EXHIBIT 10.52
STOCK PURCHASE OPTION AGREEMENT
THIS STOCK PURCHASE OPTION AGREEMENT (the "Agreement") is entered into this
24th day of April, 2003 ("Effective Date"), by and between EXCALIBUR LIMITED
PARTNERSHIP ("Excalibur") and BH CAPITAL INVESTMENTS, L.P. ("BH Capital")
(Excalibur and BH Capital are sometime hereinafter referred to individually as
an "Optionor" and collectively as the "Optionors"), and GALAXY NUTRITIONAL
FOODS, INC. ("Optionee").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Series A Preferred Stock and Warrants
Purchase Agreement, dated as of April 6, 2001 (the "Purchase Agreement"), by and
among Optionee and the Optionors, the Optionors purchased certain shares of the
Optionee's Series A Convertible Preferred Stock, $.01 par value (the "Preferred
Stock"); and
WHEREAS, Excalibur and BH Capital are currently the record and beneficial
owners of 25,945 shares and 31,439 shares, respectively, of the Preferred Stock
(the "Option Shares"); and
WHEREAS, Optionee wishes to obtain an option to purchase the Option Shares
from Optionors and Optionors are willing to grant an option to purchase the
Option Shares, all on the terms and conditions hereinafter set forth; and
WHEREAS, pursuant to Section 6.13 of the Purchase Agreement, Optionee must
hold a meeting of Optionee's stockholders (the "Stockholders Meeting") for the
purposes described more particularly in the Purchase Agreement within ninety
days of a request from Optionors; and
WHEREAS, on November 7, 2002, Optionors requested that the Stockholders
Meeting be held on or prior to February 5, 2003, which date was subsequently
extended to March 31, 2003; and
WHEREAS, Optionee wishes to obtain an extension of the date by which the
Stockholders Meeting must be held until expiry of Option Period (as defined
below), and Optionors are willing to grant such an extension under the terms and
conditions hereinafter set forth.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agree as follows:
1. Option. Optionors hereby grant an option (the "Option") to Optionee
(which, for purposes of this Agreement other than Sections 5 and 6 hereof, shall
be deemed to include any assignee(s) of the Option) to purchase the Option
Shares for cancellation or immediate conversion, or so many of such Option
Shares as Optionee determines, on the terms and conditions hereinafter set
forth, which Option shall be exercisable by Optionee during the Option Period.
As used herein, "Option Period" shall mean the period commencing on the date
hereof and expiring at earlier of (a) 5:00 p.m. Orlando, Florida time on
September 30, 2003 or (b) 5 business days after the date of the Stockholders
Meeting called pursuant to proxy statement already filed with the SEC, provided
that in the event the existing debt owed to (a) FINOVA Capital Corporation
pursuant to that certain Security Agreement dated as of November 1, 1996, as
amended, and (b) FINOVA Mezzanine Capital Inc. pursuant to that certain Loan
Agreement dated as of September 30, 1999, as amended, has not been paid off or
refinanced on or prior to July 15, 2003, the Option Period shall expire at 5:00
p.m. Orlando, Florida time on July 15, 2003. Notwithstanding the foregoing,
subject to
Section 2 of this Agreement, Optionee acknowledges that the Option is subject to
the rights of Optionors to exercise their rights convert the Option Shares in
accordance with the terms and conditions applicable to the Preferred Stock.
2. Exercise of Option. In order to exercise the Option or any part thereof,
Optionee must deliver written notice (the "Exercise Notice") to Optionors prior
to the expiration of the Option Period of Optionee's election to exercise the
Option (or portion thereof), which notice shall state the number of Option
Shares for which the Option is then being exercised (prorated to the relative
holdings of Option Shares of each Optionor on the date of the Exercise Notice).
