SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
______________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
______________________________
Date of Report (Date of earliest event reported): April 16, 1996
GALAXY FOODS COMPANY
(Exact Name of Registrant as Specified in Charter)
Delaware) 0-1625 125-1391475
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2441 Viscount Row 32809
Orlando, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (407) 855-5500
(Former name or former address, if changed since last report.)
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Item 1. Changes in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
Not applicable.
Item 3. Bankruptcy or Receivership.
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not applicable.
Item 5. Other Events.
Private Placement of Securities
On April 16, 1996, Galaxy Foods Company (the "Company") completed a
private placement of 1,337,524 shares of the Company's common stock,
$0.01 par value (the "Common Stock"), at an aggregate price of
$2,000,000, and 4,000 shares of the Company's Series A Convertible
Preferred Stock, $0.01 par value (the "Preferred Stock" and, together with
the Common Stock sold in this transaction, the "Shares"), at an aggregate
price of $4,000,000, pursuant to the terms of a Securities Purchase
Agreement (the "Purchase Agreement") by and among the Company and
the purchasers party thereto (the "Buyers") and in accordance with an
exemption from registration under Regulation D promulgated under the
Securities Act of 1933, as amended (the "Act"). The terms of the
Preferred Stock, which are summarized below, are set forth in the
Certificate of Designations, Preferences and Rights of the Series
A Preferred Stock of the Company filed by the Company with the Secretary
of State of the State of Delaware on April 16, 1996, a copy of which is
attached as an exhibit hereto. The Shares are restricted securities which
have not been registered under the Act and may not be offered or sold in
the United States absent registration or an applicable exemption from
registration requirements. The Company intends to utilize the proceeds
raised by the above-described sale of the Shares as working capital to
increase the Company's inventory levels, support a proper marketing
campaign and fuel future growth.
The terms of the Preferred Stock provide that the holder of the Preferred
Stock shall have the right to convert such shares into shares of the
Company's Common Stock at any time after June 30, 1996 (which is the
seventy-fifth day after issuance of the Preferred Stock), at the conversion
price (the "Conversion Price") equal to 71.5% (the "Conversion
Percentage") of the Average Market Price (as defined below) of the
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Common Stock for the five consecutive trading days ending one trading
day prior to the date the notice of conversion is received from the holder by
the Company; provided, however, that in no case shall the Buyers be
permitted, in the aggregate, to hold such number of shares of Common
Stock which would exceed 4.9% of the outstanding shares of
Common Stock. The "Average Market Price" of the Common Stock is the
arithmetic average of the closing bid prices for the Common Stock
for each trading day as quoted on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") SmallCap Market
("NASDAQ SmallCap") or, if NASDAQ SmallCap is not the principal
trading market for the Common Stock, on the principal trading market for
the Common Stock, or, if market value cannot be so calculated, the average
fair market value during such period as reasonably determined in good
faith by the Company's Board of Directors (all as appropriately adjusted for
any stock dividend, stock split, or other similar transaction during such
period or between the end of such period and the date of conversion). The
number of shares of Common Stock issuable upon conversion of the Series
A Preferred Stock is determined by dividing the Stated Value of the
referred Stock, which is equal to $1,000, by the Conversion Price then in
effect.
In connection with execution of the Purchase Agreement, on April 16,
1996 the Company entered into a Registration Rights Agreement with the
Buyers pursuant to which the Company has agreed to file, within seventy-
five days after the closing of the stock purchase transaction, a registration
statement under the Act covering the resale of the Common Stock
purchased by the Buyers pursuant to the terms of the Purchase Agreement
(the "Common Shares") and the Common Stock into which the Preferred
Shares are convertible (the "Conversion Shares" and, together with the
Common Shares, the "Registrable Securities"). In the event that the
registration statement described above has not been declared effective as of
such date, or if sales cannot be made pursuant to the registration statement,
or if the Common Stock is not listed on NASDAQ SmallCap, the
NASDAQ National Market System ("NASDAQ-NMS"), the New York
Stock Exchange ("NYSE") or the American Stock Exchange ("AMEX")
(any such event, a "Damage Event"), the Company is required to make
payments to the holders of the Registrable Securities in an amount equal to
the purchase price of the Registrable Securities held by such holder (which
in the case of Conversion Shares shall be equal to the Average Market
Price of the Common Stock upon conversion of the Preferred Stock for the
five trading days ending one day prior to the conversion date) multiplied by
three-hundredths (.03) multiplied further by the sum of (i) the number of
months (prorated for partial months) by which the effectiveness of the
registration statement is delayed, (ii) the number of months that sales
cannot be made after the effective date of the registration statement, and
(iii) the number of months that the Common Stock is not listed or included
for quotation on NASDAQ SmallCap, NASDAQ-NMS, NYSE or AMEX
(such number of months, the "Damage Period"), which amount may be
paid in the form of cash or shares of Common Stock (which Common
Stock shall constitute "Damage Shares" and which shall constitute
additional Registrable Securities) based on the Average Market Price
during the five trading days ending one day prior to the date that the
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registration statement is declared effective or on which sales may resume.
In no case are Damage Shares payable if payment thereof would result in
the Buyers holding such number of shares of Common Stock which
would exceed 4.9% of the outstanding shares of Common Stock; in such an
event, cash must be paid in lieu of such shares which would violate this
provision.
In addition, pursuant to the terms of the Preferred Stock, if a Damage
Event has occurred, the Conversion Percentage of the Preferred Stock is
required to be reduced by such number of percentage points equal to three
times the number of months in the Damage Period as set forth above.
The Company has the right to redeem all or any part of the Preferred Stock
at any time subsequent to one hundred eighty days after the effective date
of the registration statement referred to above, at a redemption price of
$1,398.60 per share.
On Wednesday, April 17, 1996, the Company issued a press release
disclosing the sale of the Shares, the amount of funds raised and the
planned use of the proceeds. A copy of the press release is attached hereto
as an exhibit.
Item 6. Resignations of Registrant's Directors.
Not applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibit 4.1 Certificate of Designations, Preferences and Rights of Series
A Convertible Preferred Stock of Galaxy Foods Company, as filed
with the Secretary of State of the State of Delaware on April
16, 1996 (Filed herewith.)
Exhibit 10.74 Securities Purchase Agreement, dated April 16, 1996, by
and among Galaxy Foods Company and the buyers party thereto
(Filed herewith.)
Exhibit 10.75 Registration Rights Agreement, dated April 16, 1996, by
and among Galaxy Foods Company and the buyers party thereto
(Filed herewith.)
Exhibit 99.1 Press Release issued by the Company dated April 17, 1996
(Filed herewith.)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
GALAXY FOODS COMPANY
May 9, 1996 By: /s/ Angelo S. Morini
Name: Angelo S. Morini
Title: President
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EXHIBITS
<PAGE>
EXHIBITS INDEX
Exhibit No. Exhibit Description Page No.
4.1 Certificate of Designations, Preferences and Rights
of Series A Convertible Preferred Stock of Galaxy Foods
Company, as filed with the Secretary of State of Delaware
on April 16, 1996 (Filed herewith.)
10.74 Securities Purchase Agreement, dated April 16, 1996,
by and among Galaxy Foods Company and the buyers party
thereto (Filed herewith.)
10.75 Registration Rights Agreement, dated April 16, 1996,
by and among Galaxy Foods Company and the buyers party
thereto (Filed herewith.)
99.1 Press Release issued by the Company dated April 17,
1996 (Filed herewith.)
<PAGE>
EXHIBIT 4.1
Certificate of Designations, Preferences and
Rights of Series A Convertible Preferred Stock of
Galaxy Foods Company, as filed with the
Secretary of State of the State of Delaware on
April 16, 1996
<PAGE>
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES A CONVERTIBLE
PREFERRED STOCK
OF
GALAXY FOODS COMPANY
Galaxy Foods Company (the "Company"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does
hereby certify that, pursuant to authority conferred upon the Board of
Directors of the Company by the Certificate of Incorporation, as amended, of
the Company, and pursuant to 151 of the General Corporation Law of the State
of Delaware, the Board of Directors of the Company at a meeting duly held on
April 12, 1996, adopted resolutions providing for the designations, preferences
and relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof, of forty thousand (4,000) shares of
Series A Convertible Preferred Stock of the Company, as follows:
RESOLVED, that the Company is authorized to issue 4,000 shares of Series A
Convertible Preferred Stock (the "Preferred Shares") which shall have the
following powers, designations, preferences and other special rights:
(1) Dividends. The holders of the Preferred Shares shall not be entitled to
dividends.
(2) Conversion of Preferred Shares. The holders of the Preferred Shares
shall have the right, at their option, to convert the Preferred Shares
into shares of Common Stock on the following terms and conditions:
(a) Each Preferred Share shall be convertible at any time after the
seventy-fifth (75th) day following the date of issuance (or, if such
Preferred Share is called for redemption or compulsory conversion,
at any time up to and including, but not after, the close of business
on the fifth full business day prior to the date fixed for such
redemption or compulsory conversion, unless, in the case of
redemption, default shall be made by the Company in providing the
funds for the payment of the redemption price), into fully paid and
nonassessable shares (calculated to the nearest whole share) of
Common Stock, at the conversion price (the "Conversion Price") in
effect at the time of conversion determined as hereinafter provided;
provided, however, that in no event shall any holder be entitled to
convert Preferred Shares if, after giving effect to such conversion,
the number of shares of Common Stock beneficially owned by such
holder and all other holders whose holdings would be aggregated with
such holder for purposes of calculating beneficial ownership in
accordance with Sections 13(d) and 16 of the Securities Exchange Act
of 1934, as amended, and the regulations thereunder ("Sections 13(d)
and 16"), including, without limitation, any person serving as an
<PAGE>
adviser to any holder (collectively, the "Related Persons"), would
exceed four and nine-tenths percent (4.9%) of the outstanding shares
of Common Stock (calculated in accordance with Sections 13(d) and 16).
