UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
InnoPet Brands Corp.
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(Name of Issuer)
Common Stock, $.01 Par Value
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(Title of Class of Securities)
45765C 10 3
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(CUSIP Number)
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 23, 1998
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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), Rule 13d-1(f) or Rule 13d-1(g), check the
following box 9.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the Schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
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 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
The Exhibit Index is located on page 5.
Page 1 of 5
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SCHEDULE 13D
<TABLE>
<CAPTION>
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CUSIP No. 45765C 10 3 Page 2 of 5 Pages
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<S> <C> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Explorer Fund Management, L.L.C.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF,WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
N/A
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES 80,000
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OWNED BY 8 SHARED VOTING POWER
EACH 9,202,218
REPORTING
PERSON -------- --------------------------------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
80,000
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10 SHARED DISPOSITIVE POWER
9,202,218
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,282,218
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
0
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
64.1%
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14 TYPE OF REPORTING PERSON*
IA
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION
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ITEM 1. SECURITY AND ISSUER.
Common Stock, $.01 par value
InnoPet Brands Corp.
1 East Broward Boulevard, Suite 1100
Fort Lauderdale, Florida 33301
ITEM 2. IDENTITY AND BACKGROUND.
Explorer Fund Management, L.L.C.("EFM") is a Delaware limited
liability company. EFM is principally engaged as an investment adviser. Explorer
Partners, L.L.C. ("EP"), a Delaware limited liability company, is the record
owner of 9,202,218 shares of InnoPet Brands Corp. ("InnoPet") common stock (the
"Common Stock"). Pursuant to an Investment Advisory Agreement (the "Advisory
Agreement") between EP and EFM, EP has engaged EFM as its investment adviser and
has agreed to pay EFM an asset-based and a performance-based management fee.
Pursuant to this advisory relationship, EFM has been granted the power to
exercise voting and investment control over such shares of Common Stock owned by
EP. EFM's principal place of business is 444 North Michigan Avenue, Suite 2610,
Chicago, Illinois 60611. Items (d) and (e) required by this Item 2 are
inapplicable.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONDITIONS.
On December 18, 1997, InnoPet entered into a Subscription Agreement and
Investment Representation with EP to purchase 10,000 shares of 8% Series B
cumulative convertible preferred stock (the "Series B Preferred Stock") at a
purchase price of $100 per share, with an option to purchase an additional
30,000 shares of Series B Preferred Stock. EP purchased 10,000, 2,000 and 8,000
shares of the Series B Preferred Stock on December 18, 1997, February 20, 1998
and March 18, 1998, respectively. The aggregate purchase price for each of these
acquisitions was $1,000,000, $200,000 and $800,000. EP paid the purchase price
for the Series B Preferred Stock from EP's working capital.
The Series B Preferred Stock was convertible by EP at any time into a
number of shares of InnoPet Common Stock equal to (i) the number of shares of
Preferred Stock converted, multiplied by (ii) the quotient of (a) $100, and (b)
80% of the average closing bid price for a share of InnoPet Common Stock as
quoted on the OTC Electronic Bulletin Board for the five trading days preceding
the conversion date, provided that such conversion price shall not exceed $6.00
per share. The Series B Preferred Stock pays a quarterly dividend of 8% per year
and is payable at InnoPet's sole option in cash or by the issuance of shares of
Common Stock.
On April 30, 1998, EP exercised its right to convert 75 shares of
Series B Preferred Stock and received 4,747 shares of InnoPet Common Stock in
exchange therefor. On June 23, 1998, EP exercised its right to convert all of
the remaining 19,925 shares of Series B Preferred Stock it owned, and received
8,991,426 shares of InnoPet Common Stock, including 210,545 shares of Common
Stock received as a dividend on the Series B Preferred Stock. Pursuant to a
Registration Rights Agreement by and between EP and InnoPet, InnoPet has agreed
to register the shares of Common Stock underlying the Series B Preferred Stock
owned by EP, subject to certain limitations and conditions. InnoPet has also
agreed to register any shares of Common Stock received by EP in lieu of a cash
dividend with respect to the Series B Preferred Stock.