Such Notice shall not be sent until the Optionee has immediately available funds
to pay the Purchase Price. Such notice shall be accompanied by a copy of the
Stock Purchase Agreement (the form of which is attached hereto as Exhibit A)
executed by Optionee in connection with such exercise. Within two (2) business
days after delivery to Optionors of the Exercise Notice and executed Stock
Purchase Agreement in accordance with the preceding sentence of this paragraph,
Optionors shall execute and deliver to Optionee counterparts of the Stock
Purchase Agreement. Unless otherwise agreed to in writing by Optionee and
Optionors, the closing of the purchase of the Option Shares for which the Option
is then being exercised shall be consummated in accordance with the terms and
conditions of the Stock Purchase Agreement on the third (3rd) business day after
Optionee's receipt of the counterparts of the Stock Purchase Agreement. The
parties acknowledge that the Option may be exercised in whole or in parts and
until such time as the Option is exercised in full or the Option Period expires,
the unexercised portion of the Option shall remain outstanding and in effect.
The parties agree that upon the Optionors' execution of the Stock Purchase
Agreement, Optionors shall have no right to convert or Transfer (as defined
below) the Option Shares to which such Exercise Notice applies unless the
Optionee defaults on such exercise. In such event, the Option Shares to which
such Stock Purchase Agreement applied will no longer be subject to the Option.
3. Assignment of Option. The Option and Optionee's rights in respect
thereof may, upon written notice to Optionors, be assigned, in whole or in part,
by Optionee in its sole discretion to one or more third parties provided that
upon the exercise of the Option by an assignee such assignee must convert the
Option Shares forthwith at terms no better than those available to Optionors.
4. Transfer of Option Shares. During the Option Period, Optionors may
redeem, sell, assign, transfer, exchange, gift, devise, pledge, hypothecate,
encumber or otherwise alienate or dispose of (each, a "Transfer") any Option
Shares now owned by such Optionor, or any right or interest therein, whether
voluntarily or involuntarily, by operation of law or otherwise, without the
prior written consent of Optionee provided that any such Transfer shall be
subject to this Agreement and the rights of Optionee hereunder and any party to
whom any Option Shares, or any interest therein, are Transferred (each, a
"Transferee") must agree in writing to all terms of the Option and this
Agreement. Notwithstanding the foregoing, subject to Section 2 of this
Agreement, Optionee acknowledges that the Option is subject to the rights of
Optionors or any Transferee to exercise their rights convert the Option Shares
in accordance with the terms and conditions applicable to the Preferred Stock.
5. Meeting Date Extension. Optionors hereby agree to extend until expiry of
Option Period by which, under the terms of the Purchase Agreement, Optionee must
hold the Stockholders Meeting. In connection therewith, Optionors waive all
requirements that Optionee hold the Stockholders Meeting prior to expiry of
Option Period, and all penalties, rights and remedies that Optionors may have
under the Purchase Agreement (including Section 6.13 thereof), the Optionee's
Certificate of Incorporation, as amended, or otherwise, as a result of
Optionee's failure to hold the Stockholders Meeting prior to such date.
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6. Consideration for Option and Meeting Date Extension.
a. In consideration of Optionors' grant of the Option, Optionee agrees to
issue to each Optionor warrants (the form of which is attached as
Exhibit B hereto) to purchase a total of 250,000 shares of Optionee's
common stock, $.01 par value. Optionee agrees to deliver warrants (the
"New Warrants") to Optionors (exercisable for 250,000 shares of common
stock by each Optionor) within two (2) business days after Optionee's
receipt of a fully executed original of this Agreement. The parties
acknowledge that warrants to purchase 100,000 shares of Optionee's
common stock (the "Old Warrants") have already been delivered to each
Optionor. Each Optionor agrees to redeliver the originals of the
100,000 warrants to Optionee for cancellation. Upon receipt of the New
Warrants, each Optionor will promptly deliver to Optionee the Old
Warrants marked cancelled. The Optionors agree that no additional
warrants will be issued upon exercise of Option and that the issuance
of the New Warrants shall be in lieu of any warrants, options or
similar rights to which Optionors are entitled pursuant to the
Purchase Agreement, Optionee's Certificate of Incorporation, or
otherwise upon a redemption of the Option Stock.
b. In consideration of Optionors' agreeing to Meeting Date Extension, the
Optionee agrees to increase the purchase price payable for the
purchase of any Option Shares under Section 1.2 of a Stock Purchase
Agreement by an accretion computed at the rate of 2.5% per month
starting from June 15, 2003 to the date on which such Option Shares
are purchased. Upon issuance of New Warrants, the Optionors agree to
waive such accretion to Purchase Price for period before June 15,
2003.
