EXHIBIT 10.22
OPTION AGREEMENT
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THIS OPTION AGREEMENT ("Agreement") made as of the 17th day of February,
1997, by and among Terrace Holdings, Inc., a Delaware corporation (the
"Optionor"), and Xxxxxx X. Xxxxx and Xxxxxxxx X. Xxxxx (individually and
collectively, the "Optionee").
RECITALS
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WHEREAS, the Optionor is the owner of all of the issued and outstanding
Stock of The Lasko Companies, Inc. and A&E Management, Inc. and is or will be
the owner of all of the issued and outstanding stock of a subsidiary to be
formed in which all of the business of the Optionor's operations currently
conducted under the name "The Lasko Family Kosher Tours" will continue to be
conducted (each of such companies are hereinafter individually and collectively
referred to as the "Company" and the stock of each Company is hereinafter
individually and collectively referred to as the "Option Stock"); and
WHEREAS, the Optionee may desire to acquire all of the Option Stock or all
or substantially all of the business and assets (the "Subject Business") of the
Company (the "Subject Acquisition"); and
WHEREAS, the Optionee and Optionor each believe that the Subject
Acquisition on the terms and conditions herein set forth will be in the best
interests of the stockholders of the Optionor, and the Optionor is willing to
grant to the Optionee the right, on the terms and conditions set forth in this
Agreement, to acquire the Option Stock or the Subject Business as the Optionee,
in the Optionee's sole discretion; and
WHEREAS, in accordance with the provisions of, and as part of the
consideration of the transactions consummated pursuant to the provisions of,
that certain Asset Acquisition Agreement by and between Optionor, or its
assignee, and DownEast Frozen Desserts LLC, dated as of the 9th day of December,
1996, and amended as of February 7, 1997 (the "Acquisition Agreement"), Optionor
is hereby granting the Option (hereinafter defined);
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements set forth, and other good and valuable considerations,
the receipt and adequacy of which are hereby acknowledged, the parties,
intending to be legally bound, do hereby agree as follows:
1. The Option. Optionee shall have the right (the "Call" or the "Option")
during the Option Period to purchase all but not less than all of either (i) the
Option Stock at the Option Price or (ii) the Subject Business at the Purchase
Price.
For purposes of this Option Agreement, the following terms shall have the
following respective meanings:
(a) The term "Option Period" shall mean (i) the period during which
the Option is exercisable which shall commence on April 1, 1998 (or
earlier, as provided below) and end on the earlier of (i) four years after
the date hereof, or (ii) the voluntary surrendering or cancellation hereof
by Optionee.
(b) The terms "Option Price" and "Purchase Price" shall mean and refer
to the price to be paid by Optionee for the Subject Acquisition. The
Option Price (which is the price for the Option Stock) and the Purchase
Price (which is the price for the Subject Business) shall each be the fair
market value of the Subject Acquisition at the time the Option is
exercised, and shall be subject to the acceptance of such fair market value
determination by Optionee and shall be subject to the prior approval and
recommendation thereof by a committee of disinterested directors of the
Optionor appointed therefor. Such fair market value shall be determined by
an independent investment banking firm or other appropriate financial
services entity expert in and engaged for such purpose at Optionor's sole
expense, determining the fair market value of the Option Stock or Subject
Business and such Option Price or Purchase Price (the "Fairness Opinion").
1. Exercise.
(a) The Option shall be exercisable by the Optionee, or either of
them, upon the first to occur of (i) termination of either of their
respective employments by Optionor regardless of the reason for such
termination, (ii) April 1, 1998, which is the date immediately subsequent
to the date on which the Optionor's Annual Report for fiscal 1997 on Form
10-KSB is required to be filed with the Securities and Exchange Commission,
(iii) the date on which Optionor's common stock is no longer listed for
quotation on the NASDAQ Stock Market, or (iv) any attempt by Optionor to
sell any of the Option Stock or any Subject Business to any party or entity
other than Optionee. At any time as the Option is exercisable hereunder,
the Optionee may exercise the Call, in whole but not in part, by giving
written notice (the "Exercise Notice") to the
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Optionor prior to 5:00 p.m., Florida time, on the last day of the Option
Period. The Exercise Notice shall specify whether the Call is being
exercised with respect to the Option Stock or the Subject Business. If the
call is exercised with respect to the Subject Business, the Optionor and
the Optionee will execute and deliver the Agreement to Sell and Purchase, a
copy of which is attached hereto as Attachment A. If the Call is exercised
with respect to the Option Stock, the Optionor and the Optionee will
execute an agreement selling the Option Stock and containing
representations and warranties customarily found in such an agreement and
similar in terms and conditions to Attachment A.