Page 3 of 5
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In connection with EP's purchase of the Series B Preferred Stock,
InnoPet issued 40,000, 8,000 and 32,000 Redeemable Warrants to purchase Common
Stock (the "Warrants") to EFM on December 18, 1997, February 20, 1997, and March
18, 1998, respectively. These Warrants are exercisable at any time at a price of
$6.00 per share and expire on December 5, 2001. The Warrants were issued to EFM
at a purchase price of $.0001 per Warrant. The shares of Common Stock underlying
the Warrants were registered by InnoPet and covered by a prospectus dated April
9, 1998, as supplemented on May 1, 1998.
Except for the investment advisory services to be provided to EP by
EFM, there are no other agreements or understandings between EFM and EP with
respect to the acquisition, disposition, voting or control of shares of InnoPet
Common Stock beneficially owned by EFM and EP.
ITEM 4. PURPOSE OF TRANSACTION.
(a) EFM does not have any present intention to acquire or dispose of
any additional securities of InnoPet. Although EFM may acquire up to 80,000
shares of Common Stock pursuant exercise of the Warrants, it has no intention to
exercise the Warrants at this time or in the immediate future.
(d) Based upon representations made by EP, EFM believes that EP desires
to utilize its Common Stock ownership to cause a change in certain of the
members of the Board of Directors and officers of InnoPet.
EFM does not have any plans or proposals to take any of the other
actions required to be disclosed pursuant to this Item 4.
ITEM 5. INTEREST IN SECURITIES OF ISSUER (as of June 23, 1998).
(a) EFM is the beneficial owner of an aggregate of 9,282,218 shares of
Common Stock, or 64.1% of the issued and outstanding Common Stock of InnoPet,
including (i) 9,202,218 shares of Common Stock held of record by EP, and (ii)
80,000 shares of Common Stock underlying the Warrants held of record by EFM
which are immediately exercisable.
(b) EFM has sole voting and investment power with respect to the 80,000
shares of Common Stock underlying the Warrants, as the Warrants are immediately
exercisable. EFM shares voting and investment power with EP with respect to the
9,202,218 shares of Common Stock owned by record by EP. EFM hereby disclaims
beneficial ownership of 9,202,218 shares of Common Stock held by EP except to
the extent that it exercises voting or investment control over such shares.
(c) See the description of transactions set forth in Item 3 above.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
See Items 3 and 4 above.
Page 4 of 5
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
(a) Investment Advisory Agreement, dated as of June 6, 1997, by and
between EP and EFM.
(b) Form of Registration Rights Agreement, dated as of December 18,
1997, by and between EP and InnoPet, incorporated by reference from
Exhibit 4.10 to Amendment No. 1 to InnoPet's Registration Statement
on Form SB-2 (File No. 333-36755), as filed with the Securities and
Exchange Commission on March 26, 1998.
(c) Form of Subscription Agreement and Investment Representation, dated
December 18, 1997, by and between EP and InnoPet, incorporated by
reference from Exhibit 4.8 to Amendment No. 1 to InnoPet's
Registration Statement on Form SB-2 (File No. 333-36755), as filed
with the Securities and Exchange Commission on March 26, 1998.
(d) Investor Subscription Agreement, dated as of December 18, 1997, by
and between EFM and InnoPet, incorporated by reference from Exhibit
4.9 to Amendment No. 1 to InnoPet's Registration Statement on Form
SB-2 (File No. 333-36755), as filed with the Securities and
Exchange Commission on March 26, 1998.
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.
7/1/98
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Date
Explorer Fund Management, L.L.C.
By: /S/ ROBERT L. HOLZ
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Robert L. Holz, Managing Director
Page 5 of 5
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EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT ("Agreement") dated as of June 6,
1997, is by and between Explorer Partners, L.L.C., a Delaware limited liability
company (the "Partners") and Explorer Fund Management, L.L.C. (the "Adviser"),
an Illinois limited liability company.