7. Litigation and Attorneys' Fees. If it shall be necessary for any party
to this Agreement to bring suit to enforce any provisions hereof or for damages
on account of any breach of this Agreement, the prevailing party in such
litigation and any appeals therefrom shall be entitled to recover from the other
party, in addition to any damages or other relief granted as a result of such
litigation, all costs and expenses of such litigation and their reasonable
attorneys' and paralegals' fees.
8. Time of Essence. Time is of the essence of this Agreement and in the
performance of all conditions and covenants to be performed or satisfied by
either party hereto. Waiver of performance or satisfaction of timely performance
or satisfaction of any condition or covenant by one party shall not be deemed to
be a waiver of the performance or satisfaction of any other condition or
covenant unless specifically consented to in writing. Whenever a date specified
herein shall fall on a Saturday, Sunday or legal holiday, the date shall be
extended to the next succeeding business day.
9. Counterparts. This Agreement may be executed in one or more duplicate
counterparts in originals or by facsimile, each of which, taken together, shall
upon execution by all parties be deemed to be a complete original.
10. Notices. All notices and other communications under this Agreement to
any party shall be in writing and shall be deemed given when delivered
personally to that party, sent by facsimile transmission (with electronic
confirmation) to that party at the facsimile number for that party set forth
below, mailed by certified mail (postage prepaid and return receipt requested)
to that party at the address for that party set forth below, or delivered by
Federal Express or any similar express delivery service for delivery to that
party at that address:
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(a) If to Optionee:
Galaxy Nutritional Foods, Inc.
0000 Xxxxxxxx Xxx
Xxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000; Fax: (000) 000-0000
Attention: Xxxxxxxxxxx New
(b) If to Optionors:
Excalibur Limited Partnership
00 Xxxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Phone: (000) 000 0000; Fax: (000) 000 0000
Attention: Xxxxxxx Xxxxxxx
And
BH Capital Investments, L.P.
000 Xxxxx Xxxxxx Xxxx
Xxxxx Tower, 7th Floor
Toronto, Ontario, Canada X0X 0X0
Phone: (000) 000 0000; Fax: (000 000 0000
Attention: Xxxxx Xxxxxxxxx
Any party may change its facsimile number or address for notices under this
Agreement at any time by giving the other parties notice of such change.
11. 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.
12. Binding Effect. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by and against the parties and their respective
successors, and assigns.
13. Entire Agreement. This Agreement and the Stock Purchase Agreement
constitutes the entire agreement, and supersedes all prior or contemporaneous
discussions, negotiations, agreements and understandings (both written and oral)
among the parties with respect to the subject matter hereof and thereof.
[Signatures on Following Page]
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IN WITNESS WHEREOF, the undersigned parties have executed this Agreement
the date and year first above written.
"OPTIONORS"
EXCALIBUR LIMITED PARTNERSHIP
By: Excalibur Capital Management, Inc.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------
Xxxxxxx Xxxxxxx, President
BH CAPITAL INVESTMENTS, L.P.
By: BH and Co., Inc.
By: /s/ Xxxxx Xxxxxxxxx
---------------------------
Xxxxx Xxxxxxxxx, President
"OPTIONEE"
GALAXY NUTRITIONAL FOODS, INC.
By: /s/ Xxxxxxxxxxx X. New
---------------------------
Xxxxxxxxxxx New, Chief Executive
Officer
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EXHIBIT A
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of the ____ day of _____________, 2003, among ____________________ (the
"Purchaser") located at _____________________________________, BH CAPITAL
INVESTMENTS, L.P., located at 000 Xxxxx Xxxxxx Xxxx, Xxxxx Tower, 7th Floor,
Toronto, Ontario, Canada M4W 3R8 ("BH Capital"), and EXCALIBUR LIMITED
PARTNERSHIP, located at 00 Xxxxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx, Xxxxxx M5R
IB2 ("Excalibur"). BH Capital and Excalibur are hereinafter collectively
referred to as the "Sellers."
PRELIMINARY STATEMENTS
1. Each of BH Capital and Excalibur is the owner of shares of the Series A
convertible preferred stock, par value $0.01 per share, of Galaxy Nutritional
Foods, Inc., a Delaware corporation (the "Preferred Stock").
