Item 1.01
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Entry into a Material Definitive Agreement.
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Merger Agreement
On
June 11, 2021, Iconix Brand Group, Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan
of Merger (the “Merger Agreement”) with Iconix Acquisition LLC, a Delaware limited liability company (“Parent”),
and Iconix Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Parent (“Purchaser”).
Pursuant
to the Merger Agreement, and upon the terms and subject to the conditions thereof, Purchaser agreed to commence a tender offer (such offer,
as amended from time to time as permitted by the Merger Agreement, the “Offer”) to purchase all of the outstanding
shares of common stock, par value $0.001 per share (the “Company Common Stock”), of the Company (collectively, the
“Shares”) (other than Shares held in the Company’s treasury or owned by any subsidiary of the Company, Parent,
the Purchaser or any other wholly-owned subsidiary of Parent, in each case, as of immediately prior to the commencement of the Offer)
at a price per Share of $3.15, net to the holder of such Share, in cash, without interest and subject to any applicable tax withholding
(the “Offer Price”).
Promptly
following the completion of the Offer, upon the terms and subject to the conditions of the Merger Agreement, Purchaser will then be merged
with and into the Company, with the Company surviving as a wholly-owned subsidiary of Parent (the “Merger”). The Merger
Agreement contemplates that the Merger will be effected pursuant to Section 251(h) of the Delaware General Corporation Law (the “DGCL”),
which would not require a vote of the Company’s stockholders in order to consummate the Merger. At the effective time of the Merger
(the “Effective Time”), each Share (except as provided in the Merger Agreement) will be cancelled and converted into
the right to receive the Offer Price.
The
Merger Agreement further provides for the acceleration of vesting and cash-out at the Offer Price of (i) all restricted stock units with
respect to shares of Company Common Stock outstanding as of the time immediately prior to Purchaser’s acceptance of Shares tendered
in the Offer, and (ii) all shares of restricted Company Common Stock outstanding as of the time immediately prior to Purchaser’s
acceptance of Shares tendered in the Offer.
Under
the terms of the Merger Agreement, Purchaser’s obligation to accept and pay for Shares that are tendered in the Offer is subject
to the satisfaction or waiver of certain conditions, including: (1) that prior to the expiration of the Offer there have been validly
tendered and not properly withdrawn a number of Shares that, together with Shares then-owned, directly or indirectly, by Parent, Purchaser
or any of their respective subsidiaries, would constitute at least a majority of the total number of then issued and outstanding Shares
(excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been “received” as such term
is defined in Section 251(h) of the DGCL, by the depositary for the Offer pursuant to such procedures) (the
“Minimum Condition”) (provided, that with respect to any Shares that are deemed beneficially owned as
a result of Parent’s, the Purchaser’s or any of their respective subsidiaries’ ownership of the Company’s 5.75%
Convertible Notes due 2023 (the “Convertible Notes”), such Shares shall only be counted toward the Minimum Condition
if such Convertible Notes have been validly and effectively converted into Shares); (2) the accuracy of the
Company’s representations and warranties in the Merger Agreement, subject to specific materiality qualifications and thresholds;
(3) compliance by the Company with its covenants in the Merger Agreement in all material respects; (4) the absence of legal restraints
or orders prohibiting the consummation of the transactions contemplated by the Merger Agreement; (5) the expiration or termination of
the waiting period under the United States Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (if required); (6) the absence
of a termination of the Merger Agreement in accordance with its terms; and (7) the non-occurrence of a Company Material Adverse Effect
(as defined in the Merger Agreement) that is continuing.
The
Board of Directors of the Company approved the Merger Agreement and the transactions contemplated by the Merger Agreement, including the
Offer and the Merger, and determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the
Offer and the Merger, are fair to, and advisable and in the best interests of the Company and its stockholders, and the Company intends
to file a Solicitation/Recommendation Statement on Schedule 14D-9 with the U.S. Securities and Exchange Commission (the “SEC”)
recommending that holders of Company Common Stock tender their Shares into the Offer.
The
Merger Agreement provides that the Company, on the one hand, or Parent and Purchaser, on the other hand, may specifically enforce the
obligations of the other party under the Merger Agreement, subject to the terms of the Merger Agreement.
