UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE EXCHANGE ACT OF 1934
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
RULE 13d-1(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)
AUGUST 20, 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 9 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 36,018,973(1)(2)
EACH REPORTING -----------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
15,204,548(2)
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,204,548(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)
27.66%(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
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CUSIP NO. 92846Y100 PAGE 3 OF 9 PAGES
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Corp., Inc. ("VLEN") and E-Nutriceuticals, Inc. ("ENI"), dated as of
August 20, 2003 (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 (the "Shares") 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 20,814,425 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 and 1,000,000 shares of Series D Convertible Preferred
Stock, par value $0.001 per share, of the Issuer (the "Preferred
Stock"). Accordingly, SkyePharma has beneficial ownership of 15,204,548
shares of Common Stock, assuming the conversion of all shares of
Preferred Stock owned or to be purchased by SkyePharma into Common
Stock at the current conversion price of $1.00.
3 Based on 54,965,726 shares of Common Stock outstanding on consummation
of the Merger on August 20, 2003, as described in Section 3.4(c) of the
Subscription Agreement between SkyePharma and the Issuer, dated as of
August 20, 2003 (the "Subscription Agreement") and the conversion of
1,000,000 shares of Preferred Stock into 1,000,000 shares of Common
Stock.
ITEM 1 SECURITY AND ISSUER
This statement on Schedule 13D (the "Statement") relates to the Common
Stock of Vital Living, Inc., a Nevada corporation, including such Common Stock
issuable upon conversion of Preferred Stock held by SkyePharma. The Issuer's
principal executive offices are located at 5080 North 40th Street, Suite #105,
Phoenix, Arizona, 85018.
ITEM 2 IDENTITY AND BACKGROUND
SkyePharma is a company incorporated under the laws of England and
Wales. The principal business of SkyePharma is the use of its multiple drug
delivery technologies, specifically oral, injectable, inhalation, topical and
enhanced solubility, to create a product pipeline for out-licensing to marketing
partners. The business address of SkyePharma is SkyePharma PLC, 105 Piccadilly,
London, England W1J 7NJ.
Neither SkyePharma, nor, to its knowledge and belief, any of its
executive officers or directors, has during the last five years been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or has 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.
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CUSIP NO. 92846Y100 PAGE 4 OF 9 PAGES
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Annex A hereto sets forth with respect to each executive officer and
director of SkyePharma the following information: (i) name, (ii) residence or
business address, (iii) present principal occupation or employment and the name,
principal business and address of any corporation or other organization in which
such employment is conducted and (iv) citizenship.
ITEM 3 SOURCES AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The source of funds for the 1,000,000 shares of Preferred Stock to
which this Statement relates was SkyePharma's working capital. The total amount
was $1,000,000 in cash, which was paid on August 21, 2003, in accordance with
the Subscription Agreement.
The consideration for the 14,204,548 shares of Common Stock was
SkyePharma's shares of ENI common stock, as determined pursuant to the Merger
Agreement.
To SkyePharma's knowledge and belief, none of its executive officers or
directors named in Annex A hereto, beneficially owns any shares of Common Stock.
ITEM 4 PURPOSE OF THE TRANSACTION
The purpose of the acquisition of the Common Stock and the Preferred
Stock by SkyePharma was and is for investment. The Preferred Stock was acquired
pursuant to the Subscription Agreement simultaneous with and as a condition to
consummation of the Merger of ENI and VLEN, a wholly-owned subsidiary of the
Issuer. The Common Stock was acquired by SkyePharma pursuant to the Merger
Agreement in exchange for its interest in ENI, which interest was also held for
investment purposes. SkyePharma's ENI common stock, were converted and exchanged
for shares of Common Stock of the Issuer on August 20, 2003. As a result of the
Merger, VLEN's separate corporate existence ceased and ENI became the
wholly-owned subsidiary of the Issuer, in which SkyePharma has a 27.66%
interest, including the 1,000,000 shares of Common Stock issuable on conversion
of the Preferred Stock based on a current conversion price of $1.00.
