Item 1.01. Entry into a Material Definitive
Agreement.
On July 19, 2021, Sequential
Brands Group, Inc. (“Sequential” or the “Company”) entered into an asset purchase agreement (the “Purchase
Agreement”) with Elan Polo International, Inc., (the “Buyer”), pursuant to which Sequential agreed to sell its 65% interest
in DVS Footwear International LLC (“DVS”) for $2,000,000 in cash consideration. The sale closed on July 19, 2021.
The Purchase Agreement included
customary representations, warranties and covenants of Sequential and the Buyer. The Purchase Agreement also contained indemnification
provisions pursuant to which Sequential has agreed to indemnify the Buyer against certain losses, subject to the limitations set forth
therein, including losses related to breaches of representations, warranties and covenants.
The foregoing description
of the Purchase Agreement and the transactions contemplated thereby is qualified in its entirety by the full text of the Purchase Agreement,
which is filed as an exhibit to this Form 8-K.
The Purchase Agreement is
included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual
information about Sequential, the Company or the Buyer or any of their respective businesses, subsidiaries or affiliates. The representations,
warranties and covenants contained in the Purchase Agreement (a) were made by the parties thereto only for purposes of that agreement
and as of specific dates; (b) were made solely for the benefit of the parties to the Purchase Agreement; (c) may be subject to limitations
agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection
with the execution of the Purchase Agreement (such disclosures include information that has been included in public disclosures, as well
as additional non-public information); (d) may have been made for the purposes of allocating contractual risk between the parties
to the Purchase Agreement instead of establishing these matters as facts; and (e) may be subject to standards of materiality applicable
to the contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties
and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Sequential, the Company or
the Buyer or any of their respective subsidiaries or affiliates. Additionally, the representations, warranties, covenants, conditions
and other terms of the Purchase Agreement may be subject to subsequent waiver or modification. Moreover, information concerning the subject
matter of the representations, warranties and covenants may change after the date of the Purchase Agreement, which subsequent information
may or may not be fully reflected in Sequential’s public disclosures. The Purchase Agreement should not be read alone, but should
instead be read in conjunction with the other information regarding Sequential that is or will be contained in, or incorporated by reference
into, the Forms 10-K, Forms 10-Q and other documents that are filed with the Securities and Exchange Commission.
As previously disclosed, there
are ongoing defaults under the Third Amended and Restated First Lien Credit Agreement and the Third Amended and Restated Credit Agreement,
both dated as of July 1, 2016 (collectively the “Credit Agreements”) with Bank of America, N.A., as administrative agent and
collateral agent and Wilmington Trust, National Association as administrative agent and collateral agent, respectively. The lenders under
the Credit Agreements have provided a waiver of such defaults through August 10, 2021. We have disclosed certain uncertainties and risks
applicable to us in our previous Form 8-K filed on July 2, 2021 and July 8, 2021. The disclosure in this Form 8-K should be read in conjunction
with such information.
Our Board of Directors is
continuing to evaluate strategic alternatives, including refinancing all or a portion of our debt and/or the divestiture of one or more
existing brands or a sale of the Company, which divestiture or sale may occur pursuant to a case under the federal bankruptcy code. However,
we cannot assure you that any such divestiture or sale efforts will be successful or that such efforts will yield the overall best price
for such assets, particularly if such events occurred through a restructuring or bankruptcy filing. Any sale of assets may represent a
triggering event requiring that we evaluate the carrying value of such assets for impairment purposes, which impairments may be material.