Exhibit 10.1
PORTIONS OF THIS AGREEMENT MARKED BY “***” HAVE BEEN
OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
ROYALTY AND SUPPLY AGREEMENT
This Royalty and Supply Agreement (“Agreement”) dated as of the 15th day of
July, 2010 (the “Effective Date”), is by and between AFC ENTERPRISES, INC.
(“AFC”) and DIVERSIFIED FOODS AND SEASONINGS, INC. (“Diversified”).
WHEREAS, Diversified has substantial experience in the production and/or supply
of certain commercial seasonings, spices, custom-formulated cooked products, and
other products and supplies; and
WHEREAS, AFC is the franchisor of the Popeyes®, Popeyes® Chicken & Biscuits and
Popeyes® Louisiana Kitchen quick service restaurant system and as of the
Effective Date operates, and licenses others to operate, Popeyes restaurants
around the world; and
WHEREAS, Diversified has acted as a supplier for certain products used in
Popeyes restaurants; and
WHEREAS, AFC and Diversified, and their respective predecessors, have been
parties to various agreements and amendments thereto dealing with Diversified’s
supply of products; and
WHEREAS, AFC and Diversified desire to enter into a comprehensive royalty and
supply agreement under the terms set forth herein;
NOW, THEREFORE, in consideration of the premises and representations,
warranties, covenants, and agreements contained herein, the parties, intending
to be legally bound, agree as follows:
1. DEFINITIONS
     1.1 “AFC” means AFC Enterprises, Inc., a Minnesota corporation with a
principal place of business, as of the Effective Date, located at 5555 Glenridge
Connector, NE, Suite 300, Atlanta, Georgia 30342, and its successors.
     1.2 “AFC Confidential Information” means secret, confidential or
proprietary information of AFC, including without limitation, (i) AFC’s
Formulas; (ii) other trade secrets of AFC; (iii) food preparation processes,
procedures, methods and techniques developed by AFC; (iv) marketing plans;
(v) test products; (vi) strategic plans; (vii) pricing plans and structures; and
(viii) lists of Franchisees and lists of products and supplies approved by AFC.
The term “AFC Confidential Information” does not include information that has
become generally, readily, and freely available to the public by the act of a
person or entity (other than Diversified or any affiliate or representative of
Diversified or any person or entity acting in concert with or with the
assistance or encouragement of Diversified) that has the right to disclose such
information without violating any right of AFC (such as, for example, the filing
of information by AFC with the Securities and Exchange Commission on EDGAR). The
term

 

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“AFC Confidential Information” does not include information which was known to
Diversified prior to its disclosure by AFC, or that is independently developed
by Diversified, in each case without using the AFC Confidential Information and
without any use of Prohibited Analysis on any of AFC’s products.
     1.3 “AFC Markings” means trademarks, trade names, logos or other
identifying markings owned by AFC.
     1.4 “Calendar year” or “calendar year” means the one-year period from and
including any January 1 to and including the following December 31.
     1.5 “Core Product” or “Core Products” means the products identified in
Schedule A attached hereto, including any modifications thereto, as may be
amended in accordance with the terms of this Agreement.
     1.6 “Distributor” means a person or entity that has a contract with AFC, or
with a purchasing cooperative affiliated with AFC (such as Supply Management
Services, Inc.), to distribute products to AFC or the Franchisees.
     1.7 “Diversified” means Diversified Foods and Seasonings, Inc., a Louisiana
corporation with a principal place of business, as of the Effective Date,
located at 1115 North Causeway Boulevard, Suite 200, Mandeville, Louisiana
70471, and its successors.
     1.8 “Diversified Confidential Information” means secret, confidential or
proprietary information of Diversified, including without limitation, (i) the
Popeyes Formulas, (ii) other trade secrets of Diversified; (iii) food
preparation processes, procedures, methods, and techniques developed by
Diversified, and (iv) all information regarding Diversified’s costs, prices,
revenues, margins, profits, and other financial information. The term
“Diversified Confidential Information” does not include information that has
become generally, readily, and freely available to the public by the act of a
person or entity (other than AFC or any affiliate or representative of AFC or
any person or entity acting in concert with or with the assistance or
encouragement of AFC) that has the right to disclose such information without
violating any right of Diversified. The term “Diversified Confidential
Information” does not include information which was known to AFC prior to its
disclosure by Diversified, or that is independently developed by AFC, in each
case without using the Diversified Confidential Information and without any use
of Prohibited Analysis on any of Diversified’s products.
     1.9 “Diversified Markings” means trademarks, trade names, logos or other
identifying markings owned by Diversified.
     1.10 “Domestic Market” or “Domestic Markets” means the forty eight
continental states in the United States of America (excluding Alaska and Hawaii)
and the District of Columbia.
     1.11 “Effective Date” means the date first set forth above in this
Agreement.

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     1.12 “First Amendment to Formula Agreement” means the untitled agreement
entered into on or about March 21, 1989, between Alvin C. Copeland, Sr., New
Orleans Spice Company, Inc., and Biscuit Investments, Inc.
     1.13 “Flour-Based Core Product” means the products indicated as such on
Schedule A and any other Core Product added to Schedule A after the Effective
Date that is flour-based.
     1.14 “Flour Index” means the Flour Seller’s quoted price for [***] hard
wheat flour (or, if Flour Seller has discontinued selling such brand, its most
nearly comparable brand) to be delivered in the first full calendar month
following the date of the quote, FOB the Flour Seller’s [***] mill, in bulk.
(For example, if the price is quoted on June 12, 2011, it would be the price for
delivery in July 2011.)
     1.14A. “Flour Seller” means [***], or the successor to its flour sales
business.
     1.15 “Formula Agreement” means the agreement entered into on or about
July 2, 1979, between Alvin C. Copeland, Sr., Gilbert E. Copeland, Mary L.
Copeland, Catherine Copeland, Russell J. Jones, A. Copeland Enterprises, Inc.,
and Popeyes Famous Fried Chicken, Inc.
     1.16 “Franchisee” or “Franchisees” means persons or entities who have a
franchise or other agreement with AFC for the purpose of operating a Popeyes
Restaurant.
     1.17 “Including” or “including” means including but not limited to.
     1.18 “International Market” or “International Markets” means any and all
countries or markets (including Alaska and Hawaii) in which AFC or any
Franchisee operates a Popeyes Restaurant other than in Domestic Markets.
     1.19 “Markings” means trademarks, trade names, logos or other identifying
markings.
     1.20 “Other Product” or “Other Products” means any product sold or to be
sold in Popeyes Restaurants that is not identified in Schedule A attached
hereto.
     1.21 “Popeyes” means Popeyes®, Popeyes® Chicken & Biscuits, Popeyes®
Louisiana Kitchen, a circle containing a capital letter “P”, other marks
utilized by the Popeyes System, and any other variation or derivative of any of
the foregoing, as the same may evolve over time.
     1.22 “Popeyes Formula” or “Popeyes Formulas” means the recipes or formulas
used by Diversified for the preparation of the Core Products.

