SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
|X| Filed by the Registrant
|_| Filed by a Party other than the Registrant
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-12
GALAXY NUTRITIONAL FOODS, INC., a Delaware corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the approximate box)
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and O-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule O-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
[GALAXY LOGO]
GALAXY NUTRITIONAL FOODS, INC.
2441 Viscount Row
Orlando, Florida 32809
(407) 855-5500
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, NOVEMBER 9, 2005
To the Stockholders:
A Special Meeting of Stockholders of Galaxy Nutritional Foods, Inc. (the
"Company"), will be held Wednesday, November 9, 2005 at 10:00 a.m. at the
Company's headquarters, located at 2441 Viscount Row, Orlando, Florida 32809 for
the following purpose:
1. To approve the sale of the Company's manufacturing equipment as
contemplated by the Asset Purchase Agreement, dated as of June 30, 2005, by and
between Schreiber Foods, Inc., a Wisconsin corporation, and the Company (the
"Proposed Asset Sale"), which may be deemed a sale of substantially all of the
assets of the Company pursuant to Delaware General Corporation Law ("DGCL"); and
2. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
The Proposed Asset Sale is more fully described in the accompanying Proxy
Statement. Under the DGCL, stockholders do not have appraisal rights in
connection with the Proposed Asset Sale. Stockholders of record at the close of
business on September 26, 2005 will be entitled to notice of, and to vote at,
the meeting or any adjournment thereof. Following the formal business of the
meeting, we will report on the affairs of the Company and respond to questions
of general interest to stockholders.
By Order of the Board of Directors
/s/ LeAnn Hitchcock
LeAnn Hitchcock
Corporate Secretary
Orlando, Florida
October 19, 2005
STOCKHOLDERS ARE REQUESTED TO VOTE YOUR SHARES BY PHONE, VIA THE INTERNET OR BY
SIGNING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE ENCLOSED STAMPED
ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN
PERSON.
GALAXY NUTRITIONAL FOODS, INC.
2441 Viscount Row
Orlando, Florida 32809
PROXY STATEMENT
FOR
A SPECIAL MEETING OF STOCKHOLDERS
to be held Wednesday, November 9, 2005
Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of Galaxy Nutritional Foods, Inc., a Delaware corporation
(the "Company"), for the use at the Special Meeting of Stockholders to be held
Wednesday, November 9, 2005 at 10:00 a.m., or at any adjournments or
postponements thereof, for the purposes set forth in the accompanying Notice of
Special Meeting of Stockholders. The Special Meeting will be held at the
Company's headquarters, located at 2441 Viscount Row, Orlando, Florida 32809
This proxy statement and the enclosed proxy card are first being mailed on
or about October 19, 2005 to the Company's stockholders entitled to vote at the
meeting. References in this proxy statement to "Galaxy", "we", "us", "our', or
the "Company" refers to Galaxy Nutritional Foods, Inc.
SUMMARY TERM SHEET
At the Special Meeting, our stockholders will consider and vote upon a
proposal to approve the sale of our manufacturing equipment as contemplated by
the Asset Purchase Agreement, dated as of June 30, 2005, by and between
Schreiber Foods, Inc., a Wisconsin corporation ("Schreiber"), and our Company
(the "Proposed Asset Sale"), which may be deemed a sale of substantially all of
our assets pursuant to Delaware General Corporation Law ("DGCL"). For your
convenience, we have set forth below a summary of certain information relating
to the Proposed Asset Sale that is contained under Proposal No. 1 in this proxy
statement. This summary does not contain all of the information that you may
consider to be important in determining how to vote on the Proposed Asset Sale.
You should carefully read the entire proxy statement and the other documents to
which we refer. These will give you a more detailed description of the Proposed
Asset Sale. Each item in this summary refers to the pages where that subject is
discussed in greater detail elsewhere in this proxy statement.
Summary of Existing Operations (page 10)
Currently, our Company is principally engaged in developing, manufacturing
and marketing a variety of healthy cheese, cheese alternatives and dairy-related
products. Our products are formulated and developed by our research and
development department, manufactured in and shipped from our two Orlando,
Florida facilities, and marketed and sold in two principal markets: retail and
food service.
Background of the Proposed Asset Sale (page 10)
Our Board of Directors concluded that our manufacturing capacity was
significantly in excess of its requirements. We believe that we are currently
operating at 15% of our manufacturing capacity. After reviewing alternatives
available to us, our Board of Directors concluded that it would be advantageous
for us to outsource our manufacturing to Schreiber and to sell our manufacturing
equipment. We determined that Schreiber was a highly respected contract
manufacturer that could produce high quality products on a more cost effective
basis than our Company. Our Board of Directors realized that if we could
outsource our manufacturing, we could sell the manufacturing equipment and use
the proceeds from such sale to pay off indebtedness and improve our capital
structure. In addition, our Board of Directors recognized that the reduction in
our debt service obligations that would result from paying off such indebtedness
would enhance cash flow, and allow us to increase our focus on marketing and
product research and development.
1
On June 10, 2005, our Board of Directors unanimously approved the Proposed
Asset Sale and an outsourcing arrangement with Schreiber pursuant to a Supply
Agreement (as described below). On June 30, 2005, our Company and Schreiber
executed the Asset Purchase Agreement and the Supply Agreement.
Information about the Buyer (page 10)
The purchaser of our assets will be Schreiber, which is a privately held
cheese manufacturing company with annual sales exceeding $2 billion. Schreiber's
main business is contract manufacturing cheese, cheese alternative and other
dairy products for many well-known companies and brands.
Reasons for the Proposed Asset Sale (page 11)
Our Board of Directors considered a number of factors before recommending
that our stockholders approve the Proposed Asset Sale, including the
underutilization of our manufacturing capacity, our debt service obligations and
our dependence on our asset-based financing. The Board of Directors did not
engage an independent financial advisor to determine the fairness of the
Proposed Asset Sale to our stockholders but determined, based on the factors
described above and others, that the asset sale under the terms and conditions
contemplated by the Asset Purchase Agreement is fair to our stockholders.
Further, based on the procedural safeguards provided under the DGCL, including
the required approval of our Board of Directors and the required approval of our
stockholders owning at least a majority of our outstanding common stock, our
Board of Directors believes that the asset sale is procedurally fair to our
stockholders.
Purchase Price (page 12)
Schreiber will pay us a total purchase price of $8,700,000 for the assets
to be acquired under the Asset Purchase Agreement (the "Purchased Assets").
Payment will be made in cash at the closing.
Indemnification (page 12)
Under the terms of the Asset Purchase Agreement, we have agreed to
indemnify Schreiber against, among other things, any pre-closing debts,
liabilities or obligations of our Company, and any losses, liabilities or
damages that Schreiber may incur by reason of our failure to discharge our
pre-closing liabilities. Schreiber has agreed to indemnify us against, among
other things, any post-closing debts, liabilities or obligations of Schreiber.
Except in connection with any fraudulent misrepresentation by either party,
rights of indemnification shall be the sole remedy of the parties after the
closing of the Proposed Asset Sale.
2
Alternative Transactions (page 13)
If, at the Special Meeting, our stockholders holding a majority of the
outstanding shares of our common stock do not approve the sale of the Purchased
Assets, then, as soon as is reasonably practicable thereafter, our Company and
Schreiber will consummate one of the following transactions:
1. We will sell to Schreiber, and Schreiber will purchase from us, certain
alternative assets (constituting lees than substantially all of our
assets) for an aggregate purchase price of $2,115,000, subject to
certain conditions.
2. In the event that the parties are unable to satisfy the conditions with
respect to the sale of the alternative assets as contemplated by
alternative 1 above, then the parties would negotiate in good faith to
make such alternative assets available for use by Schreiber on a basis
and for such period (not to exceed 180 days) that are reasonably
acceptable to each of our Company and Schreiber.
Termination (page 13)
The Asset Purchase Agreement provides that it may be terminated at any
time prior to the closing of the Proposed Asset Sale or the consummation of an
alternative transaction, by mutual written agreement of our Company and
Schreiber, or automatically upon written notice of termination of the Supply
Agreement (as described below). In the event the Asset Purchase Agreement is
terminated for any reason other than pursuant to a default by either party, the
Asset Purchase Agreement shall become void and there will be no liability
thereunder on the part of our Company or Schreiber.
Conditions to Close (page 13)
The closing of the Proposed Asset Sale is scheduled to occur on November
1, 2005 or, if later, the date that is three (3) business days after the date on
which all conditions to closing, including the approval of our stockholders, are
satisfied or waived. Since we have scheduled the Special Meeting for November 9,
2005, the closing of the Proposed Asset Sale will not occur prior to November 9,
2005.
Representations and Warranties (page 13)
The Asset Purchase Agreement contains various representations and
warranties of our Company to Schreiber, and also contains various
representations and warranties of Schreiber to our Company. The representations
and warranties survive the closing until twelve months after the closing date.
Other Transactions (page 14)
We also agreed that between the signing of the Asset Purchase Agreement
and the closing of the Proposed Asset Sale we would not, except in the ordinary
course of our business, (i) enter into discussions, and would discontinue all
pending discussions, relating to any of the Purchased Assets, or (ii) sell,
lease or grant any option to sell or lease, give a security interest in or
otherwise create any encumbrance on any of the Purchased Assets.
Other Material Agreements between the Company and Schreiber (page 14)
On June 30, 2005, in connection with the Asset Purchase Agreement, we
entered into a Supply Agreement with Schreiber (the "Supply Agreement").
Pursuant to the Supply Agreement, we agreed that (i) as of September 1, 2005,
Schreiber will be our sole third-party source of supply of substantially all of
our products for the term of the Supply Agreement, meaning that we can continue
manufacturing our products ourselves, and (ii) as of November 1, 2005, Schreiber
will be our sole source of supply of substantially all of our products, and we
will purchase our requirements of substantially all of our products exclusively
from Schreiber. The initial term of the Supply Agreement is for a period of five
years from the effective date of September 1, 2005 and is renewable at our
option for up to two additional five-year periods (for a total term of up to
fifteen years). If the closing of the Proposed Asset Sale has occurred and we do
not exercise our first option to extend the term, then we will be obligated to
pay Schreiber $1,500,000, and if the closing of the Proposed Asset Sale has
occurred, we have exercised the first option to extend the term and we do not
exercise our second option to extend the term, then we will be obligated to pay
Schreiber $750,000. If our stockholders do not approve the Proposed Asset Sale
at the Special Meeting, then we may terminate the Supply Agreement upon not more
than 180 days' notice delivered to Schreiber within thirty days of the Special
Meeting. If we do not terminate the Supply Agreement and we are unable to
consummate an alternative transaction with Schreiber (as described above) prior
to January 1, 2006, then Schreiber may terminate the Supply Agreement upon at
least 180 days' notice delivered to us prior to February 1, 2006.
3
On May 17, 2002, Schreiber filed a lawsuit against our Company in the
federal district court for the Eastern District of Wisconsin ("Wisconsin
lawsuit"), being Case No. 02-C-0498, alleging various acts of patent
infringement. On May 6, 2004, Schreiber and our Company executed a settlement
agreement pursuant to which all claims in the patent infringement lawsuit were
dismissed. Pursuant to this settlement agreement, we procured a worldwide, fully
paid-up, nonexclusive license to own and use all of our individually wrapped
slice equipment, which Schreiber alleged infringed on Schreiber's patents. The
term of the license extends through the life of all patents named in the lawsuit
(and all related patents) and is assignable by us in connection with the sale of
our business. Pursuant to the settlement agreement, if, during the term of the
license, we receive an offer to purchase our Company or our business, we must
notify Schreiber of the offer and Schreiber will have the option to match the
offer or make a better offer to purchase our Company or our business. We have
not received any such offer, and the decision by our Board of Directors to cause
our Company to enter into the Asset Purchase Agreement was not based upon
receipt of any offer to purchase our Company or our business.
Use of Proceeds from the Proposed Asset Sale (page 16)
As a result of the consummation of the sale of the Purchased Assets, we
will be entitled to receive a purchase price of $8,700,000 on the closing date.
