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Exhibit
10.36
FEE
AGREEMENT
This
Fee
Agreement (the "Agreement") is made and entered into as of December 19, 2007
among El Pollo Loco, Inc. (the "Company"), a Delaware corporation, Chicken
Acquisition Corp. ("CAC"), a Delaware corporation, and Trimaran Fund II, LLC
("Provider"), a Delaware limited liability company.
WHEREAS,
the Company is required to post a bond (the "Bond") securing its obligation
to
pay a judgment (the "Judgment") in connection with the El Pollo Loco S.A. de
C.V. v. El Pollo Loco, Inc. litigation (the "Litigation");
WHEREAS,
Provider agrees to assist the Company in posting the Bond by entering into
the
following agreements: (1) a Reimbursement Agreement, dated the date hereof
(the
"Reimbursement Agreement"), among Provider, CIBC as Administrative Agent, in
respect of a letter of credit to be posted to secure the Bond, in consideration
for the Company and CAC entering into this Agreement and (2) a payment and
subscription agreement, dated the date hereof (the "Payment and Subscription
Agreement"), among Provider, the Company and CAC, pursuant to which the Company
or CAC, as the case may be, shall reimburse Provider for any amounts paid by
Provider, directly or indirectly, relating to the Bond or the
Judgment.
NOW,
THEREFORE, in consideration of the mutual promises, covenants, representations
and warranties herein contained, the Company, CAC and Provider hereby agree
as
follows:
1. Fees.
(a) Up-Front
Fee.
On the
date hereof, the Company shall pay to Provider a fee equal to 3% (the "Up-Front
Fee") of the stated amount of the Letter of Credit (as defined in the
Reimbursement Agreement), which fee shall be earned, due and payable in full
immediately upon Provider's entering into the Reimbursement Agreement in any
one
or more of the forms of consideration provided for in Section 1(c) below, at
Provider's option.
(b) Periodic
Fee and Fee Upon Provision of Cash Collateral.
In the
event that, after the Company pays the Up-Front Fee to Provider, Provider is
required to pay any amount(s) (each such amount, a "Periodic Fee") in connection
with the Letter of Credit other than the Cash Collateral Fee (as defined below),
the Company shall pay, in any one or more of the forms of consideration provided
for in Section 1(c) below, at Provider’s option, a fee equal to such amount(s)
to Provider on or before each date such amount(s) is due and payable by
Provider. In the event that the Provider provides cash collateral pursuant
to
Section 2.02 of the Reimbursement Agreement, the Company shall owe to Provider
a
fee at a per annum rate equal to 13.25% (the "Cash Collateral Fee" and, together
with the Up-Front Fee and any Periodic Fees, the "Fees") of the amount of cash
collateral so provided. The Cash Collateral Fee shall be due and payable
quarterly in arrears, in each case, in any one or more of the forms of
consideration provided for in Section 1(c) below, at Provider's
option.
(c) Fee
Payment or Subscription.
At each
Closing (as defined below) upon the terms and subject to the conditions set
forth in this Agreement, as payment of any Fees to be paid at such Closing,
at
Provider's option:
(i) the
Company or CAC shall pay Provider or Provider's designee an amount in U.S.
dollars in immediately available funds equal to up to the Fees to be paid at
such Closing;
(ii) the
Company or CAC, at Provider's option, shall issue to Provider or Provider's
designee a promissory note with a principal amount equal to up to the Fees
to be
paid at such Closing containing terms substantially similar to those set forth
in Schedule A hereto, subject to applicable preemptive rights as described
below;
(iii) Provider
or Provider's designee shall automatically, and with no further action by any
party hereto, have a right of payment due immediately from the Company or CAC,
at Provider's option, for payment in full of an amount equal to up to the Fees
to be paid at such Closing, accruing interest at a rate of 13.25% per annum,
compounded annually, which rate shall increase by 0.50% per calendar quarter
(with the first such increase occurring at the beginning of the second calendar
quarter after the Closing) up to a maximum rate of 17.5% per annum;
(iv) CAC
shall
issue to Provider or Provider's designee shares of Convertible Preferred Stock,
par value $0.01 per share (the "Convertible Preferred Stock"), in CAC at a
price
per share and on terms substantially similar to those set forth in Schedule
B
hereto in an aggregate issue price equal to up to Fees to be paid at such
Closing, subject to applicable preemptive rights as described
below;
(v) CAC
shall
issue to Provider or Provider's designee shares of common stock, par value
$0.01
per share (the "Common Stock"), of CAC at a price per share as set forth in
Schedule C hereto in an aggregate amount equal to up to Fees to be paid at
such
Closing, subject to applicable preemptive rights as described below;
or
(vi) Provider
may choose any combination of (i) through (v) above for an aggregate amount
equal to up to Fees to be paid at such Closing;
provided that,
Provider may choose options (i) through (vi) only to the extent that such
options do not result in a default under the terms of the Company's or CAC's
outstanding indebtedness at the time of the Closing; provided further
that any
Issuance (as defined below), including any issuance pursuant to Section 1(d)
below, to a party to the LLC Operating Agreement (as defined below) shall be
held, at Provider's option, either: (i) directly by the purchasing stockholder
or (ii) through Trimaran Pollo Partners, LLC. For purposes of this Agreement,
the "Payment" shall mean any of (i) through (vi) above.
