SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14(a)-12
TERRACE FOOD GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of filing fee (check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
<PAGE>
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
TERRACE FOOD GROUP, INC.
1351 N.W. 22nd Street
Pompano Beach, Florida 33069
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
September 15, 1999
----------------------
To the Stockholders of
TERRACE FOOD GROUP, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
TERRACE FOOD GROUP, INC., a Delaware corporation (the "Company"), will be held
at 1351 N.W. 22nd Street Pompano Beach, Florida 33069, on Wednesday, September
15, 1999 at 9:00 a.m., local time, for the following purposes:
1. To elect six members of the Board of Directors;
2. To approve an amendment to the Company's 1997 Stock Option
Plan that would increase from 175,000 to 350,000 the number of
shares reserved for issuance pursuant to the exercise of stock
options granted or to be granted thereunder;
3. To ratify the appointment of Deloitte & Touche LLP as
independent auditors of the Company for the fiscal year ending
December 31, 1999; and
4. To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on August 16, 1999
are entitled to notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors
/s/ Steven Shulman
Steven Shulman
Chairman of the Board
Dated: August 19, 1999
Pompano Beach, Florida
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL
MEETING YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE THAT IS PROVIDED,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
-3-
<PAGE>
TERRACE FOOD GROUP, INC.
1351 N.W. 22nd Street
Pompano Beach, Florida 33069
-------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
September 15, 1999
-------------------------
INTRODUCTION
This Proxy Statement is furnished to the stockholders of TERRACE FOOD
GROUP, INC., a Delaware corporation (the "Company"), in connection with the
solicitation by the Board of Directors of the Company of Proxies for the Annual
Meeting of Stockholders to be held at 1351 N.W. 22nd Street Pompano Beach,
Florida 33069, on September 15, 1999 at 9:00 a.m., local time, or at any
adjournments thereof. The approximate date on which this Proxy Statement and the
accompanying Proxy will be first sent or given to stockholders is August 19,
1999.
RECORD DATE AND VOTING SECURITIES
The voting securities of the Company outstanding on August 16, 1999
consisted of 948,342 shares of Common Stock, $.01 par value (the "Common
Stock"), entitling the holders thereof to one vote per share, and 17,310 shares
of Series C Preferred Stock, $.001 par value (the "Preferred Stock"), entitling
the holders thereof to one vote per share. Only stockholders of record as of
that date are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. A majority of the outstanding shares of Common Stock and
Preferred Stock present in person or by proxy is required for a quorum.
PROXIES AND VOTING RIGHTS
Shares of Common Stock and Preferred Stock represented by Proxies, in
the accompanying form of Proxy, which are properly executed, duly returned and
not revoked, will be voted in accordance with the instructions contained
therein. If no specification is indicated on the Proxy, the shares represented
thereby will be voted (i) for the election as directors of the persons who have
been nominated by the Board of Directors, (ii) to approve an amendment to the
Company's 1997 Stock Option Plan, (iii) to ratify the appointment of Deloitte &
Touche LLP as independent auditors of the Company for the fiscal year ending
December 31, 1999 (iv) and for any other matter that may properly come before
the Annual Meeting in accordance with the judgment of the person or persons
voting the Proxy.
A plurality of the total votes cast by holders of Common Stock and
Preferred Stock, voting together as a single class, is required for the election
of directors. The affirmative vote of a majority of the votes cast by holders of
Common Stock and Preferred Stock voting together as a single class, is required
to approve an amendment to the Company's 1997 Stock Option Plan and to ratify
the appointment of Deloitte & Touche LLP as independent auditors of the Company
for the fiscal year ending December 31, 1999.
The execution of a Proxy will in no way affect a stockholder's right to
attend the Annual Meeting and vote in person. Any Proxy executed and returned by
a stockholder may be revoked at any time thereafter if written notice of
revocation is given to the Secretary of the Company prior to the vote to be
taken at the Annual Meeting or by execution of a subsequent Proxy which is
presented to the Annual Meeting, or if the stockholder attends the Annual
Meeting and votes by ballot, except as to any matter or matters upon which a
vote shall have been cast pursuant to the authority conferred by such Proxy
prior to such revocation. Broker "non-votes" and the shares of Common
<PAGE>
Stock and Preferred Stock as to which a stockholder abstains are included for
purposes of determining the presence or absence of a quorum at the Annual
Meeting. A broker "non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner. Broker "non-votes" are not
included in the tabulation of the voting results on the election of directors or
issues requiring approval of the majority of the votes present and, therefore,
do not have the effect of votes in opposition in such tabulations. An abstention
from voting on a matter or a Proxy instructing that a vote be withheld has the
same effect as a vote against a matter since it is one less vote for approval.