After payment of the expenses related to the Proposed Asset Sale, the proceeds
from the sale will be used to pay in full our term loan with Beltway Capital
Partners LLC (successor by assignment of our loan from Wachovia Bank, N.A.) and
to pay off the remaining obligations under capital leases related to certain
assets in the Proposed Asset Sale. To the extent there are any remaining
proceeds after payment in full of the Beltway Capital Partners LLC loan and the
capital leases, we expect that such proceeds will be used to repay a portion of
our asset-based loan from Textron Financial Corporation and for general working
capital purposes.
Conduct of Business Following the Proposed Asset Sale (page 16)
If the Proposed Asset Sale is approved and the closing conditions set
forth in the Asset Purchase Agreement are satisfied or waived, we will sell the
Purchased Assets to Schreiber, which may be deemed to be a sale of substantially
all of our assets pursuant to the DGCL. Following the consummation of the
Proposed Asset Sale, we will hold only certain limited assets, including
retained cash and certain other miscellaneous assets. Regardless of whether the
Proposed Asset Sale is consummated, our Company will convert into a branded
marketing company that will continue to market and sell our products, but will
no longer manufacture these products. Instead, such products will be
manufactured by Schreiber pursuant to the Supply Agreement.
4
If, at the Special Meeting, our stockholders holding a majority of the
outstanding shares of our common stock do not approve the Proposed Asset Sale,
then, as soon as is reasonably practicable thereafter, our Company and Schreiber
will consummate one of two alternative transactions subject to the satisfaction
of certain conditions. Since we anticipate that our Company will convert into a
branded marketing company that will continue to market and sell our products,
but will no longer manufacture these products, we do not anticipate any need for
any of this manufacturing equipment. We will review alternative options
involving the sale of any manufacturing equipment not sold to Schreiber. There
can be no assurance that any third party will offer to purchase our
manufacturing assets for a price equal to or greater than the price proposed to
be paid by Schreiber in the Proposed Asset Sale, or that such assets can
otherwise be sold at all.
Vote Required and Board Recommendation (page 17)
The approval of the Proposed Asset Sale requires the affirmative vote of
the stockholders holding at least a majority of the outstanding shares of our
common stock. The Board of Directors believes that the Proposed Asset Sale is in
the best interests of our Company and our stockholders and recommends a vote
"FOR" this proposal. It is intended that the shares represented by the enclosed
form of proxy will be voted in favor of this proposal unless otherwise specified
in such proxy.
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING
What proposal will be voted on at the Special Meeting?
The proposal to be voted on at the Special Meeting is whether to approve the
sale of our manufacturing equipment as contemplated by the Asset Purchase
Agreement, dated as of June 30, 2005, by and between Schreiber Foods, Inc., a
Wisconsin corporation, and our Company (the "Proposed Asset Sale"), which may be
deemed a sale of substantially all of our assets pursuant to Delaware General
Corporation Law ("DGCL").
Who is the purchaser?
The purchaser of our assets will be Schreiber Foods, Inc., a Wisconsin
corporation ("Schreiber"). Schreiber is a privately held cheese manufacturing
company with annual sales exceeding $2 billion. Schreiber's main business is
contract manufacturing of cheese, cheese alternative and other dairy products.
See "Proposal No. 1 - To Approve the Proposed Asset Sale - Information about the
Buyer."
What is the purchase price for our Assets?
Schreiber will pay us a total purchase price of $8,700,000 for our manufacturing
equipment, all of which will be paid in cash at closing. See "Proposal No. 1 -
To Approve the Proposed Asset Sale - Purchase Price."
What will happen if the Proposed Asset Sale is approved?
If the Proposed Asset Sale is approved, we will proceed to consummate the sale
of assets subject to the satisfaction of the closing conditions set forth in the
Asset Purchase Agreement. We anticipate the Proposed Asset Sale will close
shortly following the Special Meeting; however, the timing of the closing is
dependent upon the satisfaction of such closing conditions. There can be no
guarantee that we will satisfy these conditions, and, therefore, there can be no
guarantee that the Proposed Asset Sale will be consummated even with stockholder
approval. See "Proposal No. 1 - To Approve the Proposed Asset Sale - Summary
Terms of the Asset Purchase Agreement."
5
Will our Company continue to operate after consummation of the Proposed Asset
Sale?
Yes. Our Company will continue to operate after the consummation of the Proposed
Asset Sale. On June 30, 2005, we entered into an outsourcing arrangement with
Schreiber, pursuant to which Schreiber will become our sole source of supply of
substantially all of our products. Accordingly, we anticipate that our Company
will convert into a branded marketing company that will continue to market and
sell our products, but will no longer manufacture these products. Instead, such
products will be manufactured by Schreiber pursuant to the supply agreement.
This change in our focus will occur whether or not the Proposed Asset Sale is
consummated. See "Proposal No. 1 - To Approve the Proposed Asset Sale - Business
of the Company Following the Proposed Asset Sale" and "Proposal No. 1 - To
Approve the Proposed Asset Sale - Other Material Arrangements Between the
Company and Schreiber."
What will happen if the Proposed Asset Sale is not approved?
If, at the Special Meeting, our stockholders holding a majority of the
outstanding shares of our common stock do not approve the Proposed Asset Sale,
then, as soon as is reasonably practicable thereafter, our Company and Schreiber
will consummate one of two alternative transactions subject to the satisfaction
of certain conditions. Since we anticipate that our Company will convert into a
branded marketing company that will continue to market and sell our products,
but will no longer manufacture these products, we do not anticipate any need for
any of this manufacturing equipment. We will review alternative options
involving the sale of any manufacturing equipment not sold to Schreiber. See
"Proposal No. 1 - To Approve the Proposed Asset Sale - Business of the Company
Following the Proposed Asset Sale" and "Proposal No. 1 - To Approve the Proposed
Asset Sale - Summary of Terms of the Asset Purchase Agreement."
What is our Board of Director's recommendation with respect to the proposal to
approve the Proposed Asset Sale?
Our Board of Directors recommends a vote "FOR" approval of the Proposed Asset
Sale. See "Proposal No. 1 - To Approve the Proposed Asset Sale - Vote Required
and Board Recommendation."
Why does our Board of Directors believe the Proposed Asset Sale is in the best
interest of our Company's stockholders?
Our Board of Directors considered the risks and challenges facing our Company in
the future as compared to the opportunities available to our Company in the
future and concluded that the Proposed Asset Sale was the best alternative for
maximizing value to our stockholders. In particular, the proceeds from the
Proposed Asset Sale will be used to pay in full our term loan with Beltway
Capital Partners LLC (successor by assignment of Wachovia Bank, N.A.), which
will decrease our debt service obligations. The additional cash flow available
as a result of the decrease in our debt service obligations will be used to
enhance our marketing and product research and development efforts. See
"Proposal No. 1 - To Approve the Proposed Asset Sale - Background of the
Proposed Asset Sale" and "Proposal No. 1 - To Approve the Proposed Asset Sale -
Reasons for the Proposed Asset Sale."
6
Do I have any appraisal rights in connection with the Proposed Asset Sale?
No.
What vote is required to approve the Proposed Asset Sale?
The proposal to approve the Proposed Asset Sale requires the affirmative vote of
our stockholders holding at least a majority of our outstanding shares of common
stock. See "Proposal No. 1 - To Approve the Proposed Asset Sale - Vote Required
and Board Recommendation."
What do I need to do now?
After carefully reading and considering the information contained in this proxy
statement, you should vote your shares, per the instructions on the enclosed
proxy card, by phone, via the Internet, or by completing and signing the
enclosed proxy card and returning it in the enclosed return envelope as soon as
possible so that your shares may be represented at the Special Meeting. A
majority of shares entitled to vote must be represented at the meeting to enable
our Company to conduct business at the Special Meeting. See "Information
Concerning Solicitation and Voting."
Can I change my vote after I have submitted my signed proxy?
Yes. You can change your vote at any time before proxies are voted at the
Special Meeting. You can change your vote in one of three ways. First, you can
send a written notice to our Corporate Secretary at our executive offices,
stating that you would like to revoke your proxy. Second, you can complete and
submit a new proxy. Third, you can attend the meeting and vote in person. See
"Information Concerning Solicitation and Voting."
If my broker holds my shares in "street name," will the broker vote the shares
on my behalf?
A broker will vote shares only if the holder of the shares provides the broker
with instructions on how to vote. Shares held in "street name" by brokers or
nominees who indicate on their proxies that they do not have discretionary
authority to vote such shares as to a particular matter, referred to as "broker
non-votes," will not be voted in favor of such matter. The proposal to approve
the Proposed Asset Sale is a proposal that requires the affirmative vote of our
stockholders holding at least a majority of our outstanding shares of common
stock. Accordingly, broker non-votes will have the effect of a vote against the
proposal. We encourage all stockholders whose shares are held in street name to
provide their brokers with instructions on how to vote. See "Information
Concerning Solicitation and Voting - Quorum; Voting Rights."
Who can help answer my questions?
If you have any questions or need assistance with regard to voting your shares,
please contact our investor relations department at:
Galaxy Nutritional Foods, Inc.
2441 Viscount Row
Orlando, Florida 32809
Attention: Investor Relations
Telephone No.: (407) 855-5500
Facsimile No.: (407) 855-1099
7
If you have any questions about the Special Meeting or the proposals to be voted
on at the Special Meeting, or if you need additional copies of this proxy
statement or copies of any of our public filings referred to in this proxy
statement, you should contact our Investor Relations Department at (407)
855-5500. Our public filings can also be accessed at the Securities and Exchange
Commission's website at www.sec.gov. See "Where You Can Find More Information."
INFORMATION CONCERNING SOLICITATION AND VOTING
Record Date and Voting Securities
Stockholders of record as of September 26, 2005 are entitled to notice of
and to vote at the Special Meeting and any adjournment thereof. As of September
26, 2005, 20,051,077 shares of our common stock, par value $.01 per share, were
issued and outstanding.
Voting and Solicitation
Each share of common stock outstanding as of the record date will be
entitled to one vote, and stockholders may vote in person or by proxy. At the
Special Meeting, we will be asking our stockholders to vote on a proposal to
approve the sale of our manufacturing equipment as contemplated by the Asset
Purchase Agreement, dated as of June 30, 2005, by and between Schreiber Foods,
Inc., a Wisconsin corporation, and our Company (the "Proposed Asset Sale"),
which may be deemed a sale of substantially all of our assets pursuant to
Delaware General Corporation Law ("DGCL"). We are soliciting stockholders to
authorize proxies to vote with respect to this proposal. Our Board of Directors
knows of no other matters to be presented at the Special Meeting. If any other
matter should be presented at the Special Meeting upon which a vote may be
properly taken, shares represented by all proxies received by the Board of
Directors will be voted with respect thereto in accordance with the judgment of
the persons named as proxies.
The solicitation of proxies in the accompanying form is made by, and on
behalf of, our Board of Directors and our Company will bear the cost of
soliciting proxies. There will be no solicitation of proxies other than by mail
or personal solicitation by our officers, directors and employees, and no
additional compensation will be paid to such persons in connection with such
services. We will make arrangements with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of proxy materials to the beneficial
owners of shares held of record by such persons, and such person will be
reimbursed for reasonable expenses incurred by them.
Effect of Proxies
By submitting your proxy by phone or via the Internet or by signing and
returning the enclosed proxy card, a stockholder will be giving its proxy to our
Board of Directors and authorizing them to vote its shares. Where a choice has
been specified on the proxy with respect to the foregoing matters, the shares
represented by the proxy will be voted in accordance with the specification, and
will be voted FOR such proposal if no specification is indicated.
A stockholder has the power to revoke its proxy at any time before the
convening of the Special Meeting. A stockholder may revoke its proxy by
delivering written notice of such revocation or by delivering a new proxy to the
attention of LeAnn C. Hitchcock, Corporate Secretary, on or before November 9,
2005. In addition, on the day of the Special Meeting, prior to the convening
thereof, revocations may be delivered to the tellers who will be seated at the
door of the meeting room.