Pursuant to the terms of the Commitment Letter between SkyePharma and
the Issuer, dated as of August 20, 2003, executed pursuant to Section 5 of the
Merger Agreement, SkyePharma has committed to invest 1,000,000 U.S. dollars in
the event that the Issuer raises an additional 3,000,000 U.S. dollars in an
equity offering completed within 90 days of the Closing of the Merger, as
defined in the Merger Agreement, subject to the terms of such Commitment Letter.
This obligation, if consummated, would be expected to result in an additional
holding of 1,000,000 preferred convertible securities (the "Additional Preferred
Stock") convertible into approximately 1,000,000 shares of Common Stock or more,
depending on the price of such issuance and the conversion price and other terms
of the Additional Preferred Stock.
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 shares of Common Stock or Preferred Stock
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.
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CUSIP NO. 92846Y100 PAGE 5 OF 9 PAGES
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Pursuant to the terms of the Stockholders' Agreement, SkyePharma will
vote its Common Stock and Preferred Stock which vote with the Common Stock
together with certain other shareholders of the Issuer after the Merger, as
described in more detail in Item 6 of this Statement.
Except as set forth in this Statement, as of the date of the filing of
this Statement, neither SkyePharma, nor, to its knowledge and belief, any of its
executive officers or directors, has any other plan or proposal which relates to
or would result in any of the actions specified in subparagraphs (a) through (j)
of Item 4 of Schedule 13D.
ITEM 5 INTEREST IN SECURITIES OF THE ISSUER
(a) The percentage interest held by SkyePharma presented below is based on
54,965,726 shares of Common Stock outstanding on consummation of the
Merger on August 20, 2003, as represented by the Issuer in Section
3.4(c) of the Subscription Agreement. Assuming the conversion of all
shares of Preferred Stock owned by SkyePharma into Common Stock at a
conversion price of $1.00, SkyePharma is the beneficial owner of
15,204,548 shares of Common Stock, including Common Stock issuable on
the conversion of convertible securities of the Issuer, representing
approximately 27.66% 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. Mr. Edson is the beneficial owner of 5,046,950 shares of
Common Stock, including Common Stock issuable on the conversion of
convertible securities and the exercise of options and warrants,
representing approximately 9.18% of the Common Stock issued and
outstanding. Mr. Benson is the beneficial owner of 6,340,000 shares of
Common Stock, including Common Stock issuable on the conversion of
convertible securities and the exercise of options and warrants,
representing approximately 11.53% of the Common Stock issued and
outstanding. Mr. Hannah is the beneficial owner of 536,900 shares of
Common Stock, representing approximately 0.98% of the Common Stock
issued and outstanding. Fifth Avenue Capital is the beneficial owner of
8,860,575 shares of Common Stock, representing approximately 16.12% 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 named in Annex A hereto, 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 1,000,000
shares of Common Stock that would be issued on the conversion of all of
its shares of Preferred Stock based on the current conversion price and
its 14,204,548 shares of Common Stock. Each of the Persons listed in
Item 5(a) has the shared power to vote or direct the vote and the sole
power to dispose or direct the disposition of the shares of Common
Stock attributed to them in that Item.
Mr. Edson, a citizen of the United States of America, is the Chief
Executive Officer and Chairman of the Board of Vital Living. Mr.
Benson, a citizen of the United States of America, is the President of
Vital Living. Mr. Hannah, a citizen of the United States of America, is
a Non-executive Director of Vital Living. The business address for Mr.
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CUSIP NO. 92846Y100 PAGE 6 OF 9 PAGES
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Edson, Mr. Benson and Mr. Hannah is 5080 North 40th Street, Suite 105,
Phoenix, Arizona 85018.
