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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.

Confidentiality Agreement

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. You are currently viewing:
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El Pollo Loco, Inc. | Gold Kist Inc.

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Title: 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.
Governing Law: California     Date: 5/13/2005

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Letter Agreement, dated Feb. 23, 2005, between the Company and Gold Kist

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:

 

 

Bi-Annual Reviews of Poultry and QSR Industry

 

 

On-going New Product ideas

 

 

R & D Support – both personnel and facilities

 

 

Continuous information updates on Food Safety Issues

 

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.

 

 

 

 

/s/ Sidney Prince


 

/s/ Joe Stein


Sidney Prince

 

Joe Stein

Gold Kist Inc.

 

El Pollo Loco, Inc.

 

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:

 

 

1.

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.

 

 

2.

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).


 

3.

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.

 

 

4.

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.

 

 

5.

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


 

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.

 

 

6.

“Intentionally Left Blank”

 

 

7.

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.

 

 

8.

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.

 

 

9.

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.


 

10.

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.

 

 

11.

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.


 

12.

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 information may include annual or quarterly reports, bank references or other information reasonably directed towards a description of Supplier’s current financial status. If such information is held confidential by Supplier, release may be conditioned upon execution by EPL of a reasonable and limited confidentiality agreement.

 

 

13.

Audit – During the term of this Agreement and for a period of two years after termination, Supplier’s correspondence, records and books of account related to the supply of product to the El Pollo Loco system, shall be open to inspection and audit by EPL during Supplier’s normal business hours.

 

 

14.

Product Withdrawal – If it is deemed necessary at any time by either EPL or Supplier to recall or withdraw from Approved Distributors or from the El Pollo Lo

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