CROCS, INC. : Participation in a major definitive agreement, disclosure of FD regulations, financial statements and supporting documents (form 8-K)

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Article 1.01. The conclusion of an important definitive agreement.

Securities purchase contract

At 22 December 2021, Crocs, Inc. (the “Company”) has entered into a definitive agreement to acquire (the “Acquisition”) HEYDUDE®, a private brand of athletic footwear, pursuant to a securities purchase agreement (the “Agreement”) by and between: (i) the Company; (ii) Fortune Fortune Limited, a limited liability company incorporated under the laws of Hong Kong (“HK Seller”); (iii) Mr. Daniele Guidi (“US Seller” and, together with Seller HK, “Sellers”, and each individually, a “Seller”); (iv) Limited Intellectual Wealth, a limited liability company incorporated under the laws of Hong Kong (“FF Intellectual”); (v) Full Global Fortune Limited, a limited liability company incorporated under the laws of Hong Kong (“FF worldwide”); (v) Full fortune online limited, a limited liability company incorporated under the laws of Hong Kong (“FF Online” and collectively with FF Intellectual and FF Worldwide the “Companies Acquired by HK”); (vii) Happy One LLC, a limited liability company incorporated under the laws of State of nevada (“Happy”); (viii) Lucky Top Inc., a company incorporated under the laws of Delaware state
(“Lucky Top” and together with Happy One, the “companies acquired in the United States”); (ix) Mr. Alexandre rosano (“Guarantor”); and (x) HK Seller, in its capacity as representative and agent of the Sellers (“Representative”).

The agreement provides that the company will purchase all of the issued and outstanding equity securities of each of the companies acquired by HK and companies acquired in the United States. Guarantor indirectly holds all of the equity securities of Seller HK, Seller HK holds all equity securities of each of the companies acquired by HK (collectively, the “Securities purchased by Hong Kong“), which constitute all of the issued and outstanding equity securities of the companies acquired by HK, and the U.S. seller owns all of the equity securities of the companies acquired in the United States (collectively, the”Securities purchased in the United States“, and, with the Securities purchased by Hong Kong, the “Purchased titles“).

In accordance with the Agreement, the Company will pay a global consideration to the Sellers of $ 2.5 billion, $ 2.05 billion of which will be paid in cash (the “Cash Consideration”) and the Company will issue to the seller HK 2,852,280 ordinary shares of the Company, of par value $ 0.001 per share (“Ordinary shares”), valued at
$ 450.0 million, on the basis of the average of the volume-weighted average price of the ordinary shares for the 20 days immediately preceding the date of signature (the “Equity Counterpart Shares”). The Equity Counterparties will be subject to a lock-up period beginning on the closing date (the “Closing Date”) of the acquisition and continuing up to and including the date falling 12 months after the acquisition. closing date, provided that (a) on the date falling six months after the closing date, 50% of the Equity Counterpart Shares will be released from the lock-up, and (b) on the date falling twelve months after the closing date closing, the remaining 50% of the equity counterpart shares will be released from the lock-up. The cash consideration is subject to adjustment based on, among other things, cash, debt, transaction costs and working capital of the acquired companies and their respective subsidiaries at the closing of the acquisition (the “ fencing “).

The Company, the Acquired Companies and the Vendors have accepted the representations, warranties and covenants customary in the Agreement. Subject to certain limitations, sellers are required to indemnify the company for certain losses resulting from breaches of the representations, warranties and commitments of the acquired companies and the sellers made in the contract and for certain other matters, in each case, as set out in the A deal. $ 125.0 million of the cash consideration will be placed in an escrow account to partially secure the indemnification obligations of the sellers, which will be released to the sellers, less any amounts that have been released to indemnify the company as provided in the agreement, after the date which is 18 months after the closing date.

During the period between the date of the Agreement and the Closing (or, if earlier, termination of the Agreement), each of the Sellers, the Hong Kong Acquired Companies and the United States Acquired Companies have agreed , as applicable, to operate in the ordinary course of business in accordance with past practice, and has accepted certain other customary operating commitments, as further detailed in the Agreement. Each of the aforementioned parties has also agreed not to take certain actions prior to closing (or, if earlier, termination of the Agreement) without the prior written consent of the Company.

The Closing is subject to customary conditions, including, but not limited to, (i) the accuracy of the representations and warranties of the parties and the compliance by the parties with the commitments set forth in the Agreement, subject to certain materiality conditions; (ii) the absence of any material adverse effects (as defined in the agreement) on the acquired companies; (iii) the execution and delivery by the parties of ancillary agreements provided for in the Agreement; and (iv) any waiting period (including any extension thereof) applicable to the completion of the transactions contemplated by the Agreement or any related agreement under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 , as amended, and the rules and regulations promulgated hereunder, having expired or terminated.

