Prentice Capital Management, LP – ‘SC 13D/A’ on 12/17/07 re: Ascendia Brands, Inc. – EX-99

On:  Monday, 12/17/07, at 5:09pm ET   ·   Accession #:  902664-7-3555   ·   File #:  5-80632

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Amendment to General Statement of Beneficial Ownership   —   Schedule 13D
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC 13D/A    Ascendia Brands, Inc.                                  7     31K 
 2: EX-99       Miscellaneous Exhibit -- exhibits                      8     31K 

EX-99   —   Miscellaneous Exhibit — exhibits
Exhibit Table of Contents

EX-99
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 PRENTICE CAPITAL MANAGEMENT, LP
623 Fifth Avenue
32nd Floor
New York, New York 10022
Telephone (212) 756-8045
Facsimile (212) 756-1480

December 14, 2007                                               CONFIDENTIAL    

Ascendia Brands, Inc.                                                           
100 American Metro Boulevard                                                    
Suite 108                                                                       
Hamilton, NJ 08619                                                              

Gentlemen:                                                                      

This letter of intent ("LOI") will set forth the interest of Prentice 
Capital Management LP. and its affiliates regarding an acquisition of Series C  
Preferred Stock of Ascendia Brands, Inc. (the "Company") on the terms and       
conditions generally set forth herein (the "Transaction"). This LOI shall be    
non-binding except for the Binding Provisions (as defined below). This LOI will 
furnish a basis for the preparation of definitive documentation evidencing and  
implementing the Transaction as follows:                                        

ISSUER:           The Company.                                                  

INVESTORS:        One or more entities managed or advised by Prentice Capital   
         Management, L.P. (the "PRENTICE INVESTORS") and other
            accredited investors that are acceptable to the Prentice
Investors (collectively, the "INVESTORS").  

INVESTMENT        A minimum of Twenty-Five Million Dollars ($25,000,000) (the   
AMOUNT:           "MINIMUM INVESTMENT AMOUNT"); provided, however, the          
                  Investment Amount from the Prentice Investors shall not exceed
          Twenty-Five Million Dollars ($25,000,000). The Minimum
             Investment Amount shall include the conversion of the Two
           Million Dollar ($2,000,000) unsecured loan from Prencen
Lending LLC into Shares (as defined below). 

TYPE OF           25,000 shares (the "Shares") of a new series of preferred     
SECURITY:         stock of the Company, which new series shall be designated    
                 Series C Preferred Stock (the "Series C Preferred Stock"), to
              be issued in respect of the Minimum Investment Amount. The
               material rights, preferences and privileges of the Series C
                  Preferred Stock are set forth below under "Rights, Preferences
        and Privileges of the Series C Preferred Stock". The
                 transactions contemplated by this LOI, including the issuance
and sale of the Shares, are referred to     

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Ascendia Brands, Inc.                                                           
December 14, 2007                                                               
Page 2 of 8                                                                     

herein as the "FINANCING".                  

PRICE PER SHARE:  $1,000 per share (the "SERIES C ORIGINAL COST")               

USE OF PROCEEDS:  The proceeds from the sale of the Shares shall be used to pay 
            down a certain amount of the Company's revolver (without
            permanent reduction thereof) and to fund working capital
              requirements and other general corporate purposes, in each
                case, as agreed to by the Company and the Investors prior to
the Closing (as defined below).             

RIGHTS,              (1) RANKING. The Series C Preferred Stock shall be senior  
PREFERENCES AND          to all classes of capital stock of the Company with    
PRIVILEGES OF THE        respect to distributions upon voluntary or involuntary,
SERIES C                 liquidation, dissolution or winding up of the Company  
PREFERRED STOCK:         and redemption payments.                               

                  (2) DIVIDEND PROVISIONS. No dividends shall be paid upon
                     any class or series of capital stock of the Company
                      unless the holders of Series C Preferred Stock shall
                        be entitled to receive dividends on a pari passu basis
                       with any dividends paid on such other class or series
  of capital stock of the Company.

