LOCO 8-K
El Pollo Loco Holdings, Inc. (LOCO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
CURRENT REPORT
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Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2)
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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On November 2, 2023, El Pollo Loco Holdings, Inc. (the “Company”) announced that Laurance Roberts, the Company’s Chief Executive Officer and President, is leaving his position as Chief Executive Officer and President and as a member of the Board of Directors of the Company (the “Board”), effective as of the close of business on November 3, 2023 (the “Separation Date”). In connection with Mr. Roberts’ departure, the Board has appointed Maria Hollandsworth as interim Chief Executive Officer and President of the Company (“Interim CEO”), effective as of November 4, 2023. Ms. Hollandsworth currently serves as Chief Operating Officer of the Company and will continue in that role during her tenure as Interim CEO and President. Biographical information regarding Ms. Hollandsworth is contained in and incorporated herein by reference from the Company’s definitive proxy statement filed with the Securities and Exchange Commission on April 27, 2023.
In connection with Ms. Hollandsworth’s appointment as Interim CEO and President, the Company entered into an employment agreement with Ms. Hollandsworth (the “Employment Agreement”) pursuant to which Ms. Hollandsworth will be promoted to EVP, Chief Operating Officer and her base salary will increase to $400,000 and her target annual bonus will be increased from 50% to 75% of her annual base salary as COO. Moreover, during Ms. Hollandsworth’s tenure as Interim CEO and President, her target annual bonus will be increased from 75% to 100% of her base salary. Ms. Hollandsworth will also receive a retention bonus of $75,000 on December 1, 2023, and a retention bonus of $75,000 on May 1, 2024 (subject to continued employment with the Company). In addition, she will be entitled to receive a grant of restricted stock units with a grant date value of $200,000 which will cliff-vest on the one-year anniversary of the Employment Agreement (subject to continued employment with the Company) or earlier in the event of termination of her employment with the Company without cause or for good reason (as such terms are defined in the Employment Agreement, or in the event the Employment Agreement (for either position) is not renewed by the Company (a “Qualifying Termination”)). In the event Ms. Hollandsworth’s employment is terminated as a result of a Qualifying Termination, she will be entitled to receive continued payment of her base salary for one year, a pro-rata portion of any annual bonus earned for the year of termination based on performance and full accelerated vesting of the Interim CEO equity grant described above. The Employment Agreement also contains several restrictive covenants in favor of the Company.
There are no arrangements or understandings between Ms. Hollandsworth and any other persons pursuant to which she was selected as the Interim CEO. There are also no family relationships between Ms. Hollandsworth and any director or executive officer of the Company, and Ms. Hollandsworth has no direct or indirect material interest in any related party transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Pursuant to Mr. Roberts’ existing employment agreement, dated March 9, 2022, Mr. Roberts will receive continued payment of his base salary of $700,000 for one year and a pro-rata portion of any annual bonus earned for the year of termination based on performance.
To help facilitate the transition from Mr. Roberts to Ms. Hollandsworth, the Company has retained Mr. Roberts as a consultant from November 4, 2023 through December 28, 2023 pursuant to a Release and Consulting Agreement, dated November 1, 2023, between the Company and Mr. Roberts (the “Consulting Agreement”). Pursuant to the Consulting Agreement, Mr. Roberts will receive a gross payment of $53,846, and the Company is extending the exercise period for all stock options vested as of the Separation Date (“Vested Options”) such that the Vested Options will remain exercisable until the earliest of (1) the three-year anniversary of the Separation Date, (2) the normal expiration date of the applicable Vested Options, and (3) the date of any termination of the Vested Options as a result of any corporate transaction provided for under the equity plan under which the Vested Options were awarded. Mr. Roberts will also be entitled to reimbursement of his premiums charged to continue medical coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (commonly known as COBRA) through April 30, 2024.
In connection with the transition, on November 2, 2023, the Company entered into a Retention Award Agreement (the “Retention Award Agreement”) with Ira Fils, the Chief Financial Officer. Under the Retention Award Agreement, Mr. Fils will receive (1) a grant of restricted stock units with a grant date value of $155,000 and (2) stock options with a grant date value of $155,000, both of which will cliff-vest on the one-year anniversary of the grant (subject to continued employment with the Company) or earlier in the event of termination of his employment with the Company without cause (as defined in his employment agreement).
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The foregoing summaries of the Employment Agreement, the Consulting Agreement and the Retention Award Agreement do not purport to be complete and are qualified in their entirety by the Employment Agreement, the Consulting Agreement and the Retention Award Agreement attached as Exhibit 10.1, Exhibit 10.2 and Exhibit 10.3, respectively, and incorporated herein by reference.
Item 7.01 Regulation FD Disclosure
On November 2, 2023, the Company issued a press release entitled “El Pollo Loco, Inc. Announces Leadership Transition Plan,” a copy of which is furnished as Exhibit 99.1 hereto.
Item 9.01 Financial Statements and Exhibits.
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Exhibit |
Description | |
| 10.1 | Employment Agreement, dated November 1, 2023, between the Company and Maria Hollandsworth | |
| Release and Consulting Agreement, dated November 1, 2023, between the Company and Laurance Roberts | ||
| 10.3 | Retention Award Agreement, dated November 2, 2023, between the Company and Ira Fils | |
| 99.1 | Press Release, dated November 2, 2023 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
El Pollo Loco Holdings, Inc.
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| Date: November 2, 2023 | By: | /s/ Anne Jollay | |
| Name: | Anne Jollay | ||
| Title: | Corporate Secretary | ||
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El Pollo Loco Holdings, Inc. 8-K
Exhibit 10.1
EMPLOYMENT
AGREEMENT
Maria Hollandsworth
This EMPLOYMENT AGREEMENT (the “Agreement”) is dated as of November 1, 2023 and is entered into by and between El Pollo Loco, Inc. (the “Company”) and Maria Hollandsworth (the “Executive”).
