<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(RULE 13D-101)
Under the Securities Exchange Act of 1934
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13D-2(a)
(Amendment No. )*
POLLO TROPICAL, INC.
--------------------
(Name of issuer)
COMMON STOCK, $.01 PAR VALUE
----------------------------
(Title of class of securities)
731513 10 7
(CUSIP Number)
MR. LARRY J. HARRIS
10221 SOUTHWEST 143RD STREET
MIAMI, FLORIDA 33176
(305) 670-7696
(Name, address and telephone number of person
authorized to receive notices and communications)
Copy to:
MR. C. WILLIAM BAXLEY
KING & SPALDING
191 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30303-1763
(404) 572-4600
MARCH 13, 1998
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box: [ ]
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
(Continued on following pages)
Page 1 of 20 Pages
Exhibit Index on Page 9
<PAGE> 2
CUSIP NO. 731513 10 7
<TABLE>
<S> <C>
1. NAME OF REPORTING PERSON
S.S. OR IRS IDENTIFICATION NO. OF ABOVE PERSON
LARRY J. HARRIS
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
NUMBER OF 7. SOLE VOTING POWER 80,025
SHARES
BENEFICIALLY 8. SHARED VOTING POWER 1,147,156
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER 80,025
REPORTING
PERSON
WITH 10. SHARED DISPOSITIVE POWER 1,147,156
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,227,181
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.8%(BASED ON 8,190,505 SHARES OF COMMON STOCK ISSUED
AND OUTSTANDING ON MARCH 6, 1998 AND 80,025 SHARES OF
COMMON STOCK ISSUABLE TO MR. HARRIS UPON EXERCISE OF
PRESENTLY EXERCISABLE OPTIONS)
14. TYPE OF REPORTING PERSON*
IN
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
(Continued on following pages)
Page 2 of 20 Pages
Exhibit Index on Page 9
<PAGE> 3
CUSIP NO. 731513 10 7
<TABLE>
<S> <C>
1. NAME OF REPORTING PERSON
S.S. OR IRS IDENTIFICATION NO. OF ABOVE PERSON
MOLLY HARRIS
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
NUMBER OF 7. SOLE VOTING POWER 0
SHARES
BENEFICIALLY 8. SHARED VOTING POWER 1,147,156
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER 0
REPORTING
PERSON
WITH 10. SHARED DISPOSITIVE POWER 1,147,156
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,147,156
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.0%(BASED ON 8,190,505 SHARES OF COMMON STOCK ISSUED AND OUTSTANDING ON
MARCH 6, 1998)
14. TYPE OF REPORTING PERSON*
IN
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
(Continued on following pages)
Page 3 of 20 Pages
Exhibit Index on Page 9
<PAGE> 4
CUSIP NO. 731513 10 7
<TABLE>
<S> <C>
1. NAME OF REPORTING PERSON
S.S. OR IRS IDENTIFICATION NO. OF ABOVE PERSON
WILLIAM CARL DREW
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
NUMBER OF 7. SOLE VOTING POWER 0
SHARES
BENEFICIALLY 8. SHARED VOTING POWER 35,000
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER 0
REPORTING
PERSON
WITH 10. SHARED DISPOSITIVE POWER 35,000
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
35,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.4% (BASED ON 8,190,505 SHARES OF COMMON STOCK ISSUED AND
OUTSTANDING ON MARCH 6, 1998 AND 10,000 SHARES OF
COMMON STOCK ISSUABLE TO MR. DREW UPON EXERCISE OF PRESENTLY
EXERCISABLE OPTIONS)
14. TYPE OF REPORTING PERSON*
IN
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 4 of 20 Pages
Exhibit Index on Page 9
<PAGE> 5
STATEMENT PURSUANT TO RULE 13d-1 AND RULE 13d-2
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934
ITEM 1. SECURITY AND ISSUER.
