Unassociated Document
As
filed with the Securities and Exchange Commission on August 12,
2008
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
ICONIX
BRAND GROUP, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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11-2481903
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|
(State
or other jurisdiction
of
incorporation or organization)
|
|
(I.R.S.
employer
identification
no.)
|
1450
Broadway
New
York, New York 10018
Telephone:
(212) 730-0030
(Address,
including zip code, and telephone number, including area code, of registrant’s
principal executive offices)
Neil
Cole, Chief Executive Officer
Iconix
Brand Group, Inc.
1450
Broadway
New
York, New York 10018
Telephone:
(212) 730-0030
(Name,
address, including zip code, and telephone number, including area code, of
agent
for service)
________________
Copies
to:
Robert
J. Mittman, Esq.
Ethan
Seer, Esq.
Blank
Rome LLP
405
Lexington Avenue
New
York, NY 10174
Telephone:
(212) 885-5393
Facsimile:
(212) 885-5001
_______________
APPROXIMATE
DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable on or after the effective date of this Registration
Statement.
If
the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following
box: ¨
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: ý
If
this
Form is filed to register additional securities for an offering pursuant to
Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same
offering. ¨
If
this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
If
this
Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. ý
If
this
Form is a post-effective amendment to a registration statement filed pursuant
to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See
the definitions of “large accelerated filer”, “accelerated filer”, and “smaller
reporting company” in Rule 12b-2 of the Exchange Act:
|
Large
accelerated filer x
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Accelerated
filer
o
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Non-accelerated
filer
o
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Smaller
reporting company
o
|
| |
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(Do
not check if a smaller
reporting
company)
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|
CALCULATION
OF REGISTRATION FEE
|
Title
of each class of securities
to
be registered
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Amount
to be registered
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Proposed
maximum
offering
price
per
share
|
Proposed
maximum aggregate offering price
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Amount
of
registration
fee
|
|
Common
Stock, par value $.001 per share(1)(2)
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144,100
(2)(3)
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$
13.77 (4)
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$
1,984,257 (4)
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$
77.98 (4)
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(1)
|
All
of the shares of common stock being registered hereby are being offered
for the account of selling stockholders who acquired such shares
in
private transactions. Except as set forth in the footnotes below,
no other
shares of the registrant’s common stock are being registered pursuant to
this registration statement.
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(2)
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Includes
preferred share purchase rights. Prior to the occurrence of certain
events, the preferred share purchase rights will not be evidenced
separately from the common stock.
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(3)
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Pursuant
to Rule 416 of the Securities Act of 1933, there are also being registered
such additional shares as may be offered or issued to the selling
stockholders to prevent dilution resulting from stock dividends,
stock
splits or similar transactions.
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(4)
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Estimated
solely for the purpose of calculating the registration fee. Pursuant
to
Rule 457(c) of the Securities Act of 1933, as amended, the registration
fee has been calculated based upon the average of the high and low
prices,
as reported by Nasdaq, for the registrant’s common stock on August 11,
2008.
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PROSPECTUS
ICONIX
BRAND GROUP, INC.
144,100
shares of common stock
The
selling stockholders listed on page 13 of this prospectus are offering for
resale up to 144,100 shares of the common stock of Iconix Brand Group, Inc.
The
common stock may be offered from time to time by the selling stockholders
through ordinary brokerage transactions in the over-the-counter markets, in
negotiated transactions or otherwise, at market prices prevailing at the time
of
sale or at negotiated prices and in other ways as described in the “Plan of
Distribution.”
We
will
not receive any of the proceeds from the sale of the shares of common stock
by
the selling stockholders.
Our
common stock is listed on the Nasdaq Global Market under the symbol “ICON”. On
August 11, 2008, the last sale price of our common stock as reported by Nasdaq
was $ 13.98 per share.
Investing
in our common stock involves a high degree of risk. For more information, see
“Risk Factors” beginning on page 3.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or determined if this prospectus
is
truthful or complete. Any representation to the contrary is a criminal
offense.
The
date
of this prospectus is August 12, 2008
Table
of
Contents
Page
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1
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CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
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2
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OUR
COMPANY
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2
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RISK
FACTORS
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3
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USE
OF PROCEEDS
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13
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SELLING
STOCKHOLDERS
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13
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PLAN
OF DISTRIBUTION
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14
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LEGAL
MATTERS
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16
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EXPERTS
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16
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WHERE
YOU CAN FIND MORE INFORMATION
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16
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INFORMATION
INCORPORATED BY REFERENCE
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17
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ABOUT
THIS PROSPECTUS
This
prospectus is part of a “shelf” registration statement that we have filed with
the Securities and Exchange Commission, or the SEC. The selling stockholders
identified in this prospectus or in a supplement to this prospectus may from
time to time use this prospectus to offer and sell, in one or more transactions,
the shares of our common stock listed for sale opposite their respective names.
We will not receive any proceeds from the resale by any selling stockholder
of
the shares of common stock.
You
should rely only on the information incorporated by reference or provided in
this prospectus and any prospectus supplement. We have not authorized anyone
else to provide you with different information. This prospectus is not an offer
to sell nor is it a solicitation of an offer to buy any security in any
jurisdiction where the offer or sale is not permitted. Neither the delivery
of
this prospectus nor any sale made under this prospectus shall, under any
circumstances, imply that there has been no change in our affairs since the
date
of this prospectus or that the information contained in this prospectus or
incorporated by reference herein is correct as of any time subsequent to its
date. Our business, financial condition, results of operations and prospects
may
have changed since that date.
Except
where the context requires otherwise, in this prospectus, the “Company,”
“Iconix,” “we,” “us” and “our” refer to the combined business of Iconix Brand
Group, Inc., a Delaware corporation, and all of its subsidiaries.
This
prospectus and the documents incorporated by reference into this prospectus
include trademarks, service marks and trade names owned by us or others.
Candie’s®, Bongo®, Joe Boxer®, Rampage®, Mudd® and London Fog® are the
registered trademarks of our wholly-owned subsidiary, IP Holdings LLC, or IP
Holdings; Badgley Mischka® is the registered trademark of our wholly-owned
subsidiary, Badgley Mischka Licensing LLC; Mossimo® is the registered trademark
of our wholly-owned subsidiary, Mossimo Holdings LLC; Ocean Pacific® and OP® are
the registered trademarks of our wholly-owned subsidiary, OP Holdings LLC;
Danskin®, Danskin Now®, Rocawear® and Starter® are the registered trademarks of
our wholly-owned subsidiary, Studio IP Holdings LLC; and Cannon®, Royal Velvet®,
Fieldcrest® and Charisma® are the registered trademarks of our wholly-owned
subsidiary, Official-Pillowtex LLC. Each of the other trademarks, trade names
or
service marks of other companies appearing in this prospectus or information
incorporated by reference into this prospectus is the property of its respective
owner.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the documents incorporated by reference herein contain statements
that we believe are “forward-looking statements” as that term is used in the
Private Securities Litigation Reform Act of 1995 and are intended to enjoy
protection of the safe harbor for forward-looking statements provided by that
Act. These forward-looking statements are based on our current expectations,
assumptions, estimates and projections about our business and our industry.
Forward-looking statements include statements regarding our future financial
position, performance and achievements, business strategy, and plans and
objectives of management for future operations.
In
some
cases, you can identify forward-looking statements by terms such as “may,”
“should,” “will,” “could,” “estimate,” “project,” “predict,” “potential,”
“continue,” “anticipate,” “believe,” “plan,” “seek,” “expect,” “future” and
“intend” or the negative of these terms or other comparable expressions which
are intended to identify forward-looking statements. These statements are only
predictions and are not guarantees of future performance. They are subject
to
known and unknown risks, uncertainties and other factors, some of which are
beyond our control and difficult to predict and could cause our actual results
to differ materially from those expressed or forecasted in, or implied by,
the
forward-looking statements. In evaluating these forward-looking statements,
you
should carefully consider the risks and uncertainties described in “Risk
Factors” below and elsewhere in this prospectus, including in documents
incorporated by reference herein, and those described in any applicable
prospectus supplement. Given these uncertainties, you should not place undue
reliance on these forward-looking statements. In addition, these forward-looking
statements reflect our view only as of the date they are made.
