UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
UNDER THE EXCHANGE ACT OF 1934
AMENDMENT NO. 3
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
RULE 13d-2(a)
VITAL LIVING, INC.
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(Name of Issuer)
Common Stock, par value $0.001 per share
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(Title of Class of Securities)
92846Y100
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(CUSIP Number)
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DONALD NICHOLSON KATHRYN A. CAMPBELL, ESQ.
SKYEPHARMA PLC SULLIVAN & CROMWELL LLP
105 PICCADILLY 1 NEW FETTER LANE
LONDON W1J 7NJ, ENGLAND LONDON EC4A 1AN, ENGLAND
+44 20 7491 1777 +44 20 7959 8900
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(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
December 17, 2003
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
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 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act.
(continued on following pages)
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CUSIP NO. 92846Y100 PAGE 2 OF 8 PAGES
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SKYEPHARMA PLC
330387911
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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, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
ENGLAND AND WALES
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7 SOLE VOTING POWER
0
NUMBER OF -----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 37,860,073(1)(2)
EACH REPORTING -----------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
17,204,548(2)
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
17,204,548(1)(2)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES |X|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.30%(2)(3)
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14 TYPE OF REPORTING PERSON
CO
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(1) In order to facilitate the consummation of the transaction contemplated by
the Agreement and Plan of Merger by and among Vital Living, Inc. (the
"Issuer"), VLEN Acquisition Corp., Inc. ("VLEN") and E-Nutriceuticals, Inc.
("ENI"), dated as of August 20, 2003
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CUSIP NO. 92846Y100 PAGE 3 OF 8 PAGES
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(the "Merger Agreement", and the transaction contemplated thereby, the
"Merger"), SkyePharma PLC ("SkyePharma") entered into a Stockholders'
Agreement with the Issuer and the other parties listed therein, dated as of
August 20, 2003 (the "Stockholders' Agreement"), whereby each of Bradley
Edson ("Mr. Edson"), Stuart Benson ("Mr. Benson") and Donald Hannah (Mr.
Hannah, and with Mr. Edson and Mr. Benson, the "Founders Group"), Fifth
Avenue Capital, Inc. ("Fifth Avenue Capital") and Stephen Morris ("Mr.
Morris, and with Fifth Avenue Capital, the "Morris Group"), and SkyePharma
(collectively, the "Stockholders") agreed to vote its shares of common
stock, par value $0.001 per share (the "Common Stock") of Vital Living,
options, warrants or convertible securities to purchase Common Stock, and
other voting securities of the Issuer to elect the directors nominated by
the other Stockholders. SkyePharma does not have the right to dispose or
direct the disposition of any of the 20,655,525 shares of Common Stock or
securities convertible or exercisable into Common Stock owned by the other
parties to the Stockholders' Agreement. Accordingly, SkyePharma expressly
disclaims beneficial ownership of all such shares.
2 SkyePharma is currently the beneficial owner of 14,204,548 shares of Common
Stock, 1,000,000 shares of Series D Convertible Preferred Stock, par value
$0.001 per share, of the Issuer (the "Preferred Stock"), $1,000,000
aggregate principal amount of the 12% Senior Secured Convertible Notes due
2008 (the "Convertible Notes") and warrants exercisable for 1,000,000
shares of Common Stock (the "Warrants"). Accordingly, SkyePharma has
beneficial ownership of 17,204,548 shares of Common Stock, assuming the
conversion of all shares of Preferred Stock and the Convertible Notes and
the exercise of all the Warrants owned by SkyePharma into Common Stock at
the current conversion price or exercise price, as the case may be, of
$1.00.
3 Based on 57,801,170 shares of Common Stock outstanding on December 15, 2003
as described in the Securities Purchase Agreement, by and between the
Issuer and the other investors as set forth therein, dated as of December
15, 2003 (the "Securities Purchase Agreement"), which SkyePharma became a
party to on December 17, the conversion of 1,000,000 shares of Preferred
Stock into 1,000,000 shares of Common Stock, the conversion of the
Convertible Notes into 1,000,000 shares of Common Stock and the exercise of
the Warrants for 1,000,000 shares of Common Stock.