2. Upon the terms and subject to the conditions set forth in this
Agreement, BH Capital desires that the Purchaser purchase, and the Purchaser
desires to purchase, shares of the Preferred Stock owned by BH Capital (the "BH
Capital Shares").
3. Upon the terms and subject to the conditions set forth in this
Agreement, Excalibur desires that the Purchaser purchase, and the Purchaser
desires to purchase, shares of the Preferred Stock owned by Excalibur (the
"Excalibur Shares") The BH Capital Shares and the Excalibur Shares are
hereinafter collectively referred to as the "Shares."
NOW, THEREFORE, in consideration of the premises and the covenants and
promises herein contained, the Purchaser and Sellers hereby agree as follows:
ARTICLE I
---------
PURCHASE OF SHARES
------------------
SECTION 1.1. PURCHASE OF SHARES. Upon the terms and subject to the
conditions set forth herein, Sellers hereby agree to sell, assign, transfer and
deliver to the Purchaser, and the Purchaser hereby agrees to purchase from
Sellers, all of the Shares on the Closing Date (as defined in Section 1.3
hereof) for the purchase price set forth in Section 1.2 hereof. On the Closing
Date, Sellers shall deliver or cause to be delivered to the Purchaser the
certificates representing the Shares, accompanied by duly executed stock powers
in favor of the Purchaser. The Purchaser agrees to cancel (if the Purchaser is
Galaxy Nutritional Foods, Inc.) or convert all Shares forthwith at terms no
favorable than those available to the Sellers.
SECTION 1.2. PURCHASE PRICE. The purchase price for each Share shall be an
amount per share equal to $50.589, plus accretion as specified in Section 7(b)
of the Option Agreement plus all accrued dividends that are then unpaid for each
Share. The purchase price shall be paid to the Sellers at Closing in cash by
wire transfer of immediately available funds, or by certified check if
available, and if not available then by cashiers check or official bank check
SECTION 1.3. TIME AND PLACE OF CLOSING. The closing of the transaction
contemplated by this Agreement (the "Closing") shall be consummated on
__________ , 2003, or such other date agreed to in writing by the parties (the
"Closing Date"). The Closing shall take place at the offices of Xxxxx &
Xxxxxxxxx LLP, 000 X. Xxxxxx Xxx., Xxxxx 0000, Xxxxxxx, XX 00000, or at such
other place as may be agreed upon in writing by the parties.
ARTICLE II
----------
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
SECTION 2.1. BH CAPITAL. BH Capital hereby represents and warrants to the
Purchaser, for the benefit of the Purchaser, that:
(a) It has all the necessary power and authority to enter into and
perform its obligations under this Agreement, and this Agreement constitutes a
legal, valid and binding agreement of BH Capital, enforceable against BH Capital
in accordance with its terms.
(b) It owns beneficially and of record the BH Capital Shares and has
the full and unrestricted right and power to sell, assign, transfer and deliver
the same to the Purchaser in accordance with this Agreement, free and clear of
all liens, security interests, encumbrances, pledges, charges, claims, rights,
options, voting trusts and restrictions on transfer of any nature whatsoever.
SECTION 2.2. EXCALIBUR. Excalibur hereby represents and warrants to the
Purchaser, for the benefit of the Purchaser, that:
(a) It has all the necessary power and authority to enter into and
perform its obligations under this Agreement, and this Agreement constitutes a
legal, valid and binding agreement of Excalibur, enforceable against Excalibur
in accordance with its terms.
(b) It owns beneficially and of record the Excalibur Shares and has
the full and unrestricted right and power to sell, assign, transfer and deliver
the same to the Purchaser in accordance with this Agreement, free and clear of
all liens, security interests, encumbrances, pledges, charges, claims, rights,
options, voting trusts and restrictions on transfer of any nature whatsoever.
ARTICLE III
-----------
CONDITIONS TO CLOSING
---------------------
SECTION 3.1. CONDITIONS TO CLOSING.