WHEREAS, the Executive is currently employed by the Company as its Senior Vice President, Chief Operating Officer;
WHEREAS, the Company desires to employ Executive as its Executive Vice President, Interim Chief Executive Officer and Chief Operating Officer; and
WHEREAS, Executive is willing to accept such continued employment on the terms hereinafter set forth in this Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:
| 1. | Term of Employment Executive Representation. |
| (a) | Employment Term. Subject to the terms and conditions set forth in this Agreement, the term of Executive’s employment under this Agreement shall commence on November 4, 2023 (the “Effective Date”) and end on the 12th month anniversary of the Effective Date (the “Initial Employment Term”) and on such date and on each subsequent anniversary of such date, the term shall, without further action by Executive or Company, be extended by an additional one-year period (each such one year term, the “Renewal Employment Term”) subject to earlier termination as provided in this Agreement; provided, however, that either Company or Executive may, by written notice to the other given not less than 60 days prior to the scheduled expiration of the Initial Employment Term or Renewal Employment Term (a “Non-Renewal Notice”), as applicable, cause the term not to extend (the period during which Executive is employed under the terms of this Agreement, including the Initial Employment Term and all Renewal Employment Terms, is referred to herein as the “Employment Term”). The Employment Term shall also terminate earlier upon termination of Executive’s employment as set forth in Section 6. |
| (b) | Executive Representation. Executive hereby represents to the Company that the execution and delivery of this Agreement by Executive and the Company and the performance by Executive of the Executive’s duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any employment agreement or other agreement or policy to which Executive is a party or otherwise bound. |
| 2. | Position. |
| (a) | From the Effective Date until such time as a Chief Executive Officer is hired by the Company (or until the Company determines in its sole discretion to appoint a new Interim Chief Executive Officer), Executive shall serve as the Company’s Interim Chief Executive Officer (“Interim CEO Employment Term”) and shall principally perform Executive’s duties to the Company and its affiliates from the Company’s offices in the Orange County, California metropolitan area, subject to normal and customary travel requirements in the conduct of the Company’s business. Executive shall have such authorities, duties and responsibilities as the Board of Directors of the Company (the “Board”) may from time to time assign to Executive and reasonably consistent with those customarily performed by a Chief Executive Officer of a company having a similar size and nature of the Company, and the Executive shall report directly to the Board. In addition, Executive shall participate in the search process for a new Chief Executive Officer. During the Interim CEO Employment Term, Executive shall also continue in her duties as Chief Operating Officer. |
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| (b) | At such time as a new Chief Executive Officer is appointed by the Board, assuming Executive is not selected as the Chief Executive Officer during the selection process, the Executive shall resume her position as the Company’s Chief Operating Officer but shall remain at the Executive Vice President level. Executive shall have such authorities, duties and responsibilities as the Chief Executive Officer may from time to time assign to Executive and reasonably consistent with those customarily performed by a Chief Operating Officer of a company having a similar size and nature of the Company, and the Executive shall report directly to the Chief Executive Officer. |
| (c) | During the Employment Term, Executive will devote Executive’s full business time and best efforts to the performance of Executive’s duties hereunder and will not engage in any other business, profession or occupation (including in an advisory capacity, consulting capacity, or otherwise) for compensation or otherwise which would conflict with the rendition of such services either directly or indirectly, without the prior written consent of the Board. |
| 3. | Compensation. |
| (a) | During Executive’s the Employment Term, the Company shall pay Executive a base salary (the “Base Salary”) at the annual rate of $400,000 (less applicable withholding taxes), payable in regular installments in accordance with the Company’s usual payment practices. Executive shall be entitled to such increases in Executive’s Base Salary, if any, as may be determined from time to time in the sole discretion of the Board. |
| (b) | With respect to each full calendar year during the Employment Term, Executive shall be eligible to earn an annual bonus award (a “COO Employment Term Annual Bonus”) based on the achievement of specified performance goals, which shall be determined by the Board in its sole discretion within ninety (90) days following the commencement of each calendar year, with a targeted bonus equal to seventy five percent (75%) of Executive’s then current Base Salary (the “COO Target Bonus”). The Annual Bonus, if any, will be paid between January 1 and March 15 of the year following the year to which it relates. |
| (c) | At the discretion of the Board, during the Employment Term, Executive will be eligible to receive an annual discretionary equity grant, with the amount and terms thereof determined by the Board. |
| (d) | In consideration of Executive’s services as Interim Chief Executive Officer, Executive shall receive the following additional compensation during the Interim CEO Employment Term: |
| (i) | Executive’s targeted Annual Bonus as described in the Employment Agreement will increase to 100% of Base Salary beginning on the Effective Date, and this target will remain in effect for as long as Executive serves as Interim Chief Executive Officer (“Interim CEO Employment Term Annual Bonus”). If Executive serves as Interim Chief Executive Officer for only part of the calendar year, the target will be 100% of Base Salary during the time in the calendar year Executive served as Interim Chief Executive Officer and 75% of Executive’s Base Salary during the time that Executive was not acting as Interim Chief Executive Officer. |
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| (ii) | Executive shall receive two retention bonuses of $75,000, each payable on December 1, 2023 and May 1, 2024, respectively, provided Executive remains continuously employed by the Company through the applicable payment date (together, the “Retention Bonuses”). For purposes of clarity, Executive shall remain entitled to receive the Retention Bonuses if Executive resumes the position of Chief Operating Officer in accordance with Section 2(b) prior to one or both of the Retention Bonuses becoming payable. |
| (iii) | As soon as practicable following the Effective Date, Executive will receive a grant of Company restricted stock units valued at $200,000 on the grant date (the “CEO RSUs”). 100% of the CEO RSUs will vest on the one (1) year anniversary of the Effective Date, subject to Executive’s continued employment with the Company on such vesting date. In addition, 100% of the CEO RSUs will vest if Executive’s employment is terminated at any time prior to the vesting date as a result of a termination by the Company without Cause, a termination by Executive for Good Reason, or the Company’s decision not to renew the term of Executive’s Employment Agreement. Any accelerated vesting in connection with such a qualifying termination of employment will be subject to Executive complying with the Release requirements in Section 7 of the Employment Agreement. The CEO RSUs will be subject to the terms and conditions of the Company’s 2018 Omnibus Equity Incentive Plan and corresponding form Restricted Stock Unit Agreement. |
| 4. | Employee Benefits. During the Employment Term, Executive shall be provided, in accordance with the terms of the Company’s employee benefit plans as in effect from time to time, health insurance, retirement benefits and fringe benefits (collectively “Employee Benefits”) on the same basis as those benefits are generally made available to other senior executives of the Company. Executive shall be provided with annual vacation of four (4) weeks per each twelve (12) month period and additional weeks on a basis consistent with Company policy. During the Employment Term, the Company shall provide Executive with an automobile allowance substantially similar to the allowance provided by the Company to other similarly situated senior executives of the Company. |
| 5. | Business Expenses. During the Employment Term, reasonable, documented business expenses incurred by Executive in the performance of Executive’s duties hereunder shall be reimbursed by the Company in accordance with Company policies. |
| 6. | Termination. The Employment Term and Executive’s employment hereunder may be terminated early by either party at any time and for any reason; provided that, unless the Company determines a shorter notice period in its sole discretion, Executive will be required to give the Company at least ninety (90) days advance written notice of any resignation of Executive’s employment. Notwithstanding any other provision of this Agreement, the provisions of this Section 6 shall exclusively govern Executive’s rights upon termination of employment with the Company and its affiliates prior to expiration of the Employment Term. |
| (a) | By the Company For Cause or By Executive’s Resignation without Good Reason. |
| (i) | The Employment Term and Executive’s employment hereunder may be terminated by the Company for Cause (as defined below) or by Executive’s resignation without Good Reason (as defined below). |
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| (ii) | For purposes of this Agreement, “Cause” shall mean (a) action by the Executive that constitute acts of (1) fraud; (2) embezzlement; (3) gross insubordination; (4) gross misconduct; (5) material dishonesty which causes material harm to the Company; (b) the Executive’s inability, failure, or refusal to perform any duty, responsibility, or obligation of Executive’s position, which (to the extent such inability, failure, or refusal to perform is curable in the judgment of the Company) is not cured by the Executive within five (5) days after receiving written notice from the Company of such inability, failure, or refusal; (c) Executive’s commission of a felony; (d) Executive’s substance abuse or alcohol abuse which renders the Executive unfit to perform Executive’s duties; or € any breach of the covenants set forth in Section 7 of this Agreement by Executive; (6) any violation of the Company’s Policy Against Discrimination, Harassment and Retaliation; or (7) any violation of the Company’s Insider Trading Policy. Any voluntary termination of employment by the Executive in anticipation of an involuntary termination of the Executive’s employment by the Company for Cause shall be deemed to be a termination for Cause. |
| (iii) | If Executive’s employment is terminated by the Company for Cause, if Executive resigns without Good Reason, Executive shall be entitled to receive: |
| (A) | the Base Salary through the date of termination; |
| (B) | except in the case of termination for Cause, any Annual Bonus earned but unpaid as of the date of termination for any previously completed calendar year; |
| (C) | reimbursement for any unreimbursed business expenses properly incurred by Executive in accordance with Company policy prior to the date of Executive’s termination; and |
| (D) | such Employee Benefits, if any, as to which Executive may be entitled under the employee benefit plans of the Company; |
| (E) | any additional amounts or benefits due under any applicable plan, program, agreement or arrangement of the Company or its affiliates or pursuant to applicable law (the amounts described in clauses (A) through (E) hereof being referred to as the “Accrued Rights”). The Accrued Rights under this Section 6 shall in all events be paid in accordance with the Company’s normal payroll procedures, expense reimbursement procedures or plan terms, as applicable. |
Following such termination of Executive’s employment by the Company for Cause or resignation by Executive without Good Reason, except as set forth in this Section 6(a), Executive shall have no further rights to any contract damages, other compensation or any other benefits under this Agreement.