         (3) LIQUIDATION PREFERENCE. In the event of any
                        liquidation, dissolution or winding up of the Company,
                  whether voluntary or involuntary, the holders of
                        Series C Preferred Stock shall be entitled to receive,
                       prior and in preference to any payments on the common
                        stock of the Company (the "COMMON STOCK") or any other
                     class or series of capital stock of the Company, an
                       amount equal to the Series C Original Cost multiplied
                      by the number of then-outstanding shares of Series C
                         Preferred Stock, plus all accrued but unpaid dividends,
                     if any, relating thereto (the "SERIES C LIQUIDATION
PREFERENCE AMOUNT").          

                     (4) REDEMPTION. In the event of any Fundamental Transaction
                       (as defined in the Secured Convertible Note issued by
                     the Company to Prencen Lending LLC in the aggregate
                       principal amount of $76 million on February 9, 2007),
                         each holder of Series C Preferred Stock may require the
                      Company to redeem, prior to any payment to any other
                  class or series of capital stock of the Company,
                     such holder's shares of Series C Preferred Stock in
               cash at a price equal to 120% of the Series C
                        Liquidation Preference Amount for the shares of Series
   C Preferred Stock being redeemed.

                     (5) CONVERSION. Each holder of shares of Series C Preferred

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Ascendia Brands, Inc.                                                           
December 14, 2007                                                               
Page 3 of 8                                                                     

                       Stock shall have the right, at its option, to convert
                         its shares of Series C Preferred Stock into such number
              of shares of Common Stock determined by: (i)
                        multiplying the number of shares of Series C Preferred
                     Stock to be converted by the Series C Original Cost
                       (and adding to such product the amount of any accrued
                    but unpaid dividends, if any, with respect to such
                      shares of Series C Preferred Stock to be converted);
                   and (ii) dividing the result obtained pursuant to
                        clause (i) above by the Series C Conversion Price then
                  in effect. The "SERIES C CONVERSION PRICE" shall
                        initially be $0.25, and shall be subject to adjustment
                    as a result of the anti-dilution provisions of the
               Series C Preferred Stock, which shall include
                       full-ratchet anti-dilution protection in favor of the
                        Investors.1 The Series C Preferred Stock shall contain
                         no prohibitions or restrictions (including blockers) on
                         the ability of the Investors to convert their shares of
             Series C Preferred Stock into Common Stock.
                        Accordingly, immediately following the initial date of
                         issuance of the Shares (assuming the Minimum Investment
               Amount), the Shares shall be convertible into
                   approximately 100,000,000 shares of Common Stock.

                    (6) VOTING RIGHTS. The Series C Preferred Stock and Common
                         Stock shall vote together as a class except as required
                        by law. The holder of each share of Series C Preferred
                        Stock shall have the right to that number of votes per
                     share equal to the number of shares of Common Stock
                 issuable upon conversion of a share of Series C
Preferred Stock.              

                     (7) APPROVAL RIGHTS. In addition to the rights set forth in
                   paragraph (6) above, for so long as any shares of
                        Series C Preferred Stock are outstanding, the approval
                    of at least 50.1% of the then outstanding Series C
                         Preferred Stock (the "MAJORITY SERIES C HOLDERS") shall
                   be required to approve certain corporate actions,
                     including, without limitation, (i) entering into or
                consummating any Fundamental Transaction; (ii)
                    authorizing or issuing any shares of capital stock
                    that are senior to or pari passu with the Series C
                Preferred Stock; (iii) entering into affiliate
                    transactions; (iv) redeeming any shares of capital
                         stock of the Company (other than the Series C Preferred
                      Stock); (v) declaring or paying any dividends on the
capital stock                 

1. If the average closing bid price of the Common Stock for the ten (10) trading
days prior to the Closing is less than $0.20, the Company and the Investors     
shall renegotiate the initial Series C Conversion Price.                        

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Ascendia Brands, Inc.                                                           
December 14, 2007                                                               
Page 4 of 8                                                                     

                   of the Company; (vii) amending the Certificate of
                 Incorporation or by-laws of the Company, (viii)
                        approving the restructuring plan of the Company (which
                 restructuring plan shall be satisfactory in all
                      respects to the Majority Series C Holders), (ix) the
                        engagement of any financial advisor or consultant; and
                       (x) to hire or terminate any executive officer of the
                         Company (including all material terms relating thereto)
                   and to amend or modify the terms of any executive
                      officer's contractual arrangements with the Company.