All expenses in connection with this solicitation will be borne by the
Company. It is expected that solicitations will be made primarily by mail, but
regular employees or representatives of the Company may also solicit Proxies by
telephone, telegraph or in person, without additional compensation. The Company
will, upon request, reimburse brokerage houses and persons holding shares in the
names of their nominees for their reasonable expenses in sending solicitation
material to their principals.
Unless otherwise indicated, all share information in this Proxy
Statement gives effect to a one-for-ten reverse stock split of the Company's
outstanding Common Stock effected March 15, 1999.
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<PAGE>
SECURITY OWNERSHIP
The voting securities of the Company outstanding on June 30, 1999
consisted of 948,342 shares of Common Stock and 17,310 shares of Preferred
Stock. The following table sets forth information concerning ownership of the
Company's Common Stock, as at June 30, 1999, by (i) each director, (ii) each
executive officer, (iii) all directors and executive officers as a group, and
(iv) each person who, to the knowledge of management, owned beneficially more
than 5% of the Common Stock. The address each such person is in care of the
Company, 1351 N.W. 22nd Street, Pompano Beach, Florida 33069.
<TABLE>
<CAPTION>
Number of
Shares
Number of Shares of Preferred
of Common Stock Stock
Directors, Nominees, Executive Beneficially Beneficially
Officers and 5% Stockholders Owned(1)(2) Percent(2) Owned Percent
- ---------------------------- ----- ------- ----- -------
<S> <C> <C>
Jonathan S. Lasko 100,833(3) 10.1% - --
Richard Power 80,917(4) 8.2% 1,154 5.9%
Steven Shulman 137,951(5) 13.6% - --
Fred A. Seigel 33,042(6) 3.4% 577 2.9%
Houssam T. Aboukhater 21,000(7) 2.2% - --
Salvatore J. Bommarito 40,000(8) 4.0% 2,308 11.8%
William P. Rodrigues 5,833(9) 0.6% - --
A-One-A Wholesale Produce, Inc. 50,000(10) 5.3% - --
Michael Feinberg 57,500(11) 6.0% - --
All Directors and Executive Officers as a Group 419,576 36.2% 4,039 23.3%
</TABLE>
- ------------------------------------
(1) In each case the beneficial owner has sole voting and investment power
except that 380,000 shares held by Jonathan S. Lasko are held in joint
tenancy with his wife Ellen J. Lasko
(2) Calculations assume that all options and warrants held by each
director, director nominee and executive officer and exercisable within
60 days after June 30, 1999 have been exercised.
(3) Includes 25,000 shares held for the benefit of Jordana Lasko, a minor
and includes 49,333 shares of common stock issuable upon exercise of
options and warrants exercisable within 60 days after June 30, 1999.
(4) Includes 36,167 shares of common stock issuable upon exercise of
options and warrants exercisable within 60 days after June 30, 1999.
(5) Includes 68,001 shares of common stock issuable upon exercise of
options and warrants exercisable within 60 days after June 30, 1999.
(6) Includes 12,583 shares of common stock issuable upon exercise of
options and warrants exercisable within 60 days after June 30, 1999.
(7) Includes 1,000 shares of common stock issuable upon exercise of options
and warrants exercisable within 60 days after June 30, 1999.
(8) Includes 40,000 shares of common stock issuable upon exercise of
options and warrants exercisable within 60 days after June 30, 1999.
(9) Includes 3,333 shares of common stock issuable upon exercise of options
and warrants exercisable within 60 days after June 30, 1999.
(10) These shares were issued in connection with the Company's acquisition
of the business and assets of the named company which was previously
owned equally by Virgil Scarbrough and Scott Davis. Messrs. Scarbrough
and Davis are Officers of A-One-A Produce & Provisions, Inc., one of
the Company's wholly-owned subsidiaries.
(11) Includes 7,500 shares of common stock issuable upon exercise of options
and warrants exercisable within 60 days after June 30, 1999.
-3-
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Directors of the Company hold office until the next annual meeting of
stockholders or until their successors are elected and qualified. Directors
shall be elected by a plurality of the votes cast, in person or by proxy, at the
Annual Meeting. If no contrary instructions are indicated, Proxies representing
Common Stock and Preferred Stock will be voted for the election of Steven
Shulman, Jonathan S. Lasko, Richard Power, Fred A. Seigel, Houssam T. Aboukhater
and Salvatore J. Bommarito, the six nominees of the Board of Directors. All of
the nominees are currently directors of the Company. The Company does not expect
that any of the nominees will be unavailable for election, but if that should
occur before the Annual Meeting, the Proxies will be voted in favor of the
remaining nominees and may also be voted for a substitute nominee or nominees
selected by the Board of Directors.