This statement relates to shares of the Common Stock, par value $.01
per share (the "Common Stock"), of Pollo Tropical, Inc., a Florida corporation
(the "Company"). The Company's principal executive office is at 7300 N. Kendall
Drive, 8th Floor, Miami, Florida 33156.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is being filed jointly pursuant to Rule 13d-1(k)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
by: (i) Larry J. Harris, (ii) Molly Harris, and (iii) William Carl Drew
(individually, a "Reporting Person" and, collectively, the "Reporting
Persons").
Information with respect to each Reporting Person is given solely by
such Reporting Person, no Reporting Person has responsibility for the accuracy
or completeness of the information supplied by any other Reporting Person, and
each Reporting Person agrees that this statement is filed on behalf of such
Reporting Person only.
The Reporting Persons may be deemed to constitute a "group" for
purposes of Rule 13d-3 under the Exchange Act.
(b) The business address of each of Larry J. Harris and William Carl
Drew is 7300 N. Kendall Drive, 8th Floor, Miami, Florida 33156. The residence
address of Molly Harris is 10221 Southwest 143rd Street, Miami, Florida 33176.
(c) The principal occupation or employment of each of the following
Reporting Persons is: (i) Larry J. Harris is the Chairman of the Board of
Directors and Chief Executive Officer and a director of the Company; (ii)
William Carl Drew is the Vice President of Finance and Chief Financial Officer
of the Company; and (iii) Molly Harris, the spouse of Larry J. Harris, is not
currently employed.
The Company owns, operates and franchises quick-service restaurants
featuring grilled fresh chicken, marinated in a proprietary blend of tropical
fruit juices and spices, and authentic "made from scratch" side dishes. The
address of the Company is 7300 N. Kendall Drive, 8th Floor, Miami, Florida
33156.
(d) During the last five years, no Reporting Person has been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, no Reporting Person has been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such person was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, Federal or State securities laws or finding
any violation with respect to such laws.
Page 5 of 20 Pages
Exhibit Index on Page 9
<PAGE> 6
(f) Each of the Reporting Persons is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Except for shares of Common Stock acquired by the exercise of options
and shares of Common Stock that Larry J. Harris has the right to purchase
pursuant to presently exercisable options, each of Larry J. Harris and Molly
Harris has held the shares of Common Stock beneficially owned by them as
reported herein for more than four years. Except for shares of Common Stock that
William Carl Drew has the right to purchase pursuant to presently exercisable
options, William Carl Drew has held the shares of Common Stock beneficially
owned by him as reported herein for more than one year. No funds were involved
in the formation of the group by the Reporting Persons. It is presently
anticipated that the source of funds for the transactions proposed by the
Reporting Persons as described in Item 4 will be equity capital that will be
provided primarily by Quad-C, Inc. on terms to be negotiated between the
Reporting Persons and Quad-C, Inc., and loans from financial institutions on
terms to be negotiated.
ITEM 4. PURPOSE OF TRANSACTION.
On March 6, 1998, the Reporting Persons presented to the Company's
Board of Directors a proposal, subject to certain terms and conditions, for the
merger of the Company with a company to be formed by the Reporting Persons
pursuant to which the shareholders of the Company, other than the Reporting
Persons, would receive $9.50 per share in cash for their shares of Common Stock.
The Board of Directors of the Company held a meeting on March 6, 1998, at which
the Board indicated that it was not prepared to submit the offer of $9.50 per
share for consideration by a special committee of the Board of Directors.
Following this meeting, the Reporting Persons withdrew their proposal on March
8, 1998.
