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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO _____________.
COMMISSION FILE NO. 0-22422
POLLO TROPICAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 65-0100964
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
7300 NORTH KENDALL DRIVE, 8TH FLOOR, MIAMI, FLORIDA 33156
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (305) 670-7696
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK (PAR VALUE $.01 PER SHARE)
(TITLE OF CLASS)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this form 10-K. [X]
The aggregate market value of voting stock held by non-affiliates of
the Registrant as of March 13, 1998 was approximately $75,773,000 based on the
$9.25 closing sale price for the Common Stock on the NASDAQ National Market
System on such date. For purposes of this computation, all executive officers
and directors of the Registrant have been deemed to be affiliates. Such
determination should not be deemed to be an admission that such directors and
officers are, in fact, affiliates of the Registrant.
The number of shares of Common Stock of the Registrant outstanding as
of March 13, 1998 was 8,191,687.
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The following items of the Registrant's Form 10-K for the year ended December
28, 1997 are hereby amended to read in their entirety as follows:
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
<S> <C> <C>
Larry J. Harris 37 Chairman and Chief Executive Officer
Stuart I. Harris 44 Vice Chairman and Secretary
Nicholas A. Castaldo 46 President, Chief Operating Officer and Director
William C. Drew 38 Executive Vice President, Chief Financial Officer
Glenn Rozansky 40 Vice President, Real Estate and Development
William Walton 60 Vice President of Operations
Ronald L. Miller 54 Director
Craig M. Nash 44 Director
Alan Vituli 56 Director
Clayton E. Wilhite 52 Director
</TABLE>
LARRY J. HARRIS co-founded the Company in 1988 and has served as the
Chairman and Chief Executive Officer since the Company's inception (and as the
President from the Company's inception through September 1995). From 1982 to
1989, Mr. Harris was an officer and director of Food Spot Corporation ("Food
Spot"), a privately-held corporation which operates a convenience store chain in
South Florida and is controlled by members of Mr. Harris's family. Mr. Harris
continues to serve as a director of Food Spot. Mr. Harris is a graduate of the
Florida International University School of Hospitality Management.
STUART I. HARRIS, M.D., PH.D. co-founded the Company in 1988 and has
served as an officer and director since that time. Since 1995, Dr. Harris has
been President of Seaview Research, Inc., a medical research company. From 1989
to 1995, Dr. Harris was employed by South Florida Bioavalability Clinic, Inc.
where he served as Medical Director. From 1988 to 1989, Dr. Harris was an
Assistant Professor of Medicine at the University of Miami School of Medicine
and from 1984 to 1988, he was a Medical Staff Fellow at the National Heart, Lung
and Blood Institute of the National Institutes of Health. Dr. Harris, who is the
brother of Larry J. Harris, also serves as a director of Food Spot.
NICHOLAS A. CASTALDO has been the Company's President since October
1995 and the Company's Chief Operating Officer since November 1, 1996. He was
elected to the Board of Directors at the Company's meeting of shareholders in
May 1996. Prior to joining the Company and since August 1993, he was employed as
Vice President of Marketing of Denny's Inc. From 1986 to 1993, Mr. Castaldo was
employed by S & A Restaurant Corp., which includes the Steak & Ale and
Bennigan's restaurant chains, and ultimately served as Senior Vice President of
Marketing and Business Development. Mr. Castaldo's career spans 20 years and
includes management positions at Burger King, Citicorp, and Clairol, Inc. He is
a graduate of St. John's University and Harvard University's Graduate School of
Business.
WILLIAM C. DREW has been the Company's Vice President and Chief
Financial Officer since April 1996 and Executive Vice President since January
1998. Prior to joining the Company, Mr. Drew served, in 1995, as Chief Financial
Officer for G. Neil Companies, a direct marketing company of products for human
resource professionals. From 1990 through 1994, Mr. Drew was Chief Financial
Officer of Theater Acquisition Company, an international circuit of movie
theaters. From 1988 to 1990 Mr. Drew was Chief Financial Officer for G.L. Homes,
a real estate developer and from 1983 to 1988 Mr. Drew was employed with Ernst &
Young, LLP as an audit manager. Mr. Drew is a CPA and graduate of the University
of South Florida.
