Supply Agreement Terms and Conditions - AFC Enterprises Inc. d/b/a Popeyes Chicken and Biscuits and Cagle's Inc.
SUPPLY AGREEMENT TERMS AND CONDITIONS
Supplier: Cagle's, Inc.
Effective Date of Agreement: October 5, 1998
This Agreement is by and between AFC Enterprises, Inc. ("AFC") d/b/a Popeyes
Chicken and Biscuits and Cagle's, Inc. ("Supplier").
BACKGROUND
A. Supplier has substantial experience in the production and/or supply of
certain products that have been approved in accordance with the terms of this
Agreement. Such products are listed on Exhibit A hereto and are collectively
referred to as the "Products."
B. Supplier and AFC desire that Supplier supply the Products pursuant to the
terms of this Agreement. In consideration of the approval by AFC of Supplier
to supply the Products to approved distributors ("Distributors") or AFC, and
the mutual covenants and obligations contained herein, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. APPROVAL OF PRODUCTS
A. Initial Approval - As of the date of this Agreement, AFC Enterprises,
Inc. ("AFC") has tested samples of the Products which have been provided by
Supplier for sampling by AFC, and AFC have approved such Products.
B. Product Modifications - If Supplier makes any improvements, modifications
or changes to any of the Products, Supplier shall immediately notify AFC of
same in writing specifying the improvement, modification or change. In their
sole discretion, AFC must approve in writing any such improvements,
modifications or changes to the Products before Supplier may sell such
Products under this Agreement to any Distributor or AFC. After approval by
AFC, any such new or modified Products shall be added to Exhibit A to this
Agreement.
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C. Additional Testing - AFC may conduct testing of the Products throughout
the term of this Agreement. Supplier shall cooperate in such testing and
shall supply such Product samples as are reasonably required, free of charge,
including shipping costs. Supplier shall also allow visits to its facilities
as reasonably requested by AFC. If testing by AFC reveals that Supplier has
deviated from Popeyes product specifications (see Exhibit D) in a significant
or sustained manner, Cagle's shall have three (3) calendar days to cure the
deviation and match Popeyes product specifications completely. If subsequent
testing by AFC reveals that the same deviation from specification is
occurring, Supplier shall have two (2) additional calendar days to cure the
deviation and match Popeyes product specifications completely. If further
testing by AFC reveals that the same deviation from specification is still
occurring, AFC has the right to terminate this Agreement for cause. AFC shall
have no responsibility for any inventory of out-of-spec product resulting
from this product testing.
2. ORDERS
A. Acceptance - The Distributor(s) who have been approved in connection with
the supply of Products under this Agreement are set forth on Exhibit A.
Orders for Products shall be given by a Distributor to Supplier whereby the
Distributor shall purchase Products from Supplier, for the purpose of then
selling such Products to AFC. Supplier shall accept orders for Products from
the Distributor(s) and shall sell and deliver the Products to such
Distributor(s), provided, however, that Distributor must meet the credit
approval of Supplier. Supplier may also accept orders for Products directly
from AFC and in such cases shall sell and deliver the products to AFC in
accordance with the terms of Section 4.A. The purchase orders and other
business forms of Supplier or Distribution(s) shall govern the purchases by
Distributor(s) or AFC from Supplier.
B. Approved Distributors - Supplier agrees to sell Products under this
Agreement only to Distributors who are approved by AFC, as identified
from time to time in writing by AFC. Upon written notice by AFC to
Supplier, Supplier shall cease selling Products to any then-current or
former Distributor. If AFC elects to approve any new or different
distributors, AFC will notify Supplier in writing and Supplier shall
commence selling Products to such different distributors within ten (10)
days after such notice, provided that such distributors meet the credit
approval of Supplier.
C. Credit Approval - For all purposes of this Agreement, credit approval of
the Supplier shall be in accordance with reasonable credit terms and
according to Supplier's standard credit policies. Any request for credit
approval shall be deemed approved if not specifically disapproved by written
notice to the requesting party within 15 days from date of request.
3. SUPPLY OF PRODUCTS
A. Supply - Supplier shall maintain inventories of the Products in
sufficient quantities to fill the orders of Distributor(s) and AFC pursuant
to Section 2 without delay. During the
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term of this Agreement, the production volume shall be adjusted as mutually
agreed upon by Supplier and by AFC. Supplier shall not deliver or sell to any
Distributor(s) or directly to AFC any of the Products which AFC has
specifically requested Supplier not to sell or deliver. If Supplier
discontinues production, delivery or sales of any of the Products, it shall
so notify AFC of same in writing at least sixty (60) days prior to any
discontinuance.
B. Container Markings - All containers in which Products are shipped under
this Agreement shall be marked in a manner indicating the Product is for the
Popeyes.
C. Product Markings - All Products delivered or sold to the Distributor(s)
or AFC shall bear whatever trademarks, trade names, logos or other
identifying markings (the "Markings") as AFC shall prescribe. Supplier shall
use or affix the Markings only on Products which are delivered or sold to the
Distributor(s) or AFC. AFC shall provide the form of all Markings to Supplier
and Supplier shall affix such Markings precisely in the place(s) on each of
the Products as AFC shall designate. Supplier shall bear all costs of
affixing such Markings and of all artwork, printing plates or any other
miscellaneous items which are required as part of the production process of
the Products.
D. Rejection and Substitute Supply - Any Product samples failing to meet
the standards set forth in the pertinent Quality Standard or otherwise
pursuant to Exhibit D will subject the entire production lot of which they
are a part to rejection at no cost to AFC or the Distributors. In the event
that a production lot is rejected for failure to meet the requisite standards
set forth in Section 1.A, Supplier will deliver a substitute production lot
to the pertinent distribution warehouse within forty-eight (48) hours after
Supplier is notified of the rejection. Where product quality or performance
problems relating to product arise in the operations of AFC, Supplier shall
at AFC's request promptly visit those operations and address the problem
areas in a timely manner.
4. PRICES
A. Eight-Piece Mixed Fresh Poultry - Prices for eight-piece mixed fresh
poultry shall be determined pursuant to the formula set out in Exhibit B
hereto, some components of which may be revised monthly and some components
of which may be revised annually, as specified in Exhibit B.
B. Dark Meat - Prices for dark meat for the period October 5, 1998 through
December 31, 1999 shall be $.[*] per pound FOB Collinsville. For periods
after December 31, 1999, AFC all have the right to negotiate an annual FOB
fixed price for dark meat only or, at its option, shall have the right to
price dark meat pursuant to the formula set out in Exhibit C.
________________
* Confidential material redacted and filed separately with the Commission.
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C. Freight and Distribution - The total charge for freight and distribution
on Product delivered directly to AFC restaurants shall be $.[*] per pound.
Freight charges for Product shipped to Distributors will be billed using a
"best estimate" cost per pound. Records shall be maintained by Supplier, AFC
and the Distributors that detail variances between actual freight costs and
the "best estimate" costs. In each month, Supplier will adjust the "best
estimate" freight cost to eliminate the over/under balance from the prior
month's estimated charges compared to actual charges.
D. Audit - Supplier shall maintain cost accounting records and supporting
documentation for the various factors and cost elements in the formulas set
forth in Exhibits C and D for at least two (2) years after the pertinent
period. AFC or an agent designated by AFC shall have access to such records
and supporting documentation sufficient in the judgment of AFC or its agent
to audit such materials and to assess and verify all matters relating to
costs and prices under this Agreement.
5. PAYMENTS
Payment for the Products delivered by Supplier shall be made by and shall be the
sole responsibility of the Distributors and AFC. Supplier shall invoice the
Distributor or AFC, as the case may be, directly for all Products supplied by
Supplier. The agreements between Supplier and the Distributor or AFC shall
govern the terms of payment for the Products. Supplier shall have no recourse
against AFC for any non-payment of Supplier's invoices for Products sold and/or
delivered to any Distributor.
6. DELIVERY
Supplier shall prepay freight to all destinations. All Product shall be
transported by Supplier or a carrier designated by Supplier unless another
carrier is designated by the Distributor of AFC at the time an order is placed.
Each shipment will be accompanied by a packing slip, and the count and/or weight
evidenced by such slip will be conclusive unless Supplier is notified in writing
of a discrepancy by the Distributor or AFC within ten (10) days following
delivery. Title to, liability for, and risk of loss of all Product sold
hereunder shall remain with Supplier until delivery, whereupon title to,
liability for and risk of loss shall pass to the Distributor or AFC, as the case
may be.
7. WARRANTIES
The Products produced by Supplier under this Agreement shall conform to the
specifications set by AFC (and contained in Exhibit D), as modified from time to
time and notified to Supplier in writing. The Products shall be merchantable and
free from defects in material and workmanship
________________
* Confidential material redacted and filed separately with the Commission.
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and shall comply with all content and labeling requirements under applicable
laws. Supplier acknowledges that the samples provided to AFC induced AFC to
designate Supplier as an approved supplier for Products pursuant to this
Agreement, and induced AFC to enter into this Agreement. Upon the request of any
Distributor or AFC, Supplier shall replace at Supplier's expense, or refund the
full purchase price for, any Product which is defective or fails to conform in
any way to the samples provided or the specifications set forth by AFC. This
warranty shall control insofar as the same may conflict with any warranty or
limitation on warranty set forth in Supplier's business forms.
8. CONFIDENTIAL INFORMATION
A. Definitions - The term "Confidential Information" as used in this
Agreement means secret, confidential or proprietary information of AFC,
including without limitation, lists of Distributors, AFC restaurants and
products and supplies approved by AFC. The term "Confidential Information"
does not include information that has become generally available to the
public by the act of one who has the right to disclose such information
without violating any right of AFC. The term "Confidential Information" does
not include information which is known to the Supplier prior to its
disclosure by or AFC, as evidenced by the Supplier's written records, or
which is independently developed without using the Confidential Information.
B. Ownership - All trade secrets of AFC and the Confidential Information
furnished or disclosed by AFC to Supplier hereunder are and shall remain the
property of AFC. Any reproductions, notes, specifications, manuals, summaries
or similar documents relating to the trade secrets and Confidential
Information shall become and remain the property of AFC immediately upon
creation.
