AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON SEPTEMBER 5, 2014
Registration No. 333–
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
The Securities
Act of 1933
SEQUENTIAL BRANDS GROUP, INC.
(Exact name of registrant as specified in
its charter)
Delaware |
2300 |
86-0449546 |
(State or other jurisdiction of |
(Primary Standard Industrial |
(I.R.S. Employer |
incorporation or organization) |
Classification Code Number) |
Identification No.) |
1065 Avenue of the Americas, 30th
Floor
New York, NY 10018
(646) 564-2577
(Address, including zip code, and telephone
number, including area code, of registrants’ principal executive offices)
Yehuda Shmidman
Chief Executive Officer
1065 Avenue of the Americas, 30th
Floor
New York, NY 10018
(646) 564-2577
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
Approximate date of commencement of
proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
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. ¨
If this Form is a post-effective amendment
to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes
of securities pursuant to Rule 413(b) under the Securities Act, check the following box.
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.
Large accelerated filer ¨ |
|
Accelerated filer ¨ |
|
|
|
Non-accelerated filer ¨ |
(Do not check if a smaller reporting company). |
Smaller reporting company x |
CALCULATION OF REGISTRATION FEE
| |
| | |
Proposed | | |
| | |
| |
| |
| | |
maximum | | |
Proposed | | |
| |
| |
| | |
offering | | |
maximum | | |
Amount
of | |
Title of
each class of securities | |
Amount
to be | | |
price
per | | |
aggregate | | |
registration | |
to
be registered | |
Registered | | |
share
(4) | | |
offering
price | | |
fee | |
Common
stock, $0.001 par value (1)(3) | |
| 13,750,000 | | |
$ | 13.39955 | | |
$ | 184,243,812.50 | | |
$ | 23,730.60 | (6) |
Warrants (1) | |
| 3,000,000 | | |
$ | 13.39955 | | |
$ | 40,198,650.00 | | |
$ | 5,177.59 | (6) |
Common
stock, $0.001 par value, issuable upon exercise of warrants (1)(3) | |
| 3,000,000 | | |
| N/A | (5) | |
| N/A | (5) | |
| N/A | (5) |
| |
| | | |
| | | |
| | | |
$ | 0.00 | (6) |
| |
| | | |
| | | |
| | | |
| | |
Common
stock, $0.001 par value (2)(3) | |
| 581,341 | | |
$ | 13.39955 | | |
$ | 7,789,707.80 | | |
$ | 1,003.31 | |
| |
| | | |
| | | |
| | | |
| | |
Total
amount of registration fee | |
| | | |
| | | |
| | | |
$ | 1,003.31 | |
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(1) |
Includes the following
securities issued or issuable in connection with the registrant’s acquisition of Galaxy Brand Holdings, Inc. on August
15, 2014: (i) 13,750,000 shares of common stock, $0.001 par value, including 1,375,000 “holdback” shares
issuable on February 15, 2016, as described in this registration statement, (ii) warrants to purchase up to 3,000,000
additional shares of common stock, $0.001 par value, subject to adjustment for stock splits, stock dividends or similar
transactions, at an exercise price of $11.20 per share, and (iii) up to 3,000,000 shares of
common stock, par value $0.001, subject to adjustment for stock splits, stock dividends or similar
transactions, issuable upon the
exercise of the warrants. |
|
(2) |
Includes (i) 581,341 shares of common stock, $0.001 par value, issued in connection with the registrant’s acquisition of the remaining 18% stake in William Rast Licensing, LLC and William Rast Sourcing, LLC (subsidiaries of the registrant) held by Tennman WR-T, Inc. |
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(3) |
In the event of a stock split, stock dividend or similar transaction involving the common stock of the registrant, in order to prevent dilution, the number of shares of common stock registered by this registration statement shall be increased automatically to cover additional shares in accordance with Rule 416(a) under the United States Securities Act of 1933, as amended (the “Securities Act”). |
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(4) |
Estimated solely for the purposes of
computing the registration fee in accordance with Rule 457(c) and Rule 457(g)(3) under the Securities Act, based upon the
average of the high and low prices of the common stock on The NASDAQ Stock Market on September 3, 2014 (a date within five
business days of the filing of this registration statement). |
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(5) |
Pursuant to Rule 457(g), no separate registration fee is required in connection with the registration of the shares of common stock underlying the warrants. |
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(6) |
The registrant previously paid a fee of $36,549.42, in connection with the filing of its preliminary information statement on Schedule 14C relating to its acquisition of Galaxy Brand Holdings, Inc., which was filed with the Securities and Exchange Commission on July 7, 2014 (File No. 001-36082). Accordingly, the total registration fee payable hereunder has been reduced in an amount equal to such fee, in accordance with Rule 457(b) under the Securities Act, resulting in a net amount of $0.00 payable hereunder for the registration of securities issued or to be issued in connection with the registrant’s acquisition of Galaxy Brand Holdings, Inc. |
The registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
The information in this
prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement
filed with the Securities and Exchange Commission relating to these securities is effective. This prospectus is not an offer to
sell these securities and it is not a solicitation of an offer to buy these securities in any jurisdiction where such offer, solicitation
or sale is not permitted.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION, DATED
SEPTEMBER 5, 2014
14,331,341 Shares of Common Stock
Warrants to Purchase 3,000,000 Shares
of Common Stock
3,000,000 Shares of Common Stock Underlying
the Warrants
This prospectus relates to the resale of
up to (i) 14,331,341 shares of our common stock, $0.001 par value, (ii) warrants to purchase up to 3,000,000 additional shares
of our common stock, $0.001 par value, subject to adjustment for stock splits, stock dividends or similar
transactions, at an exercise price of $11.20
per share, and (iii) 3,000,000 shares of common stock, $0.001 par value, subject to adjustment for stock splits, stock dividends or similar
transactions, issuable
upon the exercise of the warrants. As more fully described in this prospectus, the shares of common stock and warrants offered
by this prospectus were or will be issued by us to the selling stockholders (i) as part of the consideration in connection with
the consummation of our acquisition of Galaxy Brand Holdings, Inc. on August 15, 2014, (“Galaxy”) and (ii) on May 5,
2014, as part of the consideration in connection with the consummation of our acquisition of the remaining 18% stake in William
Rast Licensing, LLC and William Rast Sourcing, LLC held by Tennman WR-T, Inc. (“Tennman”).
The common stock and warrants covered
by this prospectus may be offered for sale from time to time by the selling stockholders named in this prospectus or in a
prospectus supplement. Such shares of common stock and warrants offered by the selling stockholders in this prospectus are
being registered to permit the selling stockholders to sell such shares of common stock and warrants from time to time. The
selling stockholders may offer and sell such shares of common stock and warrants at fixed prices, prevailing market price, at
the time of sale prices related to the prevailing market prices, varying prices determined at the times of sale or negotiated
prices. Such shares of our common stock and warrants may be offered by the selling stockholders directly to investors or to
or through underwriters, dealers or other agents. We do not know when or in what amounts the selling stockholders may offer
such shares of common stock or warrants for sale. The selling stockholders may sell all, some or none of the shares of common
stock or warrants offered by this prospectus. Please see the section titled “Plan of Distribution” beginning on
page 14 of this prospectus for a more complete description of how the common stock and warrants offered by this prospectus
may be sold.
In the event of a stock split, stock
dividend or similar transaction involving our common stock, in order to prevent dilution, the number of shares of our common
stock registered by this registration statement shall be increased automatically to cover additional shares. The warrants,
but not the shares of common stock issuable upon the exercise of the warrants, are subject to transfer restrictions other
than to the limited persons specified therein. Please see the section titled “Description of Warrants” beginning
on page 13 of this prospectus for a more complete description of the terms of the warrants.
We will not receive any of the proceeds
from the shares of our common stock or warrants sold by the selling stockholders.
Our common stock is currently listed on
The NASDAQ Stock Market (“NASDAQ”), under the symbol “SQBG”. On September 4, 2014, the last reported
sale price of our common stock on NASDAQ was $13.22.
Investing in our common stock involves
risks. You should review carefully the risks and uncertainties described under the section titled “Risk Factors” beginning
on page 5 of this prospectus, and under similar headings in any amendments or supplements to this prospectus.
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.
This prospectus is dated ,
2014.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
You should rely only on the information
contained or incorporated by reference in this prospectus. Neither we nor the selling stockholders have authorized anyone to provide
you with information that is different from such information. If anyone provides you with different or inconsistent information,
you should not rely on it. The selling stockholders are offering to sell common stock and warrants only in jurisdictions where
offers and sales are permitted. You should not assume that the information we have included in this prospectus is accurate as of
any date other than the date of this prospectus or that any information we have incorporated by reference is accurate as of any
date other than the date of the document incorporated by reference. Our business, financial condition, results of operations and
prospects may have changed since that date.
The selling stockholders are offering the
common stock and warrants only in jurisdictions where such issuances are permitted. The distribution of this prospectus and the
issuance of the common stock and warrants in certain jurisdictions may be restricted by law. Persons outside the United States
who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the issuance
of the common stock and warrants and the distribution of this prospectus outside the United States. This prospectus does not constitute,
and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, the common stock or warrants offered
by this prospectus by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation.