Except
as
required by law, we assume no obligation to update these forward-looking
statements publicly, or to update the reasons actual results could differ
materially from those anticipated in these forward-looking statements, even
if
new information becomes available in the future.
All
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by these cautionary
statements.
OUR
COMPANY
We
are a
brand management company engaged in licensing, marketing and providing trend
direction for our portfolio of owned consumer brands. We currently own 16 highly
recognizable brands: Candie's®, Bongo®, Badgley Mischka®, Joe Boxer®, Rampage®,
Mudd®, London Fog®, Mossimo®, Ocean Pacific®/OP®, Danskin®, Rocawear®, Cannon®,
Royal Velvet®, Fieldcrest®, Charisma® and Starter®. We license our brands to
leading retailers and wholesalers, both domestically and internationally, for
use in connection with a broad array of product categories, including apparel,
fashion accessories, footwear, beauty and fragrance and home products and décor.
Our brands are sold across a wide range of distribution channels, from the
mass
to the luxury markets, and are marketed to a broad range of customers. We seek
to maximize the value of our brands by developing innovative advertising and
promotional campaigns designed to increase brand awareness and by providing
coordinated trend direction to our licensees to enhance product appeal and
help
maintain and build brand integrity.
We
were
incorporated under the laws of the state of Delaware in 1978. Our principal
executive offices are located at 1450 Broadway, New York, New York 10018 and
our
telephone number is (212) 730-0300. Our web site address, which we have
included in this document as an inactive textural reference only, is
www.iconixbrand.com. The information on our web site does not constitute part
of
this prospectus
RISK
FACTORS
Any
investment in shares of our common stock involves a high degree of risk. You
should consider carefully the following information about these risks, together
with all the other information contained, or incorporated by reference, in
this
prospectus or in a prospectus supplement, if any, before you decide to purchase
shares of our common stock. If any of the following risks actually occurs,
our
business, financial condition, operating results and future growth prospects
could be materially and adversely affected. Additional risks and uncertainties
not currently known to us or that we currently deem to be immaterial also may
materially adversely affect our financial condition. Any adverse effect on
our
business, financial condition or operating results could result in a decline
in
the trading price of our common stock and your loss of all or part of your
investment.
The
failure of our licensees to adequately produce, market and sell products bearing
our brand names in their license categories or to pay their obligations under
their license agreements could result in a decline in our results of
operations.
We
are no
longer directly engaged in the sale of branded products and, consequently,
our
revenues are now almost entirely dependent on royalty payments made to us under
our licensing agreements. Although the licensing agreements for our brands
usually require the advance payment to us of a portion of the licensing fees
and
in most cases provide for guaranteed minimum royalty payments to us, the failure
of our licensees to satisfy their obligations under these agreements or their
inability to operate successfully or at all, could result in their breach and/or
the early termination of such agreements, their non-renewal of such agreements
or our decision to amend such agreements to reduce the guaranteed minimums
due
thereunder, thereby eliminating some or all of that stream of revenue. Moreover,
during the terms of the license agreements, we are substantially dependent
upon
the abilities of our licensees to maintain the quality and marketability of
the
products bearing our trademarks, as their failure to do so could materially
tarnish our brands, thereby harming our future growth and prospects. In
addition, the failure of our licensees to meet their production, manufacturing
and distribution requirements could cause a decline in their sales and
potentially decrease the amount of royalty payments (over and above the
guaranteed minimums) due to us. A weak economy or softness in the apparel and
retail sectors could exacerbate this risk. This, in turn, could decrease our
potential revenues. Moreover, the concurrent failure by several of our material
licensees to meet their financial obligations to us could jeopardize our ability
to meet the debt service coverage ratios required in connection with our senior
secured term loan facility and the asset-backed notes issued by our subsidiary,
IP Holdings and/or our ability or IP Holdings’ ability to make required payments
with respect to such indebtedness. The failure to meet such debt service
coverage ratios or to make such required payments would, with respect to our
term loan facility, give the lenders thereunder the right to foreclose on the
Ocean Pacific/OP, Danskin, Rocawear, Mossimo and Starter trademarks, the
trademarks acquired by us in the Official-Pillowtex acquisition and other
related intellectual property assets securing the debt outstanding under such
facility and, with respect to the IP Holdings’ notes, give the holders of such
notes the right to foreclose on the Candie’s, Bongo, Joe Boxer, Rampage, Mudd
and London Fog trademarks and other related intellectual property assets
securing such notes.
Our
business is dependent on continued market acceptance of our brands and the
products of our licensees bearing these brands.
Although
most of our licensees guarantee minimum net sales and minimum royalties to
us, a
failure of our brands or of products bearing our brands to achieve or maintain
market acceptance could cause a reduction of our licensing revenues, and could
further cause existing licensees not to renew their agreements. Such failure
could also cause the devaluation of our trademarks, which are our primary
assets, making it more difficult for us to renew our current licenses upon
their
expiration or enter into new or additional licenses for our trademarks. In
addition, if such devaluation of our trademarks were to occur, a material
impairment in the carrying value of one or more of our trademarks could also
occur and be charged as an expense to our operating results. Continued market
acceptance of our brands and our licensees’ products, as well as market
acceptance of any future products bearing our brands, is subject to a high
degree of uncertainty, made more so by constantly changing consumer tastes
and
preferences. Maintaining market acceptance of our licensees’ products and
creating market acceptance of new products and categories of products bearing
our marks will require our continuing and substantial marketing efforts, which
may, from time to time, also include our expenditure of significant additional
funds to keep pace with changing consumer demands. Additional marketing efforts
and expenditures may not, however, result in either increased market acceptance
of, or additional licenses for, our trademarks or increased market acceptance,
or sales, of our licensees’ products. Furthermore, while we believe that we
currently maintain sufficient control over the products our licensees’ produce
under our brand names through the provision of trend direction and our right
to
preview and approve a majority of such products, including their presentation
and packaging, we do not actually design or manufacture products bearing our
marks and therefore have more limited control over such products’ quality and
design than a traditional product manufacturer might have.
Our
existing and future debt obligations could impair our liquidity and financial
condition, and in the event we are unable to meet our debt obligations we could
lose title to our trademarks.
As
of
June 30, 2008, we had consolidated debt of approximately $677.2 million,
including secured debt of $382.6 million ($255.1 million under our senior
secured term loan facility and $127.5 million under asset-backed notes issued
by
our subsidiary, IP Holdings), primarily all of which was incurred in connection
with our acquisition activities. We may also assume or incur additional debt,
including secured debt, in the future in connection with, or to fund, future
acquisitions. Our debt obligations:
| · |
could
impair our liquidity;
|
| · |
could
make it more difficult for us to satisfy our other
obligations;
|
| · |
require
us to dedicate a substantial portion of our cash flow to payments
on our
debt obligations, which reduces the availability of our cash flow
to fund
working capital, capital expenditures and other corporate
requirements;
|
| · |
could
impede us from obtaining additional financing in the future for working
capital, capital expenditures, acquisitions and general corporate
purposes;
|
| · |
impose
restrictions on us with respect to future
acquisitions;
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| · |
make
us more vulnerable in the event of a downturn in our business prospects
and could limit our flexibility to plan for, or react to, changes
in our
licensing markets; and
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| · |
place
us at a competitive disadvantage when compared to our competitors
who have
less debt.
|
While
we
believe that by virtue of the guaranteed minimum royalty payments due to us
under our licenses we will generate sufficient revenues from our licensing
operations to satisfy our obligations for the foreseeable future, in the event
that we were to fail in the future to make any required payment under agreements
governing our indebtedness or fail to comply with the financial and operating
covenants contained in those agreements, we would be in default regarding that
indebtedness. A debt default could significantly diminish the market value
and
marketability of our common stock and could result in the acceleration of the
payment obligations under all or a portion of our consolidated indebtedness.
