Item
1.01. Entry
into a Material Definitive Agreement.
Acquisition
of Wilhelmina Companies
On August 25, 2008, New Century
Equity Holdings Corp. (“NCEH”) and Wilhelmina Acquisition Corp., a New York
corporation and wholly owned subsidiary of NCEH (“Wilhelmina Acquisition”),
entered into an agreement (the “Acquisition Agreement”) with Dieter Esch
(“Esch”), Lorex Investments AG, a Swiss corporation (“Lorex”), Brad Krassner
(“Krassner”), Krassner Family Investments, L.P. (“Krassner L.P.” and together
with Esch, Lorex and Krassner, the “Control Sellers”), Wilhelmina International,
Ltd., a New York corporation (“Wilhelmina International”), Wilhelmina – Miami,
Inc., a Florida corporation (“Wilhelmina Miami”), Wilhelmina Artist Management
LLC, a New York limited liability company (“WAM”), Wilhelmina Licensing LLC, a
Delaware limited liability company (“Wilhelmina Licensing”), and Wilhelmina Film
& TV Productions LLC, a New York limited liability company (“Wilhelmina TV”
and together with Wilhelmina International, Wilhelmina Miami, WAM and Wilhelmina
Licensing, the “Wilhelmina Companies”), Sean Patterson, an executive with the
Wilhelmina Companies (“Patterson”), and the shareholders of Wilhelmina Miami
(the “Miami Holders” and together with the Control Sellers and Patterson, the
“Individual Sellers”). Pursuant to the Acquisition Agreement, NCEH
will acquire the Wilhelmina Companies subject to the terms and conditions
thereof (the “Acquisition”). The Acquisition Agreement provides for
(i) the merger of Wilhelmina Acquisition with and into Wilhelmina International
in a stock-for-stock transaction, as a result of which Wilhelmina International
will become a wholly owned subsidiary of NCEH (the “Merger”) and (ii) NCEH’s
purchase of the outstanding equity interests of the other Wilhelmina
Companies for cash. In connection with the closing of the Acquisition
Agreement, NCEH will (i) issue approximately $15 million in shares of its common
stock, par value $0.01 per share (“Common Stock”), to Lorex and Krassner L.P.
(affiliates of Esch and Krassner, respectively) at approximately $0.25 per
share of Common Stock (of which $4.5 million of Common Stock will be subject to
repurchase ratably by NCEH, depending on the performance of the Wilhelmina
Companies in fiscal 2008) and (ii) pay approximately $15 million in cash,
subject to certain adjustments and earnout payments tied to the performance of
WAM and Wilhelmina Miami. The Merger is intended to constitute a
reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Internal Revenue Code.
The Acquisition Agreement is subject
to the approval of NCEH’s shareholders, as well as certain other closing
conditions set forth in the Acquisition Agreement. In addition to the
Acquisition Agreement itself, NCEH will also submit for the approval of its
shareholders certain amendments to its certificate of incorporation
(collectively, the “Charter Amendments”) designed to, among other things,
facilitate the closing of the transactions under the Acquisition Agreement,
including but not limited to (i) an increase in the number of shares of Common
Stock authorized, (ii) the declassification of NCEH’s Board of Directors (the
“Board”) and (iii) a change in the corporate name of NCEH (new name expected to
be “Wilhelmina International, Inc.”).
The closing of the Acquisition
Agreement is expected to occur in the fourth quarter of
2008. Following the closing of the Acquisition Agreement, the Board
will be reconstituted to include as directors certain representatives of the
Control Sellers, as contemplated in the Mutual Support Agreement (as defined
below) discussed in further detail in Item 8.01.
The foregoing description of the
Acquisition Agreement does not purport to be complete and is qualified in its
entirety by reference to the full text of the Acquisition Agreement, which is
attached as Exhibit
10.1 hereto.
Registration
Rights Agreement
On August 25, 2008, NCEH entered into
a registration rights agreement (the “Registration Rights Agreement”) with the
Control Sellers and Patterson (collectively, the “Registration Rights
Holders”). Pursuant to the Registration Rights Agreement, effective
upon the closing of the Acquisition Agreement, the Registration Rights Holders
will obtain certain demand and piggyback registration rights with respect to the
Common Stock to be issued to the Registration Rights Holders under the
Acquisition Agreement. The Registration Rights Agreement contains
certain indemnification provisions for the benefit of NCEH and the Registration
Rights Holders, as well as certain other customary provisions.
The foregoing description of the
Registration Rights Agreement does not purport to be complete and is qualified
in its entirety by reference to the full text of the Registration Rights
Agreement, which is attached as Exhibit 10.2
hereto.