8
Quorum; Votes Required
Each share of issued and outstanding common stock entitles the holder
thereof to one vote. Votes cast by proxy or in person at the Special Meeting
will be tabulated by an inspector of election appointed by the Board of
Directors for the Special Meeting and will determine whether a quorum is
present. Where, as to any matter submitted to the stockholders for a vote,
proxies are marked as abstentions (or stockholders appear in person but abstain
from voting), such abstentions are included in the number of shares present or
represented at the Special Meeting for purposes of determining the presence of
quorum but as unvoted for purposes of determining the approval of any matter
submitted to the stockholders for a vote. If a broker indicates on the proxy
that it does not have discretionary authority as to certain shares to vote on a
particular matter and has not received instructions from the beneficial owner,
which is known as a "broker non-vote," those shares will be considered present
at the Special Meeting for purposes of determining a quorum but will not be
considered to be represented at the Special Meeting for purposes of calculating
the vote required for approval of such matter.
Therefore, since the proposal to approve the Proposed Asset Sale requires
the affirmative vote of stockholders holding at least a majority of the issued
and outstanding shares of our common stock, abstentions and broker non-votes
will have the same effect as votes against the Proposed Asset Sale. We encourage
all stockholders whose shares are held in street name to provide their brokers
with instructions on how to vote.
No Appraisal Rights
Under the DGCL, our stockholders do not have appraisal rights in
connection with the Proposed Asset Sale.
Special Note Regarding Forward-Looking Statements
CERTAIN STATEMENTS MADED IN THIS PROXY STATEMENT ARE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY TERMINOLOGY SUCH AS
"MAY", "WILL", "SHOULD", "EXPECT", "INTEND", "ANTICIPATE", "BELIEVE",
"ESTIMATE", "PREDICT", OR "CONTINUE" OR THE NEGATIVE OF THESE TERMS OR OTHER
COMPARABLE TERMINOLOGY AND INCLUDE, WITHOUT LIMITATION, STATEMENTS BELOW
REGARDING: COMPLETION OF THE PROPOSED ASSET SALE, POSSIBLE ADJUSTMENTS TO THE
PURCHASE PRICE, ASSESSMENT OF PROSPECTS OF CONTINUING IN BUSINESS, EFFECTS OF
THE PROPOSED ASSET SALE OR OUR PLANS FOLLOWING COMPLETION OF THE PROPOSED ASSET
SALE. BECAUSE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES, THERE
ARE IMPORTANT FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. ALTHOUGH, WE
BELIEVE THAT EXPECTATIONS REFLECTED IN THE FORWARD-LOOKING STATEMENTS ARE
REASONABLE, WE CANNOT GUARANTEE FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS.
MOREOVER, NEITHER OUR COMPANY NOR ANY OTHER PERSON ASSUMES RESPONSIBILITY FOR
THE ACCURACY OR COMPLETENESS OF THESE FORWARD-LOOKING STATEMENTS. WE ARE UNDER
NO OBLIGATION OR DUTY TO UPDATE ANY FORWARD-LOOKING STATEMENTS AFTER THE DATE OF
THIS PROXY STATEMENT TO CONFORM SUCH STATEMENTS TO ACTUAL RESULTS.
9
PROPOSAL ONE: TO APPROVE THE PROPOSED ASSET SALE
At the Special Meeting, our stockholders will consider and vote upon a proposal
to approve the sale of our manufacturing equipment as contemplated by the Asset
Purchase Agreement, dated as of June 30, 2005, by and between Schreiber Foods,
Inc., a Wisconsin corporation, and our Company (the "Proposed Asset Sale"),
which may be deemed a sale of substantially all of our assets pursuant to
Delaware General Corporation Law ("DGCL"). The material terms of the Asset
Purchase Agreement are summarized below. A copy of the Asset Purchase Agreement
is attached as Annex A to this proxy statement. We encourage you to read the
Asset Purchase Agreement in its entirety.
Summary of Existing Operations
Currently, our Company is principally engaged in developing, manufacturing
and marketing a variety of healthy cheese, cheese alternatives and dairy-related
products. Our products are formulated and developed by our research and
development department, manufactured in and shipped from our two Orlando,
Florida facilities, and marketed and sold in two principal markets: retail and
food service.
Background of the Proposed Asset Sale
Our Board of Directors concluded that our manufacturing capacity was
significantly in excess of its requirements and we were also dealing with
increasing ingredient costs, particularly the cost of casein (one of the main
ingredients purchased by our Company). We believe that we are currently
operating at 15% of our manufacturing capacity. After reviewing alternatives
available to us, our Board of Directors concluded that it would be advantageous
for us to outsource our manufacturing to Schreiber and to sell our manufacturing
equipment. We determined that Schreiber was a highly respected contract
manufacturer that could produce high quality products on a more cost effective
basis than our Company. Our Board of Directors realized that if we could
outsource our manufacturing, we could sell the manufacturing equipment and use
the proceeds from such sale to pay off indebtedness and improve our capital
structure. In addition, our Board of Directors recognized that the reduction in
our debt service obligations that would result from paying off such indebtedness
would enhance cash flow, and allow us to increase our focus on marketing and
product research and development.
On June 10, 2005, our Board of Directors unanimously approved the Proposed
Asset Sale and designated individuals to sign on behalf of our Company. Between
June 10, 2005 and June 30, 2005, counsel for our Company and Schreiber continued
to refine the draft Asset Purchase Agreement. On June 30, 2005, our Company and
Schreiber executed the Asset Purchase Agreement and the Supply Agreement. On
July 6, 2005, we filed a Current Report on Form 8-K with the Securities and
Exchange Commission disclosing the execution of the Asset Purchase Agreement and
the Supply Agreement.
Information about the Buyer
The purchaser of our assets will be Schreiber Foods, Inc., a Wisconsin
corporation. Schreiber is a privately held cheese manufacturing company with
annual sales exceeding $2 billion. Schreiber's main business is contract
manufacturing cheese, cheese alternative and other dairy products for many
well-known companies and brands. Schreiber's principal executive offices are
located at 425 Pine Street, Green Bay, Wisconsin 54307, Telephone (800)
344-0333. For more information regarding Schreiber, you may visit Schreiber's
website at http://www.schreiberfoods.com.
10
Reasons for the Proposed Asset Sale
In approving the Proposed Asset Sale, our Board of Directors considered a
number of factors before recommending that our stockholders approve the Proposed
Asset Sale, including the following:
o Our manufacturing capacity is significantly in excess of its
requirements, so our manufacturing assets are being underutilized. We
believe that we are currently operating at 15% of our manufacturing
capacity.
o Proceeds from the sale of certain of our assets will pay in full our
loan from Beltway Capital Partners LLC (successor by assignment of
Wachovia Bank, N.A.), which will lower our debt service obligations and
enhance cash flow.
o The Beltway Capital Partners LLC loan will mature on July 31, 2006.
Without the proceeds from the Proposed Asset Sale, we will need to find
alternative financing to pay off this loan.
o Our dependence on asset-based financing will substantially decrease.
The foregoing discussion of the information and factors considered by our
Board of Directors is not intended to be exhaustive, but includes the material
factors considered. In view of the variety of factors considered in connection
with its evaluation of the Proposed Asset Sale and the purchase price, our Board
of Directors did not find it practicable to, and did not, quantify or otherwise
assign relative weight to the specific factors considered in reaching its
determination and recommendations, and individual directors may have given
different weight to different factors.
The Board of Directors did not engage an independent financial advisor to
determine the fairness of the Proposed Asset Sale to our stockholders but
determined, based on the factors set forth above, that the asset sale under the
terms and conditions contemplated by the Asset Purchase Agreement is fair to our
stockholders. Further, based on the procedural safeguards provided under the
DGCL, including the required approval of our Board of Directors and the required
approval of our stockholders owning at least a majority of our outstanding
common stock, our Board of Directors believes that the asset sale is
procedurally fair to our stockholders. A fairness opinion from an independent
financial advisor typically entails a substantial fee to the requesting company.
In the context of an asset sale, the financial advisor would typically review a
company's historical and projected revenues, and the operating results of the
company and those of comparable public companies, and make certain assumptions
regarding the value of the assets and liabilities of the associated business or
assets, which may be difficult to predict in order to render its opinion. In
addition to the speculative nature of such analysis, our Board of Directors
believes that undertaking these analyses would involve a significant unnecessary
expense that would reduce the amount of proceeds available to us from the
Proposed Asset Sale.
For the foregoing reasons, our Board of Directors believes that the asset
sale, as contemplated by the Asset Purchase Agreement, is fair to our
stockholders.
Summary of Terms of the Asset Purchase Agreement
The following set forth a summary of the material provisions of the Asset
Purchase Agreement. The summary description does not purport to be complete and
is qualified in its entirety by reference to the Asset Purchase Agreement, a
copy of which is attached as Annex A to this proxy statement. All stockholders
are encouraged to read the Asset Purchase Agreement in its entirety.
11
Assets to be Sold
The Asset Purchase Agreement provides that, subject to approval by our
stockholders and satisfaction of certain other conditions described below, we
will sell most of the assets we currently use to manufacture our products, which
are listed below, and all books and records related thereto (the "Purchased
Assets").
Description of Asset (Quantity if more than 1) Vendor/Manufacturer
- ---------------------------------------------- -------------------
CC - 1000# Cheese Cooker (2) Blentech Corp.
Hayssen Packaging Machine Hayssen Manufacturing
200 gal. Kettle w/t Agitator (4) Lee Process Systems
500 gal. Kettle w/t Agitator (2) Lee Process Systems
System 1, Kustner IWS Machine Kustner Industries
Wrapping Machine, WS-20 Series II Sasib
Blentech Hard Cheese System* Blentech Corp.
System 2, 1600 SPM IWS Machine (Hardware) Kustner Industries
System 5, Ribbon - Pullman Hart Design & Mfg., Inc.
System 5, Hart Casing Linc. Pullman Machine Hart Design & Mfg., Inc.
CC - 1000 Cheeztherm Cheese Cookers (3) Blentech Corp.
System 8, Chunk Line R.R. Pankratz, Inc.
System 9 and 11, Slice Lines Hart Design & Mfg., Inc.
System 12, Cup Line* Modern Packaging
System 10, Block Line/String Cheese Line Robert Reiser
System 13, Shred Line* Hayssen Manufacturing
Dixie Vac Machine Amplicon/Calfirst
Hayssen Shred Bagger* GE Capital
Purchase Price
Schreiber will pay us a total purchase price of $8,700,000 for the
Purchased Assets, all of which will be paid in cash at the closing.
Indemnification
Under the terms of the Asset Purchase Agreement, we have agreed to
indemnify Schreiber against, among other things, (i) any pre-closing debts,
liabilities or obligations of our Company, (ii) any losses, liabilities or
damages that Schreiber may incur by reason of any untrue representation or
breach of warranty or nonfulfillment of any covenant or agreement of our Company
contained in the Asset Purchase Agreement or in any certificate, document, or
instrument delivered in connection with the Proposed Asset Sale, and (iii) any
losses, liabilities or damages that Schreiber may incur by reason of our failure
to discharge our pre-closing liabilities. Schreiber has agreed to indemnify us
against, among other things, (i) any post-closing debts, liabilities or
obligations of Schreiber, and (ii) any losses, liabilities or damages that we
may incur by reason of any untrue representation or breach of warranty or
nonfulfillment of any covenant or agreement of Schreiber contained in the Asset
Purchase Agreement or in any certificate, document, or instrument delivered in
connection with the Proposed Asset Sale. Except in connection with any
fraudulent misrepresentation by either party, rights of indemnification shall be
the sole remedy of the parties after the closing of the Proposed Asset Sale.