It is important for you to read and
consider all of the information contained in this prospectus in making your investment decision. To understand the offering
fully and for a more complete description of the offering you should read this entire document carefully, including
particularly the section titled “Risk Factors” beginning on page 5. You also should read and consider the
information in the documents incorporated by reference herein and listed in the section titled “Incorporation by
Reference of Certain Documents” beginning on page 19 of this prospectus. References to “selling
stockholders” refer to those stockholders listed in the section titled “Selling Stockholders” beginning on
page 8 of this prospectus or in any prospectus supplement, and to their respective successors, assignees and permitted
transferees.
As used in this prospectus, unless the
context requires otherwise, references to “Sequential Brands” refers to Sequential Brands Group, Inc., and references
to “the Company,” “we,” “us” or “our” refer to Sequential Brands Group, Inc. and
its subsidiaries, references to “common stock” refer to the common stock of the Company, par value $0.001, and references
to “warrants” refer to the warrants to purchase common stock that are described in this prospectus.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Except for the historical information contained
herein, this prospectus contains “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements include information relating to future events, future financial performance, strategies, expectations,
competitive environment, regulation and availability of resources. These forward-looking statements include, without limitation,
statements regarding: our expectations about our acquisition of Galaxy, proposed new business strategies, regulatory developments
or other matters; statements concerning projections, predictions, expectations, estimates or forecasts for our business, financial
and operating results and future economic performance; statements of management’s goals and objectives; and other similar
expressions concerning matters that are not historical facts. Words such as “may,” “will,” “should,”
“could,” “would,” “predicts,” “potential,” “continue,” “expects,”
“anticipates,” “future,” “intends,” “plans,” “projects,” “forecasts,”
“aims,” “targets,” “believes” and “estimates,” and similar expressions, as well
as statements in future tense, identify forward-looking statements.
Forward-looking statements should not be
read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which,
that performance or those results will be achieved. Forward-looking statements are based on information available at the time they
are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and
uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking
statements. Important factors that could cause these differences include, but are not limited to:
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our failure to achieve our business plan within the time period we originally planned; |
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our ability to locate licensees who can design, manufacture and distribute consumer branded products; |
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our ability to maintain strong relationships with our licensees; |
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the demand for our licensed products in the United States and internationally; |
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our ability to enter into license agreements both in the United States and internationally; |
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the ability of our licensees to meet their contractual obligations; |
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our ability to acquire new brands on commercially reasonable terms; |
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our ability to integrate the brands and businesses we acquire into our ongoing business; |
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the financial performance of the brands and businesses we acquire; |
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a decrease in the availability of financial resources at favorable terms; |
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the impact of issuances and public resales of our common stock; |
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our competitive position or changes in competitive actions by other companies; |
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our ability to retain key personnel on commercially reasonable terms; |
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general economic, market or business conditions; and |
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other factors discussed in the section titled “Risk Factors” in this prospectus or in a prospectus supplement, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, in our Quarterly Report on Form 10-Q filed on August 14, 2014, and in the other reports we file with the SEC, all of which are incorporated by reference herein. |
The preceding list is not intended to be
an exhaustive list of all of our forward-looking statements. The forward-looking statements are based on our beliefs, assumptions
and expectations of future performance, taking into account information currently available to us, and could turn out to be incorrect.
You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements
to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to
the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should
be drawn that we will make additional updates with respect to those or other forward-looking statements.
PROSPECTUS SUMMARY
The following summary
highlights information contained elsewhere in this prospectus. It does not contain all the information that may be important
to you in making an investment decision. You should read this entire prospectus carefully, including the documents
incorporated by reference herein, which are described in the section titled “Incorporation by Reference of Certain
Documents” beginning on page 19 of this prospectus. You should also carefully consider, among other things, the
matters discussed in the section titled “Risk Factors” beginning on page 5 of this prospectus.
Our Business
We are a licensing and brand
management company engaged in promoting, marketing and licensing a portfolio of consumer brands. Presently, our brands include
Ellen Tracy ®, William Rast ®, REVO®, Caribbean Joe ®, Heelys ®, DVS®,
The Franklin Mint ® and People’s Liberation ®, as well as the AND1®, AVIA®, Linens
‘n Things®, and Nevados® brands acquired as a result of our acquisition of Galaxy. We intend to grow our
portfolio of brands by acquiring rights to additional brands. We have licensed and intend to license our brands in a variety of
categories to retailers, wholesalers and distributors in the United States and in certain international territories. In our licensing
arrangements, our licensing partners are responsible for designing, manufacturing and distributing our licensed products, subject
to our continued oversight and marketing support. In our wholesale licenses, we grant rights to a single or small group of related
product categories to a wholesale supplier, who is permitted to sell licensed products to multiple stores within an approved channel
of distribution. In our direct-to-retail license, we grant the retailer the exclusive right to distribute branded apparel in a
broad range of product categories through its stores, consumer-direct mail and consumer-direct ecommerce distribution channels.
Our principal offices are located
at 1065 Avenue of the Americas, 30th Floor, New York, NY 10018 and our telephone number is (646) 564-2577. We were incorporated
under the laws of the State of Delaware in 1982. Our corporate website address is www.sequentialbrandsgroup.com. The information
contained on our website is not incorporated by reference into this prospectus and is not a part of this prospectus.
Recent Events
On August 15, 2014, we
consummated the acquisition of Galaxy, as contemplated by the Agreement and Plan of Merger (the “Galaxy Merger
Agreement”), dated as of June 24, 2014, among us, certain of our wholly owned subsidiaries, Galaxy, Carlyle Equity
Opportunity GP, L.P. as the representative of the Galaxy stockholders and optionholders (the “Stockholder
Representative”) and, for the limited purposes specified therein, Carlyle Galaxy Holdings, L.P. As a result of the
acquisition of Galaxy, all outstanding equity interests held by Galaxy stockholders and optionholders were converted into the
right to receive a pro rata portion of the transaction consideration, consisting in the aggregate of (i) $100,000,000 in
cash, subject to certain adjustments, (ii) 13,750,000 shares of common stock, subject to rounding, and (iii) warrants to
purchase up to an additional 3,000,000 shares of common stock, subject to adjustment for stock splits, stock dividends or
similar transactions. Pursuant to the terms of the Galaxy Merger Agreement, of the 13,750,000 shares of common stock issuable
as part of the transaction consideration, an aggregate of approximately 1,375,000 “holdback” shares are not
issuable until February 15, 2016, as described in greater detail in the section entitled “Selling Shareholders”
beginning on page 8 of this prospectus. In addition, the 3,000,000 warrant shares are subject to certain vesting criteria
based on the performance of the Linens ‘n Things® brand during the 2016 and 2017 calendar years, as set
forth in the form of warrant (Exhibit 4.4 to the registration statement of which this prospectus forms a part). The terms and
conditions of the Galaxy Merger Agreement are described in greater detail in our Current Report on Form 8-K, filed with the
SEC on June 25, 2014, which is incorporated by reference into this prospectus.
Pursuant to the Galaxy Merger
Agreement, we agreed to file a registration statement on Form S-3 with respect to the common stock and warrants issued or to be
issued as part of the consideration in that transaction. In addition, we also entered into a registration rights agreement, dated
as of August 15, 2014, with the Stockholder Representative (the “Galaxy Registration Rights Agreement”), which grants
the Stockholder Representative, on behalf of the former Galaxy stockholders and option holders, certain registration rights with
respect to such common stock and warrants. The terms and conditions of the Galaxy Registration Rights Agreement are described in
greater detail in our Current Report on Form 8-K, filed with the SEC on August 18, 2014, which is incorporated by reference into
this prospectus.
In addition, on May 5, 2014,
we consummated the acquisition of the remaining 18% stake in William Rast Licensing, LLC and William Rast Sourcing, LLC (subsidiaries
of the registrant) held by Tennman pursuant to a merger of Tennman with and into our wholly owned subsidiary Bella Rose, LLC (the
“Tennman Merger”). Included in the consideration transferred to the Tennman stockholders in that transaction were 581,341
shares of common stock that are also being offered by this prospectus.
Other Information
For a complete description of our
business, legal proceedings, financial condition, results of operations and other important information, we refer you to our
filings with the Securities and Exchange Commission (the “SEC”) that are incorporated by reference in this
prospectus, including our Annual Report on Form 10-K for the year ended December 31, 2013, our Quarterly Reports on Form 10-Q
for the quarterly periods ended March 31, 2014, and June 30, 2014, and our Current Reports on Form 8-K filed with the SEC on
June 9, 2014, June 12, 2014, June 25, 2014, and August 18, 2014 as amended September 5, 2014. For instructions on how to
find copies of these documents, please see the section titled “Where You Can Find Additional Information”
beginning on page 18 of this prospectus.
THE OFFERING
The following is a brief summary of the
offering. You should read the entire prospectus carefully, including “Risk Factors” and the information, including
financial information relating to us included in our filings with the SEC and incorporated by reference into this prospectus.
