CONFIDENTIAL SETTLEMENT AND RELEASE AGREEMENT
Exhibit
10.1
CONFIDENTIAL SETTLEMENT
AND RELEASE AGREEMENT
This
Confidential Settlement and Release Agreement (“Agreement”) is effective as of
the 18th day of June, 2008, and regards the following:
1. Parties The
following are the “Parties” to this Agreement:
1.1 “EL
POLLO LOCO, INC.”.
All
references in this Agreement to “EL POLLO LOCO, INC.” shall mean El Pollo Loco,
Inc. and its parent corporation, Chicken Acquisition Corp., Inc. All references
in this Agreement to the “EL
POLLO
LOCO, INC. Released Parties” shall mean and include EL POLLO LOCO, INC. and all
of its past and present parent companies, subsidiaries, divisions, affiliates,
related entities, joint ventures, predecessors, successors and assigns, and
all
their respective agents, subcontractors, subrogees, sureties, insurers,
co-insurers, reinsurers, servants, and attorneys, and all their respective
present and former partners, principals, members, directors, officers,
employees, stockholders and owners, and all their respective representatives,
heirs, executors, personal representatives, administrators, transferees and
assigns and anyone claiming by or through them individually and/or
collectively.
1.2 “Pollo
Loco Mexico” – All references in this Agreement to “Pollo Loco Mexico”
shall mean El Pollo Loco, S.A. de C.V.
1.3 “Pollo
Loco Mexico Released Parties” - All references in this Agreement to the “Pollo
Loco Mexico Released Parties” shall mean and include “Pollo Loco Mexico,” Xxxx
Xxxxx, Xxxxxxxxx Xxxxx, and all other members of the Xxxxx family, their
respective past and present parent companies, subsidiaries, divisions,
affiliates, related entities, joint ventures, predecessors, successors and
assigns, and all their respective agents, subcontractors, subrogees, insurers,
co-insurers, reinsurers, servants and attorneys, present and former partners,
principals, members, directors, officers, employees, stockholders and owners,
and all their respective representatives, heirs, executors, personal
representatives, administrators, transferees and assigns.
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2. Recitals
2.1 For
the
consideration and covenants described in further detail herein, Pollo Loco
Mexico, has agreed to settle and compromise any and all Claims and Unknown
Claims that were raised, could have been raised, and/or that relate in any
way
to any or all of the following: (a) the Intellectual Property Agreement attached
hereto as Exhibit “A,”; (b) the facts and circumstances underlying the following
lawsuit, Case No. 5:045 cv.000048, El
Pollo Loco, S.A. de C.V. v. El Pollo Loco, Inc.,
in the
United States District Court for the Southern District of Texas, Laredo Division
(“the District Court Lawsuit”); and/or (c) the following appeal, No. 08-40004,
El
Pollo Loco, S.A. de C.V. v. El Pollo Loco, Inc.,
in the
United States Court of Appeals for the Fifth Circuit (the “Fifth Circuit
Appeal”) (collectively, the “Pollo
Loco Mexico Dispute”).
2.2
For
the consideration and covenants described herein, Pollo Loco Mexico has also
agreed: (a) to release, in full, the judgment entered against EL POLLO LOCO,
INC. in the District Court Lawsuit; (b) to join and support a motion to return
to EL POLLO LOCO, INC. the sum of $1,087,500, plus interest, currently on
deposit in the registry of the District Court (the “Registry Deposit”); and, (c)
to join and support a motion to release the Safeco bond securing the judgment
entered against EL POLLO LOCO, INC. in the District Court
Lawsuit.
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3. Settlement
Payment and Conditions
3.1 On
or
before June 23, 2008, and on the terms and conditions described herein, EL
POLLO
LOCO, INC. or its assigns or representatives agrees to pay, or cause to be
paid,
to Pollo Loco Mexico the total sum of $10,722,860.00 (“Settlement Payment”), in
full and final settlement of the Pollo Loco Mexico Dispute, of which
$3,031,500.00 shall be for reimbursement of costs of court, and the remainder
to
compensate Pollo Loco Mexico for injuries suffered as a result of EL POLLO
LOCO,
INC.’s alleged false filing of a trademark registration with the IMPI. On or
before June 23, 2008, EL POLLO LOCO, INC. shall make the Settlement Payment
through wire-transfer to counsel for the Pollo Loco Mexico, per wiring
instructions as follows:.
INCOMING
WIRE TRANSFER INSTRUCTIONS
International
Bank of Commerce
0000
Xxx
Xxxxxxxx Xxxxxx
Xxxxxx,
Xxxxx 00000
ABA:
114
902
528
OUR
ACCOUNT NO.:
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A.