On March 13, 1998, the Reporting Persons submitted a revised proposal
(the "Revised Proposal") to the Company's Board of Directors whereby the
shareholders of the Company, other than the Reporting Persons, would receive
$10.00 per share in cash for their shares of Common Stock (the "Proposed
Transaction"). At a meeting of the Board of Directors on March 13, 1998, the
Board of Directors referred the Revised Proposal to a special committee of
disinterested directors which was established to evaluate and consider the
Revised Proposal. The Board of Directors also authorized the special committee
to engage financial and legal advisors to assist it in evaluating and
considering the Revised Proposal. The Proposed Transaction is subject, among
other things, to (i) entering into a definitive merger agreement with the
Company, (ii) approval of the transaction by a special committee of the Board of
Directors of the Company, the full Board of Directors of the Company and the
Company's shareholders, (iii) receipt of satisfactory financing for the Proposed
Transaction, (iv) the absence of any dividend declarations or payments by the
Company, and (v) receipt of a fairness opinion from the financial advisor to the
special committee of the Board of Directors of the Company stating that the
Proposed Transaction is fair, from a financial point of view, to the
shareholders of the Company.
The Reporting Persons have engaged Wheat First Union to advise them
with respect to the Proposed Transaction. In addition, the Reporting Persons
have received a letter from Quad-C, Inc. dated March 12, 1998 confirming its
interest in providing the common equity necessary to support the Proposed
Transaction, subject to customary conditions and confirmatory due diligence. In
its letter, Quad-C, Inc. also confirmed that it has received a letter from a
financial institution expressing such institution's interest in providing,
subject to customary conditions, the senior debt financing required for the
Proposed Transaction.
Page 6 of 20 Pages
Exhibit Index on Page 9
<PAGE> 7
The Proposed Transaction would, if and when consummated, result in the
Company's Common Stock (i) ceasing to be authorized for quotation on the Nasdaq
National Market and (ii) becoming eligible for termination of registration
under Section 12(g)(4) of the Exchange Act.
Except as set forth herein or in connection with the Proposed
Transaction, and until such time, if at all, as the Proposed Transaction is
consummated, no Reporting Person has any present plans or proposals that relate
to or would result in: (i) the acquisition of additional securities of the
Company or the disposition of securities of the Company; (ii) an extraordinary
corporate transaction, such as a merger, reorganization or liquidation of the
Company or any of its subsidiaries; (iii) a sale or transfer of a material
amount of assets of the Company or any of its subsidiaries; (iv) any change in
the present board of directors or management of the Company, including any plans
or proposals to change the number or term of directors or to fill any existing
vacancies on the board; (v) any material change in the present capitalization or
dividend policy of the Company; (vi) any other material change in the Company's
business or corporate structure; (vii) any changes in the Company's charter,
by-laws or instruments corresponding thereto or other actions which may impede
the acquisition of control of the Company by any person; (viii) causing a class
of securities of the Company to be delisted from a national securities exchange
or cease to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association; (ix) causing a class of equity
securities of the Company to become eligible for termination of registration
pursuant to Section 12(g)(4) of the Exchange Act; or (x) any action similar to
any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Reporting Persons may be deemed to be a group within the
meaning of Rule 13d-5 under the Exchange Act and, therefore, such group may be
deemed to be the beneficial owner, within the meaning of Rule 13d-3 under the
Exchange Act, of all of the shares of Common Stock beneficially owned by each
member of such group, or an aggregate of 1,262,181 shares of Common Stock of the
Company, representing (based on 8,190,505 shares of Common Stock which were
issued and outstanding on March 6, 1998 and the portion of options to
purchase shares of Common Stock held by any of the Reporting Persons which were
then exercisable or become exercisable within 60 days after the date hereof)
approximately 15.2% of the total of the outstanding shares of Common Stock and
such portion of such options.
Larry J. Harris is the beneficial owner of 1,147,156 (14.0%) shares of
Common Stock. In addition, Larry J. Harris has the right to purchase 80,025
shares of Common Stock at an exercise price of $13.50 per share upon the
exercise of presently exercisable options.
Molly Harris is the beneficial owner of 1,147,156 (14.0%) shares of
Common Stock.
William Carl Drew is the beneficial owner of 25,000 (0.3%) shares of
Common Stock which he jointly owns with rights of survivorship with his spouse,
Laurie Drew. Laurie Drew, a Canadian citizen, is not currently employed and has
a residence address at 11107 Des Moines Court, Cooper City, Florida 33026.
