El Pollo Loco 2015 Annual Report Download - page 32

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Table of Contents
Risks Related to Ownership of Our Common Stock
If the ownership of our common stock continues to be highly concentrated, it may prevent you and other minority stockholders from
influencing significant corporate decisions and may result in conflicts of interest.
Trimaran Capital Partners, its predecessors, affiliates, and certain funds managed by it (collectively, “Trimaran”) and Freeman Spogli & Co. and
certain funds managed by it (collectively, “Freeman Spogli”) indirectly beneficially own approximately 34.2% and 19.6%, respectively, of our
outstanding common stock. As a result, Trimaran and Freeman Spogli indirectly beneficially own shares sufficient for majority votes on all
matters requiring stockholder votes, including: election of directors; mergers, consolidations and acquisitions; the sale of all or substantially all
of our assets and other decisions affecting our capital structure; amendments to our certificate of incorporation or our by-laws; and our winding
up and dissolution. While Trimaran Pollo Partners, L.L.C. (“LLC”), owns a majority of our common stock, Freeman Spogli will be able to
instruct LLC, pursuant to LLC’s operating agreement, to vote in favor of the appointment of one member of our board of directors for so long as
they hold 5% of the outstanding membership interests of LLC and Trimaran will be able to instruct LLC, pursuant to LLC’s operating
agreement, to vote in favor of the appointment of the remaining members of our board of directors. For a further description of LLC’s limited
liability company operating agreement, see Item 13, “Certain Relationships and Related Transactions, and Director Independence—LLC
Agreement.”
This concentration of ownership may delay, deter, or prevent acts that would be favored by our other stockholders. The interests of Trimaran and
Freeman Spogli may not always coincide with our interests or the interests of our other stockholders. This concentration of ownership may also
have the effect of delaying, deterring, or preventing a change in control of us. Also, Trimaran and Freeman Spogli may seek to cause us to take
courses of action that, in their judgments, could enhance their investments in us, but that might involve risks to our other stockholders or
adversely affect us or our other stockholders. As a result, the market price of our common stock could decline, or stockholders might not receive
a premium over the then-current market price of our common stock upon a change in control. In addition, this concentration of ownership may
adversely affect the trading price of our common stock, because investors may perceive disadvantages in owning shares of a company with
significant stockholders. See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”
The interests of Trimaran and Freeman Spogli may conflict with ours or our stockholders’ in the future.
Trimaran and Freeman Spogli engage in a range of investing activities, including investments in restaurants and other consumer-related
companies in particular. In the ordinary course of their business activities, Trimaran and Freeman Spogli may engage in activities where their
interests conflict with our interests or those of our stockholders. Our amended and restated certificate of incorporation provides that none of LLC
or any of its officers, directors, employees, agents, shareholders, members, partners, principals, affiliates and managers (including, inter alia,
Trimaran and Freeman Spogli) has a duty to refrain from engaging, directly or indirectly, in the same business activities or similar business
activities or lines of business in which we operate. Trimaran and Freeman Spogli also may pursue acquisition opportunities that may be
complementary to our business, and, as a result, those acquisition opportunities may not be available to us. In addition, Trimaran and Freeman
Spogli may have an interest in pursuing acquisitions, divestitures, and other transactions that, in their judgment, could enhance their investment
in us, even though those transactions might involve risks to you, such as debt-financed acquisitions.
As a controlled company, we are not subject to all of the corporate governance rules of the NASDAQ Global Select Market (the
“NASDAQ”).
We are considered a “controlled company” under the rules of the NASDAQ. Controlled companies are exempt from the NASDAQ’s corporate
governance rules requiring that listed companies have (i) a majority of the board of directors consist of “independent” directors under the listing
standards of the NASDAQ, (ii) a nominating/corporate governance committee composed entirely of independent directors and a written
nominating/corporate governance
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