EXHIBIT "A"
TO
SECURITIES PURCHASE AGREEMENT
WARRANT TO PURCHASE SECURITIES
OF
GALAXY NUTRITIONAL FOODS, INC.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
SOLD, OFFERED FOR SALE, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO (A) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (B)
AN EXEMPTION THEREFROM AND, IF REQUESTED BY THE COMPANY, THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT
THAT THE TRANSFER IS EXEMPT FROM THE REGISTRATION PROVISIONS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE SECURITIES
OF
GALAXY NUTRITIONAL FOODS, INC.
Void after October 6, 2009 ("Expiration Date")
This Warrant is issued to Xxxx XxXxxx, or his registered assigns
(the "Holder") by GALAXY NUTRITIONAL FOODS, INC., a Delaware corporation (the
"Company"), on October 6, 2004 (the "Warrant Issue Date"). This Warrant is
issued pursuant to the terms of a Securities Purchase Agreement dated of even
date herewith (the "Purchase Agreement") in connection with an equity investment
in the Company by the Holder. Capitalized terms used herein, but not otherwise
defined, shall have the meaning ascribed to them in the Purchase Agreement.
1. Number of Shares Subject to Warrant. Subject to the terms and
conditions hereinafter set forth, the Holder is entitled, upon surrender of this
Warrant at the principal office of the Company, to purchase from the Company, at
a price equal to the Exercise Price (as defined in Section 2 below), shares of
the Warrant Stock.
For purposes of this Warrant:
(A) "Common Stock" shall mean the Company's common stock,
$0.01 par value.
(B) "Warrant Stock" shall mean 500,000 shares of the Company's
Common Stock, subject to adjustment as described in Section 7 below.
(C) "Shares" shall mean fully paid and non-assessable shares
of Common Stock.
2. Exercise Price. The per share purchase price for the Shares shall
be $1.15 (the "Exercise Price"). The Exercise Price shall be subject to
adjustment pursuant to Section 7 hereof.
3. Exercise Period. Except as otherwise provided for herein, this
Warrant shall be exercisable, in whole or in part, at any time and from time to
time. On the Expiration Date, all Warrants evidenced hereby shall thereafter be
void and of no further force and effect. Whether or not surrendered to the
Company by the Holder, this Warrant shall be deemed canceled upon the expiration
hereof.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 hereof, the purchase rights hereby
represented may be exercised in whole or in part, at the election of the Holder,
by the tender of the Notice of Exercise in substantially the form attached
hereto as Exhibit A and the surrender of this Warrant at the principal office of
the Company and by the payment to the Company in immediately available U.S.
funds, cancellation of indebtedness or other form of payment acceptable to the
Company, of an amount equal to the then applicable Exercise Price multiplied by
the number of Shares then being purchased.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, as applicable).
6. Issuance of Shares. The Company hereby covenants that it will
duly and validly reserve shares of Common Stock for issuance upon exercise of
this Warrant. The Company covenants that the Shares, when issued pursuant to the
exercise of this Warrant, will be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens, and charges with respect to the
issuance thereof. The Shares issued hereunder shall have the same rights and
obligations pertaining to the other shares of Common Stock issued previously by
the Company.
7. Adjustment of Exercise Price and Number of Shares. The number of
and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the
Company shall at any time prior to the exercise or expiration of this Warrant
subdivide its Common Stock, by split-up or otherwise, or combine its Common
Stock, or issue additional Common Stock as a dividend with respect to any of its
Common Stock, the number of Shares issuable on the exercise of this Warrant
shall forthwith be proportionately increased in the case of a subdivision or
stock dividend, or proportionately decreased in the case of a combination.
Appropriate adjustments shall also be made to the Exercise Price, provided that
the aggregate Exercise Price payable hereunder for the total number of Shares
purchasable under this Warrant (as adjusted) shall remain the same. Any
adjustment under this Section 7(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In the
event of any corporate reclassification, capital reorganization, consolidation,
spin-off or change in the Common Stock of the Company (other than as a result of
a subdivision, combination, or dividend provided for in Section 7(a) above),
then, as a condition of such event, lawful provision shall be made, and duly
executed documents evidencing the same from the Company or its successor shall
be delivered to the Holder, so that the Holder shall have the right at any time
prior to the expiration of this Warrant to purchase, at a total price equal to
that payable upon the exercise of this Warrant, the kind and amount of shares of
stock and/or other securities and property receivable in connection with such
event by a holder of the same number of shares for which this Warrant could have
been exercised immediately prior to such event. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the Exercise Price,
provided that the aggregate exercise price payable hereunder for the total
number of Shares purchasable under this Warrant (as adjusted) shall remain the
same.
