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SCHEDULE 13D
Under the Securities Exchange Act of 1934
Ascendia Brands, Inc.
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(Name of Company)
Common Stock, par value $0.001 per share
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(Title of Class of Securities)
15670X104
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(CUSIP Number of Class of Securities)
Mathew Hoffman, Esq. Eleazer Klein, Esq.
Prentice Capital Management, LP Schulte Roth & Zabel LLP
623 Fifth Avenue, 32nd Floor 919 Third Avenue
New York, NY 10022 New York, NY 10022
(212) 756-8040 (212) 756-2376
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 30, 2006
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(Date of Event which Requires
Filing of this Schedule)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [ ]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SCHEDULE 13D
----------------------- ---------------------
CUSIP NO. 15670X104 PAGE 2 OF 13 PAGES
----------------------- ---------------------
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Prentice Capital Management, LP
73-1728931
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC (See Item 3)
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
0
NUMBER OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 3,322,482
EACH --------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,322,482
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
3,322,482
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) (see Item 5)
23.9%
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14 TYPE OF REPORTING PERSON*
PN
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SCHEDULE 13D
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CUSIP NO. 15670X104 PAGE 3 OF 13 PAGES
----------------------- ---------------------
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Michael Zimmerman
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC (See Item 3)
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
0
NUMBER OF --------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 3,322,482
EACH --------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,322,482
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
3,322,482
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) (see Item 5)
23.9%
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14 TYPE OF REPORTING PERSON*
IN
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SCHEDULE 13D
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CUSIP NO. 15670X104 PAGE 4 OF 13 PAGES
----------------------- ---------------------
This Schedule 13D is being filed by Prentice Capital Management, LP
("Prentice Capital Management") and Michael Zimmerman ("Mr. Zimmerman" and,
together with Prentice Capital Management, the "Reporting Persons"), relating to
the Common Stock, par value $0.001 per share, of Ascendia Brands, Inc., a
Delaware corporation (the "Company"). Unless the context otherwise requires,
references herein to the "Shares" are to the Common Stock of the Company.
The Reporting Persons are making this single, joint filing because they may
be deemed to constitute a "group" within the meaning of Section 13(d)(3) of the
Act. Each of Prentice Capital Management and Mr. Zimmerman disclaims beneficial
ownership of all of the Shares reported in this Schedule 13D.
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D relates to the Common Stock, par value
$0.001 per share, of the Company. The Company's principal executive office is
located at 2000 Lenox Drive, Suite 202, Lawrenceville, NJ 08648.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is filed on behalf of Prentice Capital Management and
Mr. Zimmerman.
(b) The address of the principal business office of Prentice Capital
Management and Mr. Zimmerman is 623 Fifth Avenue, 32nd Floor, New York, New York
10022.
(c) The principal business of Prentice Capital Management is to serve as
investment manager to investment funds (including Prentice Capital Partners, LP,
Prentice Capital Partners QP, LP, Prentice Capital Offshore, Ltd., Prentice
Special Opportunities, LP, Prentice Special Opportunities Offshore, Ltd. and
Prentice Special Opportunities Master, L.P.) and manage investments for certain
entities in managed accounts with respect to which it has voting and dispositive
authority over Shares reported in this Schedule 13D. The principal business of
Mr. Zimmerman is to act as the Managing Member of (i) Prentice Management GP,
LLC, the general partner of Prentice Capital Management, (ii) Prentice Capital
GP, LLC, the general partner of certain investment funds and (iii) Prentice
Capital GP II, LLC, the managing member of Prentice Capital GP II, LP, which is
the general partner of certain other investment funds. As such, he may be deemed
to control Prentice Capital Management and the investment funds and managed
accounts and therefore may be deemed to be the beneficial owner of the Shares
reported in this Schedule 13D.
(d) Neither of the Reporting Persons nor any of Prentice Capital
Management's executive officers or members has, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
SCHEDULE 13D
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CUSIP NO. 15670X104 PAGE 5 OF 13 PAGES
----------------------- ---------------------
(e) Neither of the Reporting Persons nor any of Prentice Capital
Management's executive officers or members has, during the last five years, been
a party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) Prentice Capital Management is a Delaware limited partnership. Mr.
Zimmerman is a United States citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to the Bettinger Agreement, certain private investment funds and
managed accounts for which Prentice Capital Management and Mr. Zimmerman control
the investing and trading in securities (the "Prentice Parties") will acquire,
at the closing of the transactions contemplated by the Bettinger Agreement,
3,322,482 Shares. The aggregate purchase price for the 3,322,482 Shares is
$4,983,723. Prentice Capital Management and Mr. Zimmerman will not directly own
any Shares. The Prentice Parties will purchase the Shares with their investment
capital.
