At the Closing, the Company entered into an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”) in favor of Prencen and Prencen Lending with respect to the Conversion Shares, Warrant Shares and any of our Common Stock currently held or subsequently acquired by Prencen or Prencen Lending (the “Registrable Securities”). Under the Registration Rights Agreement, the Company is be required to file a registration statement with respect to the Registrable Securities not less than 60 days following the Closing, and to use its best efforts to have such registration statement declared effective not more than the earlier of 120 days following the filing deadline or 180 days following the Closing. The Registration Rights Agreement contains customary penalties for the failure to comply with such deadlines or to maintain the effectiveness of the registration statement.

At the Closing, the Company paid Prentice Capital Management, LP, an affiliate of Prencen and Prencen Lending, a closing fee of $3,667,500 and reimbursed Prencen and Prencen Lending for certain disbursements related to the transaction. In addition, the Company paid fees and expenses of $5,525,171 to Stanford Group Company (“Stanford”). At the Closing, the Company also issued Stanford warrants for the purchase of its Common Stock as follows: (i) 137,615 warrants at an exercise price of $3.76 per share, and (ii) 552,632 warrants at an exercise price of $4.37 per share.

The above description does not purport to be a complete statement of the parties’ rights and obligations under the Securities Purchase Agreement and is qualified in its entirety by reference to (i) the Securities Purchase Agreement, (ii) the Notes, (iii) the Warrants, (iv) the Registration Rights Agreement, and (v) the Voting Agreement by and among the Company and certain of its stockholders, copies of which are attached attached hereto as Exhibits 4.1 through 4.5, respectively. Except for their status as the contractual documents between the parties with respect to the transactions described therein, none of the above-referenced agreements is intended to provide factual information about the parties and the representations and warranties contained in such documents are made only for purposes of the respective agreements and as of specific dates, are intended solely for the benefit of the parties to the respective agreements, and may be subject to limitations agreed by the parties, including being qualified by disclosures between the parties. These representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the respective agreements instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the parties that differ from those applicable to investors. Accordingly, they should not be relied on by investors as statements of factual information.

(b)           On August 2, 2006 Ascendia Brands Co., Inc. (Ascendia Brands), an indirect wholly-owned subsidiary of the Company, entered into a Financing Agreement (the “Financing Agreement”) with The CIT Group/Commercial Services, Inc. for a $13 million revolving credit facility (the “Facility”). Borrowings made under the Facility are secured by a lien on accounts receivable and inventory of Ascendia Brands, and by a second lien on other assets of Ascendia Brands, the Company and its other subsidiaries. Ascendia Brands will use borrowings under the Facility for general corporate purposes, including the payment of certain fees and expenses arising in connection with the Securities Purchase Agreement.

Borrowings under the Facility will bear interest at a rate of LIBOR plus 225 basis points. The Facility has a term of three years, and contains provisions for the payment of early termination fees. At the closing, Ascendia Brands became obligated to pay CIT a Facility Fee of $100,000 and to reimburse CIT for certain costs and expenses associated with the transaction.

The above description does not purport to be a complete statement of the parties’ rights and obligations under the Financing Agreement and is qualified in its entirety by reference to the terms and conditions of the Financing Agreement, a copy of which is attached heretp as Exhibit 4.6. Except for its status as the contractual document between the parties with respect to the transaction described therein, the Financing Agreement is not intended to provide factual information about the parties and the representations and warranties contained in such document are made only for purposes of such agreements and as of specific dates, are intended solely for the benefit of the parties to the agreement, and may be subject to limitations agreed by the parties, including being qualified by disclosures between the parties. These representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the parties that differ from those applicable to investors. Accordingly, they should not be relied on by investors as statements of factual information.

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