Exhibit 10.5
EMPLOYMENT
AGREEMENT
KAREN EADON
EMPLOYMENT AGREEMENT (the
“Agreement”) dated as of October 10, 2005 by and
between El Pollo Loco, Inc. (the “Company”) and Karen
Eadon (the “Executive”).
WHEREAS, the Company has entered
into a Stock Purchase Agreement dated as of September 28, 2005
(the “Purchase Agreement”), among Chicken Acquisition
Corp.; EPL Holdings, Inc.; EPL Intermediate, Inc.; the Company; the
equity holders of EPL Holdings, Inc.; and American Securities
Capital Partners, L.P;
WHEREAS, Executive is a stockholder
and executive of the Company and, Executive’s restrictive
covenants, as reflected in this Agreement, are an essential
inducement to the Company to enter into the transactions described
in the Purchase Agreement.
WHEREAS, Executive will receive
valuable consideration as part of the transactions contemplated by
the Purchase Agreement, and has agreed to the restrictive covenants
set forth herein in order to protect the transfer of goodwill as
contemplated by the Purchase Agreement.
WHEREAS, the Company considers it
essential to its best interests and the best interests of its
stockholders to foster the continued employment of Executive by the
Company following the consummation of the transaction contemplated
by the Purchase Agreement and to enter into an agreement embodying
the terms of such employment; and
WHEREAS, Executive is willing to
accept and continue Executive’s 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 the
consummation of the transaction contemplated by the Purchase
Agreement (the “Effective Date”) and ending on the
third anniversary of the Effective Date, or December 31, 2008,
whichever is later (the “Employment Term”) on the terms
and subject to the conditions set forth in the Agreement.
Notwithstanding the preceding sentence, commencing with
January 1, 2009 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. If the Purchase Agreement is terminated for any
reason or if the transaction contemplated by the Purchase Agreement
is not otherwise consummated, this Agreement shall be void in its
entirety and each be of no force and effect.
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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 Chief Marketing
Officer, Vice President of Marketing 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.
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 her 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 $256,547 (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 commencing January 1,
2006, 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. Additional Option Grant.
On the Effective Date, Executive will receive a stock option award
to purchase a number of shares of common stock of Chicken
Acquisition Corp. as set forth on Exhibit B attached hereto on
terms and conditions substantially as set forth on Exhibit B and
such additional terms and conditions provided for in a stock option
agreement (the “Option Agreement”).
b. Initial Equity Investment
. Subject to the execution of the Option Agreement and Stockholders
Agreement (as defined in Section 7(e) of this Agreement), each
to be negotiated in
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good faith by the Executive and Chicken
Acquisition Corp., Executive shall invest a minimum of $800,000 in
Chicken Acquisition Corp. through a combination of Rollover Shares
and Rollover Options (each as defined in the Purchase Agreement)
the terms and conditions of which are substantially set forth on
Exhibit C.
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 three (3) 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.
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 her 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;
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(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 canno