Issuer |
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Sequential Brands Group, Inc. |
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Securities Offered |
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The securities offered by the selling stockholders by this prospectus include up to: |
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· 14,331,341 shares of common stock; |
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· warrants
to purchase up to 3,000,000 additional shares of common stock, subject to adjustment for stock splits, stock dividends or
similar transactions; and |
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· 3,000,000 shares of common stock issuable upon the exercise of the warrants, subject to adjustment for stock splits, stock dividends or
similar transactions. |
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Use of Proceeds |
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We
will not receive any proceeds from the sale of shares of the common stock or warrants by the selling stockholders. Please see
the section titled “Use of Proceeds” beginning on page 7 of this prospectus. |
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Risk Factors |
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Investing
in our common stock or warrants involves substantial risk. For a discussion of factors you should carefully consider before
investing in our common stock or warrants, please refer to “Risk Factors” beginning on page 5 of this
prospectus, our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, our Quarterly Report on Form 10-Q
filed with the SEC on August 14, 2014, and the other reports we file with the SEC that are incorporated by reference herein,
in addition to all other information contained in this prospectus. |
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NASDAQ Symbol |
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Our common stock is listed on NASDAQ under the symbol “SQBG.” |
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No Market for Warrants |
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There
is no active trading market for the warrants, which are subject to transfer restrictions other than to the limited persons
specified therein. Please see the section titled “Description of Warrants” beginning on page 13 of
this prospectus for a complete description of the terms of the warrants. |
RISK FACTORS
An investment in our common stock or
warrants involves a high degree of risk. Before making an investment in our common stock or warrants, you should carefully consider,
with your respective legal counsel, tax and financial advisors and/or accountants, the following risk factors, the risk factors
in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, and in our Quarterly Report on Form 10-Q filed on
August 14, 2014, and the risk factors in the other reports we file with the SEC, all of which are incorporated by reference herein,
as well as the other information contained in this prospectus. If any of the following risks actually occur, our business, financial
condition and/or results of operations could be materially and adversely affected. In such an event, the trading price of our common
stock and warrants could decline, and you could lose part or all of your investment.
Risks Relating to Ownership of Our Warrants
The adjustment to the exercise price
for the warrants and the number of shares of common stock underlying each warrant in connection with an anti-dilutive adjustment
event may not adequately compensate you for any lost value of your warrants as a result of such transaction.
If a specified corporate event
or transaction constituting a dilutive event occurs, under certain circumstances we will adjust the exercise price for warrants
and the number of shares of common stock underlying each warrant. The adjustment to the exercise price for warrants and the number
of shares of common stock underlying each warrant will be determined based on the date on which the dilutive event occurs or becomes
effective. The adjustment to the exercise price for warrants and the number of shares of common stock underlying each warrant in
connection with a dilutive event may not adequately compensate you for any lost value of your warrants as a result of such dilutive
event.
Under certain circumstances, holders
may have to pay U.S. federal income tax as a result of a deemed distribution with respect to our common stock or warrants—even
if holders do not receive a corresponding distribution of cash—such as, if we adjust, or fail to adjust, the exercise price
of the warrants in certain circumstances.
Holders of our common stock
or warrants may be treated as having received a constructive distribution in certain circumstances, for example if we make certain
adjustments to (or fail to make adjustments to) the exercise price of the warrants and such adjustment (or failure to make an adjustment)
has the effect of increasing the proportionate interest of certain holders in our earnings and profits or assets. Such a distribution
could be treated as a taxable dividend or capital gain for U.S. federal income tax purposes even though holders do not receive
any cash with respect to such constructive distribution. In addition, you may be subject to U.S. federal withholding tax on any
such constructive distribution on our common stock or warrants. You are advised to consult your independent tax advisor regarding
the possibility and tax treatment of any deemed distributions for U.S. federal income tax purposes.
Until the exercise of our warrants,
holders of the warrants do not have identical rights as holders of our common stock, but they will be subject to all changes made
with respect to our common stock.
Holders of warrants are
not entitled to any rights with respect to our common stock (including, without limitation, voting rights and rights to
receive any dividends or other distributions on our common stock), but they will be subject to all changes affecting our
common stock. See the description of our common stock in the section titled “Description of Common Stock” in our
Form 8-A filed on September 23, 2013, which is incorporated by reference into this prospectus, and the description of our
warrants, in the section titled “Description of Warrants” beginning on page 13 of this prospectus. Holders of
our warrants will have rights with respect to our common stock only if they receive our common stock upon exercise of the
warrants and only as of the date when such holder becomes a record owner of the shares of our common stock upon such
exercise. For example, with respect to warrants, if an amendment is proposed to our certificate of incorporation or bylaws
requiring stockholder approval and the record date for determining the stockholders of record entitled to vote on the
amendment occurs prior to the date a warrant holder is deemed to be the owner of the shares of our common stock due upon
exercise of the warrants, the exercising warrant holder will not be entitled to vote on the amendment, although such holder
will nevertheless be subject to any changes in the powers, preferences or special rights of our common stock.
The warrants only become exercisable
upon the achievement of certain performance-based metrics relating to the Linens ‘n Things® brand and may
not vest in full or at all. To the extent that the warrants do vest, the market price of our common stock may or may not exceed
the exercise price of the warrants at the time the warrants are exercisable.
The warrants only become exercisable
upon the achievement in the 2016 and 2017 calendar years of certain performance-based metrics relating to the Linens ‘n
Things® brand. We cannot provide you with any assurance that such performance-based metrics will be achieved. To the extent
that such performance-based metrics are not achieved, the warrants may not vest in full or at all, and the value of the warrants
may be diminished or the warrants may become worthless.
Moreover, the warrants
expire on December 31, 2019. Although, as of September 4, 2014, the market price of our common stock exceeded the
exercise price of the warrants, we cannot provide you with any assurance that, to the extent that the warrants do vest, the
market price of our common stock will remain in excess of the exercise price of the warrants in any or all subsequent periods
prior to the date of expiration. Any vested warrants not exercised by their date of expiration will expire worthless and we
will be under no further obligation to the warrant holder.
Since the warrants are executory contracts, they
may have no value in a bankruptcy or reorganization proceeding.
In the event a bankruptcy or
reorganization proceeding is commenced by or against us, a bankruptcy court may hold that any unexercised warrants are executory
contracts that are subject to rejection by us with the approval of the bankruptcy court. As a result, holders of the warrants may,
even if we have sufficient funds, not be entitled to receive any consideration for their warrants or may receive an amount less
than they would be entitled to if they had exercised their warrants prior to the commencement of any such bankruptcy or reorganization
proceeding.
The liquidity of the warrants will
be significantly limited as a result of the transfer restrictions specified therein.
The warrants, but not the shares
of common stock issuable upon the exercise of the warrants, are subject to restrictions that prohibit transfers other than to the
limited persons specified therein. The permitted transferees of the warrants include (in the case of individuals) spouses and certain
other individuals and entities for estate planning purposes and (in the case of corporate entities) certain direct owners and affiliates.
As a result, we do not expect an active trading market to develop for the warrants, and the liquidity of the warrants will be significantly
limited.
The value of our warrants will be
directly affected by the market price of our common stock, which may be volatile.
The value of our warrants will
be significantly affected by the market price of our common stock. We cannot predict how the shares of our common stock will trade
in the future. This may result in greater volatility in the value of our warrants than would be expected for non-exercisable securities.
If an effective registration is not
in place and a current prospectus is not available when an investor desires to exercise warrants or sell the shares of common stock
underlying the warrants, or if such transactions are not otherwise exempt from the requirements of the Securities Act and similar
state securities laws, then such investor may be unable to exercise his, her or its warrants, causing such warrants to expire worthless,
or to sell the shares of common stock underlying the warrants for value.
Holders of warrants will be
able to exercise the warrants and sell the shares of common stock underlying the warrants only if a registration statement relating
to such securities is then in effect, or if such transactions are exempt from the registration requirements of the Securities Act,
and such securities are qualified for sale or exempt from qualification under the applicable securities laws of the states in which
the purchaser of such securities resides. We intend to use our reasonable best efforts to keep a registration statement in effect
covering warrant shares and to maintain a current prospectus relating to warrant shares until the expiration of the warrants. We
cannot assure you that we will be able to do so, and if we do not maintain a current prospectus related to the warrant shares,
holders may be unable to sell their warrant shares. If the prospectus relating to the warrant shares is not current, the warrants
may have no value, we will have no obligation to settle the warrants for cash, the market for such warrants may be limited, and
such warrants may expire worthless.
USE OF PROCEEDS
We will receive the proceeds from the exercise
of any warrants by the selling stockholders, in an amount equal to the exercise price of $11.20 per share, except to the extent
that any selling stockholder elects to exercise his, her or its warrants pursuant to the “net exercise” provision thereof.
We will not receive any proceeds from the resale by the selling stockholders of our warrants or common stock, including common
stock issued upon the exercise of the warrants, pursuant to this prospectus.
We intend to use any proceeds received
from the exercise of the warrants primarily for general corporate purposes and other lawful purposes, including working capital,
sales and marketing activities, general and administrative matters, repayment of indebtedness, and capital expenditures. We may
also use a portion of the proceeds to acquire or invest in new brands or businesses.
We will pay estimated transaction expenses
of approximately $123,503.31 in connection with this offering.
SELLING STOCKHOLDERS
We have issued or will issue an
aggregate of 13,750,000 shares of our common stock, subject to rounding and warrants to purchase up to an additional
3,000,000 shares of our common stock, subject to adjustment for stock splits, stock dividends or similar transactions in
a private placement transaction as part of the consideration in our acquisition of Galaxy on August 15, 2014. Of the
13,750,000 shares of common stock, an aggregate of 1,375,000 “holdback” shares, subject to rounding, are not
issuable until February 15, 2016, and are only then issuable to the extent that they were not used to offset
certain indemnification obligations of the selling shareholders pursuant to the Galaxy Merger Agreement. For the purposes of
the information presented below with respect to ownership of the selling stockholders, we have assumed that all
such “holdback” shares were fully issued and outstanding as of the date of the below calculations.
