UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15 (d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported): June
14, 2007
ICONIX
BRAND GROUP, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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0-10593
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11-2481903
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(State
or Other
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(Commission
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(IRS
Employer
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Jurisdiction
of
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File
Number)
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Identification
No.)
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Incorporation)
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1450
Broadway, New York, NY
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10018
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code
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(212)
730-0030
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Not
Applicable
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(Former
Name or Former Address, if Changed Since Last Report)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01 Entry
into a Material Definitive Agreement.
On
June
14, 2007, Iconix Brand Group, Inc. (the “Company”) entered into a purchase
agreement (the “Purchase Agreement”) under which it agreed to sell to Merrill
Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) and Lehman
Brothers Inc. (“Lehman Brothers”) (together, the “Initial Purchasers”), and the
Initial Purchasers agreed to purchase from the Company, $250.0 million principal
amount of the Company’s 1.875% Convertible Senior Subordinated Notes due 2012
(the “Notes”). The Purchase Agreement also granted to the Initial Purchasers an
over-allotment option to purchase up to an additional $37.5 million aggregate
principal amount of Notes.
The
Initial Purchasers subsequently exercised their over-allotment
option
in full
and the closing of the sale of $287.5 million principal amount of Notes occurred
on June 20, 2007. The net proceeds from the offering, after deducting the
Initial Purchasers’ discount and the estimated offering expenses payable by the
Company, are expected to be approximately $280.0 million.
The
Notes
and the shares of the Company’s common stock, par value $0.001 per share (the
“Common Stock”), issuable in certain circumstances upon conversion of the Notes
have not been registered under the Securities Act of 1933, as amended (the
“Securities Act”). The Company offered and sold the Notes to the Initial
Purchasers in reliance on the exemption from registration provided by Section
4(2) of the Securities Act. The Initial Purchasers then sold the Notes to
qualified institutional buyers pursuant to the exemption from registration
provided by Rule 144A under the Securities Act. The Company relied on these
exemptions from registration based in part on representations made by the
Initial Purchasers in the Purchase Agreement. A copy of the form of Purchase
Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by
reference; the description of the Purchase Agreement in this report is a summary
and is qualified in its entirety by the terms of the Purchase
Agreement.
The
Notes
are governed by an indenture, dated as of June 20, 2007 (the “Indenture”),
between the Company and Bank of New York, as trustee (the “Trustee”). A copy of
the Indenture is attached hereto as Exhibit 4.1 and is incorporated herein
by
reference; the
description of the Indenture in this report is a summary and is qualified in
its
entirety by the terms of the Indenture.
The
Notes
will be convertible into cash and, if applicable, shares of Common Stock based
on a conversion rate of 36.2845 shares of Common Stock, subject to customary
adjustments, per $1,000 principal amount of Notes (which is equal to an initial
conversion price of approximately $27.56 per share) only under the following
circumstances: (1) during any fiscal quarter beginning after September 30,
2007
(and only during such fiscal quarter), if the closing price of the Common Stock
for at least 20 trading days in the 30 consecutive trading days ending on the
last trading day of the immediately preceding fiscal quarter is more than 130%
of the conversion price per share, which is $1,000 divided by the then
applicable conversion rate; (2) during the five business day period immediately
following any five consecutive trading day period in which the trading price
per
$1,000 principal amount of Notes for each day of that period was less than
98%
of the product of (a) the closing price of the Common Stock for each day in
that
period and (b) the conversion rate per $1,000 principal amount of Notes; (3)
if
specified distributions to holders of the Common Stock are made, as set forth
in
the Indenture; (4) if a “change of control” or other “fundamental change,” each
as defined in the Indenture, occurs; (5) if the Company chooses to redeem the
Notes upon the occurrence of a “specified accounting change,” as defined in the
Indenture; and (6) during the last month prior to maturity of the Notes. Upon
conversion, a holder will receive an amount in cash equal to the lesser of
(a)
the principal amount of the Note or (b) the conversion value, determined in
the
manner set forth in the Indenture. If the conversion value exceeds the principal
amount of the Note on the conversion date, the Company will also deliver, at
its
election, cash or Common Stock or a combination of cash and Common Stock for
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conversion value in excess of $1,000.
The
Notes
will bear interest at a rate of 1.875% per year, payable semiannually in arrears
in cash on June 30 and December 31 of each year, beginning on December 31,
2007.
In
the
event of a change of control or other fundamental change, the holders of the
Notes may require the Company to purchase all or a portion of their Notes at
a
purchase price equal to 100% of the principal amount of Notes, plus accrued
and
unpaid interest, if any. If a specified accounting change occurs, the Company
may, at its option, redeem the Notes in whole for cash, at a price equal to
102%
of the principal amount of the Notes, plus accrued and unpaid interest, if
any.