WHEREAS, the Partners is vested with the authority and responsibility
to manage its assets and is authorized to retain one or more investment advisers
and to delegate all or a portion of its investment authority to such investment
advisers; and
WHEREAS, the Adviser has agreed to provide, and the Partners hereby
retains the Adviser to provide, investment advisory services to the Adviser on
the terms and conditions set forth herein with respect to the purchase and sale
of the assets of the Partners;
NOW, THEREFORE, the parties hereto agree as follows:
1. (a) RETENTION OF THE ADVISER BY THE PARTNERS. The Partners hereby
employs the Adviser to act as an investment adviser for, and to consult with
respect to, the investment and reinvestment of the assets of the Partners in
accordance with the Partners's investment objective and policies and
limitations, (attached as Appendix A) and to consult with respect to the
administration of its affairs to the extent required by, and subject to the
review and supervision of, the Partners for the period and upon the terms herein
set forth.
(b) ADVISER'S ACCEPTANCE OF EMPLOYMENT. The Adviser accepts such
employment and agrees during such period to render such services, to supply
investment research and portfolio management (including without limitation the
selection of securities for the Partners to purchase, hold or sell and the
selection of brokers and banks through whom the Partners's portfolio
transactions are executed and financed, in accordance with the policies) and to
consult with respect to the administration of the business affairs of the
Adviser and the Partners. Initial assets for management will begin at $1,000,000
on June 9, 1996.
(c) INDEPENDENT CONTRACTOR. The Adviser shall be deemed to be an
independent contractor under this Agreement and, unless otherwise expressly
provided or authorized, shall have no authority to act for or represent the
Partners in any way or otherwise be deemed an agent of the Partners.
(d) NON-EXCLUSIVE AGREEMENT. The services of the Adviser to the
Partners under this Agreement are not to be deemed exclusive, and the Adviser
shall be free to render similar services or other services to others so long as
its services hereunder are not impaired thereby.
2. (a) FEE. For the services described in Section 1, the Adviser and
the Partners shall pay to the Adviser a management fee at the annual rate of 1%
of the Partners's assets attributed for management ("Assets") by the Adviser at
the beginning of each month, and a quarterly
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performance fee of 25% of the Partners's "new high" increase in the Assets for
any calendar quarter end (March 31, June 30, September 30 and December 31) after
first achieving 10%.
(b) PRORATION. For the month, quarter and year in which this
Agreement becomes effective or terminates, there shall be an appropriate
proration of the Adviser's fee on the basis of the number of days that the
Agreement is in effect during such month, quarter and year, respectively.
3. EXPENSES. The Partners shall assume and pay all reasonable expenses
incurred by the Adviser in connection with providing the Partners with the
services set forth in Section 1 hereof or fulfilling its obligations hereunder.
The Partners shall pay all expenses relating to the management of its assets
including, but not limited to, any costs of safekeeping, transportation,
acquisition and disposition of assets, such as brokerage, security financing and
other execution costs and custody fees.
4. LIABILITY. The Adviser shall not be liable for any error of judgment
or of law, or for any loss suffered by the Partners in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance or bad faith on the part of the Adviser in the performance of its
obligations and duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
5. (a) TERM. This Agreement shall become effective on the date hereof
and shall remain in full force and effect until June 30, 1998 and shall
automatically be renewed for additional one year periods from year to year
thereafter; unless sooner terminated as hereinafter provided.
(b) TERMINATION. This Agreement may not be assigned or otherwise
transferred (by operation of law or otherwise) by either party hereto, without
the express written consent of the other party hereto. This Agreement may be
terminated at any time without the payment of any penalty by the Partners or by
the Adviser on one hundred eighty (180) days written notice to the other party.