12
Alternative Transactions
If, at the Special Meeting, our stockholders holding a majority of the
outstanding shares of our common stock do not approve the sale of the Purchased
Assets, then, as soon as is reasonably practicable thereafter, our Company and
Schreiber will consummate one of the following transactions:
1. We will sell to Schreiber, and Schreiber will purchase from us, certain
alternative assets (those marked with an "*" above in the subsection
entitled "Assets to be Sold", the "Alternative Assets") for an
aggregate purchase price of $2,115,000. The only conditions to either
party's obligations to consummate the sale of Alternative Assets would
be the release and termination of any liens with respect to the
Alternative Assets and obtaining any consents required to be obtained
from our lenders (collectively, the "Releases and Consents").
2. In the event that the parties are unable to obtain the Releases and
Consents with respect to the sale of the Alternative Assets as
contemplated by alternative 1 above, then the parties would negotiate
in good faith to make such Alternative Assets available for use by
Schreiber on a basis and for such period (not to exceed 180 days) that
are reasonably acceptable to each of our Company and Schreiber;
provided, however, that Schreiber will use its commercially reasonable
efforts to obtain equipment that serves the same functions as the
Alternative Assets prior to the expiration of the agreed upon period of
time.
Termination
The Asset Purchase Agreement provides that it may be terminated at any
time prior to the closing of the Proposed Asset Sale or the consummation of an
alternative transaction, by mutual written agreement of our Company and
Schreiber, or automatically upon written notice of termination of the Supply
Agreement (described below). In the event the Asset Purchase Agreement is
terminated for any reason other than pursuant to a default by either party, the
Asset Purchase Agreement shall become void and there will be no liability
thereunder on the part of our Company or Schreiber.
Conditions to Close
The closing of the Proposed Asset Sale is scheduled to occur on November
1, 2005 or, if later, the date that is three (3) business days after the date on
which all conditions to closing, including the approval of our stockholders, are
satisfied or waived. Since we have scheduled the Special Meeting for November 9,
2005, the closing of the Proposed Asset Sale will not occur prior to November 9,
2005. The Asset Purchase Agreement contains closing conditions related to the
following: (i) Schreiber's representations and warranties remain true; (ii) each
party has complied with its covenants; (iii) there have been no proceedings
commenced against either party which may have the effect of preventing or
delaying the transactions contemplated by the Asset Purchase Agreement or the
Supply Agreement; (iv) any liens on the Purchased Assets shall have been
released and consents obtained from our lenders; (v) our stockholders holding a
majority of the outstanding shares of common stock shall have approved the sale
of the Purchased Assets; and (vi) each party shall have delivered appropriate
documents and certificates set forth in the Asset Purchase Agreement.
Representations and Warranties
The Asset Purchase Agreement contains various representations and
warranties of our Company to Schreiber, including representations and warranties
regarding our corporate status, authorization and enforceability,
non-contravention of the Proposed Asset Sale or our organizational documents,
non-violation of laws and material contracts, compliance with certain laws,
absence of litigation, taxes, absence of brokers, insurance, and title to the
Purchased Assets. The Asset Purchase Agreement also contains representations and
warranties of Schreiber to our Company regarding Schreiber's corporate status,
authorization and enforceability, non-contravention of the Proposed Asset Sale
or its organizational documents, non-violation of laws and material contracts,
and absence of brokers. The representations and warranties survive the closing
until twelve months after the closing date.
13
Other Transactions
We also agreed that between the signing of the Asset Purchase Agreement
and the closing of the Proposed Asset Sale we would not, except in the ordinary
course of our business, (i) enter into discussions, and would discontinue all
pending discussions, relating to any of the Purchased Assets, or (ii) sell,
lease or grant any option to sell or lease, give a security interest in or
otherwise create any encumbrance on any of the Purchased Assets.
Other Material Agreements between the Company and Schreiber
Supply Agreement
On June 30, 2005, in connection with the Asset Purchase Agreement, we
entered into a Supply Agreement with Schreiber (the "Supply Agreement").
Pursuant to the Supply Agreement, we agreed that (i) as of September 1, 2005,
Schreiber will be our sole third-party source of supply of substantially all of
our products for the term of the Supply Agreement, meaning that we can continue
manufacturing our products ourselves, and (ii) as of November 1, 2005, Schreiber
will be our sole source of supply of substantially all of our products, and we
will purchase our requirements of substantially all of our products exclusively
from Schreiber. Schreiber also has agreed to deliver such products to our
customers. The prices for such products are based on cost conversions determined
by the parties from time to time, subject to adjustment in any renewal periods.
The initial term of the Supply Agreement is for a period of five years
from the effective date of September 1, 2005 and is renewable at our option for
up to two additional five-year periods (for a total term of up to fifteen
years). If the closing of the Proposed Asset Sale has occurred and we do not
exercise our first option to extend the term, then we will be obligated to pay
Schreiber $1,500,000, and if the closing of the Proposed Asset Sale has
occurred, we have exercised the first option to extend the term and we do not
exercise our second option to extend the term, then we will be obligated to pay
Schreiber $750,000.
If our stockholders do not approve the Proposed Asset Sale at the Special
Meeting, then we may terminate the Supply Agreement upon not more than 180 days'
notice delivered to Schreiber within thirty days of the Special Meeting. If we
do not terminate the Supply Agreement and we are unable to consummate an
alternative transaction with Schreiber (as described above) prior to January 1,
2006, then Schreiber may terminate the Supply Agreement upon at least 180 days'
notice delivered to us prior to February 1, 2006.
The Supply Agreement provides for a contingent short-fall payment
obligation by our Company if a specified production level is not met during the
one-year period beginning on September 1, 2006 and ending September 1, 2007. If
a contingent short-fall payment is accrued after such one-year period, it may be
reduced by the amount by which production in the one-year period beginning on
September 1, 2007 and ending September 1, 2008 exceeds the specified target
level of production, if any.
14
In connection with the transition of manufacturing to Schreiber, the
Supply Agreement also obligates Schreiber to purchase from us, on November 1,
2005, all of our raw materials, ingredients and operating supplies and packaging
supplies held by us at our cost. If the Supply Agreement is terminated, then
Schreiber shall return any such items remaining at cost.
Litigation Settlement
On May 17, 2002, Schreiber filed a lawsuit against our Company in the
federal district court for the Eastern District of Wisconsin ("Wisconsin
lawsuit"), being Case No. 02-C-0498, alleging various acts of patent
infringement. The Complaint alleged that our machines for wrapping of individual
cheese slices, manufactured by Kustner Industries, S.A. of Switzerland, known as
models KE and KD, and our machines for producing individually wrapped slices
manufactured by Hart Design Mfg., Inc. of Green Bay, Wisconsin, infringe certain
claims of U.S. Patents Nos. 5,112,632, 5,440,860, 5,701,724 and 6,085,680.
Schreiber was seeking a preliminary and permanent injunction prohibiting us from
further infringing acts and was also seeking damages in the nature of either
lost profits or reasonable royalties.
On May 6, 2004, Schreiber and our Company executed a settlement agreement
pursuant to which all claims in the patent infringement lawsuit were dismissed.
Pursuant to this settlement agreement, we procured a worldwide, fully paid-up,
nonexclusive license to own and use all of our individually wrapped slice
equipment, which Schreiber alleged infringed on Schreiber's patents. We were not
obligated to make any cash payment in connection with the settlement of the
lawsuit or the license granted in the settlement agreement. The settlement
agreement restricts us from using the slicing equipment to co-pack product for
certain specified manufacturers, however, we are not currently engaged in any
co-packing business with any of the specified parties, and do not contemplate
engaging in the future in any co-packing business with the specified parties.
The term of the license extends through the life of all patents named in the
lawsuit (and all related patents) and is assignable by us in connection with the
sale of our business. In the event the assignee uses the applicable equipment to
manufacture private label product, and such private label product accounts for
more than 50% of the total product manufactured on the applicable equipment, the
assignee will be required to pay Schreiber a royalty in an amount to be agreed
upon by Schreiber and the assignee, but in any event not more than $.20 per
pound of product for each pound of private label product manufactured by the
assignee in any year that exceeds the amount of private label product
manufactured by our Company in the year preceding the sale of our Company or our
business. In the event that the parties cannot agree upon a royalty rate, the
assignee retains the license rights but private label production must be
maintained at a level less than 50% of the total product manufactured on the
applicable equipment.
Pursuant to the settlement agreement, if, during the term of the license,
we receive an offer to purchase our Company or our business, we must notify
Schreiber of the offer and Schreiber will have the option to match the offer or
make a better offer to purchase our Company or our business. Acceptance of the
Schreiber offer is subject to the approval by our Board of Directors, however,
if the Board of Directors determines that the Schreiber offer is equal to or
better than the other offer, the Board of Directors must take all permitted
actions to accept the offer and recommend it to our stockholders for approval.
We have not received any such offer, and the decision by our Board of Directors
to cause our Company to enter into the Asset Purchase Agreement was not based
upon receipt of any offer to purchase our Company or our business.
No Other Arrangements
Other than the Proposed Asset Sale and the transactions described above,
there are no present or proposed material agreements, arrangements,
understandings or relationships between Schreiber or any of its executive
officers, directors, controlling persons or subsidiaries and our Company or any
of our executive officers, directors, controlling persons or subsidiaries.
15
Regulatory Approvals
No United States Federal or state regulatory requirements must be complied
with or approvals obtained as a condition of the Proposed Asset Sale other than
federal securities laws.
Use of Proceeds from the Proposed Asset Sale
As a result of the consummation of the sale of the Purchased Assets, we
will be entitled to receive a purchase price of $8,700,000 on the closing date.
Of the proceeds, an estimated $250,000 will be used to pay expenses related to
the Proposed Asset Sale, including legal, accounting and printing costs and
fees. All remaining proceeds will be used to pay in full our term loan with
Beltway Capital Partners LLC (successor by assignment of Wachovia Bank, N.A.).
As of October 7, 2005, the outstanding principal amount of the term loan with
Beltway Capital Partners LLC was $7,581,985. Additionally, we will use
approximately $350,000 of the proceeds to pay off the remaining obligations
under capital leases related to certain assets in the Proposed Asset Sale. To
the extent there are any remaining proceeds after payment in full of the Beltway
Capital Partners LLC loan and the capital leases, we expect that such proceeds
will be used to repay a portion of our asset-based loan from Textron Financial
Corporation and for general working capital purposes.
Conduct of Business Following the Proposed Asset Sale
If the Proposed Asset Sale is approved and the closing conditions set
forth in the Asset Purchase Agreement are satisfied or waived, we will sell the
Purchased Assets to Schreiber, which may be deemed to be a sale of substantially
all of our assets pursuant to the DGCL. Following the consummation of the
Proposed Asset Sale, we will hold only certain limited assets, including
retained cash and certain other miscellaneous assets. As noted above, regardless
of whether the Proposed Asset Sale is consummated, our Company will convert into
a branded marketing company that will continue to market and sell our products,
but will no longer manufacture these products. Instead, such products will be
manufactured by Schreiber pursuant to the Supply Agreement.
We anticipate certain challenges during and following the transition from
manufacturing our own products to operating strictly as a branded marketing
company. These challenges include, but are not limited to, the following:
o Coordinating customer shipments while the inventory and production
equipment are in transit from our facilities to the Schreiber
facilities;
o Reserving enough inventory in our facilities to fill customer orders
while production equipment is in transit;
o Maintaining consistent formulas and quality in our products after the
transition;
o Having sufficient cash to build inventory and pay any severance
arrangements during the transition;
o Reducing the number of our employees to 31 by December 1, 2005; and
16
o Negotiating with the landlords of our leased facilities in Orlando,
Florida to terminate or sublease one or both of such facilities.
If, at the Special Meeting, our stockholders holding a majority of the
outstanding shares of our common stock do not approve the Proposed Asset Sale,
then, as soon as is reasonably practicable thereafter, our Company and Schreiber
will consummate one of two alternative transactions subject to the satisfaction
of certain conditions. Since we anticipate that our Company will convert into a
branded marketing company that will continue to market and sell our products,
but will no longer manufacture these products, we do not anticipate any need for
any of this manufacturing equipment. We will review alternative options
involving the sale of any manufacturing equipment not sold to Schreiber. There
can be no assurance that any third party will offer to purchase our
manufacturing assets for a price equal to or greater than the price proposed to
be paid by Schreiber in the Proposed Asset Sale, or that such assets can
otherwise be sold at all.