Holders of the Notes who convert their Notes in connection with a fundamental
change or in connection with a redemption upon the occurrence of a specified
accounting change may be entitled to a make-whole premium in the form of an
increase in the conversion rate.
The
Notes
rank junior in right of payment to all of the Company’s existing and future
secured senior indebtedness, equal in right of payment to all of its existing
and future unsecured senior indebtedness and senior in right of payment to
all
of its existing and future subordinated indebtedness. The Notes are also
effectively subordinated in right of payment to the obligations of all of the
Company’s subsidiaries, including both their secured and unsecured
obligations.
In
connection with the sale of the Notes, the Company entered into a registration
rights agreement, dated as of June 20, 2007, with the Initial Purchasers (the
“Registration Rights Agreement”). Under the
Registration Rights Agreement, the Company has agreed to file a shelf
registration statement covering resales by holders of the Notes and any Common
Stock issuable upon conversion of such Notes (subject to certain conditions
specified in the Registration Rights Agreement) no later than 90 days after
the
original issuance of the Notes and to use its commercially reasonable efforts
to
cause such registration to become effective as promptly as practicable, but
in
no event later than 180 days after filing such registration statement. In
addition, the Company will use its commercially reasonable efforts to keep
the
registration statement effective until the earlier of (i) the date which is
two
years from the original issuance of the Notes or (ii) the date on which all
securities covered by the registration statement are no longer registrable
securities. If the Company fails to comply with any of the foregoing
requirements, then, in each case, it will be required to pay additional interest
to the holders of the Notes. A copy of the Registration Rights Agreement
is
attached hereto as Exhibit 4.2 and is incorporated herein by reference;
the
description of the Registration Rights Agreement in this report is a summary
and
is qualified in its entirety by the terms of the Registration Rights
Agreement.
In
connection with the sale of the Notes, the Company entered into a convertible
note hedge with respect to its Common Stock with each of Merrill Lynch
International (“MLI”) and Lehman
Brothers OTC Derivatives Inc. (“Lehman OTC,” and together with MLI, the
“Counterparties”). Pursuant to the agreements governing these convertible note
hedges, which were originally dated June 14, 2007 and subsequently amended
and
restated in their entirety on June 19, 2007 (the “Convertible Note Hedge
Agreements”), the Company has purchased call options (the “Purchased Call
Options”) from the Counterparties covering up to approximately 10.4 million
shares of Common Stock. These convertible note hedges are designed to
offset the Company’s exposure to potential dilution upon conversion of the Notes
in the event that the market value per share of the Common Stock at the time
of
exercise is greater than the strike price of the Purchase Call Options (which
strike price corresponds to the initial conversion price of the Notes and is
simultaneously subject to certain customary adjustments). On June 20, 2007,
the
Company paid an aggregate amount of approximately $76.3 million of the proceeds
from the sale of the Notes for the Purchased Call Options. MLI’s performance
under its Convertible Note Hedge Agreement with the Company is guaranteed by
Merrill Lynch & Co., Inc., and Lehman OTC’s performance under its
Convertible Note Hedge Agreement with the Company is guaranteed by Lehman
Brothers. A
copy of
the Convertible Note Hedge Agreements with MLI and Lehman OTC are attached
hereto as Exhibit 10.2 and Exhibit 10.3, respectively, and are incorporated
herein by reference; the
description of the Convertible Note Hedge Agreements and the Purchased Call
Options in this report is a summary and is qualified in its entirety by the
terms of the Convertible Note Hedge Agreements.
The
Company also entered into separate warrant transactions with the Counterparties
whereby the Company, pursuant to the agreements governing these warrant
transactions, which were originally dated June 14, 2007 and subsequently amended
and restated in their entirety on June 19, 2007 (the “Warrant Transaction
Agreements”), has sold to the Counterparties warrants (the “Sold Warrants”) to
acquire up to 10.4 million shares of Common Stock, at a strike price of $42.40
per share of Common Stock. The Sold Warrants will become exercisable on
September 28, 2012 and will expire by the end of 2012. The Company received
aggregate proceeds of approximately $37.5 million from the sale of the Sold
Warrants on June 20, 2007. MLI’s performance under its Warrant Transaction
Agreement with the Company is guaranteed by Merrill Lynch & Co., Inc., and
Lehman OTC’s performance under its Warrant Transaction Agreement with the
Company is guaranteed by Lehman Brothers. A
copy of
the Warrant Transaction Agreements with MLI and Lehman OTC are attached hereto
as Exhibit 10.4 and Exhibit 10.5, respectively, and are incorporated herein
by
reference;
the
description of the Warrant Transaction Agreements and the Sold Warrants in
this
report is a summary and is qualified in its entirety by the terms of the Warrant
Transaction Agreements.
