El Pollo Loco 2015 Annual Report Download - page 112

Table of Contents
At least 10 days prior to the anticipated filing date of any registration statement, notice is to be given to all holders of registrable securities party
to the stockholders agreement outlining their rights to include their shares in that registration statement, and we must use our best efforts to
register any securities which such holders request, within 10 days of receipt of notice, to be registered. A stockholder may, until seven days prior
to the effectiveness of a registration statement, withdraw any securities that it has previously elected to include pursuant to piggyback
registration rights. Any sales of registrable securities pursuant to demand rights must be on the same terms and conditions as those applying to us
or any selling stockholder.
We are required to bear substantially all costs incurred in these registrations, other than underwriting discounts and commissions. These
registration rights could result in substantial future expenses for us and adversely affect any future equity or debt offerings.
LLC Agreement
Affiliates of Trimaran, Freeman Spogli, and certain other third-party investors have entered into a limited liability company operating agreement
(the “LLC agreement”)
for LLC. The LLC agreement generally restricts the transfer of interests in LLC owned by the parties other than affiliates
of Trimaran. Exceptions to this restriction include transfers to affiliates. In addition, the third-party investors have “tag-along” rights to sell their
interests on a pro rata basis with Trimaran affiliates in significant sales to third parties. Similarly, Trimaran affiliates have “drag-along” rights to
cause Freeman Spogli and the third-party investors to sell their interests, on a pro rata basis with Trimaran affiliates, in significant sales to third
parties. The members of LLC have preemptive rights in order to maintain their respective percentage ownership interests in LLC in the event of
an issuance of additional membership interests.
The LLC agreement permits a member of LLC who holds more than 15% of LLC’s outstanding membership units, following the later of 270
days after completion of our IPO and the time we become eligible to register securities on Form S-3, to cause LLC to exercise its registration
rights (as described under “—Stockholders Agreement”) with respect to the pro rata portion of securities owned by such member through LLC,
subject to certain exceptions. To the extent that LLC does not exercise the “piggyback” rights described under “—Stockholders Agreement,”
any
member of LLC may require us to include in any registered offering the pro rata portion of securities owned by such member through LLC.
Under the terms of the LLC agreement, LLC is solely managed by a Trimaran affiliate. Through the LLC agreement, Trimaran affiliates also
have the right to designate at least a majority of the directors on our board of directors, and other investors (including Freeman Spogli) holding at
least 15% of the outstanding interests have the right to designate one director to our board of directors, provided that Freeman Spogli has the
right to designate one director to our board of directors for so long as it owns 5% or more of LLC. The LLC agreement terminates and LLC will
be dissolved and its affairs wound up at the earlier of (1) the election of the managing member or (2) six years following the completion of our
IPO.
Monitoring and Management Services Agreement
Under the terms of a monitoring and management services agreement (the “management agreement”), entered into between us and affiliates of
Trimaran and Freeman Spogli (together, the “Sponsor Advisors”), we paid an annual advisory and monitoring fee of $357,000, which was paid
in advance in quarterly installments of $89,250 to an affiliate of Trimaran, and $143,000, which was paid in advance in quarterly installments of
$35,750 to an affiliate of Freeman Spogli, for services provided by the Sponsor Advisors to us. The management agreement provided that we
indemnify the Sponsor Advisors and their affiliates and their respective partners, members, directors, officers, employees, and agents in
connection with the services rendered to us under the agreement. It also provided that we reimburse the Sponsor Advisors for certain services to
be provided to us on a going-forward basis. The management agreement also provided for the payment of certain transaction fees payable by us
to the Sponsor Advisors in connection with future investment banking and related services and for the reimbursement by us of expenses
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