In
the case of our term loan facility, it would enable the lenders to foreclose
on
the assets securing such debt, including the Ocean Pacific/OP, Danskin,
Rocawear, Starter and Mossimo trademarks, as well as the trademarks acquired
by
us in connection with the Official-Pillowtex acquisition, and, in the case
of IP
Holdings’ asset-backed notes, it would enable the holders of such notes to
foreclose on the assets securing such notes, including the Candie’s, Bongo, Joe
Boxer, Rampage, Mudd and London Fog trademarks.
We
are experiencing rapid growth. If we fail to manage our growth, our business
and
operating results could be harmed.
Our
business has grown dramatically over the past several years. For example, after
the completion of our transition to a brand management company in 2004, our
revenue increased from $30.2 million for the year ended December 31, 2005 to
$160.0 million for the year ended December 31, 2007. Our growth has largely
resulted from our acquisition of new brands of various sizes. Since October
2004, we acquired 14 of the 16 iconic brands we currently own and increased
our
total number of licenses from approximately 18 to approximately 220.
Furthermore, we continue to evaluate and pursue appropriate acquisition
opportunities. Therefore, while we have no outstanding agreements or commitments
with respect thereto, we believe that it is likely we will make additional
acquisitions.
This
significant growth has placed considerable demands on our management and other
resources and continued growth could place additional demands on such resources.
Our ability to compete effectively and to manage future growth, if any, will
depend on the sufficiency and adequacy of our current resources and
infrastructure and our ability to continue to identify, attract and retain
personnel to manage our brands. There can be no assurance that our personnel,
systems, procedures and controls will be adequate to support our operations
and
properly oversee our brands. The failure to support our operations effectively
and properly oversee our brands could cause harm to our brands and have a
material adverse effect on our business, financial condition and results of
operations. In addition, we may be unable to leverage our core competencies
in
managing apparel brands to managing brands in new product
categories.
Also,
there can be no assurance that we will be able to sustain our recent growth.
Our
growth may be limited by a number of factors including increased competition
for
retail license and brand acquisitions, insufficient capitalization for future
acquisitions and the lack of attractive acquisition targets, each as described
further below. As we continue to grow larger, we will be required to make
additional and larger acquisitions to continue to grow at our current
pace.
If
we are unable to identify and successfully acquire additional trademarks, our
growth may be limited, and, even if additional trademarks are acquired, we
may
not realize anticipated benefits due to integration or licensing
difficulties.
A
key
component of our growth strategy is the acquisition of additional trademarks.
Historically, we have been involved in numerous acquisitions of varying sizes.
We continue to explore new acquisitions. As our competitors pursue our brand
management model, acquisitions have become more expensive and suitable
acquisition candidates are becoming more difficult to find. In addition, even
if
we successfully acquire additional trademarks, we may not be able to achieve
or
maintain profitability levels that justify our investment in, or realize planned
benefits with respect to, those additional brands. Although we seek to temper
our acquisition risks by following acquisition guidelines relating to the
existing strength of the brand, its diversification benefits to us, its
potential licensing scale and the projected rate of return on our investment,
acquisitions, whether they be of additional intellectual property assets or
of
the companies that own them, entail numerous risks, any of which could
detrimentally affect our results of operations and/or the value of our equity.
These risks include, among others:
| · |
negative
effects on reported results of operations from acquisition related
charges
and amortization of acquired
intangibles;
|
| · |
diversion
of management’s attention from other business
concerns;
|
| · |
the
challenges of maintaining focus on, and continuing to execute, core
strategies and business plans as our brand and license portfolio
grows and
becomes more diversified;
|
| · |
adverse
effects on existing licensing
relationships;
|
| · |
potential
difficulties associated with the retention of key employees, and
the
assimilation of any other employees, that may be retained by us in
connection with or as a result of our acquisitions;
and
|
| · |
risks
of entering new domestic and international licensing markets (whether
it
be with respect to new licensed product categories or new licensed
product
distribution channels) or markets in which we have limited prior
experience.
|
Acquiring
additional trademarks could also have a significant effect on our financial
position and could cause substantial fluctuations in our quarterly and yearly
operating results. Acquisitions could result in the recording of significant
goodwill and intangible assets on our financial statements, the amortization
or
impairment of which would reduce our reported earnings in subsequent years.
No
assurance can be given with respect to the timing, likelihood or financial
or
business effect of any possible transaction. Moreover, as discussed below,
our
ability to grow through the acquisition of additional trademarks will also
depend on the availability of capital to complete the necessary acquisition
arrangements. Any issuance by us of shares of our common stock (and in certain
cases, convertible securities) as equity consideration in future acquisitions
could dilute our common stock because it could reduce our earnings per share,
and any such dilution could reduce the market price of our common stock unless
and until we were able to achieve revenue growth or cost savings and other
business economies sufficient to offset the effect of such an issuance. As
a
result, there is no guarantee that our stockholders will achieve greater returns
as a result of any future acquisitions we complete.
We
may require additional capital to finance the acquisition of additional brands
and our inability to raise such capital on beneficial terms or at all could
restrict our growth.
We
may,
in the future, require additional capital to help fund all or part of potential
trademark acquisitions. If, at the time required, we do not have sufficient
cash
to finance those additional capital needs, we will need to raise additional
funds through equity and/or debt financing. We cannot assure you that, if and
when needed, additional financing will be available to us on acceptable terms
or
at all. If additional capital is needed and is either unavailable or cost
prohibitive, our growth may be limited as we may need to change our business
strategy to slow the rate of, or eliminate, our expansion plans. In addition,
any additional financing we undertake could impose additional covenants upon
us
that restrict our operating flexibility, and, if we issue equity securities
to
raise capital, our existing stockholders may experience dilution or the new
securities may have rights senior to those of our common stock.
Because
of the intense competition within our licensees’ markets and the strength of
some of their competitors, we and our licensees may not be able to continue
to
compete successfully.
Currently,
most of our trademark licenses are for products in the apparel, fashion
accessories, footwear, beauty and fragrance, and home products and
decor industries, in which our licensees face intense and substantial
competition, including from our other brands and licensees. In general,
competitive factors include quality, price, style, name recognition and service.
In addition, various fads and the limited availability of shelf space could
affect competition for our licensees’ products. Many of our licensees’
competitors have greater financial, distribution, marketing and other resources
than our licensees and have achieved significant name recognition for their
brand names. Our licensees may be unable to successfully compete in the markets
for their products, and we may not be able to continue to compete successfully
with respect to our licensing arrangements.
If
our competition for retail licenses and brand acquisitions increases, our growth
plans could be slowed.
We
may
face increasing competition in the future for retail licenses as other companies
owning established brands may decide to enter into licensing arrangements with
retailers similar to the ones we currently have in place. Furthermore, our
current or potential retailer licensees may decide to develop or purchase brands
rather than maintain or enter into license agreements with us. We also compete
with traditional apparel and consumer brand companies, other brand management
companies and private equity groups for brand acquisitions. If our competition
for retail licenses and brand acquisitions increases, it may take us longer
to
procure additional retail licenses and/or acquire additional brands, which
could
slow down our growth rate.
Our
licensees are subject to risks and uncertainties of foreign manufacturing that
could interrupt their operations or increase their operating costs, thereby
affecting their ability to deliver goods to the market, reduce or delay their
sales and decrease our potential royalty revenues.
Substantially
all of the products sold by our licensees are manufactured overseas. There
are
substantial risks associated with foreign manufacturing, including changes
in
laws relating to quotas, and the payment of tariffs and duties, fluctuations
in
foreign currency exchange rates, shipping delays and international political,
regulatory and economic developments. Any of these risks could increase our
licensees’ operating costs. Our licensees also import finished products and
assume all risk of loss and damage with respect to these goods once they are
shipped by their suppliers. If these goods are destroyed or damaged during
shipment, the revenues of our licensees, and thus our royalty revenues over
and
above the guaranteed minimums, could be reduced as a result of our licensees’
inability to deliver or their delay in delivering their products.
