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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
(Frederick's of Hollywood, Inc.)
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(Name of Issuer)
Class A Common Stock, $1.00 par value
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(Title of Class of Securities)
35582420-2
--------------------
(CUSIP Number)
Robert Greenwood, Compliance Director
Bayview Investors, Ltd.
c/o Robertson, Stephens & Company LLC
555 California Street
San Francisco, CA 94104
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
August 25, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Note. Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") of otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
CUSIP NO. 35582420-2
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Bayview Investors, Ltd.
94-2993100 (FEIN)
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /x/
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
A California limited partnership
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7 SOLE VOTING POWER
0
NUMBER OF ---------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 1,283,258
EACH ---------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 0
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,283,258
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,283,258
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
43.4%
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14 TYPE OF REPORTING PERSON*
PN
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2
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ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D ("Schedule 13D") relates to the shares of
Class A Common stock, $1.00 par value ("shares"), issued by Frederick's of
Hollywood, Inc., a Delaware Corporation ("Issuer"). The principal executive
offices of the Issuer are at 6608 Hollywood Boulevard, Hollywood, CA 90028,
(213) 466-5151.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c). This Schedule 13D is filed on behalf of Bayview Investors,
Ltd. ("Bayview") one of the six members of the group ("Group") which acquired
beneficial ownership of the shares reported herein through Royalty ("Royalty")
Corporation pursuant to the Stock Purchase Agreement dated August 25, 1997
between Royalty Corporation, as purchaser, and the Frederick N. Mellinger Trust
and the Harriet R. Mellinger Trust, as sellers, which agreement (the "Stock
Purchase Agreement") is attached hereto as Exhibit "A". The five members of
the Group not included in this Schedule 13D filing are Monroe Holdings,
L.L.C., 1995 Investments, L.L.C., ECC Spice, L.L.C., Indosuez FOH Partners, and
Truemarq (Asia) PTE LTD. Bayview is a venture capital partnership whose
partners are employees of Robertson, Stephens & Company LLC, formed in 1985
for the purpose of making investments in various companies and other entities.
This Schedule 13D also includes information with respect to the general
partner of Bayview, Robertson Stephens Private Equity Group, L.L.C., a
Delaware limited liability company ("RSPEG"). RSPEG is a partner of numerous
venture capital partnerships.
Filing Persons
Bayview Investors, Ltd.
c/o Robertson Stephens Private Equity Group, L.L.C.
555 California Street
San Francisco, CA 94104
(d) During the last 5 years, neither Bayview nor RSPEG has been
convicted in a criminal proceeding.
(e) During the last 5 years, neither Bayview nor RSPEG has been a
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
(f) Not applicable.
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The funds used for the purchase reported herein as well as a
simultaneous purchase of shares of Class B common stock of Frederick's are
derived from Royalty Corporation's working capital in the aggregate
amount of $ 19.0 million and an additional $11.6 million which will be
funded either by Royalty's existing financing arrangements described in
the Information Statement (described below) under "Description of
Financing of Merger" upon consummation of the Merger, or from financing
arrangements as described in section 6(c) of this Schedule 13D and as to
be further determined in the event the purchase described herein is
effected prior to the consummation of the Merger. Royalty's working
capital is derived from an aggregate of $19.0 million of capital
contributions made by members of the Group as follows:
Monroe Holdings $ 8,494,120
1995 Investments 3,352,940
ECC Spice 1,117,640
Bayview Investors, Ltd. 335,300
Indosuez Partners 1,900,000
Trumarq (Asia) PTE Ltd. 3,800,000
------------
Total $19,000,000
Capital contributions from Bayview were made from its working capital
which was obtained from capital contributions made by its partners. Prior to
the purchase reported herein, neither Bayview nor RSPEG was a beneficial owner
of shares of Class A Common Stock.
ITEM 4. PURPOSE OF THE TRANSACTION.
