As
filed with the Securities and Exchange Commission on April 28, 2009
Registration
No. 333
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)
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(I.R.S.
employer
identification
no.)
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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:
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: x
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. x
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:
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Large
accelerated filer x
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Accelerated
filer o
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Non-accelerated
filer o (Do
not check if a smaller reporting
company)
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Smaller
reporting company o
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CALCULATION
OF REGISTRATION FEE
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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
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Proposed maximum
aggregate offering
price
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Amount of
registration fee
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Common
Stock, par value $.001 per share(1)
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707,547 |
(2)(3) |
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$ |
11.56 |
(4) |
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$ |
8,179,243 |
(4) |
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$ |
456.40 |
(4) |
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(1)
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All
of the shares of common stock being registered hereby are being offered
for the account of a selling stockholder who acquired such shares in a
private transaction. 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 April 21,
2009.
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PROSPECTUS
ICONIX
BRAND GROUP, INC.
707,547
shares of common stock
The
selling stockholder listed on page 14 of this prospectus is offering for resale
up to 707,547 shares of the common stock of Iconix Brand Group,
Inc. The common stock may be offered from time to time by the selling
stockholder 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 stockholder.
Our
common stock is listed on the Nasdaq Global Market under the symbol
“ICON” On April 27, 2009, the last sale price of our common stock as
reported by Nasdaq was $ 12.45 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 April 28, 2009
Table of
Contents
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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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RISK
FACTORS
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3
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USE
OF PROCEEDS
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14
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SELLING
STOCKHOLDER
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14
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PLAN
OF DISTRIBUTION
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15
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LEGAL
MATTERS
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17
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EXPERTS
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17
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WHERE
YOU CAN FIND MORE INFORMATION
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17
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INFORMATION
INCORPORATED BY REFERENCE
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18
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II-5
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POWER
OF ATTORNEY
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II-5
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SUMMARY
About
Iconix Brand Group, Inc.
We are a brand management company
engaged in licensing, marketing and providing trend direction for our portfolio
of owned consumer brands. We currently own 17 brands: Candie's®,
Bongo®, Badgley Mischka®, Joe Boxer®, Rampage®, Mudd®, London Fog®, Mossimo®,
Ocean Pacific®/OP®, Danskin®, Rocawear®, Cannon®, Royal Velvet®, Fieldcrest®,
Charisma®, Starter® and Waverly®. We license our brands to leading
retailers, herein referred to as direct-to-retail, wholesalers and
suppliers for use across a wide range of product categories, including apparel,
footwear, sportswear, fashion accessories, home products and décor,
and beauty and fragrance. In addition, Scion LLC, a joint venture in
which we have a 50% investment, owns the Artful Dodger™ brand. Our
brands are sold across a variety of distribution channels, from the mass tier to
the luxury market. We support our brands with innovative advertising and
promotional campaigns designed to increase brand awareness, and provides our
licensees with coordinated trend direction 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
About the
offering and this prospectus
This
prospectus is part of a “shelf” registration statement that we have filed with
the Securities and Exchange Commission, or the SEC with respect to the resale of
up to 707,547 shares of our common stock on behalf of the selling stockholder(s)
named in this prospectus. The selling stockholder(s) 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, references in this prospectus to 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®, Starter® and Waverly® 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.
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, 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.
We
operate in a changing environment that involves numerous known and unknown risks
and uncertainties that could impact our operations. The following highlights
some of the factors that have affected, and in the future, could affect our
operations:
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.
Our
revenues are 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, herein referred to as our term loan facility, and
the asset-backed notes issued by our subsidiary IP Holdings, herein referred to
as our asset-backed notes, 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, Starter and
Waverly 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 asset-backed 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
December 31, 2008, we had consolidated debt of approximately $668.0 million,
including secured debt of $372.4 million ($255.3 million under our term loan
facility and $117.1 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:
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could
impair our liquidity;
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could
make it more difficult for us to satisfy our other
obligations;
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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;
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could
impede us from obtaining additional financing in the future for working
capital, capital expenditures, acquisitions and general corporate
purposes;
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impose
restrictions on us with respect to the use of our available cash,
including in connection with 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.
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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, Mossimo and Waverly trademarks, as well as the trademarks
acquired by us in connection with the Official-Pillowtex acquisition, and, in
the case of the 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
have experienced rapid growth in recent years. If we fail to manage this or any
future growth, our business and operating results could be harmed.
Our
business has grown dramatically over the past several years. For example, our
revenue increased from $80.7 million for the year ended December 31, 2006 to
$216.8 million for the year ended December 31, 2008. Our growth has largely
resulted from our acquisition of new brands of various sizes. Since October
2004, we acquired 15 of the 17 iconic brands we currently own and increased our
total number of licenses from approximately 18 to approximately 200.