In connection with our acquisition of Galaxy,
we entered into the Galaxy Registration Rights Agreement. Pursuant to the Galaxy Merger Agreement and the Galaxy Registration Rights
Agreement, we agreed to register for resale the shares of common stock and warrants issued in our acquisition of Galaxy, as more
fully described in the section titled “Prospectus Summary” beginning on page 3 of this prospectus.
In addition, on May 5, 2014, we issued
an aggregate of 581,341 shares of our common stock, in a private placement transaction, as part of the consideration in our acquisition
of the remaining 18% stake in William Rast Licensing, LLC and William Rast Sourcing, LLC held by Tennman.
This prospectus covers the public resale
of the foregoing shares of common stock and warrants. The selling stockholders may offer the common stock and warrants for resale
from time to time and may elect to sell some, all or none of the shares set forth under this prospectus. However, the selling stockholders
are under no obligation to sell any of the common stock or warrants offered pursuant to this prospectus.
The table on the following page sets forth
information regarding the selling stockholders and the shares of common stock and warrants (expressed as shares of underlying common
stock) that they may sell or otherwise dispose of from time to time under this prospectus.
All information with respect to ownership
of the selling stockholders has been furnished by or on behalf of the selling stockholders and is as of August 21, 2014. We believe,
based on information supplied by the selling stockholders, that except as may otherwise be indicated in the footnotes to the table
below, the selling stockholders have sole voting and dispositive power with respect to the common stock reported as beneficially
owned by them. Because the selling stockholders may sell all, part or none of the common stock they hold, no estimates can be given
as to the number of shares of common stock that the selling stockholders will hold upon termination of any offering made hereby.
In addition, the selling stockholders may have sold, transferred or otherwise disposed of, or may sell, transfer or otherwise dispose
of, at any time and from time to time, the common stock they hold in transactions exempt from the registration requirements of
the Securities Act after the date on which they provided the information set forth on the table below. For purposes of the table
below, however, we have assumed that after termination of this offering, none of the shares of common stock offered by this prospectus
will be held by the selling stockholders.
Except as provided in the footnotes to
the table on the following page, the selling stockholders have not had any position within, held any office of or had any other
material relationship with us or our affiliates during the past three years.
Beneficial ownership for the purposes of
this table is determined in accordance with the rules and regulations of the SEC. These rules generally provide that
a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting thereof, or
to dispose or direct the disposition thereof or has the right to acquire such powers within 60 days. Common stock subject to options
or issuable upon exercise of warrants that are currently exercisable or exercisable within 60 days of August 21, 2014, is deemed
to be outstanding and beneficially owned by the person holding the options or warrants. These shares, however, are not deemed outstanding
for the purposes of computing the percentage ownership of any other person.
Percentage of beneficial ownership assumes
that 39,535,356 shares of our common stock are outstanding, based on 38,160,364 shares of common stock issued and outstanding as
of September 1, 2014, plus an aggregate of 1,374,992 “holdback” shares potentially issuable to the selling stockholders
on February 15, 2016, pursuant to the terms of the Galaxy Merger Agreement, as described above. Except as disclosed in the footnotes
to this table, we believe that the stockholder identified in the table below possesses sole voting and investment power over all
shares of common stock shown as beneficially owned by the stockholder.
| |
Shares of Common Stock
Beneficially Owned Prior to Offering (1) | | |
Shares of Common Stock
Underlying Warrants Beneficially Owned Prior to Offering (2) | | |
Maximum Number of | | |
Shares of Common Stock
Beneficially Owned After Offering | |
Name of Beneficial Owner | |
Number of Shares | | |
Percentage of Shares
Outstanding | | |
Number of Shares | | |
Percentage of Shares Upon
Exercise of Warrants | | |
Shares of Common
Stock Offered | | |
Number of Shares | | |
Percentage of Shares | |
Carlyle Galaxy Holdings, L.P. (3) | |
| 6,369,812 | | |
| 16.1 | % | |
| 1,403,254 | | |
| 19.0 | % | |
| 7,773,066 | | |
| - | | |
| - | |
Eli Harari (4) | |
| 1,023,717 | | |
| 2.6 | % | |
| 224,208 | | |
| 3.1 | % | |
| 1,247,925 | | |
| - | | |
| - | |
Eli Harari 2011 Family Trust (5) | |
| 423,319 | | |
| 1.1 | % | |
| 93,256 | | |
| 1.3 | % | |
| 516,575 | | |
| - | | |
| - | |
Albert Chehebar (6) | |
| 723,516 | | |
| 1.8 | % | |
| 158,732 | | |
| 2.2 | % | |
| 882,248 | | |
| - | | |
| - | |
Isaac Shehebar (7) | |
| 723,516 | | |
| 1.8 | % | |
| 158,732 | | |
| 2.2 | % | |
| 882,248 | | |
| - | | |
| - | |
E.S. Originals, Inc. (8) | |
| 361,759 | | |
| * | | |
| 79,366 | | |
| 1.1 | % | |
| 441,125 | | |
| - | | |
| - | |
AJ Investments Associates (9) | |
| 303,870 | | |
| * | | |
| 66,666 | | |
| * | | |
| 370,536 | | |
| - | | |
| - | |
Gary D. Herwitz (10) | |
| 57,883 | | |
| * | | |
| 12,698 | | |
| * | | |
| 70,581 | | |
| - | | |
| - | |
Elyahu Cohen (11) | |
| 723,516 | | |
| 1.8 | % | |
| 158,732 | | |
| 2.2 | % | |
| 882,248 | | |
| - | | |
| - | |
Eddie Esses (12) | |
| 1,294,372 | | |
| 3.3 | % | |
| 268,738 | | |
| 3.9 | % | |
| 1,563,110 | | |
| - | | |
| - | |
MHA 1 LLC (13) | |
| - | | |
| - | | |
| 79,366 | | |
| * | | |
| 79,366 | | |
| - | | |
| - | |
Morris Hidary (14) | |
| 108,528 | | |
| * | | |
| - | | |
| - | | |
| 108,528 | | |
| - | | |
| - | |
Jacob I. Hidary (15) | |
| 108,528 | | |
| * | | |
| - | | |
| - | | |
| 108,528 | | |
| - | | |
| - | |
Abraham Bert Hidary (16) | |
| 101,292 | | |
| * | | |
| - | | |
| - | | |
| 101,292 | | |
| - | | |
| - | |
David J. Hidary (17) | |
| 36,176 | | |
| * | | |
| - | | |
| - | | |
| 36,176 | | |
| - | | |
| - | |
Isaac Hidary (18) | |
| 7,235 | | |
| * | | |
| - | | |
| - | | |
| 7,235 | | |
| - | | |
| - | |
C & One G LLC (19) | |
| - | | |
| * | | |
| 79,366 | | |
| * | | |
| 79,366 | | |
| - | | |
| - | |
KLCC Investments LLC (20) | |
| 325,583 | | |
| * | | |
| - | | |
| - | | |
| 325,583 | | |
| - | | |
| - | |
Joseph Gindi (21) | |
| 36,176 | | |
| * | | |
| - | | |
| - | | |
| 36,176 | | |
| - | | |
| - | |
MSA Galaxy Investment, L.P. (22) | |
| 808,971 | | |
| 2.0 | % | |
| 175,978 | | |
| 2.5 | % | |
| 984,949 | | |
| - | | |
| - | |
David Scharf (23) | |
| 95,142 | | |
| * | | |
| 18,334 | | |
| * | | |
| 113,476 | | |
| - | | |
| - | |
Jon Lavallee (24) | |
| 47,570 | | |
| * | | |
| 9,166 | | |
| * | | |
| 56,736 | | |
| - | | |
| - | |
Abraham M. Hidary (25) | |
| 63,428 | | |
| * | | |
| 12,222 | | |
| * | | |
| 75,650 | | |
| - | | |
| - | |
Robert Capener (26) | |
| 6,073 | | |
| * | | |
| 1,170 | | |
| * | | |
| 7,243 | | |
| - | | |
| - | |
Justin Timberlake (27) | |
| 406,830 | | |
| 1.0 | % | |
| - | | |
| 1.0 | % | |
| 406,830 | | |
| 25,142 | | |
| * | |
Trace Ayala (28) | |
| 78,164 | | |
| * | | |
| - | | |
| * | | |
| 78,164 | | |
| 4,762 | | |
| * | |
Lynn Harless (29) | |
| 51,588 | | |
| * | | |
| - | | |
| * | | |
| 51,588 | | |
| 3,143 | | |
| * | |
Paul Harless (30) | |
| 51,588 | | |
| * | | |
| - | | |
| * | | |
| 51,588 | | |
| 3,143 | | |
| * | |
Ziffren Brittenham, LLP (31) | |
| 31,266 | | |
| * | | |
| - | | |
| * | | |
| 31,266 | | |
| 1,905 | | |
| * | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
* Less than 1%.
