AMENDMENT TO ASSET ACQUISITION AGREEMENT
BY AND BETWEEN TERRACE HOLDINGS, INC.,
A DELAWARE CORPORATION,
AND DOWNEAST FROZEN DESSERTS LLC
This Amendment ("Amendment") to the Asset Acquisition Agreement dated as of
December 9, 1996 ("Agreement") is made and entered into as of the 7th day of
February, 1997, by and between Terrace Holdings, Inc., a Delaware corporation,
or its assignee under Section 13.5 of the Agreement ("THI"), and DownEast Frozen
Desserts LLC, a Delaware limited liability company whose sole business is the
ownership and operation of Xxxxxxx Ice Cream Company of Portland, Maine
(collectively "DE").
Terms not defined herein shall have the meanings ascribed to them in the
Agreement.
RECITALS
WHEREAS, subsequent to the execution of the Agreement, the parties have
determined that it is in their best interests and in the interests of their
respective shareholders and members to amend and modify certain of the terms and
conditions of the Agreement;
WHEREAS, the parties desire to proceed with the transactions contemplated
by the Agreement subject to and as modified by the terms and conditions of this
Amendment;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements of the parties in the Agreement and hereinafter set forth, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby amend the Agreement as follows:
WITNESSETH:
1. Section 3.3 of the Agreement and Exhibit 3.3 thereto are each hereby
amended to provide that the exercise price of the Warrants described therein
shall not be $2.50 but shall be the greater of $1.00 per share or the closing
sale price for THI common stock in the NASDAQ SmallCap Market on the day
immediately prior to Closing.
2. Section 4.1 of the Agreement is hereby amended to make the time of the
Closing at 10:00 a.m. (local time), February 17, 1997, as therein stated.
3. Section 6.5 of the Agreement is deleted in its entirety and the
following inserted in its place and stead:
"6.5 Submission of Transactions to Stockholder Vote Not Required. THI
has been advised that it is not required to submit the acquisition
transaction contemplated herein to its stockholders for approval. DE hereby
agrees fully to cooperate with THI and, at its expense, provide all
reasonable
assistance and documentation as may be necessary for THI fully to comply
with the applicable requirements of reporting rules promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and for the NASDAQ SmallCap Market with respect to any
required reporting of the acquisition transaction contemplated in the
Agreement for continued NASDAQ eligibility."
4. Section 6.6(a) is amended to state that 3,312,500 shares of THI common
stock are issued and outstanding.
5. Section 9.2 of the Agreement is hereby deleted in its entirety and the
following inserted in its place and stead:
"Following the Closing hereunder, Messrs. Xxxxxx Xxxxxxx and Xxxxxxx
Xxxxx shall be appointed additional members of the Board of Directors of
THI. Thereupon, the Board of Directors shall designate and appoint Xxxxxx
Xxxxxxx as Chairman of the Board, Xxxxxx Xxxxxx as Chief Executive Officer,
Xxxxxx Xxxxx as President and Xxxxxxxx Xxxxx as Chief Operating Officer.
"The parties agree that at the 1997 annual meeting of THI shareholders
they will nominate for election as directors the following seven persons:
Xxxxxx X. Xxxxx, Xxxxxxxx X. Xxxxx, Xxxxxx Xxxxxx, Xxxxxx Xxxxxxx, Xxxxx
Xxxxxxxx, Xxxxxxx Xxxxx and Xxxxxxx Xxxxx.
"Following the Closing hereunder, Xxxxxx Xxxxxx shall have direct
responsibility and authority to operate the THI subsidiary owning and
operating the Assets of DE and shall be the President and Chief Executive
Officer of such subsidiary. Following the Closing hereunder, Messrs. Xxxxxx
and Xxxxxxxx Xxxxx shall have the direct authority and responsibility to
operate the current THI operating subsidiaries or divisions (i.e., The
Lasko Companies, Inc., A&E Management, Inc. and "The Lasko Family Kosher
Tours"). Xxxxxx Xxxxx shall be the President and Chief Executive Officer of
each thereof and Xxxxxxxx Xxxxx shall be the Executive Vice President and
Chief Operating Officer of each thereof."
6. Clauses (iii) and (iv) of Section 9.5 shall each be amended to delete
the number "250,000" and insert the word "all" in each place and stead thereof.
In addition, the following sentence shall be added to the end of Section 9.5:
"With respect to the shares described in clauses (iii), (iv) and (v)
above, all of such shares, if and when registered, shall be subject to
acceptable lock-up provisions and sale restrictions for up to twelve months
with Biltmore Securities, Inc."
7. Section 10.19 of the Agreement is hereby deleted in its entirety and
the following is inserted in its place and stead:
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"10.19 Certain Agreements and Arrangements.
"10.19.1. At the Closing, THI shall issue to each of Xxxxxx X. Xxxxx and
Xxxxxxxx X. Xxxxx Warrants to purchase 375,000 shares of THI common stock, such
Warrants to be of like form and tenor as set forth in Exhibit 3.3 (as amended)
attached hereto. In consideration thereof, upon issuance of such Warrants,
Messrs. Lasko, and each of them, shall be deemed to have surrendered their
respective options to each purchase up to 750,000 shares of THI common stock,
each contained in their respective Employment Agreements, and the right to
receive such options contained in their respective Employment Agreements shall
be of no further force or effect.