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IOLTA:
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0000000000
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BENEFICIARY:
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XXXXXXXX
XXXXXX, X.X.
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Xxxx
xx Xxxxxxx Xxxxx, Xxxxx 0000
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300
Convent
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Xxx
Xxxxxxx, Xxxxx 00000
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3.2 Counsel
for Pollo Loco Mexico shall hold the Settlement Payment in escrow until all
of
the conditions set out in this paragraph 3.2. have been satisfied:
A. Within
three business days of the execution of this agreement, Pollo Loco Mexico shall
join EL POLLO LOCO, INC. in the filing of three pleadings in the District
Court:
1. A
Joint
Motion to Return to EL POLLO LOCO, INC. Funds on Deposit in Registry. The form
of this motion is attached hereto as Exhibit “B.”
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2. A
Joint
Motion to Release Surety Bond, seeking the unconditional release of Safeco
Insurance Company of America for any and all obligations under bond number
6462586 issued on or about 12/18/07 on behalf of El Pollo Loco, Inc. The form
of
this motion is attached hereto as Exhibit “C”; and
3. A
Release
of Final Judgment and Judgment Lien signed by Pollo Loco Mexico. The form of
the
Release of Final Judgment is attached hereto as Exhibit “D.”
B. The
District Court shall have entered the following Orders:
1. An
Order
directing the Clerk to release the Registry Deposit to EL POLLO LOCO,
INC..
2. An
Order
releasing Safeco Insurance Company of America for any and all obligations under
bond number 6462586 issued on or about 12/18/07 on behalf of El Pollo Loco,
Inc.
B. Pollo
Loco Mexico shall execute the assignment attached hereto as Exhibit “E.” By its
signature on this agreement, and its signature on Exhibit “E,” Pollo Loco Mexico
acknowledges that EL POLLO LOCO, INC. has executed all documents necessary
to:
(a) return to Pollo Loco Mexico the intellectual property originally conveyed
pursuant to the Intellectual Property Agreement attached hereto as Exhibit
“A,”
and (b) satisfy the provisions of the District Court Judgment requiring the
return of the Intellectual Property to Pollo Loco Mexico. Pollo Loco Mexico
further represents and warrants that no further documents, or rights, titles,
or
interests remain owing to Pollo Loco Mexico by reason of either the District
Court Judgment or Exhibit “A.” El Pollo Loco, Inc. agrees that it will cease and
refrain from the use of the Intellectual Property assigned under the assignment
attached hereto as Exhibit E.
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3.3. Upon
the
last to occur of the conditions described in paragraph 3.2, counsel for Pollo
Loco Mexico may release the settlement funds to Pollo Loco Mexico. Upon the
last
to occur of the conditions described in paragraph 3.2, EL POLLO LOCO, INC.
shall
dismiss the Fifth Circuit Appeal, with prejudice. Should it be necessary to
obtain a further extension of the briefing schedule in order to accomplish
the
conditions set out in paragraph 3.2, Pollo Loco Mexico shall join EL POLLO
LOCO,
INC. in seeking an additional thirty day extension of the briefing schedule
in
the Fifth Circuit Appeal.
3.4. Other
than as set forth in paragraph 3.1, each party hereto shall pay its own costs,
expenses and attorneys’ fees incurred or to be incurred in connection with the
Pollo Loco Mexico Dispute and this Agreement.
4. Release
of Claims And Representations
4.1 Pollo
Loco Mexico, for good and valuable consideration, the sufficiency of which
is
hereby acknowledged, forever releases EL POLLO LOCO, INC. and the EL POLLO
LOCO,
INC. Released Parties from any and all Claims and Unknown Claims of any nature
whatsoever that Pollo Loco Mexico ever had, now has, or can, shall or may have,
by reason of any matter, cause or thing occurring from the beginning of the
world to the date of this Agreement, whether known or unknown, (a) arising
out
of or in any way related to the facts, transactions, allegations, and claims
of
liability described in the District Court Lawsuit, or (b) that were brought
or
alleged, or could have been brought or alleged, in the District Court Lawsuit,
or (c) that relate in any way to the Pollo Loco Mexico Dispute. Pollo Loco
Mexico, represents and warrants that it is authorized to execute and grant
this
broad release for itself, and for and on behalf of any member of the Xxxxx
family who claims (or could have claimed) that it suffered injury in connection
with the Pollo Loco Mexico Dispute.