Additionally, pursuant to the Securities Purchase Agreement, the Prentice
Parties will be issued, at the closing of the transactions contemplated by the
Securities Purchase Agreement, Notes and Warrants that are convertible into
Common Stock of the company. The aggregate purchase price for the Notes and
Warrants is $91,000,000. If the Blocker was not in place, the notes would
initially be convertible into 52,000,000 Shares and the Series A Warrant would
be exercisable into 3,053,358 Shares. The Prentice Parties will purchase the
Notes and Warrants with their investment capital.
Capitalized terms used in this Item 3 and not previously defined have the
meanings assigned to such terms in Item 4.
ITEM 4. PURPOSE OF TRANSACTION
The Reporting Persons are acquiring the securities reported herein for
investment in the ordinary course of business. The Reporting Persons are
purchasing the securities reported herein because of their belief that the
Company represents an attractive investment based on the Company's business
prospects and strategy. Consistent with their investment purposes, the Reporting
Persons may further purchase, hold, vote, trade, dispose of, engage in short
selling of or any hedging or similar transactions with respect to the Shares or
otherwise deal in the Shares at times, and in such manner, as they deem
advisable to benefit from changes in the market price of such Shares, changes in
the Company's operations, business strategy or prospects, or from sale or merger
of the Company and based on other factors including, without limitation, the
price levels of the Shares, availability of funds, subsequent developments
affecting the Company, the Company's business, other investment and business
opportunities available to the Reporting Persons, conditions in the securities
market, general economic and industry conditions and other factors that the
Reporting Persons may deem relevant from time to time. Any acquisition or
disposition of Shares, or short sales or other hedging transaction with respect
to the Shares, by the Reporting Persons may be effected through open market or
privately negotiated transactions, or otherwise. The Reporting Persons may take
one or more actions set forth under subsections (a) through (j) of Item 4 of
Schedule 13D. The Reporting Persons may discuss such matters with management or
directors of the Company, other shareholders, industry analysts, existing or
potential strategic partners or competitors, and investment and financing
professionals. Such factors and discussions may materially affect, and result
in, the Reporting Persons' modifying their ownership of the Shares, exchanging
information with the Company pursuant to appropriate confidentiality or similar
agreements or otherwise. The Reporting Persons reserve the right to at any time
reconsider and change their plans or proposals relating to the foregoing. Except
as set forth herein, the Reporting Persons do not have any plan or proposal that
would relate to, or result in, any of the matters set forth under subsections
(a) through (j) of Item 4 of Schedule 13D.
SCHEDULE 13D
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CUSIP NO. 15670X104 PAGE 6 OF 13 PAGES
----------------------- ---------------------
Pursuant to a Stock Purchase Agreement dated as of June 30, 2006 (the
"Bettinger Agreement"), Steven Bettinger and Jodi Bettinger agreed to sell to
the Prentice Parties 3,322,482 Shares of the Company for $4,983,723. It is
anticipated that the closing of the transactions contemplated by the Bettinger
Agreement will occur (subject to customary closing conditions) simultaneously
with the closing of the transactions contemplated by the Securities Purchase
Agreement.
Pursuant to a Second Amended and Restated Securities Purchase Agreement
dated as of June 30, 2006 (the "Securities Purchase Agreement"), the Company
agreed to sell the Prentice Parties convertible notes (the "Notes") in the
principal amount of $91 million. It is anticipated that the closing of the
transactions contemplated by the Securities Purchase Agreement will occur on
July 12, 2006 or shortly thereafter (the "Closing"). The obligation of the
Prentice Parties to consummate the transactions contemplated by the Securities
Purchase Agreement is subject to the conditions set forth in the Securities
Purchase Agreement including, without limitation, execution and delivery of
additional documentation for the transactions, consent of the stockholders
executed by holders of a majority of the outstanding voting securities of the
Company and the consummation of the transactions contemplated by the CIT
Facility (as defined in the Securities Purchase Agreement), which conditions may
be waived by the Prentice Parties.
The Securities Purchase Agreement provides that the Notes will have a term
of 10 years (subject to certain put and call rights described below) and will
bear interest at the rate of 9 percent per annum; provided that during the first
six months of the term, the Company will have the option to accrue and
capitalize interest. If the Company consummates an Acquisition (as defined in
the Notes), which Acquisition shall be in form and substance satisfactory to,
and approved by, the holders of Notes representing at least a majority of the
aggregate principal amount of the Notes then outstanding, the Company may elect
to defer and capitalize interest for the balance of the term of the Notes. Any
portion of the balance due under the Notes will be, subject to the limitations
imposed by the Note Blocker (as defined below), convertible at any time, at the
option of the holders(s), into the common stock of the Company (the "Conversion
Shares") at a price of $1.75 per share (subject to certain anti-dilution
adjustments).