Common Stock issuable upon conversion of the Preferred Shares shall
not be deemed to be beneficially owned by such holder or the Related
Persons for this purpose. Each Preferred Share shall have a value
of $1,000 (the "Stated Value") for the purpose of such conversion and
the number of shares of Common Stock issuable upon conversion of each
of the Preferred Shares shall be determined by dividing the Stated
Value thereof by the Conversion Price then in effect. Every reference
herein to the Common Stock of the Company (unless a different
intention is expressed) shall be to the shares of the Common Stock of
the Company, $.01 par value, as such stock exists immediately after
the issuance of the Preferred Shares provided for hereunder, or to
stock into which such Common Stock may be changed from time to time
thereafter.
(b) The Conversion Price shall be seventy one and one-half percent
(71.5%) (the "Conversion Percentage") of the Average Market Price
(as defined below) for the Common Stock for the five (5) consecutive
trading days ending one trading day prior to the date the Conversion
Notice (as defined below) is received by the Company, subject to
adjustment as provided herein. If the registration statement (the
"Registration Statement") covering the shares of Common Stock
issuable upon conversion of the Preferred Shares required to be filed
by the Company pursuant to the Registration Rights Agreement between
the Company and initial holders of the Preferred Shares (the
"Registration Rights Agreement") has not been declared effective by
the U.S. Securities and Exchange Commission ("SEC") within seventy
five (75) days after the date of issuance of the Preferred Shares, or
if, after the Registration Statement has been declared effective by
the SEC, sales cannot be made pursuant to the Registration Statement
by reason of stop order, the Company's failure to update the
Registration Statement in accordance with the rules and regulations
of the SEC or otherwise, or if the Common Stock is not listed or
included for quotation on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") National Market System ("NASDAQ-
NMS"), the New York Stock Exchange (the "NYSE"), the American Stock
Exchange (the "AMEX"), or the NASDAQ SmallCap Market ("NASDAQ Small
Cap") then, as partial relief for the damages to the holder by reason
of any such delay in or reduction of its ability to sell the shares
of Common Stock (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Conversion Percentage
shall be reduced by a number of percentage points equal to three (3)
times the sum of: (i) the number of months (prorated for partial
months) after the end of such 75 day period and prior to the date the
Registration Statement is declared effective by the SEC; (ii) the
number of months (prorated for partial months) that sales cannot be
made pursuant to the Registration Statement (by reason of stop order,
the Company's failure to update the Registration or otherwise) after
the Registration Statement has been declared effective; and (iii) the
number of months (prorated for partial months) that the Common Stock
<PAGE>
is not listed or included for quotation on the NASDAQ-NMS, NYSE, AMEX,
or NASDAQ SmallCap after the Registration Statement has been declared
effective. (For example, if the Registration Statement becomes
effective one and one-half (1 1/2) months after the end of such 75
day period, the Conversion Percentage would be 67% until any
subsequent adjustment; if thereafter sales could not be made pursuant
to the Registration Statement for a period of two (2) months, the
Conversion Percentage would then be 61%.) If the holder converts
Preferred Shares into Common Stock and an adjustment to the
Conversion Percentage is required subsequent to such conversion, but
prior to the sale of such Common Stock by such holder, the Company
shall pay to such holder, within five (5) days after receipt of a
notice of the sale of such Common Stock from such holder, an amount
equal to the Average Market Price of the Common Stock obtained upon
conversion of such Preferred Shares for the five (5) trading days
ending one (1) trading day prior to the date of conversion multiplied
by three-hundredths (.03) times the number of months (prorated for
partial months) for which an adjustment was required. Such amount
may be paid at the Company's option in cash or Common Stock valued
based on the Average Market Price of the Common Stock for the period
of five (5) consecutive
trading days ending on the date of the sale of such Common Stock;
provided, however, that any amounts due as to that period during
which the shares are not traded or included for quotation on the
NASDAQ-NMS, NYSE, AMEX or NASDAQ SmallCap shall be paid in cash only;
provided, further, however, that in no event shall shares be issued
hereunder if, after giving effect to such issuance, the number of
shares of Common Stock beneficially owned by such holder and all
Related Persons would exceed four and nine tenths percent (4.9%) of
the outstanding shares of Common Stock (calculated in accordance with
Sections 13(d) and 16); cash shall be paid in lieu of any shares
which cannot be issued pursuant to this second provision. Common
Stock issuable upon conversion of Preferred Shares held by such
holder or the Related Persons shall not be deemed to be beneficially
owned by such holder or the Related Persons for this purpose. (For
example, if the Conversion Percentage was 67% at the time of
conversion of $1,000,000 in Stated Value of Preferred Shares (such
that the Preferred Shares were converted into Common Stock having an
Average Market Price for the applicable period in aggregate of
$1,492,537.30) and subsequent to conversion there was a further two
(2) month delay in the Registration Statement's being declared
effective, and such Common Stock was sold at the end of such two (2)
month period, the Company would pay to the holder $89,552.24 in cash
or Common Stock.)
"Average Market Price" of any security for any period shall be
computed as the arithmetic average of the closing bid prices for such
security for each trading day in such period on the NASDAQ SmallCap,
or, if the NASDAQ SmallCap is not the principal trading market for
such security, on the principal trading market for such security, or,
if market value cannot be calculated for such period on any of the
foregoing bases, the average fair market value during such period as
<PAGE>
reasonably determined in good faith by the Board of Directors of the
Company (all as appropriately adjusted for any stock dividend, stock
split, or other similar transaction during such period or between the
end of such period and the date of conversion or dividend payment, as
applicable).
(c) If the Company shall consolidate with or merge into any corporation
or reclassify its outstanding shares of Common Stock (other than by
way of subdivision or reduction of such shares) (each a "Major
Transaction"), then each Preferred Share shall thereafter be
convertible into the number of shares of stock or securities (the
"Resulting Securities") or property of the Company, or of the entity
resulting from such consolidation or merger, to which a holder of the
number of shares of Common Stock delivered upon conversion of such
Preferred Share would have been entitled upon such Major Transaction
had the holder of such Preferred Share exercised its right of
conversion and had such Common Stock been issued and outstanding and
had such holder been the holder of record of such Common Stock at the
time of such Major Transaction, and the Company shall make lawful
provision therefor as a part of such consolidation, merger or
reclassification; provided, however, that the Company shall give the
holders of the Preferred Shares written notice of any Major
Transaction promptly upon the execution of any agreement whether or
not binding in connection therewith (including without limitation a
letter of intent or agreement in principle) and in no event shall a
Major Transaction be consummated prior to seventy-five (75) days
after such notice.
(d) The Company may, at any time subsequent to one hundred eighty (180)
days after the date the Registration Statement is declared effective
by the SEC, require the holders of the Preferred Shares to convert
some or all of their Preferred Shares into Common Stock in accordance
with the terms hereof; provided, however, that in no event shall the
Company be entitled to require any holder to convert Preferred Shares
if, and no such conversion shall be effective to the extent that,
after giving effect to such conversion, the number of shares of
Common Stock beneficially owned by such holder and all Related
Persons, would exceed four and nine-tenths percent (4.9%) of the
outstanding shares of Common Stock (calculated in accordance with
Sections 13(d) and 16). Common Stock issuable upon conversion of the
Preferred Shares shall not be deemed to be beneficially owned by such
holder or the Related Persons for this purpose. The Conversion Price
for the purposes of this Section (2)(d) shall be the then applicable
Conversion Percentage of the Average Market Price for the Common
Stock for the five (5) consecutive trading days ending one day prior
to the conversion date specified in the notice of compulsory
conversion. Notice of every compulsory conversion shall be given by
mail to every holder of record of any Preferred Shares then to be
converted at least ten (10) days prior to the date fixed as the date
for the conversion thereof, at the respective addresses of such
holders as the same shall appear on the stock transfer books of the
Company. The notice shall state that the Preferred Shares shall be
<PAGE>
converted at the Conversion Price in effect on the date fixed for the
conversion, upon the surrender for cancellation, at the time and
place designated in such notice, of the certificates representing the
Preferred Shares to be converted, properly endorsed in blank for
transfer, or accompanied by proper instruments of assignment and
transfer in blank, with signatures guaranteed, and bearing all
necessary transfer tax stamps thereto affixed and canceled. If the
Company shall give notice of conversion as aforesaid, all Preferred
Shares called for conversion shall be deemed to have been converted
to Common Stock on the conversion date specified in such notice,
whether or not the certificates for such Preferred Shares shall be
surrendered for conversion. Notwithstanding the foregoing, if,
at the time fixed for such conversion, the Common Stock is not listed
or included for quotation on the NASDAQ-NMS, NYSE, AMEX or NASDAQ
SmallCap, then the Company shall either (i) withdraw its notice of
conversion or (ii) redeem the Preferred Shares designated in such
notice at the redemption price specified herein.
(e) The Company shall not issue any fraction of a share of Common Stock
upon any conversion, but shall pay in cash therefor at the Conversion
Price then in effect multiplied by such fraction.
