UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 29, 2004
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Candie's, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 0-10593 11-2481093
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
215 West 40th Street, New York, NY 10018
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 730-0030
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Definitive Material Agreement
On October 29, 2004 (the "Closing Date"), Candie's, Inc., a Delaware
Corporation ("Registrant") entered into an Asset Purchase Agreement (the
"Purchase Agreement") by and among Registrant, Badgley Mischka Licensing LLC, a
newly formed Delaware limited liability company and a wholly owned subsidiary of
Registrant ("Buyer Sub"), B.E.M. Enterprise, Ltd., a Delaware corporation (the
"Seller"), and Escada (USA) Inc., a Delaware corporation, the stockholder of
Seller.
Pursuant to the terms of the Purchase Agreement, Buyer Sub purchased from
the Seller its principal assets (the "Purchased Assets"), which include the
"Badgley Mischka" trademark. The purchase price for the Purchased Assets was
paid by the issuance of 214,981 shares of the Registrant's common stock, $.001
par value (the "Shares"). The purchase price of the Purchased Assets is subject
to an upward adjustment in the event that the closing sale price of the
Registrant's common stock on the date which is 180 days after the Closing Date
is less than the closing sale price on the Closing Date. Any such adjustment
will also be paid in shares of Registrant's common stock (the "Additional
Shares"). Registrant agreed, under certain circumstances, to file a registration
statement within 20 days of the Closing Date covering the resale from time to
time of the Shares and the Additional Shares, if any. In addition, under the
terms of the Purchase Agreement, Mark Badgley and James Mischka each executed an
employment agreement with Buyer Sub.
On the Closing Date, the Registrant also executed a letter agreement
("Letter Agreement") with UCC Funding Corporation, a Delaware Corporation
("UCC"), providing for certain financial arrangements earned by UCC for services
provided to Registrant in connection with the consummation of the transactions
contemplated by Purchase Agreement. UCC has assigned its rights under the Letter
Agreement to its affiliate, Content Holdings ("Content").
Pursuant to the Letter Agreement, Content is entitled to receive a fee
equal to 5% of the gross revenues of Buyer Sub, which includes, but is not
limited to, any royalties (other than advertising royalties, so long as such
advertising royalties are actually spent), fees, advances, or any other payments
of cash or PIK payments derived by Buyer Sub from the "Badgley Mischka"
trademark and all derivative trademarks (the "Fee Arrangement"). The term of
such Fee Arrangement continues until such time, if ever, as all the stock or
assets of Buyer Sub are sold. In the event of a sale of all or substantially all
of the stock or assets of Buyer Sub, Content is entitled to receive a cash
payment based upon the following formula: An amount equal to the greater of (i)
5% of the (sales price less $2,150,000) or (ii) the product of (x) the sales
price less $2,150,000 and (y) a fraction, the numerator of which is the gross
royalties received by Content during the trailing 12 month period and the
denominator of which is the Buyer Sub's EBITDA during the trailing 12 month
period (calculated in accordance with GAAP). UCC was also granted a first lien
position on the Buyer Sub's assets.
In connection with the Letter Agreement and in addition to the Fee
Arrangement, Robert W. D'Loren, a current director of the Registrant and the
President, Chief Executive Officer and a principal stockholder of UCC, as
designee of UCC and Content, was granted options, pursuant to the Registrant's
2002 Stock Option Plan, to acquire 50,000 shares of the Registrant's common
stock exercisable at a price of $4.419 per share.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CANDIE'S, INC.
(Registrant)
By:/s/ Neil Cole
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Neil Cole
President and Chief Executive Officer
Date: November 4, 2004