|
(1) |
Shares shown in the table above include shares held in the beneficial owner’s name or jointly with others, or in the name of a bank, nominee or trustee for the beneficial owner’s account, and also include any “holdback” shares potentially issuable to such beneficial owner on February 15, 2016, to the extent not used to offset the indemnification obligations of such beneficial owner, pursuant to the Galaxy Merger Agreement. |
|
(2) |
The
calculation of this percentage assumes for each person the acquisition by such person of all shares that may be acquired
upon exercise of warrants to purchase shares of common stock, and assumes that the other warrantholders do not exercise
their warrants. |
|
(3) |
Consists of 5,788,425 shares of common stock and warrants to purchase 1,403,254 shares of common stock issued, as well as 581,387 “holdback” shares potentially issuable, to Carlyle Galaxy Holdings, L.P. pursuant to the Galaxy Merger Agreement. Carlyle Galaxy Holdings L.P. has agreed not to sell any of our common stock through November 13, 2014, pursuant to a letter agreement with the Company dated June 24, 2014. Such letter agreement also grants Carlyle Galaxy Holdings, L.P. the right to nominate one director for election by our stockholders for so long as it and its affiliates hold at least 33% of the shares acquired by it in connection with our acquisition of Galaxy. Carlyle Group Management L.L.C. is the general partner of The Carlyle Group L.P., which is a publicly traded entity listed on NASDAQ. The Carlyle Group L.P. is the managing member of Carlyle Holdings II GP L.L.C., which is the general partner of Carlyle Holdings II L.P., which is the general partner of TC Group Cayman Investment Holdings, L.P., which is the general partner of TC Group Cayman Investment Holdings Sub L.P., which is the managing member of Carlyle Equity Opportunity GP, L.L.C., which is the general partner of Carlyle Equity Opportunity GP, L.P., which is the general partner of Carlyle Galaxy Holdings, L.P. Accordingly, each of the foregoing entities may be deemed to share beneficial ownership of the shares of common stock owned of record by Carlyle Galaxy Holdings, L.P. The address of TC Group Cayman Investment Holdings, L.P., which is the general partner of TC Group Cayman Investment Holdings Sub L.P., is c/o Intertrust Corporate Services (Cayman) Limited, 190 Elgin Avenue George Town, Grand Cayman, E9 KY1-9005. The address of each of the other entities mentioned in this footnote is c/o The Carlyle Group, 1001 Pennsylvania Ave. NW, Suite 220 South, Washington, DC 20004. |
|
(4) |
Consists of 924,866 shares of common stock and warrants to purchase 224,208 shares of common stock issued, as well as 98,851 “holdback” shares potentially issuable, to Mr. Harari pursuant to the Galaxy Merger Agreement. Mr. Harari owns a controlling interest in High Life LLC, which is a significant licensee of the AND1® brand acquired in our acquisition of Galaxy. |
|
(5) |
Consists
of 384,682 shares of common stock and warrants to purchase 93,256 shares of common stock issued, as well as 38,637 “holdback”
shares potentially issuable, to the Eli Harari 2011 Family Trust pursuant to the Galaxy Merger Agreement. The Eli Harari 2011
Family Trust owns certain interests in High Life LLC, which is a significant licensee of the AND1® brand acquired in
our acquisition of Galaxy. |
|
(6) |
Consists of 654,772 shares of common stock and warrants to purchase 158,732 shares of common stock issued to Mr. Chehebar, as well as 68,744 “holdback” shares potentially issuable, pursuant to the Galaxy Merger Agreement. |
|
(7) |
Consists of 654,772 shares of common stock and warrants to purchase 158,732 shares of common stock issued, as well as 68,744 “holdback” shares potentially issuable, to Mr. Shehebar pursuant to the Galaxy Merger Agreement. |
|
(8) |
Consists of 327,387 shares of common stock and warrants to purchase 79,366 shares of common stock issued, as well as 34,372 “holdback” shares potentially issuable, to E.S. Originals, Inc. pursuant to the Galaxy Merger Agreement. E.S. Originals, Inc. is a significant licensee of the AND1®, AVIA® and Nevados® brands acquired in our acquisition of Galaxy. |
|
(9) |
Consists of 274,999 shares of common stock and warrants to purchase 66,666 shares of common stock issued, as well as 28,871 “holdback” shares potentially issuable, to AJ Investments Associates pursuant to the Galaxy Merger Agreement. |
|
(10) |
Consists of 52,384 shares of common stock and warrants to purchase 12,698 shares of common stock issued, as well as 5,499 “holdback” shares potentially issuable, to Mr. Herwitz pursuant to the Galaxy Merger Agreement. |
|
(11) |
Consists of 654,772 shares of common stock and warrants to purchase 158,732 shares of common stock issued, as well as 68,744 “holdback” shares potentially issuable, to Mr. Cohen pursuant to the Galaxy Merger Agreement. |
|
(12) |
Consists of 1,108,550 shares of common stock and warrants to purchase 268,738 shares of common stock issued, as well as 185,822 “holdback” shares potentially issuable, to Mr. Esses pursuant to the Galaxy Merger Agreement. In connection with the consummation of our acquisition of Galaxy, Mr. Esses entered into an employment agreement with us, pursuant to which he is currently employed as the Division President of Galaxy Brands. |
|
(13) |
Consists of warrants to purchase 79,366 shares of common stock issued to MHA 1 LLC pursuant to the Galaxy Merger Agreement. |
|
(14) |
Consists of 98,216 shares of common stock issued, as well as 10,312 “holdback” shares potentially issuable, to Mr. Hidary pursuant to the Galaxy Merger Agreement. |
|
(15) |
Consists of 98,216 shares of common stock issued, as well as 10,312 “holdback” shares potentially issuable, to Mr. Hidary pursuant to the Galaxy Merger Agreement. |
|
(16) |
Consists of 91,668 shares of common stock issued, as well as 9,624 “holdback” shares potentially issuable, to Mr. Hidary pursuant to the Galaxy Merger Agreement. |
|
(17) |
Consists of 32,739 shares of common stock issued, as well as 3,437 “holdback” shares potentially issuable, to Mr. Hidary pursuant to the Galaxy Merger Agreement. |
|
(18) |
Consists of 6,548 shares of common stock issued, as well as 687 “holdback” shares potentially issuable, to Mr. Hidary pursuant to the Galaxy Merger Agreement. |
|
(19) |
Consists of warrants to purchase 79,366 shares of common stock issued to C & One G LLC pursuant to the Galaxy Merger Agreement. |
|
(20) |
Consists of 294,648 shares of common stock issued, as well as 30,935 “holdback” shares potentially issuable, to KLCC Investments LLC pursuant to the Galaxy Merger Agreement. |
|
(21) |
Consists of 32,739 shares of common stock issued, as well as 3,437 “holdback” shares potentially issuable, to Mr. Gindi pursuant to the Galaxy Merger Agreement. |
|
(22) |
Consists
of 725,916 shares of common stock and warrants to purchase 175,978 shares of common stock issued, as well as 83,055 “holdback”
shares potentially issuable, to MSA Galaxy Investment, L.P. pursuant to the Galaxy Merger Agreement. |
|
(23) |
Consists of 75,629 shares of common stock and warrants to purchase 18,334 shares of common stock issued, as well as 19,513 “holdback” shares potentially issuable, to Mr. Scharf pursuant to the Galaxy Merger Agreement. |
|
(24) |
Consists of 37,814 shares of common stock and warrants to purchase 9,166 shares of common stock issued, as well as 9,756 “holdback” shares potentially issuable, to Mr. Lavallee pursuant to the Galaxy Merger Agreement. |
|
(25) |
Consists of 50,420 shares of common stock and warrants to purchase 12,222 shares of common stock issued, as well as 13,008 “holdback” shares potentially issuable, to Mr. Hidary pursuant to the Galaxy Merger Agreement. |
|
(26) |
Consists of 4,828 shares of common stock and warrants to purchase 1,170 shares of common stock issued, as well as 1,245 “holdback” shares potentially issuable, to Mr. Capener pursuant to the Galaxy Merger Agreement. In connection with the consummation of our acquisition of Galaxy, Mr. Capener entered into an employment agreement with us, pursuant to which he is currently employed as a Senior Vice President of the Company. |
|
(27) |
Consists of 381,688 shares of common stock issued to Mr. Timberlake in connection with the Tennman Merger and 25,142 other shares of common stock owned by Mr. Timberlake. In connection with the Tennman Merger, Mr. Timberlake entered into a founder’s agreement with us, pursuant to which Mr. Timberlake and certain of his affiliates and associates have agreed to provide services to William Rast Licensing, LLC in exchange for certain royalty payments. |
|
(28) |
Consists of 73,402 shares of common stock issued to Mr. Ayala in connection with the Tennman Merger and 4,762 other shares of common stock owned by Mr. Ayala. |
|
(29) |
Consists
of 48,445 shares of common stock issued to Mrs. Harless in connection with the Tennman Merger and 3,143 other
shares of common stock owned by Mrs. Harless. |
|
(30) |
Consists
of 48,445 shares of common stock issued to Mr. Harless in connection with the Tennman Merger and 3,143 other
shares of common stock owned by Mr. Harless. |
|
(31) |
Consists
of 29,361 shares of common stock issued to Ziffren Brittenham, LLP in connection with the Tennman Merger and 1,905 other shares
of common stock owned by Ziffren Brittenham, LLP. |
DESCRIPTION OF WARRANTS
The following summary of the terms of the
warrants may not contain all of the information that is important to you and is qualified in its entirety by reference to the form
of warrant and the provisions of applicable law. A copy of the form of warrant is included as Exhibit 4.4 to the registration statement
of which this prospectus forms a part and is incorporated herein by reference.
The warrants are for the purchase of an
aggregate of up to 3,000,000 additional shares of our common stock, which are referred to as the “warrant shares.”
The warrant shares will be issued at an exercise price of $11.20 per share, which price was established based upon the average
closing price of our common stock for the 10 trading day period preceding the execution of the Galaxy Merger Agreement.
