Document:

exv10w1

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

 

 

“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.

11

 

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.

12

 

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.

13

 

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.

14

 

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

15

 

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

16

 

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

17

 

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.

18

 

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

19

 

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.

20

 

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

 

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.]

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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

 

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
	 	[***]
	 	[***]
	 	[***]
	 	[***]
	 	[***]exv4w1

Exhibit 4.1

FIRST AMENDMENT TO

AMENDED AND RESTATED PREFERRED SHARE RIGHTS AGREEMENT

     This First Amendment to Amended and Restated Preferred Share Rights Agreement (this
“Amendment”), is made and entered into as of August 17, 2010, by and between Phoenix
Technologies Ltd., a Delaware corporation (the “Company”) and Computershare Trust Company,
N.A. (the “Rights Agent”). Capitalized terms used in this Amendment but not otherwise
defined herein shall have the meanings ascribed to such terms in that certain Amended and Restated
Preferred Shares Rights Agreement, by and between the Company and the Rights Agent, dated as of
October 21, 2009 (the “Rights Agreement”).

     WHEREAS, Section 27 of the Rights Agreement provides that prior to the occurrence of a
Distribution Date, the Company may supplement or amend the Rights Agreement in any respect without
the approval of any holders of Rights;

     WHEREAS, the Distribution Date has not yet occurred;

     WHEREAS, the Board of Directors of the Company has determined to amend the Rights Agreement in
certain respects;

     NOW THEREFORE, in consideration of the foregoing and for other good and valid consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and the Rights Agent
hereby agree as follows:

1. Amendment of the Rights Agreement. The Rights Agreement is hereby amended as follows:

     (a) Section 1 of the Rights Agreement is hereby amended by inserting the following
subsections at the end of such Section 1:

“(qq) “Merger” shall have the meaning set forth in the Merger Agreement.

(rr) “Merger Agreement” shall mean the Agreement and Plan of Merger, dated
as of August 17, 2010, by and among the Company, Pharaoh Acquisition Corp.,
a Delaware corporation (“Parent”), and Pharaoh Merger Sub Corp., a Delaware
corporation (“Merger Sub”), as it may be amended from time to time.”

(ss) “Voting Agreement” shall mean the Voting Agreement, dated as of August
17, 2010, by and between Parent and Ramius, LLC.”

     (b) Section 1(a) of the Rights Agreement is hereby amended by inserting the following
sentences at the end of such Section 1(a):

 

 

Notwithstanding anything in this Section 1(a) to the contrary, neither
Parent, Merger Sub nor any of their respective Affiliates (as defined in the
Merger Agreement) (collectively, the “Parent Group”) shall be, or
shall be deemed to be, an Acquiring Person by virtue of or as a result of
(A) the execution and delivery of the Merger Agreement, the Voting Agreement
or any agreements, arrangements or understandings entered into by the Parent
Group contemplated by the Merger Agreement or the Voting Agreement; (B) the
announcement of the Merger Agreement, the Voting Agreement or the Merger;
(C) the consummation of the Merger; or (D) the consummation of the other
transactions contemplated by the Merger Agreement or the Voting Agreement.
Each event described in subclauses (A), (B), (C) and (D) is referred to
herein as an “Exempted Transaction.”

     (c) Section 1(d) of the Rights Agreement is hereby amended by inserting the following
sentence at the end of such Section 1(d):

“Notwithstanding anything in this Section 1(d) to the contrary, the Parent
Group shall not be deemed to be a Beneficial Owner of, or to beneficially
own, any securities solely by virtue of or as a result of any Exempted
Transaction.”

     (d) Section 1(l) of the Rights Agreement is hereby amended by inserting the following
sentence at the end of such Section 1(l):

“Notwithstanding anything in this Section 1(l) to the contrary, a
Distribution Date shall not be deemed to have occurred by virtue of or as a
result of any Exempted Transaction.”