On June 15, 1997, Royalty, Royalty Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Royalty, and the Issuer entered
into an Agreement and Plan of Merger, as amended on July 28, 1997 ("Merger
Agreement") whereby upon the occurrence of certain specified events, the Issuer
would be merged with Royalty Acquisition Corporation. (The Merger Agreement was
filed with the U. S. Securities and Exchange Commission ("SEC") by the Issuer
on Form 8-K on June 20, 1997 and is hereby incorporated by reference as though
fully set forth herein.) Pursuant to the Merger Agreement, (i) each outstanding
share of the Issuer's Class A Common Stock and Class B Common Stock, each par
value $1.00 per share, will be converted into the right to receive $6.14 in
cash, without interest, and (ii) each share held by the Issuer or any of its
subsidiaries or held in the Issuer's treasury is to be canceled, and no payment
is to be made with respect thereto ("Merger Transaction"). The Board of
Directors of the Issuer approved the Merger Transaction on June 15, 1997. The
planned effective date of the Merger was scheduled for August 27, 1997. On
August 6, 1997 proxy material, including an information statement (the
"Information Statement"), was mailed via the U.S. Postal Service to all of the
Issuer's stockholders who held shares as of July 21, 1997. The Information
Statement was filed with the SEC on August 4, 1997 and is hereby incorporated
by reference as though fully set forth herein.
Royalty Corporation entered into the Stock Purchase Agreement with The
Frederick N. Mellinger Trust and The Harriet R. Mellinger Trust disclosed
herein to acquire the shares of Class A Common Stock for $6.90 per share on
August 25, 1997, as supplemented September 3, 1997. In addition, pursuant to
the Stock Purchase Agreement, Royalty agreed that per consummation of the
Merger, it will purchase all other shares of the Issuer, both Class A Common
Stock and Class B Common Stock, for $6.90 per share. In addition, pursuant to
the Stock Purchase Agreement, Royalty has been granted an irrevocable proxy to
vote all of the shares subject to the Agreement in favor of the Merger.
Consequently, the primary purpose of effecting the Stock Purchase Agreement was
to enhance the Filers' ability to gain control of the Issuer through the Merger
and to discourage other competing bidders. Royalty may make additional
purchases of Class A Common Stock, or agreements or options with respect to
such stock, to further enhance its ownership position. At present, Royalty has
not entered into any specific agreements with respect to any such additional
Purchases.
Royalty intends to acquire all the shares of both the Class B Common
Stock and Class A Common Stock of the Issuer pursuant to the Merger Agreement.
Royalty intends to consummate the Merger Transaction to pay all stockholders
in cash for their shares and reconstitute the Board of Directors, all as
described in the Information Statement. As a result of the Merger, the Issuer
will become privately held, and consequently will be delisted from the New York
Stock Exchange and will terminate its registration pursuant to Section 12(g)4
of the Act.
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ITEM 5. INTEREST IN THE SECURITIES OF THE ISSUER.
(a)-(b) Royalty Corporation has direct beneficial ownership and the
members of the Group, Monroe Holdings, 1995 Investments, ECC Spice,
Bayview Investors, Ltd., Indosuez FOH Partners, and Truemarq (Asia) PTE
LTD., share indirect beneficial ownership of 1,283,258 shares (43.4%) of
the Company's Class A Common Stock. Each of the members of the Group has
deposited all of its respective shares of Royalty and rights thereto into
a voting trust which vests all voting and dispositive power of the
securities of Royalty to the Trustees ("Voting Trust"). The Trustees of
this Voting Trust are David E. Lipson, Nadine E. Lipson, Laurence E.
Lipson, and Suzanne L. Saxman whose majority vote determines all voting
and investment decisions of the shareholders of Royalty. The members of
the Board of Directors of Royalty Corporation, David E. Lipson and John
H. Friedman have the power to direct corporate action of Royalty at the
board level.
(c) Except for those shares acquired and disclosed herein, neither
Bayview nor RSPEG has purchased shares of the Company's Class A Common
Stock within the past 60 days.
Royalty Corporation entered into the Stock Purchase Agreement with
the Harriet R. Mellinger Trust and the Frederick N. Mellinger Trust on
August 25, 1997, as supplemented on September 3, 1997, to acquire from
each Trust 463,066 and 820,192 of the shares, respectively, of the
Class A Common Stock of the issuer for $6.90 per share.