Accounting Treatment of the Proposed Asset Sale
If the Proposed Asset Sale is approved by the stockholders, we will record
the proposed disposition in accordance with SFAS No. 146, "Accounting for Costs
Associate with an Exit or Disposal Activity," prior to and during the quarter in
which the Proposed Asset Sale closes.
Certain Federal Income Tax Consequences of the Proposed Asset Sale
The Proposed Asset Sale should have no direct income tax consequences to
our stockholders. The Proposed Asset Sale will be reported by our Company as a
sale of assets for federal income tax purposes in the fiscal year ending March
31, 2006. The Proposed Asset Sale will be a taxable transaction for United
States federal income tax purposes. Accordingly, our Company will recognize a
gain or loss with respect to the Proposed Asset Sale in an amount equal to the
difference between the amount of the consideration received for each asset over
the adjusted tax basis in the asset sold. Although the Proposed Asset Sale will
result in a taxable gain to our Company, we believe that a substantial portion
of the taxable gain will be offset by current year losses from operations and
available net operating loss carryforwards.
Vote Required and Board Recommendation
The approval of the Proposed Asset Sale requires the affirmative vote of
the stockholders holding at least a majority of the outstanding shares of our
common stock. The Board of Directors believes that the Proposed Asset Sale is in
the best interests of our Company and our stockholders and recommends a vote
"FOR" this proposal. It is intended that the shares represented by the enclosed
form of proxy will be voted in favor of this proposal unless otherwise specified
in such proxy.
17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table describes the beneficial ownership of our common stock by
each person or entity known to us to be the beneficial owner of more than 5% of
the outstanding shares of our capital stock outstanding as of October 7, 2005.
Beneficial ownership has been determined in accordance with the rules of the
Securities and Exchange Commission to include securities that a named person or
entity has the right to acquire within sixty (60) days.
Amount and Nature
Name and Address of Beneficial Percent
of Beneficial Owner Ownership (1) of Class (2)
-------------------------------------------------------------------------
Angelo S. Morini
2441 Viscount Row
Orlando, Florida 32809 6,462,806 (3) 28.1%
Frederick A. DeLuca
c/o Doctor's Associates, Inc.
325 Bic Drive
Milford, Connecticut 06460 4,169,842 (4) 20.5%
John Hancock Advisors, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199 1,441,348 (5) 7.2%
Fromageries Bel S.A.
4 rue d Anjou
75008 Paris, France 1,111,112 (6) 5.5%
(1) The inclusion herein of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of these shares.
(2) The total number of shares of our common stock outstanding as of October 7,
2005 is 20,051,077. The percentages are calculated on the basis of the
amount of shares outstanding plus shares which may be acquired through the
exercise of options, warrants, rights or conversion privileges by such
holder within sixty (60) days of October 7, 2005.
(3) Includes options to acquire 2,963,197 shares of our common stock, which are
currently exercisable at prices ranging from $2.05 to $5.25 per share.
Options expire as to 13,072 shares on October 1, 2006, as to 432,797 on
July 1, 2007, as to 517,203 shares on December 4, 2007, as to 1,357,000
shares on June 15, 2009, as to 343,125 on December 15, 2010, and as to
300,000 on April 19, 2011. Also includes a warrant to purchase 250 shares
at an exercise price of $5.744 per share, which expires on January 17,
2007. With the exception of the options, 10,500 shares held in a nominee
name, 286 shares held in joint tenancy and 714 shares held individually,
all of Mr. Morini's shares and warrant are held by Morini Investments
Limited Partnership, a Delaware limited partnership, of which Mr. Morini is
the sole limited partner and Morini Investments LLC, a Delaware limited
liability company, is the sole general partner. Mr. Morini is the sole
member of Morini Investments LLC.
(4) The information is based solely on a Schedule 13D/A filed with the SEC on
September 27, 2005. Mr. Frederick A. DeLuca has direct beneficial ownership
of and has sole voting and investment dispositive power over all the
reported shares. Includes a warrant to purchase 300,000 shares of our
common stock exercisable at a price per share equal to 95% of the lowest
closing sales price of our common stock during the sixty (60) days
immediately preceding October 17, 2005, beginning on October 17, 2005 until
its expiration on October 17, 2008.
(5) The information is based solely on a Schedule 13G filed with the SEC on
February 7, 2005 by each of the reporting persons listed below. John
Hancock Advisers, LLC has direct beneficial ownership of and has sole
voting and dispositive power over all the reported shares pursuant to
Advisory Agreements for the following: Manulife Financial Corporation
("MFC"), and MFC's indirect, wholly-owned subsidiary, John Hancock
Financial Services ("JHFS"), JHFS's direct, wholly-owned subsidiary John
Hancock Life Insurance Company ("JHLICO"), JHLICO's direct, wholly-owned
subsidiary John Hancock Subsidiaries, LLC ("JHS"), JHS's direct,
wholly-owned subsidiary The Berkeley Financial Group ("TBFG"), and TBFG's
direct, wholly-owned subsidiary John Hancock Advisers, LLC. Each of MFC,
JHFS, JHLICO, JHS and TBFG report that they do not beneficially own any of
the reported shares except through their indirect, wholly-owned subsidiary,
John Hancock Advisers, LLC.
18
(6) The information is based solely on a Schedule 13D filed with the SEC on
June 9, 2003, by Fromageries Bel S.A. Fromageries Bel S.A. has direct
beneficial ownership of all the reported shares. Unibel, a French limited
partnership, is deemed to beneficially own the reported shares by reason of
the provisions of Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended. Each of Fromageries Bel S.A. and Unibel, a French
limited partnership, has shared voting power and shared dispositive power
over all the reported shares of our common stock.
SECURITY OWNERSHIP OF MANAGEMENT
The following table describes the beneficial ownership of our common stock by
(i) the Chief Executive Officer, (ii) each of our four other most highly
compensated executive officers who were serving as executive officers as of
March 31, 2005, (iii) up to two additional individuals for whom disclosure would
have been provided pursuant to clause (ii) above, but for the fact that the
individual was not serving as an executive officer at the end of the last
completed fiscal year, (iv) each director, and (v) all of our directors and
executive officers as a group, outstanding as of October 7, 2005. Beneficial
ownership has been determined in accordance with the rules of the Securities and
Exchange Commission to include securities that a named person has the right to
acquire within sixty (60) days. "*" indicates less than one percent.
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership (1) Class (2)
--------------------------------------------------------------------------
David H. Lipka 259,353(3) 1.3%
Joanne R. Bethlahmy 150,286(4) *
Thomas R. Dyckman 200,797(3) 1.0%
Charles L. Jarvie 200,797(3) 1.0%
Angelo S. Morini 6,462,806(5) 28.1%
Patrice M.A. Videlier 668(6) *
Michael E. Broll 201,114(7) 1.0%
Christopher J. New 131,588(8) *
Salvatore J. Furnari 103,500(9) *
John W. Jackson 107,366(10) *
Christopher E. Morini 97,429(11) *
------------------------------------------
All executive officers and
directors as a group 7,915,704 32.4%
==========================================
19
(1) The inclusion herein of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of these shares.
(2) The total number of shares of our common stock outstanding as of October
7, 2005 is 20,051,077. The percentages are calculated on the basis of the
amount of shares outstanding plus shares which may be acquired through the
exercise of options, warrants, rights or conversion privileges by such
holder within sixty (60) days of October 7, 2005.
(3) Includes currently exercisable options to acquire 200,000 shares of our
common stock at $2.17 per share, which expire on December 17, 2007. Also,
includes currently exercisable options to acquire 225 shares of our common
stock at $2.90 per share, which expire on October 1, 2013, currently
exercisable options to acquire 286 shares of our common stock at $1.20 per
share, which expire on October 1, 2014, and currently exercisable options
to acquire 286 shares of our common stock at $1.75 per share, which expire
on October 3, 2015.
(4) Includes currently exercisable options to acquire 150,000 shares of our
common stock at $1.56 per share, which expire on October 1, 2009, and
currently exercisable options to acquire 286 shares of our common stock at
$1.75 per share, which expire on October 3, 2015.
(5) Includes options to acquire 2,963,197 shares of our common stock, which
are currently exercisable at prices ranging from $2.05 to $5.25 per share.
Options expire as to 13,072 shares on October 1, 2006, as to 432,797 on
July 1, 2007, as to 517,203 shares on December 4, 2007, as to 1,357,000
shares on June 15, 2009, as to 343,125 on December 15, 2010, as to 300,000
on April 19, 2011. Also includes a warrant to purchase 250 shares at an
exercise price of $5.744 per share, which expires on January 17, 2007.
With the exception of the options, 10,500 shares held in a nominee name,
286 shares held in joint tenancy and 714 shares held individually, all of
Mr. Morini's shares and warrant are held by Morini Investments Limited
Partnership, a Delaware limited partnership, of which Mr. Morini is the
sole limited partner and Morini Investments LLC, a Delaware limited
liability company, is the sole general partner. Mr. Morini is the sole
member of Morini Investments LLC.
(6) Includes currently exercisable options to acquire 96 shares of our common
stock at $2.90 per share, which expire on October 1, 2013, currently
exercisable options to acquire 286 shares of our common stock at $1.20 per
share, which expire on October 1, 2014, and currently exercisable options
to acquire 286 shares of our common stock at $1.75 per share, which expire
on October 3, 2015.
(7) Includes currently exercisable options to acquire 200,000 shares of our
common stock at $3.29 per share, which expire on December 17, 2008.
(8) Includes currently exercisable options to acquire 100,000 shares of our
common stock at $2.05 per share, which expire on July 16, 2011. These
options had an original exercise price of $4.98 per share, but were
repriced to $2.05 on October 11, 2002. Also, includes currently
exercisable options to acquire 25,000 shares of our common stock at $1.67
per share, which expire on December 5, 2012. Includes a warrant to
purchase 1,318 shares of our common stock at an exercise price of $5.744
per share, which expires on January 17, 2007.
(9) Includes currently exercisable options to acquire 20,000 and 10,000 shares
of our common stock at $2.05 per share, which expire on November 12, 2011
and July 8, 2012, respectively. These options had an original exercise
price of $5.60 and $4.55 per share, respectively, but were repriced to
$2.05 on October 11, 2002. Also, includes currently exercisable options to
acquire 70,000 shares of our common stock at $2.05 per share, which expire
on October 1, 2014.
(10) Includes currently exercisable options to acquire 96,429 shares of our
common stock at $2.05 per share. These options had an original exercise
prices ranging from $2.84 to $8.47 per share, but were repriced to $2.05
on October 11, 2002. Options expire as to 7,143 shares on May 16, 2006, as
to 14,286 shares on September 24, 2008, and as to 75,000 shares on April
19, 2011. Also, includes currently exercisable options to acquire 7,000
shares of our common stock at $1.28 per share, which expire on October 1,
2014.
20
(11) Includes currently exercisable options to acquire 96,429 shares of our
common stock at $2.05 per share. These options had an original exercise
prices ranging from $2.84 to $8.47 per share, but were repriced to $2.05
on October 11, 2002. Options expire as to 7,143 shares on May 16, 2006, as
to 14,286 shares on September 24, 2008, and as to 75,000 shares on April
19, 2011. Also, includes currently exercisable options to acquire 1,000
shares of our common stock at $1.28 per share, which expire on October 1,
2014.
LEGAL PROCEEDINGS
To our knowledge, none of our executive officers or directors is a party adverse
to our Company or has material interest adverse to our Company in any legal
proceeding.
OTHER BUSINESS
The Board of Directors knows of no business which will be presented for
consideration at the meeting other than that which is stated above. If any other
business should come before the meeting, votes may be cast pursuant to proxies
in respect to any such business in the best judgment of the person or persons
acting under the proxies.