| (b) | Disability or Death. |
| (i) | The Employment Term and Executive’s employment hereunder shall terminate upon Executive’s death or if Executive (A) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (B) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan, or disability plan, covering employees of the Company or an affiliate of the Company (such incapacity is hereinafter referred to as “Disability”). |
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Any question as to the existence of the Disability of Executive as to which Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to Executive and the Company. If Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and Executive shall be final and conclusive for all purposes of the Agreement.
| (ii) | Upon termination of Executive’s employment hereunder for either Disability or death, Executive or Executive’s estate (as the case may be) shall be entitled to receive: |
| (A) | the Accrued Rights; and |
| (B) | the Annual Bonus, if any, that the Executive would have been entitled to receive pursuant to Section 3(b) hereof in respect of the year in which such termination occurs based upon the actual achievement of the performance goals, multiplied by a fraction the numerator of which is the number of days Executive is employed by the Company in such year and the denominator of which is the total number of days in such year, payable when such Annual Bonus would have otherwise been payable in accordance with Section 3(b) had the Executive’s employment not terminated (the “Pro-Rata Bonus”). |
Following Executive’s termination of employment due to death or Disability, except as set forth in this Section 6(b), Executive or Executive’s estate (as the case may be) shall have no further rights to any contract damages, other compensation or any other benefits under this Agreement.
| (c) | By the Company Without Cause, By Executive’s Resignation with Good Reason or upon a Non-Renewal by the Company. |
| (i) | The Employment Term and Executive’s employment hereunder may be terminated by the Company without Cause or by Executive with Good Reason. |
| (ii) | For purposes of this Agreement, “Good Reason” shall mean: |
| (A) | Executive’s relocation, without Executive’s consent and other than for a temporary work assignment, by the Company outside Orange County, California; |
| (B) | a material diminution of Executive’s authority, duties, title or responsibilities as set forth in Sections 2(a) and 2(b) hereof; |
| (C) | a reduction of Executive’s Base Salary (as increased from time to time) as set forth in Section 3(a) hereof; |
| (D) | the material failure of the Company to provide or cause to be provided to Executive any of the Employee Benefits described in Section 4 hereof; or |
| (E) | a requirement that Executive report to anyone other than the Chief Executive Officer or the Board; provided that none of the events described in clauses (A) through (E) of this Section 6(c)(ii) shall constitute Good Reason unless Executive shall have notified the Company in writing describing the event which constitutes Good Reason within thirty (30) days of the initial occurrence of such event and then only if the Company shall have failed to cure such event within thirty (30) days after the Company’s receipt of such written notice. |
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For purposes of clarity, the Executive’s resumption of the position of COO following Executive’s tenure as Interim Chief Executive Officer shall not constitute Good Reason hereunder.
| (iii) | If Executive’s employment is terminated by the Company without Cause (other than by reason of death or Disability), by Executive with Good Reason or if the Employment Term expires as a result of the Company delivering to the Executive the Non-Renewal Notice (such event, a “Non-Renewal Termination”), Executive shall be entitled to receive: |
| (A) | the Accrued Rights; |
| (B) | subject to Executive’s execution of a general release of claims in substantially the form attached hereto as Exhibit A (with any such changes so that the release is enforceable to the fullest extent permissible under then applicable law, the “Release”), the expiration of the applicable revocation period with respect to such Release within sixty (60) days following the date of Termination, and Executive’s continued compliance with the provisions of Section 7 and 8, the Pro-Rata Bonus; |
| (C) | subject to Executive’s execution of a Release, the expiration of the applicable revocation period with respect to such Release within sixty (60) days following the date of termination, and Executive’s continued compliance with the provisions of Section 7 and 8, continued payment of the Base Salary in accordance with the Company’s normal payroll practices for a period of twelve (12) months following the date of such termination, which shall commence on the sixtieth (60th) day following such termination (with the first payment equal to the cumulative amount that would have been paid in such initial sixty (60) day period); and |
| (D) | the CEO RSUs shall fully vest to the extent they remain unvested. |
Following Executive’s termination of employment by the Company without Cause (other than by reason of Executive’s death or Disability), by Executive’s resignation with Good Reason or following a Non-Renewal Termination, except as set forth in this Section 6(c), Executive shall have no further rights to any contract damages, other compensation or any other benefits under this Agreement or under any other plans, programs or arrangements of the Company or its affiliates.