Furthermore, we continue to evaluate and pursue appropriate acquisition
opportunities to the extent that we believe that such opportunities would be in
the best interests of our company and our stockholders.
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. In addition, as we continue to grow larger, we will likely need
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
and we continue to explore new acquisitions. However, as our competitors
continue to pursue our brand management model, acquisitions may become more
expensive and suitable acquisition candidates could become 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:
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negative
effects on reported results of operations from acquisition related charges
and amortization of acquired
intangibles;
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diversion
of management’s attention from other business
concerns;
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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;
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adverse
effects on existing licensing
relationships;
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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
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risks
of entering new domestic and international 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.
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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. In the event that we are unable to obtain debt financing on
acceptable terms for a particular acquisition, we may elect to pursue the
acquisition through the issuance by us of shares of our common stock (and in
certain cases, convertible securities) as equity consideration which 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
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 guarantee 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 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 direct-to-retail 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. Further, the
rights to our brands in Latin America and Greater China are controlled primarily
through our joint ventures in these regions and while we believe that our
partnerships in these areas will enable us to better protect our trademarks in
countries covered by the ventures, we do not control either joint venture
company and thus most decisions relating to the use and enforcement of the marks
in these countries will be subject to the approval of our local
partners.
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 Corporation or Target, Kohl's Department Stores, Inc. or
Kohl’s, Kmart Corporation or Kmart and Wal-Mart Stores, Inc. or Wal-Mart were
our four largest direct-to-retail licensees during fiscal 2008, representing
approximately 11%, 6%, 5% and 3%, respectively, of our total revenue for such
period, while Li & Fung USA was our largest wholesale licensee, representing
approximately 11% of our total revenue for such period. Our license agreement
with Target for the Mossimo trademark grants it the exclusive U.S. license for
substantially all Mossimo-branded products for a term expiring in January 2012;
our second license agreement with Target for the Fieldcrest mark grants it the
exclusive U.S. license for substantially all Fieldcrest-branded products for an
initial term expiring in July 2010; and our third license agreement with Target
grants it the exclusive U.S. license for Waverly Home for a broad range of
Waverly Home-branded products for a term expiring in January
2011. 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. 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. Our license agreement with Wal-Mart for the Ocean
Pacific and OP trademarks grants it the exclusive license in the U.S., China,
India and Brazil for substantially all Ocean Pacific/OP-branded products for an
term expiring June 30, 2011; our second license agreement with Wal-Mart for the
Danskin Now trademark grants it the exclusive license in the U.S. Canada,
Argentina, and Central America for substantially all Danskin Now-branded
products for an initial term expiring December 2010; and, our third license
agreement with Wal-Mart for the Starter trademark grants it the exclusive
license in the U.S., Canada and Mexico for substantially all Starter-branded
products for an initial term expiring December 2013. Our license agreements with
Li & Fung USA grant it the exclusive worldwide license with respect to our
Royal Velvet trademarks for a variety of products sold exclusively at Bed Bath
& Beyond in the U.S., and the exclusive license (outside of the U.S.
and Canada) for the Cannon trademark for a variety of products. The term for
each of these licenses with Li & Fung USA expires on December 31, 2013.
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 chief executive officer 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
success as a marketer and 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
a term expiring on January 31, 2012, 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
net income or increase our net loss.
As of
December 31, 2008, goodwill represented approximately $144.7 million, or
approximately 10% of our total assets, and trademarks and other intangible
assets represented approximately $1,060.5 million, or approximately 75% of
our total assets. Under Statement of Financial Accounting Standards (“SFAS”)
No. 142, 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 will be required to pay when our 1.875%
convertible senior subordinated notes become due in June 2012, herein referred
to as our convertible notes. Upon conversion of the convertible notes, we
will be required to pay to the holder of such notes a cash payment equal to the
par value of the notes. This part of the payment must be made in cash, not in
shares of our common stock. As a result, we will be required to pay a minimum of
$287.5 million 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 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. 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.
For the
years ended December 31, 2008 and prior, in accordance with Statement of
Financial Accounting Standard 141 “Business Combinations” 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 Financial Accounting Standards Board issued SFAS No. 141
(revised 2007), “Business Combinations”, 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. This statement 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, this statement 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 conditions.
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 hedges with affiliates of Merrill Lynch and Lehman Brothers,
herein referred to as the counterparties, 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 note holder 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.
On
September 15, 2008 and October 3, 2008, respectively, Lehman Holdings and Lehman
OTC, filed for protection under Chapter 11 of the United States Bankruptcy Code
in the United States Bankruptcy Court in the Southern District of New
York. We currently believe, although there can be no assurance, that
the bankruptcy filings and their potential impact on these entities will not
have a material adverse effect on our financial position, results of operations
or cash flows. We will continue to monitor the bankruptcy filings of Lehman
Holdings and Lehman OTC.
