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): October 8, 1998
GALAXY FOODS COMPANY
(Exact Name of Registrant as Specified in Charter)
Delaware 0-16251 25-1391475
(State or other (Commission File Number (IRS Employer
jurisdiction Identification No.)
of incorporation)
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.)
<PAGE> 2
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 October 8, 1998, Galaxy Foods Company (the "Company")
entered into an agreement whereby the Company would issue to the
buyer specified in such agreement (the "Buyer") in accordance
with an exemption from registration under Regulation D
promulgated under the Securities Act of 1933, as amended (the
"Act") 2,500,000 shares (the "Shares") of the Company's common
stock, $0.01 par value (the "Common Stock"), at a per share
price equal to the Common Stock's closing bid price on such date
as quoted on the interdealer quotation system operated by NASDAQ,
Inc. Such closing bid price was $.375, resulting in an aggregate
sales price of the Shares of $937,500. The sale of the Shares to
Buyer was completed upon the execution and delivery by the Buyer
of a definitive Securities Purchase Agreement (the "Purchase
Agreement") dated October 8, 1998, effective October 8, 1998.
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,
expand its marketing efforts and for other general corporate
purposes.
In connection with the sale of the Shares, the Company
issued to the Buyer a Common Stock Purchase Warrant (the
"Warrant") to purchase an additional 2,500,000 shares of Common
Stock at an exercise price of $.375 per share. The Warrant vests
in accordance with the following schedule:
Shares Date of Vesting
250,000 October 8, 1998
250,000 October 8, 1999
500,000 October 8, 2000
500,000 October 8, 2001
500,000 October 8, 2002
500,000 October 8, 2003
<PAGE> 3
On November 2, 1998, the Company issued a press release
disclosing the sale of the Shares. 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 10.1 Securities Purchase Agreement, dated October
8, 1998, by and between Galaxy Foods Company and the buyer
(Filed herewith.)
Exhibit 10.2 Common Stock Purchase Warrant, dated October
8, 1998, issued by Galaxy Foods Company to the buyer (Filed
herewith.)
Exhibit 99.1 Press Release issued by the Company on
November 2,1998 (Filed herewith.)
<PAGE> 4
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
November 10, 1998 By: /s/ Angelo S. Morini
Name: Angelo S. Morini
Title: President
<PAGE> 5
EXHIBITS
<PAGE> 6
EXHIBITS INDEX
Exhibit No. Exhibit Description Page No.
10.1 Securities Purchase Agreement, dated October
8, 1998, by and between Galaxy Foods Company and
the buyer thereto (Filed herewith.)
10.2 Common Stock Purchase Warrant, dated October
8, 1998, issued by Galaxy Foods Company to the
buyer (Filed herewith.)
99.1 Press Release issued by the Company dated November 2,
1998 (Filed herewith.)
<PAGE> 7
EXHIBIT 10.1
Securities Purchase Agreement,
dated October 8, 1998, by and
between Galaxy Foods Company and
the buyer thereto
<PAGE> 8
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"),
dated as of October 8, 1998 by and among Galaxy Foods Company, a
Delaware corporation, with headquarters located 2441 Viscount
Row, Orlando, FL 32809 (the "Company"), and Mr. Fred DeLuca,
individually (the "Buyer").
PRELIMINARY STATEMENTS
A. The Company and Buyer 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. Buyer wishes to purchase, in the amounts and upon
the terms and conditions stated in this Agreement, shares of the
Company's common stock, par value $.01 per share (the "Common
Stock");
NOW THEREFORE, the Company and Buyer hereby agrees as
follows:
1. PURCHASE AND SALE OF COMMON STOCK
a. Purchase of Common Stock. The Company shall issue
and sell to Buyer and Buyer shall purchase an aggregate of
2,500,000 shares of Common Stock (the "Common Shares") at a per
share purchase price of $.375 (the "Purchase Price"), which
Purchase Price shall be payable 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 (the "Stock Certificates") to
Buyer.
b. Closing Date. The date of the closing of the sale
of the Common Shares shall be October 19, 1998 (the "Closing
Date").
2. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to the Company that:
a. Investment Purpose. The Common Shares are being
acquired by Buyer in good faith solely for his own personal
account, for investment purposes only, and are not being
purchased for resale, resyndication, distribution, subdivision or
fractionalization thereof; Buyer has no contract or arrangement
with any person to sell, transfer or pledge to any person the
Common Shares or any part thereof, any interest therein or any
rights thereto; Buyer has no present plans to enter into any such
contract or arrangement; and Buyer understands that as a result
he must bear the economic risk of the investment for an
indefinite period of time because the Common Shares have not been
registered under the 1933 Act, and, therefore, cannot be sold
unless they are subsequently registered under the 1933 Act (which
the Company is not obligated to do, and has no present intention
of doing, or unless an exemption from such registration is
available.
b. Accredited Investor Status. Buyer is an
"accredited investor" as that term is defined in Rule 501(a)(3)
of Regulation D.
c. Reliance on Exemptions. Buyer understands that
the Common Shares are being offered and sold to him under the
exemption from the registration requirements of the United States
federal and state securities laws provided for in Sections 3(b)
and 4(2) of the 1933 Act, including Regulation D promulgated
thereunder, and that the Company is relying upon the truth and
accuracy of, and Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of
Buyer set forth herein in order to determine the availability of
such exemptions and the eligibility of Buyer to acquire the
Common Shares.
<PAGE> 9
d. Information. Buyer understands and acknowledges
that he is purchasing the Common Shares without being furnished
any offering literature, prospectus or other materials other than
copies of the SEC Documents (as defined hereinbelow), that this
transaction has not been scrutinized by the SEC or by any
administrative agency charged with the administration of the
securities laws of any state, that all documents, records and
books, pertaining to the Company, its business, finances and
operations, and this investment have been made available to
Buyer, and his advisors and representatives, including his
attorney, its accountant and/or his purchaser representative, and
that the books and records of the Company will be available upon
reasonable notice for inspection by Buyer during reasonable
business hours at the Company's principal place of business.
Buyer and his advisors and representatives, including his
attorney, his accountant and/or his purchaser representative, if
any, have reviewed the SEC Documents and been afforded the
opportunity to ask questions of the Company and have received
complete and satisfactory answers to any such inquiries. Buyer
understands that his investment in the Common Shares is
speculative and involves a high degree of risk high degree of
risk of loss and that Buyer must be prepared to lose his entire
investment in the Company. Buyer has sought such accounting,
legal and tax advice as he has considered necessary to an
informed investment decision with respect to his acquisition of
the Common Shares. Buyer, or Buyer together with his purchaser
representative, if any, have such knowledge and experience in
financial and business matters that he and such representative
are capable of evaluating the merits and risks of an investment
in the Common Shares and of making an informed investment
decision.
e. Governmental Review. Buyer understands that no
United States federal or state agency or any other government or
governmental agency has approved or disapproved or passed on or
made any recommendation or endorsement of the Common Shares or
the fairness or suitability of the investment in the Common
Shares, nor have such authorities passed upon or endorsed the
merits of the offering of the Common Shares or the accuracy or
adequacy of any of the information provided by the Company to
Buyer regarding the Company, the Common Shares or any other
matter, and that the Company is relying on the truth and accuracy
of the representations, declarations and warranties herein made
by Buyer in offering the Common Shares for sale to him without
having first registered the same under the 1933 Act.
f. Transfer or Resale. Buyer understands that (i)
the Common 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)
Buyer shall have provided 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 under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any
exemption thereunder. Buyer further acknowledges that there may
be no public market for the Common Shares and that Buyer is able
(i) to bear the economic risk of this investment, (ii) to hold
the Common Shares indefinitely, and (iii) presently to afford a
complete loss of this investment. Buyer has adequate means of
providing for current needs and personal contingencies, and has
no need for liquidity in this investment.