THE HOLDER OF THE NOTES SHALL NOT HAVE THE RIGHT TO CONVERT ANY PORTION OF
THE NOTES TO THE EXTENT THAT AFTER GIVING EFFECT TO SUCH CONVERSION, THE HOLDER
(TOGETHER WITH ITS AFFILIATES) WOULD BENEFICIALLY OWN IN EXCESS OF 9.99% OF THE
NUMBER OF SHARES OUTSTANDING IMMEDIATELY AFTER GIVING EFFECT TO SUCH CONVERSION
(THE "NOTES BLOCKER"); PROVIDED THAT THE HOLDER OF THE NOTES MAY INCREASE OR
DECREASE SUCH PERCENTAGE TO ANY OTHER PERCENTAGE UPON NOTICE TO THE COMPANY;
PROVIDED, FURTHER, THAT ANY SUCH INCREASE WILL NOT BE EFFECTIVE UNTIL THE
SIXTY-FIRST (61ST) DAY AFTER SUCH NOTICE IS DELIVERED TO THE COMPANY.
SCHEDULE 13D
----------------------- ---------------------
CUSIP NO. 15670X104 PAGE 7 OF 13 PAGES
----------------------- ---------------------
The Notes rank as senior secured debt of the Company; provided however that
certain of the liens securing repayment of the Notes will be subordinated to
certain of the liens securing repayment of the CIT Facility. The Notes will also
be subordinated to indebtedness, on terms and conditions reasonably satisfactory
to the Prentice Parties, incurred in connection with an Acquisition, in an
amount up to $250 million. The Company, the Prentice Parties and certain other
parties will enter into amended and restated security documents at the closing
to reflect these arrangements.
At the Closing, the Company will issue warrants entitling the holders
thereof to purchase shares of its common stock ("Warrant Shares"). At the
Closing, the Company will issue to the Prentice Parties a (i) Series A Warrant
(the "Series A Warrant") exercisable into 3,053,358 Shares at an exercise price
of $2.10 per share and (ii) a Series B Warrant (the "Series B Warrant," together
with the Series A Warrant, the "Warrants"), exercisable on any day on or after
the earlier of (x) the date of the consummation of an Acquisition or (y) October
31, 2006, into up to 3,000,000 Shares. The exact number of Shares and the
exercise price of the Shares (which ranges from $1.15 to $1.95) underlying the
Series B Warrant shall be determined in accordance with the terms of the Series
B Warrant. The number of Shares that the Series B Warrant is exercisable into is
dependent on the principal amount of Notes outstanding at the time the Warrant
is initially exercisable.
THE HOLDER OF EITHER WARRANT SHALL NOT HAVE THE RIGHT TO EXERCISE SUCH
WARRANT, TO THE EXTENT THAT AFTER GIVING EFFECT TO SUCH EXERCISE, THE HOLDER
(TOGETHER WITH ITS AFFILIATES) WOULD BENEFICIALLY OWN IN EXCESS OF 9.99% OF THE
SHARES OUTSTANDING IMMEDIATELY AFTER GIVING EFFECT TO SUCH EXERCISE; PROVIDED
THAT THE HOLDER OF THE WARRANTS MAY INCREASE OR DECREASE SUCH PERCENTAGE TO ANY
OTHER PERCENTAGE UPON NOTICE TO THE COMPANY; PROVIDED, FURTHER, THAT ANY SUCH
INCREASE WILL NOT BE EFFECTIVE UNTIL THE SIXTY-FIRST (61ST) DAY AFTER SUCH
NOTICE IS DELIVERED TO THE COMPANY.
At the Closing, the Company is required to pay Prentice Capital Management,
a closing fee of $3,667,500 and to reimburse Prentice Capital Management for
certain disbursements related to the transaction.
At the Closing, the Prentice Parties will enter into an Amended and
Restated Registration Rights Agreement ("Registration Rights Agreement") with
the Company with respect to the Conversion Shares, the Warrant Shares and any
Shares currently held or subsequently acquired by the Prentice Parties,
including the Shares to be acquired pursuant to the Bettinger Agreement
("Registrable Securities"). Under the Registration Rights Agreement, the Company
will be required to file a registration statement with respect to the
Registrable Securities not less than 60 days following the Closing, and to use
its best efforts to have such registration statement declared effective not more
than
SCHEDULE 13D
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CUSIP NO. 15670X104 PAGE 8 OF 13 PAGES
----------------------- ---------------------
the earlier of 120 days following the filing deadline or 180 days following the
Closing. The Registration Rights Agreement contains customary penalties for the
failure to comply with such deadlines or to maintain the effectiveness of the
registration statement.