Our
failure to protect our proprietary rights could compromise our competitive
position and decrease the value of our brands.
We
own,
through our wholly-owned subsidiaries, U.S. federal trademark registrations
and
foreign trademark registrations for our brands that are vital to the success
and
further growth of our business and which we believe have significant value.
We
monitor on an ongoing basis unauthorized filings of our trademarks and
imitations thereof, and rely primarily upon a combination of trademarks,
copyrights and contractual restrictions to protect and enforce our intellectual
property rights domestically and internationally. We believe that such measures
afford only limited protection and, accordingly, there can be no assurance
that
the actions taken by us to establish, protect and enforce our trademarks and
other proprietary rights will prevent infringement of our intellectual property
rights by others, or prevent the loss of licensing revenue or other damages
caused therefrom.
For
instance, despite our efforts to protect and enforce our intellectual property
rights, unauthorized parties may attempt to copy aspects of our intellectual
property, which could harm the reputation of our brands, decrease their value
and/or cause a decline in our licensees’ sales and thus our revenues. Further,
we and our licensees may not be able to detect infringement of our intellectual
property rights quickly or at all, and at times we or our licensees may not
be
successful combating counterfeit, infringing or knockoff products, thereby
damaging our competitive position. In addition, we depend upon the laws of
the
countries where our licensees’ products are sold to protect our intellectual
property. Intellectual property rights may be unavailable or limited in some
countries because standards of registerability vary internationally.
Consequently, in certain foreign jurisdictions, we have elected or may elect
not
to apply for trademark registrations. While we generally apply for trademarks
in
most countries where we license or intend to license our trademarks, we may
not
accurately predict all of the countries where trademark protection will
ultimately be desirable. If we fail to timely file a trademark application
in
any such country, we may be precluded from obtaining a trademark registration
in
such country at a later date. Failure to adequately pursue and enforce our
trademark rights could damage our brands, enable others to compete with our
brands and impair our ability to compete effectively.
In
addition, in the future, we may be required to assert infringement claims
against third parties, and there can be no assurance that one or more parties
will not assert infringement claims against us. Any resulting litigation or
proceeding could result in significant expense to us and divert the efforts
of
our management personnel, whether or not such litigation or proceeding is
determined in our favor. In addition, to the extent that any of our trademarks
were ever deemed to violate the proprietary rights of others in any litigation
or proceeding or as a result of any claim, we may be prevented from using them,
which could cause a termination of our licensing arrangements, and thus our
revenue stream, with respect to those trademarks. Litigation could also result
in a judgment or monetary damages being levied against us.
A
substantial portion of our licensing revenue is concentrated with a limited
number of licensees such that the loss of any of such licensees could decrease
our revenue and impair our cash flows.
Our
licensees Target, Kohl's and Kmart were our three largest direct-to-retail
licensees during the six months ended June 30, 2008, representing approximately
15%, 5%, and 5%, respectively, of our total revenue for such period. During
the
year ended December 31, 2007 Target, Kohl’s, and Kmart, collectively represented
28% of our total revenue for such period. Our license agreement with Target
grants it the exclusive U.S. license with respect to the Mossimo trademark
for
substantially all Mossimo-branded products for an initial term expiring in
January 2010, and our other license agreement with Target grants it the
exclusive U.S. license with respect to our Fieldcrest trademark for
substantially all Fieldcrest-branded products for an initial term expiring
in
July 2010; our license agreement with Kohl's grants it the exclusive U.S.
license with respect to the Candie's trademark for a wide variety of product
categories for a term expiring in January 2011; and, our license agreement
with
Kmart grants it the exclusive U.S. license with respect to the Joe Boxer
trademark for a wide variety of product categories for a term expiring in
December 2010. Because we are dependent on these licensees for a significant
portion of our licensing revenue, if any of them were to have financial
difficulties affecting its ability to make guaranteed payments, or if any of
these licensees decides not to renew or extend its existing agreement with
us,
our revenue and cash flows could be reduced substantially. For example, as
of
September 2006, Kmart had not approached the sales levels of Joe Boxer products
needed to trigger royalty payments in excess of its guaranteed minimums since
2004, and, as a result, when we entered into the current license agreement
with
Kmart in September 2006 expanding its scope to include Sears stores and
extending its term from December 2007 to December 2010, we agreed to reduce
the
guaranteed annual royalty minimums by approximately half, as a result of which
our revenues from this license were substantially reduced.
We
are dependent upon our president and other key executives. If we lose the
services of these individuals we may not be able to fully implement our business
plan and future growth strategy, which would harm our business and
prospects.
Our
successful transition from a manufacturer and marketer of footwear and jeanswear
to a licensor of intellectual property is largely due to the efforts of Neil
Cole, our president, chief executive officer and chairman. Our continued success
is largely dependent upon his continued efforts and those of the other key
executives he has assembled. Although we have entered into an employment
agreement with Mr. Cole, expiring on December 31, 2012, as well as
employment agreements with other of our key executives, there is no guarantee
that we will not lose their services. To the extent that any of their services
become unavailable to us, we will be required to hire other qualified
executives, and we may not be successful in finding or hiring adequate
replacements. This could impede our ability to fully implement our business
plan
and future growth strategy, which would harm our business and
prospects.
Our
license agreement with Target could be terminated by Target in the event we
were
to lose the services of Mossimo Giannulli as our creative director with respect
to Mossimo-branded products, thereby significantly devaluing the assets acquired
by us in the Mossimo merger and decreasing our expected revenues and cash
flows.
Target,
the primary licensee of our Mossimo brand, has the right at its option to
terminate its license agreement with us if the services of Mossimo Giannulli
as
creative director for Mossimo-branded products are no longer available to
Target, upon his death or permanent disability or in the event a morals clause
in the agreement relating to his future actions and behavior is breached.
Although we have entered into an agreement with Mr. Giannulli in which he
has agreed to continue to provide us with his creative director services,
including those which could be required by Target under the Target license,
for
an initial term expiring on January 31, 2010, there can be no assurance
that if his services are required by Target he will provide such services or
that in the event we, and thus Target, were to lose the ability to draw on
such
services, Target would continue its license agreement with us. The loss of
the
Target license would significantly devalue the assets acquired by us in the
Mossimo merger and decrease our expected revenues and cash flows until we were
able to enter into one or more replacement licenses.
We
have a material amount of goodwill and other intangible assets, including our
trademarks, recorded on our balance sheet. As a result of changes in market
conditions and declines in the estimated fair value of these assets, we may,
in
the future, be required to write down a portion of this goodwill and other
intangible assets and such write-down would, as applicable, either decrease
our
profitability or increase our net loss.
As
of
June 30, 2008, goodwill represented approximately $130.6 million, or
approximately 10% of our total assets, and trademarks and other intangible
assets represented approximately $1,034.9 million, or approximately 76% of
our total assets. Under Statement of Financial Accounting Standard No. 142,
or SFAS No. 142, “Goodwill and Other Intangible Assets,” goodwill and
indefinite life intangible assets, including some of our trademarks, are no
longer amortized, but instead are subject to impairment evaluation based on
related estimated fair values, with such testing to be done at least annually.
While, to date, no impairment write-downs have been necessary, any write-down
of
goodwill or intangible assets resulting from future periodic evaluations would,
as applicable, either decrease our net income or increase our net loss and
those
decreases or increases could be material.
We
may not be able to pay the cash portion of the conversion price upon any
conversion of the $287.5 million principal amount of our outstanding convertible
senior subordinated notes, which would constitute an event of default with
respect to such notes and could also constitute a default under the terms of
our
other debt.
We
may
not have sufficient cash to pay, or may not be permitted to pay, the cash
portion of the consideration that we may need to pay if our outstanding
convertible senior subordinated notes are converted. Upon conversion of a note,
we will be required to pay to the holder of such note a cash payment equal
to
the lesser of the principal amount of such note and its conversion value. This
part of the payment must be made in cash, not in shares of our common stock.
