Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14(a)-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Materials Pursuant to ss.240.14a-12
Bradley Pharmaceuticals, Inc.
(Name of Registrant as Specified In Its Charter)
Costa Brava Partnership III L.P.
Seth W. Hamot
Douglas E. Linton
John S. Ross
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identifying the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
On July 18, 2006, Costa Brava Partnership III L.P. issued a press
release relating to Bradley Pharmaceuticals, Inc. A copy of the press release is
filed herewith as Exhibit 1.
SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS
RELATED TO SOLICITATION OF PROXIES BY COSTA BRAVA PARTNERSHIP III L.P. AND ITS
AFFILIATES FROM THE STOCKHOLDERS OF BRADLEY PHARMACEUTICALS, INC. FOR USE AT ITS
ANNUAL MEETING (A) WHEN AND IF THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION, INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN ANY
SUCH PROXY SOLICITATION, AND (B) WHEN AND IF COMPLETED, A DEFINITIVE PROXY
STATEMENT AND A FORM OF PROXY WILL BE MAILED TO STOCKHOLDERS OF BRADLEY
PHARMACEUTICALS, INC. AND WILL BE AVAILABLE AT NO CHARGE AT THE SECURITIES AND
EXCHANGE COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV. INFORMATION RELATING TO THE
POTENTIAL PARTICIPANTS IN A POTENTIAL PROXY SOLICITATION IS CONTAINED IN EXHIBIT
2 TO THIS SCHEDULE 14A FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY
COSTA BRAVA PARTNERSHIP III L.P. ON JULY 18, 2006. THIS SCHEDULE 14A IS
AVAILABLE AT NO CHARGE ON THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT
HTTP://WWW.SEC.GOV.
Exhibit 1
---------
PRESS RELEASE
COSTA BRAVA SUBMITS DIRECTOR NOMINEES TO BRADLEY PHARMACEUTICALS, INC.
NOMINEES WOULD BE DEDICATED TO ENHANCING VALUE FOR ALL STOCKHOLDERS
Boston, MA- July 18, 2006 -- Today, Costa Brava Partnership III L.P. submitted
three nominees for the Board of Directors of Bradley Pharmaceuticals, Inc.
(NYSE: BDY) to the company's Nominating and Corporate Governance Committee.
These nominees include Douglas Linton, John Ross and Seth Hamot. Costa Brava is
one of Bradley's largest shareholders, owning 1,607,700 shares, or approximately
9.5%, of Bradley's outstanding common stock, and has requested that these
candidates be considered for inclusion as part of the company's slate of
nominees for election by the common stock holders at the upcoming 2006 annual
meeting later in the third quarter of 2006. Should the Nominating and Corporate
Governance Committee decide not to accept these three individuals as part of the
company's slate, Costa Brava has notified the company that Costa Brava intends
to nominate these individuals for election as directors and to solicit proxies
for their election in a contested election. Costa Brava has hired MacKenzie
Partners, Inc. to assist in the solicitation of proxies.
Costa Brava's Seth W. Hamot, who is also a nominee, commented on the candidates:
"Costa Brava has selected industry professionals that are tremendously qualified
to address the opportunities and challenges facing Bradley. Specifically, Doug
Linton's past responsibilities at Cardinal Health, Inc. will allow him to help
manage the product returns and return reserve provisioning which have plagued
the company. John Ross's years at MetaWorks, Inc. will aid Bradley in the
effective 2007 implementation, in conjunction with MediGene, of the new
Polyphenon E Ointment products. John is also qualified to help Bradley maintain
a drug portfolio with increased patent protection going forward. Finally, as one
of the largest two holders of Bradley common stock, Costa Brava is committed to
helping Bradley generate greater shareholder value."
Mr. Hamot continued, "Today's financial and regulatory environment is different
than that which existed when the company was much smaller. With Bradley's
financial restatements now in the past, and its recently achieved status as a
current filer, Bradley now needs Board leadership better suited to this new
environment. While Bradley's management has built a company with a solid
foundation, the challenges facing the company are significant and there are a
number of areas best addressed by new directors with relevant skill sets. Over
the last two years, issues with both financial control and transparency, both of
which the current Board of Directors was charged with overseeing, have obscured
a skilled defense of the Adoxa and Keralac brands and an attempt to gain greater
patent protection for the Bradley product portfolio. We look forward to our
nominees sitting on the Board after the 2006 meeting and working with the
company's Class B directors to help the company improve performance. Costa Brava
sincerely hopes that a single slate of directors can be presented to the
shareholders for their approval."