(b) If the Optionor attempts to sell or notifies the Optionee of the
Optionor's intent to sell all or any part of the Subject Business or the
Option Stock to a bona-fide third party, the Optionor shall specify in such
notice all of the terms and conditions of such sale, and then, and only in
such event, the following shall be applicable:
(i) The Optionee shall have a period of sixty days from the
receipt of such attempt or notice within which to notify the Optionor
that it elects to exercise the Option;
(ii) If the Optionee does not exercise the Option within such
sixty day period, the Optionor shall be free to sell the Subject
Business or the Option Stock to such bona-fide third party solely on
the terms and conditions specified in the notice. Any proposed sale
or other transfer by the Optionor of the Subject Business or the
Option Stock for any price less than that at, or on any terms and
conditions other than those by which, the Optionee could have
purchased the Subject Business or the Option Stock pursuant to the
provisions hereof shall be subject to the first right in the Optionee
to purchase the Subject Business or the Option Stock at such lesser
price, subject to such other terms and conditions, and Optionee shall
have a period of thirty days from the receipt of such notice within
which to notify the Optionor that the Optionee elects to purchase the
Subject Business or the Option Stock on such other terms and
conditions. To assure that the intent of these provisions will be
carried out, it is expressly agreed that the Optionor will provide in
any agreement or document, of any kind or nature, relating to the sale
or other transfer of the Subject Business or the Option
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Stock to any bona-fide third party that such offer, agreement or other
document is subject to the provisions hereof.
2. Representations and Warranties. The Optionor represents and warrants
that it owns and will own all of the Option Stock and the Subject Business
throughout the Option Period, free and clear of all encumbrances and will, in
the event the Call is exercised, deliver to the Optionee good and marketable
title to the Option Stock and the Subject Business, free and clear of all
encumbrances. The Optionor covenants and agrees that it will not, during the
Option Period, transfer any of the Option Stock or the Subject Business except
pursuant to this Agreement.
3. Company Revenues, Expenses and Income. If the Optionee exercises the
Option to purchase the Subject Business, at or prior to the closing of the
Agreement to Sell and Purchase (Attachment A hereto), Optionor shall cause the
books, records and financial statements of the Company for the fiscal year in
which the Option is exercised to reflect only the direct revenues, expenses,
income, charges and similar matters directly related to the operation of the
Subject Business and no corporate overhead in such fiscal year items shall be
allocable thereto except for the following:
(a) no more than 80% of the compensation paid to or accrued for the
Optionee shall be allocable to the Subject Business; and
(b) a percentage of the legal and accounting fees equal to the
percentage that the revenues of the Subject Business bear to the total
revenues of the Optionor in the aggregate, shall be allocable to the
Subject Business.
4. Closing. Payment for the Option Stock or the Subject Business
purchased (the "Closing") will be made, against delivery of the certificates
representing the Option Stock, or, the Subject Business, by appropriate
instruments of transfer, including but not limited to warranty bills of sale,
certificates evidencing all the shares of capital stock of the Company with
stock powers duly endorsed in blank, signature guaranteed, attached, or such
other appropriate instruments, on a date not later than sixty days following the
later of the giving of the Exercise Notice or the receipt of the Fairness
Opinion, as the Optionee shall specify in the Exercise Notice, at the offices of
Xxxxxxx & Xxxxxxx, P.C., 00 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000, or such other place as shall be mutually agreed between the parties.
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5. Public Announcements. Until such time as may be mutually agreed upon
by the parties to this Agreement, neither party hereto shall, without the
approval of the other party, make or cause to be made any press release or other
public announcement concerning the transactions contemplated by this Agreement
except and as to the extent required by law or regulation, including without
limitation applicable federal and state securities laws and regulations.
6. Expenses. Except as otherwise expressly set forth herein, the
Optionor shall pay or reimburse expenses of the Optionee incident to the
performance and enforcement of this Agreement (including all fees and expenses
of respective counsel, accountants and other consultants, advisors and
representatives), whether or not the transactions contemplated hereby are
consummated.
7. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements, arrangements, covenants, promises, conditions, understandings,
inducements, representations and negotiations, expressed or implied, written or
oral, between them as to such subject matter.
8. Specific Performance; Other Rights and Remedies. The parties
recognize that certain of their rights under this Agreement are unique and,
accordingly, in addition to such other remedies as may be available to any of
them at law or in equity, the parties shall have the right to enforce their
rights hereunder by actions for injunctive relief and specific performance to
the extent permitted by law, without bond.
9. Waivers; Amendments. Any amendments to or modifications of this
Agreement or any waivers of requirements or breaches shall be made only with the
written consent of the party entitled to the benefit thereof. Any such waiver
shall not operate as a further or continuing waiver hereunder, nor shall any
failure to enforce or require strict performance operate as a waiver hereunder
except as is expressly set forth herein and no such waiver shall be effective
unless in writing.
10. Assignments; Successors and Assigns. This Agreement shall not be
assignable by any party without the prior written consent of the other;
provided, however, that notwithstanding the foregoing, the Optionee shall have
the right to designate an Affiliate or Affiliates to receive the Option Stock or
the Subject Business or to enter into the Agreement to Sell and Purchase or any
other agreement to purchase the Subject Business.
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This Agreement shall be binding and inure to the benefit of the parties
hereto and their respective heirs, successors and permitted assigns, including
without limitation successors by operation of law pursuant to any merger,
consolidation or sale of assets involving any of the parties.