(f) On presentation and surrender to the Company (or at any office or
agency maintained for the transfer of the Preferred Shares) of the
certificates of Preferred Shares so to be converted, duly endorsed in
blank for transfer or accompanied by proper instruments of assignment
or transfer in blank (a "Conversion Notice"), with signatures
medallion guaranteed, the holder of such Preferred Shares shall be
entitled, subject to the limitations herein contained, to receive in
exchange therefor a certificate or certificates for fully paid and
nonassessable shares, which certificates shall be delivered by the
second trading day after the date of delivery of the Conversion
Notice, and cash for fractional shares, of Common Stock on the
foregoing basis. The Preferred Shares shall be deemed to have been
converted, and the person converting the same to have become the
holder of record of Common Stock, for all purposes as of the date of
delivery of the Conversion Notice.
(g) The Company shall, so long as any of the Preferred Shares are
outstanding, reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of effecting the
conversion of the Preferred Shares, such number of shares of Common
Stock as shall from time to time be sufficient to effect the
conversion of all of the Preferred Shares then outstanding.
(h) The Company shall pay any and all taxes which may be imposed upon it
with respect to the issuance and delivery of Common Stock upon the
conversion of the Preferred Shares as herein provided. The Company
shall not be required in any event to pay any transfer or other taxes
by reason of the issuance of such Common Stock in names other than
those in which the Preferred Shares surrendered for conversion are
registered
<PAGE>
on the Company's records, and no such conversion or issuance of Common
Stock shall be made unless and until the person requesting such
issuance has paid to the Company the amount of any such tax, or has
established to the satisfaction of the Company and its transfer agent,
if any, that such tax has been paid.
(3) Voting Rights. Holders of Preferred Shares shall have no voting rights,
except as required by law and by Section 7 hereof.
(4) Redemption. The Company may, but shall not be obligated to, at any time
subsequent to one hundred eighty (180) days after the date the
Registration Statement is declared effective by the SEC, redeem the whole
or any part of the Preferred Shares then outstanding at a redemption
price of $1,398.60 per Preferred Share, plus in each case a sum equal to
all accrued and unpaid dividends thereon through the date fixed for
redemption, in accordance with the following redemption procedures:
(a) In case of redemption of only part of the Preferred Shares at any time
outstanding, the Company shall designate the amount of Preferred
Shares so to be redeemed and shall redeem such Preferred Shares on a
pro rata basis. Subject to the limitations and provisions herein
contained, the Board of Directors shall have the power and authority
to prescribe the terms and conditions upon which the Preferred Shares
shall be redeemed from time to time.
(b) Notice of every redemption shall be given by mail to every holder of
record of any Preferred Shares then to be redeemed, at least thirty
(30), but no more than ninety (90), days prior to the date fixed as
the date for the redemption thereof, at the respective addresses of
such holders as the same shall appear on the stock transfer books of
the Company. The notice shall state that the Preferred Shares shall
be redeemed by the Company at the redemption price specified above,
upon the surrender for cancellation, at the time and place designated
in such notice, of the certificates representing the Preferred Shares
to be redeemed, properly endorsed in blank for transfer, or
accompanied by proper instruments of assignment and transfer in blank,
with signatures guaranteed, and bearing all necessary transfer tax
stamps thereto affixed and canceled. On and after the date specified
in the notice described above, each holder of Preferred Shares called
for redemption shall be entitled to receive therefor the specified
redemption price upon presentation and surrender at the place
designated in such notice of the certificates for Preferred Shares
called for redemption, properly endorsed in blank for transfer or
accompanied by proper instruments of assignment or transfer in blank,
with signatures medallion guaranteed, and bearing all necessary
transfer tax stamps thereto affixed and canceled.
(c) If the Company shall give notice of redemption as aforesaid (and
unless the Company shall fail to pay the redemption price of the
Preferred Shares presented for redemption in accordance with such
notice), all Preferred Shares called for redemption shall be deemed
to have been redeemed on the date specified in such notice, whether
<PAGE>
or not the certificates for such Preferred Shares shall be
surrendered for redemption, and such Preferred Shares so called for
redemption shall from and after such date cease to represent any
interest whatsoever in the Company or its property, and the holders
thereof shall have no rights other than the right to receive such
redemption price without any interest thereof from and after such
date.
(5) Liquidation, Dissolution, Winding Up. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the
holders of the Preferred Shares shall be entitled to receive in cash out
of the assets of the Company, whether from
capital or from earnings, available for distribution to its stockholders
(the "Preferred Funds"), before any amount shall be paid to the holders
of the Common Stock, an amount equal to the Stated Value per Preferred
Share plus any accrued and unpaid dividends, provided that, if the
Preferred Funds are insufficient to pay the full amount due to the
holders of Preferred Shares and holders of shares of other classes or
series of preferred stock of the Company that are of equal rank with the
Preferred Shares as to payments of Preferred Funds (the "Pari Passu
Shares"), then each holder of Preferred Shares and Pari Passu Shares
shall receive a percentage of the Preferred Funds equal to the full
amount of Preferred Funds payable to such holder as a percentage of the
full amount of Preferred Funds payable to all holders of Preferred Shares
and Pari Passu Shares. The purchase or redemption by the Company of
stock of any class, in any manner permitted by law, shall not, for the
purposes hereof, be regarded as a liquidation, dissolution or winding up
of the Company. Neither the consolidation nor merger of the Company with
or into any other corporation or corporations, nor the sale or transfer
by the Company of less than substantially all of its assets, shall, for
the purposes hereof, be deemed to be a liquidation, dissolution or
winding up of the Company. No holder of Preferred Shares shall be
entitled to receive any amounts with respect thereto upon any liquidation,
dissolution or winding up of the Company other than the amounts provided
for herein.
(6) Preferred Rank. All shares of Common Stock shall be of junior rank to all
Preferred Shares in respect to the preferences as to distributions and
payments upon the liquidation, dissolution or winding up of the Company.
The rights of the shares of Common Stock shall be subject to the
preferences and relative rights of the Preferred Shares. Notwithstanding
the foregoing, the Company may authorize and issue additional or other
preferred stock which is of equal or junior rank with the Preferred
Shares in respect of the preferences as to distributions and payments
upon the liquidation, dissolution or winding up of the Company; provided,
however, that for so long as the Preferred Shares remain outstanding the
Company shall not issue any capital stock which is more senior in rank
than the Preferred Shares in respect of the foregoing preferences. In the
event of the merger or consolidation of the Company with or into another
corporation, the Preferred Shares shall maintain their relative powers,
designations and preferences provided for herein.
<PAGE>
(7) Vote to Change the Terms of Preferred Shares. The affirmative vote at a
meeting duly called for such purpose or the written consent without a
meeting of the holders of not less than two-thirds (2/3) of the then
outstanding Preferred Shares shall be required to amend, alter, change or
repeal any of the powers, designations, preferences and rights of the
Preferred Shares.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this certificate to be signed by
Angelo S. Morini, its President, and Julie Peterson, its Secretary, this 16th
day of April 1996.
GALAXY FOODS COMPANY
By:
/s/ Angelo S. Morini
____________________
President
Attest: /s/ Julie Peterson
____________________
Secretary
<PAGE>
Exhibit 10.74
Securities Purchase Agreement, dated April 16, 1996, by and
among Galaxy Foods Company and the buyers party thereto.
<PAGE>
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
April 16, 1996 by and among Galaxy Foods Company, a Delaware
corporation, with headquarters located 2441 Viscount Row, Orlando, FL 32809
(the "Company"), and the undersigned (each a "Buyer" and collectively, the
"Buyer").
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule
506 under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "1933 Act");
B. The Buyers wish to purchase, in the amounts and upon the terms and
conditions stated in this Agreement, (i) shares of the Company's common stock,
par value $.01 per share (the "Common Stock"), and (ii) the Company's Series
A Convertible Preferred Stock, par value $.01 per share (the "Preferred
Stock"); and
C. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement
(the "Registration Rights Agreement") pursuant to which the Company has
agreed to provide certain registration rights under the 1933 Act and the rules
and regulations promulgated thereunder, and applicable state securities laws;
NOW THEREFORE, the Company and the Buyer hereby agrees as follows:
1. PURCHASE AND SALE OF COMMON STOCK AND PREFERRED STOCK.
a. Purchase of Common Stock. The Company shall issue and sell to the Buyer
and the Buyer shall purchase an aggregate of 1,337,524 shares of Common
Stock (the "Common Shares") at a per share purchase price of $1.4953.
b. Purchase of Preferred Stock. The Company shall issue and sell to the Buyer
and the Buyer shall purchase an aggregate of 4,000 shares of Preferred Stock
(the "Preferred Shares"), which will be convertible into shares of Common
Stock (the "Conversion Shares") in accordance with the terms of the
Certificate of Designations, Preferences and Rights of Series A Convertible
Preferred Stock attached hereto as Exhibit A (the "Certificate of
Designation"). The per share purchase price for the Preferred Shares shall be
One Thousand Dollars ($1,000). The Common Shares and the Preferred Shares
are hereafter collectively referred to as the "Securities."
c. Allocation of Securities. The Securities shall be allocated among each of
the Buyers as specified on their respective counterpart signature pages to this
Agreement.