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4.2
EL
POLLO
LOCO, INC., for good and valuable consideration, the receipt and sufficiency
of
which it hereby acknowledges, forever releases Pollo Loco Mexico from any and
all Claims and Unknown Claims, of any nature whatsoever against Pollo Loco
Mexico that EL POLLO LOCO, INC. ever had, now has, or can, shall or may have,
by
reason of any matter, cause or thing occurring from the beginning of the world
to the date of this Agreement, whether known or unknown, (a) arising out of
or
related to the facts, transactions, allegations, and claims of liability
described in District Court Lawsuit; (b) that were brought or alleged or could
have been brought or alleged in the District Court Lawsuit, or (c) that relate
in any way to the Pollo Loco Mexico Dispute.
4.3 “Claims”
shall mean any claim or claims, action or actions, cause or causes of action,
arising under the law of any state or country, whether in law or in equity,
and
includes all suits, liens, liabilities, claims, demands, obligations, damages
of
any kind (including punitive or consequential damages), losses, costs or
expenses, specific performance, rescission, equitable remedies, and attorneys’
fees of any nature whatsoever, including, without limitation, claims based
on
breach of contract, fraud, libel, slander of title, diminution or destruction
of
intellectual property, infringement, or any other legal duty, legal fault,
negligence, offense, quasi-offense, contract, fraud, dolus, illicit acts, or
moral damages, damage to personal or business reputation, damage to franchisees,
damage to brand, any violation of copyright, trademark, or other intellectual
property law, any violation of Mexican law, or any other theory of liability.
The Parties specifically acknowledge that, as used in this Agreement, the term
“Mexican law” means any and all statutory or common law of any government entity
in the Republic of Mexico, including but not limited to the law of the Federal
District of Mexico, the law of any Mexican state or local government, whether
embodied in statute, judicial decision, or common law, and any laws arising
under or relating to any treaty to which Mexico is a party.
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4.5 “Unknown
Claims” means any and all Claims including, without limitation, any Claim that
the Parties do not know or even suspect to exist in their favor at the time
of
this Agreement, which, if known by the Parties, may have affected their decision
to sign this Agreement. The Parties also hereby acknowledge that they may
hereafter discover facts in addition to or different from those which they
now
know or believe to be true with respect to the subject matter of the matters
released herein, but the Parties shall have fully, finally and forever settled
and released any and all such matters, as provided in this Agreement, whether
known or unknown, suspected or unsuspected, contingent or non-contingent, which
now exist or heretofore have existed upon any theory of law or equity now
existing or coming into existence in the future.
4.6 The
Parties each acknowledge that they have been advised by legal counsel about
and
are familiar with the provisions of California Civil Code Section 1542, which
provides as follows:
“A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT
WITH
THE DEBTOR.”
The
Parties, being aware of said Code section, hereby expressly release and waive
any rights or claims they may have thereunder, as well as rights or claims
under
any other similar, comparable, or equivalent provisions of Mexican law, and
any
law of the United States of America, or any American state or otherwise, whether
embodied in statute or common law (hereafter “Release and Specific Waiver of
Unknown Claims”). The Parties acknowledge that they understand the significance
and consequence of their Release and Specific Waiver of Unknown Claims. The
Parties affirm that this Release and Specific Waiver is not a mere
recital. Rather, it is a specifically bargained-for provision of this
Agreement. The Parties affirm that they are aware that neither Party would
have entered into this Agreement but for the other Party’s agreement to a full
waiver of all claims of any type and description, as provided, including Unknown
Claims. The Parties have included this Release and Specific Waiver of
Unknown Claims in this Agreement in order to procure certainty in their
affairs.
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4.7 This
Agreement is entered into in the interests of avoiding the expenses and
uncertainties of litigation, and in order to buy peace. Neither the payment
of
the Settlement Payment described in Section Three (3) of this Agreement, nor
this Agreement, nor any of its terms and provisions shall be deemed to be an
admission of any liability, or wrongful conduct of any kind, however described,
on the part of EL POLLO LOCO, INC. or Pollo Loco Mexico. Any and all of the
allegations of liability made against EL POLLO LOCO, INC. are completely and
specifically denied by EL POLLO LOCO, INC..
4.8 Neither
this Agreement nor any of its terms and provisions nor any of the negotiations
or proceedings in connection with it shall be offered or received in evidence
in
any action or proceedings of any kind other than such proceedings as may be
necessary to consummate, defend, enforce or give effect to this
Agreement.
4.9. Pollo
Loco Mexico stipulates and agrees that any claim by any member of the Xxxxx
family that arises from or relates to the Pollo Loco Mexico Dispute shall be
barred as a matter of law by this Agreement.