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     1.23 “Popeyes Restaurant” or “Popeyes Restaurants” means a restaurant
operated in connection with the Popeyes System.
     1.24 “Popeyes System” means the entire Popeyes restaurant system that AFC
operates and/or licenses or contracts with others to operate now or in the
future, as the same may evolve over time.
     1.25 “Recipe Royalty Agreement” means the agreement entered into on or
about March 21, 1989, between Alvin C. Copeland, Sr., New Orleans Spice Company,
Inc. and Biscuit Investments, Inc.
     1.26 “Second Amendment to Formula Agreement” means the agreement so
entitled and entered into on or about March 21, 1989, between Alvin C. Copeland,
Sr., Biscuit Investments, Inc., and New Orleans Spice Company, Inc.
     1.27 “SMS” means Supply Management Services, Inc. (which is the purchasing
co-operative of the Popeyes System as of the Effective Date) and any subsequent
purchasing co-operative for the Popeyes System.
     1.28 “Supply Contract” means the agreement so entitled and entered into on
or about March 21, 1989, between New Orleans Spice Company, Inc. and Biscuit
Investments, Inc.
     1.29 “Supplemental Disclosure” means the Supplemental Disclosure Relating
to Plan of Reorganization Proposed by Canadian Imperial Bank of Commerce, as
agent, including all exhibits thereto, filed on or about August 12, 1992, in the
United States Bankruptcy Court for the Western District of Texas, Austin
Division, in the case of Al Copeland Enterprises, Inc., debtor, Case No. 91
12575 FM 11.1.22.
     1.30 “1994 Letter Agreement” means the letter agreement entered into on or
about June 13, 1994, between Alvin C. Copeland, Sr., America’s Favorite Chicken
Company, and Diversified Foods and Seasonings, Inc., executed by Kam M. Nasser
and Alvin C. Copeland, Sr.
     1.31 “1997 Settlement Agreement” means the agreement entered into on or
about May 29, 1997, between Alvin C. Copeland, Sr., AFC Enterprises, Inc.,
Diversified Foods and Seasonings, Inc., and Flavorite Laboratories, Inc.
2. TERMINATION OF PRIOR AGREEMENTS. AFC and Diversified acknowledge and agree
that, to the extent contractual rights or obligations have been created by any
agreements between the parties or their predecessors in interest, they are,
respectively, the successors in interest to those agreements, including without
limitation, the Formula Agreement, the First Amendment to Formula Agreement, the
Second Amendment to Formula Agreement, the Recipe Royalty Agreement, the Supply
Contract, the Supplemental Disclosure, the 1994 Letter Agreement, and the 1997
Settlement Agreement (collectively the “Prior Agreements”). AFC and Diversified
agree that as of the Effective Date of this Agreement, the Prior Agreements
shall be terminated in their entirety, shall have no force or

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effect whatsoever, and this Agreement shall instead be applicable in lieu
thereof, excepting only, however, that within 10 days after the Effective Date,
AFC shall pay the portion of the royalty payment that accrued but was unpaid
under the Recipe Royalty Agreement as of the Effective Date.
3. TERM AND TERMINATION
A. Term. The initial term of this Agreement (the “Initial Term”) shall commence
on the Effective Date and shall continue through March 20, 2029, unless earlier
terminated in accordance with the terms of this Agreement. At the end of the
Initial Term, this Agreement shall be renewed in two (2) year increments (each,
a “Renewal Term”), provided that AFC and Diversified mutually agree in writing
on such renewal terms. The “Term” means the Initial Term and any Renewal
Term(s). This is an exclusive requirements contract. So long as this Agreement
remains in effect, AFC agrees (i) that it will utilize Diversified as the
exclusive supplier of all of AFC’s requirements of the Core Products, and
(ii) that AFC will require the Franchisees to utilize Diversified as their
exclusive supplier of all of their requirements of the Core Products. It is
acknowledged and agreed that the supply of products by Diversified to AFC and
the Franchisees is now and may be made either directly or indirectly through
Distributors or agents.
B. Breach. In the event that (i) either party materially breaches this
Agreement, and (ii) such material breach shall remain substantially un-remedied
for a period of thirty (30) calendar days after written notice of such breach
from the non-breaching party, specifying in reasonable detail the nature and
scope of the material breach, then the non-breaching party may terminate this
Agreement by giving 30 days advance written notice to the breaching party;
provided, however, that if such matter is not reasonably susceptible of cure
within such thirty (30) day period, then the thirty (30) day period shall be
extended for a commercially reasonable period (not to exceed one hundred and
eighty (180) days in the aggregate) so long as the party in breach (1) promptly
notices the other party in writing of the expected period of time required to
cure the default together with reasonable detail to support the position that it
cannot cure the default within the thirty (30) day period; (2) commences
curative action within the thirty (30) day period or as soon as commercially
reasonable if it cannot reasonably be commenced within the thirty (30) day
period; and (3) diligently proceeds therewith to completion within a
commercially reasonable time.
C. Effect of Termination.
(i) Discontinue Use. Upon the expiration or the termination of this Agreement in
accordance with its terms for any reason, and subject to the provisions of
Section 3(C)(iii): (a) Diversified shall immediately and for fifty years and
permanently thereafter discontinue and refrain from the use of all AFC Markings
and all trade secrets of AFC and all AFC Confidential Information, and (b) AFC
shall immediately and for fifty years and permanently thereafter discontinue and
refrain from the use of all Diversified

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Markings and all trade secrets of Diversified and all Diversified Confidential
Information.
(ii) Deliver Materials. Upon the expiration or the termination of this Agreement
in accordance with its terms for any reason, and subject to the provisions of
Section 3(C)(iii): (a) Diversified shall promptly deliver to AFC, or at AFC’s
option, destroy, all AFC Markings and any other printed material containing
either the AFC Markings, AFC trade secrets and/or AFC Confidential Information,
and (b) AFC shall promptly deliver to Diversified, or at Diversified’s option,
destroy, all Diversified Markings and any other printed material containing any
Diversified Markings, Diversified trade secrets and/or Diversified Confidential
Information.
(iii) Pending Orders. Upon the expiration or the termination of this Agreement
in accordance with its terms for any reason, Diversified shall fulfill all
product orders that were made under this Agreement prior to the expiration of
this Agreement or the effective date of any termination of this Agreement. Upon
AFC’s written request, Diversified shall further continue to supply the Core
Products to the Popeyes System in accordance with and subject to the terms of
this Agreement, at prices equal to those immediately in effect prior to
termination or expiration plus 7.5%, for a period of time designated by AFC, up
to but not exceeding six (6) months. The parties shall cooperate with each other
and with any supplier designated by AFC in the transfer of the expired or
terminated services in order to facilitate the seamless transfer of the
terminated supply.
(iv) Rights to Popeyes Formulas. Upon the expiration or the termination of this
Agreement in accordance with its terms for any reason, AFC acknowledges and
agrees that Diversified shall have the full and exclusive right to use, sell,
license, and otherwise exploit commercially in any lawful manner the Popeyes
Formulas; however, in doing so Diversified shall not disclose to any party that
the Popeyes Formulas have been utilized by Popeyes at any time.
4. LICENSE AGREEMENT. Diversified hereby grants to AFC, subject to the terms and
conditions of this Agreement, an exclusive non-transferable license (the
“License”), for the full Term of this Agreement, to use the Popeyes Formulas in
connection with the operation of Popeyes Restaurants by AFC and/or the
Franchisees by virtue of having the right to use in such connection products
made in whole or in part with a Popeyes Formula by Diversified. Diversified
hereby agrees not to grant any third party the right to use any Popeyes Formula
without the express written consent of AFC, such consent to be in AFC’s sole
discretion, except that Diversified may grant such rights without AFC’s consent
for the purpose of enabling a third party to manufacture or process Core
Products (such as rights granted to a co-packer or a further processor) for use
in the Popeyes System. Diversified warrants that Diversified knows and will
maintain its knowledge of the Popeyes Formulas for the Term of this Agreement.
AFC acknowledges and agrees that (i) Diversified retains all