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GLENN ROZANSKY has been Vice President, Real Estate and Development
since 1992. From 1986 until joining the Company, Mr. Rozansky served as Vice
President of Rozansky Development Company, a real estate company which developed
retail and other commercial properties. From 1981 to 1986, Mr. Rozansky was
Project Manager at Rozansky and Kay Construction Company. Mr. Rozansky is a
graduate of Vanderbilt University. Mr. Rozansky resigned his position with the
Company effective December 28, 1997.
WILLIAM WALTON was the Company's Vice President of Operations since
November 1996 until his death in January 1998. Prior to that and since 1992 he
was the Company's Director of Training and the Director of Human Resources,
Quality Assurance and Personnel. From 1986 to 1992 Mr. Walton served with
Marriott Corporation as Area Manager for Wag's Restaurant and Director of
Conversions for their restaurant division.
RONALD L. MILLER has been a director of the Company since November
1993. Mr. Miller has been President of Miller Advisory Corp., a firm
specializing in mergers and acquisitions and the private placement of capital,
since October 1989. From 1977 to 1989, Mr. Miller was Senior Vice
President-Corporate Finance of Raymond James and Associates, Inc., an investment
banking firm, and ultimately served as head of its Corporate Finance Department.
Mr. Miller is Chairman of the Board of Directors of Provider Solutions, Inc., a
computer software company serving the home healthcare industry, hospitals and
nursing homes. Mr. Miller is also a member of the Board of Directors of Boca
Raton Capital Corp., an investment banking firm. Miller Advisory Corp. has
served as an advisor to the Company since March 1993.
CRAIG M. NASH has been a director of the Company since November 1993.
Mr. Nash is President and Chief Executive Officer of Interval International,
Inc. ("Interval"). He has been associated with Interval since 1978. Interval is
in the resort and travel business. Mr. Nash is also an attorney and has been an
active participant in the legislative and regulatory concerns of the American
Resort Development Association ("ARDA") for over a decade. Mr. Nash serves as a
member of the Board of Directors, as well as a member of the Executive
Committee, of ARDA.
ALAN VITULI has been a director of the Company since November 1993.
Since 1986, Mr. Vituli has been Chairman and Chief Executive Officer of Carrols
Corporation, an owner and operator of franchised Burger King restaurants. From
1983 to 1985, Mr. Vituli was a managing director of Smith Barney, Harris Upham
responsible for certain types of nonconventional financings. From 1973 to 1983,
he was a partner with Coopers & Lybrand in New York City.
CLAYTON E. WILHITE has been a director of the Company since August
1996. Mr. Wilhite has been Chairman of Thurloe Holdings, L.L.C., a firm that
invests in marketing-driven and consumer-focused retail businesses with
multi-unit outlet operations or the potential thereof, since it was founded in
August 1996. He has over 25 years of experience in the advertising industry,
both domestically and abroad, and presently serves as a marketing consultant to
new ventures. From August 1988 to July 1996, Mr. Wilhite served as President and
Vice Chairman of North American operations of the international advertising
agency, D'Arcy Masius Benton & Bowles. Mr. Wilhite also serves as a member of
the board of directors of Carrols Corporation, an owner and operator of
franchised Burger King restaurants. Mr. Wilhite earned his B.A. in Political
Science and his M.B.A. from the University of Michigan.
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COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's outstanding shares of
Common Stock, to file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of Common
Stock. Such persons are required by SEC regulation to furnish the Company with
copies of all such reports that they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required to be filed, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners have been complied with.
