Subsequent Events |
9 Months Ended | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 29, 2022 | |||||||||||||||||||||||||||||||
| Subsequent Events [Abstract] | |||||||||||||||||||||||||||||||
| Subsequent Events |
Proposed Partnership with WHP Global Investment Agreement On December 8, 2022, the Company, entered into an investment agreement (the “Investment Agreement”) with WH Borrower, LLC, a Delaware limited liability company (“WHP”), relating to the issuance and sale of shares of the Company’s common stock, par value $0.01, in a private placement to WHP. Pursuant to the Investment Agreement, the Company will issue and sell 5.4 million shares of common stock to WHP (the “Purchased Shares”) for a purchase price of $4.60 per share, or an aggregate purchase price of $25.0 million (the “Stock Purchase”). The Investment Agreement contains customary representations, warranties and covenants of the Company and WHP. The closing of the Stock Purchase (the “Closing”) is subject to the satisfaction or waiver of customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Closing will also require the consent of our lender under the Revolving Credit Facility. Registration Rights Agreement At the Closing, in connection with the Investment Agreement, the Company and WHP will enter into a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which, among other things, the Company will grant WHP certain registration rights. Under the Registration Rights Agreement, the Company is required to register the resale of the Purchased Shares by July 1, 2026. Membership Interest Purchase Agreement On December 8, 2022, the Company entered into a membership interest purchase agreement (the “Membership Interest Purchase Agreement”), by and among the Company, WHP and Express LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Seller”). Pursuant to the Membership Interest Purchase Agreement, (a) Seller and wholly owned subsidiary of Seller (“Contribution Co”) will enter into a contribution agreement (the “Contribution Agreement”) with EXP TOPCO, LLC (the “Joint Venture”), pursuant to which Seller will contribute certain of its intellectual property assets to the Joint Venture in exchange for 100% of the limited liability company interests of the Joint Venture, after which Seller will assign a 1% limited liability company interest to Contribution Co and (b) at least two days following the closing of the transactions contemplated by the Contribution Agreement, WHP will purchase from Seller a 60% ownership interest in the Joint Venture. The closing of the Membership Interest Purchase Agreement will take place simultaneously with the Closing. Intellectual Property License Agreement At Closing, the Company and the Joint Venture will enter into an Intellectual Property License Agreement (the “License Agreement”). The License Agreement provides the Company with an exclusive license in the United States to the intellectual property contributed in connection with the Membership Interest Purchase Agreement and certain other intellectual property. The initial term of the License Agreement is 10 years, and the License Agreement automatically renews for successive renewal terms of 10 years (unless the Company provides notice of non-renewal at least 24 months prior to the end of the initial or applicable renewal term). Except for the Company’s right not to renew the License Agreement, the License Agreement is not terminable by either party. The Company will pay the Joint Venture a royalty on net sales of certain licensed goods and will commit to an annual guaranteed minimum annual royalty during the term of the License Agreement (i.e., $60 million in the first contract year, increasing by $1 million per year for the next contract years, and remaining at $65 million following the sixth contract year). The Company will pay royalties at a rate of (i) 3.25% of net sales arising from retail sales of certain licensed goods in the first through fifth contract years (and 3.5% thereafter), and (ii) 8% of net sales arising from wholesale sales of such goods. Operating Agreement At the Closing, in connection with the Membership Interest Purchase Agreement, Seller, Contribution Co and an affiliate of WHP will enter into an amended and restated limited liability company agreement governing the operations of the Joint Venture (the “Operating Agreement”). Cash earnings of the Joint Venture will be distributed quarterly to the Company (through Seller and Contribution Co) and WHP on a pro rata basis. Under the Operating Agreement, the Joint Venture will be managed by a board of managers controlled by WHP, subject to the Company’s right to approve certain action by the Joint Venture. The Operating Agreement precludes the Company from entering into any partnership or other similar agreement or any sale, merger or other divestiture with certain Restricted Parties (as defined in the Operating Agreement). Pursuant to the Operating Agreement, each of WHP and the Company will agree to provide the other with a right of first offer with respect to any Retail Opportunity (as defined in the Operating Agreement).
|
||||||||||||||||||||||||||||||