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rights not expressly granted with respect to the Popeyes Formulas, including the
right to use the Popeyes Formulas in the production of food, in accordance with
the terms of this Agreement and (ii) AFC has no right to see or know the
contents of any Popeyes Formulas. This shall not relieve Diversified from its
obligation to provide ingredient information to AFC on a continuing basis as
necessary for compliance with laws, regulations, and judicial orders.
5. ROYALTY AGREEMENT. AFC agrees to pay a royalty payment for the exclusive use
of the Popeyes Formulas as set forth in Section 4 of $254,166.67 per month,
prorated for any period less than a month, during the Term of this Agreement and
during any period of time designated by AFC under Section 3(C)(iii), with 16% of
each payment being made to Diversified and the remaining 84% of each payment
being made to the Estate of Alvin C. Copeland, Sr., or its successor (the
“Estate”). Each payment shall be made on the first business day of each month
(or prorated period) by wire transferable funds, by cashiers or certified check,
or by any other means acceptable to Diversified and the Estate. The Estate shall
be a third-party beneficiary of this Agreement for purposes of this Section.
6. SUPPLY IN INTERNATIONAL MARKETS. AFC and Diversified agree that, subject to
the conditions in Section 8 of this Agreement, after the Effective Date of this
Agreement, no obligation is imposed on AFC by this Agreement to purchase, or to
cause any of its Franchisees or Distributors to purchase, from Diversified, any
Core Products or Other Products in or for use in any International Markets, and
no obligation is imposed on Diversified by this Agreement to sell any Core
Products or Other Products to AFC or any Franchisees or Distributors in or for
use in any International Markets. AFC and Diversified may or may not enter into
one or more other agreements from time to time that govern such purchases and
sales, but such purchases and sales are not governed by this Agreement. For
example, with respect to certain International Markets, AFC and Diversified may
agree that Diversified will supply Core Products or Other Products to such
markets, but any such separate agreements will not be governed by this
Agreement.
A. Exception for Certain International Markets. Notwithstanding the foregoing,
AFC and Diversified agree that, for a period of time commencing on the Effective
Date and continuing thereafter until December 31, 2015 for five (5) years,
certain International Markets constituting United States military bases, Canada,
and the islands of the Caribbean shall be treated as Domestic Markets and shall
be subject to all requirements of this Agreement. After this period, AFC and
Diversified may or may not enter into one or more other agreements from time to
time that govern purchases and sales for United States military bases, Canada,
and the islands of the Caribbean, but such purchases and sales will not be
governed by this Agreement.
7. EXCLUSIVE SUPPLIER OF THE CORE PRODUCTS IN DOMESTIC MARKETS. AFC hereby
appoints Diversified, and Diversified hereby accepts such appointment, as AFC’s
and the Franchisees’ exclusive supplier in Domestic Markets of the Core
Products. AFC agrees that during the Term of this Agreement, it shall purchase,
and shall require all Franchisees in Domestic Markets to purchase, all of AFC’s
and the Franchisees’ respective requirements of the Core Products for use in
Domestic Markets, exclusively from Diversified, and Diversified agrees to sell
such requirements to AFC and the

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Franchisees. During the Term of this Agreement, Diversified will be identified
by AFC to Franchisees as the sole and exclusive supplier of the Core Products
for use in Domestic Markets. Such purchases and sales may be made directly or
indirectly through Distributors or agents.
A. Use of the Core Products and the Popeyes Formula. The parties intend, and AFC
agrees, that AFC and the Franchisees will purchase all of their requirements of
the Core Products for use in Domestic Markets exclusively from Diversified
(directly or indirectly) during the Term of this Agreement. During the Term of
this Agreement, AFC shall not import, or permit any Franchisee or Distributor to
import, directly or indirectly, any Core Product or any substitute for any core
product from any International Market into any Domestic Market.
8. CONTINUITY OF SUPPLY.
A. Supply of All Products Currently Supplied to the Popeyes System. AFC and
Diversified agree that for the period of time commencing on the Effective Date
of this Agreement and continuing through December 31, 2010, AFC shall purchase,
and shall require its Franchisees and Distributors to purchase, and Diversified
shall continue to fill all orders made by AFC, the Franchisees, and/or the
Distributor(s), for any products currently supplied by Diversified to the
Popeyes System in both Domestic Markets and International Markets. Pricing for
any such product orders shall be at Diversified’s existing pricing on the
Effective Date of this Agreement, except as set forth in this Agreement. After
January 1, 2011, Diversified shall have no obligation to fill any orders for any
products for the Popeyes System, and AFC, the Franchisees, and the
Distributor(s) shall have no obligation to order any products from Diversified,
except as set forth in this Agreement (such as in Section 6A and Section 7);
provided that, upon AFC’s request, Diversified shall continue through
December 31, 2011 to fill all orders made by AFC, the Franchisees, and/or the
Distributor(s), for any products currently supplied by Diversified to the
Popeyes System in International Markets at Diversified’s existing prices on the
Effective Date of this Agreement. AFC shall give Diversified at least 90 days
advance notice of the intent to stop buying products with respect to each
particular jurisdiction in International Markets.
B. Supply of Certain Sauces. AFC and Diversified acknowledge that Diversified
currently supplies barbeque sauce (Item No. 8R3306), cajun sparkle sauce
(Item No. N656-C), cocktail sauce (Item No. 8R3307), confetti sweet and sour
sauce (Item No. SD3310), and mardi gras mustard (Item No. 8R3303) (collectively
the “Sauces”) to the Popeyes System. For a period of time commencing on the
Effective Date and continuing through December 31, 2014, AFC agrees it shall
purchase, and shall require all Franchisees in Domestic Markets (including
certain International Markets while treated as Domestic Markets under
Section 6(A)) to purchase, all of AFC’s and the Franchisees’ respective
requirements of the Sauces for use in such Domestic Markets, exclusively from
Diversified, and Diversified agrees to sell such requirements to AFC and the
Franchisees. After January 1, 2015, neither AFC, the Franchisees, nor the
Distributor(s) will have the obligation to purchase the Sauces

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from Diversified, unless Diversified’s bid for any such products is accepted by
AFC in accordance with Section 10 of this Agreement. The prices for the Sauces
until December 31, 2014 shall be the same as the existing prices for the Sauces
on the Effective Date.
9. NONDISCLOSURE, REPLICATION, PROHIBITED ANALYSIS, AND NEW PRODUCTS.
A. Nondisclosure. AFC agrees that it will not, during or after the Term of this
Agreement, use or permit the duplication or disclosure of any trade secrets
associated with the Popeyes Formulas or the Core Products or any other
Diversified Confidential Information unless such use, duplication, or disclosure
is specifically authorized in advance and in writing by Diversified through its
President.
B. Replication. AFC agrees that during the Term of this Agreement, it will not
seek or assist or encourage others to replicate the Core Products or any Popeyes
Formula for commercial use in any Domestic Markets. AFC shall, however, have the
right to independently develop, without using Prohibited Analysis, substitute
recipes for the Core Products, which substitute recipes may be commercially
utilized by AFC and/or the Franchisees in a Domestic Market only under the
conditions set forth in Section 20 of this Agreement. AFC shall further have the
right to independently develop, without using Prohibited Analysis, substitute
recipes for the Core Products or any other Diversified products, which
substitute recipes may be commercially utilized by AFC and/or the Franchisees
only in and for International Markets.
C. Prohibited Analysis. AFC agrees that it will not, during or after the Term of
this Agreement, attempt (or cause, induce, solicit, encourage, or assist any
other person or entity to attempt) to use or take advantage of or benefit from
any Prohibited Analysis on any Core Product or other Diversified product or any
Popeyes Formulas or any recipes or formulas associated with any Core Product or
other Diversified product. For purposes of this Agreement, “Prohibited Analysis”
shall mean any effort to perform a chemical or other analysis (other than simple
use of the five human senses) on any product in order to determine all or part
of the composition of the product for purposes of duplication.
D. New Products. The parties acknowledge that AFC continuously develops new
products. Nothing in this Agreement shall, in any way, preclude or limits AFC’s
rights to continue its efforts to develop new products. Notwithstanding the
foregoing, for the full term of this Agreement, AFC shall exercise good faith in
its development of any new products and agrees not to develop or sell or permit
the Franchisees to sell any new products for the purpose of intentionally
depleting the volume of Core Products sold by Diversified to the Popeyes System
pursuant to this Agreement.
10. BIDDER ON OTHER PRODUCTS IN DOMESTIC MARKETS. AFC and Diversified
acknowledge and agree that Popeyes Restaurants offer as of the Effective Date
and may continue to offer Other Products for sale to the public in Domestic
Markets. AFC