Newcastle
Purchase Agreement
On August 25, 2008, concurrently with
the execution of the Acquisition Agreement, NCEH entered into a purchase
agreement (the “Equity Financing Agreement”) with Newcastle Partners, L.P., a
Texas limited partnership (“Newcastle”), which currently owns 19,380,768 shares
or approximately 36% of the Common Stock, for the purpose of obtaining financing
to complete the transactions contemplated by the Acquisition
Agreement. Pursuant to the Equity Financing Agreement, upon and
subject to the closing of the Acquisition Agreement, Newcastle will provide
equity financing to NCEH by (i) purchasing $3 million of Common Stock at
approximately the same per share price applicable to the Common Stock issuable
in the Acquisition and (ii) committing to purchase, at NCEH’s election at any
time or times prior to six months following the closing of the Acquisition
Agreement, up to an additional $2 million of Common Stock at approximately the
same per share price applicable to the Common Stock issuable in the
Acquisition. The Equity Financing Agreement is subject to certain
other conditions, including the parties’ entry into a registration rights
agreement upon the closing of the Acquisition Agreement, pursuant to which
Newcastle will be granted certain demand and piggyback registration rights with
respect to the Common Stock it holds, including the Common Stock issuable under
the Equity Financing Agreement. The Equity Financing Agreement and
associated transactions with Newcastle were approved by an independent committee
of the Board on August 18, 2008.
On August 25, 2008, in connection
with the Acquisition Agreement and the Equity Financing Agreement, Newcastle and
the Control Sellers entered into a mutual support agreement (the “Mutual Support
Agreement”) discussed in further detail in Item 8.01.
The foregoing description of the
Equity Financing Agreement does not purport to be complete and is qualified in
its entirety by reference to the full text of the Equity Financing Agreement,
which is attached as Exhibit 10.3
hereto.
Amendment
to Bank of New York Mellon Rights Agreement
On August 25, 2008, in connection
with the Acquisition, NCEH also entered into an amendment (the “Amendment”) to
that certain Rights Agreement dated as of July 10, 2006 by and between NCEH and
The Bank of New York Mellon Trust Company, as rights agent (“Rights
Agreement”). The Amendment, among other things, (i) provides that the
execution of the Acquisition Agreement, the acquisition of Common Stock pursuant
to the Acquisition Agreement, the consummation of the other transactions
contemplated by the Acquisition Agreement and the issuance of stock options to
the Individual Sellers or the exercise thereof, shall not be deemed to be events
that cause the Rights (as defined in the Rights Agreement) to become
exercisable, (ii) amends the definition of Acquiring Person (as defined in the
Rights Agreement) to provide that the Individual Sellers and their existing or
future Affiliates and Associates (each as defined in the Rights Agreement) shall
not be deemed to be an Acquiring Person solely by virtue of the execution of the
Acquisition Agreement, the acquisition of Common Stock pursuant to the
Acquisition Agreement, the consummation of the other transactions contemplated
by the Acquisition Agreement or the issuance of stock options to the Individual
Sellers or the exercise thereof and (iii) amends the Rights Agreement to provide
that a Distribution Date (as defined in the Rights Agreement) shall not be
deemed to have occurred solely by virtue of the execution of the Acquisition
Agreement, the acquisition of Common Stock pursuant to the Acquisition
Agreement, the consummation of the other transactions contemplated by the
Acquisition Agreement or the issuance of stock options to the Individual
Sellers or the exercise thereof.
The foregoing description of the
Amendment does not purport to be complete, and is qualified in its entirety by
reference to the full text of the Amendment, which is attached as Exhibit 4.1
hereto.
Item
3.02. Unregistered
Sales of Equity Securities.
The
information set forth in Item 1.01 with respect to the Acquisition Agreement and
Equity Financing Agreement is incorporated by reference into this Item
3.02. The issuances of Common Stock pursuant to the Acquisition
Agreement and the Equity Financing Agreement will be made in reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act of
1933, as amended.
Item
3.03. Material
Modification to Rights of Security Holders.
The
information set forth in Item 1.01 with respect to the Amendment is incorporated
by reference into this Item 3.03.
Item
8.01. Other
Events.
Mutual
Support Agreement
Pursuant to the Mutual Support
Agreement executed by Newcastle and the Control Sellers, Newcastle agreed to
vote its shares of Common Stock in favor of the Acquisition Agreement and the
Charter Amendments at the meeting of NCEH’s shareholders to be held for the
purpose of approving the Acquisition. The parties agreed, effective
upon the closing of the Acquisition Agreement, (i) to use their commercially
reasonable efforts to cause their representatives serving on the Board to vote
to nominate and recommend the election of individuals designated by such parties
(three designees of Newcastle, one designee of Esch and one designee of Krassner
(collectively, the “Designees”)) and, in the event the Board will appoint
directors without shareholder approval, to use their commercially reasonable
efforts to cause their representatives on the Board to appoint the Designees to
the Board, (ii) to vote their shares of Common Stock to elect the Designees at
any meeting of NCEH’s shareholders or pursuant to any action by written consent
in lieu of meeting pursuant to which directors are to be elected to the Board,
and (iii) not to propose, and to vote their Common Stock against, any amendment
to NCEH’s certificate of incorporation or by-laws, or the adoption of any other
corporate measure, that frustrates or circumvents the provisions of the Mutual
Support Agreement with respect to the election of the Designees. The
parties also agreed, effective upon the closing of the Acquisition Agreement,
that for a period of three years thereafter the parties will use their
commercially reasonable efforts to cause their representatives on the Board to
vote to maintain the size of the Board at no more than nine persons, unless
otherwise agreed to by the Designees.