A plurality of the total votes cast by holders of Common Stock and
Preferred Stock, voting together as a single class, is required for the election
of directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ELECTION OF EACH OF THE NOMINEES
MANAGEMENT
Directors and Executive Officers
The directors and executive officers of the Company and their positions
with the Company are as follows:
<TABLE>
<CAPTION>
Name Age Director Since Position
- ---- --- -------------- --------
<S> <C> <C> <C>
Steven Shulman 58 February 1997 Chairman of the Board of Directors, President and
Chief Executive Officer
Jonathan S. Lasko 28 September 1997 Executive Vice-President, Secretary, Chief Operating
Officer and Director
Richard Power 50 February 1997 Director
Fred A. Seigel 42 February 1998 Director
Houssam T. Aboukhater 28 August 1998 Director
Salvatore J. Bommarito 50 May 1999 Director
William P. Rodrigues, 55 - Vice-President - Finance, Treasurer and Chief
Jr. Financial Officer
</TABLE>
STEVEN SHULMAN, age 58, has served as the Chairman of the Board of
Directors since February, 1997, and since February 18, 1998, he has also served
as the Chief Executive Officer of the Company. He is also a Managing Director of
Latona Associates, Inc., an investment banking firm involved in advisory
services and principal investments. He serves as a director of a number of
public and private companies and is currently a director of WPI Group, Inc.,
Ermanco Incorporated, Beacon Capital Partners, L.P. and Corinthian Directory,
Inc. Mr. Shulman holds an M.S. in Industrial Management from the Stevens
Institute of Technology, where he currently serves as Vice Chairman of its
Board.
JONATHAN S. LASKO, age 28, has been a director of the Company since
September, 1994, and its Chief Operating Officer and Secretary since August,
1995. He has also been the Company's Executive Vice-President since May, 1993.
Mr. Lasko was the vice-president of A&E
-4-
<PAGE>
Management Corp. from October 27, 1993, The Lasko Companies, Inc. from May 11,
1995 and Prime Concern Kosher Foods, Inc. from December, 1995 until such
businesses were sold in 1998. He is also President and Chief Executive Officer
of A-One-A Produce. Mr. Lasko attended Bernard Baruch College of City University
of New York, New York in 1990 and 1991. From January, 1990 until October, 1993,
when he became a full-time employee of the Company, Mr. Lasko was a part-time
employee of the Company and managed its food and beverage operations for its
Passover holiday vacation.
RICHARD POWER, age 50, has served as a director of the Company since
February, 1997. Currently Mr. Power is Executive Vice President of Tyco
International Ltd., a New York Stock Exchange listed corporation. He was
Vice-President of Tyco Fire and Safety Services from May, 1997 to March, 1999,
and the President of Carlisle Plastics, Inc. from January to May, 1997, both
divisions of Tyco International Ltd. He served as a consultant to Tyco in
Mergers and Acquisitions from 1995 through 1996, Vice President and Chief
Financial officer of Abex Inc. a New York Stock Exchange listed corporation
between 1994 and 1995,and was the Managing Director of a private investment
company from 1992 through 1994. Mr. Power holds a B.S. and an M.B.A. from Boston
College.
FRED A. SEIGEL, age 43, has served as a Director since February 18,
1998. Mr. Seigel was the founder, President and Director of Energy Capital
Partners, a privately-held, Boston-based company organized in September, 1993,
providing financing for energy efficiency projects throughout the United States.
The company was sold to ABB Structured Finance (Americas) in February, 1999. Mr.
Seigel continues to serve as its President. From January, 1988 to October, 1994,
he served as a limited partner in two large-scale energy co-generation projects
in New York state, representing a total investment of $350,000,000. From March,
1984 to November, 1986, Mr. Seigel was a project manager for Wheelabrator-Frye,
Inc., in that company's Resource Recovery Division. From January, 1981 to
January, 1993, he was the Director of the Executive Office for Energy for the
State of New Hampshire. Mr. Seigel holds a B.A. from New England College,
Henniker, New Hampshire.
HOUSSAM T. ABOUKHATER, age 28, has served as a Director of the Company
since August, 1998. Mr. Aboukhater is Vice President of Prestolite Wire, a
privately-held, Southfield, Michigan-based company, which is a leading producer
of telecommunications wire. From 1993 to 1996, Mr. Aboukhater served as Vice
President of Balcrank Products, an automotive components division of the General
Chemical Group, a New York Stock Exchange listed corporation. Mr. Aboukhater
also currently serves as Director of Market Analysis for Latona Associates, an
investment banking firm involved in advisory services and principal investments.
Mr. Aboukhater holds a B.A. in business administration from the University of
San Diego, San Diego, California.
SALVATORE J. BOMMARITO, age 50, has served as a Director of the Company
since May, 1999. Mr. Bommarito is the founder of Twin Capital, Inc./New Street
Investments, L.P. a New York city-based investment banking firm, organized in
January 1994, which services include advising on mergers and acquisitions and
private placements and providing general corporate advice. From June 1990 to
January 1994, Mr. Bommarito served as a Managing Director at Chemical
Securities, Inc. in New York where he was founder and co-head of its high yield
bond underwriting business. From December 1984 to June 1990, Mr. Bommarito
served as a Managing Director at Bankers Trust Company in New York where he was
the Senior Banker in the Merchant Banking Group which services included advising
on mergers and acquisitions, private placement and venture capital. Mr.