ITEM 1 SECURITY AND ISSUER
This Amendment No. 3 amends and supplements the Schedule 13D filed by
SkyePharma with the U.S. Securities and Exchange Commission (the "Commission")
on August 29, 2003, as amended by Amendment No. 1 filed with the Commission on
November 21, 2003 and Amendment No. 2 filed with the Commission on December 8,
2003, relating to the Common Stock of Vital Living, Inc., a Nevada corporation,
including such Common Stock issuable upon conversion of Preferred Stock and
Convertible Notes, and the exercise of Warrants, held by SkyePharma. The
Issuer's principal executive offices are located at 5080 North 40th Street,
Suite #105, Phoenix, Arizona, 85018.
ITEM 3 SOURCES AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The source of funds for the purchase of the $1,000,000 aggregate
principal amount of Convertible Notes, including the accompanying Warrants, was
SkyePharma's cash deposits. The total amount was $1,000,000 in cash, which was
paid on December 17, 2003, in accordance with the terms of the Securities
Purchase Agreement.
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CUSIP NO. 92846Y100 PAGE 4 OF 8 PAGES
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ITEM 4 PURPOSE OF THE TRANSACTION
Pursuant to the terms of the Commitment Letter (the "Commitment
Letter") from SkyePharma to the Issuer, dated as of August 20, 2003, executed
pursuant to Section 5 of the Merger Agreement, as amended on November 19, 2003
and December 4, 2003, SkyePharma has invested $1,000,000 in the Convertible
Notes and Warrants of Vital Living. As a result of SkyePharma's investment
pursuant to the Commitment Letter and as governed by the Securities Purchase
Agreement, SkyePharma now holds $1,000,000 aggregate principal amount of
Convertible Notes convertible into 1,000,000 shares of Common Stock, based on a
conversion price of $1.00, and Warrants exercisable for 1,000,000 shares of
Common Stock at an exercise price of $1.00. Such conversion or exercise price,
as the case may be, is subject to adjustment based on stock splits, subdivisions
and combinations, dividends and distributions, reorganizations and
reclassifications, and certain issuances of Common Stock, or securities
convertible or exchangeable into Common Stock, at a price lower than the
conversion or exercise price, as the case may be, of the Convertible Notes and
the Warrants, respectively. Further, at any time after April 15, 2004 that the
2004 Registration Statement, as defined below, is not effective, the Warrants
may be exercised on a cashless exercise basis by surrendering Common Stock
receivable upon exercise of the Warrants in lieu of cash until such time as the
2004 Registration Statement is declared effective.
Any Common Stock acquired by SkyePharma by the conversion of the
Convertible Notes or the exercise of the Warrants will be subject to the terms
of the Stockholders' Agreement, as described more fully in the Schedule 13D
filed by SkyePharma with the Commission on August 29, 2003.
SkyePharma is continuously evaluating the business and business
prospects of the Issuer, and its present and future interests in, and intentions
with respect to the Issuer and at any time may decide to acquire additional
shares or dispose of any or all of the Common Stock, Preferred Stock,
Convertible Notes or Warrants owned by it.
SkyePharma currently intends to exercise its rights as shareholder in
the Issuer, and in connection therewith, may, from time to time, (i) have
discussion with management and/or other shareholders of the Issuer concerning
various operational and financial aspects of the Issuer's business, (ii) make
one or more proposals to the Issuer or other shareholders of the Issuer relating
to joint ventures, mergers, business combinations or extraordinary transactions,
and (iii) solicit proxies.
ITEM 5 INTEREST IN SECURITIES OF THE ISSUER
(a) The percentage interest held by SkyePharma presented below is based on
57,801,170 shares of Common Stock outstanding on December 15, 2003 as
described in the Securities Purchase Agreement. Assuming the conversion of
all shares of Preferred Stock and the Convertible Notes and the exercise of
the accompanying Warrants owned by SkyePharma into Common Stock at a
conversion price (or exercise price in the case of the Warrants) of $1.00,
SkyePharma is the beneficial owner of 17,204,548 shares of Common Stock,
representing approximately 28.30% of the Common Stock issued and
outstanding. The information in this Statement with respect to the parties
listed below in this Item 5(a) is based solely on information provided by
the Issuer to SkyePharma, except that information with respect to Mr.