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 December 31, 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, if at
all.
Marketable
securities consist of auction rate securities. From the third quarter of 2007 to
the present, 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 have been written down to
approximately $7.5 million, based on our analysis, as an unrealized pre-tax loss
to reflect a temporary decrease in fair value, reflected as an accumulated other
comprehensive loss of $5.5 million in the stockholders’ equity section of our
consolidated balance sheet. We estimated the fair value of our auction rate
securities using a discounted cash flow model where we used the expected rate of
interest to be received. We believe this decrease in fair value is
temporary due to general macroeconomic market conditions, and interest is being
paid in full as scheduled. Further, we have the ability to hold the
securities until an anticipated full redemption, and we have no reason to
believe that any of the underlying issuers of these auction rate securities or
its third-party insurers are presently at risk of default. However,
there are no assurances that a successful auction will occur, or that we can
find a buyer outside the auction process.
A
decline in general economic conditions resulting in a decrease in
consumer-spending levels and an inability to access capital may adversely affect
our business.
Many
economic factors beyond our control may impact our forecasts and actual
performance. These factors include consumer confidence, consumer spending
levels, employment levels, availability of consumer credit, recession,
deflation, inflation, a general slowdown of the U.S. economy or an uncertain
economic outlook. Furthermore, changes in the credit and capital markets,
including market disruptions, limited liquidity and interest rate fluctuations,
may increase the cost of financing or restrict our access to potential sources
of capital for future acquisitions.
USE
OF PROCEEDS
We will
not receive any proceeds from the sale of common stock by any selling
stockholder named in this prospectus.
We have
agreed to pay certain expenses in connection with the registration of the shares
being offered by the selling stockholder.
SELLING
STOCKHOLDER
The
following table sets forth certain information regarding the selling
stockholder, based on information provided to us by the selling
stockholder. Percentage ownership of common stock after the offering
assumes the sale of all of the shares being offered by the selling stockholder
pursuant to this prospectus.
|
|
|
Number of Shares
|
|
|
|
|
|
Common Stock
Beneficially
Owned After the
|
|
| |
|
of Common Stock
|
|
|
|
|
|
Offering
|
|
|
Selling Stockholder (1)
|
|
Beneficially Owned
Prior to the
Offering
|
|
|
Shares
Being
Offered
|
|
|
Number
of
Shares
|
|
|
Percent of
Outstanding
Shares
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Triumph
Apparel Corporation
|
|
|
707,547 |
(2) |
|
|
707,547 |
(3) |
|
|
0 |
|
|
|
0 |
|
_____________________
|
(1)
|
We issued the shares to the
selling stockholder pursuant to an agreement dated April 8, 2009 between
us, our subsidiary, Studio IP Holdings LLC, Triumph Apparel Corporation
(“Triumph”) and Danskin Now, Inc. (the “Agreement”) relating to our March
2007 acquisition of certain of the assets and rights related to the
business of licensing and brand managing the Danskin® names, brands,
trademarks, intellectual property and related names worldwide (the
“Danskin Assets”). The shares were issued as payment of additional
consideration relating to the achievement of revenue and performance
targets involving the licensing of the Danskin
Assets.
|
|
(2)
|
The 707,547 shares being offered
hereby have been pledged by Triumph to Wells Fargo Trade Capital Services,
Inc. (“WFTCS”). Mr. Kenneth S. Lazar, the Chief Executive Officer of
Triumph Apparel Corporation, has voting and/or investment control over the
shares.
|
PLAN
OF DISTRIBUTION
Pursuant
to the Agreement, the selling stockholder has agreed to sell the shares being
offered hereby in open market transactions. The selling stockholder has also
agreed to sell no more than 25% of the aggregate number of shares being offered
hereby in any calendar week and no more than 10% of the aggregate shares being
offered hereby on any one trading day. The selling stockholder has
entered into an agreement with Wells Fargo Brokerage Services (“WFBS”) to sell
up to a maximum of $8,500,000 of the shares for a fee of $0.05 per share and
certain fees imposed under Section 31 of the Securities Exchange Act of 1934
(the “Exchange Act”).
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
stockholder, 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, other than the costs imposed by WFBS described above,
which will be paid by us..
The
shares may be sold on behalf of the selling stockholder by WFBS 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;
purchases
by a broker or dealer as principal and resale by such broker dealer for its
account;
over-the
counter distribution in accordance with the rules of the Nasdaq Stock
Market;
ordinary
brokerage transactions and transactions in which the broker solicits
purchasers;
a
combination of any such methods of sale; and
any other
method of open market transactions permitted pursuant to applicable
law.