     (e) Section 1(q) of the Rights Agreement is hereby amended to read in its entirety as
follows:

“(q) “Expiration Date” shall mean the earliest of (i) the Close of Business
on the Final Expiration Date, (ii) the Redemption Date, (iii) the time at
which the Board of Directors orders the exchange of the Rights as provided
in Section 24 hereof, and (iv) immediately prior to the Effective Time (as
defined in the Merger Agreement), but only if such Effective Time shall
occur.”

     (f) Section 1(ii) of the Rights Agreement is hereby amended by inserting the following
sentence at the end of such Section 1(ii):

 

 

“Notwithstanding anything in this Section 1(ii) to the contrary, a Shares
Acquisition Date shall not be deemed to have occurred by virtue of or as a
result of the public announcement of any Exempted Transaction.”

     (g) Section 1(pp) of the Rights Agreement is hereby amended by inserting the following
sentence at the end of such Section 1(pp):

“Notwithstanding anything in this Section 1(pp) to the contrary, a
Triggering Event shall not be deemed to have occurred by virtue of or as a
result of any Exempted Transaction.”

     (h) The Rights Agreement is hereby amended by adding a new Section 36 to the end of the
Rights Agreement, which new Section 36 shall read in its entirety as follows:

“Section 36. TERMINATION. On the earlier of (i) the Final Expiration Date
and (ii) immediately prior to the Effective Time, but only if such Effective
Time shall occur, (a) this Agreement shall be terminated and be without any
further force or effect, (b) none of the parties to this Agreement will have
any rights, obligations or liabilities thereunder and (c) the holders of the
Rights shall not be entitled to any benefits, rights or other interests
under this Agreement, including, without limitation, the right to purchase
or otherwise acquire Preferred Shares or any other securities of the
Company. Notwithstanding the foregoing, Section 18 hereof shall survive the
termination of this Agreement. The Company will notify in writing the
Rights Agent of the Effective Time promptly thereafter. The Rights Agent
will not be deemed to have knowledge of the Effective Time unless and until
it has received such written notice.”

2. Direction to Rights Agent. The Company hereby directs the Rights Agent in accordance
with the terms of Section 27 of the Rights Agreement, to execute this Amendment.

3. Certification of Appropriate Officer. The undersigned officer of the Company, being
duly authorized on behalf of the Company, hereby certifies on behalf of the Company to the Rights
Agent that (a) he is an ‘officer’ of the Company as such term is used in Section 27 of the Rights
Agreement, and (b) this Amendment is in compliance with Section 27 of the Rights Agreement.

4. Remaining Terms. All other provisions of the Rights Agreement that are not expressly
amended hereby shall continue in full force and effect.

5. Defined Terms. Except as otherwise expressly provided herein, or unless the context
otherwise requires, all terms used but not defined herein shall have the meanings assigned to them
in the Rights Agreement.

 

 

6. Governing Law. This Amendment and all acts and transactions pursuant hereto and the
rights and obligations of the parties hereto shall be governed, construed and interpreted in
accordance with the laws of the State of Delaware.

7. Severability. If any term, provision, covenant or restriction of this Amendment is held
by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Amendment shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

8. Title and Subtitles. The titles and subtitles used in this Amendment are used for
convenience only and are not to be considered in construing or interpreting this Amendment.

9. Counterparts; Facsimile. This Amendment may be executed in any number of counterparts
and by facsimile, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. A signature to this Amendment transmitted electronically
shall have the same authority, effect, and enforceability as an original signature.

[Signature Page Follows]

 

 

     IN WITNESS WHEREOF, the parties have executed this Amendment to Rights Agreement as of the
date first above written.

	 	 	 	 	 
	 	COMPANY:

PHOENIX TECHNOLOGIES LTD.

 	 
	 	By:  	/s/ Timothy C. Chu 	 
	 	 	Name:  	Timothy C. Chu 	 
	 	 	Title:  	VP, General Counsel and Secretary 	 

	 	 	 	 	 
	 	RIGHTS AGENT:

COMPUTERSHARE TRUST COMPANY, N.A.

 	 
	 	By:  	/s/ Michael Lang 	 
	 	 	Name:  	Michael Lang	 
	 	 	Title:  	Senior Vice President

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