CONDITIONS               The obligations of the Investors and, with respect to  
PRECEDENT:               clauses (a), (d), (g) and (h) below, the Company to    
                         consummate the closing of the Financing (the "CLOSING")
                     shall be subject to customary conditions precedent,
          which shall include, without limitation:

                     (a) The Company and the Investors shall have executed
                          and delivered a Preferred Stock Purchase Agreement
                          (the "PREFERRED STOCK PURCHASE AGREEMENT") in form
                           and substance satisfactory to the Investors and the
                       Company, including representations, warranties,
                       covenants, indemnities and conditions precedent
                            customary for transactions of this type. The Company
                     and the Investors shall engage in discussions
                          regarding appropriate protections for the minority
                            shareholders to the extent deemed appropriate by the
                    parties for a transaction of this nature and
          acceptable to each of the parties.

                      (b) No event, circumstance or fact shall have occurred
                            that has had or could reasonably be expected to have
                          a material adverse effect on the business, assets,
                           properties or condition (financial or otherwise) of
         the Company and its subsidiaries.

                        (c) The Company and its subsidiaries shall have obtained
                    all required licenses, waivers, consents and
                            approvals, governmental and otherwise, in connection
                  with the transactions contemplated hereby.

                     (d) The First Lien Loan Documents and the Second Lien
                         Loan Documents (each as defined below) shall have
                            been amended in a manner acceptable to the Investors
                            (in their sole discretion) and the Company. The term
                        (i) "First Lien Loan Documents" means the credit
                           agreement and the other loan documents by and among
                         the Company, as borrower, the subsidiaries of the
                        Company party thereto, and Wells Fargo Foothill,
                           Inc. and/or the other first lien lenders who are or

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Ascendia Brands, Inc.                                                           
December 14, 2007                                                               
Page 5 of 8                                                                     

                          may become party thereto, and the administrative
                        agent named therein and (ii) "Second Lien Loan
                             Documents" means the credit agreement and the other
                     loan documents by and among the Company, as
                         borrower, the subsidiaries of the Company party
                          thereto, and Watershed Capital Asset Management,
                             L.L.C. and funds managed by Watershed Capital Asset
                         Management, L.L.C. and/or the other second lien
                          lenders who are or may become party thereto, and
                 the administrative agent named therein.

                     (e)  The Investors shall have received a satisfactory
                           legal opinion from outside counsel to the Company
                  customary for transactions of this type.

                     (f)  The Certificate of Designations for the Series C
                             Preferred Stock shall be acceptable in all respects
                             to the Investors and shall have been filed with the
         Secretary of State of Delaware.

                      (g)  The Investors and the Company shall have received
                      such other agreements, instruments and other
                           documents as they may determine are customary for
                           the Financing, in each case in form and substance
                          reasonably satisfactory to the Investors and the
Company.              

                       (h)  The Company shall have received a fairness opinion
                   from an investment bank acceptable to the
                     Restructuring Committee of the Board of the
                         Directors of the Company and the Investors with
   respect to the Financing.

                (i)  The Company shall have obtained any and all
                           consents required under the rules and regulations
         of the American Stock Exchange.

                     (j)  The Company shall have previously delivered duly
                             executed voting agreements, in a form acceptable in
                     all respects to the Investors, from certain
                          material shareholders of the Company owning more
                     than fifty percent (50%) of the outstanding
                         Common Stock whereby such shareholders agree to
                      vote their shares in favor of the Financing.

BOARD             The Board of Directors of the Company shall be reconstituted  
COMPOSITION AND   in a manner satisfactory to Prentice Capital Management, LP., 
REPRESENTATION:   which shall include the right of affiliates of Prentice       
                  Capital Management, LP to appoint a majority of the members of
               the Board of Directors of the Company (certain of the Board
                members appointed by Prentice shall qualify as "independent"
directors                                   

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Ascendia Brands, Inc.                                                           
December 14, 2007                                                               
Page 6 of 8                                                                     

         under the rules and regulations of the American Stock
        Exchange, such that a majority of the Board shall be
"independent").                             

TIMING:           In light of the Investors' understanding of the Company's     
                 liquidity needs, the Preferred Stock Purchase Agreement shall
                  be executed by no later than December 20, 2007 and the Closing
 shall occur on or prior to December 31, 2007.