<PAGE> 10
g. Legends. Buyer understands that the stock
certificates representing the Common Shares shall bear a
restrictive legend in substantially the following form (and a
stop-transfer order shall 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 Buyer and is a valid and binding agreement of 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. Buyer is a resident of the State of
Florida.
j. No Conflicts. The execution, delivery and
performance of this Agreement by Buyer and the consummation by
Buyer of the transactions contemplated hereby will not 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
Buyer or by which any property or asset of Buyer is bound or
affected, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities
laws and regulations) applicable to Buyer or by which any
property or asset of Buyer is bound or affected. Except as
required under the 1933 Act and any applicable state securities
laws, 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 him to execute, deliver or
perform any of his obligations under this Agreement in accordance
with the terms hereof.
k. Indemnification. Buyer acknowledges that 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
Buyer hereby agrees to indemnify and hold harmless the Company
and its officers, directors, shareholders, agents and
representatives from and against any and all claims, demands,
losses, damages, expenses or liabilities (including attorneys'
and paralegals' fees and costs of investigating and litigating
claims) due to or arising out of, directly or indirectly, a
breach of any such representations or warranties.
Notwithstanding the foregoing, however, no representation,
warranty, acknowledgment or agreement made herein by Buyer shall
in any manner be deemed to constitute a waiver of any rights
granted to such Buyer under federal or state securities laws.
<PAGE> 11
l. Short position and Market Purchases. Buyer is not
purchasing the Common Shares for the purpose of covering any
short position in the Common Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer that:
a. Organization and Qualification. The Company is a
corporation duly organized and existing in good standing under
the laws of the State of Delaware, and has the requisite
corporate power to own their properties and to carry on their
business as now being conducted. The Company 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 on the
operations, properties or financial condition of the Company
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 to issue the Common Shares in
accordance with the terms hereof, (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 has been duly
executed and delivered by the Company, and (iv) this Agreement
constitutes the valid and binding obligations of the Company
enforceable against the Company in accordance with its 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 the date hereof, the
authorized capital stock of the Company consists of (i)
85,000,000 shares of Common Stock of which 61,717,051 shares were
issued and outstanding, and (ii) 1,000,000 shares of preferred
stock, $.01 par value, 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 are subject to preemptive rights or any other similar
rights of the stockholders of the Company or any liens or
encumbrances. 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 arrangements by which the
Company is or may become bound to issue additional shares of
capital stock of the Company other than options and warrants to
acquire approximately 9,546,629 shares of Common Stock, and (ii)
there are no agreements or arrangements under which the Company
is obligated to register the sale of any of its securities under
the 1933 Act other than agreements with respect to securities
which have been previously registered or are subject to current
registration statements. The Company has furnished to Buyer true
and correct copies of the Company's Certificate of Incorporation,
as amended, as in effect on the date hereof ("Certificate of
Incorporation") and the Company's Bylaws, as in effect on the
date hereof (the "Bylaws").
d. Issuance of Common Shares. The Common 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 Certificate 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 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 by which any
property or asset of the Company 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
on the operations, properties or financial condition of the
Company taken as a whole). The business of the Company is not
being conducted in violation of any law, ordinance, regulation of
any governmental entity, except for possible violations which
<PAGE> 12
either singly or in the aggregate do not have a material adverse
effect on the operations, properties or financial condition of
the Company taken as a whole. 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. During the
Company's last two (2) fiscal years, 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
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, 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 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 Litigation. 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 the Company, wherein an unfavorable decision,
ruling or finding would have a material adverse effect on the
operations, properties or financial condition of the Company
taken as a whole 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 Common Shares as required under Regulation D and
to provide a copy thereof to Buyer promptly after such filing.
<PAGE> 13
c. Reporting Status. Until the earlier of (i) the
date as of which Buyer may sell all the Common Shares without
restriction pursuant to Rule 144(k) promulgated under the 1933
Act, or (ii) the date on which Buyer has sold all the Common
Shares, 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. Buyer shall give
notice to the Company when he has sold all of the Common Shares.
d. Use of Proceeds. The Company will use the
proceeds from the sale of the Common Shares 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.
5. TRANSFER AGENT INSTRUCTIONS
Buyer acknowledges that the Common Shares shall be
"restricted" securities, that all certificates evidencing the
Common Shares shall bear the restrictive legend specified in
Section 2(g) of this Agreement, and that stop-transfer
instructions have been given by the Company to its transfer agent
with respect to the Common Shares. If 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 Buyer of any of the Common 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 Buyer.