Bommarito holds a M.B.A. from Fordham University and an A.B. from the University
of Notre Dame.
WILLIAM P. RODRIGUES, JR., age 56, was appointed Vice-President --
Finance and Chief Financial Officer on July 18, 1998. Previously, he had been
Controller of Mueller Co., a unit of Tyco International, Inc. since 1989. From
1976 to 1987, he was Vice-President -- Finance and Controller of Clearfield
Cheese Company, a subsidiary of H.P. Hood Inc., a Boston-based dairy products
company. Mr. Rodrigues holds an A.B. degree from Boston College.
Meetings and Committees
The Board of Directors of the Company held five meetings during the
fiscal year ended December 31, 1998. From time to time during such fiscal year,
the members of the Board acted by unanimous written consent. The Company has
standing Compensation and Audit Committees. The Compensation Committee reviews,
analyses and makes recommendations to the Board of Directors
-5-
<PAGE>
regarding compensation of Company directors, employees, consultants and others,
including grants of stock options. The current members of the Compensation
Committee are Steven Shulman and Richard Power. The Compensation Committee held
no formal meetings in 1998, however they approved certain actions by written
consent. The Audit Committee reviews, analyzes and makes recommendations to the
Board of Directors with respect to the Company's compensation and accounting
policies, controls and statements, and coordinates with the Company's
independent public accountants. The current members of the Audit Committee are
Steven Shulman, Richard Power, Fred Seigel, Salvatore Bommarito and Houssam T.
Aboukhater. The Audit Committee held one formal meeting in 1998. The Company
does not have a standing nominating committee or a committee that serves
nominating functions. These functions are performed by the Board of Directors of
the Company as a whole.
Executive Compensation
The following table sets forth, for the fiscal years indicated, all
compensation awarded to, earned by or paid to the chief executive officer of the
Company ("CEO") and the executive officers of the Company (other than the CEO)
who were executive officers of the Company during the fiscal year ended December
31, 1998 and whose salary and bonus exceeded $100,000 with respect to the fiscal
year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------------------------- -----------------
Year
Ended Other Annual
Name and December Annual Compensation
Principal Position 31 Salary($) Bonus($) ($) Options(#)
- ------------------------------------- ------------ ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C>
Samuel H. Lasko 1996 $125,000 - $ 9,517(2)(3) -
President and Treasurer(1) 1997 $150,000 - $22,502(2) -
1998 $ -0- - $ -0- -
Jonathan S. Lasko 1996 $ 70,000 - $ 7,255(2) 8,000(5)
Executive Vice President, Secretary 1997 $ 95,000 - $21,272(2) 12,500(5)
and Chief Operating Officer 1998 $125,000 - $14,058 -
Steven Shulman 1997 $ -0- - $ -0- 13,000(5)
Chief Executive Officer(4) 1998 $ -0- - $ -0- 15,000(5)
</TABLE>
- ---------------------
(1) Resigned effective August 26, 1998.
(2) Represents amounts paid for lease of automobile, automobile insurance
and health insurance.
(3) Does not include repayments of loans from A&E Management Corp., The
Lasko Companies, Inc. and the Company.
(4) Steven Shulman became Chief Executive Officer of the Company in
February, 1998, subsequent to the resignation of the Company's former
CEO, Milton Namiot. Mr. Shulman became President of the Company in
August, 1998, subsequent to the resignation of Samuel H. Lasko.
(5) Represents options granted to directors and executive officers under
the Company's 1997 Stock Option Plan.
-6-
<PAGE>
The following table sets forth certain information regarding stock
option grants made to Messrs. Shulman, Jonathan S. Lasko and Dr. Samuel H. Lasko
during the fiscal year ended December 31, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/sh) Date
- -------------------------------------- ----------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C>
Steven Shulman 15,000 26.3% $11.25 Aug-Nov,
2008
Jonathan S. Lasko 8,000 11.4% $11.41 Aug-Nov,
2008
Dr. Samuel H. Lasko -0- -0- -0- -0-
</TABLE>
The following table sets forth certain information regarding stock
options held by Messrs. Shulman and Jonathan S. Lasko as of December 31, 1998.
AGGREGATED OPTION EXERCISES
DURING THE MOST RECENTLY COMPLETED
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
No. of Value (1) of
Securities Unexercised in
Underlying The-Money
Unexercised Options at FY-
Shares Options at FY- End($)
Acquired on Value End (#) Exercisable/
Name Exercise(#) Realized Exercisable/ Unexercisable
Unexercisable
<S> <C> <C> <C> <C>
Steven Shulman -0- -0- 6,333/21,667 $0/0
Jonathan S. Lasko -0- -0- 41,667/16,333 $0/0
Board of Directors Compensation
</TABLE>
The Company does not currently compensate directors who are also
executive officers of the Company for their service on the Board of Directors.
