El Pollo Loco 2015 Annual Report Download - page 33

Table of Contents
committee charter meeting the NASDAQ’s requirements, and (iii) a compensation committee composed entirely of independent directors and a
written compensation committee charter meeting the requirements of the NASDAQ. We currently utilize and presently intend to continue to
utilize these exemptions. As a result, we may not have a majority of independent directors, our nomination and corporate governance committee
and compensation committee may not consist entirely of independent directors, and these committees may not be subject to annual performance
evaluations. Accordingly, our stockholders may not have the same protections as afforded to stockholders of companies that are subject to all of
the corporate governance requirements of the NASDAQ. See Item 10, “Directors, Executive Officers and Corporate Governance.”
We are a holding company with no operations, and we rely on our operating subsidiaries to provide us with the funds necessary to meet our
financial obligations and to pay dividends.
We are a holding company with no material direct operations. Our principal assets are the equity interests that we indirectly hold in our operating
subsidiary, EPL, which owns our operating assets. As a result, we are dependent on loans, dividends, and other payments from EPL, our
operating company and indirect wholly owned subsidiary, and from EPL Intermediate, Inc. (“Intermediate”), our direct wholly owned
subsidiary, to generate the funds necessary to meet our financial obligations and to pay dividends on our common stock. Our subsidiaries are
legally distinct from us and may be prohibited or restricted from paying dividends or otherwise making funds available to us under certain
conditions. Although we do not expect to pay dividends on our common stock for the foreseeable future, if we are unable to obtain funds from
our subsidiaries, we may be unable to, or our board may exercise its discretion not to, pay dividends.
Under our secured revolving credit facility, Holdings may not make certain payments such as cash dividends, except that it may, inter alia,
(i) pay up to $1 million per year to repurchase or redeem qualified equity interests of Holdings held by our past or present officers, directors, or
employees (or their estates) upon death, disability, or termination of employment, (ii) pay under the TRA, and, (iii) so long as no default or event
of default has occurred and is continuing, (a) make non-cash repurchases of equity interests in connection with the exercise of stock options by
directors and officers, provided that those equity interests represent a portion of the consideration of the exercise price of those stock options,
(b) pay up to $2.5 million per year pursuant to stock option plans, employment agreements, or incentive plans, (c) make up to $5 million in other
restricted payments per year, and (d) make other restricted payments, provided that such payments would not cause, in each case, on a pro forma
basis, (x) its lease-adjusted consolidated leverage ratio to equal or exceed 4.25 times and (y) its consolidated fixed charge coverage ratio to be
less than 1.75 times.
We do not anticipate paying any dividends on our common stock in the foreseeable future.
We do not expect to declare or pay any cash or other dividends in the foreseeable future on our common stock, because we intend to use cash
flow generated by operations to grow our business. Our secured revolving credit facility restricts our ability to pay cash dividends on our
common stock. We may also enter into other credit agreements or other borrowing arrangements in the future that restrict or limit our ability to
pay cash dividends on our common stock.
As a public company, we incur significant costs to comply with the laws and regulations affecting public companies, which could harm our
business and results of operations.
As a public company, we are subject to the reporting requirements of the Exchange Act and of the Sarbanes-Oxley Act of 2002, as amended (the
“Sarbanes-Oxley Act”), to the listing requirements of the NASDAQ, and to other applicable securities statutes and regulations. These statutes
and regulations have increased, and will continue to increase, our legal, accounting, and financial compliance costs, and have made, and will
continue to make, some activities more time-consuming and costly, particularly after we cease to be an “emerging growth company,” as defined
in the JOBS Act. For example, these statutes and regulations could make it more difficult
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