<PAGE>
d. Form of Payment. Each Buyer shall pay its pro rata portion of the purchase
price for the Common Shares and the Preferred Shares (the "Purchase Price")
by wire transfer of immediately available United States Dollars to the Company
on the Closing Date (as defined below). The Company shall promptly deliver
stock certificates, duly executed on behalf of the Company,
representing the Common Shares and the Preferred Shares (the "Stock
Certificates") to the Buyers.
e. Closing Date. The date and time of the issuance and sale of the Common
Shares and the Preferred Shares shall be 12:00 noon Eastern Standard Time on
April 16, 1996 (the "Closing Date").
2. BUYER'S REPRESENTATIONS AND WARRANTIES
Each Buyer represents and warrants to the Company as to itself, severally and
not jointly with respect to the Buyers, that:
a. Investment Purpose. The Buyer is purchasing the Securities for its own
account for investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof except pursuant to
sales registered under the 1933 Act.
b. Accredited Investor Status. The Buyer is an "accredited investor" as that
term is defined in Rule 501(a)(3) of Regulation D.
c. Reliance on Exemptions. The Buyer understands that the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire
the Securities.
d. Information. The Buyer and its advisors, if any, have been furnished with
all materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Securities which have been
requested by the Buyer. The Buyer and its advisors, if any, have been afforded
the opportunity to ask questions of the Company and have received complete
and satisfactory answers to any such inquiries. The Buyer understands that its
investment in the Securities involves a high degree of risk. The Buyer has
sought such accounting, legal and tax advice as it has considered necessary to
an informed investment decision with respect to its acquisition of the
Securities.
e. Governmental Review. The Buyer understands that no United States federal
or state agency or any other government or governmental agency has passed on
or made any recommendation or endorsement of the Securities or the fairness
or suitability of the investment in the Securities, nor have such authorities
passed upon or endorsed the merits of the offering of the Securities.
f. Transfer or Resale. The Buyer understands that (i) except as provided in
the Registration Rights Agreement, the Common Shares, the Preferred Shares, the
<PAGE>
Conversion Shares, and the shares of Common Stock that may be issued to the
Buyer pursuant to Section 2(c) of the Registration Rights Agreement and
pursuant to Section (2)(b) of the Certificate of Designation (the "Damage
Shares") have not been and are not being registered under the 1933 Act or any
state securities laws, and may not be transferred unless (a) subsequently
registered thereunder, or (b) the Buyer shall have notified the Company with a
statement of the circumstances surrounding the proposed disposition and shall
have delivered to the Company an opinion of counsel, reasonably satisfactory
in form, scope and substance to the Company, to the effect (1) that the
securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration and (2) that appropriate action necessary for
compliance with the 1933 Act has been taken; (ii) any sale of such securities
made in reliance on Rule 144 promulgated under the 1933 Act may be made
only in accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of
the SEC thereunder; and (iii) neither the Company nor any other person is
under any obligation to register such securities (other than pursuant to the
Registration Rights Agreement) under the 1933 Act or any state securities laws
or to comply with the terms and conditions of any exemption thereunder.
g. Legends. The Buyer understands that the stock certificates representing
each of the Preferred Shares and, until such time as the Common Shares, the
Conversion Shares, and the Damage Shares, if any, (collectively, the
"Registrable Securities") have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, shall bear a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE REOFFERED, SOLD, TRANSFERRED, PLEDGED, OR
ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER SAID ACT AND THE
STATE SECURITIES ACT OR BLUE SKY ACT OF ANY STATE HAVING
JURISDICTION THEREOF, OR (B) AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE
TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR THE SECURITIES ACT OR BLUE SKY ACT OF
ANY STATE HAVING JURISDICTION WITH RESPECT THERETO.
h. Authorization; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable in accordance with its terms,
subject as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium, and other similar laws affecting the enforcement of
creditors' rights generally.
I. Residency. The Buyer is a resident of that country specified in its
<PAGE>
address on the signature page hereof.
j. No Conflicts. The execution, delivery and performance of this Agreement by
the Buyer and the consummation by the Buyer of the transactions contemplated
hereby will not (i) result in a violation of the Articles of Incorporation or
Bylaws or (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Buyer, or result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state
securities laws and regulations) applicable to the Buyer or by which any
property or asset of the Buyer is bound or affected (except for such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse
Effect). The business of the Buyer not being conducted, and shall not be
conducted through the Closing Date, in violation of any law, ordinance,
regulation of any governmental entity, except for possible violations which
either singly or in the aggregate do not have a Material Adverse Effect.
Except as required under the 1933 Act and any applicable state securities laws,
the Buyer is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement in accordance with the terms hereof.
k. Indemnification. The Buyer acknowledges that the Buyer understands the
meaning and legal consequences of the representations and warranties in this
Section 2, and that the Company has relied upon such representations and
warranties, and the Buyer hereby agrees to indemnify and hold harmless the
Company and its agents and representatives from and against any and all
claims, demands, losses, damages, expenses or liabilities (including attorneys'
fees) due to or arising out of a breach of any such representations or
warranties, provided, however, that the Buyer shall be liable under this
Section 2(k) for only that amount of any such claims, demands, losses, damages,
expenses or liabilities as does not exceed the net proceeds of such Buyer as a
result of the sale of the Registrable Securities (as defined in the
Registration Rights Agreement) held by such Buyer pursuant to a Registration
Statement (as defined in the Registration Rights Agreement). Notwithstanding
the foregoing, however, no representation, warranty, acknowledgment or
agreement made herein by the Buyer shall in any manner be deemed to constitute
a waiver of any rights granted to such Buyer under federal or state securities
laws.
l. Short position and Market Purchases. The Buyer is not purchasing the
Securities for the purpose of covering any short position in the Securities,
and neither the Buyer nor any of its affiliates will, directly or indirectly,
purchase Common Stock on the open market with the purpose of causing cash to
be paid in lieu of Common Stock upon the conversion of the Preferred Shares in
accordance with the provisions of the Certificate of Designation.
<PAGE>
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyer that:
a. Organization and Qualification. The Company and its subsidiaries are
corporations duly organized and existing in good standing under the laws of the
jurisdiction in which they are incorporated, except, in the case of any such
subsidiaries, as would not have a Material Adverse Effect (as defined below),
and have the requisite corporate power to own their properties and to carry on
their business as now being conducted. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business and is
in good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary and where the failure so to
qualify would have a Material Adverse Effect. "Material Adverse Effect"
means any material adverse effect on the operations, properties or financial
condition of the Company and its subsidiaries taken as a whole.
b. Authorization; Enforcement. (i) The Company has the requisite corporate
power and authority to enter into and perform this Agreement and the
Registration Rights Agreement, and to issue the Registrable Securities and the
Preferred Shares in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by the Company's Board of Directors and no further consent or
authorization of the Company, its Board of Directors, or its stockholders is
required, (iii) this Agreement and the Registration Rights Agreement have been
duly executed and delivered by the Company, and (iv) this Agreement and the
Registration Rights Agreement constitute the valid and binding obligations of
the Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of creditors' rights and remedies
or by other equitable principles of general application.
c. Capitalization. As of April 12, 1996, the authorized capital stock of the
Company consists of (i) 85,000,000 shares of Common Stock of which
53,182,848 shares were issued and outstanding, and (ii) 1,000,000 shares of
Preferred Stock of which no shares were issued and outstanding. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. No shares of Common Stock or Preferred Stock are subject to
preemptive rights or any other similar rights of the stockholders of the
Company or any liens or encumbrances. Except as disclosed in Schedule 3(c),
as of the effective date of this Agreement, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of the Company or any of its subsidiaries, or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
subsidiaries, and (ii) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
its or their securities under the 1933 Act (except the Registration Rights
Agreement). The Company has furnished to the Buyer true and correct copies of
<PAGE>
the Company's Articles of Incorporation, as amended, as in effect on the date
hereof ("Articles of Incorporation") and the Company's Bylaws, as in effect on
the date hereof (the "Bylaws"). The Company shall provide the Buyer with a
written update of this representation signed by the Company's Chief Executive
or Chief Financial Officer on behalf of the Company as of the Closing Date.
d. Issuance of Securities. The Registrable Securities and Preferred Shares are
duly authorized and, upon issuance in accordance with the terms hereof and
thereof, shall be validly issued, fully paid and non-assessable, and free from
all taxes, liens and charges with respect to the issue thereof.
e. No Conflicts. The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the Articles of
Incorporation or Bylaws or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company
or any of its subsidiaries is a party, or result in a violation of any law,
rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect). The
business of the Company and its subsidiaries is not being conducted, and shall
not be conducted through the latest of (i) the Closing Date or (ii) the
conversion or redemption of the last of the Preferred Shares, in violation of
any law, ordinance, regulation of any governmental entity, except for possible
violations which either singly or in the aggregate do not have a Material
Adverse Effect. Except as required under the 1933 Act and any applicable
state securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court
or governmental agency in order for it to execute, deliver or perform any of
its obligations under this Agreement in accordance with the terms hereof.
f. SEC Documents, Financial Statements. Since January 1, 1993, the Company
has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents (other than exhibits)
incorporated by reference therein, being hereinafter referred to herein as the
"SEC Documents"). The Company has delivered to the Buyer true and
complete copies of the SEC Documents, except for such exhibits, schedules and
incorporated documents. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
<PAGE>
not misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to
the Buyer and referred to in Section 2(d) of this Agreement contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading.
g. Absence of Certain Changes. Since December 31, 1995, there has been no
material adverse change and no material adverse development in the business,
properties, operations, financial condition, results of operations or
prospects of the Company.
h. Absence of Litigation. Except as set forth in its Form 10-Q for the quarter
ended December 31, 1995, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or, to the
knowledge of the Company, threatened against or affecting the Company,
wherein an unfavorable decision, ruling or finding would have a Material
Adverse Effect or which would adversely affect the validity or enforceability
of, or the authority or ability of the Company to perform its obligations
under, this Agreement or any of the documents contemplated herein.