STOCKHOLDER PROPOSALS
It is anticipated that our next annual meeting of stockholders will be held on
or about January 20, 2006. Stockholders interested in presenting a proposal to
be considered for inclusion in the proxy statement and form of proxy may do so
by following the procedures prescribed in Rule 14a-8 under the Securities
Exchange Act of 1934, as amended. To be considered for inclusion, stockholder
proposals must be submitted in writing to the Corporate Secretary at our
Company's principal executive offices before November 20, 2005. It is suggested
that proponents submit their proposals by Certified Mail-Return Receipt
Requested.
In addition, Rule 14a-4 under the Securities Exchange Act of 1934, as amended,
limits the circumstances under which the proxy card distributed by registered
companies to their stockholders may permit those companies to cast the votes
represented by the proxy voting cards in their sole discretion. As applied to
our Company, the most important limitation is that for proposals made by a
stockholder at the 2005 annual meeting that are not properly submitted by the
stockholder for inclusion in our own proxy materials, we may vote proxies in our
discretion with respect to those proposals only if we have not received notice
from the stockholder by November 20, 2005 at the latest that the stockholder
intends to make those proposals at the next annual meeting.
INCORPORATION BY REFERENCE
The Securities and Exchange Commission (the "SEC") allows us to "incorporate by
reference" certain the information we file with it, which means that we can
disclose important information to you by referring you to the documents in which
such information is contained. We incorporate by reference our Annual Report on
Form 10-K/A for the fiscal year ended March 31, 2005 and our Quarterly Report on
Form 10-Q/A for the fiscal quarter ended June 30, 2005.
We will provide without charge to each person to whom a Proxy is delivered, upon
written or oral request of such person, a copy of the information incorporated
by reference in this Proxy (not including exhibits to the information that is
incorporated by reference unless the exhibits are themselves specifically
incorporated by reference), by first class mail or other equally prompt means
within one business day of receipt of such request. Such a request should be
directed to Galaxy Nutritional Foods, Inc., 2441 Viscount Row, Orlando, Florida
32809, Attention: Investor Relations, or if by telephone, (407) 855-5500.
21
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements, and other
information with the SEC. You may read and copy any document filed by our
Company at the SEC's public reference room at 100 F Street, N.E. Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. You can review our electronically filed reports, proxy
statements and other information on the SEC's website at http://www.sec.gov. Our
common stock is traded on the American Stock Exchange under the symbol "GXY".
22
ANNEX A
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT ("Agreement") dated June 30, 2005, by and
between SCHREIBER FOODS, INC., a Wisconsin corporation ("Purchaser") and GALAXY
NUTRITIONAL FOODS, INC., a Delaware corporation ("Seller").
WHEREAS, Seller produces certain imitation dairy products at a facility
located in Orlando, Florida (the "Facility"); and
WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to
purchase from Seller the Purchased Assets, according to the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, and agreements contained herein, the parties hereto agree
as follows:
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A. Definitions.
1. Agreement. This Asset Purchase Agreement.
2. Bill of Sale. The document delivered by the Seller to the Purchaser
under which Seller shall convey to Purchaser title to the Purchased
Assets in the form of Exhibit A.2 hereto.
3. Closing. The consummation of the transactions contemplated hereby as
set forth in Section D hereof.
4. Closing Date. November 1, 2005, effective as of 12:01 a.m., Central
Standard Time, or, if later, the date that is three (3) business days
after the date on which all conditions to closing specified in Sections
D.2 and D.3 have been satisfied or waived.
5. Fixed Assets. Those assets set forth on Exhibit A.5.
6. Governmental Approvals. Any order, permission, consent, approval,
license, authorization, registration, or validation of, or filing with,
or exemption by any governmental agency, commission, board or public
authority in connection with the sale of the Purchased Assets from
Seller to Purchaser, or the execution, delivery or performance by the
Seller of this Agreement or any other agreement or instrument to be
executed or delivered by Seller hereunder.
7. Material Adverse Effect. An effect that is reasonably likely to result
in a material diminution in value of the Purchased Assets (excluding,
however, any such Material Adverse Effect which results from any
announcement of the transactions contemplated by this Agreement, which
includes the effect of any announcement on any customers, suppliers or
employees, and general economic conditions).
8. Ordinary Course. With respect to the Seller's operations at the
Facility, the ordinary course of commercial operations customarily
engaged in by the Seller.
9. OSHA. The Federal Occupational Safety and Health Act of 1970.
10. Purchase Price. Eight Million Seven Hundred Thousand Dollars
($8,700,000.00).
11. Purchased Assets. The Fixed Assets and all books and records related
thereto.
12. Removal Plan. The Asset Removal Agreement in the form of Exhibit A.12
hereto describing the process and procedures for removing the Fixed
Assets from the Facility.
13. Seller Liabilities. As defined in Section H.2(a).
14. Supply Agreement. The Supply Agreement between Seller and Purchaser
dated as of the date hereof.
B. Purchase and Sale of Assets.
1. Assets Being Purchased and Sold. Pursuant to the terms and conditions
provided herein, and in consideration of the covenants, conditions and
agreement of Purchaser contained herein, Seller shall sell, convey,
assign, and transfer to Purchaser, and Purchaser shall purchase and
acquire from Seller, the Purchased Assets.
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2. Assumed Liabilities. The Purchaser shall not assume or be obligated for
any liability, obligation or commitment of Seller, direct or indirect,
known or unknown, absolute or contingent (the "Pre-Closing
Liabilities").
C. Purchase Price/Payment.
1. Amount. In reliance on the representations and warranties made herein
by Seller, subject to the terms and conditions of Section I, Purchaser
agrees to pay Seller the Purchase Price.
2. Payment. At the Closing, Purchaser shall pay to Seller, by wire
transfer of funds, the Purchase Price.
D. Closing
1. Closing/Transfer of Title. The Closing shall commence at 8:00 A.M., CST
on the Closing Date. Title and risk of loss to the individual Purchased
Assets shall pass to Purchaser at the Closing.
2. Conditions Precedent to Purchaser's Obligation to Close. Purchaser's
obligation to consummate the purchase of the Purchased Assets and to
take the other actions required to be taken by Purchaser on the Closing
Date are subject to the satisfaction, at or prior to the Closing Date,
of each of the following conditions (any of which may be waived by
Purchaser, in whole or in part).
(a) Seller's Performance. All of the covenants and obligations that
the Seller is required to perform or to comply with pursuant to
this Agreement and the Supply Agreement at or prior to the
Closing Date, including delivery to Purchaser of all items
described in Section D.4, must have been duly performed and
complied with in all material respects.
(b) No Proceedings. Since the date of this Agreement, there must not
have been commenced against Purchaser or Seller any proceeding
involving any challenge to, or seeking damages or other relief in
connection with, or which may have the effect of preventing or
delaying any of the transactions contemplated in, this Agreement
or the Supply Agreement.
(c) Release of Existing Liens. Any liens on the Purchased Assets
shall have been released and terminated at or prior to the
Closing, and Seller shall have received any consents required to
be obtained from the Seller's lenders.
(d) Stockholder Approval. The Seller's stockholders holding a
majority of the outstanding shares of common stock shall have
approved the sale of the Purchased Assets contemplated hereby.
For purposes of clarification, the accuracy of the Seller's
representations and warranties shall not be a condition to the
Purchaser's obligations to consummate the purchase of the Purchased
Assets, and Purchaser's sole remedy for any breach of any
representation or warranty by Seller hereunder shall be pursuant to
Section H.
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3. Conditions Precedent to Seller's Obligation to Close. Seller's
obligation to consummate the sale of the Purchased Assets and to take
the other actions required to be taken by Seller on the Closing Date is
subject to the satisfaction, at or prior to the Closing Date, of each
of the following conditions (any of which may be waived by Seller, in
whole or in part).
(a) Accuracy of Representations. All of Purchaser's representations
and warranties in this Agreement must have been accurate in all
material respects as of the date of this Agreement and as of the
Closing Date as if made on the Closing Date.
(b) Purchaser's Performance. All of the covenants and obligations
that the Purchaser is required to perform or to comply with
pursuant to this Agreement at or prior to the Closing Date,
including delivery to Seller of all items described in Section
D.5, must have been duly performed and complied with in all
material respects.
(c) No Proceedings. Since the date of this Agreement, there must not
have been commenced against Seller or Purchaser any proceeding
involving any challenge to, or seeking damages or other relief in
connection with, or which may have the effect of preventing or
delaying any of the transactions contemplated in, this Agreement
or the Supply Agreement.
(d) Release of Existing Liens. Any liens on the Purchased Assets
shall have been released and terminated at or prior to the
Closing, and Seller shall have received any consents required to
be obtained from the Seller's lenders.
(e) Stockholder Approval. The Seller's stockholders holding a
majority of the outstanding shares of common stock shall have
approved the sale of the Purchased Assets contemplated hereby.
4. Deliveries of Seller. At Closing, Seller shall deliver to Purchaser, in
form and content reasonably satisfactory to Purchaser, the following:
(a) copies of resolutions adopted by Seller's Board of Directors,
certified by the Secretary or Assistant Secretary of Seller,
authorizing the execution, delivery and performance of this
Agreement by Seller and authorizing and approving all other
transactions contemplated by this Agreement;
(b) the Bill of Sale;
(c) the Supply Agreement;
(d) the Removal Plan; and
(e) all such other resolutions, certifications, documents or
instruments as Purchaser or its counsel may reasonably request to
carry out the intent of this Agreement.
5. Deliveries of Purchaser. At Closing, Purchaser shall deliver to Seller,
in form and content reasonably satisfactory to Seller, the following:
(a) payment by wire transfer of the Purchase Price;
26
(b) copies of resolutions adopted by Purchaser's board of directors,
certified by the Secretary of Purchaser, authorizing the
execution, delivery and performance of this Agreement by
Purchaser and authorizing and approving all other transactions
contemplated by this Agreement;
(c) the Supply Agreement;
(d) the Removal Plan; and
(e) all such other resolutions, certifications, documents or
instruments as Seller or its counsel may reasonably request to
carry out the intent of this Agreement.
E. Covenants and Agreements
1. Access to Books and Records. After Closing, Seller and Purchaser each
will permit the other party and their representatives, upon receipt of
a written request a reasonable time in advance, including but not
limited to lawyers and accountants, during normal business hours, to
have access to and examine and make copies of the books and records
related to the Purchased Assets.
2. Liabilities. Subject to the terms of this Agreement, Seller agrees to
pay and shall discharge when due all Pre-Closing Liabilities. Purchaser
shall not assume, and Seller shall remain responsible for all other
Pre-Closing Liabilities and obligations of Seller.
3. Payment of Taxes. Seller shall be responsible for and shall pay all
federal, state, and local taxes, including, but not limited to, all
income, earnings, and property taxes, relating to Seller and the
Purchased Assets prior to the Closing Date. Purchaser shall be
responsible for and pay all such taxes relating to the Purchased Assets
payable for any period from and subsequent to the Closing Date.
4. Sales Taxes. Seller shall report and pay all sales taxes, if any,
payable to the State of Florida in connection with the transactions
contemplated by this Agreement.
5. Bulk Sales Laws. Purchaser hereby agrees to waive Seller's obligation
to comply with any notification requirements of the bulk sales law of
Florida.
6. Removal of Assets. Seller shall comply with the provisions of the
Removal Agreement.
7. Employee Matters. Purchaser shall not be obligated to extend job offers
to any employees employed by Seller as of the Closing Date. Seller
shall be responsible for any notification and/or liability under the
Worker Adjustment and Retraining Notification Act and/or any similar
state statute or local laws in connection with the consummation of the
transactions contemplated hereunder.
8. Conduct of Business Until Closing. Except as the Purchaser may
otherwise consent to or approve in writing on and after the date hereof
and prior to the Closing Date, the Seller agrees:
(a) not to enter into discussions, and to discontinue all pending
discussions, relating to the disposition of any of the Purchased
Assets, other than in the Ordinary Course;
27
(b) except in the Ordinary Course, not to sell, lease or grant any
option to sell or lease, give a security interest in or otherwise
create any encumbrance on any of the Purchased Assets;
(c) not to enter into any agreement (conditional or otherwise) to do
any of the foregoing.
