Martin Lawrence Limited Editions Inc., a Van Nuys-based publisher and wholesaler of art, said it has a tentative agreement to receive $3.5 million in cash through a private debt and equity financing from the Herrick Co. of Boca Raton, Fla.
Martin Lawrence said the financing will allow the recession-battered company to enhance and diversify its operations. But the agreement, which must be approved by shareholders at the company's September meeting, gives privately held Herrick a chance to gain control of Martin Lawrence's board of directors. The Herrick company, owned by Norton Herrick, specializes in real estate acquisitions.
As part of the agreement, Martin Blinder, a founder of Martin Lawrence, agreed to resign as chairman and chief executive and to remain with Martin Lawrence as a consultant to smooth the transition for the new chairman and chief executive.
The deal calls for Martin Lawrence to sell $2 million principal amount of senior secured debt, together with warrants to purchase 250,000 common shares. In addition, Martin Lawrence will sell $1.5 million in convertible preferred stock to Herrick. The preferred stock is convertible into 3 million common shares, plus warrants to buy 4.58 million shares, which if exercised would provide Martin Lawrence up to $5.16 million in additional funds.