4.10. In
consideration of the Settlement Payment and as a material term of this
Agreement, Pollo Loco Mexico agrees that EL POLLO LOCO, INC. shall be protected
from any claims arising from or relating to the Pollo Loco Mexico dispute by
any
affiliates of Pollo Loco Mexico or by any member of the Xxxxx family. In the
event any such claim is filed, Pollo Loco Mexico shall immediately be obligated
to defend and indemnify EL POLLO LOCO, INC. for all of its defense costs, as
and
when they are incurred, and shall likewise indemnify and hold harmless EL POLLO
LOCO, INC. from any damages or equitable relief, including exemplary damages
or
damages arising under Mexican law.
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5. Dismissal
5.1 Within
three business days of the execution of this Agreement, Pollo Loco Mexico and
EL
POLLO LOCO, INC. shall file jointly the Motions contemplated by Paragraph 3.2.
Such motions shall, however, be filed by Xxxxx & Xxxxx, LLP acting as
counsel for EL POLLO LOCO, INC.. Within three business days of the entry of
the
Orders contemplated by Paragraph 3.2 hereof, EL POLLO LOCO, INC. shall dismiss
its Appeal with prejudice.
6. Confidentiality
6.1 The
Parties acknowledge and agree that the terms of this settlement are
confidential. The Parties agree to maintain them as confidential, as described
herein. To that end and in consideration of the provisions, promises, releases,
agreements, and covenants herein, the Parties hereby acknowledge and agree
that
they shall not disclose, directly or indirectly, to any person not a Party
to
this Agreement, except as hereinafter recited, the terms of this Agreement
other
than to acknowledge that a settlement has been reached. The Parties further
acknowledge and agree that they will not initiate or participate in media
coverage of this settlement or disclose the terms of the Agreement or comment
upon publicly the Agreement or its terms other than to state generally that
a
satisfactory settlement has been reached, except as provided below. The Parties
further acknowledge and agree that providing a copy of this Agreement or any
portion thereof to any person or entity not a Party to this Agreement
constitutes a disclosure of the terms of the Agreement and would violate this
provision of the Agreement, except as provided below.
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6.2 Notwithstanding
the foregoing paragraph, the Parties recognize that certain disclosures
regarding this settlement may be required by law or the securities regulations
of the United States or states within the United States. This Agreement does
not
prohibit such required disclosures. The Parties agree, however, that if a public
disclosure regarding the amount of the settlement is required pursuant to this
paragraph, the Party making such disclosure shall state that the settlement
is
confidential, and shall disclose only so much as is required to be disclosed
by
reason of applicable law or regulation. The Parties further recognize that
this
Agreement may be disclosed to such officers, agents, accountants, employees,
and
creditors of EL POLLO LOCO, INC. or its affiliates who have a need to know
about
the Agreement, provided, however, that such persons shall be cautioned that
the
agreement is confidential and may not be disseminated further.
6.3. In
the
case of a subpoena or court order or other third party legal request seeking
or
purporting to require access to this Agreement or information about its terms
(a
“Disclosure Request”), the Party receiving such Disclosure Request agrees to
notify the other Party promptly upon receipt of the Disclosure Request, and
to
provide a copy thereof to the other Party. The Parties agree to use their best
efforts, as permitted by applicable law, to cooperate in any reasonable efforts
to prevent or limit the disclosure of the Agreement or any confidential
information relating to the Agreement (e.g., efforts to obtain an appropriate
protective order, stay of disclosure or other available similar remedy) and
to
provide the other Party with a reasonable opportunity to take action to prevent
the production of the Agreement or disclosure of any confidential information
relating to the Agreement.
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7. Miscellaneous
7.1 Successors
and Assigns.
In
executing and consenting to this Agreement, Pollo Loco Mexico and EL POLLO
LOCO,
INC., each of them and collectively, hereby bind their heirs, family members,
assigns, and successors in business or interest, and all persons and entities
claiming through them.
7.2 Modification.
Neither
this Agreement nor any provision thereof can be modified or waived in any way,
except in writing and with the express written consent of all Parties to this
Agreement.
7.3 Governing
Law.
This
Agreement shall be governed by the laws of the State of Texas, without regard
to
the conflicts of law principles thereof. The Parties hereto submit themselves
to
the jurisdiction of the District Court of the Southern District of Texas
(Xxxxxxxxx Xxxxxxx Xxxxxxx, Presiding) for purposes of the enforcement of this
Agreement.
7.4 Warranty.
The
undersigned signatories for Pollo Loco Mexico acknowledge, represent and warrant
that they are the sole and lawful owners of all rights, title and interests
in
any and all of the claims and/or causes of action released herein, or that
they
are duly authorized agents or representatives the lawful owners of such rights,
title and interests, and that none of those claims or causes of action have
been
assigned, sold, transferred, conveyed, or otherwise disposed of, whether such
assignment, sale, transfer, conveyance, or other disposition has occurred by
operation of law or otherwise.