As
a result, we may be required to pay significant amounts in cash to holders
of
the convertible notes upon their conversion.
If
we do
not have sufficient cash on hand at the time of conversion, we may have to
raise
funds through debt or equity financing. Our ability to raise such financing
will
depend on prevailing market conditions. Further, we may not be able to raise
such financing within the period required to satisfy our obligation to make
timely payment upon any conversion. In addition, the terms of any current or
future debt, including our outstanding term loan facility, may prohibit us
from
making these cash payments or otherwise restrict our ability to make such
payments and/or may restrict our ability to raise any such financing. In
particular, the terms of our outstanding term loan facility restrict the amount
of proceeds from collateral pledged to secure our obligations thereunder that
may be used by us to make payments in cash under certain circumstances,
including payments to the convertible notes holders upon conversion. Although
the terms of our outstanding term loan facility do not restrict our ability
to
make payments in cash with assets not pledged as collateral to secure our
obligations thereunder, such assets may not generate sufficient cash to enable
us to satisfy our obligations to make timely payment of the notes upon
conversion. A failure to pay the required cash consideration upon conversion
would constitute an event of default under the indenture governing the
convertible notes, which might constitute a default under the terms of our
other
debt.
Changes
in the accounting method for business combinations will have an adverse impact
on our reported or future financial results.
Currently
and for the years ended December 31, 2007 and prior, in accordance with
Statement of Financial Accounting Standard (“SFAS”) 141 “Business Combinations”
(“SFAS 141”) all acquisition-related costs such as attorney’s fees and
accountant’s fees, as well as contingent consideration to the seller, are
capitalized as part of the purchase price.
In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations” (“SFAS 141R”), which requires an acquirer to do the following:
expense acquisition related costs as incurred; record contingent consideration
at fair value at the acquisition date with subsequent changes in fair value
to
be recognized in the income statement; and recognize any adjustments to the
purchase price allocation as a period cost in the income statement. SFAS
141R applies prospectively to business combinations for which the acquisition
date is on or after beginning of the first annual reporting period beginning
on
or after December 15, 2008. Earlier application is prohibited. At the date
of
adoption, SFAS 141R is expected to have a material impact on our results of
operations and our financial position due to our acquisition
strategy.
Changes
in effective tax rates or adverse outcomes resulting from examination of our
income or other tax returns could adversely affect our
results.
Our
future effective tax rates could be adversely affected by changes in the
valuation of our deferred tax assets and liabilities, or by changes in tax
laws
or interpretations thereof. In addition, we are subject to the continuous
examination of our income tax returns by the Internal Revenue Service and other
tax authorities. We regularly assess the likelihood of recovering the amount
of
deferred tax assets recorded on the balance sheet and the likelihood of adverse
outcomes resulting from examinations by various taxing authorities in order
to
determine the adequacy of our provision for income taxes. We cannot guarantee
that the outcomes of these evaluations and continuous examinations will not
harm
our reported operating results and financial condition.
The
market price of our common stock has been, and may continue to be, volatile,
which could reduce the market price of our common
stock.
The
publicly traded shares of our common stock have experienced, and may continue
to
experience, significant price and volume fluctuations. This market volatility
could reduce the market price of our common stock, regardless of our operating
performance. In addition, the trading price of our common stock could change
significantly over short periods of time in response to actual or anticipated
variations in our quarterly operating results, announcements by us, our
licensees or our respective competitors, factors affecting our licensees’
markets generally and/or changes in national or regional economic conditions,
making it more difficult for shares of our common stock to be sold at a
favorable price or at all. The market price of our common stock could also
be
reduced by general market price declines or market volatility in the future
or
future declines or volatility in the prices of stocks for companies in the
trademark licensing business or companies in the industries in which our
licensees compete.
Convertible
note hedge and warrant transactions that we have entered into may affect the
value of our common stock.
In
connection with the initial sale of our convertible notes, we entered into
convertible note hedge transactions with affiliates of Merrill Lynch and Lehman
Brothers, which hedging transactions are expected, but are not guaranteed,
to
eliminate the potential dilution upon conversion of the convertible notes.
At
the same time, we entered into sold warrant transactions with the hedge
counterparties. In connection with such transactions, the hedge counterparties
entered into various over-the-counter derivative transactions with respect
to
our common stock and purchased our common stock; and they may enter into or
unwind various over-the-counter derivatives and/or purchase or sell our common
stock in secondary market transactions in the future.
Such
activities could have the effect of increasing, or preventing a decline in,
the
price of our common stock. Such effect is expected to be greater in the event
we
elect to settle converted notes entirely in cash. The hedge counterparties
are
likely to modify their hedge positions from time to time prior to conversion
or
maturity of the convertible notes or termination of the transactions by
purchasing and selling shares of our common stock, other of our securities,
or
other instruments they may wish to use in connection with such hedging. In
particular, such hedging modification may occur during any conversion reference
period for a conversion of notes. In addition, we intend to exercise options
we
hold under the convertible note hedge transactions whenever notes are converted
and we have elected, with respect to such conversion, to pay a portion of the
consideration then due by us to the noteholder in shares of our common stock.
In
order to unwind their hedge positions with respect to those exercised options,
the hedge counterparties will likely sell shares of our common stock in
secondary market transactions or unwind various over-the-counter derivative
transactions with respect to our common stock during the conversion reference
period for the converted notes.
The
effect, if any, of any of these transactions and activities on the trading
price
of our common stock will depend in part on market conditions and cannot be
ascertained at this time, but any of these activities could adversely affect
the
value of our common stock. Also, the sold warrant transaction could have a
dilutive effect on our earnings per share to the extent that the price of our
common stock exceeds the strike price of the warrants.
Future
sales of our common stock may cause the prevailing market price of our shares
to
decrease.
We
have
issued a substantial number of shares of common stock that are eligible for
resale under Rule 144 of the Securities Act of 1933, as amended, or Securities
Act, and that may become freely tradable. We have also already registered a
substantial number of shares of common stock that are issuable upon the exercise
of options and warrants and have registered for resale a substantial number
of
restricted shares of common stock issued in connection with our acquisitions.
If
the holders of our options and warrants choose to exercise their purchase rights
and sell the underlying shares of common stock in the public market, or if
holders of currently restricted shares of our common stock choose to sell such
shares in the public market under Rule 144 or otherwise, the prevailing market
price for our common stock may decline. The sale of shares issued upon the
exercise of our derivative securities could also further dilute the holdings
of
our then existing stockholders, including holders of the notes that receive
shares of our common stock upon conversion of their notes. In addition, future
public sales of shares of our common stock could impair our ability to raise
capital by offering equity securities.
Provisions
in our charter and in our share purchase rights plan and Delaware law could
make
it more difficult for a third party to acquire us, discourage a takeover and
adversely affect our stockholders.
Certain
provisions of our certificate of incorporation and our share purchase rights
plan, either alone or in combination with each other, could have the effect
of
making more difficult, delaying or deterring unsolicited attempts by others
to
obtain control of our company, even when these attempts may be in the best
interests of our stockholders. Our certificate of incorporation currently
authorizes 150,000,000 shares of common stock to be issued. Based on our
outstanding capitalization at June 30, 2008, and assuming the exercise of all
outstanding options and warrants and the issuance of the maximum number of
shares of common stock issuable upon conversion of all of our outstanding
convertible notes, there are still a substantial number of shares of common
stock available for issuance by our board of directors without stockholder
approval. Our certificate of incorporation also authorizes our board of
directors, without stockholder approval, to issue up to 5,000,000 shares of
preferred stock, in one or more series, which could have voting and conversion
rights that adversely affect or dilute the voting power of the holders of our
common stock, none of which has been issued to date. Furthermore, under our
share purchase rights plan, often referred to as a “poison pill,” if anyone
acquires 15% or more of our outstanding shares, all of our stockholders (other
than the acquirer) have the right to purchase additional shares of our common
stock for a fixed price. We are also subject to the provisions of
Section 203 of the Delaware General Corporation Law, which could prevent us
from engaging in a business combination with a 15% or greater stockholder for
a
period of three years from the date it acquired that status unless appropriate
board or stockholder approvals are obtained.