"10.19.2 At the Closing, THI, Xxxxxx X. Xxxxx and Xxxxxxxx X. Xxxxx shall
each have executed an option agreement substantially in the form of Exhibit
10.19.2 attached hereto under which THI shall grant to Messrs. Lasko or their
designee(s), the option to purchase the businesses, assets or capital stock of
those entities currently conducting the businesses of THI under the names "The
Lasko Family Kosher Tours" or "Terrace-Oceanside Restaurant" or in THI's current
wholly owned subsidiaries, The Lasko Family Kosher Tours, Inc., The Lasko
Companies, Inc. and A&E Management, Inc. Such option shall be exercisable by
the Xxxxxx, or either of them, at the earlier of (i) termination of either of
their employment by THI; (ii) the regular time for the filing of the 1997 THI
annual report on Form 10-KSB (i.e., March 31, 1998); (iii) at such time as THI
securities are no longer listed on the NASDAQ Stock Market, or (iv) upon any
attempt by THI to sell any such businesses, assets or capital stock to third
parties. The option price shall be subject to the prior approval and
recommendation thereof by a committee of disinterested directors of THI
appointed therefor ("Committee") based upon the Committee's receipt of a
"fairness opinion" rendered by an independent investment banking or other firm
of similar expertise in appraising and evaluating such transactions and the
acceptance of such "fairness opinion" by Messrs. Lasko. The cost and expense of
securing such fairness opinion shall be borne by THI. The option agreement
shall be presented at the 1997 annual meeting of THI shareholders for the
affirmative vote of the majority of the shares present and voting at such
meeting.
"The option agreement further shall provide that if, under clause (iv)
above, THI shall attempt to sell such businesses to any third party (after
Messrs. Lasko shall have declined to exercise their option in connection
therewith) and such third party offers to purchase for an amount less than the
Xxxxxx would have paid had they so exercised, then THI shall immediately offer
the same to Messrs. Xxxxxx at such lesser amount and if Messrs. Lasko accept,
they shall be entitled to so purchase.
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"The option agreement shall also provide that all direct revenues and
expenses of the subject businesses, operations or corporations shall be
allocable thereto, except for the following:
"(a) no more than 80% of compensation paid or accrued for Xxxxxx
Xxxxx and Xxxxxxxx Xxxxx shall be allocable to The Lasko Family Kosher
Tours, The Lasko Companies, Inc. and A&E Management, Inc.; and
"(b) a percentage of the legal and accounting fees and overhead
equal to the percentage that the revenues of the subject businesses,
operations or corporations bear to the total of such revenues of THI,
including DE operations, shall be allocable to such businesses,
operations or corporations."
8. Exhibit 10.19 is hereby deleted in its entirety and Exhibit 10.19.2
inserted in its place and stead.
9. As hereby amended, the terms, conditions, rights and obligations of the
Agreement remain in full force and effect. Except as expressly provided in this
Amendment, any conflict or contradiction between this Amendment and the
Agreement shall be controlled by the relevant provisions of the Agreement.
IN WITNESS WHEREOF, the parties hereof have signed this Amendment to the
Agreement, or have caused this Amendment to the Agreement to be signed in their
respective names by an officer thereunder duly authorized on the date and year
first above written.
TERRACE HOLDINGS, INC.
By:
---------------------------------
Xxxxxx X. Xxxxx, President
DOWNEAST FROZEN DESSERTS, LLC
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Xxxxxx Xxxxxx, Manager
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"The option agreement shall also provide that all direct revenues and
expenses of the subject businesses, operations or corporations shall be
allocable thereto, except for the following:
"(a) no more than 80% of compensation paid or accrued for Xxxxxx
Xxxxx and Xxxxxxxx Xxxxx shall be allocable to The Lasko Family Kosher
Tours, The Lasko Companies, Inc. and A&E Management, Inc.; and
"(b) a percentage of the legal and accounting fees and overhead
equal to the percentage that the revenues of the subject businesses,
operations or corporations bear to the total of such revenues of THI,
including DE operations, shall be allocable to such businesses,
operations or corporations."
8. Exhibit 10.19 is hereby deleted in its entirety and Exhibit 10.19.2
inserted in its place and stead.
9. As hereby amended, the terms, conditions, rights and obligations of the
Agreement remain in full force and effect. Except as expressly provided in this
Amendment, any conflict or contradiction between this Amendment and the
Agreement shall be controlled by the relevant provisions of the Agreement.
IN WITNESS WHEREOF, the parties hereof have signed this Amendment to the
Agreement, or have caused this Amendment to the Agreement to be signed in their
respective names by an officer thereunder duly authorized on the date and year
first above written.
TERRACE HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Xxxxxx X. Xxxxx, President
DOWNEAST FROZEN DESSERTS, LLC
By:
----------------------------------
Xxxxxx Xxxxxx, Manager
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