Under current Company policy, each non-employee Director of the Company does not
receive a fee for each Board meeting or Board committee meeting attended. Under
the terms of the Company's 1997 Stock Option Plan, Directors are eligible to
receive grants of options to purchase shares of common stock in connection with
their service on the Board of Directors. Directors are also reimbursed for their
expenses incurred in attending meetings of the Board of Directors.
Employment Agreements
The Company has a five-year employment agreement, ending August 31,
2000, with Jonathan S. Lasko. Under his employment agreement, Mr. Lasko is to
receive an annual base salary of $115,000 for the fourth year and $125,000 for
the fifth year of his employment. On February 18, 1998, the Board of Directors
accepted the recommendation of its Compensation Committee and increased Jonathan
S. Lasko's base compensation for 1998 to $125,000. In connection with the sale
by Company of its Deering Ice Cream subsidiary, by amendments dated February 17,
1997, to his employment agreement, Jonathan Lasko voluntarily surrendered his
one-time performance based
-7-
<PAGE>
option to purchase up to an aggregate of 75,000 shares of common stock, and in
lieu thereof, the Company issued to him, warrants to purchase 37,500 shares of
its common stock at an exercise price of $11.875 per share. The employment
agreement also entitles Mr. Lasko to the use of an automobile and to employee
benefit plans, such as group life, health, hospitalization and life insurance.
Under the employment agreement, employment terminates upon death or total
disability of the employee and may be terminated by the Company for "cause,"
which is defined, among other things, as the willful failure to perform duties,
embezzlement, conviction of a felony, or breach of the employee's covenant not
to compete or maintain confidential certain information.
In August, 1998, Dr. Samuel H. Lasko resigned as an officer and
director of the Company. Dr. Lasko also surrendered his one-time performance
based option to purchase up to an aggregate of 75,000 shares of common stock in
connection with the sale by the Company and, in lieu thereof, received warrants
to purchase 37,500 shares of common stock at an exercise price of $11.875 per
share.
Long-term Incentive and Pension Plans
During the year ended December 31, 1998, the Company adopted a defined
contribution 401(k) plan in accordance with the Internal Revenue Code. Employees
are eligible to participate in the 401(k) plan upon completion of three months
of service provided they are over 21 years of age. Participants may defer up to
15% of eligible compensation. Currently, the Company does not provide matching
contributions under the 401(k) Plan.
Other
No director or executive officer is involved in any material legal
proceeding in which he is a party adverse to the Company or has a material
interest adverse to the Company.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission"). Officers, directors and greater than ten percent
shareholders are required by the Commission's regulations to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge,
except for three Form 4's for Steven Shulman and that were filed late, all
Section 16(a) forms that were required to be filed during the fiscal year ended
December 31, 1998 were filed in compliance with the applicable requirements of
Section 16(a).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the acquisition of DownEast Frozen Desserts, LLC in
February 1997, the Company issued to each of Samuel H. Lasko and Jonathan S.
Lasko (collectively the "Laskos") warrants to purchase 37,500 shares of the
Company's common stock at $11.875 per share. Messrs. Laskos surrendered their
respective performance options to purchase up to 75,000 shares of the Company's
common stock, contained in their respective employment agreements. In addition,
they entered into an option agreement to purchase the businesses, assets or
capital stock of three of the Company's wholly owned subsidiaries, The Lasko
Family Kosher Tours, Inc., The Lasko Companies, Inc. and A&E Management, Inc. at
the fair market value thereof to be independently determined. The option was
exercised by Samuel H. Lasko alone and on March 13, 1998, he purchased The Lasko
Family Kosher Tours, Inc. and A&E Management, Inc. for consideration equal to
$575,000 in accordance with"fair value" and "fairness" opinions from an
-8-
<PAGE>
independent valuation firm. The sale was ratified by the shareholders at the
1998 Annual Meeting on August 26, 1998.
A-One-A Produce was purchased by the Company in 1997 from Virgil
Scarbrough and Scott Davis, who are now employed by A-One-A Produce. A-One-A
Produce leases approximately 55,000 square feet at 1351 N.W. 22nd Street,
Pompano Beach, Florida, for use as its principal offices and warehouse. The
lease term is for ten years expiring July 31, 2007, with two five year options
to extend at an annual rental of approximately $222,000. The Pompano Beach
facility is owned by an affiliate of Messrs. Scarbrough and Davis. The lease for
this facility was negotiated as part of the A-One-A Produce acquisition.
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO 1997 STOCK OPTION PLAN
The Board of Directors of the Company has unanimously approved for
submission to a vote of the shareholders a proposal to amend the 1997 Stock
Option Plan (the "Plan") to provide an increase in the number of shares reserved
for issuance pursuant to the exercise of options granted thereunder (the
"Amendment").
