Current Report — Form 8-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 8-K Current Report 70± 324K
2: EX-2.1 Plan of Acquisition, Reorganization, Arrangement, 32± 138K
Liquidation or Succession
3: EX-4.1 Instrument Defining the Rights of Security Holders 14± 66K
4: EX-4.2 Instrument Defining the Rights of Security Holders 11± 50K
5: EX-10.1 Material Contract 3 19K
14: EX-10.10 Material Contract 2± 13K
15: EX-10.11 Material Contract 11± 57K
16: EX-10.12 Material Contract 2 17K
17: EX-10.13 Material Contract 11 47K
18: EX-10.14 Material Contract 21 66K
6: EX-10.2 Material Contract 6± 30K
7: EX-10.3 Material Contract 14± 63K
8: EX-10.4 Material Contract 9 50K
9: EX-10.5 Material Contract 14± 65K
10: EX-10.6 Material Contract 25± 126K
11: EX-10.7 Material Contract 19± 89K
12: EX-10.8 Material Contract 12± 58K
13: EX-10.9 Material Contract 9± 44K
19: EX-32.1 Certification per Sarbanes-Oxley Act (Section 906) 1 9K
EX-10.4 — Material Contract
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Exhibit 10.4
[Company Logo]
"Where Capital Meets Opportunity"
230 Park Avenue Suite 1000
New York, New York 10169
Tel: (212) 472-6200
Fax: (212) 472-2228
April 15, 2005
Blair A. West Managing Director bwest@crusader.com
------------------
Via Email
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Mr. Paul A. Roman
Chief Executive Officer
Colorado Prime Foods
Suite 400
500 Bi-County Boulevard
Farmingdale, New York 11735
Re: Advisory Engagement Dear Mr. Roman:
--------------------
This letter confirms our understanding that Colorado Prime Foods and/or
DineWise their affiliates and/or subsidiaries (collectively, the "Company" or
"you") has engaged Crusader Securities, LLC, its subsidiaries, successors and
assigns, as appropriate ("Crusader" or "we"), to act as your exclusive
investment banking advisor with respect to your efforts to further develop the
Company's corporate growth strategy to maximize shareholder value including,
among other things, (i) the raising of certain amounts of capital to fund the
corporate growth strategy and to buy out certain current equity holders (the
"Requisite Capital"); (ii) the possibility of becoming a publicly traded company
in the future either through an initial public offering, a reverse merger or
public company subsidiary spin out transaction; and (iii) the possibility of
exploring certain merger and/or acquisition opportunities.
As part of our engagement, we will:
(a) undertake, in consultation with members of management, a comprehensive study
and analysis of the business, operations, financial condition and prospects of
the Company;
Mr. Paul Roman
Chief Executive Officer
Colorado Prime Foods
April 15, 2005
Page 2 of 8
(b) review with members of management the Company's financial plans and analyze
possible strategic plans and business alternatives for the Company;
(c) review the Company's current business plan and assist in the development and
finalization of a corporate growth strategy, including (i) the identification of
------------
potential M&A targets (the "Target(s)"); and (ii) the development of a strategy
to possibly take the company public in the future (collectively, the "Corporate
Strategy");
(d) make a formal presentation to you of our analysis and recommendations within
thirty (30) days of the receipt of all necessary information from the Company;
(e) prepare a Confidential Memorandum that incorporates the Corporate Strategy
for presentation to potential capital sources (collectively, the "Crusader
Material") (collectively "a" through "e" are referred to as "Phase I");
(f) approach potential Targets on behalf of the Company and then (i) structure a
potential transaction(s) with identified Targets; (ii) manage on behalf of the
Company the entire transaction including the due diligence process, the
---------
documentation of the transaction, and the closing process.
(g) introduce the Company to certain capital sources, including possible
financial and strategic investors and/or lenders, for the purpose of funding the
Corporate Strategy and to provide a copy of the Confidential Memorandum to same
(collectively "f" and "g" are referred to as "Phase II"). Any such capital
source that is either (i) introduced to the Company by Crusader; (ii) approaches
the Company during the term of this engagement; (iii) is approached by the
Company during the term of this engagement; (iii) receives the Crusader
Material, whether from Crusader, the Company or otherwise; and/or (iv) provides
capital to the Company during the term of this engagement, shall be referred to
as a "Crusader Investor".