4. COVENANTS.
a. Best Efforts. The parties shall use their best efforts timely to satisfy
each of the conditions described in Section 6 and 7 of this Agreement.
b. Form D. The Company agrees to file a Form D with respect to the Securities
as required under Regulation D and to provide a copy thereof to the Buyer
promptly after such filing.
c. Reporting Status. Until the earlier of (i) the date as of which the
Investors (as defined in the Registration Rights Agreement) may sell all the
Registrable Securities without restriction pursuant to Rule 144(k) promulgated
under the 1933 Act, or (ii) the date on which (A) the Investors have sold all
the Registrable Securities and (B) none of the Preferred Shares is outstanding
(the "Registration Period"), the Company shall file all reports required to be
filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would permit such
termination. The Investors shall give notice to the Company when they have
sold all of the Registrable Securities.
<PAGE>
d. Use of Proceeds. The Company will use the proceeds from the sale of the
Securities for the Company's internal working capital purposes and shall not,
directly or indirectly, use such proceeds for any loan to or investment in any
other corporation, partnership, enterprise or other person.
e. Expenses. The Company shall pay all reasonably expenses incurred in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the transactions contemplated hereby,
including Buyer's attorney's fees and expenses.
f. Financial Information. The Company agrees to send the following reports
to each Buyer until such Buyer transfers, assigns, or sells all of the
Registrable Securities and Preferred Shares held by such Buyer: (i) within
five (5) days after the filing thereof with the SEC, a copy of its Annual
Report on Form 10-K, its Quarterly Reports on Form 10-Q and any Current
Reports on Form 8-K; and (ii) within one day after release thereof, copies of
all press releases issued by the Company or any of its subsidiaries.
g. Reservation of Shares. The Company shall at times have authorized, and
reserved for the purpose of issuance, a sufficient number of shares of Common
Stock to provide for the conversion of the Preferred Shares and issuance of
the Damage Shares.
h. Listing. The Company shall promptly secure the listing of the
Registrable Securities upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all shares of
Registrable Securities from time to time issuable under the terms of this
Agreement, the Registration Rights Agreement and the Certificate of
Designation.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall irrevocably instruct its transfer agent to issue
certificates for the Conversion Shares and Damage Shares in such amounts
as specified from time to time by the Company to the transfer agent. Prior
to registration of the Registrable Securities under the 1933 Act, all such
certificates shall bear the restrictive legend specified in Section 2(g) of
this Agreement. The Company warrants that no instruction other than such
instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof prior to registration of the Registrable
Securities under the 1933 Act, will be given by the Company to its transfer
agent and that the Registrable Securities and the Preferred Shares shall
otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement and the Registration
Rights Agreement. Nothing in this Section shall affect in any way the
Buyer's obligations and agreement to comply with all applicable securities
laws upon resale of the Registrable Securities and the Preferred Shares. If
the Buyer provides the Company with an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, that registration
of a resale by the Buyer of any of the Registrable Securities or the Preferred
<PAGE>
Shares is not required under the 1933 Act or any applicable state securities
or blue sky laws, the Company shall permit the transfer and promptly
instruct its transfer agent to issue one or more certificates in such name
and in such denominations as specified by the Buyer.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to sell the Common Shares and
the Preferred Shares is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions
are for the Company's sole benefit and may be waived by the Company at
any time in its sole discretion:
a.The parties shall have executed this Agreement and the Registration
Rights Agreement, and delivered the same to each other.
b.The Buyers shall have delivered the Purchase Price to the Company by
wire transfer of immediately available funds pursuant to the wiring
instructions set forth on Exhibit C hereto.
c. The representations and warranties of each Buyer shall be true and
correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyers shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Buyers at or prior to the
Closing Date. The Company shall have received a certificate, executed by
the Chief Executive Officer of the Buyers, dated as of the Closing Date, to
the foregoing effect and as to such other matters reasonably requested by
the Company.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyers hereunder to purchase the Common Shares
and the Preferred Shares is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such
Buyer at any time in its sole discretion:
a. The parties shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to each other.
b. Until the Closing Date, the Common Stock shall be authorized for
quotation on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") National Market System ("NASDAQ-NMS") or
NASDAQ SmallCap Market ("NASDAQ SmallCap") and trading in the
Common Stock (or NASDAQ-NMS or NASDAQ SmallCap) shall not
have been suspended by the SEC or NASDAQ.
c. The representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of the
<PAGE>
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the
Closing Date. The Buyer shall have received a certificate, executed by the
Chief Executive Officer of the Company, dated as of the Closing Date, to
the foregoing effect and as to such other matters as may be reasonably
requested by the Buyer.
d. The Buyers shall have received the opinion of the Company's counsel
dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to the Buyers and in substantially the same form as Exhibit B.
e. The Buyer shall have received the officer's certificate described in
Section 3(c) above, dated as of the Closing Date.
f. The Company shall have delivered the Stock Certificates to the Buyer.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Delaware without regard to the
principles of conflict of laws.
b. Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement
or the validity or enforceability of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any Buyer
makes any representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the party to be
charged with enforcement.
<PAGE>
f. Notices. Any notices required or permitted to be given under the terms
of this Agreement shall be sent by mail or delivered personally or by
courier and shall be effective five days after being placed in the mail, if
mailed, certified or registered, return receipt requested, or upon receipt, if
delivered personally or by courier, in each case addressed to a party. The
addresses for such communications shall be:
If to the Company:
Galaxy Foods Company
2441 Viscount Row
Orlando, FL 32809
Telephone: (407) 855-5500
Telecopy: (407) 855-1099
Attention: Angelo Morini
With copy to:
Baker & Hostetler
200 South Orange Avenue
Orlando, FL 32801
Telephone: (407) 649-4000
Telecopy: (407) 841-0168
Attention: Kenneth C. Wright, Esq.
If to the Buyer, at the addresses on the signature pages.
With copy to:
Genesee Advisers
11921 Freedom Drive, Suite 550
Reston, VA 22090
Telephone: (703) 904-4349
Telecopy: (703) 834-6627
Attention: Neil T. Chau
And:
Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, PA 19102
Telephone: (215) 569-3399
Telecopy: (215) 568-5725
Attention: Jason M. Shargel, Esq.
Each party shall have provide notice to the other party of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor the Buyer shall assign this Agreement or any
rights or obligations hereunder without the prior written consent of the
<PAGE>
other (which consent may be withheld for any reason in the sole discretion
of the party from whom consent is sought). Notwithstanding the
foregoing, a Buyer may assign its rights hereunder to any of its "affiliates,"
as that term is defined under the 1934 Act, without the consent of the
Company, provided, however, that any such assignment shall not release
such Buyer of its obligations hereunder unless such obligations are
assumed by such affiliate and the Company has consented to such
assignment and assumption.
h. Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns,
and is not for the benefit of, nor may any provision hereof be enforced by,
any other person.
I. Survival. The representations and warranties of the Company and the
Buyer contained in Sections 2 and 3 and the agreements and covenants set
forth in Sections 4, 5, 8(g), 8(h), 8(k) and 8(l), and this subsection shall
survive the closing. Each party which constitutes the Buyer shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.
k. Publicity. The Company and the Buyer shall have the right to approve
before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that
the Company shall be entitled, without the prior approval of the Buyer, to
make any press release with respect to such transactions as is required by
applicable law and regulations (although the Buyer shall be consulted by
the Company in connection with any such press release prior to its release
and shall be provided with a copy thereof).
l. Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
m. Termination. In the event that the closing shall not have occurred on or
before five (5) days from the date hereof, this Agreement shall terminate at
the close of business on such date.
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first
written above.
GALAXY FOODS COMPANY
By:
Name:
Its:
<PAGE>
GFL ADVANTAGE FUND LTD.
By:
Name:
Its:
Address: Genesee Fund Limited
CITCO Building
Wickhams Cay
P.O. Box 662
Road Town, Tortola
British Virgin Islands
Administrator
Curacao International Trust Co. N.V.
Kaya Flamboyan 9
P.O. Box 812
Curacao, Netherland Antilles
Allocated Portion of Securities: All Preferred Shares.
GFL PERFORMANCE FUND LTD.
By:
Name:
Its:
Address: Genesee Fund Limited
CITCO Building
Wickhams Cay
P.O. Box 662
Road Town, Tortola
British Virgin Islands
Administrator
Curacao International Trust Co. N.V.
Kaya Flamboyan 9
P.O. Box 812
Curacao, Netherland Antilles
Allocated portion of Securities: All Common Shares.
<PAGE>
Exhibit 10.75
Registration Rights Agreement, dated April 16, 1996, by and
among Galaxy Foods Company and the buyers party thereto.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
April 16, 1996 by and among Galaxy Foods Company, a Delaware
corporation, with headquarters located at 2441 Viscount Road, Orlando,
Florida 32809 (the "Company"), and the undersigned (each, a
"Buyer" and collectively, the "Buyer").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among
the parties of even date herewith (the "Securities Purchase Agreement"),
the Company has agreed, upon the terms and subject to the conditions of
the Securities Purchase Agreement, (i) to issue and sell to the Buyers
shares (the "Common Shares") of the Company's common stock (the
"Common Stock") and (ii) to issue and sell to the Buyers shares of the
Company's Series A Convertible Preferred Stock (the "Preferred Shares")
which will be convertible into shares of Common Stock (as converted, the
"Conversion Shares"); and
B. To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 Act"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company
and the Buyers hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investor" means each Buyer and any transferee or assignee thereof
who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
(ii) "register," "registered," and "registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933
Act or any successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(iii) "Registrable Securities" means the Common Shares, the
Conversion Shares, and the Damage Shares (as defined herein).
