Formula Development Agreement

Exhibit 10.12


AMENDED AND RESTATED


FORMULA DEVELOPMENT AGREEMENT


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


RECITALS


1. HARDEE'S desires to introduce new products in its restaurant systems.


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


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


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


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


Angus Beefsteak Patty 4.10oz. Item #9561


Angus Beefsteak Patty 5.65oz. Item #9598


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


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


Confidential information redacted and Omitted portions are indicated by [***]. filed separately with the Commission.


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


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


(i) manufacture for or sell to any third party, other than Carl Karcher Enterprises, Inc. ("CKE") pursuant to the CKE Agreement (as defined herein), or for its own use any Angus Beef Burger Product that uses the same proprietary spices in the Angus meat block formula used in the manufacture of the Product, or


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


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

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