2
(c) Adjustment to Number of Shares. Upon each adjustment of
the Exercise Price, the number of Shares issuable upon exercise of the Warrant
shall be increased to equal the quotient obtained by dividing (x) the product
resulting from multiplying (i) the number of Shares issuable upon exercise of
the Warrant, and (ii) the Exercise Price, in each case as in effect immediately
before such adjustment by (y) the adjusted Exercise Price.
(d) Notice of Adjustment. When any adjustment is required to
be made to the Exercise Price or in the number or kind of Shares purchasable
upon exercise of the Warrant, the Company shall promptly notify the Holder of
such event and of the adjusted Exercise Price or number of Shares or other
securities or property thereafter purchasable upon exercise of this Warrant.
8. Assumption of Warrant. If at any time, while this Warrant, or any
portion thereof, is outstanding and unexpired there shall be an acquisition of
the Company by another entity by means of a merger, reorganization or
consolidation of the Company or any other transaction in which the owners of the
Company's outstanding voting power immediately prior to such transaction own,
directly or indirectly, less than 51% of the voting power of the resulting or
surviving entity immediately upon completion of such transaction, then, as a
part of such acquisition, lawful provision shall be made so that the Holder
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and upon payment of the aggregate Exercise Price
then in effect, the number of shares of stock or other securities or property of
the successor corporation resulting from such acquisition which a holder of the
Shares deliverable upon exercise of this Warrant would have been entitled to
receive in such acquisition if this Warrant had been exercised immediately
before such acquisition.
9. No Fractional Shares or Scrip. No fractional Shares or scrip
representing fractional Shares shall be issued upon the exercise of this
Warrant, but in lieu of any fractional Share the Company shall make a cash
payment therefor on the basis of the closing sale price of the Common Stock on
the AMEX Stock Exchange (or any successor exchange or quotation system on which
the Common Stock is listed or quoted) on the date of exercise.
10. No Shareholder Rights. Prior to exercise of this Warrant, the
Holder shall not be entitled to any rights of a shareholder with respect to the
Shares, including (without limitation) the right to vote such Shares, receive
dividends or other distributions thereon, exercise preemptive rights or be
notified of shareholder meetings, and such Holder shall not be entitled to any
notice or other communication concerning the business or affairs of the Company.
However, nothing in this Section 10 shall limit the right of the Holder to be
provided the notices required under this Warrant or the Purchase Agreement.
11. Compliance With Securities Act; Transferability of Warrant or
Shares.
(a) Compliance With Securities Act. The Holder, by acceptance
hereof, agrees that this Warrant, and the Shares issuable upon exercise of this
Warrant, are being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Warrant, or any Shares issuable upon exercise
of this Warrant, except under circumstances which will not result in a violation
of the Securities Act, or any applicable state securities laws. This Warrant and
all Shares issued upon exercise of this Warrant (unless registered under the
Securities Act and any applicable state securities laws) shall be stamped or
imprinted with a legend in substantially the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE
SECURITIES LAW AND MAY NOT BE SOLD, OFFERED FOR SALE, MORTGAGED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR AN EXEMPTION THEREFROM, AND, IF REQUESTED BY THE
COMPANY, THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY TO THAT EFFECT. THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE."
3
(b) Transferability. Subject to compliance with applicable
federal and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed for transfer
by delivery of an Assignment Form in substantially the form attached hereto as
Exhibit B, to the Company at the address set forth in Section 15 hereof, and the
payment to the Company of all transfer taxes and other governmental charges
imposed on such transfer. In the event of a partial transfer, the Company shall
issue to the holders one or more appropriate new warrants.
12. Restricted Securities. The Holder understands that this Warrant
and the Shares issuable upon exercise of this Warrant, will not be registered at
the time of their issuance under the Securities Act for the reason that the sale
provided for herein and in the Purchase Agreement is exempt pursuant to Section
4(2) of the Securities Act based on the representations of the Holder set forth
in the Purchase Agreement. The Holder represents that it is experienced in
evaluating companies such as the Company, has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to suffer the total loss of the
investment. The Holder further represents that it has had the opportunity to ask
questions of and receive answers from the Company concerning the terms and
conditions of this Warrant, the business of the Company, and to obtain
additional information to such Holder's satisfaction. The Holder further
represents that it is an "accredited investor" within the meaning of Regulation
D under the Securities Act, as presently in effect. The Holder further
represents that this Warrant is being acquired for the account of the Holder for
investment only and not with a view to, or with any intention of, a distribution
or resale thereof, in whole or in part, or the grant of any participation
therein.