The warrants will vest based upon the performance
in the 2016 and 2017 calendar years of the Linens ‘n Things® brand acquired from Galaxy, as follows:
|
· |
500,000 warrant shares will vest if net royalties in 2016 are equal to or exceed $10,000,000; |
|
· |
an additional 1,000,000 warrant shares will vest if net royalties in 2016 are equal to or exceed $15,000,000; |
|
· |
500,000 warrant shares will vest if net royalties in 2017 are equal to or exceed $10,000,000; and |
|
· |
an additional 1,000,000 warrant shares will vest if net royalties in 2017 are equal to or exceed $15,000,000. |
For purposes of the foregoing,
net royalties is calculated as the gross aggregate royalties and other similar revenue earned by us during the applicable calendar
year and received within 90 days after the date that such royalties have become due and payable, less the commissions and other
amounts payable pursuant to a services agreement with Earthbound LLC or another broker relating to licensing of Linens ‘n
Things® brand during the applicable calendar year. The vesting amounts for each year will be determined by us and a representative
of Galaxy’s selling shareholders, which we refer to the Stockholder Representative, based upon a statement delivered by us
to the Stockholder Representative on or before April 30 (or June 30, in certain circumstances) of the year following the applicable
calendar year, and in accordance with the agreed procedures to resolve any disagreement with respect to the amounts set forth on
such statement. We have agreed to take certain actions with respect to the operations of the Linens ‘n Things®
brand during the 2016 and 2017 calendar years, including with respect to the collection of royalties.
In the event of a change of control of
Sequential Brands before April 30, 2017, any unvested warrant shares will immediately vest, and the warrants shall become exercisable
for such vested warrant shares. If we sell the Linens ‘n Things® brand for in excess of $50,000,000 before the
end of calendar year 2017, any unvested warrant shares will immediately vest, and the warrants will become exercisable for such
vested warrant shares. In the event of a sale of the brand for less than $50,000,000, the warrant shares will vest proportionally,
based upon the value of the sale as a percentage of $50,000,000.
The warrants, but not the warrant shares,
are subject to certain transfer restrictions specified in the form of warrant agreement that prohibit transfers other than (in
the case of individuals) to spouses and certain other individuals and entities for estate planning purposes or (in the case of
corporate entities) to certain direct owners and affiliates.
The warrants may be exercised pursuant
to certain “net exercise” provisions specified in the form of warrant agreement. Pursuant to such provisions, in lieu
of purchasing vested warrant shares for cash, the holder of a warrant may elect to pay no cash, in which case the number of shares
of our common stock to be received upon exercise of the warrant will be reduced by the quotient of the aggregate exercise price
of the underlying warrant shares and the current market price of our common stock, as specified in the form of warrant agreement.
The numbers and exercise price of
warrant shares for which the warrant is exercisable are subject to adjustment for stock splits, stock dividends or similar
transactions, as specified in the form of warrant agreement, including adjustment upon any (i) subdivision, combination or
other change relating to our common stock, (ii) reclassification, reorganization, consolidation or merger of us with or into
another entity, and (iii) dividends or other distributions of our assets (or rights to acquire our assets) to holders of
shares of our common stock. In the case of (i) and (ii) above, the numbers and exercise price of the warrant shares in effect
immediately prior to such event shall be proportionately adjusted, so that the holder of each warrant shall thereafter be
entitled to receive, upon payment of the same aggregate exercise price as if the warrants had been exercised immediately
prior to such event, the same aggregate number of warrant shares that such holder would have owned upon such exercise and
been entitled to receive by virtue of such event. In the case of (iii) above, then the holder of each warrant shall be
entitled to participate in such distribution, upon exercise of the warrants, to the same extent as if the warrants had been
exercised immediately prior to the record date for such distribution.
No fractional shares of our common stock
will be issued in connection with the exercise of the warrant, and we will pay cash in lieu of any such fractional interests. The
warrant shares are subject to withholding upon issuance to the extent required by applicable law. No holder of warrants, as such,
will be entitled to vote, receive dividends or be deemed to be a stockholder for any purpose, until the issuance of warrant shares
pursuant to the terms of the warrant.
The warrants expire on December 31, 2019.
PLAN OF DISTRIBUTION
As described in this prospectus, we
are registering, for possible sale by the selling stockholders, (i) 14,331,341 shares of our common stock; (ii) warrants to
purchase up to 3,000,000 additional shares of our common stock, subject to adjustment for stock splits, stock dividends or
similar transactions, and (iii) up to 3,000,000 shares of common stock underlying the warrants, subject to certain
anti-dilution provisions and rounding. The selling stockholders, which as used herein includes donees, pledgees, transferees
or other successors-in-interest selling shares of common stock or warrants, or interests in shares of common stock or
warrants, received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution
or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock
or warrants, or interests in shares of common stock or warrants, on any stock exchange, market or trading facility on which
the shares or warrants are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market
prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of
sale, or at negotiated prices.
The selling stockholders may use any one
or more of the following methods when disposing of shares of common stock or warrants, or any interests therein:
|
· |
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
|
· |
block trades in which the broker-dealer will attempt to sell the shares or warrants as agent, but may position and resell a portion of the block as principal to facilitate the transaction; |
|
· |
purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
|
· |
an exchange distribution in accordance with the rules of the applicable exchange; |
|
· |
privately negotiated transactions; |
|
· |
short sales effected after the date the registration statement of which this prospectus is a part is declared effective by the SEC; |
|
· |
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
|
· |
broker-dealers may agree with the selling stockholders to sell a specified number of such shares or warrants at a stipulated price per share; |
|
· |
a combination of any such methods of sale; and |
|
· |
any other method permitted by applicable law. |
The selling stockholders may, from time
to time, pledge or grant a security interest in some or all of the shares of common stock or warrants owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common
stock or warrants, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer the shares
of common stock or warrants in other circumstances, in which case the transferees, pledgees or other successors in interest will
be the selling beneficial owners for purposes of this prospectus.
In connection with the sale of our common
stock or warrants, or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common stock or warrants in the course of hedging the positions
they assume. The selling stockholders may also sell shares of our common stock or warrants short and deliver these securities to
close out their short positions, or loan or pledge the common stock or warrants to broker-dealers that in turn may sell these securities.
The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or
the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution
of shares of common stock or warrants offered by this prospectus, which shares or warrants such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the selling stockholders
from the sale of the common stock or warrants offered by them will be the purchase price of the common stock or warrants less discounts
or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents from time
to time, to reject, in whole or in part, any proposed purchase of common stock or warrants to be made directly or through agents.
We will not receive any of the proceeds from this offering.
The selling stockholders also may resell
all or a portion of the shares of common stock or warrants in open market transactions in reliance upon Rule 144 under the
Securities Act; provided, that they meet the criteria and conform to the requirements of that rule.
The selling stockholders and any underwriters,
broker-dealers or agents that participate in the sale of the common stock or warrants, or interests therein, may be “underwriters”
within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on
any resale of the shares of common stock or warrants may be underwriting discounts and commissions under the Securities Act. Selling
stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject
to the prospectus delivery requirements of the Securities Act.
To the extent required, the shares of common
stock or warrants to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices,
the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will
be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement
that includes this prospectus.
In order to comply with the securities
laws of some states, if applicable, the common stock and warrants may be sold in these jurisdictions only through registered or
licensed brokers or dealers. In addition, in some states the common stock and warrants may not be sold unless they have been registered
or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
We have advised the selling stockholders
that the anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
may apply to sales of shares of common stock or warrants in the market and to the activities of the selling stockholders and their
affiliates. In addition, to the extent applicable, we will make copies of this prospectus (as it may be supplemented or amended
from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of
the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale
of the shares of common stock or warrants against certain liabilities, including liabilities arising under the Securities Act.
Pursuant to the Galaxy Registration Rights
Agreement, we have agreed to indemnify certain of the selling stockholders who are former Galaxy shareholders and optionholders
against certain liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration
of the shares of common stock and warrants offered by this prospectus. We have further agreed with such selling stockholders to
use reasonable best efforts to maintain the effectiveness of the registration statement of which this prospectus constitutes a
part for the period of time specified therein.
LEGAL MATTERS
Gibson, Dunn & Crutcher LLP, New York,
New York, will pass upon the validity of the common stock, warrants and common stock underlying the warrants offered in this offering.
EXPERTS
The consolidated financial statements incorporated
in this prospectus by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 have been
audited by CohnReznick LLP, an independent registered public accounting firm, as stated in their report, which is incorporated
herein by reference. Such consolidated financial statements have been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
The consolidated financial statements
of Sequential Brands Group, Inc. and its subsidiaries as of and for the year ended December 31, 2012, incorporated by reference
in this prospectus and elsewhere in the registration statement, have been so incorporated by reference in reliance upon the report
of Grant Thornton LLP, independent registered public accountants, upon the authority of said firm as experts in accounting and
auditing.
The consolidated financial statements
of Galaxy Brand Holdings, Inc. and subsidiaries for the period from May 13, 2013 (inception) to December 31, 2013, and the
consolidated financial statements of Galaxy Brands, LLC and subsidiaries for the period from January 1, 2013 to May 13, 2013,
included in our Current Report on Form 8-K, filed August 18, 2014, as amended September 5, 2014, and incorporated by reference
in this prospectus and elsewhere in this registration statement, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports included therein. Such consolidated financial statements are incorporated by
reference herein in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
The audited consolidated financial statements
of Galaxy Brands LLC and its subsidiary as of and for the year ended December 31, 2012, included in our Current Report on Form
8-K, filed August 18, 2014, as amended September 5, 2014, and incorporated by reference in this prospectus and elsewhere in
this registration statement, have been so incorporated by reference in reliance upon the report of Hecht and Company, P.C., independent
registered public accountants, upon the authority of said firm as experts in accounting and auditing in giving said report.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and current reports,
proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s
website at www.sec.gov. You may read and copy any document we file with the SEC at the SEC’s Public Reference Room
at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference
Room. You may also find more information by visiting our website at www.sequentialbrandsgroup.com. The information contained on
the SEC website and our website is specifically not incorporated by reference into this prospectus and should not be considered
to be a part of this prospectus.