9. Further Assurances. From time to time after the Closing Date, at the
request of the other party hereto, and without further consideration,
each party hereto shall execute and deliver such other instruments of
conveyance and transfer and take such other action as the other party
hereto may reasonably request so as to effectuate the transactions
contemplated by this Agreement.
F. Representations and Warranties of Seller. Seller represents and warrants
to Purchaser that, except as set forth in the various Schedules provided
as a part of this Section F and attached hereto:
1. Organization. Seller is a corporation duly formed and validly existing
under the laws of the State of Delaware and has the power and authority
to carry on its business as now conducted, to own and operate the
Purchased Assets, to execute this Agreement and the other agreements
and instruments referred to in this Agreement that it is executing and
delivering, and, subject to the Seller obtaining the approval of its
stockholders holding a majority of the outstanding shares of its common
stock (the "Stockholder Approval"), the Seller shall have the power and
authority to carry out the transactions contemplated hereby and
thereby.
2. Enforceability. Subject to the Seller obtaining the Stockholder
Approval, the execution and delivery by Seller of this Agreement and
the other agreements and instruments referred to in this Agreement have
been duly authorized by the Seller's board of directors and constitute
legal, valid, binding, and enforceable agreements and instruments of
Seller, except as the enforceability thereof may be affected by the
laws of bankruptcy, insolvency, reorganization, or similar laws
affecting the rights of creditors generally.
3. No Violations. Except as set forth in Schedule F.3, neither the
execution, delivery, nor performance of this Agreement or any other
agreement or instrument executed and delivered by or on behalf of
Seller in connection herewith, nor the consummation of the transactions
herein or therein contemplated, nor compliance with the terms and
provisions hereof or thereof, (i) contravenes Seller's certificate of
incorporation or by-laws, (ii) to Seller's knowledge, violates any
statute, rule or regulation of any governmental authority to which
Seller is subject, (iii) contravenes any judgment, decree or order
applicable to Seller, (iv) conflicts or is inconsistent with or will
result in any breach of or constitute a default under any contract,
commitment, agreement, understanding, arrangement, or instrument so as
to have a Material Adverse Effect on the Purchased Assets, or (v) will
result in the creation or imposition of (or the obligation to create or
impose) any lien or encumbrance on any of the Purchased Assets, or will
increase any such lien or encumbrance.
4. Litigation. There are no actions, suits, grievances, arbitrations or
proceedings pending, or, to Seller's knowledge, threatened or
anticipated before any court or governmental or administrative body or
agency affecting the Purchased Assets and that are reasonably likely to
have a Material Adverse Effect. There are no outstanding judgments,
orders, writs, injunctions or decrees of any court, governmental agency
or arbitration tribunal against, involving or affecting the Purchased
Assets.
28
5. Compliance with Laws; Licenses; Governmental Approvals. Except as set
forth in Schedule F.5, the Seller is not required to obtain any
Governmental Approvals to operate the Purchased Assets, except where
the failure to obtain such Governmental Approval would not have a
Material Adverse Effect. Since January 1, 2004, and except as set forth
in Schedule F.5, there have been no inspections of the Purchased Assets
by any OSHA authority and no citations have been issued under OSHA laws
or regulations with respect to the Purchased Assets.
6. Taxes. There are no tax liens or similar encumbrances of any type on
the Purchased Assets.
7. Contracts and Other Commitments. Schedule F.7 sets forth all material
contracts and other agreements that Seller is a party to (written or
oral) that affect or relate to the Purchased Assets. Except as set
forth in Schedule F.7, neither Seller nor, to Seller's knowledge, the
other party or parties thereto are in default under any such agreement.
8. Title to Purchased Assets. Seller has and shall transfer to Purchaser
good and valid title to all of the Purchased Assets. Except as
disclosed on Schedule F.8, and except for taxes and assessments not yet
due and payable, none of the Purchased Assets is subject to any lien,
pledge, encumbrance, or charge of any kind. Except as disclosed on
Schedule F.8, no production assets at the Facility are leased.
9. Restrictions on Purchased Assets or Premises. Seller is not a party to,
subject to, or bound by any contract, commitment or agreement that
prevents the use of any of the Purchased Assets for the purposes
currently used. To the knowledge of Seller, there are no existing laws
prohibiting the use of any Purchased Asset for its current use.
10. Insurance Inspection. Schedule F.10 contains a copy of each inspection
report received by Seller within the last twenty four (24) months from
insurance underwriters or carriers regarding the Purchased Assets.
11. No Broker. No broker, finder, agent or similar intermediary has acted
for or on behalf of Seller in connection with this Agreement or the
transactions contemplated hereby.
12. Knowledge. As of the Closing Date, Seller is not aware of any claim for
indemnity it may have against Purchaser under Section H below.
G. Representations and Warranties of Purchaser. Purchaser represents and
warrants to Seller that:
1. Organization. Purchaser is a Wisconsin corporation, duly organized,
validly existing, and in good standing under the laws of the State of
Wisconsin and has the power and authority to carry on its business, as
now conducted, to own and operate its properties and assets, to execute
this Agreement and the other agreements and instruments referred to in
this Agreement that it is executing and delivering, and to carry out
the transactions contemplated hereby and thereby.
2. Enforceability. The execution and delivery by Purchaser of this
Agreement and the other agreements and instruments referred to in this
Agreement have been duly authorized and constitute legal, valid,
binding, and enforceable agreements and instruments of Purchaser,
except as the enforceability thereof may be affected by the laws of
bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the rights of creditors generally.
29
3. No Violations. Neither the execution, delivery, nor performance of this
Agreement or any other agreement or instrument executed and delivered
by or on behalf of Purchaser in connection herewith, nor the
consummation of the transactions herein or therein contemplated, nor
compliance with the terms and provisions hereof or thereof, (i)
contravenes Purchaser's Articles of Incorporation or any provision of
law, (ii) violates any statute, rule, regulation, or order of any court
or governmental authority to which Purchaser is subject, (iii)
contravenes any judgment, decree, franchise, order, or permit
applicable to Purchaser, (iv) conflicts or is inconsistent with or will
result in any breach of or constitute a default under any contract,
commitment, agreement, understanding, arrangement, or instrument, or
(v) will result in the creation of or imposition of (or the obligation
to create or impose) any lien, encumbrance, or liability on any of the
property or assets of Purchaser, or will increase any such lien,
encumbrance, or liability.
4. No Broker. No broker, finder, agent or similar intermediary has acted
for or on behalf of Purchaser in connection with this Agreement or the
transactions contemplated hereby. No broker, finder, agent or similar
intermediary is entitled to any fee or commission relating to the
transactions contemplated by this Agreement.
5. Knowledge. As of the Closing Date, Purchaser is not aware of any of
Seller's representations and warranties under the Agreement being
untrue or inaccurate, in whole or in part. In addition, as of the
Closing Date, Purchaser is not aware of any claim for indemnity it may
have against Seller under Section H below.
H. Indemnification
1. Survival of Representations and Warranties. Seller's representations
and warranties (and the indemnities under Section H.2 relating thereto)
shall survive the Closing Date for twelve (12) months.
2. Indemnification by Seller. Seller indemnifies and agrees to hold
Purchaser harmless from, against and in respect of the following:
(a) Except with regard to the Assumed Liabilities, and except as
otherwise provided in this Agreement, all debts, liabilities, or
obligations of Seller, direct or indirect, fixed, contingent, or
otherwise existing before the Closing, including, but not limited
to, liabilities arising out of any of the acts, transactions,
circumstances, statement of facts, or violation of law that
occurred or existed before the Closing, including without
limitation, the Pre-Closing Liabilities and Seller's obligations
under applicable bulk sales laws, whether or not then known, due,
or payable and irrespective of whether the existence thereof is
disclosed to Purchaser in this Agreement or any schedule hereto
(the "Seller Liabilities");
(b) Any and all losses, liabilities, deficiencies, or damages
suffered or incurred by Purchaser by reason of any untrue
representation or breach of warranty, or nonfulfillment of any
covenant or agreement by Seller contained in this Agreement or in
any certificate, document, or instrument delivered to Purchaser
hereunder or in connection herewith;
(c) Any and all losses, liabilities, deficiencies, or damages
suffered or incurred by Purchaser as a result of Seller's failure
to discharge the Seller Liabilities;
(d) Any claim for a finder's fee or brokerage or other commission by
any person or entity for services alleged to have been rendered
at the instance of Seller with respect to this Agreement or any
of the transactions contemplated hereby and any and all losses,
liabilities, deficiencies, or damages suffered or incurred by
Purchaser by reason of nonfulfillment of any covenant or
agreement by Seller contained in this Agreement or in any other
agreement delivered in connection herewith;
30
(e) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including, without
limitation, reasonable legal fees and expenses, incident to any of the
foregoing or incurred in enforcing this indemnity.
3. Indemnification by Purchaser. Purchaser hereby agrees to indemnify and
hold Seller harmless from, against, and in respect of:
(a) Any and all debts, liabilities, or obligations of Purchaser,
direct or indirect, fixed, contingent, or otherwise accruing on
or after the Closing Date, including, without limitation, the
Assumed Liabilities;
(b) Any and all losses, liabilities, deficiencies, or damages
suffered or incurred by Seller resulting from any untrue or
inaccurate representation, breach of warranty, or nonfulfillment
of any covenant or agreement by Purchaser contained in this
Agreement or in any certificate, document, or instrument
delivered to Seller pursuant hereto or in connection herewith;
(c) Any and all losses, liabilities, deficiencies, or damages
suffered or incurred by Seller as a result of Purchaser's failure
to discharge the Assumed Liabilities;
(d) Any claim for a finder's fee or brokerage or other commission by
any person or entity for services alleged to have been rendered
at the instance of Purchaser with respect to this Agreement or
any of the transactions contemplated hereby;
(e) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including, without
limitation, reasonable legal fees and expenses, incident to any
of the foregoing or incurred in enforcing this indemnity.
4. Third-Party Claims.
(a) In respect of, arising out of, or involving a claim made by any
person, firm, governmental authority, or corporation other than
the Purchaser or Seller against the indemnified party
("Third-Party Claim"), the indemnified party must notify the
indemnifying party in writing of this Third-Party Claim promptly
after receipt by the indemnified party of written notice of the
Third-Party Claim. Thereafter, the indemnified party shall
promptly deliver to the indemnifying party copies of all notices
relating to the Third-Party Claim.
(b) If a Third-Party Claim is made against an indemnified party, the
indemnifying party shall assume the defense thereof with counsel
selected by the indemnifying party, provided such counsel is not
reasonably objected to by the indemnified party. The indemnified
party shall cooperate fully with the indemnifying party in
connection with such defense.
(c) In no event will the indemnified party admit any liability with
respect to, or settle, compromise, or discharge, any Third-Party
Claim without the indemnifying party's prior written consent, and
the indemnified party will agree to any settlement, compromise,
or discharge of a Third-Party Claim that the indemnifying party
may recommend that releases the indemnified party completely in
connection with the Third-Party Claim.
31
(d) The indemnified party shall be entitled to participate in, but
not control, the defense with its own counsel at its own expense.
If the indemnifying party does not assume the defense of any such
Third-Party Claim, the indemnified party may defend the claim in
a manner as it may deem appropriate, including, but not limited
to, settling the claim or litigation after giving notice of it to
the indemnifying party on such terms as the indemnified party may
deem appropriate, and the indemnifying party will reimburse the
indemnified party promptly in accordance with the provisions of
this Section H.
(e) The failure of either party to provide timely notice hereunder
shall not defeat the right to indemnification if the late notice
does not result in prejudice, and if so, only to the extent of
the prejudice.