ACCESS:           For so long as the Company and the Investors are proceeding   
                  with negotiation of the transaction described in this LOI, the
           Company shall afford the Investors and their respective
              counsel and other representatives reasonable access to the
           books, records and properties of the Company and to the
              directors, officers, employees, accountants, attorneys and
               other representatives of the Company, in each case so as to
           enable the Investors to make such investigations of the
                Company in connection with the Financing contemplated hereby
               as the Investors reasonably deem appropriate, provided that
                 Investors do not interfere with normal operating requirements
            of the Company and provided that the Investors and their
     counsel and representatives agree to maintain the
              confidentiality of any information received as a result of
          such access and to use any such information solely for
           purposes of evaluating a potential transaction with the
               Company as contemplated by this LOI. Upon execution of this
        LOI, the Prentice Investors shall have the right, in
                coordination with the Company, to negotiate with the lenders
               party to the First Lien Loan Documents and Second Lien Loan
Documents.                                  

FEES AND          Whether or not the transactions contemplated hereby are       
EXPENSES:         consummated, the Company shall pay the Investors for all      
          reasonable out of pocket fees and expenses incurred in
            relation to due diligence and investment negotiation and
                  documentation (including third party external legal expenses),
                such overall fees and expenses not to exceed $400,000 if the
           Closing occurs on or prior to December 31, 2007 (if the
               Closing occurs after December 31, 2007, the Company and the
             Investors shall negotiate in good faith an acceptable fee
               cap). The Company shall be responsible for its own fees and
expenses.                                   

ALTERNATIVE       In the event the Company determines that it will not be able  
FINANCING         to obtain the requisite consent of the shareholders to approve
TERMS:            the Financing, the Company and the Investors shall, in good   
                 faith, discuss the terms of an alternative financing that are
         mutually acceptable to the Company and the Investors.

NATURE OF         This LOI represents an indication of intention and does not   
OBLIGATIONS:      constitute a binding commitment with respect to a             
            transaction, and, except for the matters described under
"Access", "Fees and                         

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Ascendia Brands, Inc.                                                           
December 14, 2007                                                               
Page 7 of 8                                                                     

        Expenses", "Nature of Obligations", "Expiration" and
                "Governing Law" (which are intended to be, and are, the sole
            binding provisions (the "BINDING PROVISIONS")), does not
                 create a legal obligation on the part of any party. A binding
                  commitment with respect to the Financing will result only from
          execution of definitive written transaction agreements
                 acceptable to each of the Company (as approved by the Board's
          Restructuring Committee in its sole discretion and the
               Company's full Board thereafter in its sole discretion) and
               the Investors in their sole discretion. Accordingly, except
                  for the express terms of the Binding Provisions, neither party
                 shall have any obligation under this LOI (express or implied)
                 and is not restricted in any way hereunder, and shall have no
liability to the other hereunder.           

EXPIRATION:       This LOI shall expire unless executed by the Company on or    
               prior to 5:00 p.m. New York time on December 14, 2007. Once
                executed, this LOI may be terminated by either party upon at
             least 12 hours' advance written notice (including without
                limitation via email) to a representative of the other party
           (which, in the case of the Prentice Investors, shall be
               addressed to both Mathew Hoffman and Michael Gross), except
             that the Binding Provisions of this LOI shall survive any
             termination of this LOI by either party and provided that
                 either party may cease or terminate or suspend discussions or
         negotiations at any time for any reason or no reason.

GOVERNING LAW:    New York.                                                     

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]  

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Ascendia Brands, Inc.                                                           
December 14, 2007                                                               
Page 8 of 8                                                                     

If the foregoing terms and conditions are acceptable to you, please so
indicate by signing this LOI where indicated below and returning the same to the
undersigned via facsimile no later than 5:00 p.m. (New York time) on December   
14, 2007.                                                                       

Sincerely,                                Agreed to and Accepted:               

Prentice Capital Management, LP                                                 

                         Ascendia Brands, Inc.

By: /s/ Mathew Hoffman                    By: /s/ Andrew Sheldrick              
-------------------------------       -------------------------------   
Name:  Mathew Hoffman                 Name:  Andrew Sheldrick           
Title: General Counsel                Title: General Counsel            

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘SC 13D/A’ Filing		Date		First		Last			Other Filings
		12/31/07		6					13F-HR,  8-K
		12/20/07		6
Filed on:		12/17/07							4
		12/14/07		1		8			8-K
		2/9/07		2					8-K,  DEF 14C,  PRE 14C,  SC 13G
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