INCORPORATION BY REFERENCE OF CERTAIN
DOCUMENTS
We are incorporating by reference specified
documents that we file with the SEC, which means that we can disclose important information to you by referring you to those documents
that are considered part of this prospectus. We incorporate by reference into this prospectus the documents listed below and any
documents that we subsequently file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of this offering; provided, however, that we are not incorporating any information furnished but not filed under Item
2.02 or Item 7.01 of a Current Report on Form 8-K:
|
· |
our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed March 31, 2014; |
|
· |
our Quarterly Reports on Form 10-Q for the quarter ended March 31, 2014, filed May 14, 2014, and for the quarter ended June 30, 2014, filed August 14, 2014; |
|
· |
our Current Reports on Form 8-K filed June 9, 2014, June 12, 2014, June 25, 2014, and August 18, 2014, as amended September 5, 2014 (to the extent filed and not furnished); |
|
· |
our Definitive Proxy Statement on Schedule 14A, filed April 30, 2014; and |
|
· |
the description of our common stock in our Form 8-A, filed September 23, 2013. |
Any statement contained in a document incorporated
or deemed to be incorporated by reference into this prospectus will be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus or any other subsequently filed document that is deemed
to be incorporated by reference into this prospectus modifies or supersedes the statement. Any statement so modified or superseded
will not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
Any person, including any beneficial owner,
to whom this prospectus is delivered may request copies of this prospectus and any of the documents incorporated by reference in
this prospectus, without charge, by written or oral request directed to Sequential Brands Group, Inc., Attention: Investor Relations
Department, 1065 Avenue of the Americas, 30th Floor, New York, NY 10018, telephone (646) 564-2577 or from the SEC through the SEC’s
website at the web address provided under the heading “Where You Can Find Additional Information.”
PART II INFORMATION NOT REQUIRED
IN PROSPECTUS
Item 14. Other Expenses of Issuance
and Distribution.
The following table shows the costs and
expenses payable in connection with the sale and distribution of the securities being registered. All amounts except the SEC
registration fee are estimated.
SEC Registration Fee | |
$ | 1,003.31 | |
Accounting Fees and Expenses | |
$ | 70,500.00 | |
Legal Fees and Expenses | |
$ | 50,000.00 | |
Printing Expenses | |
$ | 1,000.00 | |
Miscellaneous | |
$ | 1,000.00 | |
Total | |
$ | 123,503.31 | |
Item 15. Indemnification of Directors
and Officers.
We are incorporated under the laws of the
State of Delaware. Section 145 (“Section 145”) of the General Corporation Law of the State of Delaware (the
“DGCL”) provides that a Delaware corporation may indemnify any persons who were, are or are threatened to be made,
parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director,
employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee
or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding,
provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’s
best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct
was illegal. Section 145(b) of the DGCL provides that a Delaware corporation may indemnify officers and directors
in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the corporation. Where an officer, director, employee
or agent is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify
him or her against the expenses which such officer or director has actually and reasonably incurred.
Section 145(g) of the DGCL provides
that a corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director or
officer of the corporation against any liability asserted against the person in any such capacity, or arising out of the person’s
status as such, whether or not the corporation would have the power to indemnify the person against such liability under the provisions
of the DGCL.
Article Fifth, paragraph D of our
amended and restated certificate of incorporation provides that a director shall not be personally liable to us or our stockholders
for monetary damages for breach of fiduciary duty as a director. However, the provision does not eliminate or limit the liability
of a director (i) for any breach of the director’s duty of loyalty to us or our 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.
Article X, Section 1 of our amended and
restated bylaws states that we shall indemnify any person who was, or is threatened to be, made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that he
or she is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, against expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her
in connection with such action, suit or proceeding, to the extent and under the circumstances permitted by the DGCL. Such indemnification
(unless ordered by a court) shall be made as authorized in a specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he or she has met the applicable standards of conduct set forth
in the DGCL. Such determination shall be made (1) by the Board by a majority vote of directors who were not parties to such action,
suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such
directors, even though less than a quorum, (3) if such quorum is not obtainable, or even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or (4) by our stockholders.
Our amended and restated bylaws also provided
that expenses incurred by a director, executive officer, employee or agent in defending or testifying in a civil, criminal, administrative
or investigative action, suit or proceeding shall (in the case of a director or executive officer of the Company) and may (in the
case of an employee or agent of the Company who is not a director or executive officer of the Company) be paid by the Company in
advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director,
executive officer, employee or agent to repay such amount if it shall ultimately be determined that such person is not entitled
to be indemnified by the Company against such expenses, and the Company may enter into agreements with such persons for the purpose
of providing for such advances.
In addition to the indemnification required
in our amended and restated certificate of incorporation and our amended and restated bylaws, we have entered into indemnity agreements
with current and former directors, officers and key employees. These agreements provide for the indemnification of such individuals
for all reasonable expenses and liabilities incurred in connection with any action or proceeding brought against them by reason
of the fact that they are or were our agents.
The foregoing is only a general summary
of certain aspects of Delaware law and the registrant’s organizational documents dealing with indemnification of directors
and officers and does not purport to be complete. It is qualified in its entirety by reference to the applicable provisions of
the DGCL and of the registrant’s amended and restated certificate of incorporation and amended and restated bylaws.
Item 16. Exhibits.
Reference is made to the Exhibit Index
filed as part of this registration statement.
Item 17. Undertakings
a) |
The undersigned registrant hereby undertakes: |
|
(1) |
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
|
(i) |
To include any prospectus required by Section 10(a)(3) of the Securities Act; |
|
(ii) |
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated 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 a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
|
(iii) |
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
|
(2) |
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 shall be deemed to be the initial bona fide offering thereof. |
|
(3) |
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. |
|
(4) |
That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement. |
|
(5) |
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)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 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 effective date. |
|
(6) |
That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus 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 than 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 first use, 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. |
|
(7) |
That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
|
(i) |
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
|
(ii) |
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
|
(iii) |
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
|
(iv) |
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
b) |
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) 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. |
c) |
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission 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 the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant 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, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. |
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all 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 September 5, 2014.
|
SEQUENTIAL BRANDS GROUP, INC. |
|
|
|
By: |
/s/ Gary Klein |
|
Name: |
Gary Klein |
|
Title: |
Chief Financial Officer |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each
person whose signature appears below hereby constitutes and appoints Yehuda Shmidman and Gary Klein, each of them acting individually,
his or her true and lawful attorney-in-fact and agent, with full power 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, supplements, subsequent registration
statements relating to the offering to which this registration statement relates, or other instruments he or she deems necessary
or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either
of them, or their or his or her substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities
Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates
indicated.
Signature/Name |
|
Position |
|
Date |
|
|
|
|
|
/s/ William Sweedler |
|
Chairman |
|
September 5, 2014 |
William Sweedler |
|
|
|
|
|
|
|
|
|
/s/ Yehuda Shmidman |
|
Director and Chief Executive Officer (Principal Executive Officer) |
|
September 5, 2014 |
Yehuda Shmidman |
|
|
|
|
|
|
|
|
|
/s/ Gary Klein |
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
|
September 5, 2014 |
Gary Klein |
|
|
|
|
|
|
|
|
|
/s/ Rodney Cohen |
|
Director |
|
September 5, 2014 |
Rodney Cohen |
|
|
|
|
|
|
|
|
|
/s/ Aaron Hollander |
|
Director |
|
September 5, 2014 |
Aaron Hollander |
|
|
|
|
|
|
|
|
|
/s/ Al Gossett |
|
Director |
|
September 5, 2014 |
Al Gossett |
|
|
|
|
|
|
|
|
|
/s/ Stewart Leonard Jr. |
|
Director |
|
September 5, 2014 |
Stewart Leonard Jr. |
|
|
|
|
|
|
|
|
|
/s/ Gary Johnson |
|
Director |
|
September 5, 2014 |
Gary Johnson |
|
|
|
|
Exhibit Index
Exhibit No. |
|
Description |
2.1 |
|
Agreement and Plan of Merger, dated as of June 24, 2014, among Sequential Brands Group, Inc., SBG Universe Brands, LLC, Universe Galaxy Merger Sub, Inc., Galaxy Brand Holdings, Inc., Carlyle Equity Opportunity GP, L.P., and Carlyle Galaxy Holdings, L.P. (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed June 25, 2014). |
4.1 |
|
Amended and Restated Certificate of Incorporation of Sequential Brands Group, Inc. (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed July 18, 2008). |
4.2 |
|
Certificate of Amendment to the Certificate of Incorporation of Sequential Brands Group, Inc. (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed September 13, 2012). |
4.3 |
|
Amended and Restated Bylaws of Sequential Brands Group, Inc. (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed September 13, 2013). |
4.4 |
|
Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 10.5 to our Current Report on Form 8-K filed August 18, 2014). |
5.1 |
|
Opinion of Gibson, Dunn & Crutcher LLP regarding the validity of the securities being registered.* |
23.1 |
|
Consent of CohnReznick LLP.* |
23.2 |
|
Consent of Grant Thornton LLP.* |
23.3 |
|
Consent of Ernst & Young LLP.* |
23.4 |
|
Consent of Hecht and Company, P.C.* |
23.5 |
|
Consent of Gibson, Dunn & Crutcher LLP (included in the opinion filed as Exhibit 5.1 to this Registration Statement).* |
24.1 |
|
Power of Attorney (included on the signature page hereto).* |
* Filed herewith.