The Agreement provides customary termination rights for the Company and the Representative (on behalf of the Sellers), including, among other reasons for termination, if Closing has not taken place on or before June 30, 2022.

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The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, which is filed as Exhibit 2.1 to this current Report on Form 8-K and is incorporated herein by reference. The agreement has been attached to this current report on Form 8-K to provide investors with information regarding its terms. The Agreement is not intended to provide other factual information about any of the parties to the Agreement or any of their respective subsidiaries or affiliates. Representations, warranties and undertakings contained in the Agreement have been made solely for the purposes of the Agreement on the specific dates set forth therein, were solely for the benefit of the parties to the Agreement, may be subject to significant restrictions and limitations as may be agreed upon by the parties for the purpose of spreading the contractual risk among those parties to the Agreement instead of establishing such matters as facts, and may be subject to materiality standards applicable to those contracting parties which differ from those applicable to investors. In addition, the assertions contained in the representations and warranties contained in the Agreement are qualified by the information contained in the confidential disclosure schedules provided by the Acquired Companies and the Sellers to the Company in connection with the signing of the Agreement. Investors should not rely on any representations, warranties and covenants or any description thereof as characterizations of the actual state of affairs or the condition of the parties to the agreement or any of their subsidiaries. or respective affiliates and investors should consider the information contained in the Agreement in conjunction with all factual information regarding the Company, if any, in its public reports filed with the Security and Trade Commission. In addition, information regarding the subject matter of representations and warranties may change after the date of the Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.

Funding commitment

As part of the conclusion of the Agreement, the 22 December 2021, the Company has also entered into letters of engagement (the “letters of engagement”), with Citigroup World Markets Inc. (“Citigroup”), by virtue of which Citigroup has undertaken to provide the Company with (i) a $ 500 million senior secured revolving credit facility (the “Revolver Backstop”) while the Company seeks an amendment to the credit agreement governing its existing senior secured revolving credit facility in order, among other things, to allow the acquisition and incurring additional debt to finance the Acquisition, and (ii) a senior secured B term loan facility in an aggregate principal amount equal to $ 2.0 billion (the “Term Loan Facility B” and, together with the Backstop Revolver, the “Facilities”). The proceeds of term loan facility B, together with approximately $ 50.0 million of the Company’s cash, will be used to (i) finance the cash consideration of the Acquisition, (ii) pay the costs and expenses related to the Acquisition and the Facilities, and (iii) in the case of the Backstop Revolver, to finance working capital and for general corporate purposes of the Company and its subsidiaries. Commitments under the Letters of Commitment are subject to the usual closing conditions.

Article 7.01. FD Regulation Disclosure.

At 23 December 2021, the Company issued a press release announcing the acquisition. A copy of the press release is provided as Exhibit 99.1 of this current report on Form 8-K.

Also on 23 December 2021, the Company has posted a presentation to investors regarding the acquisition on its website at https://investors.crocs.com. A copy of the Investor Presentation is provided as Exhibit 99.2 of this current report on Form 8-K.

Article 9.01. Financial statements and supporting documents.

(d) Exhibits.


    Exhibit
      No.                                              Description
     2.1*                Securities Purchase Agreement, dated as of December 22, 2021, by and among:
                       (i) Crocs, Inc.; (ii) Full Fortune Wealth Limited; (iii) Mr. Daniele Guidi;
                       (iv) Full Fortune Intellectual Limited; (v) Full Fortune Worldwide Limited;
                       (vi) Full Fortune Online Limited; (vii) Happy One LLC; (viii) Lucky Top Inc.;
                       (ix) Mr. Alessandro Rosano; and (x) Full Fortune Wealth Limited, in its
                       capacity as representative and agent for Sellers.

     99.1                Crocs, Inc. press release dated December 23, 2021.

     99.2                Crocs, Inc. investor presentation dated December 2    3    , 2021.

      104              Cover Page Interactive Data File (embedded within the Inline XBRL document).

       *               Certain exhibits and schedules have been omitted pursuant to Item 601(b)(2)
                       of Regulation S-K. The Company agrees to furnish supplementally to the
                       Securities and Exchange Commission a copy of any omitted exhibits or
                       schedules upon request; provided that the Company may request confidential
                       treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
                       amended.


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