El Pollo Loco 2015 Annual Report Download - page 111

Table of Contents
Policy Concerning Related Party Transactions
We intend to adopt a written policy relating to the approval of related party transactions. Our Audit Committee is to review certain financial
transactions, arrangements, and relationships between us and any of the following related parties to determine whether any such transaction,
arrangement, or relationship is a related party transaction:
Our Audit Committee will review any financial transaction, arrangement, or relationship that:
The Audit Committee will review each such transaction, arrangement or relationship to determine whether a related party has, has had or expects
to have a direct or indirect material interest. Following its review, the Audit Committee will take such action as it deems necessary and
appropriate under the circumstances, including approving, disapproving, ratifying, canceling, or recommending to management how to proceed
if it determines that a related party has a direct or indirect material interest in a transaction, arrangement, or relationship with us. Any member of
the Audit Committee who is a related party with respect to a transaction under review will not be permitted to participate in the discussions or
evaluations of the transaction; however, the Audit Committee member will provide all material information concerning the transaction to the
Audit Committee. The Audit Committee will report its action with respect to any related party transaction to the board of directors.
Stockholders Agreement
We are a party to a stockholders agreement with LLC and certain third-party investors. The stockholders agreement permits (i) LLC to make an
unlimited number of requests that we use our best efforts to register our shares under the Securities Act and (ii) Freeman Spogli to make two
requests that we use our best efforts to register its shares under the Securities Act, for so long as they own 10% or more of the membership
interests of LLC, two years after the completion of our IPO. Pursuant to the stockholders agreement, LLC may also preempt any demand request
by Freeman Spogli, in which case participation in such demand registration by LLC and Freeman Spogli shall be on a pro rata basis. In demand
registrations, subject to certain exceptions, the parties to the stockholders agreement have certain rights to participate on a pro rata basis, subject
to certain conditions. In addition, if we decide to sell our common stock, LLC and the other parties to the stockholders agreement, including
members of our management, will also have certain rights to participate on a pro rata basis, subject to certain conditions. The LLC agreement,
described below, provides that, to the extent that LLC does not exercise these “piggyback” rights, 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.
LLC and its members are entitled, under the stockholders agreement, subject to certain exceptions, to exercise demand registration rights to
register their shares of our common stock under the Securities Act. By exercising these registration rights, and selling a large number of shares of
our common stock, the price of our common stock could decline. Approximately 22,167,268 shares of common stock were subject to registration
rights on February 28, 2015.
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ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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any of our directors, director nominees or executive officers;
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any beneficial owner of more than 5% of our outstanding stock; and
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any immediate family member of any of the foregoing.
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involves or will involve, directly or indirectly, any related party identified above and is in an amount greater than $120,000;
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would cast doubt on the independence of a director;
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would present the appearance of a conflict of interest between us and the related party; or
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is otherwise prohibited by law, rule or regulation.