In connection with Crusader's engagement, the Company will furnish Crusader
with all information concerning the Company that Crusader reasonably deems
appropriate and will provide Crusader with access to the Company's officers,
directors, employees, accountants, counsel and other representatives
(respectively, the "Representatives"), it being understood that Crusader will
rely solely upon such information supplied by the Company, and their respective
Representatives, without assuming any responsibility for independent
investigation or verification thereof. All non-public information concerning the
Company that is given to Crusader will be used solely in the course of the
performance of our services hereunder and will be treated confidentially by
Crusader for so long as it remains non-public. Except as otherwise required by
law or judicial or regulatory process, Crusader will not disclose this
information to a third party without the Company's consent. Consistent with
Crusader's due diligence policies and procedures, Crusader will conduct a formal
background check on each key principal of the Company.
As compensation for our services during Phase I, you agree to pay Crusader
a non-refundable, engagement fee equal to $50,000.00 (the "Corporate Advisory
Fee"), fully earned and payable upon execution of this letter agreement. In
addition to the Corporate Advisory
Mr. Paul Roman
Chief Executive Officer
Colorado Prime Foods
April 15, 2005
Page 3 of 8
Fee, you shall pay Crusader a Capital Placement Fee, a Public Transaction Fee,
and/or the M&A Fee, as all are hereinafter defined.
During Phase II, the Company will seek certain amounts of capital to
finance and/or refinance the Corporate Strategy and you are requesting that
Crusader introduce and advise the Company in obtaining the Requisite Capital on
a best efforts basis. The Company hereby grants Crusader the exclusive right to
represent the Company on such a transaction(s). As compensation for this
service, Crusader will be paid a fee at each closing as follows: (i) for common
equity, preferred equity, convertible debentures, warrants, and/or options, if
and when exercised, a fee equal to 8.0% of such amount, whether from a public
(i.e. initial public offering) and/or private source (the "Equity Fee"); (ii)
for mezzanine and/or subordinate financing, a fee equal to 6.0% of such amount
(the "Mezzanine Fee") and/or (iii) for senior debt financing, a fee equal to
1.0% of such amount (the "Debt Fee") [collectively, the Equity Fee, the
Mezzanine Fee, and the Debt Fee are referred to as the "Capital Placement Fee"].
The Capital Placement Fee shall also apply with regard to any capital provided
by a Target(s) including, but not necessarily limited to, seller financing,
Target debt, a retained equity interest either in the form of common and/or
preferred stock, and/or a subordinated equity interest in the Seller or Target.
In the event Crusader approaches an investor included on the list of
investors attached hereto as Exhibit 'A' (the "Petsky List"), which according to
the Company were previously identified by Petsky Prunier, LLC ("Petsky"), and
Crusader also provides the Crusader Material to that investor on the Petsky List
(the "Petsky Investor"), and that Petsky Investor then provides capital to the
Company within the time frames indicated in the table below, then, in such event
and only in such event, and only for the first investment in the Company
following the date of this letter agreement, whether such first investment is in
the form of equity, mezzanine/subordinate and/or debt financing (the "First
Investment"), and only if such First Investment is from the Petsky Investor,
then Crusader shall pay a finder's fee to Petsky calculated as a percentage of
the Capital Placement fee that Crusader receives from the Company for the First
Investment, if from a Petsky Investor, for the specific tranche of capital
provided by the Petsky Investor (i.e. equity, mezzanine/subordinate, or debt)
which percentage shall be determined based on which category the Petsky
Investors falls (i.e. A, B or C) (the "Finder's Fee") as follows:
Of the Date of this Letter Agreement A B C
------------------------------------------ ------ ------ ------
Within 6 Months 15.00% 0.00% 7.50%
Between 6 Months and 12 Months 7.50% 0.00% 3.75%
After 12 months 0.00% 0.00% 0.00%
For example, if a Petsky Investor makes the First Investment within the
stipulated timeframes in the table above and then a Petsky Investor, whether the
same Petsky Investor or not, makes a subsequent investment in the Company,
whether within or outside the stipulated timeframes in the table above, then
Petsky would only receive the Finder's Fee for
Mr. Paul Roman
Chief Executive Officer
Colorado Prime Foods
April 15, 2005
Page 4 of 8
the First Investment. If another investor, not a Petsky Investor, makes the
First Investment and then a Petsky Investor makes a subsequent investment,
whether within or outside the stipulated timeframes in the table above, then
Petsky would not receive the Finder's Fee for the subsequent investment(s)
regardless of when that investment(s) was made by the Petsky Investor. Nothing
herein shall be construed or interpreted to entitle Petsky to receive any other
fees or compensation whatsoever as may be otherwise provided for herein.