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(d) Preemptive
Rights.
Any
issuance of shares or debt securities under this Agreement or the Fee Agreement
(each, an "Issuance") pursuant to Sections 1(c)(ii), (iv), (v) or (vi) above
shall be subject to applicable preemptive rights pursuant to the Stockholders
Agreement (the "Stockholders Agreement"), dated November 18, 2005, by and among
CAC and the stockholders listed therein, and the Second Amended and Restated
Limited Liability Company Operating Agreement (the "LLC Operating Agreement"),
dated March 8, 2006, of Trimaran Pollo Partners, LLC. To the extent any parties
to such agreements elect to exercise applicable preemptive rights with respect
to any Issuance, at Provider's option:
(i) upon
such
Issuance, Provider shall sell to each party who has duly exercised applicable
preemptive rights the number of shares or debt securities (or pro rata portion
of such debt security, as the case may be) as to which such preemptive rights
have been exercised at a price per share or per debt security equal to the
price
per share or per debt security in the Issuance; or
(ii) CAC
shall
(A) repurchase from Provider the number of shares or debt securities as to
which
such preemptive rights have been duly exercised at a price per share or per
debt
security equal to the price per share or per debt security in the Issuance
and
(B) sell such shares or debt securities to each party who has duly exercised
applicable preemptive rights.
(e) Closings.
(i) The
closing of the Up-Front Fee (the "Up-Front Fee Closing") shall take place on
the
date on which all of the conditions set forth in Section 3(a)(i) of this
Agreement have been satisfied or waived (other than those conditions which
by
their terms are intended to be satisfied at the Closing) at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New
York 10036, or on such other date as mutually agreed by the parties to this
Agreement.
(ii) The
closing of each Periodic Fee or Cash Collateral Fee (together with the Up-Front
Fee Closing, each a "Closing") shall take place no later than five days after
all of the conditions set forth in Section 3(a)(ii) of this Agreement have
been
satisfied or waived (other than those conditions which by their terms are
intended to be satisfied at such Closing) at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP, Four Times Square, New York, New York 10036, or
on such other date as mutually agreed by the parties to this
Agreement.
(f) Blue
Sky Compliance.
The
Company, Provider and CAC shall comply with all state securities or "blue sky"
laws which are applicable to the Payment hereunder, and Provider agrees to
provide the Company and CAC with such information, and cooperate with such
filings, as may be required in connection with such compliance.
3
(g) Stockholders
Agreement.
If
shares of capital stock are to be issued pursuant to this Agreement or the
Fee
Agreement, (i) the Provider shall, if necessary, execute a Joinder (the
"Joinder") to the Stockholders Agreement pursuant to which Provider becomes
a
party to the Stockholders Agreement as an Additional Stockholder (as defined
in
the Stockholders Agreement) and bound by the provisions thereto and (ii) CAC
shall cause such amendments to the Stockholders Agreement as are required
pursuant to the terms thereto to reflect Provider or Provider’s designee, as
applicable, as an Additional Stockholder.
(h) Compliance
with Indentures.
If
requested by Trimaran, the Company or CAC, as applicable, shall engage (at
the
Company or CAC's expense, as applicable) an investment banking firm of national
standing to give an opinion as to the fairness to the Company or CAC, as the
case may be, of the transactions contemplated by this Agreement. Each of the
Company and CAC shall use best efforts to comply with Section 4.11 of the
Indenture, dated as of November 18, 2005, among El Pollo Loco, Inc. (as
successor to EPL Finance Corp. by merger), EPL Intermediate, Inc. and The Bank
of New York Trust Company, N.A., as trustee (the "EPL Indenture") and Section
4.11 of the Indenture, dated as of November 18, 2005, between EPL Intermediate,
Inc. (as successor to EPL Intermediate Finance Corp. by merger) and The Bank
of
New York Trust Company, N.A., as trustee (the "Intermediate Indenture" and,
together with the EPL Indenture, the Indentures), to the extent applicable,
including by delivering an officer's certificate or fairness opinion if
required; provided
that, if
either the Company or CAC are unable to so comply with the Indentures, this
Agreement shall be modified by the parties but only to the extent required
to so
comply with the Indentures.
2. Representations
and Warranties and Other Agreements.
(a) Representations
and Warranties and Agreements of Provider.