7.5 Complete
Agreement.
The
Parties intend and agree that the terms set forth in this Agreement, including
all exhibits hereto, are intended by the Parties as a complete, final and
exclusive expression of their mutual agreements, waiver and general release
of
all claims with respect to the Pollo Loco Mexico Dispute, and supersedes any
other prior or contemporaneous oral or written agreements, proposed agreements,
negotiations and discussions with respect to the subject matter hereof, except
to the extent, if any, expressly incorporated by reference herein.
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7.6 Headings.
The
headings of the sections and paragraphs contained herein are for reference
and
convenience only and are not to be used to define, limit, or construe the
express provisions of this Agreement.
7.7 Authority.
The
individuals who execute this Agreement represent and warrant that: (i) they
are
duly authorized to execute this Agreement on behalf of the Party that they
purport to represent and that they have the requisite power and authority to
deliver and perform all of their obligations under this Agreement; (ii) no
other
signature, act or authorization is necessary to bind such entity to the
provisions of this Agreement; (iii) Pollo Loco Mexico, is authorized to execute
this release for itself and on behalf of any and all members of the Xxxxx family
who claim (or could have claimed) any injury in connection with the Pollo Loco
Mexico Dispute; and (iv) the Parties named herein are all the necessary and
proper parties to this Agreement.
7.8 Knowledge,
Review and Interpretation.
The
undersigned Parties, and each of them, acknowledge, declare, and agree that:
(i)
they have consulted legal counsel about this Agreement, or have had the
opportunity to do so and have voluntarily chosen not to do so; (ii) they have
had adequate time and opportunity to review the terms of this Agreement, have
carefully read it, and have a full understanding of the terms hereof; (iii)
they
are sophisticated parties that have negotiated this Agreement at arm’s length
and cooperated in drafting and in preparing this Agreement, and accordingly,
expressly waive any rule of law or any legal decision that would require
interpretation of any ambiguities in this Agreement against the Party that
has
drafted it; and, (iv) they have entered into this Agreement voluntarily and
intend to be legally bound to the provisions of this Agreement, which shall
be
interpreted in a reasonable manner to effect the purposes of this
Agreement.
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7.9 Multiple
Counterparts.
This
Agreement may be executed in multiple counterparts. For purposes of this
Agreement, facsimile documents will be deemed to be equal to originals.
7.10 Pending
Appeal.
This
agreement is binding regardless of any rulings that may later be issued by
the
United States District Court or by the United States Court of Appeals for the
Fifth Circuit.
7.11 Notice.
Any
notice required by this Agreement shall be deemed delivered if sent by overnight
service or by facsimile as follows:
If
to EL
POLLO LOCO, INC.:
Xxxxx
Xxxxxxx
General
Counsel
El
Pollo
Loco, Inc.
0000
Xxxxxx Xxxx, Xxxxx 000
Xxxxx
Xxxx, XX 00000
xxxxxxxx@xxxxxxxxxxx.xxx
With
copies to:
Xxxxx
X.
Xxxxxxx / Xxxxxxxx Xxxxx
Xxxxx
& Xxxxx, LLP
0000
Xxxxxxxxx
Xxxxxxx,
XX 00000
xxxxxxxx@xxxxx-xxxxx.xxx
xxxxxx@xxxxx-xxxxx.xxx
If
to
Pollo Loco Mexico:
Sr.
Xxxx
Francisco “Pancho” Xxxxx
El
Palenque, Inc.
0000
Xxx
Xxxxxxxx Xxxxxx
Xxxxxx,
Xxxxx 00000
xxxxxx@xxxxxxxxxxxx.xxx
cc:
xxxx@xxxxxxxxxxxx.xxx
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With
copies to:
Xxxxxx
X.
Xxxxxx/Xxxxx X. Xxxxxxxx
XXXXXXXX
XXXXXX, P.C.
Bank
Of
America Plaza, Suite 1020
300
Convent
Xxx
Xxxxxxx, Xxxxx 00000
xxxxxxx@xxxxxxx.xxx
xxxxxxxxx@xxxxxxx.xxx
IN
WITNESS WHEREOF, the undersigned have approved and executed this Agreement
as of
the date written above.
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BY:
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/s/
Xxxx Xxxxxxxxx Xxxxx
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Date
6.18.08
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El
Pollo Loco, Inc.
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BY:
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/s/
Xxxxxx X. Xxxxx
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Date
June 18, 2008
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