In
addition to the foregoing, the Agreement provides that any sales that may
be made in privately negotiated transactions shall be at a per share price not
less than the average closing sales prices for the common stock for the ten
trading days immediately preceding the date of such private
sales. Moreover, the Agreement could be modified in the future to
allow sales to be made through brokers or dealers or otherwise:
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;
and
in
privately negotiated transactions at prices other than currently allowed under
the Agreement.
The open
market sales of the shares being offered hereby contemplated by the Agreement
are expected to be made at market prices prevailing at the time of sale.
However, if any future sales are made by selling stockholder in
privately negotiated transactions or otherwise, it is possible that such shares
may be sold 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.
Except as
set forth in the Agreement, the selling stockholder will not be restricted as to
the price or prices at which the selling stockholder may sell its
shares. Sales of shares by the selling stockholder 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 stockholder 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.
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
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.
A selling
stockholder and any broker-dealers or agents that participate with a selling
stockholder 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.
A selling
stockholder 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.
Any
selling stockholder of the shares being offered under this prospectus are
subject to applicable provisions of the 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.
EXPERTS
The
financial statements and schedule of Iconix Brand Group, Inc. as of
December 31, 2008 and 2007 and for each of the three years in the period ended
December 31, 2008 and management's assessment of the effectiveness of internal
control over financial reporting as of December 31, 2008 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, proxy statements 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
and information 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. Our SEC file
number for documents we file under the Exchange Act is 001-10593.
The
following documents filed by us with the SEC are hereby incorporated by
reference in this prospectus:
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|
·
|
our annual report on Form 10-K
for the fiscal year ended December 31, 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
|
|
$ |
$456.40 |
|
|
Legal
fees and expenses
|
|
$ |
20,000.00 |
|
|
Accounting
fees and expenses
|
|
$ |
10,000.00 |
|
|
Miscellaneous
expenses
|
|
$ |
4,543.60 |
|
|
Total
|
|
$ |
35.000.00 |
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__________
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:
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|
(1)
|
for
any breach of the director’s duty of loyalty to the corporation or its
stockholders,
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|
|
(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
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|
|
(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(c) of Article VII of the by-laws. Section 2(c) 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(c) 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 agreement with Mr. Neil Cole, our chief executive officer, provides
that we shall indemnify him to the extent provided in our by-laws, Our
employment agreements with Mr. Andrew Tarshis, our executive vice president and
general counsel, and Mr. Warren Clamen, our executive vice
president and chief financial officer 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 that we cover him under our directors’ and officers’
liability insurance on the same basis as we cover our other senior executive
officers and directors.
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 by-laws may
be sufficiently broad to permit indemnification of our directors and officers
for liabilities arising under 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 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:
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|
|
|
| |
|
|
|
5
|
|
Opinion
of Blank Rome LLP.
|
| |
|
|
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23.1
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Consent
of BDO Seidman, LLP, Independent Registered Public Accounting Firm of
Iconix Brand Group, Inc.
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| |
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23.2
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Consent
of Blank Rome LLP (included in Exhibit 5).
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| |
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24
|
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Power
of Attorney (included on the signature page of the Registration
Statement).
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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:
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|
(i)
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To
include any prospectus required by Section 10(a)(3) of the Securities
Act;
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|
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(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 percent change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the
effective registration statement;
and
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|
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(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 us pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, or 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 April 27, 2009.
|
ICONIX
BRAND GROUP, INC.
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|
|
|
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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 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
|
|
Chairman
of the Board, Chief Executive Officer and
|
|
April
27, 2009
|
|
Neil
Cole
|
|
Director
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Warren Clamen
|
|
Chief
Financial Officer (Principal Financial and
|
|
April
27, 2009
|
|
Warren
Clamen
|
|
Accounting
Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Drew Cohen
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|
Director
|
|
April
27, 2009
|
|
Drew
Cohen
|
|
|
|
|
|
|
|
|
|
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|
/s/ F. Peter Cuneo
|
|
Director
|
|
April
27, 2009
|
|
F.
Peter Cuneo
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Barry Emanuel
|
|
Director
|
|
April
27, 2009
|
|
Barry
Emanuel
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Mark Friedman
|
|
Director
|
|
April
27, 2009
|
|
Mark
Friedman
|
|
|
|
|
|
|
|
|
|
|
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/s/ James A. Marcum
|
|
Director
|
|
April
27, 2009
|
|
James
A. Marcum
|
|
|
|
|
|
|
|
|
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/s/ Steven Mendelow
|
|
Director
|
|
April
27, 2009
|
|
Steven
Mendelow
|
|
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|
|
EXHIBIT
INDEX
|
|
|
|
| |
|
|
|
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 Blank Rome LLP (included in Exhibit 5).
|
| |
|
|
|
24
|
|
Power
of Attorney (included on the signature page of the Registration
Statement).
|