Laurie Drew has not been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) during the last five years. During the last
five years, Laurie Drew has not been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction as a result of which she was or
is subject to a judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, Federal or State securities
laws or finding any violation with respect to such laws. In addition, William
Carl Drew (i) has the right to purchase 10,000 shares of Common Stock at an
exercise price of $4.50 per share upon the exercise of presently exercisable
options, (ii) holds options to purchase 8,000 shares of Common Stock at an
exercise price of $4.50 per share, which options become exercisable on April 15,
1999, (iii) holds options to purchase 12,000 shares of Common Stock at an
exercise price of $4.50 per share, which options become exercisable on April 15,
2000, and (iv) holds options to purchase 10,000 shares of Common Stock at an
exercise price of $8.00 per share, one-third of which options become exercisable
on February 4, 1999, 2000 and 2001, respectively.
Page 7 of 20 Pages
Exhibit Index on Page 9
<PAGE> 8
(b) The following is information concerning the nature of each
Reporting Person's beneficial ownership of Common Stock:
<TABLE>
<CAPTION>
Sole Power to Vote or Shared Power to Vote or
Direct the Vote/ Direct the Vote/
Sole Power to Dispose or Shared Power to Dispose or
Direct the Disposition Direct the Disposition
---------------------------- ----------------------------
Number of Shares Number of Shares
---------------------------- ----------------------------
<S> <C> <C>
Larry J. Harris 80,025 1,147,156
Molly Harris 0 1,147,156
William Carl Drew 0 35,000
</TABLE>
- ------------------------------
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
To the knowledge of each Reporting Person on the date hereof, except
to the extent reflected in the proposal described in Item 4, and as set forth
below or in the Exhibits filed herewith, no Reporting Person has any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
person with respect to securities issued by the Company, including, but not
limited to, transfer or voting of any such securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
divisions of profits or loss or the giving or withholding of proxies:
(a) Larry J. Harris holds options to purchase 80,025 shares of Common
Stock at an exercise price of $13.50 per share granted to him on August 20, 1993
under the Company's 1993 Stock Option Plan, which option is presently
exercisable in full and expires on August 20, 2003.
(b) William Carl Drew holds options to purchase (i) 10,000 shares of
Common Stock at an exercise price of $4.50 per share granted to him on April 15,
1996 under the Company's 1995 Stock Option Plan, which options are presently
exercisable in full and expire on April 15, 2005, (ii) 8,000 shares of Common
Stock at an exercise price of $4.50 per share granted to him on April 15, 1996
under the Company's 1995 Stock Option Plan, which options become exercisable in
full on April 15, 1998 and expire on April 15, 2005, (iii) 12,000 shares of
Common Stock at an exercise price of $4.50 per share granted to him on April 15,
1996 under the Company's 1995 Stock Option Plan, which options become
exercisable in full on April 15, 1999 and expire on April 15, 2005, and (iv)
10,000 shares of Common Stock at an exercise price of $8.00 per share granted to
him on February 4, 1998 under the Company's 1995 Stock Option Plan, one-third of
which options become exercisable on February 4, 1999, 2000 and 2001,
respectively, and all of which expire on April 15, 2005.
Page 8 of 20 Pages
Exhibit Index on Page 9
<PAGE> 9
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
Exhibit Description
<S> <C>
1 Joint Filing Agreement dated as of March 16, 1998 among Larry J.
Harris, Molly Harris and William Carl Drew.
2 Proposal dated March 6, 1998 on behalf of Larry J. Harris, Molly
Harris and William Carl Drew to the Board of Directors of the
Company (the "Original Proposal").
3 Letter dated March 8, 1998 on behalf of Larry J. Harris, Molly Harris
and William Carl Drew to the Board of Directors of the Company
withdrawing the Original Proposal.
4 Revised Proposal dated March 13, 1998 on behalf of Larry J. Harris,
Molly Harris and William Carl Drew to the Board of Directors of the
Company.