C. Nondisclosure - During or after the term of this Agreement for so long as
any such information remains a trade secret, Supplier agrees that it will not
use or permit the duplication or disclosure of any trade secret (other than
to an employee of Supplier 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 in advance
and in writing by an officer of AFC. For a period commencing with the date of
this Agreement and for so long thereafter as any such information remains
competitively sensitive, up to a maximum of three (3) years after termination
of this Agreement, Supplier agrees that it will not use or permit the
duplication or disclosure of any Confidential Information to any person
(other than to an employee of Supplier 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 in
advance and in writing by an officer of AFC.
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9. INDEMNIFICATION
Supplier shall and hereby agrees to indemnify, defend and hold AFC harmless from
and against any and all actions, claims, costs (including attorney's fees),
damages, judgments and liabilities whatsoever, including without limitation any
product liability claims, in law or equity, arising out of (i) the production,
supply, distribution, delivery or sale by Supplier of any products or goods or
(ii) the breach by Supplier of any of its obligations or representations under
this Agreement.
AFC shall and hereby agree to indemnify, defend and hold Supplier harmless from
and against any and all actions, claims, costs (including attorney's fees),
damages, judgments and liabilities whatsoever, including without limitation any
product liability claims, in law or equity, arising out of the breach by AFC of
any of its obligations or representations under this Agreement.
10. INSURANCE
A. During the term of this Agreement, Supplier shall maintain and keep in
force, at its own expense, the following minimum insurance coverage and
minimum limits:
(i) Workers' Compensation Insurance - to the extent permitted by law
Supplier shall be allowed to self insure for worker's compensation.
(ii) Employer's Liability Insurance - for employee bodily injuries and
deaths, with a limit of $500,000 each accident.
(iii) Comprehensive or Commercial General Liability Insurance -covering
claims for bodily injury, death and property damage, including Premises
and Operations, Independent Contractors, Products and Completed
Operations, Personal Injury, Contractual, and Broadform Property Damage
liability coverage, with limits as follows. Occurrence/Aggregate Limit
of $1,000,000 for bodily injury, death and property damage each
occurrence and $2,000,000 general aggregate or split liability limits
of: $1,000,000 for bodily injury per person, $1,000,000 for bodily
injury per occurrence, and $500,000 for property damage.
(iv) Comprehensive Automobile Liability Insurance - covering owned,
non-owned and hired vehicles, with limits as follows: Combined Single
Limit of $500,000 for bodily injury, death and property damage per
occurrence or split liability limits of: $500,000 for bodily injury per
person, $500,000 for bodily injury per occurrence, and $250,000 for
property damage.
B. All such policies of insurance shall provide that the same shall not be
canceled without first giving thirty (30) days' prior written notice
thereof to AFC. No such cancellation shall affect Supplier's obligation to
maintain the insurance coverage required by this Agreement.
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C. Except for Workers' Compensation Insurance, AFC shall be named is an
Additional Insured on all such required policies. All liability insurance
policies shall be written on an "occurrence" policy form and by insurance
companies acceptable to AFC.
D. Supplier shall be responsible for payment of any and all deductibles
from insured claims under its policies of insurance. The coverage afforded
under any insurance policy obtained by Supplier pursuant to this Agreement
shall be primary coverage regardless of whether or not AFC has similar
coverage.
E. Supplier shall not perform under this Agreement unless and until
certificates of such insurance, including renewals thereof, have been
delivered to and approved by AFC.
F. The minimum limits of coverage required by this Agreement may be
satisfied by a combination of primary and excess or umbrella insurance
policies.
G. At any time during the term of this Agreement and upon written notice
to the Supplier, AFC shall have the right to increase the minimum limits of
insurance coverage in a commercially reasonable amount or otherwise modify
the insurance requirements of this Agreement in a commercially reasonable
manner.
H. If Supplier shall fail to comply with any of the insurance requirements
herein, AFC may, at its sole discretion and upon written notice to Supplier
by AFC, terminate this Agreement. The maintenance of the insurance coverage
required under this Agreement shall in no way operate to limit the
liability of Supplier to AFC under the provisions of this Agreement.
11. INSPECTION
AFC and their designated representatives shall have the right to inspect
Supplier's manufacturing facilities during normal business hours at any time
during the term of this Agreement, upon reasonable notice by AFC of such
inspection.
12. FUTURE BUSINESS RELATIONSHIPS
During the term of this Agreement, AFC shall have the right to evaluate the
Supplier based on Supplier's pricing, product quality and consistency of
delivery and other factors. Supplier will cooperate in such evaluation. AFC
shall also have the right to test other suppliers with respect to the supply of
products similar to the Products being supplied by Supplier.
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13. TERM AND TERMINATION
A. Term - The initial term of this Agreement is three years: October 5,
1998 through October 4, 2001. At the end of this three-year period, AFC may
elect to extend the Agreement through October 4, 2003.
If at the end of the initial three-year term AFC elects not to extend the
Agreement, AFC shall notify Supplier in writing by October 4, 2001 of AFC's
intent not to extend. The period from October 5, 2001 through April 4, 2002
will then serve as a transition period, during which Supplier will continue
to supply Products pursuant to the terms of this Agreement (unless the
parties agree on alternative arrangements), while both parties implement
new sales and purchasing arrangements (respectively) to take effect on
April 5, 2002.
If at the end of the initial three-year term AFC elects to extend the
Agreement, AFC shall notify Supplier in writing by October 4, 2001. At the
end of the two-year extension period, AFC must notify Supplier whether AFC
intends to negotiate a new contract. The period from October 5, 2003
through April 4, 2004 will then serve as a transition period, during which
Supplier will continue to supply Products pursuant to the terms of this
Agreement (unless the parties agree on alternative arrangements).
B. Events of Default-Supplier - Supplier shall be in default hereunder if
any one or more of the following events happen:
(i) Supplier shall have serviced Distributors or AFC in a manner
detrimental to the operation of the restaurants; or
(ii) Supplier shall otherwise fail to perform or comply with any of
the material terms or conditions in this Agreement, for reasons other
than an event of Force Majeure, and such failure shall continue for a
period of seven (7) days after written notice thereof from AFC to
Supplier; or
(iii) The filing by Supplier of a voluntary petition of bankruptcy or a
voluntary petition or answer seeking reorganization, rearrangement, or
readjustment of its debts, or any relief under any bankruptcy or
insolvency act or law, now or hereafter existing, or any agreement by
Supplier indicating consent to, approval of, or acquiescence in, any
such petition or proceeding; or
(iv) The application by Supplier or the consent or acquiescence of
Supplier in the appointment of a receiver or trustee for all or a
substantial part of any of its properties or assets; or
(v) The making by Supplier of a general assignment for the benefit of
creditors; or
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(vi) The inability of Supplier or the admission of Supplier in
writing of its inability to pay its debts as they mature; or
(vii) The filing of an involuntary petition against Supplier seeking
reorganization, rearrangement or readjustment of its debts or for any
other relief under any bankruptcy or insolvency act or law, now or
hereafter existing, or the involuntary appointment of a receiver or
trustee for Supplier for all or a substantial part of its property or
assets, or the issuance of a warrant of attachment, or execution of
similar process against a substantial part of the property of Supplier
and the continuance of such for one hundred and twenty (120) days
undismissed or undischarged; or
(viii) Supplier shall fail to meet the quality standards set by AFC as
contained in Exhibit D.
C. Events of Default - AFC. AFC shall be in default hereunder if any one
or more of the following events happen:
(i) AFC shall fail to perform or comply with any of the material
terms or conditions in this Agreement, for reasons other than an event
of Force Majeure, and such failure shall continue for a period of seven
(7) days after written notice thereof from Supplier to AFC; or
(ii) The filing by AFC of a voluntary petition of bankruptcy or a
voluntary petition or answer seeking reorganization, rearrangement, or
readjustment of its debts, or any relief under any bankruptcy or
insolvency act or law,
(iii) The application by AFC or the consent or acquiescence of AFC in
the appointment of a receiver or trustee for all or a substantial part
of any of its properties or assets; or
(iv) The making by AFC of a general assignment for the benefit of
creditors; or
(v) The inability of AFC or the admission of AFC in writing of its
inability to pay its debts as they mature; or
(vi) The filing of an involuntary petition against AFC seeking
reorganization, rearrangement or readjustment of its debts or for any
other relief under bankruptcy or insolvency act or law, now or
hereafter existing, or the involuntary appointment of receive or
trustee for AFC for all or a substantial part of its property or
assets, or the issuance of a warrant of attachment, or execution of
similar process against a substantial part of the property of AFC and
the continuance of such for one hundred and twenty (120) day
undismissed or undischarged.
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D. In the event of any material breach (including any event of default)
under this Agreement, the non-breaching party may terminate the
Agreement immediately upon written notice to the breaching party,
provided that Supplier shall continue to supply Products pursuant to
the terms of the Agreement for a period of up to one (1) month at AFC's
request, to allow AFC to implement new supply arrangements.
E. In the event any "third party" distributor (i.e., a distributor
selected by Popeyes to distribute Supplier's poultry in markets not
served by Supplier's own distribution system) fails during three (3)
consecutive billing cycles to pay Supplier according to the agreed upon
payment terms, Supplier may require that Popeyes find an alternate
"third party" distributor within sixty (60) days of written
notification from Supplier.
14. EFFECT OF TERMINATION
A. Upon the expiration or the termination of this Agreement for any
reason, Supplier shall:
Discontinue Use - Immediately and permanently discontinue the use of
all Markings, any trade secrets of AFC, and any Confidential
Information which was used in the supply of the Products or to which
Supplier has otherwise gained possession pursuant to this Agreement;
and
Deliver Materials - Immediately deliver to AFC or, at AFC's option,
destroy all Markings and any other printed material containing either
Markings, AFC trade secrets and/or Confidential Information.
