Exhibit 10.9


 


AMENDED AND RESTATED


 


FORMULA DEVELOPMENT AGREEMENT


 


THIS FORMULA DEVELOPMENT AGREEMENT is executed this 21st day of May,
2004, and made effective as of February 1, 2004, by and between CARL KARCHER ENTERPRISES, INC., a
California corporation (“CKE”) and PIERRE
FOODS, INC., a North Carolina corporation (“Vendor”).


 


RECITALS


 


1.                                       CKE
desires to introduce new products in its restaurant systems.


 


2.                                       Vendor
is in the business of developing formulations and producing and manufacturing
products of the type and kind contemplated by this Agreement.


 


3.                                       VENDOR
has developed a product which CKE desires to consider for use in its restaurant
systems.


 


NOW, THERFORE, in consideration of the mutual promises herein made, the
parties agree as follows:


 


1.                                       Vendor
has developed specifications and desired elements or characteristics for the
following products (individually each a “Product” and collectively the “Products”):


 


Angus Beefsteak Patty 5.65 oz. Item #9598


 


2.                                       Simultaneously
with the execution of this Agreement, the parties entered into an Amended and
Restated Agreement for the Products (the “Product Contract”).


 


3.                                       So
long as the Purchase Threshold (as defined herein) is met, Vendor grants CKE,
together with its parent, subsidiary and affiliate corporations, an exclusive
right to purchase the Products.  It is
expressly understood that Vendor will process and manufacture the Products
utilizing certain proprietary processes, methods, ingredients and formulas
(collectively, the “Formula”) described on Exhibit A attached hereto and in
accordance with CKE’s Finished Product Specifications attached to the Product
Contract.  The parties agree and
acknowledge that Vendor has ownership of the Formula.  Other than for the rights granted herein to
CKE by Vendor, CKE, together with its parent, subsidiary and affiliate
corporations, will not by virtue of this relationship acquire or claim any
proprietary interest in: (i) the Formula of Vendor utilized in the manufacture
and production of the Products, (ii) any patents, patent applications,
proprietary information, processes or methods containing confidential
information of Vendor and belonging to Vendor, (iii) any software, trade
secrets or other proprietary information, methods or processes licensed by
third parties to Vendor, or (iv) any other products, recipes, formulas,
techniques, procedures, or processes of the Vendor and belonging to Vendor.


 










	
   

  	
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4.                                       CKE
acknowledges that it is aware that Vendor presently manufactures various
protein and sandwich products substantially similar to the Products for third
parties and for its own branded sandwiches. 
This Agreement shall not limit the right of Vendor to continue the
manufacture and sale of any products and/or branded items as they are presently
or hereafter may be constituted or to develop and process other branded items
or products for itself or others; provided, however, that
notwithstanding the foregoing, so long as the Purchase Threshold is met, Vendor
may not:


 


(i)                                     manufacture for or
sell to any third party, except under the HARDEE’S Agreement (as herein
defined), or for its own use any Angus Beef Burger Product that uses the same
proprietary spices in the Angus meat block formula used in the manufacture of
the Product, or


 


(ii)                                  manufacture for or
directly sell to any Competitor of CKE (as defined herein) any Angus Beef
Burger Product confusingly similar to a Product.  “Angus Beef Burger Product” means a beef
patty consisting of more than 51% of black cattle beef with a raw weight range
and with respect to a Product (so long as the Product is subject to the Product
Contract) within .3oz., plus or minus, of the raw weight of such Product.


 


5.                                       For purposes of
this Agreement, the term “Competitor of CKE” shall mean any national or
regional chain of “quick” service restaurants or food shops with one hundred
(100) or more restaurants or shops operated under the same tradename in which
food is prepared on-premises and sold at an inside counter, table service or
drive-thru window, intended for immediate on-premises, off-premises, or
in-vehicle consumption.