Furthermore, the Company hereby acknowledges that it has terminated its
engagement with Petsky and that Petsky is therefore not authorized to contact
any investor on behalf of the Company, whether a Petsky Investor or otherwise,
and the Company has informed Petsky that Crusader, pursuant to this letter
agreement, has been granted the exclusive right to represent the Company on all
investment banking matters, including among other things, all capital raising
initiatives. Furthermore, if it is subsequently determined that Petsky had not
in fact contacted an investor categorized in 'A' or 'C' on the Petsky List, then
any such investor shall be re-categorized as 'B'.
If the Company elects to pursue a strategy of possibly becoming a public
company via (i) a reverse merger into a non-operating, public shell entity; or
(ii) a public company subsidiary spin out transaction (the "Public
Transaction"), any one of which the Company may pursue based on Crusader's
recommendations during Phase I of this engagement. In the event the Company
elects to pursue a strategy to become a public company, Crusader shall the right
exclusively advise and structure such a transaction to take the Company public
(the "Public Services"). For these Public Services, the Company shall pay
Crusader a flat fee equal to $100,000.00 (the "Public Fee"). In addition,
Crusader shall receive a 7.5% equity interest in the public Company as evidenced
by registered, unrestricted common equity shares (the "Public Shares"). The
Company shall pay the Public Fee and issue the Public Shares to Crusader
simultaneously with the closing of the Public Transaction (collectively, the
"Public Fee" and the "Public Shares" are referred to as the "Public Transaction
Fee").
In addition, you hereby grant Crusader the exclusive right to represent the
Company in any and all M&A transaction(s), whether to acquire other companies
and/or possibly sell the Company, including the acquisition and/or merger of
private or public companies. As compensation for performing these M&A services,
you agree to pay Crusader a percentage "M&A Fee", as hereinafter defined, at the
closing of the each merger and/or acquisition as follows:
Total Consideration M&A
From To %
---------- ---------- -------
$ 0 $1,000,000 5.00%
$1,000,001 $2,000,000 4.25%
$2,000,001 $3,000,000 3.50%
$3,000,001 $4,000,000 2.75%
$4,000,001 > 2.00%
The M&A Fee shall be calculated as (i) the percentage as outlined above
sequentially and additively multiplied against each tranche of the value of the
total consideration for the
Mr. Paul Roman
Chief Executive Officer
Colorado Prime Foods
April 15, 2005
Page 5 of 8
Target including, but not necessarily limited to, any future or contingent
consideration and/or compensation to the Company and/or the seller(s) based on
any earn-out structure, whether contained in the purchase agreement and/or
employment agreement(s), and/or any other form of consideration that is part of
the overall transaction(collectively, the "Total Consideration"); plus (ii) two
----
percent (2.0%) of the value of the Company's stock issued, if any, as
consideration by the Company to the Target (collectively, I and ii are referred
to as the "M&A Fee"). Notwithstanding the foregoing two paragraphs relating to
the M&A Fee, the Company shall be able to close two (2) M&A transactions during
the first twelve (12) months from the date of this letter agreement without
having to pay Crusader the M&A Fee for those two (2) transactions (the "Excluded
M&A Transactions") so long as (i) the total consideration for each of the
Excluded M&A Transactions is less than $1.0 million per transaction; (ii) the
Company does not request that Crusader work on either of the Excluded M&A
Transactions; and (iii) the target companies of the Excluded M&A Transactions do
not receive the Crusader Material.
In addition, the Company agrees to periodically reimburse Crusader for all
out-of--pocket expenses resulting from or arising out of this engagement.
Simultaneously with the execution of this letter, the Company shall deposit with
Crusader $2,500.00 as an advance against such expenses (the "Expense Deposit")
and Crusader will provide the Company with a reconciliation of all expenses
incurred on behalf of the Company pursuant to this letter agreement no less
frequently than on a quarterly basis. Furthermore, Crusader shall not incur any
expense on behalf of the Company in excess of $500.00 without the prior approval
of the Company. The Company shall periodically deposit such additional funds
with Crusader as are required to maintain the Expense Deposit at not less than
$1,000.00.
All fees and expenses payable hereunder are net of all applicable withholding
and similar taxes such that Crusader shall be paid the full amount of any and
all fees contemplated herein, without any offset and/or withholdings. Any and
all amounts payable herein shall be fully earned and paid in cash in U.S.
currency via wire transfer to Crusader on each closing day.
No advice rendered by Crusader, whether formal or informal, may be disclosed, in
whole or in part, or summarized, excerpted from or otherwise referred to without
our prior written consent. In addition, Crusader may not be otherwise referred
to without our prior written consent. If requested by Crusader, the Company
shall include a mutually acceptable reference to Crusader in any press release
or other public announcement made by the Company regarding the matters described
in this letter. Furthermore, the Company hereby grants Crusader the right to
make a press release or other public announcement after the closing of each
transaction referencing the Company and evidencing Crusader's involvement in any
such transaction involving the Company.