Additionally, the Company and certain of its stockholders have agreed
to enter into a Voting Agreement (the "Voting Agreement") whereby the parties
have agreed to vote (a) in favor of the Stockholder Approval (as defined in the
Securities Purchase Agreement); (b) against any proposal or any other corporate
action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Transaction Agreements (as defined in the Securities Purchase
Agreement) or which could reasonably be expected to result in any of the
conditions to the Company's obligations under the Transaction Agreements, as
applicable, not being fulfilled; (c) so long as the Prentice Parties or any of
their affiliates hold any Notes as and to the extent provided in the Securities
Purchase Agreement, in favor of one person designated by the Prentice Parties
and nominated by the Company (the "Prentice Nominee") to serve on the board of
directors of the Company; and (d) if the Prentice Parties request the Company to
take action to remove the Prentice Nominee as a director, in support of such
removal.
The foregoing descriptions of the Securities Purchase Agreement, the
Bettinger Agreement, the Notes, the Warrants, the Amended and Restated
Registration Rights Agreement and the Voting Agreement do not purport to be
complete and are qualified in their entirety by the terms of each such document
which are incorporated herein by reference in response to this Item 4 and which
have been filed as exhibits to the Company's Current Report on Form 8-K, filed
with the Securities and Exchange Commission on July 30, 2006.
ITEM 5. INTEREST IN SECURITIES OF THE COMPANY.
(a) Prentice Capital Management may be deemed to beneficially own, in the
aggregate, 3,322,482 Shares, representing approximately 23.9% of the Company's
outstanding Shares (based on 13,913,056 Shares outstanding as provided by the
Company). Mr. Zimmerman may be deemed to beneficially own, in the aggregate,
3,322,482 Shares representing approximately 23.9% of the Company's outstanding
Common Stock.
(b) Prentice Capital Management and Michael Zimmerman have shared voting
power with respect to 3,322,482 Shares.
(c) Except as described herein, during the last sixty days there were no
transactions in the Common Stock effected by the Reporting Persons.
SCHEDULE 13D
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CUSIP NO. 15670X104 PAGE 9 OF 13 PAGES
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(d) The limited partners or shareholders of the private investment funds
and the entities for which Prentice Capital Management and Mr. Zimmerman manages
investments in managed accounts have the right to participate indirectly in the
receipt of dividends from, or proceeds from the sale of, the Shares in
accordance with their respective ownership interests in their respective funds.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE COMPANY.
As described in Item 4 above, the Prentice Parties agreed to purchase
Shares pursuant to a Stock Purchase Agreement with Steven Bettinger and Jodi
Bettinger dated as of June 30, 2006.
As described in Item 4 above, the Prentice Parties agreed to purchase Notes
and Warrants pursuant to a Second Amended and Restated Securities Purchase
Agreement with the Company dated as of June 30, 2006 and to enter into a related
Registration Rights Agreement.
Pursuant to Rule 13d-1(k) promulgated under the Exchange Act, the Reporting
Persons have entered into an agreement with respect to the joint filing of this
statement, and any amendment or amendments hereto, which is attached hereto as
Exhibit A.
Except as otherwise set forth herein, the Reporting Persons do not have any
contract, arrangement, understanding or relationship with any person with
respect to securities of the Company.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A - The Joint Filing Agreement dated June 30, 2006, signed by each of
the Reporting Persons in order to confirm that this statement is being filed on
behalf of each of the Reporting Persons.
Exhibit B - The Bettinger Securities Agreement dated as of June 30, 2006, by and
among Steven Bettinger, Jodi Bettinger and Prencen, LLC.
Exhibit C - The Securities Purchase Agreement dated as of June 30, 2006 is
incorporated by reference to the Company's Current Report on Form 8-K filed with
the Securities and Exchange Commission on July 7, 2006.
Exhibit D - Form of Note is incorporated by reference to the Company's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
July 7, 2006.
SCHEDULE 13D
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CUSIP NO. 15670X104 PAGE 10 OF 13 PAGES
----------------------- ---------------------
Exhibit E - Form of Warrant is incorporated by reference to the Company's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
July 7, 2006.
Exhibit F - Form of Registration Rights Agreement is incorporated by reference
to the Company's Current Report on Form 8-K filed with the Securities and
Exchange Commission on July 7, 2006.
Exhibit G - Form of Voting Agreement is incorporated by reference to the
Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission on July 7, 2006.