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ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the aggregate compensation paid to the
Company's Chief Executive Officer and each of the Company's other executive
officers whose total annual salary and bonus was $100,000 or more (the Chief
Executive Officer and such other executive officers are sometimes referred to
herein as the "Named Executive Officers") with respect to the fiscal year ended
December 28, 1997:
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION (1) COMPENSATION
------------------------------ ---------------------------
RESTRICTED SECURITIES
FISCAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARD OPTIONS COMPENSATION
- --------------------------- ---- ------ ----- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Larry J. Harris 1997 $200,000 $180,000 -0- -0-
Chairman of the Board 1996 $250,000 $ -0- -0- -0-
and Chief Executive Officer 1995 $250,000 $ -0- -0- -0-
Nicholas A. Castaldo 1997 $250,000 $125,000 -0- -0-
President, Chief Operating 1996 $250,000 $ 50,000 -0- -0-
Officer and Director 1995 $ 62,500 $ -0- $112,500(2) 200,000 -0-
William Carl Drew 1997 $135,000 $ 40,500 -0- -0-
Executive Vice President, 1996 $ 87,000 $ 15,000 30,000 -0-
Chief Financial Officer
Glenn Rozansky(3) 1997 $135,000 $ 25,000 -0- $65,000(5)
Vice President, Real Estate and 1996 $135,000 $ -0- -0- -0-
Development 1995 $135,000 $ -0- 5,000 -0-
William Walton 1997 $ 90,000 $ 22,500 20,000 -0-
Vice President, Operations(4) 1996 $ 66,000 $ 9,500 -0- -0-
1995 $ 60,000 $ -0- -0- -0-
</TABLE>
(1) The columns for "Other Annual Compensation" and "LTIP Payouts" have been
omitted because there is no compensation required to be reported in such
columns. The aggregate amount of perquisites and other personal benefits
provided to each Named Executive Officer is less than the lesser of $50,000
or 10% of the total of annual salary and bonus of such officer.
(2) At December 28, 1997, the number and value of restricted stock holdings was
25,000 shares and $214,075, respectively.
(3) Mr. Rozansky resigned effective December 28, 1997.
(4) Mr. Walton served as the Company's Vice President of Operations until his
death in January 1998.
(5) Represents amount accrued for payment in connection with Mr. Rozansky's
resignation.
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OPTION GRANTS TABLE
The following table sets forth certain information concerning options
granted during the 1997 fiscal year to the Named Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
SECURITIES TOTAL OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OF FOR OPTION TERM
OPTIONS EMPLOYEES BASE PRICE EXPIRATION ---------------------------
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---------- ----------- -------------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
William Walton (1) 20,000 40% $4.50 June 2005 49,260 122,215
</TABLE>
(1) None of the options granted to Mr. Walton during 1997 are exercisable as Mr.
Walton passed away prior to any vesting of these options.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth certain information concerning options
exercised during the 1997 fiscal year and unexercised stock options held in each
case by the Named Executive Officers as of the end of the 1997 fiscal year.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
NUMBER OF OPTIONS AT 1997 OPTIONS AT 1997
SHARES FISCAL YEAR-END FISCAL YEAR-END
ACQUIRED ON VALUE EXERCISABLE(E) EXERCISABLE(E)
NAME EXERCISE REALIZED UNEXERCISABLE(U) UNEXERCISABLE(U)
- ---- ----------- -------- ---------------- ----------------
<S> <C> <C> <C> <C>
Larry J. Harris -0- $ -0- 80,025(E) $ -0-(E)
-0-(U) -0-(U)
Nicholas A. Castaldo -0- -0- 30,000(E) 121,890(E)
170,000(U) 690,719(U)
William Carl Drew -0- -0- 4,000(E) 16,252(E)
26,000(U) 105,638(U)
William Walton (1) -0- -0- 9,100(E) 36,963(E)
20,334(U) 82,617(U)
Glenn Rozansky -0- -0- 44,333(E) 228,640(E)
1,667(U) 6,773(U)
</TABLE>
(1) Mr. Walton served as the Company's Vice President of Operations until his
death in January 1998. Mr. Walton's vested options are exercisable by his
estate.