These
provisions could deter unsolicited takeovers or delay or prevent changes in
our
control or management, including transactions in which stockholders might
otherwise receive a premium for their shares over the then current market price.
These provisions may also limit the ability of stockholders to approve
transactions that they may deem to be in their best interests.
Due
to the recent downturn in the market, certain of the marketable securities
we
own may take longer to auction than initially
anticipated.
Marketable
securities consist of investment grade auction rate securities. Commencing
with
the third quarter of fiscal 2007, our balance of auction rate securities failed
to auction due to sell orders exceeding buy orders. These funds will not be
available to us until a successful auction occurs or a buyer is found outside
the auction process. As a result, $13.0 million of auction rate securities
were
written down to $10.7 million, based on our analysis, as an unrealized pre-tax
loss of $2.3 million to reflect a temporary decrease in fair value. We believe
this decrease in fair value is temporary due to general macroeconomic market
conditions, as the underlying securities have maintained their investment grade
rating. There are no assurances that a successful auction will occur, or that
we
can find a buyer outside the auction process.
USE
OF PROCEEDS
We
will
not receive any proceeds from the sale of common stock by the selling
stockholders named in this prospectus.
We
have
agreed to pay certain expenses in connection with the registration of the shares
being offered by the selling stockholders.
SELLING
STOCKHOLDERs
The
following table sets forth certain information regarding the selling
stockholders, based on information provided to us by the selling stockholders.
Percentage ownership of common stock after the offering assumes the sale of
all
of the shares being offered by the selling stockholders pursuant to this
prospectus.
|
Selling
Stockholder (1)
|
Number
of Shares of Common Stock Beneficially Owned Prior to the
Offering
|
Shares
Being
Offered
|
Common
Stock Beneficially
Owned
After the Offering
|
|
Number
of
Shares
|
Percent
of
Outstanding
Shares
|
|
Shawn
Carter
|
129,690
|
129,690
|
0
|
0
|
|
John
Meneilly
|
14,410
|
14,410
|
0
|
0
|
|
______________
|
|
|
|
|
| |
|
|
|
|
(1)
We
issued the shares to the selling stockholders in connection with our March
2007
acquisition of certain of the assets and rights related to the business of
licensing and brand managing the Rocawear® names, brands, trademarks,
intellectual property and related names worldwide (the “Rocawear Assets”). The
shares were issued as payment of additional consideration relating to the
achievement of revenue and performance targets involving the licensing of the
Rocawear Assets for certain specified periods (the “First Earn-Out”). Pursuant
to the agreements we entered into with the selling stockholders we will also
be
paying to them an aggregate of $1,071,077 as part of the First Earn-Out. We
also
agreed to register the shares for resale by the selling stockholders. Mr.
Carter, the founder of Rocawear, remains actively involved in the brand as
the
core licensee, and has been contracted by us to aid with the creative direction
of the brand. Mr. Carter also provides endorsement services to us pursuant
to an
agreement we entered into with him in March 2007. Scion LLC is a brand
management and licensing company formed by us with Mr. Carter in March 2007
to
buy, create and develop brands across a spectrum of consumer product categories.
On November 7, 2007, Scion completed its first brand acquisition when its
wholly-owned subsidiary purchased Artful Dodger™, an exclusive, high end urban
apparel brand for a purchase price of $15.0 million. Concurrent with the
acquisition of Artful Dodger, Scion entered into a license agreement
covering all major apparel categories for the United States
PLAN
OF DISTRIBUTION
We
have
been advised that the selling stockholders, which may include pledgees, donees,
transferees or other successors-in-interest who have received shares from the
selling stockholders after the date of this prospectus, may from time to time,
sell all or a portion of the shares offered hereby in privately negotiated
transactions or otherwise, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to these market prices or
at
negotiated prices.
All
costs, expenses and fees in connection with the registration of the shares
offered by this prospectus other than those of any counsel for the selling
stockholders, shall be borne by us. Brokerage costs, if any, attributable to
the
sale of the selling stockholder’s shares will be borne by the selling
stockholder.
The
shares may be sold by the selling stockholders by one or more of the following
methods:
| · |
block
trades in which the broker or dealer so engaged will attempt to sell
the
shares as agent but may position and resell a portion of the shares
as
principal to facilitate the
transaction;
|
| · |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
| · |
over-the
counter distribution in accordance with the rules of the Nasdaq National
Market;
|
| · |
ordinary
brokerage transactions and transactions in which the broker solicits
purchasers;
|
| · |
through
the writing of
put or
call options on the shares or other hedging transactions (including
the
issuance of derivative securities), whether the options or other
derivative securities are listed on an option or other exchange or
otherwise;
|
| · |
privately
negotiated transactions;
|
| · |
a
combination of any such methods of sale;
and
|
| · |
any
other method permitted pursuant to applicable
law.
|
The
transactions described above may or may not involve brokers or
dealers.
The
selling stockholders will not be restricted as to the price or prices at which
the selling stockholders may sell their shares. Sales of shares by the selling
stockholders may depress the market price of our common stock since the number
of shares which may be sold by the selling stockholder may be relatively large
compared to the historical average weekly trading of our common stock.
Accordingly, if the selling stockholders were to sell, or attempt to sell,
all
of such shares at once or during a short time period, we believe such a
transaction could adversely affect the market price of our common stock.
From
time
to time the selling stockholders may pledge their shares under margin provisions
of customer agreements with their brokers or under loans or other arrangements
with third parties. Upon a default by the selling stockholders, the broker
or
such third party may offer and sell any pledged shares from time to
time.
In
effecting sales, brokers and dealers engaged by a selling stockholder may
arrange for other brokers or dealers to participate in the sales as agents
or
principals. Brokers or dealers may receive commissions or discounts from the
selling stockholder or, if the broker-dealer acts as agent for the purchaser
of
such shares, from the purchaser in amounts to be negotiated, which compensation
as to a particular broker dealer might be in excess of customary commissions
which are not expected to exceed those customary in the types of transactions
involved. Broker-dealers may agree with the selling stockholder to sell a
specified number of such shares at a stipulated price per share, and to the
extent the broker-dealer is unable to do so acting as agent for a selling
stockholder, to purchase as principal any unsold shares at the price required
to
fulfill the broker-dealer commitment to such selling stockholder. Broker-dealers
who acquire shares as principal may then resell those shares from time to time
in transactions that are:
| · |
in
the over-the counter market or
otherwise;
|
| · |
at
prices and on terms prevailing at the time of
sale;
|
| · |
at
prices related to the then-current market price;
or
|
| · |
in
negotiated transactions.
|
These
resales may involve block transactions or sales to and through other
broker-dealers, including any of the transactions described above. In connection
with these sales, these broker-dealers may pay to or receive from the purchasers
of those shares commissions as described above. A selling stockholder may also
sell the shares in open market transactions under Rule 144 under the Securities
Act, rather than under this prospectus.
The
selling stockholders and any broker-dealers or agents that participate with
the
selling stockholder(s) in sales of the shares may be deemed to be “underwriters”
within the meaning of the Securities Act in connection with these sales. In
this
event, any commissions received by these broker-dealers or agents and any profit
on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
We
have
agreed to indemnify the selling stockholders against certain liabilities under
the Securities Act. The selling stockholder(s) may agree to indemnify any agent,
dealer or broker-dealer that participates in transactions involving sales of
the
shares against certain liabilities, including liabilities arising under the
Securities Act.
The
selling stockholders are subject to applicable provisions of the Securities
Exchange Act of 1934, or Exchange Act, and the SEC’s rules and regulations,
including Regulation M, which provisions may limit the timing of purchases
and
sales of the shares by the selling stockholders.
