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Exhibit
10.6
EMPLOYMENT AGREEMENT
JERRY LOVEJOY
EMPLOYMENT
AGREEMENT (the "Agreement") dated as of June 28, 2007 by and
between El Pollo Loco, Inc. (the "Company") and Jerry Lovejoy
(the "Executive").
WHEREAS,
the Company considers it essential to its best interests and
the best interests of its stockholders to employ
Executive and
to enter into an agreement embodying the terms of such
employment ;
and
WHEREAS,
Executive is willing to accept employment on the terms
hereinafter set forth in this Agreement.
NOW,
THEREFORE, in consideration of the premises 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 provisions of Section 8 of this Agreement, Executive
shall be employed by the Company for a period commencing on a date
no later than June 28, 2007 (the date on which employment
commences, the "Effective Date") and ending on December 31, 2010
(the "Employment Term") on the terms and subject to the conditions
set forth in the Agreement. Notwithstanding the preceding sentence,
commencing with January 1, 2011 and on each January 1 thereafter
(each an "Extension Date"), the Employment Term shall be
automatically extended for an additional one-year period, unless
the Company or Executive provides the other party hereto 60 days'
prior written notice before the next Extension Date that the
Employment Term shall not be so extended. For the avoidance of
doubt, the term "Employment Term" shall include any extension that
becomes applicable pursuant to the preceding sentence.
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.
During
the Employment Term, Executive shall serve as the Company's
Senior Vice President, Legal 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. In such
position, Executive shall have such duties and authority as
shall be determined from time to time by the Chief Executive
Officer of the Company and the Executive shall report directly
to the Chief Executive Officer.
1
b.
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;
provided that
Executive shall be permitted to participate in such charitable and
community-related services as Executive may choose;
provided further
that such services do not materially interfere with his duties
hereunder.
3.
Compensation.
a.
During
the Employment Term, the Company shall pay Executive a base
salary (the "Base Salary") at the annual rate of $220,000
(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 (an
"Annual Bonus") calculated, in accordance with Exhibit A
attached hereto, with a targeted bonus equal to seventy-five
percent (75%) of Executive's then current Base Salary (the
"Target Bonus").
4.
Equity.
a.
Option Grant. On
the Effective Date, Executive will receive a stock option award to
purchase 11,123 shares of common stock of Chicken Acquisition Corp.
on such terms and conditions provided for in a stock option
agreement substantially in the form attached hereto as Exhibit B
(the "Option Agreement").
b.
Additional Equity Investment. Subject
to the execution of the Stockholders Agreement dated as of
November
18, 2005, among the Company, and
certain other stockholders of the Company, Executive shall invest
$50,000 in Chicken Acquisition Corp.
5.
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 two (2) weeks per each 12-month period or
additional weeks on a basis consistent with Company
policy.
6.
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.
7.
Termination .
The Employment Term and Executive's employment hereunder may be
terminated by either party at any time and for any reason;
provided that
Executive will be required to give the Company at least 30 days
advance written notice of any resignation of Executive's
employment. Notwithstanding any other provision of this Agreement,
the provisions of this Section 7 shall exclusively govern
Executive's rights upon termination of employment with the Company
and its affiliates.
2
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).
(ii)
For
purposes of this Agreement, "Cause" shall mean action by the
Executive that constitutes misconduct, dishonesty, the failure
to comply with specific directions of the Board of Directors
that are consistent with the terms hereof (after having been
given a reasonably detailed written notice of, and a period of
20 days to cure, such misconduct or failure), a deliberate and
premeditated act against the Company or its Affiliates, the
commission of a felony, substance abuse or alcohol abuse which
renders the Executive unfit to perform his duties, or any
breach of the covenants set forth in Section 8 of this
Agreement. Any voluntary termination of employment by the
Executive in anticipation of an involuntary termination of the
Executive's employment for Cause shall be deemed to be a
termination for Cause.
(iii)
If
Executive's employment is terminated by the Company for Cause,
or if Executive resigns without Good Reason, Executive shall
be entitled to receive:
(A)
the
Base Salary through the date of termination;
(B)
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 (the
amounts described in clauses (A) through (D) hereof being
referred to as the "Accrued Rights").
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 7(a), Executive shall have no
further rights to any 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 and if Executive becomes
physically or mentally incapacitated and is therefore unable
for a period of six (6) consecutive months or for an aggregate
of nine (9) months in any twenty-four (24) consecutive month
period to perform Executive's duties (such incapacity is
hereinafter referred to as "Disability"). 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.
3
(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)
a
pro rata portion of any Annual Bonus that the Executive would
have been entitled to receive pursuant to Section 4 hereof in
such year based upon the percentage of the calendar year that
shall have elapsed through the date of Executive's termination
of employment, payable when such Annual Bonus would have
otherwise been payable had the Executive's employment not
terminated,
Following
Executives termination of employment due to death or
Disability, except as set forth in this Section 7(b),
Executive or Executive's estate (as the case may be) shall
have no further rights to any compensation or any other
benefits under this Agreement.
c.
By the Company Without Cause or by Executive's Resignation with
Good Reason .
(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 by the Company outside Orange County, California;
or
(B)
a
reduction of Executive's title as set forth in Section 2(a)
hereof; or
(C)
a
reduction of Executive's Base Salary (as increased from time
to time) as set forth in Section 3(a) hereof; or
(D)
the
failure of the Company to provide or cause to be provided to
Executive a
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