B. AFC's Costs - In the event Supplier terminates this Agreement or
discontinues performance under this Agreement prior to the expiration of
its term for any reason other than a breach by AFC, Supplier agrees to pay
AFC its administrative costs and expenses incurred in obtaining other
sources of supply, including without limitation AFC's costs of any bidding
process, testing, inspection and approvals of Product.
C. Supplier's Costs. In the event AFC terminates this Agreement or
discontinues performance under this Agreement prior to the expiration of
its term for any reason other than a breach by Supplier, AFC agrees to pay
Supplier its administrative costs and expenses incurred in obtaining other
customers, including without limitation Supplier's costs of any bid and
approval process.
15. FORCE MAJEURE
"Force Majeure" shall mean and include any circumstance beyond the reasonable
control of Supplier or AFC, including without limitation, the following: any act
of nature or the public enemy, accident, explosion, fire, storm, earthquake,
flood, drought, perils of the sea, the
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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. Force Majeure shall
not mean, however, any delay of delivery caused by choice of shipment route by
Supplier which is affected by weather, when alternative shipment routes were
available. When circumstances require Supplier to allocate Product amount
Supplier's customers, Supplier agrees that it shall not discriminate against the
Distributor(s) or Members and that Supplier will supply them on a basis no less
favorable to them than a pro rata basis. Notwithstanding anything herein to the
contrary, the Distributor(s) or Members may purchase Product from third parties
during any period Supplier is unable to satisfy purchase orders as a result of
an event of Force Majeure. In case the performance of any terms or provisions
hereof shall be delayed or prevented because of an event of Force Majeure, the
affected party may, at its option, suspend performance during the period such
cause continues, and no liability shall attach against either party on account
thereof. Any party suffering an event of Force Majeure shall diligently attempt
to remove such cause or causes with reasonable dispatch. As soon as any event of
Force Majeure is remedied, the parties' respective rights, obligations and
performance as set forth in this Agreement shall be immediately reinstated.
16. CERTIFICATION OF INDEPENDENT PRICE DETERMINATION
Supplier represents and warrants that the Price under this Agreement has been
arrived at independently, without the purpose of restricting competition, and
that there has not been any consultation, communication, or agreement with any
other supplier or competitor relating to (i) such Price or (ii) the methods or
factors used to calculate such Price.
17. NOTICES
Any notice under this Agreement 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 Supplier:
Popeyes Chicken and Biscuits (To the address set forth
5555 Glenridge Connector, NE Suite 300 on Exhibit A)
Atlanta, GA 30342
Attention: Dino Del Nano
18. AMENDMENTS, WAIVERS, AND MODIFICATIONS
No change in, addition to, modification or waiver of the terms and provisions of
this Agreement shall be binding upon Supplier or AFC unless it is mutually
agreed upon in writing. Any such instrument shall be attached to this Agreement
and shall be incorporated herein.
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19. ASSIGNMENT
Neither this Agreement nor any rights hereunder may be assigned by either party
without the prior written consent of the other party, which consent shall not be
unreasonably withheld. Any such assignment and written consent shall be attached
to this Agreement and shall be incorporated herein.
20. SEVERABILITY
In the event any one or more provisions of this Agreement or of any instrument
or other document delivered pursuant hereto or in connection herewith shall, for
any reason, be held to be invalid, illegal, or unenforceable, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other instrument or document, and this Agreement and such other
instruments and documents shall be interpreted and construed as if such invalid,
illegal or unenforceable provision had never been contained therein.
21. GOVERNING LAW
This Agreement shall be governed, interpreted, performed and enforced solely in
accordance with the laws of the State of Georgia, without reference to
principles of conflicts of law; provided, however, notwithstanding anything to
the contrary herein, the arbitration provisions set forth hereon, and the
initiation and conduct of any arbitration thereunder, shall be governed in all
respects exclusively by the Commercial Arbitration Rules of the American
Arbitration Association and by the Federal Arbitration Act, Title IX, United
States Code.
22. EFFECTIVE DATE
Execution of this Agreement or commencement of performance pursuant to this
Agreement by Supplier constitutes acceptance by Supplier of this Agreement and
its terms and conditions. Upon execution of this Agreement by Supplier, this
Agreement shall be delivered to AFC for its acceptance. This Agreement shall be
effective only upon execution by AFC, which execution shall evidence the
acceptance by AFC of this Agreement.
23. ARBITRATION
It is agreed between the parties that any controversy or claim between them
arising out of, in connection with, or relating to the enforcement, non-
enforcement, interpretation, performance or breach of any provision of this
Agreement shall be settle exclusively by arbitration in the City of Atlanta,
Georgia, before three arbitrators appointed by the American Arbitration
Association pursuant to its standard procedures. The arbitration shall be
conducted pursuant to the Commercial Arbitration Rules of the American
Arbitration Association in effect at the time any arbitration proceeding is
commenced. The arbitration award shall be final and binding on both
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parties and judgment upon such arbitration award may be entered in any court
having jurisdiction.
Notwithstanding this agreement to arbitrate, either party may seek from a court
any provisional remedy that may be necessary to protect its rights or property
pending the establishment of the arbitration panel or the determination of the
merits of the controversy.
24. 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, oral or written. If any other
agreement affects the supply of Product by Supplier to any Distributor or AFC,
the terms and provisions of this Agreement shall control in the event of any
conflict.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered by their authorized representatives as of the date indicated.
CAGLE'S, INC.
By: /s/ John Bruno
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Title: Sr. V.P.
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Date: 12 - 28, 1998
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AFC ENTERPRISES, INC.
By: /s/ Dino Del Nano
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Title: V.P. POPCA
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Date: 12 - 22, 1998
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EXHIBIT A TO
SUPPLY AGREEMENT TERMS AND CONDITIONS
SPECIFIC AWARD TERMS
Supplier Name: Cagle's, Inc.
Supplier Address: 2000 Hills Avenue, N.W.
Atlanta, GA 30318
Attn: John Bruno
Contract Term: See Section 13
Popeyes Markets Served: Direct distribution by Cagle's, Inc.: All operating
restaurants in the Atlanta and Columbus/Albany marketing
areas. (restaurants included attached as Exhibit "E")
Third Party distribution: New Orleans
Volume: For direct distribution, AFC will purchase 100% of all of its fresh
poultry requirements from Cagle's, Inc. Current volumes can range from
50,000 -80,000 pounds depending on promotions and time of year.
Additional volume needs from new restaurant growth in these areas by
AFC will be supplied by Cagle's, Inc.
For third party distribution, AFC will purchase three truckloads per
week, which can range from 105,000 - 115,000 pounds per week.
Currently, those pounds are being shipped to AFC restaurants in New
Orleans.
Products: Popeyes eight piece cut whole chickens
*Popeyes 4-piece dark meat
**Popeyes drumsticks
**Popeyes 4-piece white meat
**Popeyes Wings
*Priced in connection with COPA.
**Prices negotiated separately and purchases are counted toward volume
commitment.
Description of Products: See Exhibit D
Approved Distributors: F. Christiana & Company, or others designated by AFC.
Initial Price Term: See Section 4
Billing Weights: Each case to be weighed and marked at actual weight.
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EXHIBIT B
COST-PLUS FORMULA FOR EIGHT-PIECE MIXED FRESH POULTRY
The attached worksheet (Cagle's Inc. - AFC, Inc. - Churchs Grain Based Cost
Plus Pricing) sets forth the cost-plus formula for price calculations for
Churchs marinated eight-piece mixed fresh poultry. The line items and
methodology set forth on the worksheet shall remain constant. However, the
actual numeric values within the worksheet will vary as described below.
The following factors and cost elements will be adjusted each month:
. Percent of corn used for feed
. Percent of soybean meal used for feed
. Percent of other ingredients used for feed
. Cost per ton of other ingredients
. Feed conversion factor and resulting total feed cost
. Chick cost
. Processing yield and resulting total live cost-dressed weight equivalent
. Offal recovery credit
. Giblet recovery credit
The values for the foregoing factors and cost elements will be adjusted monthly
to reflect Supplier's actual costs for the month that is two months prior to the
billing month. As an example, Supplier shall use actual costs from the month of
August as the basis for the above factors and cost elements for Product shipped
and billed during the month of October. For plant costs, Supplier will use the
actual weighted average of costs at its Collinsville operation. For feed
conversion, two-month prior results for female birds in the 3.50 to 3.99 weight
range will be used. The chick cost will be based on Supplier's two-month prior
cost for all chicks hatched at the Dalton hatchery.
The following factors and cost elements will remain fixed during each 12
month period of the Agreement, and will be reviewed annually. Any change to
these items shall be mutually agreed upon and will take effect at the beginning
of each new year of the contract on October 5.
. Milling and delivery per ton
. Milling and delivery shrink and resulting cost
. Grower pay
. Condemned percent and resulting cost
. DOA percent and resulting cost
. Catch and haul
. Flock medication
. Flock service
. Live G&A
. Plant cost-1st processing
. Plant G&A
. Giblet removal yield loss
. Fat removal yield % and resulting cost
. Cutting shrink % and resulting cost
. 2nd processing labor
. Packaging cost
. Profit % for Cagle's and resulting cost
<PAGE>
The values for the foregoing factors and cost elements during the period from
October 5, 1998 through October 4, 1999 shall be those set forth on the attached
worksheet.
In the event of a specification change by AFC or any change brought about
by a governing third party (i.e. USDA), adjustments to the above factors and
cost elements will be mutually agreed upon and will then become immediately
effective. Supplier shall have the right to seek a temporary adjustment of cost
elements in the event that a flock virus or other extreme condition were to
alter the cost of production. AFC and Supplier will mutually agree on the
nature, duration, and financial magnitude of any such adjustment, and implement
such adjustment for a mutually agreed-upon period of time. In the event no
adjustment can be mutually agreed upon, as contemplated in this paragraph, the
factor or cost element shall be the average of the actual factor or cost for the
three months immediately preceding the event prompting the request for
adjustment.
<PAGE>
CAGLE'S INC. - AFC INC.