Name Number of Shares
---- ----------------
The Harriet R. Mellinger Trust 463,066
The Frederick N. Mellinger Trust 820,192
---------
Total 1,283,258
(d) Not applicable
(e) Not applicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
A. Royalty entered into the Stock Purchase Agreement to purchase 1,283,258
shares (43.4%) of the Company's Class A Common Stock from the Frederick N.
Mellinger Trust and Harriet N. Mellinger Trust for $6.90 per share on August
25, 1997, as supplemented on September 3, 1997. The Stock Purchase Agreement,
as supplemented, is attached hereto as Exhibit A.
B. Royalty Corporation, its wholly owned subsidiary, Royalty Acquisition
Corporation, and the Issuer entered into the Merger Agreement on June 15, 1997,
as amended by First Amendment to Agreement and Plan of Merger dated as of July
28, 1997, to acquire 100% of the outstanding stock of the Issuer. The Merger
Agreement was filed with the U. S. Securities and Exchange Commission ("SEC") by
the Issuer on Form 8-K on June 20, 1997 and is hereby incorporated by reference
as though fully set forth herein.
C. The balance of the funds required to consummate the purchase will be
provided as a loan to Royalty Corporation by some or all of the members of the
Group.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Copies of all written agreements relating to the filing of joint
acquisition statements and copies of all written agreements, contracts,
arrangements, understandings, plans or proposals relating to the Merger
Transaction, acquisition of control, change in corporate structure, the
transfer of voting securities, finder's fees, the shareholder agreement, and
voting trust agreement have been identified in Item 6 above and are attached
or incorporated by reference as already herein specified.
(a) Stock Purchase Agreement, as supplemented
(b) Merger Agreement, incorporated by reference from Issuer's Form 8-K
filed on June 20, 1997.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 4, 1997
BAYVIEW INVESTORS, LTD.
By: /s/ Dana K. Welch
------------------------
Authorized Signatory
6
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EXHIBIT A
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of August 25,
1997, by and between Royalty Corporation, a Delaware corporation ("Buyer"), and
the Frederick N. Mellinger Trust and the Harriet R. Mellinger Trust
(collectively, "Seller").
WHEREAS, Frederick's of Hollywood, Inc. ("Frederick's") has entered into
an Agreement and Plan of Merger dated as of June 15, 1997, as amended by First
Amendment to Agreement and Plan of Merger dated as of July 28, 1997 (the
"Merger Agreement") with Buyer, pursuant to which Buyer's wholly owned
subsidiary Royalty Acquisition Corp. will be merged with and into Frederick's
(the "Merger"), with Frederick's surviving the Merger; and
WHEREAS, under the Merger Agreement, each issued and outstanding share of
Class A capital stock, $1.00 par value, and Class B capital stock, $1.00 par
value, of Frederick's will be canceled and converted into the right to receive
$6.14 per share (the "Merger Price "); and
WHEREAS, as of the date hereof, Seller owns, and is willing to sell on the
terms contained herein, 1,283,258 shares of Class A capital stock and 3,159,103
shares of Class B capital stock (collectively, the "Shares") of Frederick's;
and
WHEREAS, Buyer is willing to and shall purchase 1,283,258 shares of the
Class A capital stock and 2,563,258.9 shares of the Class B capital stock as a
single unit representing 43.42212% of the total issued and outstanding shares
of each of the Class A capital stock and the Class B capital stock, plus an
additional 595,844.1 shares of Class B capital stock representing 10.0937% of
the total issued and outstanding shares of the Class B capital stock, at $6.90
per share and otherwise in accordance with the terms and subject to the
conditions of this Agreement.
WHEREAS, Buyer is willing, upon consummation of the Merger, to make an
additional payment to the remaining stockholders ("Remaining Stockholders") so
that their aggregate consideration is $6.90 per share.
Accordingly, for and in consideration of the foregoing, the parties hereto
agree as follows:
1. Purchase and Sale. On the terms and subject to the conditions of this
agreement, Seller hereby agrees to sell, convey, transfer and assign to the
Buyer, and the Buyer hereby agrees to purchase, accept and acquire from Seller,
the Shares.