Doug Linton
- -----------
As the senior purchasing executive at Cardinal Health in the 1980s and early
90s, Douglas Linton played a key role in developing the sophisticated purchasing
programs and systems that powered Cardinal's consolidation strategy from a small
regional player to the most profitable of the "Big Three" drug wholesalers.
After delivering similar results for two regional drug wholesalers, Doug
returned to Cardinal to create their very successful Fee-for-Service program for
smaller manufacturers. Since joining ValueCentric, LLC (
http://www.valuecentric.com ) in November, 2005, he has been consulting with
branded pharmaceutical manufacturers on Fee-for-Service strategies and the use
of wholesaler sales and inventory data. He graduated with a degree in Economics
with honors from the College of Wooster (Ohio) and received an MBA from
Carnegie-Mellon University.
John Ross
- ---------
John Ross was a co-founder, investor, and board member of MetaWorks Inc.
MetaWorks, formed in 1993, is a healthcare information management business
providing clients with state-of-the-art statistical techniques, particularly
meta-analyses and cross design syntheses, to evaluate clinical data. MetaWorks'
systematic reviews and meta-analytic services can be employed to support
regulatory approvals and product claims, establish competitive knowledge, assist
management in making strategic clinical research decisions, and establish
pharmacoeconomic claims.
Clients of MetaWorks include pharmaceutical and device firms, hospital chains,
as well as regulatory, education and research agencies of domestic and
international governments. In 1997 MetaWorks was the only private, for profit
organization designated by the Agency for Healthcare Research and Quality (AHRQ)
as an Evidence-Based Practice Center (EPC). Earlier in 2006, Mr. Ross sold his
interest in MetaWorks to a larger, global provider of evidenced-based services
and information to the pharmaceutical and life science industries. He graduated
with a Bachelors of Commerce from McMaster University in Ontario, Canada, and
received an MBA from Boston University. Mr. Ross also completed Harvard Business
School's Owner/President Management (OPM) Program.
Seth Hamot
- ----------
Seth Hamot has been the managing member of the Costa Brava partnerships since
1997. Prior to that time he was one of the partners of the Actionvest entities.
Both Costa Brava and Actionvest are investment funds that focus on turnaround
situations, defaulted and distressed debt, and complex litigation. He has served
as a director of distressed firms and on creditor committees of bankrupt
companies. Mr. Hamot graduated with a degree in Economics from Princeton
University.
SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS
RELATED TO SOLICITATION OF PROXIES BY COSTA BRAVA PARTNERSHIP III L.P. AND ITS
AFFILIATES FROM THE STOCKHOLDERS OF BRADLEY PHARMACEUTICALS, INC. FOR USE AT ITS
ANNUAL MEETING (A) WHEN AND IF THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION, INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN ANY
SUCH PROXY SOLICITATION, AND (B) WHEN AND IF COMPLETED, A DEFINITIVE PROXY
STATEMENT AND A FORM OF PROXY WILL BE MAILED TO STOCKHOLDERS OF BRADLEY
PHARMACEUTICALS, INC. AND WILL BE AVAILABLE AT NO CHARGE AT THE SECURITIES AND
EXCHANGE COMMISSION'S WEBSITE AT HTTP://WWW.SEC.GOV. INFORMATION RELATING TO THE
POTENTIAL PARTICIPANTS IN A POTENTIAL PROXY SOLICITATION WILL BE CONTAINED IN
EXHIBIT 2 TO THE SCHEDULE 14A FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
BY COSTA BRAVA PARTNERSHIP III L.P. ON JULY 18, 2006. THE SCHEDULE 14A WILL BE
AVAILABLE AT NO CHARGE ON THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT
HTTP://WWW.SEC.GOV.