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DIRECTOR COMPENSATION
The Company's Board of Directors is divided into three classes. Each
class of directors serves staggered three-year terms or until their successors
are elected and qualified. The Company pays each director who is not an employee
of the Company an annual retainer of $12,500 plus (a) $1,000 for each Board of
Directors meeting, or separately held committee meeting, attended in person and
(b) $500 for each Board of Directors, or separately held committee meeting, in
which directors participate by telephone conference call. The Company reimburses
all directors for expenses incurred in connection with their services as
directors. In addition, each director who is not an employee of the Company
generally receives options to purchase 15,000 shares of Common Stock (which vest
equally over three years) in connection with this initial election to the Board
of Directors and options to purchase an additional 3,000 shares (which vest
equally over three years) for each year of service thereafter under the
Company's 1995 Directors' Stock Option Plan ( the "1995 Directors Plan").
EMPLOYMENT AGREEMENTS
In September 1995, the company entered into an employment agreement
with Nicholas A. Castaldo to serve as the Company's President and such agreement
was amended on May 7, 1997 (collectively, the "Agreement"). The Agreement is for
an initial term expiring on September 30, 1998. It may be extended by the
Company for successive additional one-year terms. Pursuant to the agreement, Mr.
Castaldo received a base annual salary of $250,000. Mr. Castaldo is eligible for
bonuses of up to 40% of his base salary based upon the achievement of certain
individual and corporate performance standards. Mr. Castaldo also received (i)
200,000 stock options with an exercise price of $4.50 per share, which options
vest over four years commencing September 30, 1997, and (ii) 25,000 shares of
restricted stock, which vest over three years commencing September 30, 1998.
Additionally, he receives a monthly car allowance. Mr. Castaldo has also agreed
not to compete with the Company during his employment with the Company and for a
period of two years following his termination of employment with the Company.
Nicholas A. Castaldo's employment agreement provides that so long as he
is employed by the Company and is in compliance with this agreement, the Board
of Directors will take all action necessary to nominate him to serve as a
director of the Company. He was first elected to the Board of Directors at the
meeting of Shareholders in May 1996. There are no other arrangements or
understandings with the Company with respect to the selection of officers and
directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Alan Vituli and Craig M. Nash are members of the Compensation
Committee. Alan Vituli is the Chairman and Chief Executive Officer of Carrols
Corporation, with which the Company had an exclusive franchise development
agreement. See "Item 13. Certain Relationships and Related Transactions -
Related Party Agreement."
LONG-TERM INCENTIVE AND PENSION PLAN
The Company has no long-term incentive or pension plans.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The three principal components of compensation the Company provides to
its executive officers are salary, bonus and stock (in the form of options or
restricted stock). These components are designed to facilitate fulfillment of
the compensation objectives of the Company's Board of Directors and the
Compensation Committee, which objectives include (i) attracting, motivating and
retaining competent and highly qualified management in a competitive
environment, (ii) recognizing individual initiative and achievement, (iii)
rewarding management for short and long-term accomplishments, and (iv) aligning
management compensation with the achievement of the Company's goals and
performance objectives, including earnings growth.
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The Compensation Committee endorses the position that equity ownership
by management is beneficial in aligning management's and shareholders' interests
in the enhancement of shareholder value. This alignment is amplified by the
extensive holdings by management of Company Common Stock and stock options. Base
salaries for new management personnel are determined initially by evaluating the
responsibilities of the position held and the experience of the individual, and
by reference to the competitive marketplace for managerial talent, including a
comparison of base salaries for comparable positions at similar companies of
comparable sales and capitalization. Annual bonuses are determined and awarded
by evaluating the performance of the executive officer, the performance of the
Company (and the executive officer's contribution to such performance), the
competitive marketplace, compliance with specific requirements in employment
agreements and the responsibilities assumed by the executive officer consistent
with the policies enumerated herein. The Compensation Committee is finalizing a
structured senior executive officer bonus plan that factors in both a
quantitative measure of the Company's performance and an objective measure of
the officers performance. The plan is expected to be finalized during 1998.
CHIEF EXECUTIVE OFFICER COMPENSATION
For the 1997 fiscal year, Larry J. Harris, the Chairman of the Board
and Chief Executive Officer of the Company received $200,000 in salary and
$180,000 in bonus. The Compensation Committee did not award Mr. Harris any
stock-based compensation because, as one of the Company's largest shareholders,
the Compensation Committee believed that Mr. Harris' interests were already
aligned with those of the shareholders of the Company.