2. Purchase Price and Closings.
(a) Buyer agrees to pay as the purchase price for the Shares an
amount equal to $6.90 per Share. Payment for the Shares shall be made
upon the earlier of the consummation of the Merger or the Merger Deadline
(as defined in Section 10.1 of the Merger Agreement, hereinafter the
"Closing"). At the Closing, Seller shall deliver or cause to be
delivered to Buyer a stock certificate or certificates duly endorsed for
transfer by delivery or accompanied by stock powers duly endorsed in
blank for the Shares sold by Seller, together with such other documents
as may be necessary to effect the transfer thereof to Buyer. At the
Closing, Buyer shall pay in cash to Seller the per Share purchase price
multiplied by the Shares being sold by Seller at the Closing.
(b) In the event the Merger is consummated pursuant to the Merger
Agreement, Buyer hereby agrees that an additional payment of $0.76 per
share shall be paid to the Remaining Stockholders entitled to payment of
the Merger Price, at such time as the Merger Price is paid to such
holders.
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3. Representations and Warranties of the Seller. Seller represents and
warrants to the Buyer as follows:
(a) Seller has good and marketable title to the Shares, free and
clear of any claims, security interests, liens and encumbrances except
for a pledge of the Shares to Bank of America. Upon sale hereunder, good
and marketable title to the Shares will be transferred to Buyer, free and
clear of any claims, security interests, liens and encumbrances
whatsoever, including without limitation the pledge to Bank of America.
(b) The execution and delivery of this Agreement on behalf of Seller
and the consummation by Seller of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of Seller,
and this Agreement constitutes the legal, valid and binding agreement of
Seller enforceable in accordance with its terms.
4. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to the Seller as follows:
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of Delaware.
(b) The execution and delivery of this Agreement and the
consummation by Buyer of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Buyer,
and this Agreement constitutes the legal, valid and binding agreement of
Buyer enforceable in accordance with its terms.
(c) Buyer has a net worth of at least $17 million.
5. Irrevocable Proxy. Seller hereby irrevocably appoints the Buyer or
any designee of the Buyer the lawful agent, attorney and proxy of Seller, during
the term of this Agreement, to vote all of the Shares in favor of the Merger
Agreement, and the transactions contemplated by the Merger Agreement against any
other proposal for any merger, sale of assets or other business combination
between the Company and any other person or entity or which would result in any
of the conditions to the Buyer's obligations not being fulfilled. Seller
acknowledges that the irrevocable proxy created hereby is coupled with an
interest.
6. Conditions Precedent to the Seller's Obligations. Each of the
obligations of Seller to be performed hereunder shall be subject to the
satisfaction (or waiver by Seller), prior to the time Seller is obligated to
perform such obligation, of each of the following conditions:
(a) Buyer's representations and warranties contained in this
Agreement shall be true on and as of such time with the same force and
effect as though made on and as of such time.
(b) Buyer shall have complied in all material respects with the
covenants set forth herein to be performed by it.
7. Conditions Precedent to Buyer's Obligations. Each of the
obligations of Buyer to be performed hereunder shall be subject to the
satisfaction (or waiver by Buyer), prior to the time Buyer is obligated to
perform such obligation, of each of the following conditions:
(a) Seller's representations and warranties contained in this
Agreement shall be true on and as of such time with the same force and
effect as though made on and as of such time.
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(b) Seller shall have complied in all material respects with the
covenants set forth herein to be performed by Seller.
8. Termination. This Agreement may be terminated and the purchase and
sale contemplated herein may be abandoned:
(a) By mutual consent of the parties hereto.
(b) By either party hereto, if such party is precluded by an order
or injunction of a court of competent jurisdiction from consummating the
purchase and sale contemplated hereunder.
(c) By either party hereto, if after the date hereof any action has
been taken or any statute, rule or regulation has been enacted,
promulgated or deemed applicable to the transactions contemplated hereby
by any government or governmental agency that makes the consummation of
the transactions contemplated hereby illegal.
(d) By either party hereto upon termination of the Merger Agreement
in accordance with its terms, as fully set forth in Article X thereof.