Exhibit 2
---------
The following individuals may be deemed to be participants in the
solicitation pursuant to Instruction 3 to Item 4 of Schedule 14A: Costa Brava
Partnership III L.P. ("Costa Brava"), Seth W. Hamot, Douglas E. Linton and John
S. Ross. Messrs. Hamot, Linton, and Ross are referred to herein as "Nominees."
Costa Brava is a Delaware limited partnership with its principal
business address at 420 Boylston Street, Boston, MA 02116. Seth W. Hamot is the
president of Roark, Rearden & Hamot, LLC, which is the general partner of Costa
Brava Partnership III L.P. Costa Brava has an interest in the election of
directors of Bradley Pharmaceuticals, Inc. ("Bradley") through (1) its
beneficial ownership of 1,640,700 shares of common stock, $0.01 par value per
share ("Common Stock") of Bradley, (2) the nomination of Mr. Hamot, who is the
President of Roark, Rearden & Hamot, LLC, the general partner of Costa Brava,
and (3) indemnification agreements that Costa Brava intends to enter into with
each Nominee pursuant to which Costa Brava will indemnify, defend and hold
harmless the Nominees against certain losses. Costa Brava disclaims beneficial
ownership of 33,000 of such shares that are held through separate accounts that
are deemed to be beneficially owned by Mr. Hamot.
During the past two years, Costa Brava and separate accounts deemed to
be beneficially owned by Mr. Hamot purchased the Common Stock of Bradley
Pharmaceuticals, Inc. disclosed on Annex A hereto. Costa Brava has also been
party to certain call and put options with respect to the Common Stock of
Bradley Pharmaceuticals, Inc. as disclosed on Annex A hereto.
Mr. Hamot is the beneficial owner of 1,640,700 shares of Common Stock
of Bradley, of which 1,607,700 of the shares are held through Costa Brava. The
remaining 33,000 shares are held through separate accounts that are deemed to be
beneficially owned by Mr. Hamot.
Neither Mr. Linton nor Mr. Ross beneficially own shares of Common Stock
of Bradley.
Costa Brava has agreed to pay Mr. Linton and Mr. Ross $25,000 each in
consideration of their agreement to stand as Nominees for election at the 2006
Annual Meeting of Stockholders.
Costa Brava intends to enter into an indemnification agreement with
each Nominee. The indemnification agreement would provide that Costa Brava will
indemnify each Nominee from and against any losses incurred by any Nominee
arising from such Nominee's role as a Nominee, with certain exceptions.
We are not aware of any additional interest, direct or indirect, of
Costa Brava or the Nominees in the solicitation.
ANNEX A
Costa Brava Partnership III L.P. - Purchases of Common Stock
During the past two years, Costa Brava Partnership III L.P. purchased
the following shares of Common Stock of the Company:
Transaction Date Shares Price ($)
Purchase 2/17/2005 25,000 13.31
Purchase 2/22/2005 22,200 13.25
Purchase 2/23/2005 2,800 13.24
Purchase 2/28/2005 35,000 10.25
Purchase 3/2/2005 18,200 9.00
Purchase 3/4/2005 25,000 8.23
Purchase 3/4/2005 5,000 8.33
Purchase 3/7/2005 100,000 8.75
Purchase 3/9/2005 20,000 8.81
Purchase 3/11/2005 25,000 8.60
Purchase 3/11/2005 45,800 8.70