| (d) | Notice of Termination. Any purported termination of employment by the Company or by Executive (other than due to Executive’s death) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 11(g) hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. |
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| 7. | Non-Interference/Non-Solicitation. Executive acknowledges and recognizes that in the course of performing services for the Company, Executive will have access to certain confidential and proprietary information of the Company and its affiliates that is extremely valuable to the Company and its affiliates and is not known to the general public. Accordingly, Executive agrees as follows: |
| (a) | Executive agrees that during the term of employment and until the first anniversary of the date of termination of Executive’s employment with the Company or any subsidiary of the Company, as the case may be (the “Restricted Period”), the Executive will not directly or indirectly, use any Company Confidential Information (as defined in Section 8) to interfere with business relationships (whether formed before or after the date of this Agreement) between the Company or any of its affiliates and customers, suppliers, partners, members or investors of the Company or its affiliates. |
| (b) | Executive further agrees that during the Restricted Period, Executive will not, directly or indirectly, (i) solicit or encourage any employee of the Company or its affiliates to leave the employment of the Company or its affiliates, or (ii) solicit or encourage to cease to work with the Company or its affiliates any consultant then under contract with the Company or its affiliates; provided, however, that general advertising not directed specifically at employees of the Company or any affiliate shall not be deemed to violate this Section 7(b). |
| (c) | It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 7 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that any restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein. |
| 8. | Confidentiality and Cooperation. Executive will not at any time (whether during or after Executive’s employment with the Company) disclose or use for Executive’s own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries or affiliates, any trade secrets, information, data, or other confidential information relating to customers, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, manufacturing processes, financing methods, plans, or the business and affairs of the Company generally, or of any subsidiary or affiliate of the Company (“Company Confidential Information”); provided that the foregoing shall not apply to information which is not unique to the Company or which is generally known to the industry or the public other than as a result of Executive’s breach of this covenant; provided further that the foregoing shall not apply when Executive is required to divulge, disclose or make accessible such information by a court of competent jurisdiction or an individual duly appointed thereby, by any administrative body or legislative body (including a committee thereof) having supervisory authority over the business of the Company, or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Executive to divulge, disclose or make accessible such information. Executive agrees that upon termination of Executive’s employment with the Company for any reason, he will return to the Company immediately all memoranda, books, papers, plans, information, letters and other data, and all copies thereof or therefrom, in any way relating to the business of the Company and its affiliates and/or containing any Company Confidential Information, except that he may retain personal notes, notebooks and diaries that do not contain Company Confidential Information of the type described in the preceding sentence. Executive further agrees that he will not retain or use for Executive’s account at any time any trade names, trademark or other proprietary business designation used or owned in connection with the business of the Company or its affiliates. Except to the extent that it could reasonably be expected to materially and unreasonably interfere with the Executive’s professional and personal responsibilities and commitments, upon reasonable notice from the Company to the Executive, Executive agrees to cooperate, both during and after the Employment Term, at the Company’s sole cost and expense (including reasonable, necessary and documented legal fees to the extent not otherwise paid by insurance), with respect to matters of which Executive has knowledge. |
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| 9. | Defend Trade Secrets Act. |
| (a) | Notwithstanding anything set forth in this Agreement to the contrary, Executive shall not be prohibited from reporting possible violations of federal or state law or regulation to any governmental agency or entity or making other disclosures that are protected under the whistleblower provisions of federal or state law or regulation, nor is Executive required to notify the Company regarding any such reporting, disclosure or cooperation with the government. |
| (b) | Pursuant to Section 1833(b) of the Defend Trade Secrets Act of 2016, Executive acknowledges that he shall not have criminal or civil liability under any federal or State trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Nothing in this Agreement is intended to conflict with Section l833(b) of the Defend Trade Secrets Act of 2016 or create liability for disclosures of trade secrets that are expressly allowed by such section. |
| 10. | Specific Performance. Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Section 7 or Section 8 would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company shall be entitled to cease making any payments or providing any benefit otherwise required by this Agreement and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. |
| 11. | Limitation on Benefits. |
| (a) | Notwithstanding anything contained in this Agreement to the contrary, to the extent that the payments and benefits provided under this Agreement and benefits provided to, or for the benefit of, Executive under any other Company plan or agreement (such payments or benefits are collectively referred to as the “Benefits”) would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), the Benefits shall be reduced (but not below zero) if and to the extent that a reduction in the Benefits would result in Executive retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Executive received all of the Benefits (such reduced amount is referred to hereinafter as the “Limited Benefit Amount”). In order to effectuate the Limited Benefit Amount, the Company shall reduce or eliminate the Benefits by first reducing or eliminating amounts which are payable from any cash severance, then from any payment in respect of any equity award that is not covered by Treas. Reg. Section 1.280G-1 Q/A 24(b) or (c), then from any payment in respect of an equity award that is covered by Treas. Reg. Section 1.280G-1 Q/A 24(c), in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). |
| (b) | A determination as to whether the Benefits shall be reduced to the Limited Benefit Amount pursuant to this Agreement and the amount of such Limited Benefit Amount shall be made by the Company’s independent public accountants or another certified public accounting firm or executive compensation consulting firm of national reputation designated by the Company (the “Firm”) at the Company’s expense. The Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation to the Company and Executive within ten (10) business days of the date of termination of the Executive’s employment, if applicable, or such other time as reasonably requested by the Company or Executive. |
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| 12. | Release. By signing this agreement and for the consideration set forth herein, Executive waives and releases the Company and its owners, shareholders, directors, officers, employees, and agents from all claims, known or unknown, arising up to and including the execution of this Agreement, relating to or arising out of Executive’s employment with the Company, including but not limited to any claims of breach of express or implied contract, fraud, misrepresentation, defamation, liability in tort, claims regarding the payment of wages, employee benefits, claims under any anti-discrimination statute, or any other claim arising out of or relating to Executive’s employment with the Company. |
Executive understands and agrees that this Agreement includes a release of all claims under the Age Discrimination in Employment Act (“ADEA”) and, therefore, pursuant to the requirements of the ADEA, Executive acknowledges that he has been and hereby is advised: (i) that this release includes, but is not limited to, all claims under the ADEA arising up to and including the date of execution of this release; (ii) to consult with an attorney and/or other advisor of his choosing concerning his rights and obligations under this release; (iii) to consider fully this release before executing it; (iv) that he has been offered ample time and opportunity, in excess of twenty-one days, to consider this release before executing it; (v) that this release shall become effective and enforceable seven days following its execution by Executive; and (vi) that during the seven day period following execution by Executive, Executive may revoke this acceptance of this Agreement by delivering written notice via email to [email protected].
To effect a full and complete release as described above, Executive expressly waives and relinquishes all rights and benefits afforded by California Civil Code § 1542, or any similar provision of any other state or federal law or common law, and does so understanding and acknowledging the significance of such a specific waiver of Section 1542. Executive understands that Executive’s waiver under Section 1542 extends to the Company and other released parties. Section 1542 of the Civil Code states: A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release, and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party. So that this Agreement provides a full and complete waiver and release, Executive assumes the risk that Executive may later discover facts different from those Executive now knows or believe to be true.
| 13. | Miscellaneous. |
| (a) | Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to conflicts of laws principles thereof. |
| (b) | Entire Agreement/Amendments. This Agreement contains the entire understanding of the parties with respect to the employment of Executive by the Company. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto. |
| (c) | No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. |
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| (d) | Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby. |
| (e) | Assignment. This Agreement shall not be assignable by Executive. This Agreement may be assigned by the Company to a company which is a successor in interest to substantially all of the business operations of the Company. Such assignment shall become effective when the Company notifies the Executive of such assignment or at such later date as may be specified in such notice. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such successor company, provided that any assignee expressly assumes the obligations, rights and privileges of this Agreement. |
| (f) | Successors Binding Agreement. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributes, devises and legatees. |
| (g) | Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. |
If to the Company:
El Pollo Loco, Inc.