Effective March 15, 1999, the shareholders of the Company approved a
one-for-ten reverse stock split of the Company's outstanding Common Stock.
Giving effect to such stock split, there are now 175,000 shares of Common Stock
reserved for issuance pursuant to the exercise of options granted under the
Plan. The Plan, as proposed to be amended, would authorize the issuance of a
maximum of 350,000 shares of Common Stock pursuant to the exercise of options
granted thereunder. As of the date hereof, stock options to purchase 154,850 of
the 175,000 shares of Common Stock currently available under the Plan have been
granted to directors, officers and employees of the Company. Furthermore, the
Company has additional options, warrants and other securities convertible or
exercisable into 1,584,943 shares of Common Stock. No options to purchase shares
of Common Stock under the Plan have been exercised through the date hereof.
The following is the proposed Amendment to the Plan:
Section 2.5 of the Plan shall be amended in its entirety to read as
follows:
"2.5 Shares Subject to the Plan"
"The maximum number of shares of Common Stock which
may be subject to Stock Options granted under the Plan shall
be 350,000. The Stock Options shall be subject to adjustment
in accordance with Section 4.1, as appropriate, and shares to
be issued upon exercise of Stock Options may be either
authorized and unissued shares of Common Stock or authorized
and issued shares of Common Stock purchased or acquired by the
Company for any purpose. If a Stock Option or portion thereof
shall expire or is terminated, canceled or surrendered for any
reason without being exercised in full, the unpurchased shares
of Common Stock which were subject to such Stock Option or
portion thereof shall be available for future grants of Stock
Options under the Plan."
-9-
<PAGE>
The Board of Directors believes it is in the Company's and its
shareholders' best interests to approve the Amendment because it will provide
the Company with greater flexibility in granting future options and help the
Company attract and retain key personnel.
The 1997 Stock Option Plan and Participants
The purposes of the Plan are to enable the Company to attract and
retain persons of ability as directors, officers and other key employees with
managerial, professional or supervisory responsibilities, to retain able
consultants and advisors, and to motivate such persons to use their best efforts
on behalf of the Company by providing them with an equity participation in the
Company.
Options may be granted to (i) directors, officers and other full-time
salaried employees of the Company and its subsidiaries with managerial,
professional or supervisory responsibilities, and (ii) consultants and advisors
who render bona fide services to the Company and its subsidiaries, in each case,
where the Compensation Committee determines that such officer, employee,
consultant or advisor has the capacity to make a substantial contribution to the
success of the Company. As used herein with respect to the Plan, references to
the Company include subsidiaries of the Company.
Administration of the Plan
The Plan is administered by the Compensation Committee, which is
appointed by the Company's Board of Directors, and consists of three members of
the Board of Directors (the "Committee"). Under the terms of the Plan, the
Committee will have the authority to determine, subject to the terms and
conditions of the Plan, the persons to whom options are granted, the number of
options granted to each optionee, and the terms and conditions of each option,
including its duration.
The Plan can be amended, suspended, reinstated or terminated by the
Board of Directors; provided, however, that without approval of the Company's
shareholders, no amendment shall be made which (i) increases the maximum number
of shares of Common stock which may be subject to stock options granted under
the Plan, except for specified adjustment provisions, (ii) extends the term of
the Plan, (iii) materially increases the benefits accruing to optionees under
the Plan, (iv) materially modifies the requirements as to eligibility for
participation in the Plan, or (v) will cause stock options granted under the
Plan to fail to meet the requirements of Rule 16b-3. Unless previously
terminated or extended by the Board of Directors, the Plan will terminate on
February 20, 2007.
Option Price
Under the Plan, stock options to purchase shares of Common Stock may be
granted at exercise prices not less than the fair market value of the shares as
of the date of grant.
As of June 30, 1999, 154,850 options have been granted, including
142,000 to current officers and directors.
Terms of Options
Stock options may be granted for a term of up to ten years. The Plan
provides that if a stock option, or portion thereof, expires, lapses without
being exercised or is terminated, canceled or surrendered for any reason without
being exercised in full, the unpurchased shares of Common Stock which were
subject to such stock option or portion thereof shall be available for future
grants of stock options under the Plan.
-10-
<PAGE>
Pursuant to the terms of the Plan, the option price for all options
must be paid in cash, by check, bank draft or money order payable in United
States dollars to the order of the Company, or with Common Stock of the Company
owned by the optionee and having a fair market value on the date of exercise
equal to the aggregate exercise price of the shares to be so purchased, or a
combination thereof.
