMPLIANCE. The Company warrants that all goods
to be delivered hereunder will be of merchantable quality, free from any latent
or patent defects, will strictly conform to all of CKE's specifications or
samples in all material respects and will be fit and safe for their intended
use. The Company also warrants that the Company shall be in compliance with all
applicable laws, regulations, rules and ordinances, and warrants that the goods
shall comply with and shall not be misbranded or adulterated under any and all
applicable federal, state and local laws, rules, ordinances and regulations
(collectively "Laws"), including specifically those Laws governing health and
food safety and the production, packaging, storage, distribution and sale of the
goods. The Company also warrants that is has the full and legal authority to
enter into and fully perform this Agreement in accordance with its terms and
that the execution and delivery of this Agreement has been duly authorized by
the Company.
25. EXPENSES. Except as otherwise specifically provided in this Agreement,
each party shall be responsible for any expenses incurred by such party in
carrying out its obligations herein.
26. INDEPENDENT CONTRACTOR. The parties shall be and act as independent
contractors, and under no circumstances shall this Agreement be construed as one
of agency, partnership, joint venture or employment between the parties. Each
party acknowledges and agrees that it neither has or will give the appearance or
impression of having any legal authority to bind or commit the other party in
any way.
27. FAILURE TO OBJECT. The failure of either party to object to or to take
affirmative action with respect to any conduct of the other party which is in
violation of the terms hereof shall not be construed as a waiver thereof, nor of
any future breach or subsequent wrongful conduct.
28. NOTICES. All notices, requests and approvals under this Agreement shall
be in writing and shall be deemed to have been properly given if and when
personally delivered or sent certified mail, postage prepaid, return receipt
requested, or twenty-four (24) hours after being sent by standard form of
telecommunications, or thirty-six (36) hours after being sent by Federal Express
or other overnight courier service providing delivery confirmation, to the
address of the party set forth below or at such other address as any of the
parties hereto from time to time may have designated by written notice to the
other party:
----------
Confidential information redacted and
Omitted portions are indicated by [***]. filed separately with the Commission.
11
<Page>
To the Company: To CKE:
Pierre Foods, Inc. Carl Karcher Enterprises, Inc.
9990 Princeton Road 6307 Carpinteria Ave., Suite A
Cincinnati, Ohio 45246 Carpinteria, California 93013
Attention: Robert C. Naylor Attention: John Dunion
with a copy to: with a copy to:
T. Stewart Gibson, PLLC Carl Karcher Enterprises, Inc.
The Power Plant, Suite 302-B 6307 Carpinteria Ave., Suite A
1701 Sunset Avenue Carpinteria, California 93013
Rocky Mount, North Carolina 27804 Attention: Legal Counsel
29. MISCELLANEOUS.
(a) Each of the individuals executing this Agreement certifies that he
or she is duly authorized to do so.
(b) The rights and remedies set forth herein are intended to be
cumulative, and the exercise of any one right or remedy by either party shall
not preclude or waive its exercise of any other rights or remedies hereunder or
pursuant to law or equity.
(c) Should any party commence legal action to interpret or enforce the
terms of this Agreement, the prevailing party in such action shall be entitled
to recover reasonable attorneys' fees and costs, including those incurred at the
trial and appellate levels and in any bankruptcy, reorganization, insolvency or
other similar proceedings.
This Agreement is not to be legally binding until the Company has sent two
(2) signed original copies to CKE and CKE has signed and returned its acceptance
to the Company.
PIERRE FOODS, INC. CARL KARCHER ENTERPRISES, INC.
By: /s/ Robert C. Naylor By: /s/ John Dunion
-------------------------------- -----------------------------
Robert C. Naylor John Dunion
Senior Vice President - Sales Executive Vice President
----------
Confidential information redacted and
Omitted portions are indicated by [***]. filed separately with the Commission.
12
<Page>
EXHIBIT I
---------
FIXED COSTS COMPONENTS
THROUGH APRIL 30, 2004
Omitted portions are indicated by [***]. Confidential information redacted and
filed separately with the Commission.
<Page>
EXHIBIT I
CONFIDENTIAL
ANGUS BURGERS (RESOURCES 9560Z ***) PRICING
PIERRE FOODS
Pricing Effective Week of 02/08/04 (Negotiated Price Using *** Raw Material
Cost)
<Table>
<Caption>
Resource 9560Z
Per Pound
Price
<S> <C> <C>
Fresh Domestic Angus *** $
Fresh Domestic Angus *** $
Fresh Angus *** $
Curavis 350 Phosphate $ ***
$
$
*** $
$
FORMULA
Fresh Domestic Angus *** % $
Fresh Domestic Angus *** % $
Fresh Angus *** % $
Curavis 350 Phosphate *** % $ *** 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
TOTAL FORMULA COST $ *** contents, or to use such contents in any way.
YIELD
*** %
*** %
%
--------------
TOTAL YIELD LOSS *** %*
Cook Yield (Div. By) %
$
$
*** ***
$
$
$ ***
$
$
PROFIT AND CORPORATE OVERHEAD COST $
***
*** $ ***
TOTAL PRODUCT COST $
--------------
TOTAL *** COST/CASE: $ ***
--------------
</Table>
* Any changes to formulation will affect the formula cost. Resources 9560Z 25.78
lbs / case
** This product is discontinued and replaced by 9598. This pricing is effective
until 05/01/04. See Exhibit 1-A
5/3/2004 3:12 PM
Omitted portions are indicated by [***]. Confidential information redacted and
filed separately with the Commission.
<Page>
EXHIBIT I-A
FIXED COSTS COMPONENTS
AFTER APRIL 30, 2004
Omitted portions are indicated by [***]. Confidential information redacted and
filed separately with the Commission.
<Page>
EXHIBIT I-A
CONFIDENTIAL
ANGUS BURGERS (RESOURCE 9598 ***) PRICING
PIERRE FOODS
Pricing Effective Week of 05/01/04 (Negotiated Price Using *** Raw Material
Cost)
<Table>
<Caption>
Resource 9598
Per Pound
*** Price
<S> <C> <C>
Fresh Domestic Angus *** $
Fresh Domestic Angus *** $
Fresh Angus *** $
Curavis 350 Phosphate $ ***
$
$
*** $
$
FORMULA
Fresh Domestic Angus *** % $
Fresh Domestic Angus *** % $
Fresh Angus *** % $
Curavis 350 Phosphate *** % $ ***
%