3535 Harbor Boulevard, Suite 100
Costa Mesa, CA 92626
Attn: Board of Directors
Attn: Chief Legal Officer
If to Executive: To the most recent address of Executive set forth in the personnel records of the Company.
| (h) | Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation. |
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| (i) | Section 409A. The intent of the parties is that payments and benefits under this Agreement comply with Section 409A of the Code, to the extent subject thereto, and accordingly, to the maximum extent permitted, this Agreement shall be interpreted and administered to be in compliance therewith. Notwithstanding anything contained herein to the contrary, Executive shall not be considered to have terminated employment with the Company for purposes of any payments under this Agreement which are subject to Section 409A of the Code until the Executive has incurred a “separation from service” from the Company within the meaning of Section 409A of the Code. Each amount to be paid or benefit to be provided under this Agreement shall be construed as a separate identified payment for purposes of Section 409A of the Code. Without limiting the foregoing and notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement during the six-month period immediately following an Executive’s separation from service shall instead be paid on the first business day after the date that is six months following the Executive’s separation from service (or, if earlier, the Executive’s date of death). To the extent required to avoid an accelerated or additional tax under Section 409A of the Code, amounts reimbursable to Executive under this Agreement shall be paid to Executive on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in kind benefits provided to Executive) during one year may not affect amounts reimbursable or provided in any subsequent year. The Company makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to any such payment. |
| (j) | Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. |
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
| By: | /s/ | ||
| Name: | Maria Hollandsworth | ||
| EL POLLO LOCO, INC. | |||
| By: | /s/ | ||
| Name: | Rosanne Setoguchi |
| Title: | Chief People Officer |
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Exhibit A
Form of Release
1. Release by the Executive. Maria Hollandsworth (the “Executive”), on his or her own behalf and on behalf of his or her descendants, dependents, heirs, executors, administrators, assigns and successors, and each of them, hereby acknowledges full and complete satisfaction of and releases and discharges and covenants not to sue El Pollo Loco, Inc. (the “Company”), its divisions, subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as its and their assignees, successors, directors, officers, stockholders, partners, representatives, attorneys, agents or employees, past or present, or any of them (individually and collectively, “Releasees”), from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with the Executive’s employment or any other relationship with or interest in the Company or the termination thereof, including without limiting the generality of the foregoing, any claim for severance pay, profit sharing, bonus or similar benefit, equity-based compensation, pension, retirement, life insurance, health or medical insurance or any other fringe benefit, or disability, or any other claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected resulting from any act or omission by or on the part of Releasees committed or omitted prior to the date of this General Release Agreement (this “Agreement”) set forth below, including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act, or any other federal, state or local law, regulation or ordinance (collectively, the “Claims”); provided, however, that the foregoing release does not apply to any obligation of the Company to the Executive pursuant to any of the following: (1) Section 6 of the Employment Agreement dated as of October [●], 2023 by and between the Company and the Executive (the “Employment Agreement”); (2) any equity-based awards previously granted by the Company to the Executive, to the extent that such awards continue after the termination of the Executive’s employment with the Company in accordance with the applicable terms of such awards; (3) any right to indemnification that the Executive may have pursuant to the Company’s bylaws, its corporate charter or under any written indemnification agreement with the Company (or any corresponding provision of any subsidiary or affiliate of the Company) with respect to any loss, damages or expenses (including but not limited to attorneys’ fees to the extent otherwise provided) that the Executive may in the future incur with respect to his or her service as an employee, officer or director of the Company or any of its subsidiaries or affiliates; (4) with respect to any rights that the Executive may have to insurance coverage for such losses, damages or expenses under any Company (or subsidiary or affiliate) directors and officers liability insurance policy; (5) any rights to continued medical and dental coverage that the Executive may have under COBRA; (6) any rights to payment of benefits that the Executive may have under a retirement plan sponsored or maintained by the Company that is intended to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended; or (7) any rights to accrued benefits under the Company’s employee benefits plans. In addition, this release does not cover any Claim that cannot be so released as a matter of applicable law. The Executive acknowledges and agrees that he or she has received any and all leave and other benefits that he or she has been and is entitled to pursuant to the Family and Medical Leave Act of 1993.
2. Acknowledgement of Payment of Wages. Except for accrued vacation (which the parties agree totals approximately [__] days of pay) and salary for the current pay period, the Executive acknowledges that he or she has received all amounts owed for his or her regular and usual salary, and usual benefits through the date of this Agreement.
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3. Waiver of Civil Code Section 1542. This Agreement is intended to be effective as a general release of and bar to each and every Claim hereinabove specified. Accordingly, the Executive hereby expressly waives any rights and benefits conferred by Section 1542 of the California Civil Code and any similar provision of any other applicable state law as to the Claims. Section 1542 of the California Civil Code provides:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”
The Executive acknowledges that he or she later may discover claims, demands, causes of action or facts in addition to or different from those which the Executive now knows or believes to exist with respect to the subject matter of this Agreement and which, if known or suspected at the time of executing this Agreement, may have materially affected its terms. Nevertheless, the Executive hereby waives, as to the Claims, any claims, demands, and causes of action that might arise as a result of such different or additional claims, demands, causes of action or facts.
4. ADEA Waiver. The Executive expressly acknowledges and agrees that by entering into this Agreement, he or she is waiving any and all rights or claims that he or she may have arising under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), which have arisen on or before the date of execution of this Agreement. The Executive further expressly acknowledges and agrees that:
(a) He or she is hereby advised in writing by this Agreement to consult with an attorney before signing this Agreement;
(b) He or she was given a copy of this Agreement on [____________] and informed that he or she had twenty-one (21) days within which to consider this Agreement and that if he or she wished to execute this Agreement prior to expiration of such 21-day period, he or she should execute the Acknowledgement and Waiver attached hereto as Exhibit A-1;
(c) Nothing in this Agreement prevents or precludes the Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law; and
(d) He or she was informed that he or she has seven (7) days following the date of execution of this Agreement in which to revoke this Agreement, and this Agreement will become null and void if the Executive elects revocation during that time. Any revocation must be in writing, addressed to the Company’s Chief Executive Officer and delivered in accordance with the notice provisions of the Employment Agreement, and must be received by the Company during the seven-day revocation period. In the event that the Executive exercises his or her right of revocation, neither the Company nor the Executive will have any obligations under this Agreement.
5. No Transferred Claims. The Executive represents and warrants to the Company that he or she has not heretofore assigned or transferred to any person not a party to this Agreement any released matter or any part or portion thereof.
6. Miscellaneous. The following provisions shall apply for purposes of this Agreement:
(a) Number and Gender. Where the context requires, the singular shall include the plural, the plural shall include the singular, and any gender shall include all other genders.
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(b) Section Headings. The section headings of, and titles of paragraphs and subparagraphs contained in, this Agreement are for the purpose of convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation thereof.
(c) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without giving effect to any choice of law or conflicting provision or rule (whether of the State of California or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of California to be applied. In furtherance of the foregoing, the internal law of the State of California will control the interpretation and construction of this agreement, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.
(d) Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction, and to this end the provisions of this Agreement are declared to be severable; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn (as to geographic scope, period of duration or otherwise) so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
(e) Modifications. This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.
(f) Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
(g) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.