<PAGE> 14
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company hereunder to sell the
Common 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
delivered the same to each other.
b. Buyer shall have delivered the Purchase Price to
the Company by wire transfer of immediately available funds
pursuant to the wiring instructions provided by the Company.
c. The representations and warranties of 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 Buyer 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 Buyer at or prior to the Closing
Date.
7. CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE
The obligation of Buyer hereunder to purchase the
Common Shares is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that
these conditions are for Buyer's sole benefit and may be waived
by Buyer at any time in his sole discretion:
a. The parties shall have executed this Agreement and
delivered the same to each other.
b. 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 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.
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 three (3) 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.
<PAGE> 15
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.
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: Mr. 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 Buyer:
Mr. Fred DeLuca
325 Bic Drive
Milford, Connecticut 06460
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 Buyer shall
assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other (which consent may
be withheld for any reason in the sole discretion of the party
from whom consent is sought).
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.
<PAGE> 16
i. Survival. The representations and warranties of
the Company and Buyer contained in Sections 2 and 3 and the
agreements and covenants set forth in Sections 4, 8(g), 8(h),
8(k) and 8(l), and this subsection shall survive the closing.
k. Publicity. The Company and 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 Buyer, to make any press release
with respect to such transactions as the Company determines is
required by applicable law and regulations.
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, Buyer and the Company have caused
this Securities Purchase Agreement to be duly executed as of the
date first written above.
"Company"
GALAXY FOODS COMPANY
By: /s/ Angelo S. Morini
Name: Angelo S. Morini
Title: President and CEO
"Buyer"
/s/ Fred DeLuca
Fred DeLuca, individually
<PAGE> 17
EXHIBIT 10.2
Common Stock Purchase Warrant,
dated October 8, 1998, issued by
Galaxy Foods Company to the buyer
<PAGE> 18
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE
SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL FOR THE
CORPORATION THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS.
Right to Purchase 2,500,000 Shares of
Common Stock of Galaxy Foods Company
Date: October 8, 1998
GALAXY FOODS COMPANY
Common Stock Purchase Warrant
GALAXY FOODS COMPANY, a Delaware corporation (the
"Company"), hereby certifies that, for value received, Fred
DeLuca, or assigns, is entitled, subject to the terms set forth
below, to purchase from the Company 2,500,000 fully paid and
nonassessable shares of Common Stock, $.01 par value, of the
Company, at a purchase price of $0.375 per share (hereinafter
referred to as the "Purchase Price"). The number and character
of such shares of Common Stock and the Purchase Price are subject
to adjustment as provided herein.
As used herein the following, unless the context otherwise
required, have the following respective meanings:
(a) The term "Company" shall include Galaxy Foods Company
and any corporation which shall succeed to or assume the
obligations of the Company
hereunder.
(b) The term "Common Stock" includes (a) the Company's
Common Stock, $.01 par value per share; (b) any other capital
stock of any class of classes (however designated) of the
Company, authorized on or after such date, the holders of which
shall have the right, without limitation as to amount, either to
all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and the
holders of which shall ordinarily, in the absence of
contingencies, be entitled to vote for the election of directors
of the Company; and (c) any other securities into which or for
which any of the securities described in (a) or (b) may be
converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other
than Common Stock) and other securities of the Company or any
other person (corporate or otherwise) which the holders of the
Warrants at any time shall be entitled to receive, or shall have
received, on the exercise of the Warrants, in lieu of or in
addition to Common Stock, or which at any time shall be issuable
or shall have been issued in exchange for or in replacement of
Common Stock or Other Securities pursuant to Section 4 of this
Warrant or otherwise.
<PAGE> 19
1. Exercise of Warrant
1.1 Vesting of Warrant. This warrant may be exercised in
full or in part according to the terms and conditions in
paragraphs 1.2 and 1.3 listed below and upon vesting of
the warrants which will vest according to the following
schedule:
250,000 vested October 8, 1998
250,000 vested October 8, 1999
500,000 vested October 8, 2000
500,000 vested October 8, 2001
500,000 vested October 8, 2002
500,000 vested October 8, 2003
and can be exercised in increments of up to the maximum
warrants issuable under the terms of this agreement.