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hereby agrees that, with respect to all Other Product offerings in Domestic
Markets of the type that Diversified is capable of producing, AFC shall, at the
time of such bidding, provide Diversified the opportunity to submit a
competitive bid on any such Other Products.
A. Bidding Process. AFC agrees that with respect to any Other Product offerings
of the type that Diversified is capable of producing, AFC shall offer
Diversified a fair and reasonable opportunity to develop and bid on any such
Other Products, on terms and conditions (including lead time) no less favorable
than those offered any other bidder. AFC shall provide Diversified with
commercially-reasonable information (including whatever is or was provided to
any other prospective bidder) to develop and bid on any such Other Products.
Diversified has no obligation to submit a bid.
B. Award by AFC. AFC agrees that it will consider any bid presented by
Diversified on Other Products in a commercially reasonable manner and will
timely notify Diversified, in writing, whether Diversified’s bid is selected for
further negotiation of price and terms. AFC’s decision to select, or not select,
any Diversified bid for negotiation shall be subject to AFC’s sole discretion.
In the event AFC selects Diversified’s bid on any such Other Products, AFC and
Diversified may negotiate the price and other terms of one or more separate
agreements for any such Other Products. Neither AFC nor Diversified shall have
any obligation to enter into any agreement as a result of Diversified’s bid
being selected.
11. MODIFICATION OF CORE PRODUCTS
A. Initial Approval. AFC acknowledges and agrees that the Core Products meet or
exceed all of AFC’s quality standards. Diversified agrees that the Core Products
will continue to meet AFC’s quality standards as in effect between the parties
as of the Effective Date for the Term of this Agreement. If AFC requests a
higher standard of quality for any product, Diversified will use good faith
efforts to attempt to satisfy the request, and AFC acknowledges that any higher
costs entailed in meeting the higher quality standard may affect the reasonable
price of the product.
B. Product Modifications Initiated by Diversified. If Diversified makes any
material improvements, modifications, or changes to the formula of any of the
Core Products, Diversified shall notify AFC in writing specifying the
improvement, modification or change and any cost implications related to the
change. Unless and until AFC, in its sole discretion, approves the modified Core
Product, (a) Diversified shall not sell such modified product under this
Agreement to AFC, any Distributor(s), or the Franchisees, and (b) AFC, any
Distributor(s), and the Franchisees shall continue to buy the pre-modified Core
Product from Diversified in accordance with Section 7 and the other terms and
conditions of this Agreement.
C. Product Modification Requests by AFC. The parties agree that although
Diversified owns the Popeyes Formulas, AFC retains the right to make all
decisions regarding the Popeyes brand, including the right specifically to
request in good faith modifications, improvements, or changes to the Core
Products, including the Popeyes

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Formulas, for any reason, including without limitation, actual or reasonably
anticipated changes required by international laws (but only for such
International Markets while treated as Domestic Markets under Section 6(A)),
federal laws, state laws, or local laws or regulations, and changes in consumer
preferences or industry standards. In the event of any such request by AFC for a
modification, improvement or change to a Core Product or the Popeyes Formulas,
(a) AFC will notify Diversified of the requested modification, improvement or
change, and (b) provided AFC is not contractually prohibited from doing so by a
confidentiality agreement or other contractual limitation, AFC will provide
Diversified with the material information, if any, known to AFC regarding how
the requested modification, improvement or change might be accomplished
(including any work, formulas, recipes or manufacturing techniques related to
the requested modification, improvement or change, whether developed by AFC or
any third party), and (c) Diversified shall use commercially reasonable efforts
to cooperate with AFC in executing the change. The price for any such modified
Core Product shall be set in accordance with Section 13(G) of this Agreement. In
the event (i) AFC in good faith requests improvements, modifications or changes
that are commercially reasonable and that are stated in terms that are
objectively measurable, and (ii) AFC has provided the information specified
above, if any, without any exception due to a confidentiality agreement or
contractual limitation, and (iii) the request for modifications is not for the
purpose of intentionally depleting the volume of Core Products sold by
Diversified to the Popeyes System pursuant to this Agreement, and
(iv) Diversified fails to make the requested improvements, modifications or
changes within a commercially fair and reasonable time period, and (v) the
requested improvements, modifications or changes are shown to be feasible and
capable of being made by Diversified, AFC, or a third party, and (vi)
Diversified is unable or unwilling to then produce and sell the modified Core
Product at the price determined in accordance with Section 13(G) of this
Agreement, then the Core Product at issue shall be removed from the list of Core
Products attached hereto as Schedule A, and shall thereafter not be included as
one of the Core Products covered under this Agreement. The parties acknowledge
that the time period provided for the change may vary depending on whether an
immediate or other time restriction is implicated by a change in laws,
regulations or interpretations thereof, and the complexity of the requested
modifications. If the parties disagree whether the conditions for removal of a
Core Product from Schedule A have been met, the issue shall be settled
exclusively by arbitration in the City of New Orleans, Louisiana, before a
three-person arbitration panel appointed by The American Arbitration Association
(“AAA”) and pursuant to the Commercial Arbitration Rules of the AAA, which rules
are hereby incorporated by reference thereto and made a part of this Agreement.
The arbitrators shall determine whether the conditions for removal of a Core
Product from Schedule A have been met. The arbitration shall be completed within
90 days of its commencement. The arbitration award shall be final and binding on
both parties. The costs of the arbitration shall be borne equally by AFC and
Diversified, but each party shall bear its own attorneys fees. During the period
that the arbitration is pending, the Core Product at issue shall remain on
Schedule A.

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D. Time Period for Modification Requests by AFC. Except for any changes required
by international, federal, state or local laws, regulations, or judicial orders
in Domestic Markets (including International Markets while treated as Domestic
Markets under Section 6(A)), AFC agrees that it will not make any requests for
any modifications to the Core Products (as provided in Section 11(C) of this
Agreement) before January 1, 2016; provided, however, that AFC and Diversified
acknowledge that governmental regulation regarding sodium levels is possible in
the next five (5) years, and Diversified will use good faith efforts to achieve
a reduction in sodium levels, but Diversified cannot warrant the amount of such
reduction, if any, at this time.
E. Approval of Modified Core Products. Before Diversified may sell any
materially modified Core Product under this Agreement to AFC, any
Distributor(s), or the Franchisees, AFC must approve the modifications to a Core
Product in writing. Upon such approval, the modified Core Product shall be added
to the list of Core Products attached hereto as Schedule A, and thereafter shall
be included as one of the Core Products covered under this Agreement.
F. Quality and Assurance Testing. Subject to the limitations set forth in
Section 9 above, AFC may conduct testing of the Core Products throughout the
Term of this Agreement for quality and assurance purposes only. Diversified
shall use commercially reasonable efforts to cooperate in such testing and shall
supply such Core Product samples as are reasonably required, free of charge,
including shipping costs.
G. Certain Terminology. The use in this Agreement of any one of the terms
“modifications” or “improvements” or “changes,” or any of their derivatives
(such as “modified” or “improved” or “changed”), alone without the others is
intended in each case to stand for and encompass all three terms, and no
distinction is intended by the use of one term without the others.
12. ORDERS, SUPPLY, AND DELIVERY. The parties agree to use commercially
reasonable efforts to work with each other (and with the Distributors, with any
purchasing cooperative working with AFC such as SMS, with any processor working
with Diversified, and with any other person or entity involved in the
distribution chain) to handle orders, supply, and delivery of the Core Products
through the Distributor(s) to AFC and the Franchisees in a commercially
reasonable manner. AFC or its designee shall instruct the Franchisees and/or the
Distributor(s) to place purchase orders with Diversified at least two weeks
before the requested date of delivery by Diversified. Diversified will use
commercially reasonable efforts to accommodate any purchase orders not placed
timely. AFC shall require its Distributors to maintain at least a two-week
inventory of all Core Products.