[Remainder of page intentionally left blank]
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The undersigned have read and understand the consequences of this Agreement and voluntarily sign it. The undersigned declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
EXECUTED this ________ day of ________ 20___, at ______________________ County, __________.
| “EXECUTIVE” | ||
| /s/ | ||
| Maria Hollandsworth |
EXECUTED this ________ day of ________ 20___, at ______________________ County, __________.
| “COMPANY” | ||
| EL POLLO LOCO, INC. | ||
| By: | /s/ | |
| Rosanne Setoguchi | ||
| Chief People Officer | ||
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Exhibit A-1
ACKNOWLEDGMENT AND WAIVER
I, Maria Hollandsworth, hereby acknowledge that I was given 21 days to consider the foregoing Agreement and voluntarily chose to sign the Agreement prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
EXECUTED this ___ day of ____________, at ___________ County, _________.
| /s/ | |
| Print Name: Maria Hollandsworth |
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El Pollo Loco Holdings, Inc. 8-K
Exhibit 10.2
Release and Consulting Agreement
| 1. | Separation of Employment. |
| (a) | The employment of Laurance Roberts (“Executive”) with El Pollo Loco, Inc. (the “Company”) is terminating on November 3, 2023 (the “Separation Date”). |
| (b) | As a condition of being eligible to receive the consideration pursuant to this Agreement, Executive agrees to assist with the smooth and orderly transition of Executive’s duties in a positive fashion through the Separation Date (the “Transition Period”). Executive agrees to continue to employ Executive on an at-will basis as the Chief Executive Officer (“CEO”), and Executive agrees to perform any job duties assigned by the Board of Directors, conduct himself professionally, and remain in compliance with Executive’s legal obligations toward the Company. |
| (c) | Unless Executive resigns or is terminated before the Separation Date, on or after the Separation Date, Executive will receive an agreement similar to this Separation Agreement confirming the terms of Executive’s departure (the “Confirming Agreement”). In the event Executive elects not to sign the Confirming Agreement or, after signing, revokes Executive’s acceptance of the Confirming Agreement within the revocation period, this Agreement shall remain in full force and effect except that Executive will not be eligible for the COBRA Premium as described in Section 2 of this Agreement. |
2. Consideration. In consideration for entering into and not revoking this Release and Consulting Agreement (this “Agreement”), the Executive shall receive the benefits set forth in Section 6(c) of the of the Employment Agreement dated as of March 9, 2022 by and between the Company and the Executive (the “Employment Agreement”). In addition, in consideration for entering into and not revoking this Agreement, the Company shall extend the exercise period for the vested options held by the Executive upon the Separation Date, as set forth in the table below, such that the vested options will remain exercisable until the earliest of (1) the three-year anniversary of the Separation Date, (2) the normal expiration date of the applicable option grant, and (3) the date of any termination of the options as a result of any corporate transaction provided for under the equity plan under which the option grant was awarded.
| Option Grant Date | Grant Number | Number of Vested Options on Separation Date |
| 10/24/22 | 155R | 29,484 |
| 10/24/22 | 215R | 39,684 |
| 10/24/22 | 12RE | 42,736 |
| 10/24/22 | 25R | 15,432 |
| 10/24/22 | 10R | 25,510 |
The Company also agrees that, if Executive signs the Confirming Agreement and qualifies for and timely completes all documentation necessary to continue health insurance coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), and following the Effective Date of the Confirming Agreement, the Company will pay to the insurance carriers when due, the applicable cost of health care insurance coverage for Executive and Executive’s dependents through April 30, 2024 (the “COBRA Premium”). The Company’s obligation to pay the COBRA Premium shall cease immediately if: (i) the Company determines that it cannot pay the COBRA Premium on behalf of Executive without violating applicable law, (ii) Executive or Executive’s eligible dependents cease to be eligible or COBRA coverage, or (iii) Executive obtains subsequent employment through which Executive is eligible to obtain substantially equivalent or better health insurance. Executive shall immediately provide written email notice to the Company’s Chief People Officer at [email protected] when Executive becomes eligible for such health insurance prior to April 30, 2024. At the conclusion of the Company’s obligation to pay the COBRA Premiums, Executive and his/her other qualified beneficiaries may continue to purchase COBRA continuation coverage at his/her own expense, subject to applicable law, and the Company shall have no further or additional obligation or liability for continuation of any benefits.
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3. Release by the Executive. Laurance Roberts (the “Executive”), on his or her own behalf and on behalf of his or her descendants, dependents, heirs, executors, administrators, assigns and successors, and each of them, hereby acknowledges full and complete satisfaction of and releases and discharges and covenants not to sue the Company, its divisions, subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as its and their assignees, successors, directors, officers, stockholders, partners, representatives, attorneys, agents or employees, past or present, or any of them (individually and collectively, “Releasees”), from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with the Executive’s employment or any other relationship with or interest in the Company or the termination thereof, including without limiting the generality of the foregoing, any claim for severance pay, profit sharing, bonus or similar benefit, equity-based compensation, pension, retirement, life insurance, health or medical insurance or any other fringe benefit, or disability, or any other claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected resulting from any act or omission by or on the part of Releasees committed or omitted prior to the date of this Agreement set forth below, including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act, or any other federal, state or local law, regulation or ordinance (collectively, the “Claims”); provided, however, that the foregoing release does not apply to any obligation of the Company to the Executive pursuant to any of the following: (1) Section 6 of the Employment Agreement; (2) any equity-based awards previously granted by the Company to the Executive, to the extent that such awards continue after the termination of the Executive’s employment with the Company in accordance with the applicable terms of such awards or as such awards are modified by this Agreement; (3) any right to indemnification that the Executive may have pursuant to the Company’s bylaws, its corporate charter or under any written indemnification agreement with the Company (or any corresponding provision of any subsidiary or affiliate of the Company) with respect to any loss, damages or expenses (including but not limited to attorneys’ fees to the extent otherwise provided) that the Executive may in the future incur with respect to his or her service as an employee, officer or director of the Company or any of its subsidiaries or affiliates; (4) with respect to any rights that the Executive may have to insurance coverage for such losses, damages or expenses under any Company (or subsidiary or affiliate) directors and officers liability insurance policy; (5) any rights to continued medical and dental coverage that the Executive may have under COBRA; (6) any rights to payment of benefits that the Executive may have under a retirement plan sponsored or maintained by the Company that is intended to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended; or (7) any rights to accrued benefits under the Company’s employee benefits plans. In addition, this release does not cover any Claim that cannot be so released as a matter of applicable law. The Executive acknowledges and agrees that he or she has received any and all leave and other benefits that he or she has been and is entitled to pursuant to the Family and Medical Leave Act of 1993.
4. Acknowledgement of Payment of Wages. Except for accrued vacation (which the parties agree totals approximately 31 days of pay) and salary for the current pay period, the Executive acknowledges that he or she has received all amounts owed for his or her regular and usual salary, and usual benefits through the date of this Agreement.