STOCK OPTIONS
During the 1997 fiscal year, the Company granted an aggregate of 20,000
options to purchase Common Stock to its executive officers. The grant was
approved by the Compensation Committee, based upon a recommendation by the
Company's Chief Executive Officer. The grant was at $4.50 per share which was
higher than the market price of the Common Stock on the date of the grant.
In December 1993, the Internal Revenue Service issued proposed
regulations concerning compliance with Section 162(m) generally disallows a
public company's deduction for compensation to any one employee company's
shareholders. None of the Named Executive Officers presently receives, and the
Compensation Committee does not anticipate that any of such persons will
receive, annual cash compensation in excess of the $1.0 million cap provided in
Section 162(m). Each of the Company's stock options and stock award plans is in
compliance with the requirements of Section 162(m).
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PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Company's Common Stock with the cumulative total shareholder return on The
NASDAQ Composite Stock Index and The Media General Restaurant Industry Stock
Index commencing on October 19, 1993 (the first day the Common Stock began
trading on The NASDAQ Stock Market) and ended December 28, 1997. The graph
assumes a $100 investment on October 19, 1993 in each of Pollo Tropical, Inc.
Common Stock., The NASDAQ Stock Market Index and the Media General Restaurant
Index.
10/19/93 12/31/93 12/30/94 12/29/95 12/29/96 12/31/97
-------- -------- -------- -------- -------- --------
Pollo Tropical, Inc. $100 $102 $50 $22 $11 $43
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Nasdaq Stock
Market Index $100 $100 $97 $138 $170 $208
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Media General
Restaurant Index $100 $103 $93 $127 $128 $134
- --------------------------------------------------------------------------
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the March 27, 1998, information with
respect to the beneficial ownership of the Company's Common Stock by (i) the
Company's Chief Executive Officer and each of the other "Named Executive
Officers" (as defined in "Executive Compensation - Summary Compensation Table"
in Item 11), (ii) each director of the Company, (iii) all directors and
executive officers of the Company as a group and (iv) each holder of five
percent (5%) or more of the Company's outstanding shares of Common Stock. The
Company is not aware of any beneficial owner of more than five percent of the
outstanding shares of Common Stock other than as set forth in the following
table.
<TABLE>
<CAPTION>
AMOUNT
AND NATURE PERCENT OF
OF BENEFICIAL OUTSTANDING
NAME OF BENEFICIAL OWNER(1) OWNERSHIP(2) SHARES
- --------------------------- ------------- -----------
<S> <C> <C>
Larry J. and Molly Harris(3) 1,227,181 15.0%
Stuart I. and Mary Harris(4) 1,326,762 16.2%
Nicholas A. Castaldo(5) 56,000 *
William Carl Drew(6) 35,000 *
Glenn Rozansky(7) 150,736 1.8%
William Walton(8) 9,100 *
Ronald L. Miller(9) 87,263 1.1%
Craig M. Nash(10) 23,500 *
Alan Vituli(11) 24,154 *
Clayton E. Wilhite(12) 6,000 *
All directors and executive officers as a group
(10 persons) 2,945,696 36.0%
Dimensional Fund Advisors, Inc.(13)
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401 509,000 6.2%
* Less than 1%
</TABLE>
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(1) Unless otherwise indicated, the address of each of the beneficial owners
identified is c/o Pollo Tropical, Inc. 7300 North Kendall Drive, 8th Floor,
Miami, Florida 33156.
(2) Unless otherwise indicated, each person has sole voting and investment
power with respect to the shares indicated. Except as noted below, the
number of shares indicated includes shares of Common Stock subject to stock
options granted pursuant to the Company's 1993 Stock Option Plan, the
Company's 1995 Stock Option Plan and the Company's 1995 Directors' Stock
Option Plan that are presently exercisable or exercisable within 60 days.