(iv) "Registration Statement" means a registration statement of the
<PAGE>
Company under the 1933 Act.
b. Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase
Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare, and, on or prior
to May 7, 1996, file with the SEC a Registration Statement on Form S-3
(or, if such form is unavailable for such a registration, on such other form
as is available for such a registration) covering the resale of the
Registrable Securities, which Registration Statement shall state that, in
accordance with Rule 416 promulgated under the 1933 Act, such
Registration Statement also covers such indeterminate number of
additional shares of Common Stock as may become issuable upon
conversion of the Preferred Shares to prevent dilution resulting from stock
splits, stock dividends or similar transactions. The Registration Statement
(and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided to and approved by
the Buyer and its counsel prior to its filing or other submission, such
approval not to be unreasonably withheld.
b. Underwritten Offering. If any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof involves an underwritten
offering, the Investors who hold a majority in interest of the Registrable
Securities subject to such underwritten offering shall have the right to
select one legal counsel and an investment banker or bankers and manager
or managers to administer their interest in the offering, which investment
banker or bankers or manager or managers shall be reasonably satisfactory
to the Company.
c. Payments by the Company. If the Registration Statement covering the
Registrable Securities required to be filed by the Company pursuant to
Section 2(a) hereof is not declared effective by the SEC on or before a date
which is seventy five (75) days after the Closing Date or if, after the
Registration Statement has been declared effective by the SEC, sales
cannot be made pursuant to the Registration Statement (by reason of stop
order, the Company's failure to update the Registration Statement or
otherwise), or if the Common Stock is not listed or included for quotation
on the National Association of Securities Dealers Automated Quotation
("NASDAQ") National Market System (the "NASDAQ-NMS"), the New
York Stock Exchange (the "NYSE") the American Stock Exchange (the
"AMEX") or the NASDAQ SmallCap Market ("NASDAQ SmallCap"),
then the Company will make payments to the Buyer in such amounts and
at such times as shall be determined pursuant to this Section 2(c) as partial
relief for the damages to the Buyer by reason of any such delay in or
reduction of its ability to sell the Registrable Securities (which remedy
shall not be exclusive of any other remedies available at law or in equity).
The Company shall pay to each holder of Registerable Securities an
amount equal to the purchase price of the Common Shares purchased by
such holder (the "Purchase Price") multiplied by three-hundredths (.03)
<PAGE>
multiplied further by the sum of: (i) the number of months (prorated for
partial months) after the end of such 75 day period and prior to the date the
Registration Statement is declared effective by the SEC; (ii) the number of
months (prorated for partial months) that sales cannot be made pursuant to
the Registration Statement after the Registration Statement has been
declared effective; and (iii) the number of months (prorated for partial
months) that the Common Stock is not listed or included for quotation on
the NASDAQ-NMS, NYSE, AMEX or NASDAQ SmallCap after the
Registration Statement has been declared effective. (For example, if the
Registration Statement becomes effective one and one-half (1 1/2) months
after the end of such 75 day period, the Company would pay $45,000 for
each $1,000,000 of Purchase Price of the Common Shares until any
subsequent adjustment; if thereafter, sales could not be made pursuant to
the Registration Statement for a period of two (2) months, the Company
would pay an additional $60,000 for each $1,000,000 of Purchase Price.)
Such amounts may be paid at the Company's option in cash or in Common
Stock (the "Damage Shares", which term shall include the shares
of Common Stock which may be issued pursuant to Section (2)(b) of the
Certificate of Designation) valued based on the Average Market Price for
the period (a "Damage Pricing Period") of five (5) consecutive trading days
ending on the trading day prior to the date that the Registration Statement
is declared effective or that sales can be resumed under the Registration
Statement, as applicable; provided, however, any amounts due as to any
Damage Pricing Period during which the Registrable Securities not listed
or included for quotation on the NASDAQ-NMS, NYSE, AMEX or
NASDAQ SmallCap shall be paid in cash only; and provided further,
however, that in no event shall Damage Shares be paid hereunder if, after
giving effect to such payment, the number of shares of Common Stock
beneficially owned by such holder and all other holders whose holdings
would be aggregated with such holder for purposes of calculating beneficial
ownership in accordance with Sections 13(d) and 16 of the Securities
Exchange Act of 1934, as amended, and the regulations thereunder
("Sections 13(d) and 16"), including, without limitation, any person
serving as an adviser to any holder (collectively, the "Related Persons"),
would exceed four and nine tenths percent (4.9%) of outstanding shares of
Common Stock (calculated in accordance with Sections 13(d) and 16);
cash shall be paid for any Damage Shares which cannot be issued pursuant
to this proviso. Common Stock issuable upon conversion of the Preferred
Shares held by such holder or Related Persons shall not be deemed to be
beneficially owned by such holder or the Related Persons for this purpose.
Payments of cash or issuances of Damage Shares pursuant hereto shall be
made within five (5) days after the end of each period that gives rise to
such obligation, provided that, if any such period extends for more than
thirty (30) days, interim payments shall be made for each such thirty (30)
day period with the interim payment (if paid in Damage Shares) based on
the last five (5) trading days of such thirty (30) day period. In addition to
the payments provided herein, with respect to the Preferred Shares
purchased by such holder the Company shall provide an adjustment to the
Conversion Percentage (as that term is defined in the Certificate of
Designation) and pay the amounts specified in Section (2)(b) of the
Certificate of Designation. "Average Market Price" of any security for any
period shall be computed as the arithmetic average of the closing bid prices
<PAGE>
for such security for each trading day in such period on the NASDAQ-
NMS, or, if the NASDAQ-NMS is not the principal trading market for
such security, on the principal trading market for such security, or, if
market value cannot be calculated for such period on any of the foregoing
bases, the Average Market Price shall be the average fair market value
during such period as reasonably determined in good faith by the Board of
Directors of the Company.
d. Piggy-Back Registrations. If at any time prior to the expiration of the
Registration Period (as hereinafter defined) the Company shall file with the
SEC a Registration Statement relating to an offering for its own account or
the account of others under the 1933 Act of any of its equity securities
(other than on Form S-4 or Form S-8 or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of
any entity or business or equity securities issuable in connection with stock
option or other employee benefit plans) the Company shall send to each
Investor who is entitled to registration rights under this Section 2(d)
written notice of such determination and, if within twenty (20) days after
receipt of such notice, such Investor shall so request in writing, the
Company shall include in such Registration Statement all or any part of the
Registrable Securities such Investor requests to be registered,
except that if, in connection with any underwritten public offering for the
account of the Company the managing underwriter(s) thereof shall impose
a limitation on the number of shares of Common Stock which may be
included in the Registration Statement because, in such underwriter(s)'
judgment, marketing or other factors dictate such limitation is necessary to
facilitate public distribution, then the Company shall be obligated to
include in such Registration Statement only such limited portion of the
Registrable Securities with respect to which such Investor has requested
inclusion hereunder; provided that no portion of the equity securities which
the Company is offering for its own account shall be excluded; provided,
further that the Company shall be entitled to exclude Registrable Securities
to the extent necessary to avoid breaching obligations existing prior to the
date hereof to other stockholders of the Company. Any exclusion of
Registrable Securities shall be made pro rata among the Investors seeking
to include Registrable Securities, in proportion to the number of
Registrable Securities sought to be included by such Investors; provided,
however, that the Company shall not exclude any Registrable Securities
unless the Company has first excluded all outstanding securities, the
holders of which are not entitled to inclusion of such securities in such
Registration Statement or are not entitled to pro rata inclusion with the
Registrable Securities; and provided, further, however, that, after giving
effect to the immediately preceding proviso, any exclusion of Registrable
Securities shall be made pro rata with holders of other securities having the
right to include such securities in the Registration Statement other than
holders of securities entitled to inclusion of their securities in such
Registration Statement by reason of demand registration rights. No right
to registration of Registrable Securities under this Section 2(d) shall be
construed to limit any registration required under Section 2(a) hereof. The
obligations of the Company under this Section 2(d) may be waived by
Investors holding a majority in interest of the Registrable Securities. If an
offering in connection with which an Investor is entitled to registration
<PAGE>
under this Section 2(d) is an underwritten offering, then each Investor
whose Registrable Securities are included in such Registration Statement
shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this
Agreement, on the same terms and conditions as other shares of Common
Stock included in such underwritten offering.
e. Eligibility for Form S-3. The Company represents and warrants that it
meets the requirements for the use of Form S-3 for registration of the sale
by the Buyer and any other Investor of the Registrable Securities and the
Company shall file all reports required to be filed by the Company with the
SEC in a timely manner so as to maintain such eligibility for the use of
Form S-3. In the event that Form S-3 is not available for sale by the
Investors of the Registrable Securities, the Company shall register the sale
on another appropriate form.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare promptly, and file with the SEC not later
than May 13, 1996, a Registration Statement with respect to the number of
Registrable Securities provided in Section 2(a), and thereafter to use its
best efforts to cause such Registration Statement relating to Registrable
Securities to become effective as soon as possible after such filing,
and keep the Registration Statement effective pursuant to Rule 415 at all
times until the earlier of (i) the date as of which the Investors may sell all
the Registrable Securities without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act, or (ii) the date on which (A) the
Investors have sold all the Registrable Securities and (B) none of the
Preferred Shares are outstanding (the "Registration Period"), which
Registration Statement (including any amendments or supplements thereto
and prospectuses contained therein) shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. The Investors
shall give notice to the Company when they have sold all of the Registrable
Securities.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration
Statement as may be necessary to keep the Registration Statement effective
at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition
of all Registrable Securities of the Company covered by the Registration
Statement until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof as set forth in the Registration Statement.