The
convertible note hedge transactions and the warrant transactions are separate
transactions, entered into by the Company with the Counterparties, are not
part
of the terms of the Notes and will not affect the holders’ rights under the
Notes. In addition, holders
of
the Notes will not have any rights with respect to the Purchased Call Options
or
the Sold Warrants.
If
the
market value per share of the Common Stock at the time of conversion of the
Notes is above the strike price of the Purchased Call Options, the Purchased
Call Options entitle the Company to receive from the Counterparties net shares
of Common Stock, cash or a combination of shares of Common Stock and cash,
depending on the consideration paid on the underlying Notes, based on the excess
of the then current market price of the Common Stock over the strike price
of
the Purchased Call Options. Additionally, if the market price of the Common
Stock at the time of exercise of the Sold Warrants exceeds the strike price
of
the Sold Warrants, the Company will owe the Counterparties net shares of Common
Stock or cash, not offset by the Purchased Call Options, in an amount based
on
the excess of the then current market price of the Common Stock over the strike
price of the Sold Warrants.
These
transactions will generally have the effect of increasing the conversion price
of the Notes to $42.40 per share of Common Stock, representing a 100% percent
premium based on the last reported sale price of $21.20 per share on June 14,
2007.
The
Sold
Warrants and the underlying Common Stock issuable upon exercise of the Sold
Warrants have not been registered under the Securities Act, and may not be
offered or sold in the United States absent registration or an applicable
exemption from the registration requirements. This report on Form 8-K does
not
constitute an offer to sell, or a solicitation of an offer to buy, any security
and shall not constitute an offer, solicitation or sale in any jurisdiction
in
which such offering would be unlawful.
Item
2.03 Creation
of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet
Arrangement of a Registrant.
As
disclosed in Item 1.01 above, on June 20, 2007, the Company issued $287.5
million principal amount of the Notes. The Company offered and sold the Notes
to
the Initial Purchasers in reliance on the exemption from registration provided
by Section 4(2) of the Securities Act. The Initial Purchasers then sold the
Notes to qualified institutional buyers pursuant to the exemption from
registration provided by Rule 144A under the Securities Act. The Notes will
bear
interest at a rate of 1.875% per year, payable semiannually in arrears in cash
on June 30 and December 31 of each year, beginning on December 31, 2007. The
Notes will mature on June 30, 2012.
In
the
event of a change of control or other fundamental change, the holders of the
Notes may require the Company to purchase all or a portion of their Notes at
a
purchase price equal to 100% of the principal amount of Notes, plus accrued
and
unpaid interest, if any. If a specified accounting change occurs, the Company
may, at its option, redeem the Notes in whole for cash, at a price equal to
102%
of the principal amount of the Notes plus accrued and unpaid interest, if any.
Holders of the Notes who convert their Notes in connection with a fundamental
change or in connection with a redemption upon the occurrence of a specified
accounting change may be entitled to a make-whole premium in the form of an
increase in the conversion rate, in each case, determined in the applicable
manner set forth in the Indenture.
The
Notes
and the underlying Common Stock issuable upon conversion of the Notes have
not
been registered under the Securities Act, and may not be offered or sold in
the
United States absent registration or an applicable exemption from registration
requirements. This report on Form 8-K does not constitute an offer to sell,
or a
solicitation of an offer to buy, any security and shall not constitute an offer,
solicitation or sale in any jurisdiction in which such offering would be
unlawful.
Additional
terms and conditions are contained in Item 1.01 and are incorporated herein
by
reference.
Item
3.02. Unregistered
Sales of Equity Securities.
The
Company issued and sold to the Initial Purchasers $287.5 million aggregate
principal amount of Notes on June 20, 2007 (after exercise by the Initial
Purchasers of their over-allotment option). The net proceeds to the Company
after deducting the Initial Purchasers’ discount and estimated offering expenses
are estimated to be approximately $280.0 million. The Initial Purchasers
received an aggregate commission of $6.5 million in connection with the offering
of the Notes.
The
Company entered into a Warrant Transaction Agreement with each of the
Counterparties on June 14, 2007 which were subsequently amended and restated
as
of June 19, 2007, pursuant to which, in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act, the Company issued
Sold Warrants to the Counterparties to acquire up to the number of shares equal
to the maximum number of shares of Common Stock which may be issued in
connection with the conversion of the Notes, at a strike price of $42.40 per
share of Common Stock. The Company received aggregate proceeds of approximately
$37.5 million from the sale of the Sold Warrants on June 20, 2007.