11. Notices. All notices and other communications permitted or required
under this Agreement shall be given in writing and shall be (a) mailed by First
Class or Express Mail, postage prepaid, (b) sent by facsimile or other form of
rapid transmission, confirmed thereafter as in (a) above, or (c) personally
delivered to the receiving party. All such notices and communications shall be
mailed, sent or delivered as follows:
If to the Optionor, at:
Terrace Holdings, Inc.
0000 Xxxxxxxx Xxxx
Xxxxx X-000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx & Xxxxxxx, P.C.
00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
If to the Optionee, at:
Xxxxxx X. Xxxxx and Xxxxxxxx X. Xxxxx
c/o 0000 Xxxxx Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
or to such other persons as the party to receive such communication or notice
may have designated by written notice to the other party. Notice shall be
effective when given, except in the case of notice by mail, which shall become
effective two business days after mailing provided there is written proof of
such mailing.
12. Severability. The invalidity, illegality or unenforceability of any
of the provisions of this Agreement shall
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not invalidate the balance hereof, but this Agreement shall be reformed and
construed as if such invalid, illegal or unenforceable provision(s) were not
contained herein. The parties shall endeavor in good faith negotiations to
replace the invalid, illegal or unenforceable provision(s) with valid, legal and
enforceable provisions, the economic effect of which comes as close as possible
to that of the invalid, illegal or unenforceable provision(s).
13. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument binding upon the parties hereto.
14. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by and construed under the laws
of the State of Florida without giving effect to any choice or conflicts of laws
provisions.
15. Consent to Jurisdiction and Service. Each of the parties hereby
consents and submits to the jurisdiction of the courts of the State of Florida
and of any federal court located in said jurisdiction in connection with any
actions or proceedings brought against it by any other party to this Agreement
arising out of or relating to this Agreement and hereby agrees that any and all
claims in respect of any such act or proceeding may be heard and determined in
any such court.
The Optionor hereby irrevocably designates and appoints Xxxxxx X. Xxxxx as
its authorized agent and to receive service of process in the State of Florida
when and as such legal actions or proceedings may be brought and such service of
process shall be deemed complete upon the date of delivery thereof to the
Optionor. It is understood that a copy of said process served on such agent as
soon as practicable will be forwarded to the Optionor, at its address set forth
herein, but its failure to receive such copy shall not affect in any way the
service of said process on said agent as the agent of the Optionor.
16. Inspection and Information. The Optionee may on or prior to the
Closing hereunder, through its representatives and counsel, make such
investigation of the business, properties and assets, and of the financial legal
condition of the Optionor as it may deem necessary or advisable, and the
Optionor agrees, at its expense, to cooperate therewith and make all persons and
documents relevant to such inquiry reasonably available.
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17. Section Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning of
interpretation of hits Agreement.
18. Certain Terminology. Whenever used herein, the singular number shall
include the plural, the plural shall include the singular, and the use of any
gender shall include all genders, except where the context otherwise requires,
reference to "this section" or words of similar import shall be deemed to refer
to the entire section and not a particular subsection and references to
"hereunder," "herein," "hereof" or words of similar import shall be deemed to
refer to the entire Agreement and not the particular section or subsection.
19. Further Acts. The parties hereto each agree that at any time, and
from time to time, before and after the consummation of the transactions
contemplated by this Agreement, it/he will do all such things and execute and
deliver all such agreements, assignments, instruments, other documents and
assurance, as any other party or its/his counsel reasonably deems necessary or
desirable in order to carry out the terms and conditions of this Agreement and
the transactions contemplated hereby or to facilitate the enjoyment of any of
the rights created hereby or to be created hereunder.
20. No Presumption. This Agreement shall be construed without regard to
any presumption or other rule requiring construction against the party causing
this Agreement to be drafted.
21. Definitions. As used herein, unless context otherwise requires, the
following terms shall have the following respective meanings:
(a) "Acquisition Agreement" is defined in the preamble of this
Agreement.
(b) "Affiliate" of any person shall mean any person which directly or
indirectly owns or controls or is under common ownership or control with or
is controlled by such person.
(c) "Call" is defined in Section 1 of this Agreement.
(d) "Company" is defined in the Recitals to this Agreement.
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(e) "Fairness Opinion" is defined in Section 1 of this Agreement.
(f) "Option" is defined in Section 1 of this Agreement.
(g) "Optionee" is defined in the Preamble to this Agreement.
(h) "Optionor" is defined in the Preamble to this Agreement.
(i) "Option Price" is defined in Section 1 of this Agreement.
(j) "Purchase Price" is defined in Section 1 of this Agreement.
(k) "Subject Acquisition" is defined in the Recitals to this
Agreement.
(l) "Subject Business" is defined in the Recitals to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement
as of the date first above written, which date coincides with the closing of the
transactions consummated in accordance with the Acquisition Agreement.
TERRACE HOLDINGS, INC.
By:___________________________
______________________________
Xxxxxx X. Xxxxx
______________________________
Xxxxxxxx X. Xxxxx
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