Edson's shareholding is from the Form 4 filed by Mr. Edson with the
Commission on October 3, 2003. Mr. Edson is the beneficial owner of
4,808,050 shares of Common Stock, representing approximately 8.32% of the
Common Stock issued and outstanding. Mr. Benson is the beneficial owner of
6,345,000 shares of Common Stock, including Common Stock issuable on the
conversion of convertible securities and the exercise of options and
warrants, representing
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CUSIP NO. 92846Y100 PAGE 5 OF 8 PAGES
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approximately 10.97% of the Common Stock issued and outstanding. Mr. Hannah
is the beneficial owner of 611,900 shares of Common Stock, representing
approximately 0.93% of the Common Stock issued and outstanding. Fifth
Avenue Capital is the beneficial owner of 8,860,575 shares of Common Stock,
representing approximately 15.33% of the Common Stock issued and
outstanding. Stephen Morris is a principal of Fifth Avenue Capital. Mr.
Morris is individually the beneficial owner of 30,000 shares of Common
Stock issuable on the conversion of convertible securities and the exercise
of options and warrants, representing approximately 0.05% of the Common
Stock issued and outstanding. Except as set forth in this Item 5, neither
SkyePharma, nor to its knowledge and belief, any of its executive officers
or directors, beneficially owns any shares of Common Stock.
(b) SkyePharma has the shared power to vote or to direct the vote of, and the
sole power to dispose or direct the disposition of, its 14,204,548 shares
of Common Stock and its 3,000,000 shares of Common Stock that would be
issued on the conversion of all of its shares of Preferred Stock and its
$1,000,000 principal amount of Convertible Notes, based on the current
conversion prices, and the exercise of all of its Warrants.
(c) There have been no transactions by SkyePharma nor, to SkyePharma's
knowledge, by any of the other persons listed in Item 5(a) in the class of
securities reported on in this Statement that were effected during the past
60 days, other than as set forth in this Statement. On October 1, 2003, Mr.
Edson elected a cashless exercise of his 1,000,000 warrants, for which he
surrendered 234,900 shares of Common Stock as payment for the 765,100
shares of Common Stock he received, resulting in a net decrease in his
beneficial ownership of Common Stock, including convertible securities
convertible into Common Stock, of 234,900 shares.
(d) No person other than SkyePharma has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, its
Common Stock, Preferred Stock, Convertible Notes or Warrants.
ITEM 6 CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Pursuant to the terms of the Commitment Letter, SkyePharma invested
$1,000,000 in Convertible Notes and Warrants of the Issuer, which purchase was
governed by the Securities Purchase Agreement. The Securities Purchase Agreement
included customary representations and warranties of the Issuer. Pursuant to the
terms of the Convertible Notes, interest is payable semi-annually at a rate of
12% per annum, 8% payable in cash and the balance of 4% payable, at the Issuer's
sole discretion, in either cash or Common Stock. The Convertible Notes are
convertible at any time at a conversion price of $1.00 into Common Stock,
subject to the customary anti-dilution adjustments described above, until the
maturity date of December 17, 2008. The Convertible Notes are redeemable at the
option of the Issuer, commencing on December 17, 2004, if the sales price for
the Common Stock is at least $3.00 per share for ten consecutive trading days
prior to the notification of redemption. The Warrants entitle SkyePharma to
purchase Common Stock of the Issuer at an exercise price of $1.00 per share,
subject to the customary anti-dilution adjustments described above, and are
exercisable by SkyePharma at any time through December 16, 2008. The Warrants
are redeemable at the option of the Issuer, commencing December 17, 2004, if the
sales price for the Common Stock is at least $3.00 per share for ten consecutive
trading days prior to the notification of redemption.
SkyePharma and the Issuer entered into a Letter Agreement, dated
December 17, 2003, pursuant to which the Issuer has agreed that in the case of a
redemption by the Issuer of the Notes
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CUSIP NO. 92846Y100 PAGE 6 OF 8 PAGES
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or the Warrants, if SkyePharma has not notified the Issuer that it will accept
the redemption price for the Notes or the Warrants within the redemption notice
period, SkyePharma would be deemed to have elected to convert or exercise its
Notes or Warrants, as the case may be, prior to the effectiveness of such
redemption, notwithstanding the procedural requirements described in the Notes
and Warrants.