None
of
the Notes, the Sold Warrants, or the underlying Common Stock issuable upon
conversion of the Notes or the Sold Warrants has been registered under the
Securities Act, and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements. This
report on Form 8-K does not constitute an offer to sell, or a solicitation
of an
offer to buy, any security and shall not constitute an offer, solicitation
or
sale in any jurisdiction in which such offering would be unlawful.
Additional
information pertaining to the Notes and the Sold Warrants is contained in Item
1.01 and is incorporated herein by reference.
Item
9.01
Financial
Statements and Exhibits
(d)
Exhibits.
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Exhibit
No.
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Exhibit
4.1
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Indenture,
dated June 20, 2007, between Iconix Brand Group, Inc. and The Bank
of New
York.
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Exhibit
4.2
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Registration
Rights Agreement, dated June 20, 2007, among Iconix Brand Group,
Inc.,
Merrill Lynch Pierce, Fenner & Smith, Incorporated & Lehman
Brothers Inc.
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Exhibit
10.1
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Purchase
Agreement, dated June 14, 2007, by and among Iconix Brand Group,
Inc,
Merrill Lynch Pierce, Fenner & Smith, Incorporated & Lehman
Brothers Inc.
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Exhibit
10.2
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Letter
Agreement Confirming OTC Convertible Note Hedge, dated June 19, 2007,
among Iconix Brand Group, Inc., Merrill Lynch International and,
solely in
its capacity as agent thereunder, Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
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Exhibit
10.3
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Letter
Agreement, Confirming OTC Convertible Note Hedge, dated June 19,
2007,
among Iconix Brand Group, Inc., Lehman Brothers OTC Derivatives Inc.
and,
solely in its capacity as agent thereunder, Lehman
Brothers.
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Exhibit
10.4
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Letter
Agreement, Confirming OTC Warrant Transaction, dated June 19, 2007,
among
Iconix Brand Group, Inc., Merrill Lynch International and, solely
in its
capacity as agent thereunder, Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
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Exhibit
10.5
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Letter
Agreement, Confirming OTC Warrant Transaction, dated June 19, 2007,
among
Iconix Brand Group, Inc., Lehman Brothers OTC Derivatives Inc. and,
solely
in its capacity as agent thereunder, Lehman
Brothers.
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SIGNATURES
Pursuant
to the requirements
of the
Securities Exchange Act of 1934, the Registrant has duly caused this report
to
be signed on its behalf by the undersigned thereunto duly
authorized.
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ICONIX
BRAND GROUP, INC.
(Registrant)
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By:
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/s/
Warren Clamen
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Warren
Clamen
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Chief
Financial Officer
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EXHIBIT
INDEX
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Exhibit
No.
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Description
of Exhibit
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Exhibit
4.1
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Indenture,
dated June 20, 2007, between Iconix Brand Group, Inc. and The Bank
of New
York.
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Exhibit
4.2
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Registration
Rights Agreement, dated June 20, 2007, among Iconix Brand Group,
Inc.,
Merrill Lynch Pierce, Fenner & Smith, Incorporated & Lehman
Brothers Inc.
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Exhibit
10.1
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Purchase
Agreement, dated June 14, 2007, by and among Iconix Brand Group,
Inc,. Notes, Merrill Lynch Pierce, Fenner & Smith, Incorporated &
Lehman Brothers Inc.
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Exhibit
10.2
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Letter
Agreement Confirming OTC Convertible Note Hedge, dated June 19, 2007,
among Iconix Brand Group, Inc., Merrill Lynch International and,
solely in
its capacity as agent thereunder, Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
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Exhibit
10.3
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Letter
Agreement, Confirming OTC Convertible Note Hedge, dated June 19,
2007,
among Iconix Brand Group, Inc., Lehman Brothers OTC Derivatives Inc.
and,
solely in its capacity as agent thereunder, Lehman
Brothers.
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Exhibit
10.4
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Letter
Agreement, Confirming OTC Warrant Transaction, dated June 19, 2007,
among
Iconix Brand Group, Inc., Merrill Lynch International and, solely
in its
capacity as agent thereunder, Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
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Exhibit
10.5
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Letter
Agreement, Confirming OTC Warrant Transaction, dated June 19, 2007,
among
Iconix Brand Group, Inc., Lehman Brothers OTC Derivatives Inc. and,
solely
in its capacity as agent thereunder, Lehman
Brothers.
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