<PAGE>
c. The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement and its legal counsel
(i) promptly after the same is prepared and publicly distributed, filed with
the SEC, or received by the Company, one copy of the Registration
Statement and any amendment thereto, each preliminary prospectus and
prospectus and each amendment or supplement thereto, and (ii) such
number of copies of a prospectus, including a preliminary prospectus, and
all amendments and supplements thereto and such other documents as such
Investor may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor.
d. In the case of the Registration Statement referred to in Section 2(a),
the Company shall furnish to the counsel of each Investor each letter
written by or on behalf of the Company to the SEC or the staff of the SEC,
and each item of correspondence from the SEC or the staff of the SEC, in
each case relating to such Registration Statement (other than any portion of
any thereof which contains information for which the Company has sought
confidential treatment).
e. The Company shall use reasonable efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such
other securities or "blue sky" laws of such jurisdictions in the United States
as the Investors who hold a majority in interest of the Registrable
Securities being offered reasonably request, (ii) prepare and file in those
jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a
condition thereto to (a) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(e), (b)
subject itself to general taxation in any such jurisdiction, (c) file a general
consent to service of process in any such jurisdiction, (d) provide any
undertakings that cause more than nominal expense or burden to the
Company, or (e) make any change in its charter or bylaws, which in each
case the Board of Directors of the Company determines to be contrary to
the best interests of the Company and its stockholders.
f. In the event Investors who hold a majority in interest of the Registrable
Securities being offered in the offering select underwriters for the offering,
the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with
the underwriters of such offering. The incremental costs incident to such
an underwritten offering shall be paid one-half (1/2) by the Company and
one-half (1/2) by the participating Investors, pro rata based on the number of
Registrable Securities sold by them, provided that all selling commissions,
concessions and discounts, expense allowances (whether accountable or
nonaccountable), options and warrants and costs of ongoing consulting or
<PAGE>
engagement requirements of any such underwriter shall be paid and borne
pro rata by the Investors and not by the Company, and the Company shall
not provide such Underwriter with rights of first refusal with respect to any
subsequent offerings, including debt and equity financing, or any
requirements with respect to mergers, acquisitions or other business
combinations.
g. As promptly as practicable after becoming aware of such event, the
Company shall notify each Investor of the happening of any event, of
which the Company has knowledge, as a result of which the prospectus
included in the Registration Statement, as then in effect, includes an untrue
statement of a material fact or omission to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and use its
best efforts promptly to prepare a supplement or amendment to the
Registration Statement to correct such untrue statement or omission, and
deliver such number of copies of such supplement or amendment to each
Investor as such Investor may reasonably request.
h. The Company shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest possible moment and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution
thereof.
I. The Company shall permit a single firm of counsel, designated as
selling stockholders' counsel by the Investors who hold a majority in
interest of the Registrable Securities being sold, to review the Registration
Statement and all amendments and supplements thereto a reasonable
period of time prior to their filing with the SEC, and not file any document
in a form to which such counsel reasonably objects.
j. The Company shall make generally available to its security holders as
soon as practicable, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the 1933 Act) covering a twelve-
month period beginning not later than the first day of the Company's fiscal
quarter next following the effective date of the Registration Statement.
k. At the request of the Investors who hold a majority in interest of the
Registrable Securities being sold, the Company shall furnish, on the date
that Registrable Securities are delivered to an underwriter, if any, for sale
in connection with the Registration Statement (i) if required by an
underwriter, a letter, dated such date, from the Company's independent
certified public accountants in form and substance as is customarily given
by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters, and (ii) an
opinion, dated as of such date, from counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
underwriters and the Investors.
<PAGE>
l. The Company shall make available for inspection by (i) any Investor,
(ii) any underwriter participating in any disposition pursuant to the
Registration Statement, (iii) one firm of attorneys and one firm of
accountants or other agents retained by the Investors, and (iv) one firm of
attorneys retained by all such underwriters (collectively, the "Inspectors")
all pertinent financial and other records, and pertinent corporate
documents and properties of the Company (collectively, the "Records"), as
shall be reasonably deemed necessary by each Inspector to enable each
Inspector to exercise its due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information
which any Inspector may reasonably request for purposes of such due
diligence; provided, however, that each Inspector shall hold in confidence
and shall not make any disclosure (except to an Investor) of any Record or
other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified,
unless (a) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (b) the release of
such Records is ordered pursuant to a subpoena or other final, non-
appealable order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
or any other agreement. The Company shall not be required to disclose
any confidential information in such Records to any Inspector until and
unless such Inspector shall have entered into confidentiality agreements (in
form and substance satisfactory to the Company) with the Company with
respect thereto, substantially in the form of this Section 3(l). Each Investor
agrees that it shall, upon learning that disclosure of such Records is sought
in or by a court or governmental body of competent jurisdiction or through
other means, give prompt notice to the Company and allow the Company,
at its expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, the Records deemed confidential.
m. The Company shall hold in confidence and not make any disclosure
of information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other final, non-appealable order from a court or
governmental body of competent jurisdiction, or (iv) such information has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. The Company agrees that it shall,
upon learning that disclosure of such information concerning an Investor is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such Investor and allow such
Investor, at the Investor's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such information.
n. The Company shall use its best efforts either to (i) cause all the
Registrable Securities covered by the Registration Statement to be listed on
the New York Stock Exchange or the American Stock Exchange and on
each additional national securities exchange on which securities of the
<PAGE>
same class or series issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of
such exchange, or (ii) secure designation and quotation of all the
Registrable Securities covered by the Registration Statement on the
NASDAQ-NMS or NASDAQ SmallCap.
o. The Company shall provide a transfer agent and registrar, which may
be a single entity, for the Registrable Securities, and shall provide CUSIP
numbers for the Registrable Securities, not later than the effective date of
the Registration Statement.
p. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and the managing underwriter or underwriters, if
any, to facilitate the timely preparation and delivery of certificates
representing the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the managing
underwriter or underwriters, if any, or the Investors may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Investors may request. No later than the
effective date of any Registration Statement registering the resale of
Registrable Securities, the Company shall deliver to its transfer agent
instructions, accompanied by any reasonably required opinion of counsel,
that (i) permit sales of legended securities in a timely fashion that complies
with then mandated securities settlement procedures for regular way
market transactions; and (ii) upon the conversion of the Preferred Shares
and the contemporaneous resale, pursuant to a Registration Statement, of
the Conversion Shares, permit the issuance of stock certificates without
restrictive legends to the transferees of such Conversion Shares.
q. The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investors of Registrable Securities
pursuant to the Registration Statement.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement and to
make payments under Section 2(c) hereof with respect to the Registrable
Securities of a particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held
by it and the intended method of disposition of the Registrable Securities
held by it as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with
such registration as the Company may reasonably request. At least five (5)
days prior to the first anticipated filing date of the Registration Statement,
the Company shall notify each Investor of the information the Company
requires from each such Investor if such Investor elects to have any of such
Investor's Registrable Securities included in the Registration Statement.
<PAGE>
b. Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested
by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement.
c. In the event Investors holding a majority in interest of the Registrable
Securities being registered determine to engage the services of an
underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary
form, including, without limitation, customary indemnification and
contribution obligations, with the managing underwriter of such offering
and take such other actions as are reasonably required in order to expedite
or facilitate the disposition of the Registrable Securities, unless such
Investor has notified the Company in writing of such Investor's election to
exclude all of such Investor's Registrable Securities from the Registration
Statement. The incremental costs incident to such an underwritten
offering shall be paid by the Investor to the extent provided in Section 3(f).
d. Subject to the Company's obligations under Section 2(c), each Investor
agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 3(g) or 3(h), such Investor
will immediately discontinue disposition of Registrable Securities pursuant
to the Registration Statement covering such Registrable Securities until
such Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(g) or 3(h) and, if so directed by the
Company, such Investor shall deliver to the Company (at the expense of
the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
e. No Investor may participate in any underwritten registration hereunder
and, in connection with such underwritten registration, receive related
payments under Section 2(c) hereof (which payments result from such
Investor's failure to perform the following) unless such Investor (i) agrees
to sell such Investor's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled hereunder to
approve such arrangements, (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts, incurred in
connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, the fees and
<PAGE>
disbursements of counsel for the Company, and the fees and disbursements
of counsel for the Investors, shall be borne by the Company, subject to
Section 3(f) hereof.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Investor who holds such Registrable
Securities, (ii) the directors, officers and each person who controls any
Investor within the meaning of the 1933 Act or the Securities Exchange
Act of 1934, as amended (the "1934 Act"), if any, and (iii) any underwriter
(as defined in the 1933 Act) for the Investors; and the directors, officers
and each person who controls any such underwriter within the meaning of
the 1933 Act or the 1934 Act, if any, (each, an "Indemnified Person"),
against any losses, claims, damages, liabilities or expenses (joint or
several) (collectively, "Claims") to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state a material fact
therein required to be stated or necessary to make the statements therein
not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or
alleged violation by the Company of the 1933 Act, the 1934 Act, any other
law, including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the
foregoing clauses (i) through (iii) being, collectively, "Violations").