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13. PRICES AND DELIVERY
A. Pricing of Core Products. Diversified’s sales price for each Core Product is
for F.O.B. the facility designated by Diversified. Once an initial price for a
Core Product is established or adjusted, the price of the Core Product shall
remain the same unless and until adjusted. The parties agree that the prices
established pursuant to this Section 13 are fair and reasonable.
B. Initial Prices for Initial Core Products. As of the Effective Date of this
Agreement, the Core Product prices shall be the prices set forth in Schedule A
attached hereto under the heading “Effective Date Price”.
C. January 1, 2011 Price Cuts. On January 1, 2011, the price of each Core
Product (as in effect immediately before January 1, 2011) shall be reduced by an
amount equal to 3% of the Effective Date price of such Core Product, and rounded
off to the nearest penny, provided that (i) in the case of a Core Product that
was added to Schedule A after the Effective Date, the price shall not be subject
to the price cut, and (ii) in the case of a Flour-Based Core Product, the price
shall be further adjusted pursuant to Section 13(H). In the case of Core
Products existing on the Effective Date that are not Flour-Based Products, their
prices shall be the prices set forth in Schedule A attached hereto under the
heading “Price as of 1-1-2011”. In the case of Flour-Based Core Products, their
prices cannot be calculated in advance, because their prices fluctuate in
accordance with Section 13(H) below.
D. January 1, 2012 Price Cuts. On January 1, 2012, the price of each Core
Product (as in effect immediately before January 1, 2012) shall be reduced by an
amount equal to 3% of the price of such Core Product, and rounded off to the
nearest penny, provided that (i) in the case of a Core Product that was added to
Schedule A after the Effective Date, the price shall not be subject to the price
cut, and (ii) in the case of a Flour-Based Core Product, the price shall be
further adjusted pursuant to Section 13(H). In the case of Core Products
existing on the Effective Date that are not Flour-Based Products, their prices
shall be the prices set forth in Schedule A attached hereto under the heading
“Price as of 1-1-2012”. In the case of Flour-Based Core Products, their prices
cannot be calculated in advance, because their prices fluctuate in accordance
with Section 13(H) below.
E. January 1, 2013 Price Cuts. On January 1, 2013, the price of each Core
Product (as in effect immediately before January 1, 2013) shall be reduced by an
amount equal to 3% of the price of such Core Product, and rounded off to the
nearest penny, provided that (i) in the case of a Core Product that was added to
Schedule A after the Effective Date, the price shall not be subject to the price
cut, and (ii) in the case of a Flour-Based Core Product, the price shall be
further adjusted pursuant to Section 13(H). In the case of Core Products
existing on the Effective Date that are not Flour-Based Products, their prices
shall be the prices set forth in Schedule A attached hereto under the heading
“Price as of 1-1-2013”. In the case of Flour-Based Core Products, their prices
cannot be calculated in advance, because their prices fluctuate in accordance
with Section 13(H) below.

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F. January 1, 2014 Price Cuts. On January 1, 2014, the price of each Core
Product (as in effect immediately before January 1, 2014) shall be reduced by an
amount equal to 3% of the price of such Core Product, and rounded off to the
nearest penny, provided that (i) in the case of a Core Product that was added to
Schedule A after the Effective Date, the price shall not be subject to the price
cut, and (ii) in the case of a Flour-Based Core Product, the price shall be
further adjusted pursuant to Section 13(H). In the case of Core Products
existing on the Effective Date that are not Flour-Based Products, their prices
shall be the prices set forth in Schedule A attached hereto under the heading
“Price as of 1-1-2014”. In the case of Flour-Based Core Products, their prices
cannot be calculated in advance, because their prices fluctuate in accordance
with Section 13(H) below.
G. Initial Price Adjustments for Modified Core Products. In the event any of the
Core Products are modified pursuant to Section 11 of this Agreement, the parties
agree to in good faith negotiate a reasonable price adjustment for the modified
Core Product. Diversified shall provide AFC with commercially reasonable
information regarding the reasons justifying the change in price of the Core
Product, the capital expenditures and units sales made, and Diversified’s
initial price adjustment for the modified Core Product. If within 30 days of
Diversified’s submission of its initial price adjustment, the parties are unable
to agree upon a reasonable price adjustment for the modified Core Product, the
determination of the initial price adjustment shall be settled exclusively by
arbitration in the City of New Orleans, Louisiana, before a three-person
arbitration panel appointed by The American Arbitration Association (“AAA”) and
pursuant to the Commercial Arbitration Rules of the AAA, which rules are hereby
incorporated by reference thereto and made a part of this Agreement. The
arbitrators shall determine a reasonable initial price adjustment. The
arbitration shall be completed within 90 days of its commencement. The
arbitration award shall be final and binding on both parties. Once the
arbitration award is rendered, the price of the modified Core Product shall
equal the price of the pre-modified Core Product, plus or minus (as applicable)
the price adjustment determined by the arbitration. The costs of the arbitration
shall be borne equally by AFC and Diversified, but each party shall bear its own
attorneys fees. The modified Core Product will not be sold until its price is
resolved and pending resolution thereof the pre-modified Core Product will
continue to be sold at its price determined in accordance with the terms of this
Agreement.
H. Semi-Annual Price Adjustments for Flour-Based Core Products. Beginning on
January 1, 2011, and thereafter on the first day of each subsequent July and
January, the price of each Flour-Based Core Product (in existence immediately
prior to such month) shall be adjusted (unless otherwise agreed) by applying the
following formula:
The new price for the Flour-Based Core Product = Old Product Price + [((New
Flour Index - Old Flour Index) / Pounds Per Flour Index Unit) x Pounds Per DFS
Unit], with the final amount rounded off to the nearest penny.

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where:
“Old Product Price” means the price of the Flour-Based Core Product as in effect
immediately before the adjustment (and after any adjustment under Section 13(C),
(D), (E), or (F))
“New Flour Index” means the Flour Index as of the close of business on the
thirteenth (or, if not a business day, the last business day before the
thirteenth) of the month immediately preceding the adjustment date
“Old Flour Index” means the Flour Index as of the close of business on the
thirteenth (or, if not a business day, the last business day before the
thirteenth) of the calendar month six months preceding the month immediately
preceding the adjustment date
“Pounds Per Flour Index Unit” means the number of pounds in the unit of product
used by the Flour Index (which, as of the Effective Date, is 100)
“Pounds Per DFS Unit” means the number of pounds in the unit of product stated
on Schedule A
For example, [***].
Diversified shall request the Flour Seller to provide the Flour Index prices as
of the pertinent times promptly in writing by email or fax or other comparable
method to both Diversified and AFC. The parties may discuss alternative
mechanisms for determining the price of Flour-Based Core Products.
If for any reason the price adjustment mechanism set forth in this Section 13(H)
cannot be implemented, and the parties are unable to agree upon a reasonable
substitute mechanism within 30 days (such as the adoption of a substitute Flour
Index), the determination of the substitute mechanism shall be settled
exclusively by arbitration in the City of New Orleans, Louisiana, before a
three-person arbitration panel appointed by The American Arbitration Association
(“AAA”) and pursuant to the Commercial Arbitration Rules of the AAA, which rules
are hereby incorporated by reference thereto and made a part of this Agreement.
The arbitrators shall determine a reasonable substitute mechanism to replace the
mechanism set forth in this Section 13(H). The arbitration shall be completed
within 90 days of its commencement. The arbitration award shall be final and
binding on both parties. The costs of the arbitration shall be borne equally by
AFC and Diversified, but each party shall bear its own attorneys fees. During
the period that the arbitration is pending, the prices of the Flour Based Core
Products shall remain the same as prior to the arbitration.
I. Price Adjustments for Extraordinary Circumstances. AFC and Diversified
anticipate that, for the time period from the Effective Date through
December 31, 2014, the price for each Core Product that is not a Flour-Based
Core Product shall be as set forth in Schedule A attached hereto. In the event
of an extraordinary change in

