EXHIBIT 10.27
February 5, 2004
Bill Kantola
Pilgrims Pride Corporation
2475 Meadowbrook Parkway, Suite A
Duluth, GA 30096
Dear Bill:
This letter is to confirm El Pollo Loco,
Inc.’s (“EPL”) selection of Pilgrims Pride
Corporation (“Pilgrims”) as a supplier of Whole
Chicken, Fresh Breast, Fresh Thigh, “Saddlecut” chicken
hind halves, and Popcorn style chicken to the El Pollo Loco System
(the “EPL System”). The EPL System includes company
operated units and Franchise units that elect to purchase product
from Pilgrims.
As discussed and agreed by and between EPL and
Pilgrims; Pilgrims will supply the EPL System with:
Up to * pounds - Whole chicken, EPL
Specification *. $*/lb delivered to MBM/Rancho Cucamonga, CA and
$*/lb delivered to MBM/Pleasanton, CA.
Fresh Breast meat – EPL Specification *.
$*/lb delivered to MBM/Rancho Cucamonga, CA and $*/lb delivered to
MBM/Pleasanton, CA. 100% of EPL System needs, with up to 50% of
volumes set aside for the development of alternate supplier(s).
*
Fresh Thigh meat – EPL Specification *.
$*/lb delivered to MBM/Rancho Cucamonga, CA and $*/lb delivered to
MBM/Pleasanton, CA. 100% of EPL System needs, with up to 50% of
volumes set aside for the development of alternate
supplier(s).
Popcorn style chicken (10# case – 2/5#
bags pack). El Pollo Loco specification *. $*/lb delivered Rancho
Cucamonga and $*/lb delivered to MBM/Pleasanton, CA. 100% of EPL
System needs.
Saddlecut chicken, EPL Specification *. $*/lb
delivered to MBM/Rancho Cucamonga, CA and $*/lb delivered to
MBM/Pleasanton, CA.
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For the period
of March 8 through April 12:
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*loads per week
(estimate)
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For the period
of August 9 through September 27:
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*loads per week
(estimate)
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Whole chicken, EPL Specification *. $* direct
store delivered in Arizona and $* direct store delivered in
Texas.
Product will be delivered to stores in plastic
containers (tubs) and containers (tubs) will be subject to the
approval of EPL.
Terms: Net 14 Days.
Pricing contract period 03/01/04 through
03/01/05.
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*
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Confidential
material redacted and filed separately with the
Commission.
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Bill Kantola
Pilgrims Pride Corporation
Page 2
Pilgrims Pride Corporation 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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LTO offerings
to provide mutual growth opportunities
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Open invitation
for Plant Tours and product Training
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Support and
Participation for Total Pilgrims product ideas and new product
offerings
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Additionally, Pilgrim 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 Pilgrim 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 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.
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.
Bill, thank you for your help and support on
this matter and please contact me with any questions.
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Bill Kantola
Pilgrims Pride
Corporation
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Joe Stein
El Pollo Loco, Inc.
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cc:
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Mary Beth
Ritchie, Shanae Brown/MBM, Greg McGuckin/MBM, Terrie
Massey/MBM
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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
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