 


6.                                       For
the purposes of this Agreement, “Purchase Threshold” means the purchase under
the Product Contract by CKE and its parent, subsidiary, and affiliate
corporations of *** pounds aggregate of Products from Vendor during each
rolling twelve (12) month trailing period, the first test period ending
fourteen (14) months after the month in which first delivery of Products is
made under the Product Contract.  If less
than *** pounds is available in any such period for sale by Vendor, then such
lesser amount available shall be the Purchase Threshold.


 


7.                                       CKE
agrees as a condition of this Agreement that CKE will not contract with more
than two (2) other manufacturers (other than Vendor) at any one time to
manufacture and produce the Products for CKE, said other manufacturers to be
the same manufacturers as mutually agreed by CKE and HARDEE’S (herein defined)
and designated under the HARDEE’S Agreement. 
Vendor agrees that as a condition of this Agreement that Vendor so long
as the Purchase Threshold is met will enter into agreements without royalty or
fee with such other manufacturers (designated under the HARDEE’S Agreement) to
license the use of Vendor’s proprietary Formula for the Products to said
manufacturers solely for the purpose of manufacturing and producing the
Products for CKE.  Provided,
notwithstanding the foregoing sentence, Vendor agrees that CKE may engage one
or two of the aforesaid designated manufacturers which Vendor will license to
use the Formula during the time period beginning as










	
   

  	
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of the date of this Agreement
until the Purchase Threshold is first tested. 
Failure by Vendor to enter into a license agreement with a designated
manufacturer within a reasonable time, through no fault of the designated
manufacturer, shall constitute a material default under this Agreement.  It is expressly understood and agreed by the
parties that other than licensing the use of the Formula, Vendor shall have no
further role in the relationship between CKE and the other said manufacturer.


 


8.                                       Vendor
represents and warrants that it owns the formulations and specifications to
manufacture the Products free and clear and has the right to enter into this
Agreement and grant CKE and its parent, subsidiary, and affiliate corporations
the exclusive right to purchase the Products pursuant to Section 3 and the
right to license its proprietary formulas and specifications for the production
and manufacture of the Products under Section 7.


 


9.                                       It
is expressly acknowledged that the Vendor in consideration of the premises
herein and other consideration received, the legal sufficiency of which is
acknowledged, does hereby grant CKE the right of first refusal hereinafter
described.  Upon the occurrence of any
one of the following events, CKE upon written notice to Vendor shall have the
right of first refusal to purchase the Formula, and all rights of ownership
thereto, from the Vendor for a purchase price and purchase terms provided in
writing by Vendor to CKE within fourteen (14) calendar days following the
occurrence of any such event.  CKE shall
have fourteen (14) calendar days after receiving the purchase price and
purchase terms notice within which to accept or decline Vendor’s proposal.  If CKE declines to purchase the Formula
during such time period, then Vendor shall be free to contract with and sell to
any third party the Formula unencumbered without restriction, but not on
different terms than those offered to CKE without giving CKE a fourteen (14)
day right of first refusal concerning the same. 
From the date of the occurrence of any one of the events until the date
on which the Formula is purchased by CKE or by a third party under this
provision, Vendor shall permit CKE, or any manufacturer designated by CKE, to
produce the Products for CKE under the terms of the standard license agreement
set forth in Section 7 hereunder.


 


a.                                       The
Vendor ceases to manufacture or is unable to manufacture the Product for any
reason for a period of thirty (30) consecutive calendar days excepting a Force
Majeure (as defined in the Product Contract) provided Vendor shall cooperate in
good faith in such event with CKE and its then designated manufacturers and any
other temporary designated manufacturer appointed by CKE to ensure appropriate
supply of Products until Vendor can resume production and supply of the
Products as contemplated under the Product Contract, at which point the rights
and obligations of the parties under the Product Contract shall resume.  In such a Force Majeure event, until Vendor
is able to resume its supply obligations under the Product Contract, the
Purchase Threshold and Volume Requirements (as defined in the Product Contract)
shall be waived;










	
   

  	
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b.                                      Excepting
by reason of delay or default of persons outside the control of Vendor, the
Vendor fails to perform or observe any portion of its obligations under Section
7 herein at any time;