SCHEDULE 13D
----------------------- ---------------------
CUSIP NO. 15670X104 PAGE 11 OF 13 PAGES
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SIGNATURES
After reasonable inquiry and to the best of his knowledge and belief, each
of the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: July 10, 2006
PRENTICE CAPITAL MANAGEMENT, LP
By: /s/ Michael Weiss
-----------------------
Name: Michael Weiss
Title: Chief Financial Officer
MICHAEL ZIMMERMAN
/s/ Michael Zimmerman
-------------------------
Michael Zimmerman
SCHEDULE 13D
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CUSIP NO. 15670X104 PAGE 12 OF 13 PAGES
----------------------- ---------------------
EXHIBIT A
JOINT FILING AGREEMENT
This will confirm the agreement by and among the undersigned that the schedule
13D filed with the Securities and Exchange Commission on or about the date
hereof with respect to the beneficial ownership by the undersigned of the Common
Stock, par value $0.001 per share, of Ascendia Brands, Inc., a Delaware
corporation, is being filed, and all amendments thereto will be filed, on behalf
of each of the persons and entities named below, in accordance with Rule 13d-1
under the Securities Exchange Act of 1934, as amended. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
Dated as of July 10, 2006
PRENTICE CAPITAL MANAGEMENT, LP
By: /s/ Michael Weiss
-----------------------
Name: Michael Weiss
Title: Chief Financial Officer
MICHAEL ZIMMERMAN
/s/ Michael Zimmerman
-------------------------
Michael Zimmerman
EXHIBIT B
BETTINGER AGREEMENT
EXECUTION COPY
STOCK PURCHASE AGREEMENT dated as of June 30, 2006 (this "AGREEMENT")
between STEVEN BETTINGER and JODI BETTINGER (collectively, the "SELLERS"), and
PRENCEN, LLC, a Delaware limited liability company (the "PURCHASER").
WHEREAS, the Sellers own shares of Common Stock, $0.001 par value per
share (the "COMMON STOCK"), of Ascendia Brands, Inc. (f/k/a Cenuco, Inc.), a
Delaware corporation (the "COMPANY").
WHEREAS, the Purchaser seeks to purchase from the Sellers, and the
Sellers seeks to sell to the Purchaser, Three Million, Three Hundred and Twenty
Two Thousand, Four Hundred and Eighty Two (3,322,482) shares of Common Stock as
currently owned as set forth on SCHEDULE I hereto (the "PURCHASED SHARES") in
accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual benefits
representations, warranties, conditions, covenants and agreements contained
herein, the parties hereto hereby agree as set forth below.
ARTICLE I
PURCHASE AND SALE OF THE PURCHASED SHARES
1.1 PURCHASE AND SALE OF PURCHASED SHARES.
Upon the terms and subject to the conditions set forth herein, on the
date following the satisfaction or waiver of all of the conditions set forth in
Article IV of this Agreement and simultaneous with the closing of the
transactions contemplated by that certain Securities Purchase Agreement, dated
as of the date hereof, by and among the Company, the Purchaser and the other
buyers signatory thereto (or such other date as is mutually agreed to by the
Sellers and the Purchaser) (the "CLOSING DATE"), the Sellers shall sell to the
Purchaser, and the Purchaser shall purchase from the Sellers, the Purchased
Shares (the "CLOSING").
1.2 PURCHASE PRICE.
Upon the terms and subject to the conditions of this Agreement, at the
Closing, the Purchaser shall pay to the Sellers an aggregate amount equal to
Four Million, Nine Hundred and Eighty Three Thousand, Seven Hundred and Twenty
Three Dollars ($4,983,723) (the "PURCHASE PRICE"), which represents the purchase
by the Purchaser of the Purchased Shares at a purchase price of $1.50 per share
from the Sellers.
1.3 THE CLOSING.
The Closing contemplated hereby shall take place at 10:00 a.m., EST on
the Closing Date. All actions taken at the Closing shall be deemed to have
occurred simultaneously.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Each Seller represents and warrants to the Purchaser as of the date
hereof as set forth below.
2.1 LEGAL CAPACITY
Such Seller has the legal capacity and right to execute, deliver,
enter into, consummate and perform this Agreement.
2.2 TITLE TO PURCHASED SHARES.
Such Seller is either (a) the sole record and beneficial owner, (b)
the joint record and beneficial owner with the other Seller or (c) the joint
record and beneficial owner with a child of the Sellers of the Purchased Shares
to be sold by it pursuant to this Agreement and owns such shares free from all
taxes, liens, claims, encumbrances and charges. There are no outstanding rights,
options, subscriptions or other agreements or commitments obligating the Seller
to sell or transfer the Purchased Shares and the Purchased Shares are not
subject to any lock-up or other restriction on their transfer or on the ability
of the Purchaser to sell or transfer the Purchased Shares. The Purchased Shares
are free of any transfer restrictions or legends. The Purchased Shares are
restricted securities being transferred by the Seller pursuant to Rule 144(k) of
the Securities Act of 1933, as amended (the "SECURITIES ACT").