Since Crusader will be acting on behalf of the Company in connection with
its engagement hereunder and relying solely on information provided by you, the
Company and the Representatives agree to indemnify and hold Crusader harmless
from all cost, loss,
Mr. Paul Roman
Chief Executive Officer
Colorado Prime Foods
April 15, 2005
Page 6 of 8
damages, and/or liability resulting from its engagement hereunder (the "Crusader
Indemnity").
Crusader's engagement hereunder may be terminated at any time by the
Company or by Crusader, with or without cause, upon thirty (30) days' prior
written notice thereof by facsimile, overnight mail, or hand delivery, to the
other party, with such thirtieth (30th) day after the written termination notice
referred to as the "Termination Date", provided, however, no such written
termination notice may be delivered by the Company to Crusader during the six
(6) month period from and after the date of this letter agreement and, if and
when terminated by either party thereafter, such a termination shall not affect
the Company's obligation to pay (i) the Capital Placement Fee for a period of
two (2) years from the Termination Date for any transaction completed after the
Termination Date related or unrelated to the Corporate Strategy, with any
Crusader Investor who ultimately provides the Company with either the Requisite
Capital or any other additional capital; (ii) the Public Transaction Fee for a
period of one (1) year from the Termination Date relating to any strategy for
the Company to become a public company developed by Crusader and proposed to the
Company during the term of this engagement; (iii) the M&A Fee for a period of
two (2) years from the Termination Date relating to any Target identified and/or
introduced to the Company by Crusader during the term of this engagement; (iv)
other fees and expenses as provided for herein; and/or (v) the Crusader
Indemnity.
Any provision of this letter agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, only be ineffective to the
extent of such prohibition or unenforceability without invalidating any other
provision of this letter agreement. Any controversy or claim arising out of or
relating to this letter agreement or the breach thereof shall be resolved by
binding arbitration, in accordance with the rules of regulations of the American
Arbitration Association as these rules may be amended. Such rules and procedures
are incorporated herein and made a part of this letter agreement by reference.
The parties agree that they will abide by and perform any award rendered in any
such arbitration and than any court having jurisdiction may issue a final
judgment based upon any such award.
This letter agreement may be executed by the parties to this letter
agreement on separate counterparts and said counterparts taken together shall be
deemed to constitute one and the same document. A party may validly deliver such
executed counterpart of this letter agreement to the other party by facsimile,
regular or overnight mail, or hand delivery. The provisions of this letter
agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs and legal representatives, successors and
assigns. Furthermore, in the event that Crusader must initiate an action for the
collection of any amount due hereunder, Crusader shall be entitled to the
recovery of all of its costs, losses, fees (including contingency fees) and
expenses associated with the collection of such amounts. In addition, Crusader
shall be entitled to charge interest on any amounts owed to Crusader not
collected at the closing of a transaction equal to the lesser of 2% percent per
month or the maximum amount allowed under New York State statutory usury laws.
Any waiver by Crusader to collect any amounts when due hereunder shall not
constitute a waiver
Mr. Paul Roman
Chief Executive Officer
Colorado Prime Foods
April 15, 2005
Page 7 of 8
by Crusader of any of its rights to pursue the collection of any such amounts at
its subsequent election.
In connection with this engagement, Crusader is acting as an independent
contractor and not in any other capacity, with duties owing solely to the
Company. All aspects of the relationship created by this agreement shall be
governed by and construed in accordance with the laws of the State of New York,
applicable to contracts made and to be performed therein. This letter supersedes
and replaces any and all writings, agreements and/or understandings between the
parties and may be only be modified in writing executed by both parties hereto.
We are pleased to accept this engagement and look forward to working with you on
this assignment. Please confirm that the foregoing is in accordance with your
understanding by signing and returning to us the enclosed duplicate of this
engagement letter agreement.
Very truly yours,
CRUSADER SECURITIES, LLC
By: /s/Blair A. West
------------------
Name: Blair A. West
Title: Managing Director
Accepted and agreed to as of the date first written above:
COLORADO PRIME FOODS
By: Paul A. Roman
Its: President and CEO
Exhibit A
A
Bedford Capital Corporation
Circle Peak Capital Management, LLC
Lake Capital Management, LLC
Craig Capital Corporation
Mercantile Capital Partners, LLC
Post Capital Partners, LLC
Cooking.com
Nicolas Rachline
Schwan Food Company
B
Jefferson Capital Partners, Ltd.