Purchase 3/14/2005 63,200 8.97
Purchase 3/14/2005 50,000 9.08
Purchase 3/15/2005 50,000 9.30
Purchase 3/15/2005 25,000 9.61
Purchase 3/16/2005 40,000 10.25
Purchase 3/16/2005 15,000 10.08
Purchase 3/17/2005 15,500 10.13
Purchase 3/18/2005 10,000 9.47
Purchase 3/18/2005 20,000 9.89
Purchase 3/21/2005 15,000 9.41
Purchase 3/21/2005 10,000 9.55
Purchase 3/24/2005 5,000 9.78
Purchase 3/24/2005 10,000 9.69
Purchase 3/29/2005 17,100 9.57
Purchase 4/1/2005 10,200 9.37
Purchase 4/5/2005 7,000 9.10
Purchase 4/6/2005 15,000 9.24
Purchase 4/15/2005 5,300 8.94
Purchase 4/26/2005 6,800 9.05
Purchase 4/27/2005 16,000 9.04
Purchase 4/29/2005 4,500 9.05
Purchase 4/29/2005 20,000 9.14
Purchase 4/29/2005 10,000 9.19
Purchase 5/11/2005 5,000 8.43
Purchase 5/17/2005 25,000 7.87
Purchase 5/19/2005 2,500 8.01
Purchase 5/20/2005 7,400 8.27
Purchase 5/23/2005 5,000 8.59
Purchase 5/24/2005 10,000 8.83
Purchase 5/25/2005 4,000 9.00
Purchase 6/7/2005 15,000 10.95
Purchase 6/8/2005 25,000 10.72
Purchase 6/9/2005 24,000 10.64
Purchase 6/10/2005 6,100 10.59
Purchase 6/15/2005 10,200 10.85
Purchase 6/16/2005 12,600 10.81
Purchase 6/28/2005 10,000 10.81
Purchase 7/15/2005 44,900 10.41
Purchase 8/8/2005 4,000 10.93
Purchase 8/9/2005 9,400 10.97
Purchase 8/10/2005 15,000 10.92
Purchase 8/26/2005 6,000 10.63
Purchase 8/30/2005 10,000 10.81
Purchase 8/31/2005 10,000 10.76
Purchase 9/28/2005 25,000 10.78
Purchase 9/30/2005 10,000 10.87
Purchase 10/5/2005 18,100 10.59
Purchase 10/6/2005 10,200 10.49
Purchase 10/7/2005 10,000 10.50
Purchase 10/12/2005 10,000 9.87
Purchase 10/12/2005 7,300 10.07
Purchase 10/14/2005 5,000 10.95
Purchase 10/14/2005 10,000 11.40
Purchase 10/21/2005 10,000 11.54
Purchase 11/15/2005 10,000 12.55
Purchase 11/16/2005 10,000 12.64
Purchase 12/2/2005 10,000 12.32
Purchase 12/8/2005 10,000 12.54
Purchase 12/9/2005 15,000 12.60
Purchase 12/12/2005 110,000 10.91
Purchase 12/14/2005 60,000 9.86
Purchase 12/15/2005 25,000 10.06
Purchase 12/15/2005 50,000 10.08
Purchase 1/31/2006 35,000 11.68
Purchase 5/22/2006 25,000 12.87
Purchase 5/22/2006 5,000 12.92
Purchase 6/23/2006 75,000 12.08
Purchase 6/26/2006 25,000 11.50
Purchase 6/28/2006 1,400 15.00
TOTAL 1,607,700
During the past two years, accounts that are deemed to be beneficially
owned by Mr. Hamot made the following purchases of Common Stock of the Company.
Costa Brava Partnership III L.P. disclaims beneficial ownership of these shares.
Transaction Date Shares Price
Purchase 3/8/2005 2,000 8.88
Purchase 4/6/2005 2,000 9.319
Purchase 4/12/2005 1,000 9.12
Purchase 4/12/2005 1,000 9.14
Purchase 4/12/2005 1,000 9.16
Purchase 4/12/2005 1,400 9.127
Purchase 4/12/2005 100 9.08
Purchase 4/12/05 500 9.2
Purchase 4/25/2005 3,300 8.96
Purchase 4/25/2005 1,400 8.881
Purchase 4/25/2005 300 8.95
Purchase 10/11/2005 7,000 10.188
Purchase 12/2/2005 5,000 12.21
Purchase 1/31/2006 1,000 11.996
Purchase 4/10/2006 5,000 13.19
Purchase 4/10/2006 1,000 13.497
TOTAL 33,000
Costa Brava Partnership III L.P. was previously party to the following
call options with respect to Common Stock of the Company. Each contract was with
respect to 100 shares of Common Stock.
