EXHIBIT 10.1
CONFIDENTIAL PORTIONS HAVE BEEN
OMITTED BASED UPON A REQUEST
FOR CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT OF 1934
AND HAVE BEEN SEPARATELY FILED
WITH THE SECURITIES AND EXCHANGE
COMMISSION.
February 23, 2005
Mr. Sidney Prince
Gold Kist Inc.
244 Perimeter Center Parkway, N.E.
Atlanta, GA 30346-2397
Dear Mr. Prince:
As discussed and agreed, Gold Kist Inc will
supply to the El Pollo Loco system up to * pounds annually of EPL
Specification * “whole birds” for two years effective
March 1, 2005.
For the first year of the Agreement, up to *
pounds of whole birds at $* per pound for delivery to MBM Rancho
Cucamonga, CA or Pleasanton, CA. Effective March 1, 2005 to
February 28, 2006.
Effective March 1, 2006 to February 28, 2007,
pricing will be based on * with pricing to be changed quarterly
within the calendar year. New Quarterly Pricing to change: March 1,
2006; June 1, 2006; September 1, 2006; and December 1, 2006.
Calculation of price will be determined based on * plus freight.
Freight to remain at $* for MBM Rancho Cucamonga, CA and
Pleasanton, CA for year two.
Saddle cut chicken, EPL Specification *. Price
$* delivered to MBM Rancho Cucamonga, CA or Pleasanton, CA *
pounds. Effective March 1, 2005 to February 28, 2006. If, during
the course of this Agreement, Gold Kist can provide more than *
pounds annually and the EPL system has the need for additional
volumes, EPL and Goldkist will discuss and mutually agree on
additional volumes the EPL system will purchase.
Fresh Breast meat – Up to * of EPL System
needs for EPL Specification *. Price $* delivered to MBM/Rancho
Cucamonga, CA or MBM/Pleasanton, CA. Effective March 1, 2005 to
February 28, 2006.
Fresh Thigh meat – Up to * of EPL System
needs for EPL Specification *. Price $* delivered to MBM/Rancho
Cucamonga, CA. Effective March 1, 2005 to February 28,
2006.
Additionally, Gold Kist agrees that it will not
sell, offer to sell, nor contract with any other authorized
purchasers of EPL products to sell any of the products set forth
above for a price equal to or less the than the prices set forth in
this letter, unless said authorized purchaser agrees to purchase an
amount of the product in question which is substantially greater
than that set forth herein for said product. Notwithstanding, in
the event Gold Kist receives an offer from another authorized
purchaser of EPL products to purchase any of the EPL products
described in this letter for a price less than those set forth
herein, and the proposed contracted volume is not
Mr. Sidney Prince
Gold Kist Inc.
Page 2
substantially greater than that set forth herein
for said product, EPL, in its sole discretion, may permit the
proposed transaction on the condition that the same pricing is
extended to EPL for the balance of the term of the agreement
described herein.
Also, Gold Kist offers the following to EL Pollo
Loco:
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Bi-Annual
Reviews of Poultry and QSR Industry
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On-going New
Product ideas
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R & D
Support – both personnel and facilities
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Continuous
information updates on Food Safety Issues
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Please sign and return both copies of this
letter. After I have received the signed copies, I will sign and
return a copy for your files. Signing this letter acknowledges
acceptance of the terms and conditions as presented
above.
Sidney, thank you for your help and support on
this matter and please contact me with any questions.
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/s/ Sidney Prince
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/s/ Joe Stein
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Sidney
Prince
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Joe
Stein
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Gold Kist
Inc.
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El Pollo Loco,
Inc.
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cc: Jennifer Benus, Shanae Brown/MBM
El Pollo Loco Inc.
GENERAL TERMS AND CONDITIONS
OF SUPPLY
THESE GENERAL TERMS AND CONDITIONS
shall govern the supply of approved products (herein referred to,
whether singularly or collectively as the “Products”)
to the EPL system of company-owned and franchisee-owned El Pollo
Loco Restaurants and shall constitute the agreement between El
Pollo Loco Corporation and those parties, which have been approved
as suppliers (each such approved supplier is referred to herein as
“Supplier”) to the EPL system.
In consideration of the designation
by EPL as an approved Supplier and intending to be legally bound,
Supplier, through the act of supplying the Products to and for use
within the El Pollo Loco system, agrees to the
following:
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1.
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Approval – The approval by EPL of a Supplier
to the El Pollo Loco system (the “Approval”) shall be
confirmed in a written approval letter (the “Approval
Letter”) signed by EPL authorized representative, Stephen E.