(3) The number of shares indicated (i) excludes approximately 300,918 shares of
Common Stock held in trust for the benefit of Larry and Molly Harris'
children, with respect to which Mr. And Mrs. Harris disclaim beneficial
ownership, and (ii) includes 80,025 shares of Common Stock issuable to Mr.
Harris upon exercise of presently exercisable options.
(4) The number of shares indicated (i) excludes approximately 198,879 shares of
Common Stock held in trust for the benefit of Stuart and Mary Harris'
children, with respect to which Dr. and Mrs. Harris disclaim beneficial
ownership, (ii) includes 1,248, 442 shares of Common Stock owned by Harris
Family investments, Ltd., a family limited partnership of which Harris
Family Investments, Ltd., is the sole general partner and 24,970 shares of
Common Stock owned by Harris Family Investments, Inc. Because of its power
to vote, control and dispose of such shares, Harris Family Investments,
Inc. may be deemed to be the beneficial owner, Dr. and Mrs. Harris are the
only shareholders, directors and officers of all of such shares, of all of
such shares beneficially owned by Harris Family Investments, Inc., and
(iii) includes 53,350 shares of Common Stock issuable upon exercise of
presently exercisable options.
(5) The number of shares indicated (i) includes 25,000 shares of restricted
Common Stock awarded to Mr. Castaldo pursuant to the Company's 1995
Restricted Stock Award Plan, which vest over three years commencing
September 30, 1998 and for which Mr. Castaldo has voting power, (ii)
includes 1,000 shares owned directly by Mr. Castaldo, (iii) includes 30,000
shares of Common Stock issuable upon exercise of presently exercisable
options, and (iv) excludes 170,000 shares of Common Stock issuable pursuant
to stock options granted to Mr. Castaldo which become exercisable over
three years, commencing September 30, 1998.
(6) The number of shares indicated (i) includes 25,000 shares owned directly,
(ii) includes 10,000 shares of Common Stock issuable upon exercise of
presently exercisable options, (iii) excludes 20,000 shares of Common Stock
issuable pursuant to stock options granted Mr. Drew which become
exercisable over two years, commencing April 15, 1999, and (iv) excludes
10,000 shares of Common Stock issuable pursuant to stock options granted to
Mr. Drew which become exercisable over three years, commencing February 4,
1999.
(7) The number of shares indicated (i) includes 109,736 shares owned directly,
and (ii) includes 41,000 shares of Common Stock issuable upon exercise of
presently exercisable options. Glenn Rozansky resigned effective December
28, 1997.
(8) The number of shares indicated includes 9,100 shares of Common Stock
issuable upon exercise of presently exercisable options, which are
exercisable by Mr. Walton's estate. Mr. Walton served as the Company's Vice
President of Operations until his death in January 1998.
(9) The number of shares indicated (i) includes 2,000 shares owned directly,
(ii) includes 10,000 shares owned by Sheila Miller, his wife, (iii)
includes 55,263 shares owned by Miller Advisory Corp. Pension Plan and
Trust, of which Mr. Miller is the sole shareholder, (iv) includes 20,000
shares issuable upon exercise of presently exercisable options held by Mr.
Miller and (v) excludes 4,000 shares of Common Stock issuable pursuant to
stock options granted to Mr. Miller which become exercisable over two
years, commencing May 31, 1998.
(10) The number of shares indicated (i) includes 20,000 shares issuable upon
exercise of presently exercisable options, (ii) includes 1,500 shares owned
directly, (iii) includes 2,000 shares owned by his wife, and (iv) excludes
4,000 shares of Common Stock issuable pursuant to stock options granted to
Mr. Nash which become exercisable over two years, commencing May 31, 1998.
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<PAGE> 12
(11) The number of shares indicated (i) includes 24,154 shares issuable upon the
exercise of presently exercisable options, and (ii) excludes 4,000 shares
of Common Stock issuable pursuant to stock options granted to Mr. Vituli
which become exercisable over two years, commencing May 31, 1998.