Subject to the restrictions set forth in Section 6(d) with respect to the
number of legal counsel, the Company shall reimburse the Investors and
each such underwriter or controlling person, promptly as such expenses are
incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending
any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i)
shall not apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in
writing to the Company by any Indemnified Person or underwriter for such
Indemnified Person expressly for use in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the
Company pursuant to Section 3(c) hereof; (ii) with respect to any
preliminary prospectus, shall not inure to the benefit of any such person
<PAGE>
from whom the person asserting any such Claim purchased the Registrable
Securities that are the subject thereof (or to the benefit of any person
controlling such person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the
prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(c) hereof; (iii)
shall not be available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made available
by the Company; and (iv) shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors pursuant
to Section 9.
b. In connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to indemnify, hold harmless and
defend, to the same extent and in the same manner set forth in Section
6(a), the Company, each of its directors, each of its officers who signs the
Registration Statement, each person, if any, who controls the Company
within the meaning of the 1933 Act or the 1934 Act, any underwriter and
any other stockholder selling securities pursuant to the Registration
Statement or any of its directors or officers or any person who controls
such stockholder or underwriter within the meaning of the 1933 Act or the
1934 Act (collectively and together with an indemnified Person, an
"Indemnified Party"), against any Claim to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such
Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such violation occurs in reliance upon
and in conformity with written information furnished to the Company by
such Investor expressly for use in connection with such Registration
Statement or to the extent such Claim is based upon any violation or
alleged violation by the Investor of the 1933 Act, 1934 Act or any other
law; and such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the prior written consent
of such Investor, which consent shall not be unreasonably withheld;
provided, further, however, that the Investor shall be liable under this
Section 6(b) for only that amount of a Claim as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9. Notwithstanding anything
to the contrary contained herein, the indemnification agreement contained
in this Section 6(b) with respect to any preliminary prospectus shall not
inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or
supplemented.
<PAGE>
c. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution, to the same extent
as provided above, with respect to information such persons so furnished in
writing by such persons expressly for inclusion in the Registration
Statement.
d. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to made against
any indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the indemnifying
party shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person
or the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its
own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due
to actual or potential differing interests between such Indemnified Person
or Indemnified Party and any other party represented by such counsel in
such proceeding. The Company shall pay reasonable fees for only one
separate legal counsel for the Investors, and such legal counsel shall be
selected by the Investors holding a majority in interest of the Registrable
Securities included in the Registration Statement to which the Claim
relates; provided, that legal fees of such firm shall be reasonable. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve
such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action. The
indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due
and payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (i) no contribution shall be made under circumstances where
the maker would not have been liable for indemnification under the fault
standards set forth in Section 6, (ii) no seller of Registrable Securities
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the 1933 Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent
<PAGE>
misrepresentation, and (iii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company
agrees to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood
that nothing herein shall limit the Company's obligations under Section
4(c) of the Securities Purchase Agreement) and the filing of such reports
and other documents is required for the applicable provisions of Rule 144;
and
c. furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144, the 1933
Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably
requested to permit the investors to sell such securities pursuant to Rule
144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities pursuant to
this Agreement shall be automatically assignable by the Investors to any
transferee of all or any portion of Registrable Securities if: (i) the Investor
agrees in writing with the transferee or assignee to assign such rights, and
a copy of such agreement is furnished to the Company within a reasonable
time after such assignment, (ii) the Company is, within a reasonable time
after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned,
(iii) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted
under the 1933 Act and applicable state securities laws, (iv) at or before the
time the Company receives the written notice contemplated by clause (ii) of
this sentence the transferee or assignee agrees in writing with the Company
to be bound by all of the provisions contained herein, (v) such transfer
shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement, (vi) such transferee shall be an
"accredited investor" as that term defined in Rule 501 of Regulation D
<PAGE>
promulgated under the 1933 Act; and (vi) in the event the assignment
occurs subsequent to the date of effectiveness of the Registration Statement
required to be filed pursuant to Section 2(a), the transferee agrees to pay its
all reasonable expenses of amending or supplementing such Registration
Statement to reflect such assignment.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of
the Company and Investors who hold a majority in interest of the
Registrable Securities. Any amendment or waiver effected in accordance
with this Section 10 shall be binding upon each Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities.
If the Company receives conflicting instructions, notices or elections from
two or more persons or entities with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.
b. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by registered or certified mail, return
receipt requested, or delivered personally or by courier and shall be
effective five days after being placed in the mail, if mailed, or upon receipt,
if delivered personally or by courier, in each case addressed to a party. The
addresses for such communications shall be:
If to the Company:
Galaxy Foods Company
2441 Viscount Road
Orlando, Florida 23809
Telephone: (407) 855-5500
Telecopy: (407) 855-1099
Attention: Angelo Morini
With copy to:
Baker & Hostetler
200 South Orange Avenue
Orlando, FL 32801
Telephone: (407) 649-4000
Telecopy: (407) 841-0168
Attention: Kenneth C. Wright, Esq.
If to the Buyer, at the addresses on the signature pages.
<PAGE>
With copy to:
Genesee Advisers
11921 Freedom Drive, Suite 550
Reston, VA 22090
Telephone: (703) 904-4349
Telecopy: (703) 834-6627
Attention: Neil T. Chau
And:
Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, PA 19102
Telephone: (215) 569-3399
Telecopy: (215) 568-5725
Attention: Jason M. Shargel, Esq.
Each party shall have provide notice to the other party of any change in
address.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements
made and to be performed entirely within such State. In the event that any
provision of this Agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof
which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision hereof.
e. This Agreement and the Securities Purchase Agreement constitute the
entire agreement among the parties hereto with respect to the subject
matter hereof and thereof. There are no restrictions, promises, warranties
or undertakings, other than those set forth or referred to herein and therein.
This Agreement and the Securities Purchase Agreement supersede all prior
agreements and understandings among the parties hereto with respect to
the subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
g. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of which
<PAGE>
shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party
so delivering this Agreement.
I. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
GALAXY FOODS COMPANY
By:
Name:
Its:
GFL ADVANTAGE FUND LTD.
By:
Name:
Its:
Address: Genesee Fund Limited
CITCO Building
Wickhams Cay
P.O. Box 662
Road Town, Tortola
British Virgin Islands
Administrator
Curacao International Trust Co. N.V.
Kaya Flamboyan 9
P.O. Box 812
Curacao, Netherland Antilles
<PAGE>
GFL PERFORMANCE FUND LTD.
By:
Name:
Its:
Address: Genesee Fund Limited
CITCO Building
Wickhams Cay
P.O. Box 662
Road Town, Tortola
British Virgin Islands
Administrator
Curacao International Trust Co. N.V.
Kaya Flamboyan 9
P.O. Box 812
Curacao, Netherland Antilles
<PAGE>
EXHIBIT 99.1
Press Release issued by Registrant,
dated March 11, 1996
<PAGE>
GALAXY FOODS COMPANY
_____________________________________________________________________________
2441 Viscount Row, Orlando, FL 32809
Ph: 407-855-5500 Fax: 407-855-7485
FOR IMMEDIATE RELEASE
Contact: Rebecca Barksdale, ext. 105
Investor Relations
GALAXY FOODS COMPANY ANNOUNCES COMPLETION
OF A $6 MILLION PRIVATE PLACEMENT
ORLANDO, FLORIDA (April 17, 1996) -- Galaxy Foods Company (Nasdaq:
GALX) today announced the completion of a private placement of an aggregate
of approximately $6,000,000 in the Company's convertible preferred stock and
common stock, in reliance on Regulation D, promulgated under the Securities
Act of 1933, as amended (the "Act"). The Company sold approximately
1,337,524 shares of common stock and 4,000 shares of convertible preferred
stock in one series, which preferred stock is convertible into common stock
pursuant to a formula that is based upon the market value of the Company's
common stock. The conversion formula is set forth in the Form 8-K Current
Report dated this date and filed with the Securities and Exchange Commission.
The securities sold pursuant to this private placement are restricted
securities which have not been registered under the Act and may not be offered
or sold in the United States absent registration or an applicable exemption
from registration requirements. The transaction documents require the Company
to file a registration statement with the Securities and Exchange Commission
in the future, allowing for the public resale of the common stock sold in the
transaction and the common stock into which the convertible preferred stock is
convertible.
Angelo S. Morini, Chairman, President and Chief Executive Officer, stated,
"the funds raised from this private placement will be used primarily to fuel
our rapid growth, increase inventory levels and enable the Company to support a
proper marketing campaign. Morini further stated, "preliminary sales figures
for the Company's fourth quarter, just completed March 31, are approximately
seventy-five percent of the total sales for the prior nine months. As we now
begin our first quarter of fiscal 1997, we continue to steadily increase sales
in both the retail and food service markets through the addition of several
popular supermarket chains and prominent restaurant accounts."
Galaxy Foods Company produces a complete line of healthy cheese products for
the retail, food service and industrial markets. Galaxy Foods is the inventor
and originator of formagg , nutritionally balanced cheese products which are
low in fat, have no cholesterol and no lactose and contain more vitamins and
minerals than conventional cheese. Other brands names include Soyco,
Soymage and Lite Bakery .
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