In the event of such termination or abandonment, neither party hereto (or
any of its directors, officers or trustees) shall have any liability, or
further obligation to the other party to this Agreement, except that nothing
herein will relieve either party from liability under Section 10 or for any
material breach of any warranty set forth in Sections 3 or 4, or for any
willful breach of this Agreement.
9. Further Assurances. Each party agrees to cooperate with the other,
and to execute and deliver, or cause to be executed and delivered, all such
other instruments, and to take all such other actions as it may be reasonably
requested to take, from time to time, in order to effectuate the provisions and
purposes of this Agreement.
10. Specific Performance. Each party acknowledges that (i) the Shares
ansferred to Buyer pursuant to this Agreement and the rights of Seller hereunder
are unique, (ii)Eneither party will have any adequate remedy at law if the other
party shall fail to perform any of its obligations hereunder and (iii) each
party shall have the right, in addition to any other rights it may have, to
specific enforcement of this Agreement if the other party shall fail to perform
any of its obligations hereunder.
11. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, personal
representatives, successors and assigns. Buyer may, without the consent of the
Seller, assign any or all of its rights hereunder, provided that any such
assignment shall not effect the obligations of Buyer hereunder.
12. Amendment and Modification. This Agreement may not be amended,
modified, supplemented or changed in any respect except by a writing duly
executed by Seller and Buyer.
13. Other Provisions.
(a) Notice. All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed first
class, certified return receipt requested, with postage prepaid as
follows:
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If to Buyer, addressed to:
Royalty Corporation
c/o D'Ancona & Pflaum
30 North LaSalle, Suite 2900
Chicago, IL 60602
Attn: Suzanne L. Saxman
If to Seller, addressed to:
The Frederick N. Mellinger Trust
The Harriet R. Mellinger Trust
c/o Hugh V. Hunter
16633 Ventura Boulevard, Suite 1211
Encino, California 91436
(b) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
taken together shall constitute one instrument.
(c) Headings. The headings of the paragraphs and subparagraphs of
this Agreement are inserted for convenience only and shall not constitute
a part hereof.
(d) Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
(e) Benefit of Parties. Except as expressly provided herein,
nothing in this Agreement shall be construed to give any person or entity
other than Seller, Buyer and the Remaining Stockholders any legal or
equitable right, remedy or claims under this Agreement, and this
Agreement shall be for the sole and exclusive benefit of Seller, Buyer
and the Remaining Stockholders.
(f) Expenses. The parties shall bear their own respective expenses
incurred in connection with this Agreement and consummation of the
transactions contemplated hereby.
(g) Severability. Whenever possible, each provision shall be
construed so as to be interpreted in such manner as to be effective and
valid under applicable law. If any provision of this Agreement or the
application thereof to any party or circumstance shall be prohibited by
or invalid under applicable law, such provision shall be ineffective to
the extent of such prohibition without invalidating the remainder of such
provision or any other provision of this Agreement or the application of
such provision to other parties or circumstances.
(h) Waivers. No delay on the part of either party in the exercise
of any right or remedy shall operate as a waiver thereof, and no single
or partial exercise of any right or remedy by either party shall preclude
any other or further exercise thereof, or exercise of any other right or
remedy.
10
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
<TABLE>
<CAPTION>
SELLER: BUYER:
<S> <C>
THE FREDERICK N. MELLINGER TRUST ROYALTY CORPORATION
a Delaware corporation
By: /s/ Hugh V. Hunter By: /S/ David E. Lipson
-------------------------------- ----------------------
Hugh V. Hunter, Co-Trustee David E. Lipson,
Chariman of the Board & President
BY: WELLS FARGO BANK, CO-TRUSTEE
By: /s/ Gary Newman
-----------------------------
By: /s/ Karen M. Vielhaber
-----------------------------
THE HARRIET R. MELLINGER TRUST
By: /s/ Hugh V. Hunter
--------------------------------
Hugh V. Hunter, Co-Trustee
BY: WELLS FARGO BANK, CO-TRUSTEE
By: /s/ Gary Newman
-----------------------------
By: /s/ Karen M. Vielhaber
-----------------------------
</TABLE>
11
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SUPPLEMENT TO STOCK PURCHASE AGREEMENT
This Supplement to Stock Purchase Agreement (the "Agreement") is made as
of September 3, 1997, by and between Royalty Corporation, a Delaware
corporation ("Buyer"), and the Frederick N. Mellinger Trust and the Harriet R.