Galaxy Foods Company reserves the right to cancel any
unvested warrants at any time prior to the vesting date
if the Company is dissatisfied with the business
relationship between the two parties.
1.2 Full Exercise. Once vested, this Warrant may be
exercised in full by the holder hereof by surrender of this
Warrant, with the form of subscription at the end hereof duly
executed by such holder, to the Company at its principal office,
accompanied by payment, in cash or by certified or official bank
check payable to the order of the Company, in the amount obtained
by multiplying the number of shares of Common Stock for which
this Warrant is then exercisable by the Purchase Price then in
effect.
1.3 Partial Exercise. This Warrant may be exercised in
part by surrender of this Warrant in the manner and at the place
provided in Section 1.1 except that the amount payable by the
holder on such partial exercise shall be the amount obtained by
multiplying (a) the number of shares of Common Stock designated
by the holder in the subscription at the end hereof by (b) the
Purchase Price then in effect. On any such partial exercise the
Company at its expense will forthwith issue and deliver to or
upon the order of the holder hereof a new Warrant or Warrants of
like tenor, in the name of the holder hereof or as such holder
(upon payment by such holder of any applicable transfer taxes)
may request, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock for which such
Warrant or Warrants may still be exercised.
1.4 Company Acknowledgement. The Company will, at the time of the
exercise of the Warrant, upon the request of the holder hereof,
acknowledge in writing its continuing obligation to afford to
such holder any rights to which such holder shall continue to be
entitled after such exercise in accordance with the provisions of
this Warrant. If the holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the
Company to afford to such holder any such rights.
2. Delivery of Stock Certificates on Exercise. As soon as
practicable after the exercise of this Warrant in full or in
part, the Company at its expense (including the payment by it if
any applicable issue taxes) will cause to be issued in the name
of and delivered to the holder hereof, or as such holder (upon
payment by such holder of any applicable transfer taxes) may
direct, a nonassessable shares of Common Stock (or Other
Securities) to which such holder shall be entitled on such
exercise, plus, in lieu of any fractional share to which such
holder would otherwise be entitled, cash equal to such fraction
multiplied by the then current market value of one full share,
together with any other stock or other securities and property
(including cash, where applicable) to which such holder is
entitled upon such exercise pursuant to Section 1 and otherwise.
<PAGE> 20
3. Adjustment for Dividends in Other Stock, Property or
Reclassification. In case at any time or from time to time, the
holders of Common Stock (or Other Securities) shall have
received, or (on or after the record date fixed for the
determination of shareholders eligible to receive) shall have
become entitled to receive, without payment therefor,
(a) other or additional stock or other securities or
property (other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out
of earnings or earned surplus of the Company), or
(c) other or additional stock or other securities or
property (including cash) by way of spin-off, split-up,
reclassification, recapitalization, combination of shares of
similar corporate rearrangement, other than additional shares of
Common Stock (or Other Securities) issued as s stock dividend or
in a stock-split (adjustment in respect of which are provided for
in Section 4 hereof), then and in each such case the holder of
this Warrant, on the exercise hereof as provided in Section 1
hereof, shall be entitled to receive the amount of stock and
other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section 3) which
such holder would hold on the date of such exercise if on the
date hereof the holder had been the holder of record of the
number of shares of Common Stock called for on the face of this
Warrant and had thereafter, during the period from the date
hereof to and including the date of such stock and other
securities and property (including cash in the cases referred to
in subdivision (b) and (c) of this Section 3) receivable by such
holder as aforesaid during such period, giving effect to all
adjustments called for during such period by Section 4 hereof.