5 Letter of Interest dated March 12, 1998 from Quad-C, Inc. to Larry J. Harris.
6 Letter Agreement dated March 12, 1998 between Quad-C, Inc. and Larry J. Harris.
</TABLE>
Page 9 of 20 Pages
Exhibit Index on Page 9
<PAGE> 10
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this statement is true,
complete and correct.
Dated: March 16, 1998
/s/ Larry J. Harris
----------------------------------
Larry J. Harris
/s/ Molly Harris
----------------------------------
Molly Harris
/s/ William Carl Drew
----------------------------------
William Carl Drew
Page 10 of 20 Pages
Exhibit Index on Page 9
<PAGE> 1
EXHIBIT 1
Joint Filing Agreement
(Pursuant to Rule 13d-1(k))
In accordance with Rule 13d-1(k) promulgated under the Securities
Exchange Act of 1934, as amended, the persons named below agree to the joint
filing on behalf of each of them of a Statement on Schedule 13D (including
amendments thereto) with respect to the Common Stock of Pollo Tropical, Inc.,
and further agree that this Joint Filing Agreement be included as an exhibit to
such joint filing. Each party to this Joint Filing Agreement expressly
authorizes Larry J. Harris to file on such party's behalf any and all
amendments to such Statement. Each such party undertakes to notify Larry J.
Harris of any changes giving rise to an obligation to file an amendment to
Schedule 13D and it is understood that in connection with this Statement and
all amendments thereto each such party shall be responsible only for
information supplied by such party.
In evidence thereof, the undersigned, being duly authorized, hereby
execute this Agreement this 16th day of March, 1998.
/s/ Larry J. Harris
-------------------------------
Larry J. Harris
/s/ Molly Harris
-------------------------------
Molly Harris
/s/ William Carl Drew
-------------------------------
William Carl Drew
Page 11 of 20 Pages
Exhibit Index on Page 9
<PAGE> 1
EXHIBIT 2
Proposal dated March 6, 1998
March 6, 1998
Board of Directors
Pollo Tropical, Inc.
7300 North Kendall Drive
8th Floor
Miami, Florida 33156
Gentlemen:
I am pleased to make a proposal, on behalf of myself, Molly Harris and
W. Carl Drew, to acquire all of the outstanding shares of common stock of Pollo
Tropical, Inc. (the "Company") not currently owned by us (the "Remaining
Shares"). The transaction would be structured as a cash merger in which each
holder of Remaining Shares would receive $9.50 per share.
We believe that such a transaction would result in substantial
benefits to the Company and the holders of the Remaining Shares and would
provide the holders of the Remaining Shares with the opportunity to realize a
fair and generous cash value for their shares. The offer price of $9.50 per
Remaining Share represents a premium of approximately 19% over the closing sale
price of the Company's common stock on March 5, 1998, and a premium of
approximately 28% over the closing sale price of the Company's common stock
three months ago on December 5, 1997.
Such a transaction would permit the holders of the Remaining Shares to
obtain at an attractive premium liquidity which is not normally available to
them in light of the thinly traded market for the Company's common stock.
Indeed, the price of $9.50 per share is higher than any closing sale price of
the Company's common stock during the past 31 months. We also believe that the
acquisition can be structured to accommodate and promote the interests of the
Company's employees and customers.
This proposal is subject, among other things, to the following
conditions:
1. the execution of a definitive Merger Agreement with
the Company containing representations, covenants, conditions and
other terms usual for transactions of this type,
2. approval of the transaction by a Special Committee of
the Board of Directors of the Company, the Board of Directors of the
Company and the Company's shareholders,
3. the receipt of satisfactory financing for the
transaction,
Page 12 of 20 Pages
Exhibit Index on Page 9
<PAGE> 2
4. the receipt of a fairness opinion from the financial
advisor to the Special Committee stating that the proposed transaction
is fair, from a financial point of view, to the holders of the
Remaining Shares, and
5. the absence of any dividend declarations or payments
between the date of this letter and the closing of the transaction.