2.3 AUTHORITY
Such Seller has the requisite power and authority to execute and
deliver this Agreement and to carry out and perform all of its obligations under
the terms of this Agreement, including, without limitation, the full power and
authority to sell and transfer such Purchased Shares held jointly by such Seller
and any child of such Seller. This Agreement has been duly executed and
delivered by such Seller, and this Agreement constitutes the valid and legally
binding obligation of such Seller enforceable against such Seller in accordance
with its terms, except as such enforceability may be limited by general
principles of equity or to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors' rights and remedies.
2.4 ACCREDITED INVESTOR STATUS; AFFILIATE STATUS.
Such Seller is an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D under the Securities Act. Such Seller is not an
affiliate of the Company and has not been an affiliate of the Company for the
three month period immediately preceding the Closing Date.
2.5 NONCONTRAVENTION.
The execution, delivery and performance by such Seller of this
Agreement and the consummation by such Seller of the transactions contemplated
hereby will not (a) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which such Seller is a party, or (b)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to such Seller, except
for such conflicts, defaults, rights or violations which would not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on
the ability of such Seller to perform its obligations hereunder.
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2.6 CONSENTS.
Except for the approvals required to be obtained by Closing in
accordance with Article IV, no consent, approval, permit, order, notification or
authorization of, or any exemption from registration, declaration or filing
with, any person (governmental or private) is required in connection with the
execution, delivery and performance by such Seller of this Agreement or the
consummation by such Seller of the transactions contemplated hereby.
2.7 SELLER STATUS.
Such Seller (a) is a sophisticated person with respect to the sale of
the Purchased Shares; (b) has adequate information concerning the business and
financial condition of the Company to make an informed decision regarding the
sale of the Purchased Shares; and (c) has independently and without reliance
upon the Purchaser, and based on such information as such Seller has deemed
appropriate, made its own analysis and decision to enter into this Agreement,
except that such Seller has relied upon the Purchaser's express representations,
warranties and covenants in this Agreement. Such Seller acknowledges that the
Purchaser has not given such Seller any investment advice, credit information or
opinion on whether the sale of the Purchased Shares is prudent.
2.8 ABSENCE OF LITIGATION.
There is no action, suit, claim, proceeding, inquiry or investigation
before or by any court, public board, government agency or self regulatory
organization or body pending or, to the knowledge of such Seller, threatened
against or affecting such Seller that could reasonably be expected to have a
material adverse affect on the ability of such Seller to perform its obligations
hereunder.
2.9 NO BROKERS.
Such Seller has taken no action that would give rise to any claim by
any person for brokerage commissions, finder's fees or similar payments relating
to this Agreement or the transactions contemplated hereby.
2.10 OUTSTANDING AMOUNTS.
Such Seller has paid any and all amounts and charges due and owing to
the Company with respect to the Purchased Shares and there are no unpaid amounts
or charges claimed to be due to the Company from such Seller with respect to the
Purchased Shares.
2.11 EXCLUDED INFORMATION
Such Seller acknowledges that (i) the Purchaser currently may have,
and later may come into possession of, information with respect to the Company
that is not known to such Seller and that may be material to a decision to sell
the Purchased Shares for the Purchase Price ("SELLER EXCLUDED INFORMATION"),
(ii) such Seller has determined to sell the Purchased Shares notwithstanding its
lack of knowledge of the Seller Excluded Information, if any, and (iii)
Purchaser shall have no liability to such Seller, and such Seller waives and
releases any claims that it might have against Purchaser pursuant to this
Agreement, whether under applicable
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securities laws or otherwise, with respect to the nondisclosure of the Seller
Excluded Information, if any, in connection with such Seller's sale of the
Purchased Shares for the Purchase Price in accordance herewith; provided,
however, that the Seller Excluded Information, if any, shall not and does not
affect the truth or accuracy of the representations or warranties of Purchaser
in this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Sellers as of the date
hereof as set forth below.
3.1 ORGANIZATION AND EXISTENCE.
The Purchaser is an entity duly organized and validly existing under
the laws of the jurisdiction of its formation.
3.2 NO PUBLIC SALE OR DISTRIBUTION.
The Purchaser is acquiring the Purchased Shares in the ordinary course
of business for its own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the Securities Act, and the Purchaser does
not have a present arrangement to effect any distribution of the Purchased
Shares to or through any person or entity; PROVIDED, HOWEVER, that by making the
representations herein, the Purchaser does not agree to hold any of the
Purchased Shares for any minimum or other specific term and reserves the right
to dispose of the Purchased Shares at any time in accordance with or pursuant to
a registration statement or an exemption under the Securities Act.