Stock options granted pursuant to the Plan will not be assignable or
transferable except by will or the laws of intestate succession. Stock options
acquired pursuant to the Plan may be exercised by the optionee (or the
optionee's legal representative) only while the optionee is employed by the
Company, or within six months after termination of employment due to a permanent
disability, or within three months after termination of employment due to
retirement. The executor or administrator of a deceased optionee's estate or the
person or persons to whom the deceased optionee's rights thereunder have passed
by will or by the laws of descent or distribution shall be entitled to exercise
the option within the sixth month after the decedent's death. Stock options
expire immediately in the event an optionee is terminated with or without cause
or resigns; provided, however, in the event the Company terminates the
employment of an optionee who at the time of such termination was an officer of
the Company and had been continuously employed by the Company during the two
year period immediately preceding such termination, for any reason except "good
cause" (as defined in the Plan), each stock option held by such optionee (which
had not then previously lapsed or terminated and which had been held by such
optionee for more than six months prior to such termination) shall be
exercisable for a period of three months after such termination to the extent
otherwise exercisable during that period. All of the aforementioned exercise
periods set forth in this paragraph are subject to the further limitation that
an option shall not, in any case, be exercisable beyond its stated expiration
date.
The purchase price and the number and kind of shares that may be
purchased upon exercise of options granted pursuant to the Plan, and the number
of shares which may be granted pursuant to the Plan, are subject to adjustment
in certain events, including stock splits, recapitalizations, mergers, and
reorganizations.
Required Vote
The affirmative vote of a majority of the votes cast by holders of
Common Stock and Preferred Stock, voting together as a single class, is required
to approve an amendment to the Company's 1997 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF
THE PROPOSED AMENDMENT TO THE 1997 STOCK OPTION PLAN.
-11-
<PAGE>
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP to be the
independent auditors of the Company for the fiscal year ending December 31,
1999. Although the selection of auditors does not require ratification, the
Board of Directors has directed that the appointment of Deloitte & Touche LLP be
submitted to stockholders for ratification. If stockholders do not ratify the
appointment of Deloitte & Touche LLP, the Board of Directors will consider the
appointment of other certified public accountants. A representative of Deloitte
& Touche LLP is expected to be available at the Annual Meeting to make a
statement if such representative desires to do so and to respond to appropriate
questions.
Required Vote
The affirmative vote of a majority of the votes cast by holders of
Common Stock and Preferred Stock, voting together as a single class, is required
for ratification of the appointment of Deloitte & Touche LLP as independent
auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF
THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
-12-
<PAGE>
STOCKHOLDER PROPOSALS
To the extent required by law, any stockholder proposal intended for
presentation at next year's annual stockholders' meeting must be received at the
Company's principal executive offices prior to April 22, 2000.
OTHER MATTERS
So far as it is known, there is no business other than that described
above to be presented for action by the stockholders at the forthcoming Annual
Meeting, but it is intended that Proxies will be voted upon any other matters
and proposals that may legally come before the Annual Meeting, or any
adjustments thereof, in accordance with the discretion of the persons named
therein.
The Annual Report on Form 10-KSB for the fiscal year ended December 31,
1998, as amended, including financial statements has been mailed to stockholders
with this Proxy Statement. If, for any reason, you did not receive your copy of
the Annual Report, please advise the Company and a copy will be sent to you.
By Order of the Board of Directors
/s/ Steven Shulman
Steven Shulman
Chairman of the Board
Dated: August 19, 1999
Pompano Beach, Florida
-13-
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TERRACE FOOD GROUP, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 15, 1999
The undersigned, a stockholder of Terrace Food Group, Inc., a Delaware
corporation (the "Company"), does hereby appoint Steven Shulman and Jonathan S.
Lasko, and each of them, the true and lawful attorneys and proxies with full
power of substitution, for and in the name, place and stead of the undersigned,
to vote all of the shares of Common Stock of the Company which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Stockholders of the Company to be held at the 1351 N.W. 22nd Street Pompano
Beach, Florida 33069, on Wednesday, September 15, 1999, at 9:00 a.m., local
time, or at any adjournment or adjournments thereof.
The undersigned hereby instructs said proxies or their substitutes:
1. ELECTION OF DIRECTORS:
To vote for the election of the following directors: Steven
Shulman, Jonathan S. Lasko, Richard Power, Fred A. Seigel,
Houssam T. Aboukhater and Salvatore J. Bommarito.
TO WITHHOLD
AUTHORITY TO VOTE FOR
TO WITHHOLD ANY INDIVIDUAL
AUTHORITY TO VOTE NOMINEE(S), PRINT
FOR ____ FOR ALL NOMINEES_____ NAMES BELOW:
2. AMENDMENT TO THE COMPANY'S 1997 STOCK OPTION PLAN:
To vote for approval of the amendment to the Company's 1997
Stock Option Plan that would increase from 175,000 to 350,000
the number of shares reserved for issuance pursuant to the
exercise of stock options granted or to be granted thereunder.