Our advisors are in the process of preparing a definitive Merger
Agreement relating to the transaction, which we will provide you in the near
future. In addition, we have engaged Wheat First Union to advise us with
respect to the transaction, and we have received a letter from Quad-C, Inc.
confirming its interest in providing the common equity necessary to support our
proposal, subject of course to customary conditions, including confirmatory due
diligence. In its letter, Quad-C, Inc. also confirms that it has received a
letter from a financial institution expressing such institution's interest in
providing, subject to customary conditions, the senior debt financing required
for the transaction. Based on these letters and our discussions, we believe
that satisfactory financing will be available in order to consummate the
transaction promptly.
We wish to make it clear that we are not interested under any
circumstances in selling our entire interest in the Company.
We expect that you will desire to deliberate on this proposal through
a Special Committee of disinterested directors and that such committee will
desire to retain its own advisors to assist in those deliberations. We look
forward to working with you and the advisors to the Special Committee to
complete this transaction and trust you will give this proposal your prompt
attention. We, of course, reserve the right to amend or withdraw this proposal
at any time in our sole discretion.
Very truly yours,
/s/ Larry J. Harris
-------------------------------
Larry J. Harris
Page 13 of 20 Pages
Exhibit Index on Page 9
<PAGE> 1
EXHIBIT 3
Withdrawal Letter dated March 8, 1998
March 8, 1998
Board of Directors
Pollo Tropical, Inc.
7300 North Kendall Drive
8th Floor
Miami, Florida 33156
Gentlemen:
Thank you for meeting with me Friday afternoon.
As you know, we are disappointed with your response to our proposal. We
believe that the transaction outlined by us would result in substantial benefits
to Pollo Tropical, Inc. (the "Company") and the holders of the Company's shares
not held by us and would provide such shareholders with the opportunity to
realize a fair and generous cash value for their shares.
In light of your response, on behalf of myself, Molly Harris and W.
Carl Drew, we hereby formally withdraw our proposal to acquire all of the
outstanding shares of common stock of the Company not currently owned by us.
Very truly yours,
/s/ Larry J. Harris
---------------------------
Larry J. Harris
Page 14 of 20 Pages
Exhibit Index on Page 9
<PAGE> 1
EXHIBIT 4
Revised Proposal dated March 13, 1998
March 13, 1998
Board of Directors
Pollo Tropical, Inc.
7300 North Kendall Drive
8th Floor
Miami, Florida 33156
Gentlemen:
Thank you for meeting with me last Friday afternoon. I have had an
opportunity to consider your response and to take into account your views
regarding my original proposal.
In light of your response, I am pleased to make a revised proposal, on
behalf of myself, Molly Harris and W. Carl Drew, to acquire all of the
outstanding shares of common stock of Pollo Tropical, Inc. (the "Company") not
currently owned by us (the "Remaining Shares"). The transaction would be
structured as a cash merger in which each holder of Remaining Shares would
receive $10.00 per share.
We believe that such a transaction would result in substantial
benefits to the Company and the holders of the Remaining Shares and would
provide the holders of the Remaining Shares with the opportunity to realize a
fair and generous cash value for their shares. The offer price of $10.00 per
Remaining Share represents a premium of approximately 26% over the closing sale
price of the Company's common stock on March 12, 1998, and a premium of
approximately 42% over the closing sale price of the Company's common stock
three months ago on December 12, 1997.
Such a transaction would permit the holders of the Remaining Shares to
obtain at an attractive premium liquidity which is not normally available to
them in light of the thinly traded market for the Company's common stock.
Indeed, the price of $10.00 per share is higher than the trading price of the
Company's common stock in connection with any trade in well over three years.
We also believe that the acquisition can be structured to accommodate
and promote the interests of the Company's employees and customers, and we
would intend to seek to keep the Company's current management team in place.
