Document:

Exhibit
10.13

 

FIRST AMENDMENT AGREEMENT

 

THIS FIRST AMENDMENT AGREEMENT (“Amendment”)
is executed as of the 27th day of June, 2004, by and between HARDEE’S FOOD
SYSTEMS, INC., a North Carolina corporation (“HFS”) and PIERRE FOODS, INC., a
North Carolina corporation (the “Company”).

 

RECITALS

 

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

 

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

 

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

 

4.               HFS 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 HFS and meets HFS’s standards and specifications, HFS
agrees that some of the production capacity of the Products currently in
Company’s current plant may be moved to the additional plant.  HFS 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 HFS for the Products.  To the extent
of any plant capacity constraints, the

 

	
   

  	
  Confidential information redacted and

  
	
  Omitted portions are indicated by [***].

  	
  filed separately with the Commission.

  

 

 

Company shall fulfill the
supply requirements of HFS prior to the fulfillment of any product requirements
of a Competitor of HFS (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
HFS or HFS’s parent or affiliate companies, including without limitation, Carl
Karcher Enterprises, 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
HFS 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 HFS from a designated raw material supplier of HFS
under contract with HFS, including beef products purchased by HFS 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 HFS, only those raw materials purchased by or
arranged for delivery to Company by and for the account of HFS from a
designated raw material supplier of HFS will be used in the manufacturing of
the Products.

	
   

  	
  Confidential
  information redacted and

  
	
  Omitted
  portions are indicated by [***].

  	
  filed
  separately with the Commission.

  

 

2

 

(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 HFS 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 HFS, the Company
shall deliver evidence satisfactory to HFS 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. 
HFS 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 HFS’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.  HFS 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, HFS 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 HFS 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
party and entitle the other party to all remedies at law and equity including
without limitation, liquidated damages and injunctive relief.

	
   

  	
  Confidential
  information redacted and

  
	
  Omitted
  portions are indicated by [***].

  	
  filed
  separately with the Commission.

  

 

3

 

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

	
   

  	
  Confidential
  information redacted and

  
	
  Omitted
  portions are indicated by [***].

  	
  filed
  separately with the Commission.

  

 

4

 

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 HFS 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.

	
   

  	
  Confidential
  information redacted and

  
	
  Omitted
  portions are indicated by [***].

  	
  filed
  separately with the Commission.

  

 

5

 

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

 

	
   

  	
  HARDEE’S
  FOOD SYSTEMS, 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
  information redacted and

  
	
  Omitted
  portions are indicated by [***].

  	
  filed
  separately with the Commission.

  

 

6Exhibit 10.14

 

SECOND AMENDMENT AGREEMENT

 

THIS SECOND AMENDMENT AGREEMENT (“Amendment”) is executed as of the
30th day of September 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 First Amendment Agreement dated June 27,
2004 (the “First Amendment”).

 

3.                                       CKE
and Company desire to amend the Original Agreement and the First Amendment, and
memorialize the amendment in writing.

 

4.                                       All
capitalized terms herein not otherwise defined shall have the meaning ascribed
to such terms in the respective Original Agreement or First Amendment, 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.                                   Paragraph
3(c) of the Original Agreement is amended to read in its entirety as follows:

 

Until October 31, 2004 at no additional cost
to CKE, the Company will maintain safety stock volume of up to six (6) weeks of
Product based on trailing six month period average for system wide availability
in the Company’s Ohio storage facilities. 
Commencing on November 1, 2004 and for the remainder of the term
(including all renewals and extensions thereof), at no additional cost to CKE,
the Company will maintain safety stock volume of no less than three (3) weeks
of Product based on trailing six month period average for system wide
availability in the Company’s Ohio storage facilities.  CKE reserves the right to arrange all freight
carriers and to pick up product at Company’s manufacturing facility and cold
storage warehouses.  Addresses for the
storage facilities are as follows:

 

	
  CSI Brea

  2750 Orbitor Avenue

  Brea, California

  Attn:  Maritza Jimenez

  714-993-3533

  	
  Pierre Foods, Inc.

  9990 Princeton Road

  Cincinnati, Ohio 45246

  Attn:  Bill Kolb

  800-543-1604

  	
  Cincinnati Freezer

  2881 E. Sharon Road

  Cincinnati, Ohio 45241

  Attn:  Don Lucas

  513-771-3573

  

 

	
   

  	
  Confidential information redacted and

  
	
  Omitted portions are indicated by [***].

  	
  filed separately with the Commission.

  

 

 

B.                                     Paragraph
2(b) of the First Amendment is amended to read in its entirety 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 ***.

 

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

 

3.                                       No
Default.  The Original Agreement and
the First Amendment 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 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 and the First Amendment, 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 Amendment 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.

	
   

  	
  Confidential
  information redacted and

  
	
  Omitted
  portions are indicated by [***].

  	
  filed
  separately with the Commission.

  

 

2

 

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

  	
   

  
										

	
   

  	
  Confidential
  information redacted and

  
	
  Omitted
  portions are indicated by [***].

  	
  filed
  separately with the Commission.

  

 

3

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