Exhibit 10.10


 


FIRST AMENDMENT AGREEMENT


 


THIS FIRST AMENDMENT AGREEMENT (“Amendment”) is executed as of the 27th
day of June, 2004, by and between CARL KARCHER ENTERPRISES, INC., a California
corporation (“CKE”) and PIERRE FOODS, INC., a North Carolina corporation (the “Company”).


 


RECITALS


 


1.                                       CKE
and Company are parties to a certain Amended and Restated Agreement dated May
21, 2004 (the “Original Agreement”).


 


2.                                       CKE
and Company are parties to a certain Amended and Restated Formula Development
Agreement dated May 21, 2004 (the “Original FDA”).


 


3.                                       CKE
and Company are parties to a certain Amended and Restated Confidentiality
Agreement dated May 21, 2004 (the “Original Confidentiality”).


 


4.                                       CKE
and Company desire to amend the Original Agreement and Original FDA and
memorialize the amendment in writing.


 


5.                                       All
capitalized terms herein not otherwise defined shall have the meaning ascribed
to such terms in the respective Original Agreement or Original FDA, as the
content may require.


 


NOW, THEREFORE, IN CONSIDERATION of the
mutual covenants contained herein for other good and valuable consideration,
the receipt and legal sufficiency of which are hereby acknowledged, the parties
agree as follows:


 


1.               Amendments.


 


A.           The
Original Agreement is amended as follows:


 


(a) Paragraph 3(a) is amended by the addition
of the following two new paragraphs to be inserted immediately following the
first paragraph thereof:


 


Company agrees and acknowledges that it shall
commence building an additional plant in a *** location as soon as its
production output increases by at least *** pounds (*** of which must be on a
***) per year of flame cooked broiled protein from its production output as of
the date of this Amendment.  Provided
that such additional plant is in a location agreeable to CKE and meets CKE’s
standards and specifications, CKE agrees that some of the production capacity
of the Products currently in Company’s current plant may be moved to the
additional plant.  CKE will determine
such amounts of production capacity to be moved based on business
considerations in its sole discretion.


 


Company shall exercise commercially
reasonable efforts to fulfill all the supply requirements of CKE for the
Products.  To the extent of any plant
capacity constraints, the


 










	
   

  	
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Company shall fulfill the supply requirements of CKE prior to the
fulfillment of any product requirements of a Competitor of CKE (as defined in the
Amended and Restated Formula Development Agreement).


 


(b) Paragraph 4(a) is amended by the addition
of the following new paragraphs as follows:


 


It is acknowledged that in the event Company
shall enter into a binding supply agreement, written or oral, with a Top Ten
QSR (as herein defined), other than CKE or CKE’s parent or affiliate companies,
including without limitation, Hardee’s Food Systems, Inc., or its appointed
purchasing agent for the supply of a burger product consisting of more than 51%
of black cattle beef (a “Major Contract”), the Company should realize plant
efficiencies and other economies. 
Therefore, in the event Company shall enter into a Major Contract and so
long as and only so long as at least one Major Contract shall remain in
effect, the Company agrees to ***


 


During the term of such Major Contract,
Company further agrees that (1) the net prices on a poundage basis for the
Products hereunder shall not be greater, (2) the payment terms hereunder shall
not be worse, and (3) the fixed costs charges hereunder shall not be more, and
(4) to the extent the product Company is producing under such Major Contract is
comparable in size to and with similar cost components as the Products
hereunder, the cook yields, and process yields hereunder shall not be less,
than those being provided under such Major Contract for similar product items,
as determined on a poundage basis so that CKE is treated on a so-called “most
favored nations” basis.


 


For purposes of this Agreement, the term “Top Ten QSR” means any one of
the ten largest hamburger chains ranked by system wide sales based on the Chain
Restaurant Operators Directory.  To the
extent such Directory is no longer published or such information is no longer
provided in such Directory, the basis of determining the Top Ten QSR shall be
based on annual sales as set forth in public filings or other such reliable
sources.


 


(c) Section 4(b) is amended by the addition
of a new paragraph to read as follows:


 


The Company agrees that no raw materials
purchased by or arranged for delivery to Company by and for the account of CKE
from a designated raw material supplier of CKE under contract with CKE,
including beef products purchased by CKE under its contract with ***, may be
used by Company or its agent to produce beef products for any other customer of
Company.  Provided, the foregoing
sentence does not prohibit Company from contracting directly with such
suppliers for raw materials for Company’s other customers nor from accepting
from such suppliers raw materials purchased by or arranged for delivery to
Company for the account of Company’s other customers.  Company agrees that, without the prior
written consent of CKE, only those raw materials purchased by or arranged for
delivery to Company by and for the account of CKE from a designated raw
material supplier of CKE will be used in the manufacturing of the Products.