Lash, Director of Supply Chain Management. The Approval Letter
shall identify a) the Products for which Supplier is approved, b)
the approved product specification, and c) the specific
facility(ies) approved to manufacture the product. Supplier’s
acceptance of the Approval and these General Terms And Conditions
shall be manifested exclusively through the act of Supplier’s
selling the Products for use within the El Pollo Loco
system.
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2.
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Sale And
Distribution – Supplier shall sell the Products
within the El Pollo Loco system only to distributors approved by
EPL (collectively “Approved Distributors”) who are
authorized to resell or otherwise transfer the Products to El Pollo
Loco restaurants. EPL shall inform Supplier of the identity of
Approved Distributors by periodic written notification. In certain
circumstances Supplier may be authorized by EPL to sell Products
within the El Pollo Loco system directly to restaurants or by such
other distribution means as shall have the prior written approval
of EPL. Supplier warrants that it will not sell or otherwise
transfer Products bearing the EPL, Fosters, Coca-Cola, Dr. Pepper
or other trademarks owned by or authorized for use by or licensed
by EPL (“The Marks”) trademark, logo or other indicia
of Fosters ® , Dr. Pepper ® or Coca-Cola ® to any third party, except as contemplated
above, without the prior written authorization of (including
distribution of excess products to charitable or other
organizations, e.g., Second Harvest).
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3.
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Specifications – As a condition to retention of Approval,
Supplier shall satisfy and comply diligently with all written
quality assurance requirements of EPL, as they may be amended from
time to time in the sole discretion of EPL, including but not
limited to the EPL product specifications which have been furnished
to Supplier, the EPL Quality Assurance Policies and Procedures
which have been furnished to Supplier, and all other written
quality assurance communications from EPL (together the
“Specifications” ). The Products shall be
manufactured, stored and shipped by Supplier in strict compliance
with all applicable federal, state and local laws and the
Specifications. Supplier recognized and acknowledges that EPL may,
from time to time, make representations to third parties regarding
the content of various EPL products. Accordingly, Supplier may not
change or materially alter Product formulations or processing
procedures without EPL prior knowledge and written approval. Any
deviation whatsoever by Supplier from the Specifications may result
in immediate termination of the Approval. If the Products are to
carry the EPL marks, Supplier shall not undertake any activities
which are not authorized by EPL and which are intended or designed,
directly or indirectly, to differentiate those Products produced by
Supplier from identically specified Products produced by other
Suppliers for the El Pollo Loco system.
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4.
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Unapproved
Products –
Supplier will not knowingly sell any unapproved products for use
within the El Pollo Loco system. If Supplier is advised by EPL that
unapproved products produced by Supplier are being sold by
identified third parties to the El Pollo Loco system, Supplier will
undertake best efforts and all commercially reasonable necessary
steps which are legally within its power to bring about a
discontinuance of this activity.
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5.
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Confidentiality
– Supplier
acknowledges that the Specifications are the confidential, and
proprietary information of EPL to be used by Supplier solely for
the purpose of supplying Product to the El Pollo Loco system.
Supplier specifically warrants for itself, its employees and
agents, that it (they) will not: (a) disclose the Specifications
(or any portion thereof) nor cause them to be revealed to the
general public not to any person, corporation or other business
association (including any of the Approved Distributors or
franchisees of El Pollo Loco not specifically authorized in writing
by EPL to receive them; (b) permit disclosure of the Specifications
to any of its employees except those who have a “need to
know” to enable Supplier to perform its obligations; (c)
permit anyone to reproduce, copy or exhibit the Specifications or
any portion thereof of any confidential or proprietary information
received from EPL, or (d) use the Specifications to produce the
Products either for Supplier’s own use or for sale or
distribution to customers outside the El Pollo Loco system. No
obligation will exist with respect to any information contained in
the Specifications which Supplier can establish through
written
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documents was (1) known to
Supplier from a source other than EPL, or parties authorized to act
on behalf of EPL or the El Pollo Loco system, prior to receipt of
the Specification from EPL or parties authorized to act on behalf
of EPL or the El Pollo Loco system, or (2) substantially the same
information that was previously published or became available to
third parties without restriction through no act or failure to act
on the part of Supplier, or (3) substantially the same information
previously available to Supplier from a third party having no
obligation to hold such information in confidence. If EPL or
parties authorized to act on behalf of EPL or the El Pollo Loco
system, provide Supplier with any information which relates to the
purchase and sale of the Products, including but not limited to
Product sales estimates, purchase expectations, geographical
expansion plans and the like, Supplier shall likewise maintain the
confidentiality of such information.