Exhibit B-1
Based on a 36 oz. WOG
--------------------------------------------------------------------------------------------------------------------------
INGREDIENT COST
COST PER
CBT plus COST FINISHED POUND
ITEM % of ration measure Basis PER LB OF FEED
---- ------------------- ----- ------ -------
CORN [*] % 56 lbs $ [*] $ [*] $ [*]
SOYBEAN MEAL [*] % 2,000 lbs $ [*] $ [*] $ [*]
OTHER [*] % 2,000 lbs $ [*] $ [*] $ [*]
------ -------
INGREDIENT COST 100.00% $ [*]
MILLING & DELIVERY per ton $ [*] $ [*] $ [*]
SHRINK $ [*]
-------
Total feed cost delivered to farm $ [*]
-------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
FEED COST IMPACT ON TOTAL COST CALCULATION
CONVERSION PRICE PER POUND TOTAL COST CONTRIBUTION
FEED CONVERSION [*] $ [*] $ [*]
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
NON FEED COST - LIVE
CHICK COST $ [*]
GROWER PAY $ [*]
CONDEMNED $ [*]
DOA $ [*]
CATCH & HAUL $ [*]
MEDICATION $ [*]
FLOCK SERVICE $ [*]
LIVE G & A $ [*]
--------
TOTAL LIVE (NON FEED) COST $ [*] $ [*]
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Total Live Cost $ [*]
Processing Yield [*] %
Total Live Cost - Dressed Weight Equivilent $ [*]
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Processing Cost
Plant Cost - 1st processing $ [*]
Offal Credit $ [*]
Plant G&A $ [*]
--------
Sub-total 1st processing $ [*] $ [*]
Total Wholebird Cost $ [*]
Additional Cost
Giblet Removal Yield Loss [*]% $ [*]
Giblet Recovery $ [*]
--------
Total Cost to remove Giblets $ [*]
--------
Total WOG Cost $ [*]
Fat Removal Yield Loss [*]% $ [*]
Cutting Shrink [*]% $ [*]
2nd Processing Labor $ [*]
CO2 $ [*]
Packaging $ [*]
Total Cutting/Packing Cost $ [*]
Sub-Total 2nd Processing and WOG Cost $ [*]
-------
Total Popeyes 8 piece Cost $ [*]
Profit [*] % $ [*]
-------
Grand Total Contract Cost FOB Collingsville AL $ [*]
-------
--------------------------------------------------------------------------------------------------------------------------
Distribution Cost direct to AFC Popeyes locations [*]
Delivered Store Cost [*]
___________________________
* Confidential material redacted and filed separately with the Commission.
<PAGE>
EXHIBIT C
FORMULA PRICE FOR DARK MEAT
As set forth in Section 4.B, after December 31, 1999, AFC shall have the option
to negotiate an FOB fixed price each year for dark meat or to use the dark meat
pricing formula below.
Example
-------
Price/Lb.
---------
UB Breast, front halves, 1&3/4 and down, NE delivered warehouse $.[*]
Less: $.[*] delivery cost assumed in above number .[*]
----
.[*]
Front recovery at 50% factor .[*]
8-Piece Price (from the formula set forth in Exhibit B, less delivery and
cutting) .[*]
Less: Front recovery at factored rate .[*]
----
Leg Quarter subtotal .[*]
Leg Quarter factored (divide by .5) .[*]
Profit (from the formula set forth in Exhibit B) .[*]
----
Dark Meat Cost FOB Collinsville $.[*]
EXHIBIT D
Include Popeyes 8-piece and Popeyes 4-piece dark product specs for Exhibit D.
________________
* Confidential material redacted and filed separately with the Commission.
<PAGE>
EXHIBIT D
POPEYES CHICKEN & BISCUITS
POULTRY SPECIFICATIONS
8-PIECE CUT-UP
(Leaf Fat Removed)
15 HEAD
THE PRODUCT SHALL BE:
A. INGREDIENTS
-----------
Plant Grade A or better, eviscerated, ready-to-cook fresh broiler chickens
without necks or giblets guaranteed to be inspected by the U.S. Department
of Agriculture for wholesomeness. This product will be cut into 8 pieces:
2 drumsticks, 2 wings, 2 thighs with back attached (leaf fat removed), 2
split breasts with ribs and back portion intact. The cut-up chicken must
be graded according to Popeyes specifications and found acceptable.
B. INGREDIENTS NOT TO BE USED
--------------------------
Any parts graded below Plant Grade A. Any whole birds or parts which are
either frozen or have been previously frozen.
C. WEIGHT
------
Any individual whole bird selected to be cut into the Popeyes style must
meet the weight requirements; that is, after cutting and upon store
delivery, each bird must weigh between [*]. to [*]. ([*] - [*] ounces) leaf
fat removed. Deviations from these established weight standards will not be
accepted without the prior approval of A.F.C. Poultry Quality Assurance
Department.
D. QUALITY
-------
Plant A grade or better meeting all Popeyes specifications. If a part has
a defect it must be replaced with an alike part from within the same weight
range with no
_________
* Confidential treatment redacted and filed separately with the Commission.
<PAGE>
defect. All parts must comply with all applicable federal and state pure
food laws, will not be adulterated within the meaning of the Food, Drug and
Cosmetic Act, as amended, and will be free from organisms or chemicals
which would make the product unsuitable for processing or human
consumption.
1. Defeathering - The whole bird or part shall have a clean appearance,
------------
especially on the breast. The whole bird or part shall be free of
pinfeathers, diminutive feathers, and hair which would normally be
visible to a grader at regular examination line speeds. The use of
singeing apparatus to remove the hair and small feathers is strongly
--------
recommended.
2. Conformation - The whole bird or part shall be normally shaped and
------------
free of all deformities except for possible slight curvatures of the
breastbone and back. Deformities that affect the normal distribution
of flesh and bone structure that could cause inaccurate cuts are not
acceptable.
3. Fleshing - The whole bird shall have a well-developed to moderate
--------
covering of flesh. All parts should be sufficiently fleshed to avoid
any thin appearances. The breast should be moderately long and deep
and have sufficient flesh to give it a rounded appearance with the
flesh carrying well up to the crest of the breastbone along its entire
length. The drumstick is well fleshed and moderately thick and wide
at the knee joint and has a well-rounded, plump appearance with the
flesh carrying well down toward the hock. The thigh is well to
moderately fleshed. The wing is well to moderately fleshed.
4. Discoloration of the Skin & Flesh - The whole bird or part shall be
---------------------------------
practically free of such defects. Discoloration due to bruising shall
be free of clots (discernible clumps of red or dark cells). Evidence
of incomplete bleeding, such as more than an occasional slightly
reddened feather follicle, is not permitted. Flesh bruises and
discoloration of the skin, such as blue back, are not permitted on the
breast or legs of the carcass or on any individual parts.
5. Exposed Flesh - Parts shall be free of exposed flesh resulting from
-------------
cuts, tears, and missing skin, other than slight trimming around the
edge.
6. Skin Coverage - Loose skin resulting from over scalding, picking, or
--------------
any evisceration areas that could cause excessive water pockets need
to be eliminated to produce the proper skin coverage and adhesion on
all parts.
7. Disjointed & Broken Bones & Missing Parts - All parts shall be free of
-----------------------------------------
broken or disjointed parts (except thighs). The wing tip or "flipper"
must
<PAGE>
be intact. No missing parts are allowed, and any part removed due to a
defect must be replaced with a similar non defective part.
E. DEFECTIVE CONDITIONS
--------------------
To be eligible for Popeyes standards, all whole birds used as raw
materials, and parts shall be free form and not show any evidence of:
1. Decomposition (slimy texture, pungent).
2. Internal organs (lungs, trachea, crop, etc.) that were not completely
removed during the evisceration process.
3. Feathers (pin feathers, brush feathers, excessive hairs).
4. Any extraneous material of any type either inside the shell cavity or
on the outside of the carcass.
5. Either frozen or have been previously frozen.
F. TEMPERATURES
------------
Proper temperature control adds greatly to the quality of shelf life of
Popeyes cut-up product. This control begins in the processing plant at
the scald tank and carries through the chiller, cut-up line, holding room,
and even onto the delivery vehicle. The specified temperature ranges must
be strictly adhered to in order to ensure the top quality product which
Popeyes demands. Any deviations from these ranges or any recommendations
for change must be forwarded to A.F.C. Poultry Quality Assurance Department
for approval prior to implementation.
1. Scald Temperature - 132 degrees F to 136 degrees F is specified in
-----------------
order to have a product which has no "bloom" or one that the epidermis
and layer of fatty tissue has been removed.
2. Chill Tank - Temperature of the water at the exit of the chill tank
----------
will be 32 degrees F to 36 degrees F. The temperature of the product
at the chiller exit will be 32 degrees F to 36 degrees F.
3. Pre-Wash - Temperature of the Chlorinated water at the pre-wash
--------
stations on automated machinery will be 32 to 38 degrees F, with a
maximum of 5 parts per million of chlorine present at the wash
stations.
<PAGE>
4. Holding Room - Temperature of the holding room will be 28 degrees F to
------------
36 degrees F.
5. Delivery Vehicles - All delivery vehicles will be pre-chilled to 30
-----------------
degrees F prior to loading of any product designated for Popeyes.
After completion of loading and during transit, the vehicle operator
is required to maintain the internal temperature of the carrier at 28
degrees F to 30 degrees F at all times. Upon delivery, the internal
temperature of the product must not exceed 34 degrees F, nor less than
28 degrees F..
G. AUTOMATED CUTTING MACHINE
-------------------------
Only automated cutting machinery approved by A.F.C. Poultry Quality
----
Assurance may be used to cut Popeyes poultry products. Each machine must
be approved by A.F.C. Poultry Quality Assurance prior to implementation.
The pre-chilled chlorinated water used in the pre-wash stations on the
automated machinery will have a temperature of 32 to 38 degrees F and have
a maximum of 5 parts per million of Chlorine present at the pre-wash
stations. Chlorinated water at each blade station should be maximum of 20
parts per millions.
