Exhibit
10.12


 


AMENDED AND
RESTATED


 


FORMULA
DEVELOPMENT AGREEMENT


 


THIS FORMULA DEVELOPMENT AGREEMENT is
executed this 21st day of May, 2004, and made effective as of December 1,
2002, by and between HARDEE’S FOOD SYSTEMS,
INC., a North Carolina corporation (“HARDEE’S”) and PIERRE FOODS, INC., a North Carolina
corporation (“Vendor”).


 


RECITALS


 


1.                                       HARDEE’S 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 HARDEE’S 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 4.10oz. Item #9561


 


Angus Beefsteak Patty 5.65oz. Item #9598


 


2.                                       Simultaneously
with the execution of this Agreement, the parties entered into a  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 HARDEE’S,
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 HARDEE’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
HARDEE’S by Vendor, HARDEE’S, 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)


 










	
   

  	
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  Omitted portions are indicated by [***].

  	
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any other products, recipes, formulas, techniques, procedures, or
processes of the Vendor and belonging to Vendor.


 


4.                                       HARDEE’S
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, other than Carl Karcher Enterprises, Inc. (“CKE”)
pursuant to the CKE Agreement (as defined herein), 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 HARDEE’S (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 HARDEE’S” 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 HARDEE’S 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.                                       HARDEE’S agrees
as a condition of this Agreement that HARDEE’S will not contract with more than
two (2) other manufacturers (other than Vendor) at any one time to manufacture
and produce the Products for HARDEE’S. 
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 by HARDEE’S) 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 HARDEE’S.  Provided, notwithstanding the foregoing
sentence, Vendor agrees that HARDEE’S may engage one or two










	
   

  	
  Confidential
  information redacted and

  
	
  Omitted
  portions are indicated by [***].

  	
  filed
  separately with the Commission.

  



 


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designated manufacturers which Vendor will license to use the Formula
during the time period beginning as 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 HARDEE’S 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 HARDEE’S 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 HARDEE’S the right of first refusal hereinafter described.  Upon the occurrence of any one of the
following events, HARDEE’S 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 HARDEE’S within fourteen (14) calendar days following the occurrence
of any such event.  HARDEE’S shall have
in fourteen (14) calendar days after receiving the purchase price and purchase
terms notice within which to accept or decline Vendor’s proposal.  If HARDEE’S 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 HARDEE’S without giving HARDEE’S 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 HARDEE’S or by a
third party under this provision, Vendor shall permit HARDEE’S, or any
manufacturer designated by HARDEE’S, to produce the Products for HARDEE’S 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 HARDEE’S and its then designated manufacturers and any
other temporary designated manufacturer appointed by HARDEE’S 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;










	
   

  	
  Confidential
  information redacted and

  
	
  Omitted
  portions are indicated by [***].

  	
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  separately with the Commission.

  



 


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


 


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


 


d.                                      The Vendor (i)
voluntarily commences any proceeding or 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 HARDEE’S 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 Missouri. The parties consent to the
exclusive jurisdiction of the state and federal courts of the State of Missouri
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 HARDEE’S, any provision of this Agreement.


 


12.                                 There are no
understandings, agreements, or representations, express or implied, not
specified herein.  This Agreement may not
be amended except in a writing signed by the parties.










	
   

  	
  Confidential
  information redacted and

  
	
  Omitted
  portions are indicated by [***].

  	
  filed
  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 February 1, 2004, with CKE
which Agreement and the attachments thereto (the “CKE Agreement”) grant CKE the
right to purchase products similar to the Products in accordance with the terms
and conditions therein.  Notwithstanding
anything herein to the contrary, HARDEE’S acknowledges and agrees that the
rights, privileges, and options of CKE under the CKE Agreement, and the terms
thereof, shall not be deemed a violation of the Product Contract, this
Agreement, or the Attachments (as defined in the Product Contract).


 


Executed 
the day and year first above written and effective as of December 1,
2002.


 


	
  HARDEE’S FOOD SYSTEMS, 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

  
						











	
   

  	
  Confidential
  information redacted and

  
	
  Omitted
  portions are indicated by [***].

  	
  filed
  separately with the Commission.

  



 


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EXHIBIT A


 


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  Confidential
  information redacted and

  
	
  Omitted
  portions are indicated by [***].

  	
  filed
  separately with the Commission.