(c) PAYMENT UPON TERMINATION. Termination of this Agreement shall
not affect the right of the Adviser to receive payment on any unpaid balance of
the compensation described in Section 2 earned prior to such termination,
including unrealized gains from assets in the portfolio at the time of such
termination.
6. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder
shall not be thereby affected.
7. INDEMNITY AND LIABILITY. The Partners will indemnify and hold the
Adviser harmless from and against all expenses or liabilities arising out of or
in connection with or based upon the performance by the Adviser of this
Agreement and the transactions contemplated hereby; provided, however, that the
foregoing indemnity shall not be applicable with respect to any expense or
liability arising solely out of or based solely upon the willful misfeasance or
bad
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faith of the Adviser in performing services hereunder. The Adviser shall not be
liable to the Partners or any other person for performance by the Adviser of
this Agreement, except for losses resulting from its willful misfeasance or bad
faith in performing service hereunder. The Partners agrees that any indemnity or
release of liability provided hereunder shall survive the termination of this
Agreement.
8. CONFIDENTIALITY. The Adviser will treat as confidential any
information furnished to it by the Partners, except for disclosure of such
information as may be required by law. The Partners will treat any information
furnished by the Adviser as confidential for use only with respect to the assets
of the Partners.
9. GOVERNING LAW. To the extent Federal law does not apply, this
Agreement shall be construed in accordance with the laws of the state of
Illinois for contracts to be performed entirely therein and without regard to
the choice of law principles thereof.
10. ENTIRE AGREEMENT. This Agreement and Appendix A hereto together
contains the entire understanding of the parties hereto relating to the
provision of investment advisory services by the Adviser to the Partners and
may not be amended or modified in any respect except by a writing signed by
the parties hereto.
11. CONFLICTS OF INTEREST. The Adviser, or an affiliate of the Adviser,
may earn placement, investment banking or other fees in connection with the
private placement of equity securities, which equity securities may be purchased
by the Partners or by other investment advisory clients of the Adviser.
The Adviser may have other investment advisory clients and investment
vehicles and will seek to allocate investment opportunities and dispositions
fairly among all clients or vehicles. The Adviser may cause the Partners to
purchase securities from or sell securities to such other clients or vehicles
when the Adviser believes such transactions are appropriate. Proprietary trades
made by or on behalf of the Adviser, or the principals and employees of the
Adviser, which are in the same securities or instruments in which the Partners
is making a purchase or sale will only be effected after such trades have been
effected on behalf of the Partners.
The Adviser will seek to disclose to the Partners any specific conflicts
of interest not previously disclosed that arise and which are considered by the
Adviser to be material to investors in the Partners.
No funds, securities or property of the Partners will be commingled by
the Adviser with the property of any other fund or person.
12. NOTICES. All notices required or permitted to be sent under this
Agreement shall be sufficient if delivered or faxed to the Adviser at:
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Explorer Fund Management, L.L.C.
444 North Michigan Avenue
Suite 2910
Chicago, IL 60611
Attention: Mr. Robert L. Holz
Telephone Number: (312) 321-1600
Fax Number: (312) 321-1660
or such other name or address as may be given in writing to the Partners. All
notices hereunder shall be sufficient if delivered or faxed to the Partners at
the same address written above or such other name or address as may be given in
writing in the Adviser.
IN WITNESS WHEREOF, the Adviser and the Partners have caused this Agreement to
be executed on the day and year first above written.
EXPLORER PARTNERS, L.L.C.
By: /s/ TIMOTHY J. KEATING
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Name: Timothy J. Keating
Title: Manager and Member
EXPLORER FUND MANAGEMENT, L.L.C., ADVISER
By: /s/ ROBERT L. HOLZ
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Name: Robert L. Holz
Title: Managing Director
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APPENDIX A
The Partners' investments shall be in common stocks, convertible preferred
stock, convertible debentures, debentures, warrants on common stock. The
investments may be in private placements. The investment horizon for each is
expected to be approximately six months, however, it may be longer.
5