3.3 ACCREDITED INVESTOR STATUS.
The Purchaser is an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D under the Securities Act.
3.4 AUTHORITY.
The Purchaser has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement. This Agreement has
been duly and validly authorized, executed and delivered on behalf of the
Purchaser and shall constitute the legal, valid and binding obligation of the
Purchaser enforceable against it in accordance with its terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
3.5 NONCONTRAVENTION.
The execution, delivery and performance by the Purchaser of this
Agreement and the consummation by the Purchaser of the transactions contemplated
hereby will not (a) result in
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a violation of the organizational documents of the Purchaser, (b) conflict with,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Purchaser is a party, or (c) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws) applicable to the Purchaser, except in the case of
clauses (b) and (c) above, for such conflicts, defaults, rights or violations
which would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of the Purchaser to perform its
obligations hereunder.
3.6 PURCHASER STATUS.
The Purchaser (a) is a sophisticated person with respect to the sale
of the Purchased Shares; (b) has adequate information concerning the business
and financial condition of the Company to make an informed decision regarding
the purchase of the Purchased Shares; and (c) has independently and without
reliance upon the Sellers, and based on such information as the Purchaser has
deemed appropriate, made its own analysis and decision to enter into this
Agreement, except that the Purchaser has relied upon the Sellers' express
representations, warranties and covenants in this Agreement. The Purchaser
acknowledges that the Sellers have not given the Purchaser any investment
advice, credit information or opinion on whether the purchase of the Purchased
Shares is prudent.
3.7 ABSENCE OF LITIGATION.
There is no action, suit, claim, proceeding, inquiry or investigation
before or by any court, public board, government agency or self-regulatory
organization or body pending or, to the knowledge of the Purchaser, threatened
against or affecting the Purchaser that could reasonably be expected to have a
material adverse affect on the ability of the Purchaser to perform its
obligations hereunder.
3.8 NO BROKERS.
The Purchaser has taken no action that would give rise to any claim by
any person for brokerage commissions, finder's fees or similar payments relating
to this Agreement or the transactions contemplated hereby.
3.9 EXCLUDED INFORMATION
The Purchaser acknowledges that (i) the Sellers currently may have,
and later may come into possession of Purchaser Excluded Information that is not
known to the Purchaser and that may be material to a decision to purchase the
Purchased Shares for the Purchase Price ("PURCHASER EXCLUDED INFORMATION"), (ii)
Purchaser has determined to purchase the Purchased Shares notwithstanding its
lack of knowledge of the Purchaser Excluded Information, if any, and (iii)
Sellers shall have no liability to Purchaser, and Purchaser waives and releases
any claims that it might have against Sellers pursuant to this Agreement,
whether under applicable securities laws or otherwise, with respect to the
nondisclosure of the Purchaser Excluded Information, if any, in connection with
the Purchaser's purchase of the Purchased Shares for the Purchase Price in
accordance herewith; provided, however, that the Purchaser Excluded Information,
if any,
-5-
shall not and does not affect the truth or accuracy of the representations or
warranties of the Sellers in this Agreement.
ARTICLE IV
CONDITIONS TO CLOSING
4.1 CONDITIONS TO THE SELLERS' OBLIGATION TO SELL.
The obligation of the Sellers hereunder to sell the Purchased Shares
to the Purchaser on the Closing Date is subject to the satisfaction, on or
before the Closing Date, of each of the following conditions, PROVIDED, that
these conditions are for the Sellers' sole benefit and may be waived by the
Sellers at any time in its sole discretion by providing the Purchaser with prior
written notice thereof:
(a) The Purchaser shall have delivered to the Sellers the Purchase
Price by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Sellers.
(b) The representations and warranties of the Purchaser shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Purchaser shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Purchaser at or prior to the Closing Date.
4.2 CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE.
The obligation of the Purchaser hereunder to purchase the Purchased
Shares on the Closing Date is subject to the satisfaction, on or before the
Closing Date, of each of the following conditions, PROVIDED, that these
conditions are for the Purchaser's sole benefit and may be waived by the
Purchaser at any time in its sole discretion by providing the Sellers with prior
written notice thereof:
(a) The Sellers shall have delivered to the Transfer Agent the
certificate representing the Purchased Shares (i) duly manually endorsed for
transfer on the back of such certificate or on a stock power to be attached to
such, in each case duly executed in the name that appears on the face of such
certificate, (ii) including a Medallion Guarantee stamp placed below the
signature on the back of such certificate or below the signature on any
accompanying stock power and (iii) authorizing the transfer of the Purchased
Shares to the Purchaser or, if requested by the Purchaser, to such affiliates of
the Purchaser and in such amounts as the Purchaser shall designate in writing to
the Sellers on or prior to the Closing Date (the "DESIGNEES").