Bolder Capital, LLC
Freeman Spogli & Company, Inc.
Alex Lee, Inc.
Crown Capital Group
Dorset Capital Management, LLC
eDiets.com, Inc.
Wine.com, Inc.
AtHome America, Inc.
Atkins Nutritionals, inc.
Dean & DeLuca, Inc.
Dr. Leonard's Healthcare Corp.
GroceryWorks.com, Inc
Home Shopping Network, Inc.
Jenny Craig, Inc.
Rodale, Inc.
Satlton, Inc.
Smithfield Foods, Inc.
Swift & Company
Tastefully Simple, Inc.
Tyson Fresh Meats, Inc.
U.S. Premium Beef Ltd.
Weight Watchers Intl.
Williams Foods, Inc.
Wisconsin Cheeseman
C
Alpine Investors, LP
Bear Creek Corporation
Bear Stearns Merchant Banking
Sutton Place Group, LLC
Brynwood Partners L.P.
Capital Resource Partners
Castanea Partners, Inc.
Cross Country Group, LLC
Crosstown Traders, Inc.
First Atlantic Capital, Ltd.
Hunt Private Equity Group, Inc.
Jupiter Partners, LLC
Marketing Investors Corporation
PAS Associates
Linsalata Capital Parners, Inc.
Paul S. Pickard
Summit Partners
Sun Capital Partners, Inc.
Thoma Cressey Equity Partners, Inc.
Webster Capital Winston Partners
American Capital Strategies, Ltd.
Prairie Capital L.P.
Private Equity Capital
Riverside Company
SKM Growth Investors
Svoboda, Collins, LLC
Swander Pace Capital
Fresh Direct, Inc.
Cornerstone Brands, Inc.
1-800-Flowers.com, Inc.
Allstar Marketing Group, LLC
Fingerhut Direct Marketing, Inc.
Guthy-Renker Corporation
Hickory Farms, Inc.
Market Day Corporation
Neiman Marcus Direct
Omaha Steaks International, Inc.
Pampered Chef, Ltd.
Potpourri Group, Inc.
QVC, Inc.
Reader's Digest Association, Inc.
Swiss Colony
Taylor Corporation
Alticor Inc.
Cargill, Inc.
M & S Fine Foods, Inc.
Oreck Corporation
Wornick Company
Addendum ("Addendum"), dated July 14, 2006, to "Advisory Engagement"
agreement (the "Engagement Agreement"), dated April 15, 2005, between Crusader
Securities, LLC ("Crusader") and Colorado Prime Foods (New Colorado Prime
Holdings, Inc.) (the "Company").
WHEREAS, the Company is proposing to effectuate a reverse merger with an
OTC Bulletin Board Company, SimplaGene USA, Inc. ("SimplaGene").
WHEREAS, the Company is also proposing to effectuate a $2,500,000 financing
with Dutchess Private Equities Fund, LP and Dutchess Private Equities Fund II,
LP (together, "Dutchess"); and
WHEREAS, in order to amend and clarify specific aspects of the Engagement
Agreement, and in order to effectuate the transactions described above, the
parties have determined to agree to the following:
1. In addition to the other cash fees provided for in the Advisory
Engagement to be paid to Crusader at the closing of the transactions
contemplated hereby, Crusader will also be issued 7.5% of the common stock of
SimplaGene (the "Crusader Shares"), excluding the securities to be issued to
Dutchess, at the closing of the reverse acquisition (e.g. 2,250,000 of
30,000,000 shares). Upon receipt of the Crusader Shares, Crusader will then be
responsible for the transfer of common stock of SimplaGene out of the Crusader
Shares equal to 1.5% of the common stock of SimplaGene (e.g. 450,000 of
30,000,000 shares) owed to J. Michael Valo via 21st Century Associates, LLC, as
provided for in the letter of intent between the Company and SimplaGene, in
connection with the transactions described above.
2. In lieu of issuing registered, unrestricted common equity of
SimplaGene to Crusader as required by the Engagement Agreement, and which the
Company will not be capable of doing, Crusader and SimplaGene shall enter into a
Registration Rights Agreement, at the closing, in the form attached hereto as
Exhibit A.
Colorado Prime Foods Crusader Securities, LLC
New Colorado Prime Holdings, Inc.
By /s/ Paul A. Roman By /s/Blair A. West
------------------- -----------------
Name: Paul A. Roman Name: Blair A. West
Title: Chief Executive Officer Title: Managing Director
Dates Referenced Herein and Documents Incorporated by Reference
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