 


c.                                       The
Vendor ceases to do business as a manufacturer of beef products for any reason;
and


 


d.                                      The
Vendor (i) voluntarily commences any proceeding or file any petition seeking
relief under any Federal, state or foreign bankruptcy, insolvency,
receivership, liquidation or similar law, (ii) consents to the institution of,
or fails to contravene in a timely and appropriate manner, any such proceeding
or the involuntary filing of any such petition, (iii) applies for or consents
to the appointment of a receiver, trustee, custodian, or similar official of
itself or of a substantial part of its property, (iv) files an answer admitting
the material allegations of a petition filed against it in any voluntary
or involuntary bankruptcy proceeding, (v) makes a general assignment for the
benefit of creditors, (vi) becomes unable, admits in writing its inability or
fails generally to pay its debts as they become due or (vii) takes any
corporate or other action for the purpose of effecting any of the
foregoing.  Provided in the event of a
Chapter 11 reorganization, if the trustee affirms the Product Contract and the
associated agreements, and the Vendor affirmatively shows its ability to produce
and supply, and so long as it does so, the Products in accordance with the
Product Contract, such event so long as in Chapter 11 status, or a complete
discharge therefrom, shall not be deemed an event under this subsection (d).


 


10.                                 The
parties recognize the unique nature of this Agreement due to the uniqueness of
the Product, the health and liability issues integral to the Product and the
effect of the Product on the reputation of CKE and Vendor.  Accordingly, the parties agree that this
Agreement is personal in nature and that neither party may assign or otherwise
transfer its rights and obligations under this Agreement to another party
without the express prior written consent of the non-transferring party which
consent will not be unreasonably withheld. 
This Agreement shall be binding on and inure to the benefit of the
parties hereunder and their respective approved successors and assigns.


 


11.                                 This
Agreement shall be governed by the laws of the State of California. The parties
consent to the exclusive jurisdiction of the state and federal courts of the
State of California for the adjudication of matters arising out of this
Agreement; and neither party will assert forum  non  conveniens
with respect to such venue. This Agreement, and all Exhibits, are only valid if
and when duly signed by authorized representatives of both parties.  No third party is authorized to amend or
waive, on behalf of CKE, any provision of this Agreement.


 


12.                                 There
are no understandings, agreements, or representations, express or implied, not
specified herein.  This Agreement amends,
restates and supercedes that certain Formula Development Agreement pertaining
to the subject matter hereof executed by the parties on February 1, 2004.  This Agreement may not be amended except in a
writing signed by the parties.










	
   

  	
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  Omitted
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  separately with the Commission.

  



 


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13.                                 It
is expressly agreed and acknowledged that Vendor has entered into a certain
Amended and Restated Agreement dated of even date and effective December 1,
2002 with HARDEE’S Food Systems, Inc. (“HARDEE’S”), which agreement, and any
amendments and attachments thereto including the Amended and Restated Formula
Development Agreement between HARDEE’S and the Vendor, dated of even date and
effective as of December 1, 2002 (all the “HARDEE’S Agreement), grant to HARDEE’S
the right to purchase products similar to the Products in accordance with the
terms and conditions therein. 
Notwithstanding anything herein to the contrary, CKE acknowledges that
the rights, privileges, and options of HARDEE’S under the HARDEE’S Agreement,
and the terms thereof, shall not be deemed a violation of the Product Contract,
this Agreement, or any agreements delivered therewith.


 


Executed the 21st day of May, 2004 and effective as of February 1,
2004.


 


	
  CARL KARCHER
  ENTERPRISES, INC.

  	
  PIERRE
  FOODS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/
  John Dunion

  	
   

  	
  By:

  	
    /s/
  Robert C. Naylor

  	
   

  
	
   

  	
  John Dunion

  	
   

  	
  Robert C.
  Naylor

  
	
   

  	
  Executive
  Vice President

  	
   

  	
  Senior Vice
  President-Sales

  
								











	
   

  	
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EXHIBIT A


 


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  separately with the Commission.