Exhibit 5.1
[Letterhead of Gibson, Dunn & Crutcher
LLP]
September 5, 2014
Sequential Brands Group, Inc.
1065 Avenue of the Americas, 30th Floor
New York, NY 10018
| Re: | Registration Statement on Form S-3 of Sequential
Brands Group, Inc. |
Ladies and Gentlemen:
We have examined the Registration Statement
on Form S-3 (the “Registration Statement”) of Sequential Brands Group, Inc., a Delaware corporation (the “Company”),
filed with the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Act of 1933,
as amended (the “Securities Act”). The Registration Statement relates to the resale from time to time by the
selling holders named therein (the “Selling Holders”) of the following securities (collectively, the “Issued
Securities”):
(i) the following securities, subject in
each case to rounding, issued or issuable pursuant to the Galaxy Merger Agreement (as defined below): (w) 12,375,000 shares of
the Company’s common stock, par value $0.001 per share (the “Galaxy Shares”), issued to the former stockholders
and optionholders of Galaxy Brand Holdings, Inc. (“Galaxy”) on August 15, 2014 (the “Galaxy Closing
Date”); (x) up to 1,375,000 shares of the Company’s common stock, par value $0.001 per share (the “Holdback
Shares”), issuable to the former Galaxy stockholders and optionholders; (y) warrants to purchase up to 3,000,000 additional
shares of the Company’s common stock, par value $0.001 per share (the “Warrants”), issued to the former
Galaxy stockholders and optionholders on the Galaxy Closing Date; and (z) up to 3,000,000 shares, subject to adjustment for stock
splits, stock dividends or similar transactions, of the Company’s common stock, par value $0.001 per share (the “Warrant
Shares”), issuable upon the exercise the Warrants; and
(ii) 581,341 shares of the Company’s
common stock, par value $0.001 per share (the “Tennman Shares” and, collectively with the Galaxy Shares, the
“Issued Shares”), issued to the former stockholders of Tennman WR-T, Inc. (“Tennman”) pursuant
to the Tennman Merger Agreement (as defined below);
The Galaxy Shares and the Warrants were issued and the Holdback
Shares are issuable pursuant to the Agreement and Plan of Merger, dated as of June 24, 2014, among the Company, certain of its
wholly owned subsidiaries, Galaxy, and the other parties thereto (the “Galaxy Merger Agreement”). The Tennman
Shares were issued pursuant to the Agreement and Plan of Merger, dated as of May 5, 2014, among the Company, the Tennman stockholders
named therein and the other parties thereto (the “Tennman Merger Agreement”). The Warrants are governed by the
Common Stock Purchase Warrant entered into with each holder thereof (collectively, the “Warrant Agreements”).
September 5, 2014
Page 2
In arriving at the opinions expressed below,
we have examined originals, or copies certified or otherwise identified to our satisfaction as being true and complete copies of
the originals, of the Galaxy Merger Agreement, the Tennman Merger Agreement, the form of the Warrant Agreement, and such other
documents, corporate records, certificates of officers of the Company and of public officials and other instruments as we have
deemed necessary or advisable to enable us to render the opinions set forth below. In our examination, we have assumed without
independent investigation the genuineness of all signatures, the legal capacity and competency of all natural persons, the authenticity
of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as copies.
As to any facts material to these opinions, we have relied to the extent we deemed appropriate and without independent investigation
upon statements and representations of officers and other representatives of the Company and others.
We have assumed without independent investigation
that:
(i) at the time any Issued Securities are
sold pursuant to the Registration Statement (the “Relevant Time”), the Registration Statement and any supplements
and amendments thereto (including post-effective amendments) will be effective and will comply with all applicable laws;
(ii) all Issued Securities will be issued
and sold in the manner stated in the Registration Statement and the applicable prospectus supplement;
(iii) at the Relevant Time, all corporate
or other action required to have been taken by the Company to duly authorize each proposed issuance of Holdback Shares and Warrant
Shares shall remain in full force and effect; and
(iv) upon the issuance of any Holdback
Shares or Warrant Shares, the total number of shares of the Company’s common stock, par value $0.001 per share, will not
exceed the total number of shares that the Company is then authorized to issue under its certificate of incorporation and other
relevant documents.
September 5, 2014
Page 3
Based upon the foregoing and in reliance
thereon, and subject to the assumptions, exceptions, qualifications and limitations set forth herein, we are of the opinion that:
1. the Issued Shares are validly issued,
fully paid and non-assessable;
2. the Holdback Shares, when issued pursuant
to the terms of the Galaxy Merger Agreement, will be validly issued, fully paid and non-assessable;
3. the Warrant Shares, when issued upon
the exercise of the Warrants in accordance with the terms of the Warrant Agreements and for the additional consideration specified
therein, will be validly issued, fully paid and non-assessable; and
4. the Warrants are the legal, valid and
binding obligations of the Company.
The opinions expressed above are subject
to the following exceptions, qualifications, limitations and assumptions:
A. We render no opinion herein as to matters
involving the laws of any jurisdiction other than the Delaware General Corporation Law. We are not admitted to practice in the
State of Delaware; however, we are generally familiar with the Delaware General Corporation Law as currently in effect and have
made such inquiries as we consider necessary to render the above opinions. This opinion is limited to the effect of the current
state of the laws of the State of Delaware and the facts as they currently exist. We assume no obligation to revise or supplement
this opinion in the event of future changes in such laws or the interpretations thereof or such facts.
B. The opinion contained in paragraph 4
above is subject to (i) the effect of any bankruptcy, insolvency, reorganization, moratorium, arrangement or similar laws affecting
the rights and remedies of creditors’ generally, including without limitation the effect of statutory or other laws regarding
fraudulent transfers or preferential transfers, and (ii) general principles of equity, including without limitation concepts of
materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance, injunctive relief
or other equitable remedies regardless of whether enforceability is considered in a proceeding in equity or at law.
C. We express no opinion regarding the
effectiveness of the following provisions in the Warrant Agreement: (i) any provision waiving the right to object to venue in any
court; (ii) any agreement to submit to the jurisdiction of any Federal court; (iii) any waiver of the right to jury trial or (iv)
any provision to the effect that every right or remedy is cumulative and may be exercised in addition to any other right or remedy
or that the election of some particular remedy does not preclude recourse to one or more others.
September 5, 2014
Page 4
We consent to the filing of this opinion
as an exhibit to the Registration Statement, and we further consent to the use of our name under the caption “Legal Matters”
in the Registration Statement and the prospectus that forms a part thereof. In giving these consents, we do not thereby admit that
we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations
of the Commission promulgated thereunder.
Very truly yours,
/s/ Gibson, Dunn & Crutcher LLP
Exhibit 23.1
Consent of Independent Registered Public
Accounting Firm
We consent to the incorporation by reference in this
Registration Statement on Form S-3 of Sequential Brands Group, Inc. of our report dated March 31, 2014 on our audit of the
consolidated financial statements of Sequential Brands Group, Inc. and Subsidiaries as of December 31, 2013 and for the year
then ended. We also consent to the reference to our firm under the caption “Experts”.
/s/ CohnReznick LLP
New York, New York
September 5, 2014
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated April 1, 2013 with respect to
the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2012 of Sequential
Brands Group, Inc., (formerly People’s Liberation, Inc.), which is incorporated by reference in this Registration Statement.
We consent to the incorporation by reference in the Registration Statement of the aforementioned report, and to the use of our
name as it appears under the caption “Experts.”
/s/Grant Thornton LLP
New York, NY
September 5, 2014
Exhibit
23.3
Consent of Independent
Auditors
We consent to the reference
to our firm under the caption “Experts” in the Registration Statement on Form S-3 and related Prospectus of Sequential
Brands Group, Inc., for the registration of common stock, warrants and common stock underlying the warrants, and to the incorporation
by reference therein of our report dated April 29, 2014, with respect to the consolidated financial statements of Galaxy Brand
Holdings, Inc. and subsidiaries for the period from May 13, 2013 (inception) to December 31, 2013, and of our report dated June
23, 2014, with respect to the consolidated financial statements of Galaxy Brands, LLC and subsidiaries for the period from January
1, 2013 to May 13, 2013, each included in the Current Report on Form 8-K of Sequential Brands Group, Inc. filed with the Securities
and Exchange Commission on August 18, 2014, as amended September 5, 2014.
/s/ Ernst
& Young LLP
September 5, 2014
Exhibit 23.4
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption “Experts” in the
Registration Statement on Form S-3 and related prospectus of Sequential Brands Group, Inc., for the registration of common
stock, warrants and common stock underlying the warrants, and to the incorporation by reference therein of our report dated
July 2, 2013, with respect to the financial statements of Galaxy Brands LLC and subsidiary for the period from January 1,
2012, through December 31, 2012, included in the Current Report on Form 8-K of Sequential Brands Group, Inc. filed with the
Securities and Exchange Commission on August 18, 2014, as amended September 5, 2014.
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/s/ Hecht and Company, P.C. |
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September 5, 2014 |
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