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6.
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“Intentionally Left
Blank”
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7.
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Inspection
of Facilities – EPL
shall have the right to inspect without advance notice (a) the
premises of Supplier at which the Products are produced; (b) all of
the Supplier’s facilities and equipment relating to
manufacture, storage and delivery of the Products and all
components’ and (c) the Products, prior to their shipment to
the El Pollo Loco system. Neither EPL nor its employees or agents
shall be required by Supplier to execute a confidentiality
agreement, waiver or other agreement as a condition to engaging in
inspections related to the Products. EPL may engage the services of
an independent inspection firm, selected in the sole discretion of
EPL, to perform these inspections. Supplier will pay the reasonable
cost of this third party inspection so long as the cost for routine
inspection does not exceed the sum of Three Thousand Dollars
($3,000.00) per annum per individual approved location.
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8.
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Laboratory
Testing – At
EPL request, Supplier shall promptly submit for analysis, samples
of the Products or samples of any components in accordance with any
testing schedule established from time to time by EPL. Supplier
agrees to send the samples to facilities selected in the sole
discretion of EPL, and Supplier agrees to pay the reasonable costs
of any third party laboratory testing so long as the cost for
routine inspections does not exceed the sum of Three Thousand
Dollars ($3,000.00) per annum per individual approved product per
location.
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9.
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Records
Retention – For a
period of at least two (2) years from the date of shipment (or for
such longer period if requested by EPL), Supplier agrees to keep
complete records of the manufacture, storage, shipment and sale of
the Products and, upon request by EPL, to make these records
available to EPL.
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10.
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Indemnification – As a condition of the Approval, Supplier will
defend, indemnify and hold harmless El Pollo Loco its parents,
subsidiaries, affiliates, Approved Distributors, directors,
officers, employees, representatives, system purchasing agent(s)
and El Pollo Loco franchisees, of and from all claims, demands,
losses, damages, liabilities, costs and expenses, including
reasonable attorneys’ fees and costs resulting from injury,
illness and/or death caused, in whole or in part, by (i) contact
with, use and/or consumption of the Products, including, without
limitation, any product liability, strict product liability, or any
variation thereof, (ii) failure of the Products to comply with
applicable specifications’ warranties and certifications
under this Agreement unless (and then only to the extent) such
injury, illness and/or death is directly caused by EPL, its
parents, subsidiaries, affiliates, Approved Distributors, El Pollo
Loco franchisees, system purchasing agent(s) or unrelated third
parties. Such indemnification obligation shall continue during the
term of this Agreement and for anytime thereafter agrees to advise
Supplier if EPL receives notice that a claim has been or will be
filed with respect to a matter covered by this indemnity and
Supplier shall be given the opportunity to assume the defense
thereof. If Supplier fails to assume such defense, EPL may defend
the action in the manner it deems appropriate, and Supplier shall
pay to EPL all costs, including reasonable attorneys’ fees,
incurred by EPL in effecting such defense and any subsequent legal
appeal, in addition to any sum which EPL may pay by reason of any
settlement or judgment against EPL. This right to indemnity
hereunder shall exist notwithstanding that joint or several
liability may be imposed upon EPL (or the other persons identified
above) by statute, ordinance, regulation or judicial
decision.
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11.
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Insurance
– Supplier will
maintain, during the entire term of the indemnification,
comprehensive liability insurance, including product liability
coverage, in minimum amounts of Ten Million Dollars ($10,000,000)
U.S. currency per occurrence for damage, injury and/or death to
persons, One Million Dollars ($1,000,000) U.S. currency per
occurrence for damage and/or injury to property and Worker’s
Compensation Insurance as required by law. Such coverage shall be
on a Date of Occurrence Form. The insurance coverage required
herein shall be provided by an insurance company or companies with
a Bests rating of A-X or better reasonably acceptable to EPL
Supplier shall, promptly after receipt of the Approval Letter and
annually thereafter, provide the Supply Chain Management Department
with certificates of insurance evidencing such coverage and naming
El Pollo Loco, its parents, subsidiaries and affiliates as
additional named insured’s. Each certificate shall indicate
that the coverage represented thereby shall not be canceled nor
modified until at least thirty (30) days prior written notice has
been given to EPL. Such insurance shall be carried during the term
of this Agreement, including extension, and for at least three (3)
years thereafter.
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12.
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Financial
Reports – Upon
request and at least once annually, Supplier will provide to EPL
financial information sufficient to reasonably demonstrate
Supplier’s satisfactory financial condition. Such
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