(b) The representations and warranties of the Sellers shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Sellers shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Sellers at or prior to the Closing Date.
-6-
(c) The Sellers shall have obtained all governmental, regulatory or
third party consents and approvals, if any, necessary for the sale of the
Purchased Shares.
(d) The Transfer Agent shall have agreed to credit the Purchased
Shares to the Purchaser (or its Designee's, as applicable) balance account with
DTC through its Deposit Withdrawal Agent Commission system.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 SECURITIES FILINGS
The Sellers shall make any filings with the Securities and Exchange
Commission required to be filed by the Sellers pursuant to the Securities and
Exchange Act of 1934, as amended (the "EXCHANGE ACT") with respect sale of the
Purchased Shares contemplated hereby within the time periods required for such
filings under the Exchange Act.
5.2 GOVERNING LAW; JURISDICTION; JURY TRIAL.
All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
-7-
5.3 HEADINGS.
The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
5.4 SEVERABILITY.
If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
5.5 ENTIRE AGREEMENT; AMENDMENTS.
This Agreement supersedes all other prior oral or written agreements
between the Purchaser and the Sellers, their affiliates and persons acting on
their behalf with respect to the matters discussed herein, and this Agreement
and the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Sellers nor the Purchaser
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Sellers and the Purchaser. No provision
hereof may be waived other than by an instrument in writing signed by the party
against whom enforcement is sought.
5.6 NOTICES.
Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (a) upon receipt, when delivered
personally; (b) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (c) one business day after deposit with an overnight courier
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Sellers:
9620 Bridgebrook Drive
Boca Raton, FL 33496
Attention: Steven Bettinger
Telephone: (561) 843-0575
Facsimile: (561) 892-5707
with a copy to (for information purposes only):
Akerman Senterfitt
Las Olas Centre II, Suite 1600
350 East Las Olas Boulevard
Ft. Lauderdale, Florida 33301-28711
-8-
Attention: David C. Ristaino, Esq.
Telephone: (954) 468-2460
Facsimile: (954) 463-2224
If to the Purchaser:
Prencen, LLC
c/o Prentice Capital Management, LP
623 Fifth Avenue
32nd Floor
New York, NY 10022
Attention: Michael Weiss
Mathew Hoffman
Telephone: (212) 756-8045
Facsimile: (212) 756-1480
with a copy to (for information purposes only):
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Attention: Eleazer Klein, Esq.
Telephone: (212) 756-2000
Facsimile: (212) 593-5955
Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the Sellers' facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (a) or (c) above, respectively.
5.7 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns. Neither the Sellers nor the
Purchaser shall assign this Agreement or any of their respective rights or
obligations hereunder without the prior written consent of the other party.
5.8 NO THIRD PARTY BENEFICIARIES.
This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other person.
-9-
5.9 SURVIVAL.
Unless this Agreement is terminated by mutual consent of the Sellers
and the Purchaser, the representations and warranties of the Sellers and the
Purchaser contained in Articles II and III shall survive the Closing Date and
the delivery of the Purchased Shares through the date that is three years after
the Closing Date provided that the representations in Section 2.2 shall survive
through the applicable statute of limitations.
5.10 FURTHER ASSURANCES.
Each party shall use its commercially reasonable efforts to do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as any other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
5.11 NO STRICT CONSTRUCTION.
The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
[The remainder of the page is intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement as of the date first written above.
SELLERS
/s/ Steven Bettinger
-----------------------------------------
STEVEN BETTINGER
/s/ Jodi Bettinger
-----------------------------------------
JODI BETTINGER
BUYER
PRENCEN, LLC
By: Prentice Capital Management, LP,
as Manager
By: /s/ Mathew B. Hoffman
--------------------------------------
Name: Mathew B. Hoffman
Title: General Counsel
Schedule I
Purchased Shares
CERTIFICATE AMOUNT OF
NUMBER NAME ON CERTIFICATE COMMON STOCK
------------ ------------------- ------------
CI 0060 Steven Bettinger 100,000
CI 0448 Steven Bettinger 470,000
CI 0110 Steven Bettinger & Andi Bettinger** 20,000
CI 0447 Steven Bettinger & Andi Bettinger** 28,296
CI 0321 Steven & Jodi Bettinger 712,857
CI 0515 Steven Bettinger 100,000
CI 0517 Steven Bettinger 1,500,625
Steven Bettinger **
Steven Bettinger **
TOTAL 2,931,778
* Andi Bettinger is the daughter of Steven Bettinger and Jodi Bettinger
** Certificates for an aggregate of 390,704 shares of Common Stock