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Diversified’s costs payable to third parties for essential ingredients or
commodities that is beyond the reasonable control of Diversified, Diversified
may request that AFC agree to an increase in price for a Core Product that is
not a Flour-Based Product so affected, but only for the period of time in which
Diversified experiences such extraordinary changes in Diversified’s costs. If
Diversified seeks such an increase in price, Diversified shall provide AFC with
commercially reasonable information and reasons justifying the requested change
in price, and Diversified’s proposed price adjustment. If within 10 days of
Diversified’s submission of its proposed price adjustment, the parties are
unable to agree upon a reasonable price adjustment for any such affected
non-flour based Core Products, the determination of the price adjustment and the
time period for such adjustment for each such Core Product shall be settled
exclusively by arbitration in the City of New Orleans, Louisiana, before a
three-person arbitration panel appointed by The American Arbitration Association
(“AAA”) and pursuant to the Commercial Arbitration Rules of the AAA, which rules
are hereby incorporated by reference thereto and made a part of this Agreement.
The arbitrators shall determine a reasonable price adjustment and a reasonable
time period the adjusted price will be in effect for each such Core Product at
issue. The arbitration shall be completed within 30 days of its commencement.
The arbitration award shall be final and binding on both parties. The costs of
the arbitration shall be borne equally by AFC and Diversified, but each party
shall bear its own attorneys fees. During the period that the arbitration is
pending, the prices of the non-flour based Core Products at issue shall remain
the same as prior to the arbitration.
J. Annual Price Adjustments for All Other Core Products Beginning January 1,
2015. Beginning on January 1, 2015, and thereafter on each subsequent January 1,
with respect to each Core Product (in existence immediately prior to such
January 1) that is not a Flour-Based Core Product, the price shall be adjusted
as set forth in this Section 13(J). The parties agree to in good faith negotiate
prior to each such January 1 in an attempt to agree in advance upon a reasonable
annual price adjustment for these non-flour based Core Products to establish the
price for the coming year. At least 60 days prior to each such January 1,
Diversified shall provide AFC with commercially reasonable information and
reasons justifying the change in price for these non-flour based Core Products,
the capital expenditures and units sales made, and Diversified’s prices for
these non-flour based Core Products as of the coming January 1. If within
30 days of Diversified’s submission of its annual price adjustments, the parties
are unable to agree upon a reasonable price adjustment for any non-flour based
Core Products for the coming year, the determination of the price adjustment for
each such Core Product for such year shall be settled exclusively by arbitration
in the City of New Orleans, Louisiana, before a three-person arbitration panel
appointed by The American Arbitration Association (“AAA”) and pursuant to the
Commercial Arbitration Rules of the AAA, which rules are hereby incorporated by
reference thereto and made a part of this Agreement. The arbitrators shall
determine a reasonable price adjustment for such year for each Core Product at
issue. The arbitration shall be completed within 90 days of its commencement.
The arbitration award shall be final and binding on both parties. Once the
arbitration award is rendered, the new price for that year for each non-flour
based Core Product at issue

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shall equal the price immediately prior to the arbitration, plus or minus (as
applicable) the price adjustment determined by the arbitration. The costs of the
arbitration shall be borne equally by AFC and Diversified, but each party shall
bear its own attorneys fees. During the period that the arbitration is pending,
the prices of the non-flour based Core Products at issue shall remain the same
as prior to the arbitration.
K. Passage of Title, Ownership, and Risk. Title to, ownership of, and risk of
loss with respect to each Core Product purchased and sold under this Agreement
shall remain with Diversified until delivery at Diversified’s designated
facility, at which point such title, ownership, and risk of loss will pass.
14. PAYMENTS BY DISTRIBUTOR(S) AND FRANCHISEES. Payment for the Core Products
and any Other Products delivered by Diversified shall be made by and shall be
the sole responsibility of the party purchasing such products. Diversified shall
invoice directly for all products supplied by Diversified. AFC shall not be
responsible for any non-payment of Diversified’s invoices for products sold
and/or delivered to the Distributor(s) or the Franchisees. If Diversified in
good faith gives AFC notice that Diversified considers a specified Distributor
or AFC-designated processor not to be creditworthy and provides AFC with
commercially reasonable information supporting same, then Diversified may
require cash on delivery from such Distributor or processor, and the refusal of
Diversified to extend credit to such Distributor or processor or to deliver any
product to such Distributor or processor absent payment in cash on delivery
shall not be deemed a breach of this Agreement in any way.
15. WARRANTIES.
     A. Diversified’s Warranties. Diversified will not adulterate or misbrand
any products as prohibited by the Federal Food, Drug, and Cosmetic Act (“FDA”).
Diversified agrees that its supplies of beef, pork, and poultry products will be
from processors under inspection from the USDA. The Core Products supplied by
Diversified shall be merchantable and free from defects in material and
workmanship and shall comply with all content and labeling requirements under
applicable laws in Domestic Markets. Upon the request of AFC, any
Distributor(s), or the Franchisees delivered in writing to Diversified within
10 days of receipt of any Core Products from Diversified that fail to conform to
any of the warranties set forth in this Section 15(A), Diversified shall
replace, at Diversified’s expense, or refund the full purchase price of, such
nonconforming Core Products, and Diversified may require, at Diversified’s
expense, the prompt return of any such nonconforming Core Products. This
warranty shall control insofar as the same may conflict with any warranty or
limitation on warranty set forth in Diversified’s forms.
     B. AFC’s Warranties. AFC represents and warrants as of the Effective Date
that (i) AFC does not foresee any major changes in AFC’s and its Franchisees’
requirements for the Core Products in the foreseeable future; (ii) AFC does not
know of any laws or regulations in any jurisdiction in the Domestic Markets with
which the Core Products are not compliant; and (iii) AFC has no plans to permit
the Franchisees to remove any of the Core Products from their menus in the
foreseeable future. If at any time AFC foresees any such

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major change or plans, or learns of any such laws or regulations, AFC shall give
Diversified prompt written notice, in reasonable detail, of such matters.
16. CONFIDENTIAL INFORMATION
A. Ownership by AFC. Ownership of all trade secrets of AFC and the AFC
Confidential Information (including any furnished or disclosed by AFC to
Diversified hereunder or previously) is and shall remain the property of AFC.
Any reproductions, notes, specifications, manuals, summaries or similar
documents relating to the trade secrets of AFC and AFC Confidential Information
shall become and remain the property of AFC immediately upon creation. Subject
to the limitations of Section 9 of this Agreement, AFC and Diversified
acknowledge and agree that AFC owns any recipes or formulas it independently
develops, without Prohibited Analysis, for any products sold or to be sold in
Popeyes restaurants.
B. Ownership by Diversified. Ownership of all trade secrets of Diversified and
the Diversified Confidential Information (including any furnished or disclosed
by Diversified to AFC hereunder or previously) is and shall remain the property
of Diversified. Any reproductions, notes, specifications, manuals, summaries or
similar documents relating to the trade secrets of Diversified and Diversified
Confidential Information shall become and remain the property of Diversified
immediately upon creation. AFC and Diversified acknowledge and agree that
Diversified owns the Popeyes Formulas and any other recipes or formulas it has
developed or develops, whether or not for products sold or to be sold in Popeyes
Restaurants, including but not limited to the recipes and formulas for the Core
Products.
C. Nondisclosure of Trade Secrets. Diversified and AFC each agrees that it will
not, during or after the term of this Agreement for so long as any such
information remains trade secrets, use or permit the duplication or disclosure
of any trade secrets owned by the other party to any person or entity (other
than to employees who must have such information for the sole purpose of
supplying the products contemplated under this Agreement), unless such use,
duplication, or disclosure is specifically authorized by this Agreement or
otherwise in advance and in writing by an authorized representative of the other
party. This obligation survives the expiration or termination of this Agreement
in perpetuity.
D. Nondisclosure of Confidential Information. AFC and Diversified each agrees
that it will not, for a period commencing with the Effective Date of this
Agreement and for so long thereafter as any such information remains
competitively sensitive, use or permit the duplication or disclosure of any
Confidential Information of the other party to any person or entity (other than
to employees who must have such information for the sole purpose of supplying
the products contemplated under this Agreement), unless such use, duplication,
or disclosure is specifically authorized by this Agreement or otherwise in
advance and in writing by an authorized representative of the other party.