Mr. Morris, a citizen of the United Kingdom, is the sole officer and
director of ENI and president of Fifth Avenue Capital. His business
address is 32 Lancaster Mews, London, W2 3QE, England. Fifth Avenue
Capital, a British Virgin Islands corporation, is a company that
invests in international business opportunities, with its principal
offices located at Suite 1601-1603, Kinwick Centre, 32 Hollywood Road,
Central Hong Kong. None of the persons listed in Item 5(a), to
SkyePharma's knowledge, has during the last five years been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has 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.
(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 sixty days other than (i) the grant by the Issuer to Mr. Edson
of 1,300,000 shares of Common Stock and (ii) the amendment of the
warrant agreement with Mr. Benson eliminating the full ratchet
anti-dilution protection provision therein and settling the total
number of shares of Common Stock subject to or issuable under any
warrant agreements or other derivative securities to Mr. Benson to be
6,310,000 after the Effective Time, and (iii) otherwise, as set forth
in this Statement.
(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 or Preferred Stock.
ITEM 6 CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER
SkyePharma and the Issuer entered into the Subscription Agreement
pursuant to which SkyePharma purchased 1,000,000 shares of Preferred Stock
convertible into Common Stock subject to the conditions set forth in Sections 5
and 6 thereof.
Pursuant to the terms of the Commitment Letter between SkyePharma and
the Issuer, dated as of August 20, 2003, executed pursuant to Section 5 of the
Merger Agreement, SkyePharma has committed to invest 1,000,000 U.S. dollars in
the event that the Issuer raises an additional 3,000,000 U.S. dollars in an
equity offering completed within 90 days of the Closing of the Merger, subject
to the terms of such Commitment Letter. This obligation, if consummated, would
be expected to result in an additional holding of 1,000,000 preferred
convertible securities (the "Additional Preferred Stock") convertible into
approximately 1,000,000 shares of Common Stock or more, depending on the price
of such issuance and the conversion price and other terms of the Additional
Preferred Stock.
SkyePharma, the Issuer, Mr. Edson, Mr. Benson, Mr. Morris, Mr. Hannah
and Fifth Avenue Capital have entered into a Stockholders' Agreement, dated as
of August 20, 2003, which contains the terms that are summarized below:
Board of Directors
The Board of the Issuer will consist of nine members. So long as the
Founders Group beneficially owns in aggregate at least 65% of the shares of
Common Stock (including any share of Capital Stock of the Issuer Convertible
into Common Stock) owned by it at the date of the
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CUSIP NO. 92846Y100 PAGE 7 OF 9 PAGES
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execution of the Stockholders' Agreement, it is entitled to nominate four
directors. So long as the Morris Group beneficially owns in aggregate at least
65% of the shares of Common Stock (including any share of Capital Stock of the
Issuer Convertible into Common Stock) owned by it at the date of the execution
of the Stockholders' Agreement, it is entitled to nominate one director. So long
as SkyePharma beneficially owns in aggregate at least 65% of the shares of
Common Stock (including any share of Capital Stock of the Issuer Convertible
into Common Stock) owned by it at the date of execution of the Stockholders'
Agreement, it is entitled to nominate one director. Each of the Founders Group,
the Morris Group and SkyePharma covenants that it will vote in favor of the
other Stockholders' nominee or nominees. Each Stockholder furthermore agrees
that it will not take any action, or cause the Issuer to take any action, to
remove, with or without cause, a director nominated by another Stockholder.
Vacancies
At any time a vacancy is created or exists on the Board of the Issuer,
the remaining directors (if any) representing the Stockholder whose Board seat
is vacant shall have the right to designate the person to fill the vacancy. If
no directors representing the Stockholder remain, the Stockholder shall have the
right to designate the person to fill the vacancy. All other Stockholders are
obligated to vote in favor of such nominee.
To SkyePharma's knowledge and belief, none of its executive officers or
directors named in Annex A hereto, have entered into any contracts,
arrangements, understandings or relationships (legal or otherwise) with respect
to any securities of the Issuer.