This proposal is subject, among other things, to the following
conditions:
1. the execution of a definitive Merger Agreement with
the Company containing representations, covenants, conditions and
other terms usual for transactions of this type,
Page 15 of 20 Pages
Exhibit Index on Page 9
<PAGE> 2
2. approval of the transaction by a Special Committee of
the Board of Directors of the Company, the Board of Directors of the
Company and the Company's shareholders,
3. the receipt of satisfactory financing for the
transaction,
4. the receipt of a fairness opinion from the financial
advisor to the Special Committee stating that the proposed transaction
is fair, from a financial point of view, to the holders of the
Remaining Shares, and
5. the absence of any dividend declarations or payments
between the date of this letter and the closing of the transaction.
Our advisors are in the process of preparing a definitive Merger
Agreement relating to the transaction, which we will provide you in the near
future. In addition, we have engaged Wheat First Union to advise us with
respect to the transaction, and we have received a letter from Quad-C, Inc.
confirming its interest in providing the common equity necessary to support our
proposal, subject of course to customary conditions, including confirmatory due
diligence. In its letter, Quad-C, Inc. also confirms that it has received a
letter from a financial institution expressing such institution's interest in
providing, subject to customary conditions, the senior debt financing required
for the transaction. Based on these letters and our discussions, we believe
that satisfactory financing will be available in order to consummate the
transaction promptly.
As you would expect, as part of this process Quad-C, Inc. will need
timely access to information from the Company to complete its confirmatory due
diligence. Quad-C, Inc. is, of course, prepared to sign a confidentiality
agreement containing customary terms prior to receiving such information.
We expect that you will desire to deliberate on this proposal through
a Special Committee of disinterested directors and that such committee will
desire to retain its own advisors to assist in those deliberations. We look
forward to working with you and the advisors to the Special Committee to
complete this transaction and trust you will give this proposal your prompt
attention. We, of course, reserve the right to amend or withdraw this proposal
at any time in our sole discretion.
Very truly yours,
/s/ Larry J. Harris
----------------------------------
Larry J. Harris
Page 16 of 20 Pages
Exhibit Index on Page 9
<PAGE> 1
EXHIBIT 5
Letter of Interest from
Quad-C, Inc. to Larry J. Harris
dated March 12, 1998
Mr. Larry J. Harris
10221 Southwest 143rd Street
Miami, Florida 33176
Dear Larry:
This letter confirms the interest of Quad-C, Inc. in providing the common
equity necessary in connection with your bid to acquire Pollo Tropical, Inc.
(the "Company") in an acquisition transaction. The investment will be funded
by certain partnerships controlled by Quad-C, Inc. and individuals affiliated
with Quad-C, Inc. (such partnerships and individuals collectively being
referred to as the "Quad-C Group"). In addition, Banque Paribas has expressed
an interest in providing equity for this transaction.
Purchase Price:
Based upon the information made available to us to date, including the
financing model provided to us, we are willing to support a purchase price per
share of $10.00. Our proposal is subject to confirmatory due diligence which
we believe can be concluded within the next two to three weeks assuming we have
complete access to the management and internal information of the Company.
This proposal is conditioned upon your willingness to allow us to begin due
diligence immediately.
Level of Review/Approved Process:
This proposal has been reviewed by the principals of Quad-C, Inc.,
including its Managing Partner, Terrence D. Daniels. No further formal
approvals will be required since Quad-C, Inc. has total discretion over the
investment decisions of the Quad-C Group.
Page 17 of 20 Pages
Exhibit Index on Page 9
<PAGE> 2
Mr. Larry J. Harris
Page 2
Financing/Capital Structure:
We would expect that the acquisition would be structured as a merger and
leveraged recapitalization of the Company, approved by the Board of the
Company, in which you would retain stock valued at approximately $9 million.