In connection with the purchase of the Convertible Notes and Warrants,
on December 17, 2003, SkyePharma became a party to a Registration Rights
Agreement between the Issuer and the investors listed therein, dated as of
December 15, 2003 (the "December Registration Rights Agreement"), the terms of
which require the Issuer to file with the Commission on or before January 14,
2004 a registration statement (the "2004 Registration Statement") to permit the
offering and sale of the Common Stock issuable on the conversion of the
Convertible Notes and the exercise of the Warrants, and Common Stock issuable as
payments of interest on the Convertible Notes. The Issuer must also use
reasonable best efforts to have the 2004 Registration Statement declared
effective by the Commission as promptly as practicable and no later than April
15, 2004. In the event that the Issuer fails to file the 2004 Registration
Statement by January 14, 2004, the 2004 Registration Statement is not declared
effective by April 15, 2004 or the 2004 Registration Statement does not remain
effective and available for use, subject to customary blackout periods and other
terms of the December Registration Rights Agreement, SkyePharma will be entitled
to liquidated damages in the amount of 2.0% of the principal amount of its
Convertible Notes for each thirty day period in which the Registration Statement
is not declared effective or does not remain effective and available for use.
The December Registration Rights Agreement also requires the Issuer to use its
best efforts to list the Common Stock covered by the 2004 Registration Statement
with any securities exchange on which the Common Stock of the Issuer is then
listed.
Pursuant to the Securities Purchase Agreement, the Issuer and the
investors listed therein entered into the Security Agreement, dated as of
December 15, 2003 (the "Security Agreement"), which SkyePharma became a party to
on December 17, 2003. The Security Agreement granted the holders of the Notes a
continuing first priority security interest in the assets of the Issuer, subject
to the terms and conditions set forth therein. However, the security interest
may be subordinated to the extent necessary for the Issuer to obtain a financing
secured only by the Issuer's accounts receivable and inventory.
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CUSIP NO. 92846Y100 PAGE 7 OF 8 PAGES
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ITEM 7 MATERIALS TO BE FILED AS EXHIBITS
Exhibit 1. Registration Rights Agreement, between Vital Living, Inc.
and SkyePharma PLC, dated as of August 20, 2003
(incorporated by reference to Exhibit 1 to the Schedule 13D
filed by SkyePharma PLC with the Commission on August 29,
2003).
Exhibit 2. Subscription Agreement between, Vital Living, Inc. and
SkyePharma PLC, dated as of August 20, 2003 (incorporated
by reference to Exhibit 2 to the Schedule 13D filed by
SkyePharma PLC with the Commission on August 29, 2003).
Exhibit 3. Stockholders' Agreement, between SkyePharma PLC, Vital
Living Inc., Bradley Edson, Stuart Benson, Donald Hannah,
Stephen Morris and Fifth Avenue Capital Inc., dated as of
August 20, 2003 (incorporated by reference to Exhibit 4 to
the Schedule 13D filed by SkyePharma PLC with the
Commission on August 29, 2003).
Exhibit 4. Securities Purchase Agreement, between Vital Living, Inc.,
SkyePharma PLC and the other Investors named therein, dated
as of December 15, 2003.
Exhibit 5. Registration Rights Agreement, between Vital Living, Inc.,
SkyePharma PLC and the other Investors named therein, dated
as of December 15, 2003.
Exhibit 6. Letter Agreement, between Vital Living, Inc. and SkyePharma
PLC, dated as of December 17, 2003.
Exhibit 7. Security Agreement, between Vital Living, Inc., SkyePharma
PLC and the other Investors named therein, dated as of
December 15, 2003.
Exhibit 8. 12% Senior Secured Convertible Note of Vital Living, Inc.,
dated as of December 17, 2003.
Exhibit 9. Warrant to purchase 1,000,000 shares of Common Stock of
Vital Living, Inc., dated as of December 17, 2003.
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CUSIP NO. 92846Y100 PAGE 8 OF 8 PAGES
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
December 19, 2003 SkyePharma PLC
By: /s/ Donald Nicholson
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Name: Donald Nicholson
Title: Finance Director