5. Sole Remedy. Except in connection with any fraudulent misrepresentation
by either party proven by the other in a court of competent
jurisdiction, or with respect to Third Party Claims, to which the
limitations of this subparagraph do not apply, Purchaser and Seller
agree that their sole remedy after Closing, whether in respect to a
breach of warranty, representation or covenant by Seller or Purchaser
hereunder, shall be limited to rights of indemnification pursuant to
Sections H.2 and H.3. Purchaser and Seller shall use commercially
reasonable efforts to mitigate the losses, costs, expenses and damages
to which either may become entitled to indemnification hereunder.
6. Direct Damages. The indemnification obligations of the parties pursuant
to this Section H shall be limited to direct damages, loss, claims,
liabilities, demands, charges, suits, penalties, costs and expenses and
shall not include incidental, consequential, indirect, punitive or
exemplary damages.
I. Alternative Transactions. If, at the stockholders meeting held for the
purpose of approving of the sale of the Purchased Assets to Purchaser
pursuant to the terms hereof, Seller's stockholders holding a majority of
the outstanding shares of common stock do not approve the sale of the
Purchased Assets contemplated hereby, then, as soon as is reasonably
practicable thereafter, the Seller and Purchaser shall consummate one of
the following transactions (each, an "Alternative Transaction"):
1. Seller shall sell to Purchaser, and Purchaser shall purchase from
Seller, the Alternative Assets listed on Exhibit I.1 for an aggregate
purchase price of $2,115,000. The only conditions to either Party's
obligations to consummate the sale of Alternative Assets pursuant to
this Section I.1 (other than payment of the purchase price therefore)
shall be the release and termination of any liens with respect to the
Alternative Assets and Seller's receipt of any consents required to be
obtained from the Seller's lenders (collectively, the "Releases and
Consents").
2. In the event that the parties are unable to obtain the Releases and
Consents with respect to the sale of the Alternative Assets as
contemplated by Section I.1, then the parties shall negotiate in good
faith to make such Alternative Assets available for use by the
Purchaser on a basis and for such period (not to exceed 180 days) that
are reasonably acceptable to each of the Seller and Purchaser;
provided, however, that Purchaser shall use its commercially reasonable
efforts to obtain equipment that serves the same functions as the
Alternative Assets prior to the expiration of the agreed upon period of
time. The only additional conditions to either Party's obligations to
consummate the arrangements contemplated by this Section I.2 shall be
the Releases and Consents.
32
J. Termination. This Agreement may be terminated at any time prior to the
Closing or the consummation of an Alternative Transaction:
1. by mutual written agreement of Seller and Purchaser;
2. automatically upon written notice of termination of the Supply
Agreement given pursuant to Section VII.C thereof.
K. Miscellaneous.
1. Expenses. Except as specifically set forth in this Agreement to the
contrary, all fees and expenses incurred by Seller in connection with
this Agreement will be borne by Seller and all fees and expenses
incurred by Purchaser in connection with this Agreement will be borne
by Purchaser.
2. Parties In Interest. This Agreement will be binding on and inure to the
benefit of the parties hereto. Neither this Agreement, nor the parties'
rights and obligations hereunder, may be assigned by any party to any
third party without the other party's prior written consent, provided,
however, consent to assignment shall not be required with respect to an
assignment to a purchaser of all or substantially all of the assets of
either Seller or Purchaser, as the case may be.
3. Entire Agreement; Amendments. This Agreement and the agreements and
schedules referred to in this Agreement contain the entire
understanding of the parties with respect to the subject matter of this
Agreement. There are no restrictions, agreements, promises, warranties,
covenants, or undertakings other than those expressly set forth herein
or therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter.
This Agreement may be amended only by a written instrument duly
executed by the parties or their successors or assigns.
4. No Waiver. No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or a similar nature.
5. Headings. The section and paragraph headings contained herein are for
the convenience of the parties only and are not intended to define or
limit the contents of their sections and paragraphs.
6. Applicable Law. This Agreement and all amendments thereof shall be
governed by and construed in accordance with the laws of the State of
Wisconsin applicable to contracts made and to be performed therein.
7. Notices. All notices, claims, certificates, requests, demands, and
other communications under this Agreement will be in writing and
notices will be deemed to have been duly given if delivered or mailed,
registered or certified mail, postage prepaid, return receipt
requested, or for overnight delivery, by a nationally recognized
overnight mail service, as follows:
33
If to Purchaser to: Schreiber Foods, Inc.
Attn: Ron Dunford
425 Pine Street
Green Bay, Wisconsin 54307
Ron.Dunford@SchreiberFoods.com
If to Seller to: Galaxy Nutritional Foods, Inc.
2441 Viscount Row
Orlando, FL 32809-6217
Attention: Michael Broll
e-mail: mebroll@galaxyfoods.com
with a copy (which shall not constitute
notice)to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Arnold J. Levine, Esquire
e-mail: alevine@proskauer.com
or to such other address as the party to whom notice is to be given
previously may have furnished to the other party in writing in the
manner set forth in this section.
8. Joint Announcement. The Seller and Purchaser shall agree on the form
and substance of all joint press releases or other public announcements
of matters related to this Agreement or any of the transactions
contemplated hereby that shall be released on or after the Closing;
provided, however, that nothing in this Section J.8 shall be deemed to
prohibit any party hereto from making any disclosure required by law.
9. Severability. If any term, condition, or provision of this Agreement
shall be declared invalid or unenforceable, the remainder of the
Agreement, other than such term, condition, or provision, shall not be
affected thereby and shall remain in full force and effect and shall be
valid and enforceable to the fullest extent permitted by law.
10. Definition of Knowledge. For purposes of this Agreement, the phrases
"to the best of the Seller's knowledge," "to the Seller's knowledge,"
"to the knowledge of the Seller," "know," or similar words and phrases
referring to facts or other information known by the Seller shall be
deemed to mean and refer to facts and information within the actual
knowledge of those individuals listed on Exhibit K.10.
34
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the day and year first above written.
SELLER PURCHASER
GALAXY NUTRITIONAL FOODS, INC. SCHREIBER FOODS, INC.
By: /s/ David H. Lipka By: /s/ Ron Dunford
--------------------------- -------------------
Name: David H. Lipka Name: Ron Dunford
Its: Chairman Its: President and COO of
Schreiber Chain Sales
35
Exhibit A.5
FIXED ASSETS
- --------------------------------------------------------------------------------
DESCRIPTION VENDOR/MANUFACTURER Asset #
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(2) CC - 1000# cheese cookers Blentech Corp. 193
- --------------------------------------------------------------------------------
Hayssen packaging machine Hayssen Manufacturing 194
- --------------------------------------------------------------------------------
(4) 200 gal. & (2) 500 gal.
Kettles w/t agitators Lee Process Systems 199
- --------------------------------------------------------------------------------
System 1, Kustner IWS machine Kustner Industries 377,393
- --------------------------------------------------------------------------------
Wrapping machine, WS-20 Series II Sasib 378
- --------------------------------------------------------------------------------
Blentech Hard Cheese System Blentech Corp. 466
- --------------------------------------------------------------------------------
System 2, 1600 SPM IWS Machine
(Hardware) Kustner Industries 480,492
- --------------------------------------------------------------------------------
System 5, Ribbon - Pullman Hart Design & Mfg. Inc. 1179
- --------------------------------------------------------------------------------
System 5, Hart Casing Linc.
Pulman Machine Hart Design & Mfg. Inc. 1418
- --------------------------------------------------------------------------------
3 CC-1000 Cheeztherm cheese cookers Blentech Corp. 1674
- --------------------------------------------------------------------------------
System 8, Chunk Line R.R. Pankratz, Inc. 1937
- --------------------------------------------------------------------------------
Systems 9 and 11, Slice Lines Hart Design & Mfg. Inc. 1938
- --------------------------------------------------------------------------------
System 12, Cup Line Modern Packaging 1939
- --------------------------------------------------------------------------------
System 10, Block Line/String
Cheese Line Robert Reiser 2048
- --------------------------------------------------------------------------------
System 13, Shred Line Hayssen Manufacturing 2049
- --------------------------------------------------------------------------------
Dixie Vac Machine Amplicon/Calfirst 2159,2186
- --------------------------------------------------------------------------------
Hayssen Shred Bagger GE Capital 2068
- --------------------------------------------------------------------------------
Exhibit I.1
ALTERNATIVE ASSETS
- --------------------------------------------------------------------------------
DESCRIPTION VENDOR/MANUFACTURER Asset #
- --------------------------------------------------------------------------------
Blentech Hard Cheese System Blentech Corp. 466
- --------------------------------------------------------------------------------
System 12, Cup Line Modern Packaging 1939
- --------------------------------------------------------------------------------
System 13, Shred Line Hayssen Manufacturing 2049
- --------------------------------------------------------------------------------
Hayssen Shred Bagger GE Capital 2068
- --------------------------------------------------------------------------------
36
[GALAXY LOGO]
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
.................................................................................
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
GALAXY NUTRITIONAL FOODS, INC.
The undersigned hereby appoints DAVID H. LIPKA and MICHAEL E. BROLL, and
each of them, as proxies, each with the power to appoint his substitute, and
authorizes each of them to represent and to vote, as designated on the reverse
hereof, all of the shares of common stock of Galaxy Nutritional Foods, Inc. (the
"Company") held of record by the undersigned at the close of business on
September 26, 2005, at the Special Meeting of Stockholders of the Company to be
held at the Company's headquarters, 2441 Viscount Row, Orlando, Florida 32809,
at 10:00 a.m., local time, on Wednesday, November 9, 2005, or at any adjournment
thereof.
(Continued, and to be marked, dated, and signed, on the other side)
38
VOTE BY TELEPHONE OR INTERNET
QUICK ooo EASY ooo IMMEDIATE
Galaxy Nutritional Foods, Inc.
Voting by telephone or Internet is quick, easy and immediate. As a Galaxy
Nutritional Foods, Inc. stockholder, you have the option of voting your shares
electronically through the Internet or on the telephone, eliminating the need to
return the proxy card. Your electronic vote authorizes the named proxies to vote
your shares in the same manner as if you marked, signed, dated and returned the
proxy card. Votes submitted electronically over the Internet or by telephone
must be received by 6:00 p.m., Eastern Standard Time, on November 8, 2005.
To Vote Your Proxy by Internet
- ------------------------------
www.continentalstock.com
Have your proxy card available when you access the above website. Follow the
prompts to vote your shares.
To Vote Your Proxy by Phone
- ---------------------------
1 (866) 894-0537
Use any touch-tone telephone to vote your proxy. Have your proxy card available
when you call. Follow the voting instructions to vote your shares.
PLEASE DO NOT RETURN THE CARD BELOW IF YOU ARE VOTING ELECTRONICALLY OR BY
PHONE.
To Vote Your Proxy by Mail
- --------------------------
Mark, sign, and date your proxy card below, detach it, and return it in the
postage-paid envelope provided.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
.................................................................................
PROXY
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS Please mark
INDICATED, WILL BE VOTED "FOR" PROPOSAL 1. THIS PROXY IS your votes |X|
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, WHICH like this
RECOMMENDS A VOTE FOR THE PROPOSAL.
1. PROPOSAL TO APPROVE THE SALE OF THE 2. In their discretion, the proxies
COMPANY'S MANUFACTURING EQUIPMENT AS are authorized to vote upon such
CONTEMPLATED BY THE ASSET PURCHASE other business as may properly
AGREEMENT, DATED JUNE 30, 2005, BY come before the meeting.
AND BETWEEN SCHREIBER FOODS, INC.
AND THE COMPANY, WHICH MAY BE DEEMED
A SALE OF SUBSTANTIALLY ALL OF THE
ASSETS OF THE COMPANY PURSUANT TO
DELAWARE GENERAL CORPORATION LAW.
FOR AGAINST ABSTAIN
|_| |_| |_|
- ------------------------------------------
COMPANY ID:
PROXY NUMBER:
ACCOUNT NUMBER:
- ------------------------------------------
Signature _____________________ Signature _______________________ Date_________
NOTE: Please sign exactly as name appears hereon. When shares are held by joint
owners, each owner should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give title as such. If a corporation,
please sign in full corporate name by President or other authorized officer. If
a partnership, please sign in partnership name by authorized person.
38