H. PACKAGING AND SHIPPING
----------------------
Cut up broilers are to be packed 3 head, 24 pieces [*] measuring [*] X [*];
numbered indicating a particular saw position if cut by hand; or if cut by
automated machine a bag number will not be present. The bags are then
packed in a new, [*], using approximately [*] pounds of ice as the
refrigerant; or in a plastic, properly cleaned and sanitary case, using
approximately [*] pounds of ice as the refrigerant.
When CO-2 is used as the refrigerant, the bags are packed in a properly
cleaned and sanitary case, using approximately 4 pounds of CO-2. The CO-2
must be present on both the bottom of the box and on top of the product for
proper refrigeration.
A 15 head case will have five individual bags, each case should weigh
between [*] and [*] pounds net weight with any particular load averaging
[*] pounds net weight per case upon store delivery. In an five bag case, 15
head case, there shall be 2 rows of bags in a prone position with one bag
in a prone position the width of the case. Leaving the middle between the
two rows open for proper ice or CO-2 coverage.
_________
* Confidential material redacted and filed separately with the Commission.
<PAGE>
The appropriate Popeyes proprietary labels must be used on all cases and
all cases are to reflect a legible date of kill, expressed as an "open"
kill date or calendar date (Example "Killed on 012194" and "Used by
012894"). Both statements "Killed on" and "Used by" will be required to be
present on the labels. This product will have a shelf life of [*] days with
the day of kill being day zero. This product shall be delivered to the
Popeyes restaurant within [*] days of kill date, with day of kill being
zero. The number of bags per case, number of head per case, net case
weight, refrigerant used, and shipping criteria may be changed only with
specified expressed approval of A.F.C. Poultry Quality Assurance
Department.
I. INSPECTION
----------
On-site inspection of the processing plant, grow-out farms, and hatching
facilities by a representative of A.F.C. Poultry Quality Assurance staff is
authorized at all times.
J. CUTTING REQUIREMENTS
--------------------
Product will be cut by approved automated machinery and will only be
accepted if all approved machine requirements and washing procedures are
met and approved by A.F.C. Poultry Quality Assurance and the U.S.D.A.
Individually hand cut products (saw cut products) will only be acceptable
from those plants which have yet to receive their automated cutting
machinery.
1&2 Wings - The wings should be cut from the carcass in such a manner so
-----
that the meat on the wing is [*] to [*] as measured from the edge of
the breast meat to the edge of the wing meat at a 90 degree angle from
the humerus bone. Two wings, a left and a right, are cut from the
carcass in this manner.
3. Quarter - The correctly cut quarter will begin below the tip of the
-------
keel, cutting along the edge of the thigh and exiting straight (90
degree angle) through the backbone [*] to [*] behind the natural
depression on the back of the broiler. This cut separates the white
meat and the dark meat. There should be no damage to the tip of the
keep or any shaved areas on the drums or thighs.
_________
* Confidential material redacted and filed separately with the
Commission.
<PAGE>
4. Legs - The correctly cut legs are separated from the thighs through
----
the knuckle of the knee joint (Femorotial and Patellar joint). The
proper leg cut will be indicated by the exposed red bone marrow
resembling a figure "8" or "H" shape on the drums. All tendons should
be connected to the joint. The cut should not exceed [*] past the
white cartilage line toward the thigh and should not be short of the
white cartilage line.
5. Thighs - A continuous cut is made through the backbone, separating the
------
thigh into two equal sections. The thigh sections should be cut so
that a portion of the backbone remains on each part. A solid line of
backbone should be present on both thigh parts for at least the top
edge of the length of the thigh. The muscle along the top edge of the
backbone, closest to where the quarter cut was made, must be firmly
attached. The leaf fat shall be removed from the thigh so any
remaining leaf fat is not greater than [*] inches in any dimension.
6. Breast Back Bone - A continuous cut is made through the backbone,
----------------
separating the rib section into two equal sections. The backbone
should be cut so a solid line of backbone is visible for the entire
length of the cut. All rib bones must be firmly attached to the
backbone. The bottom edge where the quarter cut has been made should
form a 90 degree angle with the backbone.
7. Keel Cut - Cut along the keel section (Sternum) of the cut breasts,
--------
with the neck section towards the blade, separating the keel and the
breasts into two equal sections. There should be sufficient amount of
keel on each breast so that the breast meat and tender meat are
covered by bone and cartilage along the entire length of the cut with
no meat exposed over ([*]) [*] inches in length.
_________
* Confidential treatment redacted and filed separately with the Commission.
<PAGE>
POPEYES CHICKEN & BISCUITS
POULTRY SPECIFICATIONS
CUT UP DARK MEAT
LEAF FAT AND TAIL ATTACHED
32 HEAD
THE PRODUCT SHALL BE:
A. INGREDIENTS
-----------
Plant Grade A or better, eviscerated, ready-to-cook fresh broiler chickens
without necks or giblets guaranteed to be inspected by the U. S. Department
of Agriculture for wholesomeness. Using the back half or dark meat section
of the broiler, the product should be cut into four pieces: 2 thighs with
back and tail attached; and two drumsticks (leaf fat and tail attached).
The cut-up chicken must be graded according to Popeyes specifications and
found acceptable.
B. INGREDIENTS NOT TO BE USED
--------------------------
Any parts graded below Plan Grade A. Any whole birds or parts which are
either frozen or have been previously frozen.
C. WEIGHT
------
Any individual back half selected to be cut into the Popeyes dark meat
style must meet the weight requirements; that is, after cutting and upon
store delivery, each back half must be uniform and weigh between [*].
and [*] (leaf fat and tail attached). Deviations from these established
weight standards will not be accepted without the prior approval of A.F.C.
Poultry Quality Assurance Department. The cut-up chicken must be graded
according to Popeyes specifications and found acceptable.
_________
* Confidential treatment redacted and filed separately with the Commission.
<PAGE>
D. QUALITY
-------
Plant A grade or better meeting all Popeyes specifications. If a part has
a defect it must be replaced with an alike part from within the same weight
range with no defect. All parts must comply with all applicable federal
and state pure food laws, will not be adulterated within the meaning of the
Food, Drug and Cosmetic Act, as amended, and will be free from organisms or
chemicals which would make the product unsuitable for processing or human
consumption.
1. Defeathering - The parts shall have a clean appearance, especially on
------------
the breast. The parts shall be free of pinfeathers, diminutive
feathers, and hair which would normally be visible to a grader at
regular examination line speeds. The use of singeing apparatus to
remove the hair and small feathers is strongly recommended.
--------
2. Conformation - The parts shall be normally shaped and free of all
------------
deformities except for possible slight curvatures of the back.
Deformities that affect the normal distribution of flesh and bone
structure that could cause inaccurate cuts are not acceptable.
3. Fleshing - The drumstick is well fleshed and moderately thick and wide
--------
at the knee joint and has a well-rounded, plump appearance with the
flesh carrying well down toward the hock. The thigh is well to
moderately fleshed.
4. Discoloration of the Skin & Flesh - The parts shall be practically
---------------------------------
free of such defects. Discoloration due to bruising shall be free of
clots (discernible clumps of red or dark cells). Evidence of
incomplete bleeding, such as more than an occasional slightly reddened
feather follicle, is not permitted. Flesh bruises and discoloration
of the skin, such as blue back, are not permitted on the legs of the
carcass or on any individual parts.
5. Exposed Flesh - Parts shall be free of exposed flesh resulting from
-------------
cuts, tears, and missing skin, other than slight trimming around the
edge.
6. Skin Coverage - Loose skin resulting from over scalding, picking, or
-------------
any evisceration areas that could cause excessive water pockets need
to be eliminated to produce the proper skin coverage and adhesion on
all parts.
<PAGE>
7. Disjointed & Broken Bones & Missing Parts - All parts shall be free of
-----------------------------------------
broken or disjointed parts (except thighs). No missing parts are
allowed, and any part removed due to a defect must be replaced with a
similar non defective part.
E. DEFECTIVE CONDITIONS
--------------------
To be eligible for Popeyes standards, all whole bird used as raw materials,
and parts shall be free form and not show any evidence of:
1. Decomposition (slimy texture, pungent).
2. Internal organs (lungs, trachea, crop, etc.) that were not completely
removed during the evisceration process.
3. Feathers (pin feathers, brush feathers, excessive hairs).
4. Any extraneous material of any type either inside the shell cavity or
on the outside of the carcass.
5. Either frozen or have been frozen.
F. TEMPERATURES
------------
Proper temperature control adds greatly to the quality and shelf life of
Popeyes cut-up product. This control begins in the processing plant at the
scald tank and carries through the chiller, cut-up line, holding room, and
even onto the delivery vehicle. The specified temperature ranges must be
strictly adhered to in order to ensure the top quality product which
Popeyes demands. Any deviations from these ranges or any recommendations
for change must be forwarded to A.F.C. Poultry Quality Assurance Department
for approval prior to implementation.
1. Scald Temperature - 132 degrees F to 136 degrees F is specified in
-----------------
order to have a product which has no "bloom" or one that the epidermis
and layer of fatty tissue has been removed.
2. Chill Tank - Temperature of the water at the exit of the chill tank
----------
will be 32 degrees F to 36 degrees F. The temperature of the product
at the chiller exit will be 32 degrees F to 36 degrees F.
<PAGE>
3. Pre-Wash - Temperature of the Chlorinated water at the pre-wash
--------
stations on automated machinery will be 32 to 38 degrees F,, with a
maximum of 5 parts per million of chlorine present at the wash
stations.
4. Holding Room - Temperature of the holding room will be 28 degrees F to
------------
36 degrees F.
5. Delivery Vehicles - All delivery vehicles will be pre-chilled to 30
-----------------
degrees F prior to loading of any product designated for Popeyes.
After completion of loading and during transit, the vehicle operator
is required to maintain the internal temperature of the carrier at 28
degrees F to 30 degrees F at all times. Upon delivery, the internal
temperature of the product must not exceed 34 degrees F, nor less than
28 degrees F.