	
   

  	
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(d) Section 4(f)(ii) is amended to read as
follows:


 


(ii) Maintenance 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 necessary to substantiate that all invoices and
other charges submitted to CKE for payment hereunder are valid and proper and
to verify the Company’s compliance with provisions of this Agreement, the
Amended and Restated Formula Development Agreement and the Amended and Restated
Confidentiality Agreement.  Upon
reasonable request from CKE, the Company shall deliver evidence satisfactory to
CKE for verification of compliance with this Agreement, the Amended and
Restated Formula Development Agreement and the Amended and Restated
Confidentiality Agreement.  All Records
shall be maintained in accordance with generally accepted accounting principals
consistently applied.  CKE and/or its
representative shall have the right at any time during normal business hours,
upon twenty-four (24) hours notice, to examine, inspect and audit said
Records.  Provided, under no
circumstances shall any trade secrets or protected confidential information of
any person be subject to such examination, inspection, or audit.  Company agrees to take all actions reasonably
necessary and available to it (without disclosing such trade secrets or
confidential information) to substantiate, to CKE’s satisfaction, its
compliance with this Agreement, the Amended and Restated Formula Development
Agreement and the Amended and Restated Confidentiality Agreement, including
without limitation, by permitting visual inspection of the Company’s plant to
ensure compliance.  CKE shall bear any
cost related to any such examination, inspection or audit; provided, however,
Company shall be responsible for such cost of audits for inspections upon a
finding based on the results thereof that Company is not in material compliance
with this Agreement.


 


(e) Paragraph 9(b) is amended and restated to
read in its entirety as follows:


 


(b)                                 At
the end of the Term of this Agreement, CKE shall have the right to renew this
Agreement, on the same terms and conditions as set forth herein, for up to five
(5) additional renewal terms of one (1) year each by giving notice of its
intent to renew to Company within ninety (90) days prior to the expiration of
the then current Term or renewal term. 
For the purposes of this Agreement, the term “Term” shall be deemed to
include any renewal terms.


 


(f) Paragraph 29 is amended by the addition
of a new subsection (d) to read as follows:


 


(d) Except with the prior written consent of
the other party, neither party shall disclose the existence of this Agreement
or the subject matter hereof, except on a “need to know” basis in the ordinary
course of its business in dealing with its employees, financing sources, stock
or industry analysts, advisors, and other representatives and as may be
otherwise required by law, including SEC filings.  Provided, however, that subject to the
foregoing, in no event shall either party directly disclose the existence of
this Agreement or the subject matter hereof to any competitor of the other
party (the Competitor of CKE as defined in the Amended and Restated Formula
Development Agreement) or to any affiliate of a competitor of the other
party.  Each party agrees and
acknowledges that such disclosure shall cause irreparable harm to the other










	
   

  	
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party and entitle the other party to all remedies at law and equity
including without limitation, liquidated damages and injunctive relief.


 


B.   The Original FDA is amended as follows:


 


(a) Paragraph 4 of the Original FDA is amended by (i) spelling the word
“formula” in subsection (i) of Paragraph 4 as “Formula”, (ii) deleting the “.”
at the end of subsection (ii) and inserting “, or” and (iii) the addition of a
new subsection (iii) to read as follows:


 


(iii)
manufacture for or directly sell to any Competitor of CKE any Angus Beef Burger
Product (the term “Angus Beef Burger Product” determined as defined in
subsection (ii) above but without the raw weight range restriction) that is (a)
produced solely according to the Formula and CKE’s complete Finished Product
Specifications, or (b) produced with or resulting in a product with Angus
beef  trimmings and any two (2) of the
following three (3) variables or factors in common with the Product:


 


•                  ***


 


•                  ***


 


•                  ***


 


(b)  A new Paragraph 14 is added
to the Original FDA to read in its entirety as follows:


 


14.                                 At
the end of the initial Term of this Agreement, CKE shall have the right to
renew this Agreement, on the same terms and conditions as set forth herein, for
up to five (5) additional renewal terms of one (1) year each by giving notice
of its intent to renew to Company within ninety (90) days prior to the
expiration of the initial Term or then current renewal term.  For the purposes of this Agreement, the term “Term”
shall be deemed to include the initial Term and any renewal terms.


 


2.  No
change.  Except as otherwise modified
or amended hereby, the Original Agreement, Original FDA, and the Original
Confidentiality and all documents and instruments delivered therewith shall
remain in full force and effect as written.


 


3  No Default.  The Original Agreement, the Original FDA, and
the Original Confidentiality are in full force and effect and, as of the date
of this Amendment and to the best knowledge, information, and belief of each
party without independent investigation by either party, (a) there exists no
default or event of default or event, occurrence, condition or act which, with
the giving of notice, the lapse of time or the happening of any other event or
condition, would become a default or event of default thereunder, (b) neither
party has violated any of the terms or conditions of any of the foregoing
agreements, (c) all of the obligations and covenants to be performed by each
party thereto have been fully performed, and (d) each party acknowledges and
agrees that with respect the relationship between the parties as contemplated
by the aforesaid collective agreements, there have been no violations of
law.  This provision shall not be
construed to










	
   

  	
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limit either party from making
any future claims for future breach or subsequent wrongful conduct by either
party.


 


4.  Entire Agreement.  This Amendment, together with the Original
Agreement, the Original FDA, and the Original Confidentiality, as may be
amended hereby, shall constitute the complete agreement between CKE and the
Company and shall supersede all prior or contemporaneous proposals,
representations, understandings, and other communications and correspondence
between the parties concerning the matters addressed in this Amendment and the
aforesaid agreements, whether oral or written.


 


5  Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute but one and the same instrument.










	
   

  	
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IN WITNESS WHEREOF, the parties execute this
Amendment in accordance with law the day and year first above written.


 


	
   

  	
  CARL KARCHER ENTERPRISES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Dunion

  	
   

  
	
   

  	
  Name:

  	
  John Dunion

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PIERRE FOODS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert C. Naylor

  	
   

  
	
   

  	
  Name:

  	
  Robert C. Naylor

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President - Sales

  	
   

  
										











	
   

  	
  Confidential
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  Omitted
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  filed
  separately with the Commission.

  



 


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