Number of
Contacts Price per
Date of Bought Underlying
Transaction Transaction (Sold) Share ($) Contract Description
Buy 5/16/2005 100 0.33 July 2005 $10.00 Call
Buy 5/17/2005 400 0.31 July 2005 $10.00 Call
Buy 5/19/2005 80 0.33 July 2005 $10.00 Call
Buy 5/20/2005 51 0.43 July 2005 $10.00 Call
Buy 5/25/2005 118 0.53 July 2005 $10.00 Call
Buy 9/6/2005 35 1.53 Oct 2005 $10.00 Call
Buy 9/6/2005 30 1.53 Oct 2005 $10.00 Call
Buy 9/6/2005 35 1.53 Oct 2005 $10.00 Call
Buy 9/6/2005 25 0.38 Oct 2005 $12.50 Call
Buy 9/6/2005 5 0.38 Oct 2005 $12.50 Call
Buy 9/6/2005 15 0.38 Oct 2005 $12.50 Call
Buy 9/6/2005 20 0.38 Oct 2005 $12.50 Call
Buy 9/6/2005 25 0.38 Oct 2005 $12.50 Call
Buy 9/6/2005 25 0.38 Oct 2005 $12.50 Call
Buy 9/6/2005 20 0.38 Oct 2005 $12.50 Call
Buy 9/6/2005 25 0.38 Oct 2005 $12.50 Call
Buy 9/6/2005 30 0.38 Oct 2005 $12.50 Call
Buy 9/7/2005 25 0.38 Oct 2005 $12.50 Call
Buy 5/1/2006 90 0.69 May 2006 $15.00 Call
Buy 5/1/2006 25 0.25 May 2006 $17.50 Call
Buy 5/1/2006 30 0.35 Jun 2006 $17.50 Call
Buy 5/12/2006 201 0.25 Jun 2006 $17.50 Call
Sell 6/7/2005 100 1.24 July 2005 $10.00 Call
Sell 6/7/2005 200 1.24 July 2005 $10.00 Call
Sell 7/18/2005 200 0.38 July 2005 $10.00 Call
Sell 7/18/2005 80 0.38 July 2005 $10.00 Call
Sell 7/18/2005 51 0.38 July 2005 $10.00 Call
Sell 7/18/2005 118 0.38 July 2005 $10.00 Call
Sell 10/21/2005 35 1.53 Oct 2005 $10.00 Call
Sell 10/21/2005 30 1.53 Oct 2005 $10.00 Call
Sell 10/21/2005 35 1.53 Oct 2005 $10.00 Call
Expired 10/24/2005 25 - Oct 2005 $12.50 Call
Expired 10/24/2005 5 - Oct 2005 $12.50 Call
Expired 10/24/2005 15 - Oct 2005 $12.50 Call
Expired 10/24/2005 20 - Oct 2005 $12.50 Call
Expired 10/24/2005 25 - Oct 2005 $12.50 Call
Expired 10/24/2005 25 - Oct 2005 $12.50 Call
Expired 10/24/2005 20 - Oct 2005 $12.50 Call
Expired 10/24/2005 25 - Oct 2005 $12.50 Call
Expired 10/24/2005 30 - Oct 2005 $12.50 Call
Expired 10/24/2005 25 - Oct 2005 $12.50 Call
Expired 5/22/2006 90 - May 2006 $15.00 Call
Expired 5/22/2006 25 - May 2006 $17.50 Call
Expired 6/19/2006 30 - Jun 2006 $17.50 Call
Expired 6/19/2006 201 - Jun 2006 $17.50 Call
Costa Brava Partnership III L.P. was or is party to the following put
options with respect to Common Stock of the Company. Each contract was or is
with respect to 100 shares of Common Stock. Upon the exercise of a contract by a
holder, Costa Brava is obligated to purchase Common Stock from the holder at the
price per share set forth under the heading "Contract Description".
Number of
Contacts Price per
Date of Bought Underlying
Transaction Transaction (Sold) Share ($) Contract Description
Sale 12/15/2005 275 0.57 Jan 2006 $10.00 Put
Sale 5/2/2006 70 1.15 Nov 2006 $12.50 Put
Sale 5/12/2006 125 0.89 Aug 2006 $12.50 Put
Sale 5/12/2006 311 1.20 Nov 2006 $12.50 Put
Sale 5/12/2006 200 2.45 Nov 2006 $15.00 Put
Expired 1/23/2006 275 - Jan 2006 $10.00 Put
Covered 6/28/2006 14(1) 2.44 Nov 2006 $15.00 Put
- -----------------------
(1) Upon the exercise of fourteen (14) contracts by a holder, Costa Brava became
obligated to purchase 1,400 shares of Common Stock from the holder at a purchase
price of $15.00 per share. One hundred eighty six (186) of the contracts
(November 2006 $15.00 Put) written and sold by Costa Brava on May 12, 2006
remain outstanding following such exercise.