G. AUTOMATED CUTTING MACHINE
-------------------------
Only automated cutting machinery approved by A.F.C. Poultry Quality
----
Assurance may be used to cut Popeyes poultry products. Each machine must
be approved by A.F.C. Poultry Quality Assurance prior to implementation.
The pre-chilled chlorinated water used in the pre-wash stations on the
automated machinery will have a temperature of 32 to 38 degrees F and have
a maximum of 5 parts per million of Chlorine present at the pre-wash
stations. Chlorinated water at each blade station should be a maximum of
20 parts per million.
H. PACKAGING AND SHIPPING
----------------------
Cut up back halves are to be packed [*] thighs and [*] drumsticks, [*]
pieces [*]; numbered indicating a particular saw position if cut by hand;
or if cut by automated machine a bag number will not be present. The bags
are then packed in a new, [*], using approximately [*] pounds of ice as the
refrigerant; or in a plastic, properly cleaned and sanitary case, using
approximately [*] pounds of ice as the refrigerant.
A 32 head case will have eight individual bags, each case should weigh
between [*] and [*] pounds net weight with any particular load averaging
[*] pounds net weight per case upon store delivery. In an eight bag case,
32 head case, there shall be 2 rows of bags standing upright.
_________
* Confidential treatment redacted and filed separately with the Commission.
<PAGE>
Leaving the middle between the two rows open for proper ice coverage. The
appropriate Popeye proprietary labels must be used on all cases and all
cases are to reflect a legible date of kill, expressed as an "open" kill
date or calendar date (Example "Killed on 012194" and "Used by 012894").
Both statements "Killed on" and "Used by" will be required to be present on
the labels. This product will have a shelf life of [*] days with the day of
kill being day zero. This product shall be delivered to the Popeyes
restaurant within [*] days of kill date, with day of kill being zero. The
number of bags per case, number of head per case, net case weight,
refrigerant used, and shipping criteria may be changed only with specified
expressed approval of A.F.C. Poultry Quality Assurance Department.
I. INSPECTION
----------
On-site inspection of the processing plant, grow-out farms, and hatching
facilities by a representative of A.F.C. Poultry Quality Assurance staff is
authorized at all times.
J. CUT
---
Product will be cut by approved automated machinery and will only be
accepted if all approved machine requirements and washing procedures are
met and approved by A.F.C. Poultry Quality Assurance and the U.S.D.A.
Individual hand cut products (saw cut products) will only be acceptable
from those plants which have yet to receive their automated cutting
machinery.
1. Quarter - The correctly cut quarter will begin below the tip of the
-------
keel, cutting along the edge of the thigh and exiting straight (90
degree angle) through the backbone [*] to [*] behind the natural
depression on the broiler. This cut separates the white meat and the
dark meat. There should be no damage to the tip of the keel or any
shaved areas on the drums and thighs.
2. Legs - The correctly cut legs are separated from the thighs through
----
the knuckle of the knee joint (Femorotial and Patellar joint). The
proper leg cut will be indicated by the exposed red bone marrow
resembling a figure "8" or "H" shape on the drums. All tendons should
be connected to the joint. The cut should not exceed [*] past the
white cartilage line toward the thigh and should not be short of the
white cartilage line.
_________
* Confidential material redacted and filed separately with the Commission.
<PAGE>
3. Thighs - A continuous cut is made through the backbone, separating the
------
thigh into two equal sections. The thigh sections should be cut so
that a portion of the backbone remains on each part. A solid line of
backbone should be present on both thigh parts for at least the top
edge of the length of the thigh. The muscle along the top edge of the
backbone, closest to where the quarter cut was made, must be firmly
attached.
<PAGE>
POPEYES CHICKEN & BISCUITS
POULTRY SPECIFICATIONS
WHITE MEAT
32 HEAD
THE PRODUCT SHALL BE:
A. INGREDIENTS
-----------
Plant Grade A or better, eviscerated, ready-to-cook fresh broiler chickens
without necks or giblets guaranteed to be inspected by the U. S. Department
of Agriculture for wholesomeness. Using only the white meat or front half
section of the broiler the product should be cut into four pieces: 2
wings, 2 split breasts with the ribs and back portion intact. The cut-up
chicken must be graded according to Popeyes specifications and found
acceptable.
B. INGREDIENTS NOT TO BE USED
--------------------------
Any parts graded below Plant Grade A. Any whole birds or parts which are
either frozen or have been previously frozen.
C. WEIGHT
------
Any individual front half selected to be cut into the Popeyes white meat
style must meet the weight requirements; that is, after cutting and upon
store delivery, each front half must be uniform and weigh between [*].
to [*]. Deviations from these established weight standards will not be
accepted without the prior approval of A.F.C. Poultry Quality Assurance
Department.
D. QUALITY
-------
Plant A and meeting our Popeyes specifications. If a part has a defect it
must be replaced with an alike part from within the same weight range with
no defect. All
<PAGE>
parts must comply with all applicable federal and state pure food laws,
will not be adulterated within the meaning of the Food, Drug and Cosmetic
Act, as amended, and will be free from organisms or chemicals which would
make the product unsuitable for processing or human consumption.
1. Defeathering - The parts shall have a clean appearance, especially on
------------
the breast. The part shall be free of pinfeathers, diminutive
feathers, and hair which would normally be visible to a grader at
regular examination line speeds. The use of singeing apparatus to
remove the hair and small feathers is strongly recommended.
--------
2. Conformation - The parts shall be normally shaped and free of all
------------
deformities except for possible slight curvatures of the breastbone
and back. Deformities that affect the normal distribution of flesh
and bone structure that could cause inaccurate cuts are not
acceptable.
3. Fleshing - The breast should be moderately long and deep and have
--------
sufficient flesh to give it a rounded appearance with the flesh
carrying well up to the crest of the breastbone along its entire
length. The wing is well to moderately fleshed.
4. Discoloration of the Skin & Flesh - The parts shall be practically
---------------------------------
free of such defects. Discoloration due to bruising shall be free of
clots (discernible clumps of red or dark cells). Evidence of
incomplete bleeding, such as more than an occasional slightly reddened
feather follicle, is not permitted. Flesh bruises and discoloration
of the skin, such as blue back, are not permitted on the breast of the
carcass or on any individual parts.
5. Exposed Flesh - Parts shall be free of exposed flesh resulting from
-------------
cuts, tears, and missing skin, other than slight trimming around the
edge.
6. Skin Coverage - Loose skin resulting from over scalding, picking, or
-------------
any evisceration areas that could cause excessive water pockets need
to be eliminated to produce the proper skin coverage and adhesion on
all parts.
7. Disjointed & Broken Bones & Missing Parts - All parts shall be free of
-----------------------------------------
broken or disjointed parts. The wing tip or "flipper" must be intact.
No missing parts are allowed, and any part removed due to a defect
must be replaced with a similar non defective part.
<PAGE>
E. DEFECTIVE CONDITIONS
--------------------
To be eligible for Popeyes standards, all whole birds used as raw
materials, and parts shall be free form and not show any evidence of:
1. Decomposition (slimy texture, pungent).
2. Internal organs (lungs, trachea, crop, etc.) that were not completely
removed during the evisceration process.
3. Feathers (pin feathers, brush feathers, excessive hairs).
4. Any extraneous material of any type either inside the shell cavity or
on the outside of the carcass.
5. Either frozen or have been previously frozen.
F. TEMPERATURES
------------
Proper temperature control adds greatly to the quality and shelf life of
Popeyes cut-up product. This control begins in the processing plant at the
scald tank and carries through the chiller, cut-up line, holding room, and
even onto the delivery vehicle. The specified temperature ranges must be
strictly adhered to in order to ensure the top quality product which
Popeyes demands. Any deviations from these ranges or any recommendations
for change must be forwarded to A.F.C. Poultry Quality Assurance Department
for approval prior to implementation.
1. Scald Temperature - 132 degrees F to 136 degrees F is specified in
-----------------
order to have a product which has no "bloom" or one that the epidermis
and layer of fatty tissue has been removed.
2. Chill Tank - Temperature of the water at the exit of the chill tank
----------
will be 32 degrees F to 36 degrees F. The none of the product at the
chiller exit will be 32 degrees F to 36 degrees F.
3. Pre-Wash - Temperature of the Chlorinated water at the pre-wash
--------
stations on automated machinery will be 32 to 38 degrees F,, with a
maximum of 5 parts per million of chlorine present at the wash
stations.
<PAGE>
4. Holding Room - Temperature of the holding room will be 28 degrees F to
------------
36 degrees F.
5. Delivery Vehicles - All delivery vehicles will be pre-chilled to 30
-----------------
degrees F prior to loading of any product designated for Popeyes.
After completion of loading and during transit, the vehicle operator
is required to maintain the internal temperature of the carrier at 28
degrees F to 30 degrees F at all times. Upon delivery, the internal
temperature of the product must not exceed 34 degrees F, nor less 28
degrees F.
G. AUTOMATED CUTTING MACHINE
-------------------------
Only automated cutting machinery approved by A.F.C. Poultry Quality
----
Assurance may be used to cut Popeyes poultry products. Each machine must
be approved by A.F.C. Poultry Quality Assurance prior to implementation.
The pre-chilled chlorinated water used in the pre-wash stations on the
automated machinery will have a temperature of 32 to 38 degrees F and have
a maximum of 5 parts per million of Chlorine present at the pre-wash
stations. Chlorinated water at each blade station should be a maximum of
20 parts per million.
H. PACKAGING AND SHIPPING
----------------------
Cut up front halves are to be packed [*] split breasts and [*] wings, [*]
pieces [*]; numbered indicating a particular saw position if cut by hand;
or if cut by automated machine a bag number will not be present. The bags
are then packed in a new, [*], using approximately [*] pounds of ice as the
refrigerant; or in a plastic, properly cleaned and sanitary case, using
approximately [*] pounds of ice as the refrigerant.
A 32 head case will have eight individual bags, each case should weigh
between [*] and [*] pounds net weight with any particular load averaging
[*] pounds net weight per case upon store delivery. In an eight bag case,
32 head case, there shall be 2 rows of bags standing upright. Leaving the
Middle between the two rows open for proper ice coverage.