The
obligations of the parties under the Mutual Support Agreement shall terminate
upon the earlier of (i) the written agreement of all of the parties, (ii) the
termination of the Acquisition Agreement or (iii) the date on which two of the
three groups of parties to the Mutual Support Agreement (Esch and his affiliates
as one group, Krassner and his affiliates as another group and Newcastle as
another group) each owns less than 5% of the Common Stock
outstanding.
Press
Release
On August
26, 2008, NCEH filed a press release regarding the Acquisition and related
transactions. A copy of the press release is furnished as Exhibit 99.1 hereto
and incorporated herein by reference.
Item
9.01. Financial
Statements and Exhibits.
(d) Exhibits.
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Exhibit
No.
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Description
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4.1
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Amendment
to Rights Agreement dated August 25, 2008 by and between New Century
Equity Holdings Corp. and The Bank of New York Mellon Trust
Company.
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10.1
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Agreement
dated August 25, 2008 by and among New Century Equity Holdings Corp.,
Wilhelmina Acquisition Corp., Wilhelmina International, Ltd., Wilhelmina –
Miami, Inc., Wilhelmina Artist Management LLC, Wilhelmina Licensing LLC,
Wilhelmina Film & TV Productions LLC, Dieter Esch, Lorex Investments
AG, Brad Krassner, Krassner Family Investments, L.P., Sean Patterson and
the shareholders of Wilhelmina – Miami, Inc.
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10.2
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Registration
Rights Agreement dated August 25, 2008 by and among New Century Equity
Holdings Corp., Dieter Esch, Lorex Investments AG, Brad Krassner, Krassner
Family Investments, L.P. and Sean Patterson.
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10.3
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Purchase
Agreement dated August 25, 2008 by and between New Century Equity Holdings
Corp. and Newcastle Partners, L.P.
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99.1
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Press
Release dated August 26, 2008.
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IMPORTANT ADDITIONAL
INFORMATION WILL BE FILED WITH THE SEC
NCEH
INTENDS TO FILE A PRELIMINARY PROXY STATEMENT WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION (THE “SEC”) IN CONNECTION WITH THE ACQUISITION AND TO MAIL A
DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS TO NCEH
SHAREHOLDERS. SHAREHOLDERS OF NCEH ARE ADVISED TO READ, WHEN
AVAILABLE, NCEH’S PRELIMINARY PROXY STATEMENT, INCLUDING ANY AMENDMENTS THERETO,
AND DEFINITIVE PROXY STATEMENT IN CONNECTION WITH NCEH’S SOLICITATION OF PROXIES
FOR THE SHAREHOLDER MEETING TO BE HELD TO APPROVE THE ACQUISITION BECAUSE THE
PROXY STATEMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT NCEH, THE WILHELMINA
COMPANIES AND THE ACQUISITION. THE DEFINITIVE PROXY STATEMENT WILL BE
MAILED TO SHAREHOLDERS AS OF A RECORD DATE TO BE ESTABLISHED FOR VOTING ON THE
ACQUISITION. SHAREHOLDERS WILL ALSO BE ABLE TO OBTAIN A COPY OF THE
PROXY STATEMENTS, WITHOUT CHARGE, ONCE AVAILABLE, AT THE SEC’S INTERNET SITE AT
HTTP://WWW.SEC.GOV OR BY DIRECTING A REQUEST TO: NEW CENTURY EQUITY HOLDINGS
CORP., 200 CRESCENT COURT, SUITE 1400, DALLAS, TEXAS 75201, ATTENTION: MARK E.
SCHWARZ.
NCEH
AND ITS DIRECTORS AND OFFICERS MAY BE DEEMED PARTICIPANTS IN THE SOLICITATION OF
PROXIES FROM NCEH’S SHAREHOLDERS. A LIST OF THE NAMES OF THOSE
DIRECTORS AND THE OFFICERS AND DESCRIPTIONS OF THEIR INTERESTS IN NCEH IS
CONTAINED IN NCEH’S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2007, AS AMENDED, WHICH IS FILED WITH THE SEC, AND WILL ALSO BE
CONTAINED IN NCEH’S PROXY STATEMENTS WHEN THEY BECOME
AVAILABLE. NCEH’S SHAREHOLDERS MAY OBTAIN ADDITIONAL INFORMATION
ABOUT THE INTERESTS OF ITS DIRECTORS AND OFFICERS IN THE ACQUISITION BY READING
NCEH’S PROXY STATEMENTS WHEN THEY BECOME AVAILABLE.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Date: August
26, 2008
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NEW
CENTURY EQUITY HOLDINGS CORP.
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By: |
/s/ John
Murray
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Name:
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John
Murray
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Title:
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Chief Financial
Officer
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