In
order
to comply with certain states’ securities laws, if applicable, the shares may be
sold in those jurisdictions only through registered or licensed brokers or
dealers. In certain states the shares may not be sold unless the shares have
been registered or qualified for sale in such state, or unless an exemption
from
registration or qualification is available and is obtained.
LEGAL
MATTERS
The
validity of the common stock offered by this prospectus will be passed upon
for
us by Blank Rome LLP, New York, New York.
The
consolidated financial statements and schedule as of December 31, 2007 and
2006 and for each of the three years in the period ended December 31, 2007
and
management’s assessment of the effectiveness of internal control over financial
reporting as of December 31, 2007 incorporated by reference in this
Prospectus have been so incorporated in reliance on the reports of BDO Seidman,
LLP, an independent registered public accounting firm, incorporated herein
by
reference given on the authority of said firm as experts in auditing and
accounting.
The
financial statements of Official Pillowtex LLC as of December 31, 2006 and
for
the year then ended incorporated by reference in this Prospectus have
been
so incorporated in reliance on the reports of BDO Seidman, LLP, an independent
registered public accounting firm, incorporated herein by reference given on
the
authority of said firm as experts in auditing and accounting.
The
financial statements of Rocawear Licensing LLC as of December 31, 2006 and
for
the year then ended incorporated by reference in this Prospectus have
been
so incorporated in reliance on the reports of BDO Seidman, LLP, an independent
registered public accounting firm, incorporated herein by reference given on
the
authority of said firm as experts in auditing and accounting..
WHERE
YOU CAN FIND MORE INFORMATION
We
are
subject to the informational requirements of the Exchange Act and we file
reports and other information with the SEC.
You
may
read and copy any of the reports, statements, or other information we file
with
the SEC at its Public Reference Section at 100 F Street, N.E., Room 1580,
Washington, D.C. 20549 at prescribed rates. Information on the operation of
the
Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.
The
SEC also maintains a Web site at http://www.sec.gov that contains reports,
proxy
statements and other information regarding issuers that file electronically
with
the SEC. In addition, the Nasdaq Stock Market maintains a Web site at
http://www.nasdaq.com that contains reports, proxy statements and other
information filed by us.
Our
internet address is www.iconixbrand.com.
We make
available free of charge, on or through our web site, annual reports on form
10-K, quarterly reports on form 10-Q, current reports on Form 8-K and amendments
to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act as soon as reasonably practicable after we electronically file
such
material with, or furnish it to, the SEC. Information contained on our web
site
is not part of this prospectus.
This
prospectus constitutes a part of a registration statement on Form S-3 that
we
have filed with the SEC under the Securities Act. This prospectus does not
contain all of the information set forth in the registration statement, certain
parts of which are omitted in accordance with the rules and regulations of
the
SEC. For further information about us and our securities we refer you to the
registration statement and the accompanying exhibits and schedules. The
registration statement may be inspected at the Public Reference Room maintained
by the SEC at the address set forth in the first paragraph of this section.
Statements contained in this prospectus regarding the contents of any contract
or any other document filed as an exhibit are not necessarily complete. In
each
instance, reference is made to the copy of such contract or document filed
as an
exhibit to the registration statement, and each statement is qualified in all
respects by that reference.
INFORMATION
INCORPORATED BY REFERENCE
The
SEC
allows us to “incorporate by reference” into this prospectus the information we
file with them. This means that we may disclose important information to you
by
referring you to other documents filed separately with the SEC. The information
we incorporate by reference into this prospectus is legally deemed to be a
part
of this prospectus, except for any information superseded by other information
contained in, or incorporated by reference into, this prospectus.
The
following documents filed by us with the SEC are hereby incorporated by
reference in this prospectus:
| · |
our
current reports on Form 8-K/A filed April 25, 2007 and December 4,
2007;
|
| · |
our
annual report on Form 10-K for the fiscal year ended December 31,
2007;
|
| · |
our
quarterly report on Form 10-Q for the quarterly period ended March
31,
2008;
|
| · |
our
quarterly report on Form 10-Q for the quarterly period ended June
30,
2008;
|
| · |
our
current reports on Form 8-K filed January 29, February 25, May 6,
May 21,
and August 5, 2008; and
|
| · |
the
description of our common stock and our preferred share purchase
rights
contained in our registration statements on Form 8-A, filed with
the SEC
and all amendments or reports filed by us for the purpose of updating
those descriptions.
|
All
reports and other documents subsequently filed by us pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this prospectus and
prior to the termination of this offering shall be deemed to be incorporated
by
reference in this prospectus and to be part hereof from the dates of filing
of
such reports and other documents; provided, however, that we are not
incorporating any information furnished under either Item 2.02 or Item 7.01
of
any Current Report on Form 8-K.
We
hereby
undertake to provide without charge to each person, including any beneficial
owner, to whom a copy of this prospectus is delivered, upon written or oral
request of any such person, a copy of any and all of the information that has
been or may be incorporated by reference in this prospectus, other than exhibits
to such documents, unless the exhibits are specifically incorporated by
reference into the documents that this prospectus incorporates. Requests for
such copies should be directed to our corporate secretary, at the following
address or by calling the following telephone number:
Iconix
Brand Group, Inc.
1450
Broadway
New
York,
New York 10018
(212)
730-0030
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution.
The
following table sets forth fees and expenses payable by the registrant, other
than underwriting discounts and commissions, in connection with the preparation
of this registration statement and the issuance and distribution of the common
stock being registered hereby. All of the amounts shown are
estimates.
|
SEC
registration fees
|
|
$
|
77.98
|
|
|
Legal
fees and expenses
|
|
$
|
30,000.00
|
|
|
Accounting
fees and expenses
|
|
$
|
20,000.00
|
|
|
Miscellaneous
expenses
|
|
$
|
0.00
|
|
|
Total
|
|
$
|
50,077.98
|
|
__________
Item
15. Indemnification of Directors and Officers
Section
145 of the Delaware General Corporation Law, or DGCL, permits a corporation,
under specified circumstances, to indemnify its directors, officers, employees
or agents against expenses (including attorneys’ fees), judgments, fines and
amounts paid in settlements actually and reasonably incurred by them in
connection with any action, suit or proceeding brought by third parties by
reason of the fact that they were or are directors, officers, employees or
agents of the corporation, if such directors, officers, employees or agents
acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, i.e., one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect
to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent
that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers, employees or agents are
fairly and reasonably entitled to indemnity for such expenses despite such
adjudication of liability.
Section
102(b)(7) of the DGCL provides that a certificate of incorporation may contain
a
provision eliminating or limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director provided that such provision shall not eliminate or limit
the
liability of a director:
| |
(1) |
for any breach of the director’s duty of loyalty to the
corporation or its stockholders, |
| |
(2)
|
for
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of
law,
|
| |
(3)
|
under
Section 174 (relating to liability for unauthorized acquisitions
or
redemptions of, or dividends on, capital stock) of the DGCL,
or
|
|
|
(4) |
for
any transaction from which the director derived an improper personal
benefit.
|
Our
certificate of incorporation provides that all persons who we are empowered
to
indemnify pursuant to the provisions of Section 145 of the DGCL (or any similar
provision or provisions of applicable law at the time in effect), shall be
indemnified by us to the full extent permitted thereby. The foregoing right
of
indemnification shall not be deemed to be exclusive of any other rights to
which
those seeking indemnification may be entitled under any by-law, agreement,
vote
of stockholders or disinterested directors, or otherwise.