(a) The obligation of the Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the occurrence of each of the
following events contemporaneously with or prior to the Closing of the
transaction contemplated by this Agreement:
(i) Sellers shall have delivered or caused to be delivered to the
Purchaser, the original stock certificates for the Shares referred to in Section
1.1 of this Agreement, accompanied by duly executed stock powers in accordance
with said Section 1.1.
(ii) Sellers shall have delivered such other documents or
instruments required under this Agreement or as may be necessary or reasonably
requested by the Purchaser to effectuate the purposes hereof and consummate the
transactions contemplated hereby.
(b) The obligations of each of the Sellers to consummate the
transactions contemplated by this Agreement shall be subject to the Purchaser's
delivery of the purchase price for the Shares pursuant to Section 1.2 of this
Agreement and Purchaser converting all Shares forthwith at terms no better than
those available to Sellers.
ARTICLE IV
----------
SURVIVAL
--------
SECTION 4.1 SURVIVAL. The representations, warranties and covenants made by
each Seller and in each instrument, agreement and certificate entered into and
delivered by them pursuant to this Agreement, shall survive the Closing and the
consummation of the transactions contemplated hereby. In the event of a breach
or violation by either Seller of any of such representations, warranties or
covenants, the Purchaser shall have all rights and remedies for such breach or
violation available to it under the provisions of this Agreement and in law and
equity, irrespective of any investigation made by or on behalf of the Purchaser
on or prior to the Closing Date.
ARTICLE V
---------
MISCELLANEOUS PROVISIONS
------------------------
SECTION 5.1. ENTIRE AGREEMENT. This Agreement (including the documents or
portions of documents incorporated herein by reference) embodies the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, relative to said subject matter.
SECTION 5.2. BINDING EFFECT; ASSIGNMENT. This Agreement and the various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
Neither this Agreement nor any of the rights of any party hereto may be assigned
without the prior written consent of each other party.
SECTION 5.3. AMENDMENT; WAIVER. This Agreement may not be changed, amended,
terminated, augmented, rescinded or discharged (other than by performance), in
whole or in part, except by a writing executed by the parties hereto. No waiver
of any of the provisions or conditions of this Agreement or any of the rights of
a party hereto shall be effective or binding unless such waiver shall be in
writing and signed by the party claimed to have given or consented thereto.
SECTION 5.4. OTHER DOCUMENTS; MISCELLANEOUS. The parties shall, in good
faith, either before or after the Closing, execute such other instruments,
assignments or documents as may be necessary or appropriate for the consummation
of the transactions contemplated by this Agreement provided that no such
additional instrument, assignment, or document shall increase or modify in
material fashion the obligations of any party under this Agreement. Whenever the
context requires, words used in the singular shall be construed to include the
plural and vice versa. The Article and Section headings of this Agreement are
inserted for convenience only and shall not constitute a part of this Agreement
in construing or interpreting any provision hereof.
SECTION 5.5. GOVERNING LAW. This Agreement shall in all respects be
construed with and governed by the laws of the State of Delaware, without
reference to principles of conflict of laws.
SECTION 5.6 NOTICES. All notices and other communications under this
Agreement to any party shall be in writing and shall be deemed given when
delivered personally to that party, sent by facsimile transmission (with
electronic confirmation) to that party at the facsimile number for that party
set forth below, mailed by certified mail (postage prepaid and return receipt
requested) to that party at the address for that party set forth below, or
delivered by Federal Express or any similar express delivery service for
delivery to that party at that address:
(a) If to the Purchaser:
_______________________
_______________________
_______________________
Phone: (___) ________; Fax: (___) __________
Attention:
(b) If to Sellers:
Excalibur Limited Partnership
00 Xxxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Phone: (000) 000 0000; Fax: (000) 000 0000
Attention: Xxxxxxx Xxxxxxx
And
BH Capital Investments, L.P.
000 Xxxxx Xxxxxx Xxxx
Xxxxx Tower, 7th Floor
Toronto, Ontario, Canada X0X 0X0
Phone: (000) 000 0000; Fax: (000) 000 0000
Attention: Xxxxx Xxxxxxxxx
Any party may change its facsimile number or address for notices under
this Agreement at any time by giving the other parties notice of such change.