Provider represents and warrants to, and agrees with, the Company and CAC that,
as of the date hereof and as of each Closing:
(i) Any
shares of capital stock (the "Shares"), notes or obligations acquired by
Provider pursuant to this Agreement (collectively with the Shares, "Securities")
are for Provider's own account for investment purposes or to satisfy preemptive
rights pursuant to the Stockholders Agreement or the LLC Operating Agreement
and
not with a view to distribution of the Securities or for sale in violation
of the Securities Act of 1933, as amended, and the rules and regulations in
effect from time to time thereunder (the "Securities Act") or other applicable
law; provided that the disposition of Provider's property shall at all times
be
within Provider's control.
(ii) Provider
has been advised by the Company and CAC that: (A) neither the offer nor
sale of any Securities has been registered under the Securities Act or any
state
or foreign securities or "blue sky" laws and neither the Company nor CAC is
required to register the Securities; (B) the Securities, when issued, are
characterized as "restricted securities" under the Securities Act as they are
being acquired from CAC in a transaction not involving a public offering and
that Provider may not resell the Securities and must continue to bear the
economic risk of the investment in its Securities unless the offer and sale
of
the Securities is subsequently registered under the Securities Act and all
applicable state or foreign securities or "blue sky" laws or an exemption from
such registration is available; (C) it is not anticipated that there will
be any public market for the Securities in the foreseeable future; (D) when
and if the Securities may be disposed of without registration under the
Securities Act in reliance on Rule 144, such disposition can be made only in
limited amounts in accordance with the terms and conditions of such Rule;
(E) if the Rule 144 exemption is not available, public offer or sale of any
Securities without registration will require the availability of another
exemption under the Securities Act; (F) a restrictive legend in the form
satisfactory to CAC shall be placed on the certificates representing the
Securities; and (G) a notation shall be made in the appropriate records of
CAC indicating that the Securities are subject to restrictions on transfer
and,
if CAC should engage the services of a stock transfer agent, appropriate stop
transfer restrictions will be issued to such stock transfer agent.
4
(iii) Provider
is an "accredited investor" as defined in the Securities Act and Provider has
such knowledge, skill and experience in business, financial and investment
matters so that Provider is capable of evaluating the merits, risks and
consequences of an investment in the Securities to be purchased by it and is
able to bear the economic risk of the loss of its investment.
(iv) Provider
is duly organized, validly existing and in good standing under the laws of
its
jurisdiction of organization.
(v) Provider
has all the requisite power and authority to execute and deliver this Agreement
and to perform its obligations hereunder.
(vi) This
Agreement has been duly and validly authorized, executed and delivered by
Provider.
(vii) This
Agreement constitutes the valid, binding and enforceable agreement of Provider
except as enforceability may be limited by (A) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws relating to or affecting creditor’s rights generally and (B) general
principles of equity (regardless of whether such enforceability is considered
in
a proceeding in equity or at law).
(viii) The
execution, delivery and performance by Provider of this Agreement does not
and
will not (A) violate any provision of Provider's organizational documents,
(B) constitute or result in a breach of or a default (or an event which,
with notice or lapse of time, or both, has the potential of constituting a
default) under any agreement to which Provider is a party, (C) violate any
law binding upon Provider or to which any of its assets are subject or
(D) require the consent of any third party or governmental body or agency,
except with respect to clauses (B), (C) and (D) above, as would not reasonably
be expected to have a material adverse effect on Provider.
5
(b) Representations
and Warranties of the Company and CAC.
Each of
the Company and CAC (each, as "Representing Party") represents and warrants,
as
to itself, to Provider that, as of the date hereof and as of each
Closing:
(i) The
Representing Party is a corporation duly organized, validly existing and in
good
standing
under the laws of the State of Delaware.
(ii) The
Representing Party has the requisite corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder.
(iii) This
Agreement has been duly and validly authorized, executed and delivered by the
Representing Party.
(iv) This
Agreement constitutes the valid, binding and enforceable agreement of the
Representing Party, except as such enforceability may be limited by
(A) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws relating to or affecting creditors’
rights generally and (B) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
(v) The
execution, delivery and performance by the Representing Party of this Agreement
does not and will not (A) violate any provision of the Representing Party’s
Certificate of Incorporation or By-laws, (B) constitute or result in a
breach of or a default (or an event which, with notice or lapse of time, or
both, has the potential of constituting a default) under any agreement to which
the Representing Party is a party, (C) violate any law binding upon the
Representing Party or to which any of its assets are subject or (D) require
the consent of any third party or governmental body or agency.
(vi) The
Shares, upon issuance by CAC pursuant to this Agreement, will be duly
authorized, validly issued, fully paid and non-assessable.
(vii) Assuming
the accuracy of the representations set forth in Section 2 hereof, the offer
and
sale of the Securities is not required to be registered under the Securities
Act.
3. Conditions
to Performance.
(a) Conditions
to the Company and CAC's Obligations at each Closing.