4. Extraordinary Events. In the event that the Company
shall (i) issue additional shares of Common Stock as a dividend
or other distribution on outstanding Common Stock, (ii) subdivide
its outstanding shares of Common Stock, or (iii) combine its
outstanding shares of Common Stock into a smaller number of
shares of Common Stock, then, in each such event, the Purchase
Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Purchase Price by a fraction,
the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common
Stock outstanding immediately after such event, and the product
so obtained shall thereafter be the Purchase Price then in
effect. The Purchase Price, as so adjusted, shall be readjusted
in the same manner upon the happening of any successive event or
events described herein in this Section 4. The holder of this
Warrant shall thereafter, on the exercise hereof as provided in
Section 1 hereof, be entitled to receive that number of shares of
Common Stock determined by multiplying the number of shares of
Common Stock which would otherwise (but for the provisions of
this Section 4) be issuable on such exercise by a fraction of
which (i) the numerator of the Purchase Price which would
otherwise (but for the provisions of this Section 4) be in
effect, and (ii) the denominator is the Purchase Price in effect
on the date of such exercise.
5. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the
holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or
other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, or
<PAGE> 21
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of
the Company to or consolidation or merger of the Company with or
into any other person, or
(c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company, then and in each such
event the Company will mail or cause to be mailed to each holder
of a Warrant a notice specifying (i) the date on which any such
record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of
such dividend, distribution or right, (ii) the date of which any
such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any is to
be fixed, as of which the holders of record of the Common Stock
(or Other Securities) shall be entitled to exchange their shares
of Common Stock (or Other Securities) for securities or other
property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up, and (iii) the amount and character of
any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such
proposed issue or grant is to be offered or made. Such notice
shall be mailed at least 20 days prior to the date specified in
such notice on which any such action is to be taken.
6. Reservation of Stock Issuable on Exercise of Warrant.
The Company will at all times reserve and keep available, solely
for issuance and delivery on the exercise of the Warrants, all
shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrants.
7. Exchange of Warrant. On surrender for exchange of any
Warrant, properly endorsed, to the Company, the Company at its
expense will issue and deliver to or on the order of the holder
thereof a new Warrant and Warrants of like tenor, in the name of
such holder or as such holder (on payment by such holder of any
applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant or Warrants
so surrendered.
8. Replacement of Warrant. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any
such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security reasonably satisfactory in
form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the
company at its expense will execute and deliver, in lieu thereof,
a new Warrant of like tenor.
9. Warrant Agent. The Company may, by written notice to
each holder of a Warrant, appoint an agent for the purpose of
issuing Common Stock (or Other Securities) on the exercise of
this Warrant pursuant to Section 1 hereof, exchanging Warrants
pursuant to Section 7 hereof, and replacing Warrants pursuant to
Section 8 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
10. Remedies. The Company stipulates that the remedies at
law of the holder of this Warrant in the event of any default or
threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant are not and will
not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.
<PAGE> 22
11. Negotiability. This Warrant is issued upon the
following terms, to all of which each holder or owner hereof by
the taking hereof consents and agrees:
(a) No holder of this Warrant shall, as such, be
entitled to vote or to receive dividends or to be deemed the
holder of Common Stock that may at any time be issuable upon
exercise of the Warrant for any purpose whatsoever, nor shall
anything contained herein be construed to confer upon such
holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether
upon any recapitalization, issue or reclassification of stock,
change of par value or change of stock to no par value,
consolidation, merger or conveyance or otherwise), or to receive
notice of meetings, or to receive dividends or subscription
rights, until such holder shall have exercised the Warrant and
been issued shares of the Common Stock in accordance with the
provisions hereof;
<PAGE> 23
(b) neither this Warrant nor any shares of Common
Stock purchased pursuant to this Warrant are registered under the
Securities Act of 1933 and applicable state securities laws.
Therefore, the Company may require, as a condition of allowing
the transfer or exchange of this Warrant or, until a registration
statement for such shares has been filed with and declared
effective by the Securities and Exchange Commission and
applicable state securities commissions, such shares, that the
holder or transferee of this Warrant or such shares, as the case
may be, furnish to the Company an opinion of counsel reasonably
acceptable to the Company to the effect that such transfer or
exchange may be made without registration under the Securities
Act of 1933 and applicable state securities laws. Until a
registration statement for such shares has been filed with and
declared effective by the Securities and Exchange Commission and
applicable state securities laws; and
(c) Until this Warrant is transferred on the books of
the Company, the Company may treat the registered holder hereof
as the absolute owner hereof for all purposes, notwithstanding
any notice to the contrary.