The appropriate Popeyes proprietary labels must be used on all cases and
all cases are to reflect a legible date of kill, expressed as an "open"
kill date or calendar date (Example "Killed on 012194" and "Used by
012894"). Both statements "Killed on" and "Used by " will be required to be
present on the labels. This
_________
* Confidential material redacted and filed separately with the Commission.
<PAGE>
product will have a shelf life of [*] days with the day of kill being day
zero. This product shall be delivered to the Popeyes restaurant within [*]
days of kill date, with day of kill being zero. The number of bags per
case, number of head per case, net case weight, refrigerant used, and
shipping criteria may be changed only with specified expressed approval of
A.F.C. Poultry Quality Assurance Department.
I. INSPECTION
----------
On-site inspection of the processing plant, grow-out farms, and hatching
facilities by a representative of A.F.C. Poultry Quality Assurance staff is
authorized at all times.
J. CUTTING REQUIREMENTS
--------------------
Product will be cut by approved automated machinery and will only be
accepted if all approved machine requirements and washing procedures are
met and approved by A.F.C. Poultry Quality Assurance and the U.S.D.A.
Individual hand cut products (saw cut products) will only be acceptable
from those plants which have yet to receive their automated cutting
machinery.
1 & 2 Wings - The wings should be cut from the carcass in such a manner so
-----
that the meat on the wing is [*] to [*] as measured from the edge of
the breast meat to the edge of the wing meat at a 90 degree angle
from the humerus bone. Two wings, a left and a right, are cut from
the carcass in this manner.
3. Quarter - The correctly cut -quarter will begin below the tip of the
-------
keel, cutting along the edge of the thigh and exiting straight (90
degree angle) through the backbone [*] to [*] behind the natural
depression on the back of the broiler. This cut separates the white
meat and the dark meat. There should be no damage to the tip of the
keel or any shaved areas on the drums or thighs.
4. Breast Backbone - A continuous cut is made through the backbone,
---------------
separating the rib section into two equal sections. The backbone
should be cut so a solid line of backbone is visible for the entire
length of the cut. All rib bones must be firmly attached to the
backbone. The bottom edge
_________
* Confidential material redacted and filed separately with the Commission.
<PAGE>
where the quarter cut has been made should form a 90 degree angle
with the backbone.
5. Keel Cut - Cut along the keel section (Sternum) of the cut breasts,
--------
with the neck section towards the blade, separating the keel and the
breasts into two equal sections. There should be sufficient amount of
keel on each breast so that the breast meat and tender meat are
covered by bone and cartilage along the entire length of the cut with
no meat exposed over ([*]) [*] inches in length.
_________
* Confidential material redacted and filed separately with the Commission.
<PAGE>
POPEYES CHICKEN & BISCUITS
POULTRY SPECIFICATIONS
WINGS
THE PRODUCT SHALL BE:
A. INGREDIENTS
-----------
Plant Grade A or better, eviscerated, ready-to-cook fresh broiler chickens
without necks or giblets guaranteed to be inspected by the U. S. Department
of Agriculture for wholesomeness. This product will be cut from a Whole
broiler or white meat section to produce 2 wings. The cut-up chicken must
be graded according to Popeyes specifications and found acceptable.
B INGREDIENTS NOT TO BE USED
--------------------------
Any parts graded below Plant Grade A. Any whole birds or parts which are
either frozen or have been previously frozen.
C. WEIGHT
------
Any wing selected for Popeyes wings must meet the weight requirements; that
is, after cutting and upon store delivery, each wing must be uniform and
weigh between [*] to [*]. Deviations from these established weight
standards will not be accepted without the prior approval of A.F.C. Poultry
Quality Assurance Department.
D. QUALITY
-------
Plant A and meeting our Popeyes specifications. If a part has a defect it
must be replaced with an alike part from within the same weight range with
no defect. All parts must comply with all applicable federal and state pure
food laws, will not be adulterated within the meaning of the Food, Drug and
Cosmetic Act, as amended,
_________
* Confidential material redacted and filed separately with the Commission.
<PAGE>
and will be free from organisms or chemicals which would make the product
unsuitable for processing or human consumption.
1. Defeathering - The parts shall have a clean appearance, especially on
------------
the breast. The part shall be free of pinfeathers, diminutive
feathers, and hair which would normally be visible to a grader at
regular examination line speeds. The use of singeing apparatus to
remove the hair and small feathers is strongly recommended.
--------
2. Conformation - The parts shall be normally shaped and free of all
------------
deformities except for possible slight curvatures of the breastbone
and back. Deformities that affect the normal distribution of flesh and
bone structure that could cause inaccurate cuts are not acceptable.
3. Fleshing - The breast should be moderately long and deep and have
--------
sufficient flesh to give it a rounded appearance with the flesh
carrying well up to the crest of the breastbone along its entire
length. The wing is well to moderately fleshed.
4. Discoloration of the Skin & Flesh - The parts shall be practically
---------------------------------
free of such defects. Discoloration due to bruising shall be free of
clots (discernible clumps of red or dark cells). Evidence of
incomplete bleeding, such as more than an occasional slightly reddened
feather follicle, is not permitted. Flesh bruises and discoloration of
the skin, such as blue back, are not permitted on the breast of the
carcass or on any individual parts.
5. Exposed Flesh - Parts shall be free of exposed flesh resulting from
-------------
cuts, tears, and missing skin, other than slight trimming around the
edge.
6. Skin Coverage - Loose skin resulting from over scalding, picking, or
-------------
any evisceration areas that could cause excessive water pockets need
to be eliminated to produce the proper skin coverage and adhesion on
all parts.
7. Disjointed & Broken Bones & Missing Part - All parts shall be free of
----------------------------------------
broken or disjointed parts. The wing tip or "flipper" must be intact.
No missing parts are allowed, and any part removed due to a defect
must be replaced with a similar non defective part.
<PAGE>
E. DEFECTIVE CONDITIONS
--------------------
To be eligible for Popeyes standards, all whole birds used as raw
materials, and parts shall be free from and not show any evidence of:
1. Decomposition (slimy texture, pungent).
2. Internal organs (lungs, trachea, crop, etc.) that were not completely
removed during the evisceration process.
3. Feathers (pin feathers, brush feathers, excessive hairs).
4. Any extraneous material of any type either inside the shell cavity or
on the outside of the carcass.
5. Either frozen or have been previously frozen.
F. TEMPERATURES
------------
Proper temperature control adds greatly to the quality and shelf life of
Popeyes cut-up product. This control begins in the processing plant at the
scald tank and carries through the chiller, cut-up line, holding room, and
even onto the delivery vehicle. The specified temperature ranges must be
strictly adhered to in order to ensure the top quality product which
Popeyes demands. Any deviations from these ranges or any recommendations
for change must be forwarded to A.F.C. Poultry Quality Assurance Department
for approval prior to implementation.
1. Scald Temperature - 132 degrees F to 136 degrees F is specified in
-----------------
order to have a product which has no "bloom" or one that the epidermis
and layer of fatty tissue has been removed.
2. Chill Tank - Temperature of the water at the exit of the chill tank
----------
will be 32 degrees F to 36 degrees F. The temperature of the product
at the chiller exit will be 32 degrees F to 36 degrees F.
3. Pre-Wash - Temperature of the Chlorinated water at the pre-wash
--------
stations on automated machinery will be 32 to 38 degrees F,, with a
maximum of 5 parts per million of chlorine present at the wash
stations.
<PAGE>
4. Holding Room - Temperature of the holding room will be 29 degrees F to
------------
36 degrees F.
5. Delivery Vehicles - All delivery vehicles will be pre-chilled to 30
-----------------
degrees F prior to loading of any product designated for Popeyes.
After completion of loading and during transit, the vehicle operator
is required to maintain the internal temperature of the carrier at 28
degrees F to 30 degrees F at all times. Upon delivery, the internal
temperature of the product must not exceed 34 degrees F, nor less 28
degrees F.
G. AUTOMATED CUTTING MACHINE
-------------------------
Only automated cutting machinery approved by A. F. C. Poultry Quality
----
Assurance may be used to cut Popeyes poultry products. Each machine must be
approved by A.F.C. Poultry Quality Assurance prior to implementation. The
pre-chilled chlorinated water used in the pre-wash stations on the
automated machinery will have a temperature of 32 to 38 degrees F and have
a maximum of 5 parts per million of Chlorine present at the pre-wash
stations. Chlorinated water at each blade station should be a maximum of 20
parts per million.
H. PACKAGING AND SHIPPING
----------------------
Cut up wings are to be packed [*] pieces [*]; numbered indicating a
particular saw position if cut by hand; or if cut by automated machine a
bag number will not be present. The bags are then packed in a new, [*],
using approximately [*] pounds of ice as the refrigerant; or in a plastic,
properly cleaned and sanitary case, using approximately [*] pounds of ice
as the refrigerant.
A case will have four individual bags, each case should weigh between [*]
pounds to [*] pounds net weight with any particular load averaging [*]
pounds net weight per case upon store delivery. In an four bag case, there
shall be 2 rows of bags standing upright. Leaving the middle between the
two rows open for proper ice coverage.
The appropriate Popeyes proprietary labels must be used on all cases and
all cases are to reflect a legible date of kill, expressed as an "open"
kill date or calendar date (Example "Killed on 012194" and "Used by
012894"). Both statements "Killed on" and "Used by" will be required to be
present on the labels. This
_________
* Confidential material redacted and filed separately with the Commission.
<PAGE>
product will have a shelf life of [*] days with the day of kill being day
zero. This product shall be delivered to the Popeyes restaurant within [*]
days of kill date, with day of kill being zero. The number of bags per
case, number of head per case, net case weight refrigerant used, and
shipping criteria may be changed only with specified expressed approval of
A.F.C. Poultry Quality Assurance Department.