The
foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger
Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 2.1 and is incorporated into this report by reference.
The
Merger Agreement contains customary representations and warranties by each of Parent, Purchaser and the Company. These representations
and warranties were made solely for the benefit of the parties to the Merger Agreement and (1) may not be treated as categorical statements
of fact, but rather as a way of allocating risk to one of the parties if those statements prove inaccurate, (2) may have been qualified
in the Merger Agreement by disclosures that were made to the other party in the confidential disclosure schedules to the Merger Agreement,
(3) may apply contractual standards of “materiality” that are different from “materiality” under applicable securities
laws, (4) were made only as of the date of the Merger Agreement or such other date as may be specified in the Merger Agreement and (5)
have been included in the Merger Agreement for the purpose of allocating risk between contracting parties rather than establishing
matters as fact. Accordingly, the Merger Agreement is included with this filing only to provide investors
with information regarding the terms of the Merger Agreement, and not to provide investors with any other factual information regarding
the Company, its subsidiaries or other affiliates or their respective businesses. Investors are not third-party beneficiaries to the representations
and warranties of the Company under the Merger Agreement and should not rely on such representations and warranties or any descriptions
thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or other affiliates at
the time they were made or otherwise. Moreover, information concerning the subject matter of such representations and warranties may change
after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the Company
that is or will be contained in, or incorporated by reference into, the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
other documents that the Company files with or furnishes to the SEC.
The
Company has made customary covenants in the Merger Agreement, including, without limitation, covenants to conduct its business in all
material respects in the ordinary course consistent with past practice, including not taking certain specified actions, prior to the consummation
of the Merger. Parent and Purchaser also have made customary covenants in the Merger Agreement.
The
Company has also agreed not to solicit or initiate discussions with third parties regarding other acquisition proposals regarding the
Company and has agreed to certain restrictions on its ability to respond to such proposals, provided that the Company may enter into
discussions concerning, or provide confidential information to persons making, certain unsolicited proposals if the Company’s Board
of Directors determines that it would be inconsistent with its fiduciary duties not to do so. The Merger Agreement contains certain termination
rights for the Company and Parent, including the right of the Company, in certain circumstances, to terminate the Merger Agreement and
accept a Superior Proposal, as that term is defined in the Merger Agreement. The Company will be required to pay Parent a termination
fee equal to $1,824,000 and expense reimbursement of $10,000,000 if, among other reasons, the Merger Agreement is terminated (i) by
the Company to enter into an acquisition agreement that constitutes a Superior Proposal or (ii) by Parent because the Board of Directors
of the Company adversely changes its recommendation to stockholders to accept the Offer and tender their Shares to Purchaser in the Offer.
If the Company terminates the Merger Agreement under certain circumstances, Parent will be required to pay the Company a reverse termination
fee equal to $11,824,000.
Parent and Purchaser have obtained an equity commitment from Lancer Capital,
LLC and a debt financing commitment provided by Silver Point Capital, which Parent and Purchaser have represented to us are sufficient
for Purchaser to pay (and Parent to cause Purchaser to pay) the aggregate consideration in respect of the Shares in the Offer and the
Merger and all related fees and expenses. Lancer Capital, LLC (the “Guarantor”) delivered to Parent a letter dated
the date of the Merger Agreement in which the Guarantor committed, subject to the conditions set forth in the letter, to contribute to
Parent as equity capital an aggregate amount of $60 million to allow Parent, together with its debt financing, to pay the amounts required
to be paid by Parent and Purchaser in connection with the consummation of the Offer and the Merger. The Company is an express third-party
beneficiary of the equity commitment letter. The Guarantor also guaranteed for the benefit of the Company the payment of the reverse
termination fee and certain indemnification and reimbursement obligations under the Merger Agreement with respect to Parent’s debt
financing.
Additional
Information and Where to Find It
In
connection with the proposed acquisition of Iconix Brand Group, Inc. (“Iconix”),
Iconix Merger Sub Inc. (“Purchaser”), will commence a tender offer for all of the outstanding shares of Iconix. The
tender offer for Iconix’s common stock has not yet commenced. This report is neither an offer to buy nor the solicitation of an
offer to sell any securities. It is also not a substitute for the tender offer materials that
Purchaser will file with the U.S. Securities and Exchange Commission (the “SEC”) upon commencement of the tender offer.