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17. INDEMNIFICATION. This Section is intended to address only indemnification
for claims made by third parties. Damages for breaches of this Agreement shall
be governed by applicable law.
     A. Indemnification by Diversified. Diversified shall and hereby agrees to
indemnify, defend and hold AFC as well as its successors and permitted assigns,
and each of their respective officers, directors, and employees, harmless from
and against any and all loss, liability, actions, claims, costs (including,
without limitation, reasonable attorney’s fees and expenses), damages, judgments
and liabilities whatsoever (including without limitation any products liability
claims, in law or equity) to the extent proximately caused by the negligence or
willful misconduct of Diversified, its agents, or assigns.
     B. Indemnification by AFC. AFC shall and hereby agrees to indemnify, defend
and hold Diversified as well as its successors and permitted assigns, and each
of their respective officers, directors, and employees, harmless from and
against any and all loss, liability, actions, claims, costs (including, without
limitation, reasonable attorney’s fees and expenses), damages, judgments and
liabilities whatsoever (including without limitation any products liability
claims, in law or equity) to the extent proximately caused by the negligence or
willful misconduct of AFC, its agents, or assigns.
18. INSURANCE. During the Initial Term of this Agreement and any Renewal
Term(s), each party shall maintain and keep in force, at its own expense,
comprehensive or commercial general liability insurance that includes product
liability insurance with respect to its products in an amount not less than
$2,000,000 per occurrence, with a reputable insurer, and shall cause the other
party to be included as an additional insured on such insurance. The minimum
limits of coverage required by this Agreement may be satisfied by a combination
of primary and excess or umbrella insurance policies.
19. INSPECTION. AFC and SMS shall have the right reasonably to inspect
Diversified’s manufacturing facilities during normal business hours at any time
during the Term of this Agreement, upon reasonable notice by AFC of such
inspection and execution and delivery of a confidentiality agreement reasonably
requested by Diversified and subject to Diversified’s reasonable scheduling
needs.
20. FORCE MAJEURE. “Force Majeure” shall mean and include any circumstance
beyond the reasonable control of Diversified that causes a significant
disruption in Diversified’s supply of any Core Products to the Popeyes System,
including without limitation, the following: any act of nature or the public
enemy, accident, explosion, fire, storm, earthquake, flood, drought, hurricane,
perils of the sea, the elements, casualty, strikes, lock-outs, labor troubles,
riots, sabotage, embargo, war (whether or not declared), governmental laws,
regulations, orders, or decrees, unavailability of raw material, or seizure for
reasons other than the adverse financial condition of the party so affected.
In the event of a Force Majeure, Diversified agrees that it will provide written
notice to AFC within three (3) business days from the initial occurrence of any
such event or as soon as commercially practical, stating: 1) the nature, scope
and all relevant circumstances (as then

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known) of the Force Majeure event and impacts on the Popeyes System, and 2)
whether Diversified has the need, ability and present intention, on a temporary
basis, to immediately license the Popeyes Formula to a third party who is able
to manufacture the Core Products at issue being produced by Diversified for the
Popeyes System in sufficient quantity and quality so as not to cause a
disruption in supply to the Popeyes System. In the event Diversified needs but
is unable on a temporary basis to immediately license the Popeyes Formula to a
third party who is able to manufacture the Core Products at issue in sufficient
quantity and quality so as not to cause a disruption in supply to the Popeyes
System, then AFC, the Distributor(s), or the Franchisees may begin purchasing
products substantially similar to the Core Products at issue from third parties.
This right shall only apply during any period Diversified is unable to satisfy
its buyer’s purchase orders as a result of an event of Force Majeure. In the
event Diversified licenses the Popeyes Formula to a third party manufacturer
pursuant to this paragraph, Diversified shall require the third party to execute
a confidentiality agreement to maintain the Popeyes Formula in the strictest
confidence. If the third party manufacturer sets a price for the Core Products
at issue in excess of a reasonable price for the Core Products under the
circumstances, Diversified shall pay the third party manufacturer the difference
between a reasonable price and the third party’s price for the duration of the
term of the event of the Force Majeure, such that AFC, the Distributors, and the
Franchisees shall in no event pay more than a reasonable price under the
circumstances to such third party for the Core Products at issue during an event
of Force Majeure. No further liability shall attach to Diversified during any
such event of Force Majeure.
If Diversified and AFC do not agree on what constitutes a reasonable price for
the Core Products at issue under the circumstances, the determination of the
reasonable price shall be settled exclusively by arbitration in the City of New
Orleans, Louisiana, before a three-person arbitration panel appointed by The
American Arbitration Association (“AAA”) and pursuant to the Commercial
Arbitration Rules of the AAA, which rules are hereby incorporated by reference
thereto and made a part of this Agreement. The arbitrators shall determine a
reasonable price for each Core Product at issue under the circumstances. The
arbitration shall be completed within 90 days of its commencement. The
arbitration award shall be final and binding on both parties. Once the
arbitration award is rendered, the reasonable prices determined by the award
shall be the reasonable prices for the Core Products at issue for purposes of
such event of Force Majeure. The costs of the arbitration shall be borne equally
by AFC and Diversified, but each party shall bear its own attorneys fees.
In the event of a Force Majeure, Diversified shall diligently attempt to remove
or work around the disruption with reasonable dispatch. As soon as the
disruption resulting from any event of Force Majeure is remedied, the parties’
respective rights, obligations and performance as set forth in this Agreement
shall be immediately reinstated in full.
21. CERTIFICATE OF INDEPENDENT PRICE DETERMINATION. Each party represents and
warrants that the prices under this Agreement have been arrived at
independently, without the purpose of restricting competition, or any
consultation, communication, or agreement with any other competitor relating to
(i) such prices or (ii) the methods or factors used to calculate such prices.