SkyePharma and the Issuer entered into a Registration Rights Agreement,
dated as of August 20, 2003 (the "Registration Rights Agreement"), pursuant to
which the Issuer is obligated to prepare and file with the Securities and
Exchange Commission (the "SEC") as soon as reasonably practicable after March
31, 2004 a registration statement (the "Registration Statement") to permit the
offering and sale pursuant to Rule 415 of SkyePharma's restricted shares, as
defined in the Registration Rights Agreement (the "Restricted Shares"). If the
Issuer fails to file and maintain the Registration Statement, SkyePharma is
entitled to demand the filing of the Registration Statement within 20 days of
the notice of demand and the Issuer is obligated to comply. The Registration
Rights Agreement also provides for "piggyback" registration, whereby if the
Issuer intends to register shares under the Securities Act of 1933 (the
"Securities Act") other than on Form S-4 or S-8, it must provide SkyePharma with
notice of the proposed registration, and SkyePharma can require the Issuer to
include its Restricted Shares in the registration statement and offering on the
same terms and conditions as the shares otherwise being sold in such
registration. The Registration Rights Agreement also contains covenants whereby
the Issuer must use its best efforts to ensure that SkyePharma has a readily
realizable market for its shares of Common Stock, including using its reasonable
best efforts to obtain a listing for the Common Stock prior to December 31, 2003
and, in the event the Common Stock is not listed by such date, using its best
efforts to procure purchasers for SkyePharma's Restricted Shares.
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.
Exhibit 2. Subscription Agreement between Vital Living, Inc. and
SkyePharma PLC, dated as of August 20, 2003.
Exhibit 3. Commitment Letter of SkyePharma PLC, dated as of August 20,
2003.
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CUSIP NO. 92846Y100 PAGE 8 OF 9 PAGES
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Exhibit 4. 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.
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.
August 29, 2003 SkyePharma PLC
By: /s/Donald Nicholson
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Name: Donald Nicholson
Title: Finance Director
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CUSIP NO. 92846Y100 PAGE 9 OF 9 PAGES
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ANNEX A
The name, position, present principal occupation and address thereof and
citizenship of each director and executive officer of SkyePharma is set forth
below.
The business address for SkyePharma and each of the executive officers and
directors listed below is SkyePharma PLC, 105 Piccadilly, London, England W1J
7NJ.
NAME POSITION PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND ADDRESS(1) CITIZENSHIP
Ian Gowrie-Smith Executive Chairman Australian
Michael Ashton Chief Executive Australian
Officer
Donald Nicholson Finance Director British
and Executive
Director
Air Chief Marshal Senior Independent Retired British
Sir Michael Beavis Non-executive
Director
Dr. David Ebsworth Non-executive Non-executive Director of Clal Biotechnology British
Director Industries and CuraGen Corporation
R. Stephen Harris Non-executive Non-executive Chairman of Proteome Sciences plc British
Director and Non-executive Director of Advanced Medical
Solutions Group plc, Microscience Ltd,
Prophilian plc, Sinclair Pharma Limited and
GeneMedix plc
Dr. Keith Mansford Non-executive External Director of Sepracor Inc., Chairman British
Director of Mansford Associates, Non-executive
Chairman of Conve Limited and Professor of
Biochemistry at the University of Buckingham.
Dr. Argeris Non-executive Partner at Care Capital LLC, External Director of American
(Jerry) Karabelas Director Human Genome Sciences, Fox Chase Cancer Center,
The University of the Sciences in Philadephia,
Member of the Scientific Advisory Committee of the
Massachusetts General Hospital, Boston, Director
of NitroMed Inc., Halsey Pharmaceuticals, Anadys,
Renolvo and a Member of the Scientific Advisory
Board of Epigenesis.
Torao Yamamoto Non-executive Senior Managing Director of the Pharmaceutical Division Japanese
Director of Kowa Company Limited in Japan, Member of the Board of
Directors of Kowa Company Limited, Kowa Pharmaceutical
Europe, Ltd., and Kowa Research Europe, Ltd.
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1 If Principal Employment is not with SkyePharma.