The solicitation and the offer to buy shares of Iconix’s common stock will be made only pursuant to an offer to purchase
and related materials that Purchaser intends to file with the SEC. At the time the tender offer is commenced, Purchaser will file a Tender
Offer Statement on Schedule TO with the SEC, and thereafter the Company will file a Solicitation/Recommendation Statement on Schedule
14D-9 with respect to the tender offer. The Tender Offer Statement on Schedule TO (including an offer to purchase, a related letter of
transmittal and other offer documents) and the Solicitation/Recommendation Statement on Schedule 14D-9 will contain important information
that should be read carefully and considered before any decision is made with respect to the tender offer. These materials will be sent
free of charge to the Company’s stockholders when available and may also be obtained by contacting the Company’s Investor
Relations Department at (212) 730-0030 or investorrelations@iconixbrand.com. In addition, all of these materials (and all other tender
offer documents filed with the SEC) will be available at no charge from the SEC through its website at www.sec.gov upon filing with the
SEC. ICONIX’S STOCKHOLDERS ARE ADVISED TO READ THE TENDER OFFER MATERIALS AND THE SOLICITATION/RECOMMENDATION STATEMENT, AS EACH
MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND ANY OTHER RELEVANT DOCUMENTS FILED BY PURCHASER OR ICONIX WITH THE SEC WHEN THEY
BECOME AVAILABLE BEFORE THEY MAKE ANY DECISION WITH RESPECT TO THE TENDER OFFER. THESE MATERIALS WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE TENDER OFFER, PURCHASER AND ICONIX.
Cautionary Note Regarding Forward-Looking
Statements
This
communication contains forward-looking statements that involve risks and uncertainties, including statements regarding our pending acquisition
by affiliates of Lancer (the “Transaction”), including the expected timing of the closing of the transaction and considerations
taken into account by our Board of Directors in approving the Transaction. These forward-looking statements involve risks and uncertainties,
many of which are outside management’s control. If any of these risks or uncertainties materialize, or if any of our assumptions
prove incorrect, our actual results could differ materially from the results expressed or implied by these forward-looking statements.
These risks and uncertainties include risks associated with: the risk that the conditions to the closing of the Transaction are not satisfied,
including the risk that a sufficient number of Iconix’s stockholders do not participate in the Transaction; the risk that the merger
agreement for the Transaction may be terminated in circumstances that require Iconix to pay a termination fee of $1,824,000 and expense
reimbursement of $10,000,000; potential litigation relating to the Transaction; the failure to satisfy other conditions to completion
of the Transaction, including the receipt of all regulatory approvals related to the Transaction (and any conditions, limitations or restrictions
placed on these approvals); the failure of Lancer to consummate the necessary financing arrangements; risks that the tender offer and
related transactions disrupt current plans and operations and the potential difficulties in employee retention as a result of the proposed
transactions; the effects of local and national economic, credit and capital market conditions on the economy in general, and other risks
and uncertainties; uncertainties as to the timing of the consummation of the Transaction and the ability of each party to consummate the
Transaction; and the risks described in the filings that we make with the SEC from time to time, including the risks described under the
headings “Risk Factors” and “Management Discussion and Analysis of Financial Condition and Results of Operations”
in our Annual Report on Form 10-K, which was filed with the SEC on March 31, 2021, and which should be read in conjunction with
our financial results and forward-looking statements. Our filings with the SEC are available on the SEC filings section of the Investor
Relations page of our website at http://iconixbrand.com. All forward-looking statements in this communication are based on information
available to us as of the date of this communication, and we do not assume any obligation to update the forward-looking statements provided
to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law. You
should not place undue reliance on such forward-looking statements. All forward-looking statements are based on information available
to management on the date of this communication, and we assume no obligation to, and expressly disclaim any obligation to, update or revise
any forward-looking statements, whether as a result of new information, future events or otherwise. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date hereof.