13. Successors and Assigns. The terms and provisions of this Warrant
shall inure to the benefit of, and be binding upon, the Company and the Holders
hereof and their respective successors and assigns.
14. Amendments and Waivers. Any term of this Warrant may be amended
and the observance of any term of this Warrant may be waived (either generally
or in a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder.
15. Notices. All notices required under this Warrant shall be deemed
to have been given or made for all purposes (i) upon personal delivery, (ii)
upon confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile, (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) three business days
after posting when sent by registered or certified mail. Notices to the Company
shall be sent to the address of the Company set forth below (or at such other
place as the Company shall notify the Holder hereof in writing) and notices to
the Holder shall be sent to the address of the Holder set forth below (or at
such other place as the Holder shall notify the Company hereof in writing):
4
To the Company: GALAXY NUTRITIONAL FOODS, INC.
0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
Attn: Xx. Xxxxxxx X. Xxxxx
With a copy to: Xxxxx & Xxxxxxxxx LLP
000 X. Xxxxxx Xxxxxx
XxxXxxxx Xxxxxx, Xxxxx 0000
Telecopier: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
To the Holder as provided on the signature page of this Warrant.
16. Captions. The section and subsection headings of this Warrant
are inserted for convenience only and shall not constitute a part of this
Warrant in construing or interpreting any provision hereof.
17. Governing Law. This Warrant shall be governed by the laws of the
State of Florida, without regard to the choice or conflict of laws principles
thereof.
[SIGNATURE PAGE FOLLOWS]
5
IN WITNESS WHEREOF, the undersigned have caused this Warrant
to be duly executed as of the date first set forth above.
COMPANY
GALAXY NUTRITIONAL FOODS, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx
Chief Executive Officer
HOLDER
/s/ Xxxx Xxxxxx
-----------------------------------------
Xxxx XxXxxx
Holder's address for its principal place
of business is as follows:
Xxxx XxXxxx
000 Xxx Xxxxx
Xxxxxxx, XX 00000
Holder's address for notice purposes (if
different than above):
Xxxx XxXxxx
000 Xxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
6
EXHIBIT A
NOTICE OF EXERCISE
To: GALAXY NUTRITIONAL FOODS, INC.
The undersigned hereby elects to purchase ______________ Shares (as
defined in the attached Warrant) of GALAXY NUTRITIONAL FOODS, INC., pursuant to
the terms of the attached Warrant and payment of the Exercise Price per Share
required under such Warrant accompanies this notice.
The Holder represents that it is experienced in evaluating companies such
as the Company, has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of its investment,
and has the ability to suffer the total loss of the investment. The Holder
further represents that it has had the opportunity to ask questions of and
receive answers from the Company concerning the terms and conditions of this
Warrant, the business of the Company, and to obtain additional information to
such Holder's satisfaction. The Holder further represents that it is an
"accredited investor" within the meaning of Regulation D under the Securities
Act, as presently in effect. The undersigned hereby represents and warrants that
the undersigned is acquiring such shares for its own account for investment
purposes only, and not for resale or with a view to distribution of such shares
or any part thereof.
Date:_______________________ WARRANT HOLDER:
By:
-------------------------------------
Name:
Address:
Name in which shares should be registered: ____________________________
7
EXHIBIT B
ASSIGNMENT FORM
TO: GALAXY NUTRITIONAL FOODS, INC.
The undersigned hereby assigns and transfers unto _____________________________
of ______________________________________________ (Please typewrite or print in
block letters) the right to purchase ____________ Shares (as defined in the
Warrant) of GALAXY NUTRITIONAL FOODS, INC. subject to the Warrant, dated as of
_____________________________, by and between GALAXY NUTRITIONAL FOODS, INC. and
the undersigned (the "Warrant").
This assignment complies with the provisions of Section 11 of the Warrant and is
accompanied by funds sufficient to pay all applicable transfer taxes.
In addition, the undersigned and/or its assignee will provide such evidence as
is reasonably requested by, GALAXY NUTRITIONAL FOODS INC., to evidence
compliance with applicable securities laws as contemplated by Sections 11 and 12
of the Warrant.
Date:_______________________ By:
---------------------------------
(Print Name of Signatory)
(Title of Signatory)
8