The purchase price for the acquired common stock of the Company would be paid
in cash at closing and financed through a combination of debt and equity. Any
definitive proposal submitted by Quad-C, Inc. would be subject to arranging the
required financing. We would expect that the transaction would be financed
with up to $55 million in bank debt, with the remaining funding coming from
equity provided by the Quad-C Group and Banque Paribas and the retention of
common equity held by you and certain other existing shareholders. We are
working with Banque Paribas, who has expressed an interest in providing the
senior debt financing required for the transaction. Quad-C has a longstanding
relationship with Banque Paribas, which has financed a number of our leveraged
buyouts.
Key operating management of the Company will be given the opportunity to
invest alongside the Quad-C Group in the transaction.
Summary:
Our proposal is conditioned upon the following:
(i) Complete and immediate access to the management and internal records
of the Company to perform due diligence;
(ii) Execution within 30 days of a definitive Merger Agreement with the
Company.
Further, this letter will become effective only after you have accepted
and returned to Quad-C, Inc. a fully executed copy of the attached Letter
Agreement dated the date hereof providing that you will work exclusively with
Quad-C, Inc. in seeking to effect the acquisition.
The above is a non-binding proposal for the acquisition of Pollo Tropical,
Inc. No party will be under any obligation to proceed and no offer, or other
obligation (except for the confidentiality obligations set forth in the letter
dated January 30, 1998 and your agreement contained in the attached Letter
Agreement) shall be implied, unless and until a definitive merger agreement has
been executed and delivered by all parties thereto.
Should you require any further information regarding our proposal, please
feel free to call me. We are prepared to move as quickly in the due diligence
as permitted.
Sincerely,
/s/ Edward T. Harvey
---------------------------------
Edward T. Harvey
Page 18 of 20 Pages
Exhibit Index on Page 9
<PAGE> 1
EXHIBIT 6
Letter Agreement between
Quad-C, Inc. and Larry J. Harris
dated March 12, 1998
Mr. Larry J. Harris
10221 Southwest 143rd Street
Miami, Florida 33176
Dear Larry:
Reference is made to our letter to you dated the date hereof with respect
to our proposal in connection with your bid to acquire Pollo Tropical, Inc.
This letter agreement confirms your agreement that in recognition of the
undertaking set forth in our proposal and the effort and expense we will be
incurring with respect thereto, you will work exclusively with Quad-C, Inc.,
and Quad-C, Inc. will work exclusively with you, in seeking to effect the
acquisition, unless and until this letter agreement is terminated.
You further agree that, if there is a public announcement that the Board
of Directors of Pollo Tropical, Inc. has formed a Special Committee to consider
your offer, in the event an agreement of sale, merger or recapitalization is
entered into by Pollo Tropical, Inc. within 90 days of the date hereof with a
party other than Quad-C, Inc. providing for the conversion of the outstanding
common stock of Pollo Tropical, Inc. into cash or securities of another issuer
and such transaction is consummated at an effective price per share above
$10.00, then upon consummation of such transaction you shall pay to Quad-C,
Inc. the lesser of (i) Quad-C, Inc.'s reasonable documented direct out-of-pocket
expenses, including expenses paid by Quad-C, Inc. to its financial, legal and
other advisors, in connection with this transaction, or (ii) (A) 50% of the
proceeds received by you in excess of $10.00 per share in connection with the
conversion of Pollo Tropical, Inc. common stock held by you in such
transaction, minus (B) $375,000.
Page 19 of 20 Pages
Exhibit Index on Page 9
<PAGE> 2
Mr. Larry J. Harris
Page 2
This letter agreement will terminate upon the earlier to occur of (i)
termination by Quad-C, Inc. of its proposal for the acquisition of Pollo
Tropical, Inc. or (ii) 60 days from the date hereof. Each of the parties agrees
to negotiate in good faith during the next 60 days to reach a mutually
satisfactory agreement regarding the terms of a transaction between you and the
undersigned.
Sincerely,
/s/ Edward T. Harvey
------------------------
Edward T. Harvey
Agreed:
/s/ Larry J. Harris
- -------------------------------
Larry J. Harris
Page 20 of 20 Pages
Exhibit Index on Page 9