Our
by-laws provide that we shall indemnify to the fullest extent provided for
or
permitted by law each of our officers and/or directors involved in, or made
or
threatened to be made a party to, any action, suit, claim or proceeding,
arbitration, alternative dispute resolution mechanism, investigation,
administrative or legislative hearing or any other actual, threatened, pending
or completed proceeding, whether civil or criminal, or whether formal or
informal, and including an action by or in the right of our company or any
enterprise, and including appeals therein by reason of the fact that such
officer and/or director or such person’s testator or intestate (an “Indemnitee”)
(i) is or was a director or officer of our company or (ii) while serving as
a
director or officer of our company, is or was serving, at our request, as a
director, officer, or in any other capacity, of any other enterprise, against
any and all judgments, fines, penalties, amounts paid in settlement, and
expenses, including attorneys’ fees, actually and reasonably incurred as a
result of or in connection with any proceeding, except as provided in Section
2(b) of Article VII of the by-laws. Section 2(b) of Article VII of the by-laws
provides that no indemnification shall be made if a judgment or other final
adjudication adverse to him or her establishes that such Indemnitee’s acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that such Indemnitee
personally gained in fact a financial profit or other advantage to which he
or
she was not legally entitled. In addition, Section 2(b) provides that no
indemnification shall be made with respect to any proceeding initiated by any
Indemnitee against our company, or a director or officer of our company, other
than to enforce the terms of the indemnification provisions of the by-laws
unless such proceeding was authorized by our Board. Further, no indemnification
shall be made with respect to any settlement or compromise of any proceeding
unless and until we have consented to such settlement or
compromise.
Our
certificate of incorporation also provides that no director shall be personally
liable to our company or our stockholders for any monetary damages for breaches
of fiduciary duty as a director, except for liability (i) for any breach of the
director’s duty of loyalty to our company or stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) under Section 174 of the DGCL; or (iv) for any
transaction from which the director derived an improper personal
benefit.
Our
employment agreements with Mr. Neil Cole, our chief executive officer, Mr.
Andrew Tarshis, our senior vice president and general counsel, and Ms. Deborah
Sorell Stehr, our senior vice president - business affairs and licensing,
generally provide that we shall indemnify each of them for the consequences
of
all acts and decisions made by such person while performing services for us.
Mr.
Cole’s employment agreement also requires us to cover Mr. Cole under our
directors’ and officers’ liability insurance on the same basis as we cover our
other senior executive officers and directors and the employment agreements
for
Mr. Tarshis and Ms. Stehr provide that such persons will be added to our
directors’ and officers’ liability insurance.
We
have
obtained an insurance policy providing for indemnification of officers and
directors and certain other persons against liabilities and expenses incurred
by
any of them in certain stated proceedings and conditions.
The
indemnification provisions in our certificate of incorporation and bylaws may
be
sufficiently broad to permit indemnification of our directors and officers
for
liabilities arising under the Securities Act of 1933, or the Securities
Act.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions or otherwise, we have been advised that in the opinion
of
the Securities and Exchange Commission, or SEC, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
Item
16. Exhibits
The
following exhibits are filed herewith:
|
Number
|
|
Exhibit
Title
|
|
5
|
|
Opinion
of Blank Rome LLP.
|
| |
|
|
|
23.1
|
|
Consent
of BDO Seidman, LLP, Independent Registered Public Accounting Firm
of
Iconix Brand Group, Inc.
|
| |
|
|
|
23.3
|
|
Consent
of BDO Seidman, LLP, Independent Registered Public Accounting Firm
of
Rocawear Licensing LLC
|
| |
|
|
|
23.4
|
|
Consent
of BDO Seidman, LLP, Independent Registered Public Accounting Firm
of
Official Pillowtex LLC
|
| |
|
|
|
23.5
|
|
Consent
of Blank Rome LLP (included in Exhibit 5).
|
| |
|
|
|
24
|
|
Power
of Attorney (included on the signature page of the Registration
Statement).
|
Item
17. Undertakings
The
undersigned registrant hereby undertakes:
(a) To
file,
during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
|
|
(i) |
To
include any prospectus required by Section 10(a)(3) of the Securities
Act;
|
| |
(ii) |
To reflect in the prospectus any facts
or
events arising after the effective date of the registration statement
(or
the most recent post-effective amendment thereof) which, individually
or
in the aggregate, represent a fundamental change in the information
set
forth in the registration statement. Notwithstanding the foregoing,
any
increase or decrease in volume of securities offered (if the total
dollar
value of securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimate maximum
offering range may be reflected in the form of prospectus filed with
the
SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20% change in maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the
effective registration statement; and |
| |
(iii) |
To include any material information
with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in
the
registration statement; |
provided,
however,
that
paragraphs (a)(i), (a)(ii) and (a)(iii) do not apply if the information required
to be included in a post-effective amendment by those paragraphs is contained
in
reports filed with or furnished to the SEC by the us pursuant to Section 13
or
Section 15(d) of the Exchange Act, that are incorporated by reference in the
registration statement, or is contained in a form of prospectus filed pursuant
to Rule 424(b) that is part of the registration statement.
(b) That,
for
the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time be deemed to be the initial bona
fide
offering
thereof.
(c) To
remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the
offering.
(d) That,
for
the purpose of determining liability under the Securities Act to any purchaser
each prospectus required to be filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than registration
statements relying on Rule 430B or other prospectuses filed in reliance on
Rule
430A shall be deemed to be part of and included in the registration statement
as
of the date it is first used after effectiveness. Provided,
however, that
no
statement made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed incorporated
by reference into the registration statement or prospectus that is part of
the
registration statement will, as to a purchaser with a time of contract of sale
prior to such effective date, supersede or modify any statement that was made
in
the registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such date of first
use.
(e) That,
for
purposes of determining any liability under the Securities Act, each filing
of
our annual report pursuant to section 13(a) or section 15(d) of the Exchange
Act
(and, where applicable, each filing of an employee benefit plan’s annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(f) Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion
of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by one of our directors, officers or controlling
persons in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel
the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Securities Act and will be governed
by
the final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies
that
it has reasonable grounds to believe that it meets all of the requirements
for
filing on Form S-3 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
New
York, State of New York, on August 11, 2008.
|
ICONIX
BRAND GROUP, INC.
|
| |
|
|
By:
|
|
/s/
Neil Cole
|
| |
|
Neil
Cole,
Chairman
of the Board, President and Chief Executive
Officer
|
POWER
OF ATTORNEY
Each
person whose signature appears below constitutes and appoints each of Neil
Cole
and Warren Clamen his true and lawful attorney-in-fact and agent with full
powers of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each
and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could
do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, acting alone, or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated:
|
Name
|
Title
|
Date
|
| |
|
|
|
/s/
Neil Cole
Neil
Cole
|
|
Chairman
of the Board, Chief Executive Officer and Treasurer (Principal
Executive
Officer)
|
|
August
11, 2008
|
|
/s/
Warren Clamen
Warren
Clamen
|
|
Chief
Financial Officer (Principal Financial and Accounting
Officer)
|
|
August
11, 2008
|
|
/s/
Drew Cohen
Drew
Cohen
|
|
Director
|
|
August
11, 2008
|
|
/s/
F. Peter Cuneo
F.
Peter Cuneo
|
|
Director
|
|
August
11, 2008
|
|
/s/
Barry Emanuel
Barry
Emanuel
|
|
Director
|
|
August
11, 2008
|
|
/s/
Mark Friedman
Mark
Friedman
|
|
Director
|
|
August
11, 2008
|
|
/s/
James A. Marcum
James
A. Marcum
|
|
Director
|
|
August
11, 2008
|
|
/s/
Steven Mendelow
Steven
Mendelow
|
|
Director
|
|
August
11, 2008
|
EXHIBIT
INDEX
|
Number
|
|
Exhibit
Title
|
|
5
|
|
Opinion
of Blank Rome LLP.
|
|
23.1
|
|
Consent
of BDO Seidman, LLP, Independent Registered Public Accounting Firm
of
Iconix Brand Group, Inc.
|
|
23.2
|
|
Consent
of BDO Seidman, LLP, Independent Registered Public Accounting Firm
of
Rocawear Licensing LLC
|
|
23.3
|
|
Consent
of BDO Seidman, LLP, Independent Registered Public Accounting Firm
of
Official Pillowtex LLC
|
|
23.4
|
|
Consent
of Blank Rome LLP (included in Exhibit 5).
|
|
24
|
|
Power
of Attorney (included on the signature page of the Registration
Statement).
|