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22. NOTICES. Whenever, under the terms of this Agreement, notice is required,
the same shall be given in writing and shall be delivered personally, or by
certified mail, postage prepaid, addressed to the party for whom intended as
follows:

     
If to AFC:
  If to Diversified:
 
   
AFC Enterprises, Inc.
  Diversified Foods & Seasonings, Inc.
Attn: General Counsel
  Attn: President/Chief Executive Officer
5555 Glenridge Connector, NE, Suite 300
  1115 North Causeway Boulevard, Suite 200
Atlanta, GA 30342-4741
  Mandeville, LA 70471

Either party may change its notice address at any time by giving notice thereof
to the other party.
23. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which taken together shall
constitute one agreement between the parties. This Agreement or any counterpart
may be delivered physically or by email of a scanned pdf file or other
comparable electronic means.
24. SEVERABILITY. If any provision of this Agreement is held by a court of
competent jurisdiction to be contrary to applicable law, invalid, or
unenforceable for any reason, the remaining provisions of this Agreement shall
remain in full force and effect. To the extent permissible under applicable law
without invalidating the Agreement, the illegal, invalid, or unenforceable
provision shall be construed instead to provide that which is most fair and
equitable between the parties under the circumstances and is legal, valid, and
enforceable.
25. AMENDMENTS, WAIVERS, AND MODIFICATIONS. No change in, addition to,
modification or waiver of the terms and provisions of this Agreement shall be
binding upon Diversified or AFC unless it is mutually agreed upon in writing.
Any such instrument shall be attached to this Agreement and shall be
incorporated herein. Notwithstanding the foregoing, whenever this Agreement
provides that Schedule A shall have a Core Product added to it, Schedule A shall
be deemed amended to add such Core Product, whether the parties execute a formal
amendment or not.
26. ASSIGNMENT. Neither this Agreement nor any rights hereunder maybe assigned
by either party without the prior written consent of the other party, which
consent shall not be unreasonably withheld.
27. GOVERNING LAW. This agreement shall be governed by, interpreted, performed
and enforced solely in accordance with the laws of the State of Louisiana,
without reference to principles of conflicts of law.
28. EFFECTIVE DATE. This Agreement shall be effective only upon execution of the
Agreement by AFC and Diversified, and the occurrence of the Effective Date.

21

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29. BEST EFFORTS TO AVOID TERMINATION. Each party shall use best efforts to
avoid termination of this Agreement. This Agreement may only be terminated in
accordance with Section 3(B), and then only after the terminating party has
exhausted all commercially reasonable efforts to avoid terminating the
Agreement, including without limitation (i) timely seeking to obtain redress of
any breaches through payment of compensation, specific performance, or other
appropriate remedy or combination of remedies short of termination;
(ii) offering to enter into amendments to the terms and provisions of this
Agreement that are fair and equitable under the circumstances; and (iii)
offering to enter into non-binding mediation with the breaching party in an
effort to resolve the issues through mutual agreement.
30. FORUM SELECTION. Any legal action or proceeding by either party against the
other arising out of, in connection with, or relating to this Agreement or the
enforcement, non-enforcement, interpretation, performance or breach of any
provision of this Agreement shall be brought in the United States District Court
for the Eastern District of Louisiana. Each party consents to the exclusive
jurisdiction of such court and the respective appellate courts for the purpose
of all such legal actions and proceedings, except those brought for enforcement
of a judgment or order rendered by any such courts. Each party waives, to the
fullest extent permitted by law, any objection which it may now or later have to
the laying of venue in any such courts and any claim that any such court is an
inconvenient forum.
31. ENTIRE AGREEMENT. This Agreement represents the entire understanding between
the parties with respect to the subject matter hereof and supersedes all other
negotiations, agreements, representations and covenants, whether oral or
written.
[The remainder of this page is intentionally left blank so that the signature
page may start on a separate page.]

22

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered by their authorized representatives as of the date first above
written.

                      AFC ENTERPRISES, INC.       DIVERSIFIED FOODS &
SEASONINGS, INC.    
 
                   
By:

  /s/ Cheryl A. Bachelder
 
Title:  Chief Executive Officer       By:
  /s/ Al Copeland Jr.
 
Title:  Chairman of the Board    
 
  Date: July 15, 2010           Date: July 15, 2010    

23

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SCHEDULE “A”
CORE PRODUCTS
(Items in grey are Flour-Based Core Products. Their prices for January 1, 2011,
2012, 2013, and 2014 are merely projections assuming no change in the Flour
Index.)

                                                  EFFEC-                        
        TIVE   PRICE   PRICE   PRICE   PRICE                 DATE   AS OF   AS
OF   AS OF   AS OF ITEM   ITEM #   PACK SIZE   PRICE   1-1-2011   1-1-2012  
1-1-2013   1-1-2014
Red Beans
    001-100     9/5# bags per case   [***]   [***]   [***]   [***]   [***]
Jambalaya
    3F0349     9/5# bags per case   [***]   [***]   [***]   [***]   [***]
Macaroni & Cheese
    1F0160     16/3# bags per case   [***]   [***]   [***]   [***]   [***]
Cajun Meat
    1F0111     20/2.25# bags per case   [***]   [***]   [***]   [***]   [***]
Cajun Gravy
    1F0112     9/5# bags per case   [***]   [***]   [***]   [***]   [***]
All Purpose Batter (a complementary batter
    3D0099     50# per bag  
[***]
 
[***]
 
[***]
 
[***]
 
[***]
used for adhesion purposes on onion rings)
             
 
 
 
 
 
 
 
 
 
Catfish Production Batter
    3D0333     40# per bag  
[***]
 
[***]
 
[***]
 
[***]
 
[***]
Multi-Purpose Batter (a fast-fry batter for shrimp
    3D2004     10/4.5# bags per case  
[***]
 
[***]
 
[***]
 
[***]
 
[***]
and crawfish)
             
 
 
 
 
 
 
 
 
 
Zero Trans Biscuit [***]
    1D2009     49.2# per bag  
[***]
 
[***]
 
[***]
 
[***]
 
[***]
Onion Ring Batter
    1955     12/1.32# bags per case  
[***]
 
[***]
 
[***]
 
[***]
 
[***]
Onion Ring Batter
    3D3068     50# per bag  
[***]
 
[***]
 
[***]
 
[***]
 
[***]
Poultry Batter
  SC600   10/4.638# bags per case  
[***]
 
[***]
 
[***]
 
[***]
 
[***]
Shoestring Batter Totes
    1D2000     2000# (priced per lb)  
[***]
 
[***]
 
[***]
 
[***]
 
[***]
Shoestring Fry Batter
    1D2010     2000# per tote  
[***]
 
[***]
 
[***]
 
[***]
 
[***]
Butterfly Shrimp Breading
    601     50# per bag  
[***]
 
[***]
 
[***]
 
[***]
 
[***]
Butterfly Shrimp Breading
    3D0086     50# per bag  
[***]
 
[***]
 
[***]
 
[***]
 
[***]
Popcorn Shrimp Breading
    3D0303     50# per bag  
[***]
 
[***]
 
[***]
 
[***]
 
[***]
Butterfly Shrimp Seasoning
    602-R     75/32.2 gr. Bags per case   [***]   [***]   [***]   [***]   [***]
Butterfly Shrimp Seasoning
    1S0588     25# per bag   [***]   [***]   [***]   [***]   [***]
La. Mild Seasoning
    1S0514     50# per bag   [***]   [***]   [***]   [***]   [***]
Mild #3 Seasoning
    1S0616     70/211.84 gr. per case   [***]   [***]   [***]   [***]   [***]
Mild #3 Seasoning
    1S0524     50# per bag   [***]   [***]   [***]   [***]   [***]
Red Rice Seasoning
    1S0610     60/1.76 oz. bags per case   [***]   [***]   [***]   [***]   [***]
Spicy #2 Seasoning
    1S0609     50/181.44 gr. bags per case   [***]   [***]   [***]   [***]  
[***]
Riverbend Breader (for chicken nuggets)
    3D3529     50# per bag  
[***]
 
[***]
 
[***]
 
[***]
 
[***]
Riverbend Nugget Marinade (for chicken nuggets
    3S0670     50# per bag   [***]   [***]   [***]   [***]   [***]
Riverbend Nugget Marinade (for chicken nuggets
    3S0671     25# per bag   [***]   [***]   [***]   [***]   [***]
Spicy #2 Seasoning
    1S0242     50# per bag   [***]   [***]   [***]   [***]   [***]
Spicy Filet Seasoning
    1S0591     50# per bag   [***]   [***]   [***]   [***]   [***]
Frozen Butterfly Shrimp Batter
    3D1213     50# per bag  
[***]
 
[***]
 
[***]
 
[***]
 
[***]
Crawfish Seasoning
    1S0240     48/20.5 gr. bags per case   [***]   [***]   [***]   [***]   [***]