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5. Waiver of Civil Code Section 1542. This Agreement is intended to be effective as a general release of and bar to each and every Claim hereinabove specified. Accordingly, the Executive hereby expressly waives any rights and benefits conferred by Section 1542 of the California Civil Code and any similar provision of any other applicable state law as to the Claims. Section 1542 of the California Civil Code provides:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”
The Executive acknowledges that he or she later may discover claims, demands, causes of action or facts in addition to or different from those which the Executive now knows or believes to exist with respect to the subject matter of this Agreement and which, if known or suspected at the time of executing this Agreement, may have materially affected its terms. Nevertheless, the Executive hereby waives, as to the Claims, any claims, demands, and causes of action that might arise as a result of such different or additional claims, demands, causes of action or facts.
6. ADEA Waiver. The Executive expressly acknowledges and agrees that by entering into this Agreement, he or she is waiving any and all rights or claims that he or she may have arising under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), which have arisen on or before the date of execution of this Agreement. The Executive further expressly acknowledges and agrees that:
(a) He or she is hereby advised in writing by this Agreement to consult with an attorney before signing this Agreement;
(b) He or she was given a copy of this Agreement on November 1, 2023 and informed that he or she had twenty-one (21) days within which to consider this Agreement and that if he or she wished to execute this Agreement prior to expiration of such 21-day period, he or she should execute the Acknowledgement and Waiver attached hereto as Exhibit A;
(c) Nothing in this Agreement prevents or precludes the Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law; and
(d) He or she was informed that he or she has seven (7) days following the date of execution of this Agreement in which to revoke this Agreement, and this Agreement will become null and void if the Executive elects revocation during that time. Any revocation must be in writing, addressed to the Company’s Chief Financial Officer and delivered in accordance with the notice provisions of the Employment Agreement, and must be received by the Company during the seven-day revocation period. In the event that the Executive exercises his or her right of revocation, neither the Company nor the Executive will have any obligations under this Agreement.
7. Consulting Term. Beginning on the Separation Date and continuing until December 28, 2023 (the “Consulting Term”), Executive agrees to provide such consulting services to the Company as are reasonably requested by either the Board of Directors or Chief Executive Officer of the Company from time to time; provided that Executive and the Company agree that in no event will the Company require, nor will Executive perform, a level of services during such period that would result in Executive not having a “separation from service” (within the meaning of Section 409A of the Code) from the Company and its affiliates on the Separation Date. During the Consulting Term, Executive agrees to be available to perform consulting services for up to ten (10) hours per week, as requested at the Company’s sole discretion. The consulting services will be performed at such times as are reasonably requested by the Company after reasonable consultation with Executive. Executive acknowledges and agrees that his status at all times during the Consulting Term shall be that of an independent contractor, and that Executive shall have the right to control and determine the method and means of performing the consulting services. Executive hereby waives any rights to be treated as an employee or deemed employee of the Company or any of its affiliates for any purpose during the Consulting Term. Executive and the Company hereby agree that Executive shall be entitled to the Company will pay Executive a total cash payment of $ $53,846.16. This cash payment shall be paid in substantially equal installments on a bi-weekly basis in accordance with the Company’s standard payroll practices over a period of sixty consecutive days following the Separation Date.
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8. No Transferred Claims. The Executive represents and warrants to the Company that he or she has not heretofore assigned or transferred to any person not a party to this Agreement any released matter or any part or portion thereof.
9. Miscellaneous. The following provisions shall apply for purposes of this Agreement:
(a) Number and Gender. Where the context requires, the singular shall include the plural, the plural shall include the singular, and any gender shall include all other genders.
(b) Section Headings. The section headings of, and titles of paragraphs and subparagraphs contained in, this Agreement are for the purpose of convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation thereof.
(c) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without giving effect to any choice of law or conflicting provision or rule (whether of the State of California or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of California to be applied. In furtherance of the foregoing, the internal law of the State of California will control the interpretation and construction of this agreement, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.
(d) Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction, and to this end the provisions of this Agreement are declared to be severable; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn (as to geographic scope, period of duration or otherwise) so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
(e) Modifications. This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.
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(f) Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
(g) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.
The undersigned have read and understand the consequences of this Agreement and voluntarily sign it. The undersigned declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
EXECUTED this ________ day of ________ 2023, at ______________________ County, __________.
| “EXECUTIVE” | ||
| /s/ | ||
| LAURANCE ROBERTS |
EXECUTED this ________ day of ________ 2023, at ______________________ County, __________.
| “COMPANY” | ||
| EL POLLO LOCO, INC. | ||
| By: | /s/ | |
| Rosanne Setoguchi | ||
| Chief People Officer | ||
5
Exhibit A
ACKNOWLEDGMENT AND WAIVER
I, Laurance Roberts, hereby acknowledge that I was given 21 days to consider the foregoing Agreement and voluntarily chose to sign the Agreement prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
EXECUTED this ___ day of ____________ 2023, at ___________ County, _________.
| /s/ | |
| Print Name: Laurance Roberts |
6
El Pollo Loco Holdings, Inc. 8-K
Exhibit 10.3
November 2, 2023
Ira Fils
| Re: | Equity Retention Bonus |
Dear Ira:
As you are aware, El Pollo Loco Holdings, Inc. (the “Company”) is in the process of a leadership transition in the Chief Executive Officer position (the “CEO Transition”). The Company appreciates your continued service and as an incentive to remain with the Company or any of its affiliates through the CEO Transition, the Company is pleased to offer you a retention bonus opportunity of two equity grants, pursuant to the Company’s policies, during the first open trading window after this letter agreement is fully executed (“Effective Date”). You will receive (1) a grant of restricted stock units with a grant date value of $155,000 and (2) stock options with a grant date value of $155,000, both of which will vest on the terms set forth in this letter agreement and equity agreements (the “Retention Bonus”).
Your Retention Bonus will be earned and vested if you remain employed with the Company through one year from the Effective Date (the “Retention Period”). In no event will your Retention Bonus be earned and vested if your employment with the Company or any of its affiliates is terminated by the Company with Cause1 at any time prior to end of the Retention Period or if you resign or have given your notice of resignation at any time prior to the end of the Retention Period. Should you be terminated by the Company without Cause prior to end of the Retention Period, your Retention Bonus will be deemed fully earned and vested at the time of your termination.
Nothing in this letter agreement constitutes an employment or service commitment by the Company or any of its affiliates or affects your status as an employee “at will” who is subject to termination for any reason (or for no reason, with or without cause) at any time. This letter agreement contains all of the terms and conditions of the Retention Bonus opportunity and supersedes all prior understandings and agreements, written or oral, between you and the Company and any of its affiliates with respect to such matters. This letter agreement may be amended only by a written agreement signed by an authorized officer of the Company that expressly refers to this letter. The validity, interpretation, construction and performance of this letter agreement shall be governed by the laws of the State of California without regard to the conflicts of laws principles thereof.
1 For purposes of this letter agreement, “Cause” shall mean (a) action by you that constitutes acts of (1) fraud; (2) embezzlement; (3) gross insubordination; (4) gross misconduct; (5) material dishonesty which causes material harm to the Company; (b) your inability, failure, or refusal to perform any duty, responsibility, or obligation of your position, which (to the extent such inability, failure, or refusal to perform is curable in the judgment of the Company) is not cured by you within five (5) days after receiving written notice from the Company of such inability, failure, or refusal; (c) your commission of a felony; (d) substance abuse or alcohol abuse which renders you unfit to perform your duties; or (e) any misappropriation of Confidential Information or Trade Secrets; (6) any violation of the Company’s Policy Against Discrimination, Harassment and Retaliation; or (7) any violation of the Company’s Insider Trading Policy.