(12) The number of shares indicated (i) includes 6,000 shares issuable upon the
exercise of presently exercisable options, (ii) excludes 10,000 shares of
Common Stock awarded to Mr. Wilhite pursuant to the Company's 1995
Directors' Stock Option Plan which become exercisable over two years,
commencing August 12, 1998, and (iii) excludes 2,000 shares of Common Stock
issuable pursuant to stock options granted to Mr. Wilhite which become
exercisable over two years, commencing May 22, 1999.
(13) The number of shares indicated includes (i) 359,800 shares owned directly,
(ii) 70,300 shares owned by DFA Investment Dimensions Group, Inc., and (ii)
78,900 shares owned by The DFA Investment Trust Company, as set forth in
the Schedule 13G delivered to the Company in February 1998, and not
independently verified.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATED PARTY AGREEMENT
In December 1994, the Company entered into an exclusive franchise
development agreement with Carrols Corporation, a privately held company which
is the largest franchisee of Burger King. The Company received $120,000 in
initial franchise fees during the 1994 fiscal year from Carrols Corporation. No
payments were due or made during the 1995 and 1996 fiscal years. In April 1997,
the Company recognized $25,000 for forfeitures of exclusivity fees when the
franchise development agreement with Carrols Corporation was terminated. Alan
Vituli, a director of the Company and a member of the Company's Compensation
Committee, is the Chairman and Chief Executive Officer of Carrols Corporation.
Clayton Wilhite serves as a member of the board of directors of Carrols
Corporation.
During Fiscal 1997, the Company entered into an agreement to purchase
certain rights relating to parking, exclusivity and option terms for $150,000
from Verde Properties Limited Company ("Verde Properties"). Larry Harris, the
Company's Chairman and Chief Executive Officer and Stuart Harris, the Company's
Vice Chairman and Secretary, partly own Verde Properties.
RELATED PARTY LEASE
The Company leases the land on which its Dadeland restaurant is located
from Verde Properties. The lease expires in 2009, subject to three five-year
renewal periods at the Company's option. The lease provides for a monthly rental
of $8,050 in 1996 and $8,050 in 1997, plus sales tax, increasing every five
years to $10,646 per month for the final five-year period of the initial term,
and obligates the tenant to pay real estate taxes. Under the terms of the lease,
the Company paid rents to Verde Properties of $91,350 in the fiscal year ended
December 31, 1995, $96,600 in the fiscal year ended December 29, 1996 and
$96,600 in the fiscal year ended December 28, 1997. The assets of the restaurant
are collateralized under the terms of the lease.
The Company believes that the terms of the foregoing arrangements are
at least as favorable as those that it could obtain from non-affiliated third
parties. All business transactions with affiliates of the Company require the
approval of a majority of the Company's non-employee directors and must be on
terms no less favorable than could be obtained from non-affiliated third
parties.
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<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Miami,
State of Florida, on April 24, 1998.
POLLO TROPICAL, INC.
By: /s/ LARRY J. HARRIS
------------------------------------
Larry J. Harris
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ LARRY J. HARRIS Chairman and Chief April 24, 1998
- -------------------------------- Executive Officer
Larry J. Harris (Principal Executive
Officer)
/s/ STUART I. HARRIS Vice Chairman and Secretary April 24, 1998
- --------------------------------
Stuart I. Harris
/s/ NICHOLAS A. CASTALDO President, Chief Operating April 24, 1998
- -------------------------------- Officer and Director
Nicholas A. Castaldo
/s/ WILLIAM CARL DREW Executive Vice President April 24, 1998
- -------------------------------- and Chief Financial Officer
William Carl Drew
/s/ VIVIAN LOPEZ-BLANCO Controller April 24, 1998
- --------------------------------
Vivian Lopez-Blanco
/s/ RONALD L. MILLER Director April 24, 1998
- --------------------------------
Ronald L. Miller
/s/ CRAIG M. NASH Director April 24, 1998
- --------------------------------
Craig M. Nash
/s/ ALAN VITULI Director April 24, 1998
- --------------------------------
Alan Vituli
/s/ CLAYTON WILHITE Director April 24, 1998
- --------------------------------
Clayton Wilhite
</TABLE>
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