SECTION 5.7 LITIGATION AND ATTORNEYS' FEES. If it shall be necessary for
any party to this Agreement to bring suit to enforce any provisions hereof or
for damages on account of any breach of this Agreement, the prevailing party in
such litigation and any appeals therefrom shall be entitled to recover from the
other party, in addition to any damages or other relief granted as a result of
such litigation, all costs and expenses of such litigation and their reasonable
attorneys' and paralegals' fees.
SECTION 5.8 PRELIMINARY STATEMENTS. The preliminary statements and preamble
contained in this Agreement are hereby made a part of this Agreement.
[Signatures on Following Page]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
"PURCHASER"
___________________________________
By: _______________________________
Name: _____________________________
As its: ___________________________
"BH CAPITAL"
BH CAPITAL INVESTMENTS, L.P.
By: HB and Co., Inc., its General Partner
By: _______________________________
Xxxxx Xxxxxxxxx
President
"EXCALIBUR"
EXCALIBUR LIMITED PARTNERSHIP
By: Excalibur Capital Management, Inc.,
its General Partner
By: _______________________________
Xxxxxxx Xxxxxxx
President
EXHIBIT B
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
REGULATION S OF THE SECURITIES ACT, AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER
THE PROVISIONS OF THE SECURITIES ACT, SUPPORTED IN EACH CASE (OTHER THAN
PURSUANT TO A REGISTRATION STATEMENT) BY AN OPINION OF COUNSEL.
STOCK PURCHASE WARRANT
To Purchase 250,000 Shares of Common Stock of
GALAXY NUTRITIONAL FOODS, INC.
THIS CERTIFIES that, for value received, ___________________________ (the
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after the date hereof (the "Initial Exercise Date")
and on or prior to the close of business on July 15, 2006 (the "Termination
Date"), but not thereafter, to subscribe for and purchase from Galaxy
Nutritional Foods, Inc., a corporation incorporated in Delaware (the "Company"),
two hundred and fifty thousand (250,000) shares (the "Warrant Shares") of Common
Stock, $0.01 par value, of the Company (the "Common Stock"). The per share
purchase price of the Warrant Shares (the "Exercise Price") shall be $2.00.
1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
Holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
2. Authorization of Shares. The Company covenants that all shares of Common
Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
3. Exercise of Warrant. Except as provided in Section 4 herein, exercise of
the purchase rights represented by this Warrant may be made at any time or times
on or after the Initial Exercise Date, and before the close of business on the
Termination Date by the surrender of this Warrant and the Notice of Exercise
Form annexed hereto duly executed, at the office of the Company (or such other
office or agency of the Company as it may designate by notice in writing to the
registered Holder hereof at the address of such Holder appearing on the books of
the Company) and upon payment of the Exercise Price
of the shares thereby purchased by wire transfer or cashier's check drawn on a
United States bank, the Holder of this Warrant shall be entitled to receive a
certificate for the number of shares of Common Stock so purchased. This Warrant
may also be exercised in whole or in part by means of a "cashless exercise" by
tendering this Warrant to the Company to receive a number of shares of Common
Stock equal in Market Value to the difference between the Market Value of the
shares of Common Stock issuable upon such exercise of this Warrant and the total
cash exercise price of that part of the Warrant being exercised. "Market Value"
for this purpose shall be the closing price of the Common Stock as reported by
Bloomberg L.P. on the date of such cashless exercise. Certificates for shares
purchased hereunder shall be delivered to the Holder hereof within four (4)
Trading Days after the date on which this Warrant shall have been exercised as
aforesaid. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the Holder
or any other person so designated to be named therein shall be deemed to have
become a the Holder of record of such shares for all purposes, as of the date
the Warrant has been exercised by payment to the Company of the Exercise Price
and all taxes required to be paid by the Holder, if any, pursuant to Section 5
prior to the issuance of such shares, have been paid. If this Warrant shall have
been exercised in part, the Company shall, at the time of delivery of the
certificate or certificates representing the Warrant Shares, deliver to the
Holder a new Warrant evidencing the rights of the Holder to purchase the
unpurchased shares of Common Stock called for by this Warrant, which new Warrant
shall in all other respects be identical with this Warrant.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which the Holder would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the Exercise Price.
5. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the Holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder of this Warrant or in such name or names as may be directed by the
Holder of this Warrant; provided, however, that in the event certificates for
shares of Common Stock are to be issued in a name other than the name of the
Holder of this Warrant, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
hereof; and the Company may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any transfer tax incidental thereto.
6. Further Assurances. The Company will take all action that may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of stock, free from all taxes, liens and
charges with respect to the issue thereof, on the exercise of all or any portion
of this Warrant from time to time outstanding.
7. Transfer, Division and Combination.
(a) Subject to compliance with any applicable securities laws,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company, together with
a written assignment of this Warrant substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. A Warrant, if properly assigned, may be exercised
by a new Holder for the purchase of shares of Common Stock without having a new
Warrant issued.
(b) This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 7(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
(c) The Company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 7.
(d) The Company agrees to maintain, at its aforesaid office, books for
the registration and the registration of transfer of the Warrants.
8. No Rights as Stockholder until Exercise. This Warrant does not entitle
the Holder hereof to any voting rights or other rights as a stockholder of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price, the Warrant Shares so purchased shall
be and be deemed to be issued to such Holder as the record owner of such shares
as of the close of business on the later of the date of such surrender or
payment.
9. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant certificate or any
stock certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday, Sunday or a legal holiday, then such action may be taken or
such right may be exercised on the next succeeding day not a Saturday, Sunday or
legal holiday.
11. Adjustments of Exercise Price and Number of Warrant Shares.
(a) Stock Splits, etc. The number and kind of securities purchasable
upon the exercise of this Warrant and payment of the Exercise Price shall be
subject to adjustment from time to time upon the happening of any of the
following. In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock to the Holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock or (iv)
issue any shares of its capital stock in a reclassification of the Common Stock,
then the number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder of this Warrant
shall be entitled to receive the kind and number of Warrant Shares or other
securities of the Company which he would have owned or have been entitled to
receive had such Warrant been exercised in advance thereof. Upon each such
adjustment of the kind and number of Warrant Shares or other securities of the
Company which are purchasable hereunder, the
Holder of this Warrant shall thereafter be entitled to purchase the number of
Warrant Shares or other securities resulting from such adjustment at an Exercise
Price per Warrant Share or other security obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of Warrant
Shares purchasable pursuant hereto immediately prior to such adjustment and
dividing by the number of Warrant Shares or other securities of the Company
resulting from such adjustment. An adjustment made pursuant to this paragraph
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume in
writing or by by operation of law the due and punctual observance and
performance of each and every covenant and condition of this Warrant to be
performed and observed by the Company and all the obligations and liabilities
hereunder, subject to such modifications as may be deemed appropriate (as
determined in good faith by resolution of the Board of Directors of the Company)
in order to provide for adjustments of shares of Common Stock for which this
Warrant is exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 11. For purposes of this Section 11,
"common stock of the successor or acquiring corporation" shall include stock of
such corporation of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock. The foregoing provisions of this Section 11 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
12. Voluntary Adjustment by the Company. The Company may at any time during
the term of this Warrant, reduce the then current Exercise Price to any amount
and for any period of time deemed appropriate by the Board of Directors of the
Company.
13. Notice of Adjustment. Whenever the number of Warrant Shares or number
or kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company shall
promptly mail by registered or certified mail, return receipt requested, to the
Holder of this Warrant notice of such adjustment or adjustments setting forth
the number of Warrant Shares (and Other Property) purchasable upon the exercise
of this Warrant and the Exercise Price of such Warrant Shares (and Other
Property) after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which such
adjustment was made. Such notice, in the absence of manifest error, shall be
conclusive evidence of the correctness of such adjustment.
14. Registration. If at any time the Company proposes to 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 securities the Company shall
include in such Registration Statement all or any part of the Warrant Shares
then outstanding, provided that in any event, the Company shall cause the
Warrant Shares to be registered for resale no later than December 31, 2003.
15. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend or other distribution,
or any right to subscribe for or purchase any evidences of its indebtedness, any
shares of stock of any class or any other securities or property, or to receive
any other right; or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation; or
(c) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, in any one or more of such cases, the Company shall give to the Holder (i)
at least 30 days' prior written notice of the date on which a record date shall
be selected for such dividend, distribution or right or for determining rights
to vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 30
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (x) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (y) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or Other
Property deliverable upon such disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to the
Holder at the last address of the Holder appearing on the books of the Company
and delivered in accordance with Section 16(d).