12. Notices, etc. All notices and other communications
from the Company to the holder of this Warrant shall be mailed by
first class registered or certified mail,
postage prepaid, at such address as may have been furnished to
the Company in writing by such holder or, until any such holder
furnishes to the Company an address, then to, and at the address
of, the last holder of this Warrant who has so furnished an
address to the Company.
13. Governing Law. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of Florida.
14. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. the headings
in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. This Warrant
is being executed as an instrument under seal. The invalidity or
unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
15. Expiration. The right to exercise this Warrant shall
expire at 5:00 pm Orlando time on October 8, 2003. Whether or
not surrendered to the Company by the holder, this Warrant shall
be deemed cancelled upon the expiration hereof.
(Corporate Seal) GALAXY FOODS COMPANY
By:/s/Angelo S. Morini
Attest:
By: /s/Cynthia Hunter Title: CEO and President
Title: CFO
<PAGE> 24
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO:___________________________
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase
thereunder, ..................... shares of Common Stock of
Galaxy Foods Company and herewith makes payment of
$.......................therefore, and requests that the
certificates for such shares be issued in the name of, and
delivered to
...................................................., whose
address is
.................................................................
.....................
Dated: ................................................
(Signature must conform to name of
holder as specified on the face of the
warrant)
..............................
(Address)
<PAGE> 25
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns,
and transfers unto ...........................................
......... the right represented by the within Warrant to purchase
...........................................shares of Common Stock
of Galaxy Foods Company to which the within Warrant relates, and
appoints ......................................................
Attorney to transfer such right on the books of Galaxy Foods
Company with full power of substitution in the premises.
Dated: .............................
(Signature must conform to name of
holder as specified on the face of the
Warrant)
Signed in the presence of:
.......................... ...................................
(Address)
<PAGE> 26
EXHIBIT 99.1
Press Release issued by Registrant,
dated November 2, 1998
<PAGE> 27
GALAXY FOODS ANNOUNCES PRIVATE PLACEMENT OF STOCK
ORLANDO, FLORIDA (October 26, 1998) - Galaxy Foods Company
(NASDAQ: GALX), makers of healthy cheese and dairy-related
products, today announced a private placement of 2,500,000 shares
of their common stock to Mr. Fred DeLuca, Chairman and Founder of
Subway Restaurants. The shares were purchased at market price on
the date of the agreement, October 8, 1998. The purchase of
these shares followed a visit to Galaxy Foods Company's plant in
Orlando, Florida by Mr. DeLuca.
Fred DeLuca, Chairman and Founder of Subway Restaurants stated,
"I was extremely impressed with Galaxy's high-tech facility and
their state-of-the-art equipment. At Subway, our mission is to
provide delicious, healthy products to our customers and I feel
Galaxy has the same goals in mind. The trend is definitely
moving towards a low-fat, healthier diet for many consumers.
Galaxy's products provide these benefits without sacrificing
flavor. After my visit at Galaxy's plant, I felt the Company had
outstanding potential and I decided to make an investment."
Angelo Morini, Galaxy's President and CEO added, "We are proud
to have Mr. DeLuca as a significant shareholder in our Company.
Mr. DeLuca is on the cutting edge when it comes to educating
consumers about the benefits of a healthy diet. We both share
the belief that consumers are looking for great tasting, healthy
alternatives to the options currently available. We look forward
to a long and beneficial relationship with Mr. DeLuca and
Subway."
Galaxy Foods Company is the inventor and originator of a new,
healthier and better way to make cheese and dairy-related
products. Our products are primarily low or no fat (no saturated
fat), have no cholesterol and no lactose and contain more
vitamins and minerals than conventional cheese. Galaxy brand
names include formagg, Soyco, Soymage, Veggie Slices, Wholesome
Valley, and Lite Bakery. For more information, contact Rebecca
Barksdale at (407) 855-5500, extension 105. You may also obtain
more information from our site on the World Wide Web at
http://www.galaxyfoods.com (best viewed through Netscape
Navigator).