FOR ____ AGAINST ____ ABSTAIN ____
3. RATIFICATION OF APPOINTMENT OF AUDITORS:
To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending
December 31, 1999.
FOR ____ AGAINST ____ ABSTAIN ____
4. DISCRETIONARY AUTHORITY:
To vote with discretionary authority with respect to all other
matters which may come before the Meeting.
FOR ____ AGAINST ____ ABSTAIN ____
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREINBEFORE
GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED (i) FOR THE ELECTION
AS DIRECTORS OF THE PERSONS WHO HAVE BEEN NOMINATED BY THE BOARD OF DIRECTORS,
(ii) FOR APPROVAL OF THE AMENDMENT TO THE COMPANY'S 1997 STOCK OPTION PLAN,
(iii) TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999 AND (iv) IN
ACCORDANCE WITH THE DISCRETION OF THE PROXIES OR PROXY WITH RESPECT TO ANY OTHER
BUSINESS TRANSACTED AT THE ANNUAL MEETING.
<PAGE>
The undersigned hereby revokes any proxy or proxies heretofore given and
ratifies and confirms that all the proxies appointed hereby, or any of them, or
their substitutes, may lawfully do or cause to be done by virtue hereof. The
undersigned hereby acknowledges receipt of a copy of the Notice of Annual
Meeting and Proxy Statement, both dated August 19, 1999.
Dated _______________________, 1999
_____________________________ (L.S.)
_____________________________ (L.S.)
Signature(s)
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH. WHEN SIGNING ON BEHALF OF A CORPORATION, YOU SHOULD BE
AN AUTHORIZED OFFICER OF SUCH CORPORATION, AND PLEASE GIVE YOUR TITLE AS SUCH.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TERRACE FOOD GROUP, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 15, 1999
The undersigned, a stockholder of Terrace Food Group, Inc., a Delaware
corporation (the "Company"), does hereby appoint Steven Shulman and Jonathan S.
Lasko, and each of them, the true and lawful attorneys and proxies with full
power of substitution, for and in the name, place and stead of the undersigned,
to vote all of the shares of Series C Preferred Stock of the Company which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of the Company to be held at the 1351 N.W. 22nd Street
Pompano Beach, Florida 33069, on Wednesday, September 15, 1999, at 9:00 a.m.,
local time, or at any adjournment or adjournments thereof.
The undersigned hereby instructs said proxies or their substitutes:
1. ELECTION OF DIRECTORS:
To vote for the election of the following directors: Steven
Shulman, Jonathan S. Lasko, Richard Power, Fred A. Seigel,
Houssam T. Aboukhater and Salvatore J. Bommarito.
TO WITHHOLD
AUTHORITY TO VOTE FOR
TO WITHHOLD ANY INDIVIDUAL
AUTHORITY TO VOTE NOMINEE(S), PRINT
FOR ____ FOR ALL NOMINEES_____ NAMES BELOW:
2. AMENDMENT TO THE COMPANY'S 1997 STOCK OPTION PLAN:
To vote for approval of the amendment to the Company's 1997
Stock Option Plan that would increase from 175,000 to 350,000
the number of shares reserved for issuance pursuant to the
exercise of stock options granted or to be granted thereunder.
FOR ____ AGAINST ____ ABSTAIN ____
3. RATIFICATION OF APPOINTMENT OF AUDITORS:
To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending
December 31, 1999.
FOR ____ AGAINST ____ ABSTAIN ____
4. DISCRETIONARY AUTHORITY:
To vote with discretionary authority with respect to all other
matters which may come before the Meeting.
FOR ____ AGAINST ____ ABSTAIN ____
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREINBEFORE
GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED (i) FOR THE ELECTION
AS DIRECTORS OF THE PERSONS WHO HAVE BEEN NOMINATED BY THE BOARD OF DIRECTORS,
(ii) FOR APPROVAL OF THE AMENDMENT TO THE COMPANY'S 1997 STOCK OPTION PLAN,
(iii) TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999 AND (iv) IN
ACCORDANCE WITH THE DISCRETION OF THE PROXIES OR PROXY WITH RESPECT TO ANY OTHER
BUSINESS TRANSACTED AT THE ANNUAL MEETING.
<PAGE>
The undersigned hereby revokes any proxy or proxies heretofore given and
ratifies and confirms that all the proxies appointed hereby, or any of them, or
their substitutes, may lawfully do or cause to be done by virtue hereof. The
undersigned hereby acknowledges receipt of a copy of the Notice of Annual
Meeting and Proxy Statement, both dated August 19, 1999.
Dated _______________________, 1999
_____________________________ (L.S.)
_____________________________ (L.S.)
Signature(s)
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH. WHEN SIGNING ON BEHALF OF A CORPORATION, YOU SHOULD BE
AN AUTHORIZED OFFICER OF SUCH CORPORATION, AND PLEASE GIVE YOUR TITLE AS SUCH.