If you agree to the terms of this letter agreement, please sign this letter agreement in the space provided below and return an executed copy of this letter agreement to Maria Hollandsworth so that it is received no later than the close of business on November 10, 2023.
This letter agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. This letter agreement may be signed using electronic signature technology (e.g., via DocuSign or similar electronic signature technology), and any such signed electronic record shall be valid and as effective to bind the party so signing as a paper copy bearing such party’s hand-written signature. Photographic copies of any signed counterparts may be used in lieu of the originals for any purpose.
We appreciate your dedication to the Company.
| EL POLLO LOCO HOLDINGS, INC. | ||
| /s/ | ||
| By: | Maria Hollandsworth |
Accepted and Agreed:
| /s/ | |
| By: | Ira Fils |
El Pollo Loco Holdings, Inc. 8-K
Exhibit 99.1
El Pollo Loco Holdings, Inc. Announces Leadership Transition Plan
Laurance Roberts to Leave El Pollo Loco After 10 Years of Service as CEO and CFO
Chief Operating Officer Maria Hollandsworth Named Interim President and CEO
Company Has Initiated a Search for a New CEO
COSTA MESA, CA – November 2, 2023 – El Pollo Loco Holdings, Inc. (“El Pollo Loco” or the “Company”) (Nasdaq: LOCO), the nation’s leading fire-grilled chicken restaurant chain, today announced that Laurance Roberts is leaving his position as President, CEO and Director after more than 10 years at the Company. To ensure a smooth transition, Mr. Roberts will continue to provide consulting services to the Company through December 28, 2023.
The Board has engaged a nationally recognized executive search firm to identify a new Chief Executive Officer. While this process continues, Maria Hollandsworth, El Pollo Loco’s Chief Operating Officer, will assume the role of Interim President and CEO. Her appointment will help facilitate a seamless leadership transition until a new CEO is appointed.
“Larry has been an instrumental part of El Pollo Loco’s history as a public company, from serving as our CFO during our initial public offering in 2014 to leading the Company as our CEO for the past two years”, said William Floyd, Chairman of the El Pollo Loco Board. “On behalf of the Board, I want to thank Larry for his leadership and valuable contributions to El Pollo Loco over the past 10 years. It has been a privilege to work with Larry and we wish him the best.”
Mr. Roberts stated, “Being part of El Pollo Loco has been the highlight of my career, and I am proud of what we have accomplished together during my time with the Company. I look forward to working with Maria, the rest of the management team and the Board of Directors through the end of the year to ensure the Company is well-positioned for the future.”
Ms. Hollandsworth commented, “I am pleased to be named Interim President and CEO of El Pollo Loco and look forward to working closely with the Board and our senior leadership team to continue to drive our strong brand forward.”
Mr. Floyd continued, “Maria is a seasoned veteran with over 30 years of experience in the restaurant industry. With extensive operational experience across multiple franchised, quick-service brands, we believe Maria is well suited to step into the role of Interim President and CEO. During her tenure at the Company, Maria has put the customer at the forefront of everything we do while driving significant operational improvements. She has been vital in creating our strategic vision and we are excited for her to lead this brand forward. The Board and management team are committed to ensuring a smooth transition, and I look forward to working closely with Maria throughout this process.”
About Maria Hollandsworth
Before joining El Pollo Loco in November 2022, Ms. Hollandsworth was the Regional Vice President of Operations for Dunkin’, a division of multi-brand restaurant company Inspire Brands, Inc. During her tenure, she worked closely with Dunkin’ franchisees to establish and execute a strategic market plan. She also led the leadership team in building strong relationships with franchisee leaders and increasing profitability through a culture of trust, respect, and improved guest satisfaction. Prior to Inspire, Ms. Hollandsworth worked for over 20 years at Jack in the Box, most recently serving as the Vice President of Strategic Initiatives and Operations Services from 2013 to 2018, where she successfully executed the creation and implementation of enterprise-wide strategic initiatives across over 2,000 restaurants. Prior to this role, Ms. Hollandsworth held leadership roles in both company and franchise operations at Jack in the Box.
About El Pollo Loco
El Pollo Loco (Nasdaq:LOCO) is the nation’s leading fire-grilled chicken restaurant with a mission to bring people together around food, family, and culture in the communities it serves. El Pollo Loco is renowned for its handcrafted food, an innovative blend of traditional Mexican cuisine and better-for-you eating, that Los Angeles is known for. Since 1980, El Pollo Loco has successfully opened and maintained over 490 company-owned and franchised restaurants in Arizona, California, Colorado, Nevada, Texas, Utah, and Louisiana while remaining true to its Mexican-American heritage. El Pollo Loco continues to grow and evolve, nourishing connections to tradition, culture, and one another through fire-grilled goodness that makes us feel like familia. For more information, visit us at ElPolloLoco.com.
Investor Contact:
Jeff Priester
ICR
Media Contact:
Jacie Prieto-Lopez
The ID Agency
310-804-5115
Forward-Looking Statements
This press release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements because they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. They appear in a number of places throughout this press release and include our 2023 outlook and statements regarding the expected results of our initiatives and our ability to capture opportunities and attract franchisees, as well as our ongoing business intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, sales levels, liquidity, prospects, growth, strategies and the industry in which we operate. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those that we expected.
While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties that could cause outcomes to differ materially from our expectations. These factors include, but are not limited to: uncertainty regarding a potential resurgence of the COVID 19 pandemic or another pandemic, epidemic or infectious disease outbreak on our company, our employees, our customers, our partners, our industry and the economy as a whole, as well as our franchisees’ ability to maintain operations in their individual restaurants; global economic or other business conditions that may affect the desire or ability of our customers to purchase our products such as inflationary pressures, high unemployment levels, increases in gas prices, and declines in median income growth, consumer confidence and consumer discretionary spending; our ability to open new restaurants in new and existing markets, including difficulty in finding sites and in negotiating acceptable leases; our ability to compete successfully with other quick-service and fast casual restaurants; vulnerability to changes in political and economic conditions and consumer preferences; our ability to attract, develop, assimilate and retain employees; vulnerability to conditions in the greater Los Angeles area and to natural disasters given the geographic concentration and real estate intensive nature of our business; the possibility that we may continue to incur significant impairment of certain of our assets, in particular in our new markets; changes in food and supply costs, especially for chicken, labor, construction and utilities; social media and negative publicity, whether or not valid, and our ability to respond to and effectively manage the accelerated impact of social media; our ability to continue to expand our digital business, delivery orders and catering; and other risks set forth in our filings with the Securities and Exchange Commission from time to time, including under Item 1A, Risk Factors in our annual report on Form 10 K for the year ended December 28, 2022, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission, all of which are or will be available online at www.sec.gov.
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the ways that we expect. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.