16. Authorized Shares.
(a) The Company covenants that during the period the Warrant is
outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares
may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the Principal Market upon which the Common
Stock may be listed.
(b) The Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in par
value, (ii) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant, and (iii) use its best
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Warrant.
(c) Upon the request of the the Holder, the Company will at any time
during the period this Warrant is outstanding acknowledge in writing, in form
reasonably satisfactory to the Holder, the continuing validity of this Warrant
and the obligations of the Company hereunder.
(d) Before taking any action which would cause an adjustment reducing
the current Exercise Price below the then par value, if any, of the shares of
Common Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Common Stock at
such adjusted Exercise Price.
(e) Before taking any action which would result in an adjustment in
the number of shares of Common Stock for which this Warrant is exercisable or in
the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
17. Miscellaneous.
(a) Jurisdiction. This Warrant shall be binding upon any successors or
assigns of the Company. This Warrant shall constitute a contract under the laws
of Delaware without regard to its conflict of law principles or rules, and be
subject to arbitration pursuant to the terms set forth in that certain Series A
Preferred Stock and Warrants Purchase Agreement effective as of April 6, 2001
among the Company, Excalibur Limited Partnership and BH Capital Investments,
L.P. (the "Purchase Agreement")
(b) Restrictions. The Holder hereof acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
(c) Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the Holder shall operate
as a waiver of such right or otherwise prejudice the Holder's rights, powers or
remedies, notwithstanding all rights hereunder terminate on the Termination
Date. If the Company fails to comply with any provision of this Warrant, the
Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder hereof by the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement.
(e) Limitation of Liability. No provision hereof, in the absence of
affirmative action by the Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of the Holder hereof, shall give
rise to any liability of the Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
(f) Remedies. The Holder, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
(g) Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of the Holder. The provisions of this Warrant are intended
to be for the benefit of all holders from time to time of this Warrant and shall
be enforceable by any such Holder or holder of Warrant Shares.
(h) Indemnification. The Company agrees to indemnify and hold harmless
the Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, reasonable attorneys' fees,
expenses and disbursements of any kind which may be imposed upon, incurred by or
asserted against the Holder in any manner relating to or arising out of any
failure by the Company to perform or observe in any material respect any of its
covenants, agreements, undertakings or obligations set forth in this Warrant;
provided, however, that the Company will not be liable hereunder to the extent
that any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses or disbursements are
found in a final non-appealable judgment by a court to have resulted from the
Holder's bad faith or willful misconduct in its capacity as a stockholder or
warrantholder of the Company.
(i) Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.
(j) Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
(k) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Stock Purchase Warrant to
be executed by its officer thereunto duly authorized.
Dated: April __, 2003
GALAXY NUTRITIONAL FOODS, INC.
By: _____________________________
Name: ___________________________
Title: __________________________
NOTICE OF EXERCISE
To: [Transfer Agent]
(1) The undersigned hereby elects to purchase ________ shares of
Common Stock (the "Common Stock"), of Galaxy Nutritional Foods, Inc. (the
"Company") pursuant to the terms of the attached Warrant, and (check one:) [ ]
tenders herewith payment of the exercise price in full OR [ ] tenders the
Warrant for cashless exercise, together with all applicable transfer taxes, if
any.
(2) Calculation of cashless exercise value, if applicable:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(3) The undersigned hereby restates and confirms the continued
accuracy of the investment representations made by the Investors under Article
III of the Series A Preferred Stock and Warrants Purchase Agreement dated
effective April 6, 2001 by and between the Company and the Investors signatory
thereto, as applicable to the undersigned on the date hereof.
(4) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
_______________________________
(Name)
_______________________________
(Address)
_______________________________
Dated: _____________________, _____
_______________________________________
Signature
EXHIBIT A
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and
supply required information. Do not use this form to
exercise the Warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________
_______________________________________________________________
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
Any assignee receiving this Warrant in a non-public resale transaction must be
an accredited investor as that term is defined under the Securities act of 1933,
as amended, and the rules and regulations promulgated thereunder.
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