I. INSPECTION
----------
On-site inspection of the processing plant, grow-out farms, and hatching
facilities by a representative of A.F.C. Poultry Quality Assurance staff is
authorized at all times.
J. CUTTING REQUIREMENTS
--------------------
Product will be cut by approved automated machinery and will only be
accepted if all approved machine requirements and washing procedures are
met and approved by A.F.C. Poultry Quality Assurance and the U.S.D.A.
Individual hand cut products (saw cut products) will only be acceptable
from those plants which have yet to receive their automated cutting
machinery.
1 & 2 Wings - The wings should be cut from the carcass in such a manner so
-----
that the meat on the wing is [*] to [*] as measured from the edge
of the breast meat to the edge of the wing meat at a 90 degree angle
from the humerus bone. Two wings, a left and a right are cut from
the carcass in this manner.
_________
* Confidential material redacted and filed separately with the Commission.
<PAGE>
EXHIBIT E
---------
AS OF 12/3/98
2114 - ATLANTA MARKET (20 RESTAURANTS)
------------------------------------------------------------------------------------------------------------------------------------
AREA 65 CALVIN HUNTER (404) 459-4591 (o) 888-312-8755 (pgr) AUDIX: 4591
---------------------------------------------------------------------------------------------------- -------------------------------
REST# ADDRESS CITY STATE ZIP PHONE# OPENED AUDIX MANAGER
----- ------- ---- ----- --- ------ ------ ----- -------
192 2767 Clairmont Rd. Atlanta GA 30329 (404) 329-0790 9/6/90-C 0192 Patrick Serjue
2676 3189 Norcross-Tucker Rd. Tucker GA 30084 (770) 939-6872 12/19/86 2676 William Calhoun
3121 2691 Windy Hill Rd. SE Marietta GA 30067 (770) 612-1848 12/15/94 9121 Bruce Hainer
3243 2591 Piedmont Rd. Atlanta GA 30324 (404) 365-9818 12/15/94 9243 Reggie Brown
3287 1635 Pleasant Hill Road Duluth GA 30136 (770) 806-8620 6/20/94 9287 Dewitt Hensley
---------------
3535 2330 Ronald Regan Pkwy. Snellville GA 30278 (770) 736-8633 5/1/95 9535 Hartley Lapsey
---------------
4701 3389 Buford Hwy. Atlanta GA 30329 (404) 321-0654 11/5/98 9163 Napaporn Foster
Restaurants: 7
------------------------------------------------------------------------------------------------------------------------------------
AREA 79 ROGER JENNINGS (404) 459-4596 (o) 888-312-8757 (pgr) AUDIX: 4596
------------------------------------------------------------------------------------------------------------------------------------
REST# ADDRESS CITY STATE ZIP PHONE# OPENED AUDIX MANAGER
----- ------- ---- ----- --- ------ ------ ----- -------
2108 515 Lee St., SW Atlanta GA 30310 (404) 753-1280 7/22/78 2108 Marilyn Ofodile
3695-K-B 3651 Peachtree Pkwy. Suwanee GA 30174 (770) 495-8665 6/27/96 9695 Daphne Christ
3705-K 1745 Hwy. 138 Conyers GA 30208 (770) 860-9220 5/6/96 9705 Bill Hinton
3761-K-B 10779 Alpharetta Hwy. Roswell GA 30076 (770) 649-0988 6/27/96 9761 Michael Turner
3816-K-B 1715 Howell Mill Rd. Atlanta GA 30318 (404) 350-0911 6/28/96 9816 Gwen Bennett
3677-K 2385 Wesley Chapel Atlanta GA 30034 (770) 987-4001 5/6/96 9677 Carolyn Vicks
Restaurants: 6
------------------------------------------------------------------------------------------------------------------------------------
AREA 314 JEROME CARTER (404) 459-4593 (o) (770) 879-9858 (888) 312-8756 pgr AUDIX: 4593
------------------------------------------------------------------------------------------------------------------------------------
REST# ADDRESS CITY STATE ZIP PHONE# OPENED AUDIX MANAGER
----- ------- ---- ----- --- ------ ------ ----- -------
2070 683 Boulevard Atlanta GA 30308 (404) 875-7070 4/28/82 9970 Carol Sentmore
2107 6717 Highway 85 Riverdale GA 30274 (770) 997-7104 4/28/78 2107 Joseph
Arredondo
2113 610 Cascade Ave. Atlanta GA 30310 (404) 758-2312 2/1/79 2113 Nathan Harden
2587 3506 Memorial Dr. Atlanta GA 30032 (404) 289-5229 12/19/86 2587 Marilyn Wright
3441-K 8059 Tara Blvd. Jonesboro GA 30230 (770) 472-0922 1/25/95 9441 Joann Cantu
3689-K 1232 S. Hairston Rd. St. Mountain GA 30088 (404) 298-7002 5/6/96 9689 Coretta Morris
3735-K 2685 Metropolitan Avenue Atlanta GA 30315 (404) 767-0333 11/14/95 9735 OPEN
Restaurants: 7
------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
AS OF 12/3/98
2213 - COLUMBUS MARKET (15 RESTAURANTS)
------------------------------------------------------------------------------------------------------------------------------------
AREA 445 CHARLES WILLIS (770) 902-6004 (H) 888-528-3170 (pgr) 770-329-8986 (cell) (AUDIX) 2213
F-16 BOUNDRY STREET, EUFAULA, AL 36027
------------------------------------------------------------------------------------------------------------------------------------
REST# ADDRESS CITY STATE ZIP PHONE# OPENED AUDIX MANAGER
----- ------- ---- ----- --- ------ ------ ----- -------
4442 4471 VICTORY DR COLUMBUS GA 31903 (706) 682-6226 02/24/98 4442 VACANT
4441 4501 RIVER RD COLUMBUS GA 31904 (706) 327-1330 02/27/98 4441 Beverly Clark
4439 102 N POPLAR ST BUTLER GA 31006 (912) 862-2358 02/28/98 4439 Jason Willis
4451 201 BROAD ST CUTHBERT GA 31740 (912) 732-6655 03/16/98 9451 David Sampson
Restaurants: 4
------------------------------------------------------------------------------------------------------------------------------------
AREA 455 CHRIS BRYANT (H) 912-994-5138 (PAGER) 888-314-0608 (F) (AUDIX) 9455
HWY. 87, BOX 11085, JULIETTE, GA 31046 (CELL) 770-331-3486
------------------------------------------------------------------------------------------------------------------------------------
REST# ADDRESS CITY STATE ZIP PHONE# OPENED AUDIX MANAGER
----- ------- ---- ----- --- ------ ------ ----- -------
4428 RR 1 BOX 30 BYRON GA 31008 (912) 956-3130 03/01/98 4428 Aaron Johnson
4455 214 CENTRAL DR DUBLIN GA 31027 (912) 272-9232 02/26/98 8455 Frankie Reeves
4440 US HIGHWAY 129 GRAY GA 31032 (912) 986-4362 02/26/98 4440 James Bryson
4435 606 W OAK ST McRAY GA 31055 (912) 868-6664 02/26/98 4435 Martha Johnson
4445 515 N IRWIN AVE OCILLA GA 31774 (912) 468-7206 02/27/98 4445 Deborah Dobbs
Restaurants: 5
------------------------------------------------------------------------------------------------------------------------------------
AREA 460 VON MUNCY (H) 912-446-9412 (PAGER) 888-552-1459 AUDIX: 9460
1404 WHISPERING PINES RD., #F2, ALBANY, GA 31707 (CELL) 770-331-3485
------------------------------------------------------------------------------------------------------------------------------------
REST# ADDRESS CITY STATE ZIP PHONE# OPENED AUDIX MANAGER
----- ------- ---- ----- --- ------ ------ ----- -------
4450 71 US HIGHWAY 19 CAMILLA GA 31730 (912) 336-5484 03/04/98 4450 Sherry Casterline
4443 1401 S SLAPPEY BLVD ALBANY GA 31701 (912) 888-9903 4443 Jimmy Paterson
4444 2533 DAWSON RD ALBANY GA 31701 (912) 431-3065 03/20/98 4444 Chris Harrell
4446 106 E FRANKLIN ST SYLVESTER GA 31791 (912) 776-9998 03/01/98 4446 Marsha Cumas
4437 1515 E UNION ST VIENNA GA 31092 (912) 268-7164 03/06/98 4437 Marie West
Restaurants: 5
<PAGE>
[SMS LOGO]
January 6, 2000
Mr. John Bruno
Senior Vice President
Cagles, Inc.
2000 Hills Avenue, N.W.
Atlanta, Georgia 30318
RE: Future Business
Dear John:
As we spoke today, I can offer Cagles approximately 150,000 lbs. of Churchs'
Breast Strips, plus approximately 125,000 of Popeyes' Breast Strips for an
annual contract period. Both products would be priced at $[*]/lb. FOB your
production facility. The Churchs' volume will be supplied to the following
distributors: Caro, PFD, Kelly's Foods & Thomas & Howard. The Popeye's volume
will be sent to PFG Temple & Victoria, Caro, plus the small quantity of
competitor's product being delivered locally today.
I would agree to extend the Churchs cost-plus contract until 3/31/2004, which is
a 2 1/2 year addition to the current contract.
The additional 35,000 lbs. of Churchs' 8-piece & associated dark meat that you
have available will be favorably considered for placement, once I am able to
review all of the offers associated with the other Churchs' poultry contracts
that are expiring and have to be renegotiated and in place prior to 4/1/2000. I
do not have enough data to make that decision today.
Of course, all strip products will have to pass the normal Popeyes' and Churchs'
quality approval process, since these items are not approved for use today in
either system. If you would like to substitute tenders for any of the strip
volume, that is always an option.
Based on what I am able to offer above, will we be able to implement the reduced
dark meat pricing for Churchs we discussed previously?
Thank you for your consideration in this matter. Please call me at 770-353-3021,
if you have any questions. I look forward to your call.
Respectfully yours,
/s/ Jeff Spotz
Jeff Spotz
President
cc: Dan Cheatham
___________________
* Confidential material redacted and filed separately with the Commission.