Mellinger Trust (collectively, "Seller").
WHEREAS, Buyer and Seller have entered into a Stock Purchase Agreement
dated as of August 25, 1997 (the "Stock Purchase Agreement"), providing for the
purchase by Buyer of shares of Class A capital stock and Class B capital stock
of Frederick's of Hollywood, Inc. owned by Seller (the "Shares"); and
WHEREAS, pursuant to Section 12 of the Stock Purchase Agreement Buyer and
Seller desire to supplement the Stock Purchase Agreement;
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties hereto agree as follows:
1. Status of Stock Purchase Agreement. Except as specifically
supplemented herein, the Stock Purchase Agreement shall remain in full force
and effect. This Supplement is not to be construed as a release, waiver or
modification of any of the terms, conditions, representations, warranties,
covenants, rights or remedies set forth in the Stock Purchase Agreement, except
as specifically set forth herein. All capitalized terms not otherwise defined
herein shall have the meaning ascribed to them in the Stock Purchase Agreement.
2. Termination. Section 8(d) of the Stock Purchase Agreement is hereby
revised to read in its entirety as follows: "By Seller if Buyer has not paid
the purchase price for the Shares on or prior to the Merger Deadline."
3. Closing. The parties recognize and agree that Buyer may, at its
option, exercise its right to purchase the Shares at any time upon written
notice to Seller, and that such exercise shall be effective upon delivery of
such written notice to Seller, subject only to Buyer paying the purchase price
therefor within two business days of delivery of such written notice. Buyer
and Seller acknowledge and agree that Seller's obligation to sell the Shares to
Buyer upon Buyer's exercise of its right to purchase the Shares is
unconditional and not subject to completion of the Merger or any other
contingency.
4. Indemnification. Buyer shall indemnify Seller, immediately upon
demand by Seller, for (a) any fee payable to Janney Montgomery Scott, Inc.
("Janney") pursuant to the agreement between Seller and Janney dated May 9,
1996 as a result of the consummation of the transactions contemplated by the
Stock Purchase Agreement; and (b) the out-of-pocket costs and expenses
(including attorneys' fees) incurred by Seller in connection with or related
to this Supplement, up to a maximum of $25,000. Upon and after Seller's
delivery of the Shares to Buyer, Buyer shall also indemnify Seller (including,
without limitation, the trustees of Seller, and their respective officers,
employees and agents), for any expense (including, without limitation,
reasonable attorneys fees and other costs of defense), loss, damage, liability
or claims ("Claims") asserted by any shareholder of Frederick's of Hollywood,
Inc. or by any other third party other than beneficiaries of the Seller,
arising from or relating to the transactions contemplated by the Stock Purchase
Agreement, as supplemented hereby. Buyer retains the right to provide and
participate in the defense of such Claims.
5. Buyer's Account. Buyer represents that the Shares are being
acquired for its own account and not with a view to resale. If the Merger is
not consummated, and prior to March 1, 1998 Buyer resells the Shares to an
unaffiliated third party for a price per share greater than $6.90, then Buyer
shall pay Seller as additional purchase price the amount of any such
difference.
6. Best Efforts. Buyer shall use its best efforts to cause the
consummation of the Merger pursuant to the Agreement and Plan of Merger among
Buyer, Royalty Acquisition Corp. and Frederick's of Hollywood, Inc. Buyer and
Seller each shall take such actions requested by the other to effectuate the
terms of the Stock Purchase Agreement, as supplemented hereby.
7. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
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8. Governing Law. This Amendment shall be governed by the laws of the
state of California (regardless of the laws that might otherwise govern under
applicable California principles of conflicts of law) as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies.
*****
SELLER: BUYER:
THE FREDERICK N. MELLINGER TRUST ROYALTY CORPORATION
a Delaware Corporation
By: /s/ Hugh V. Hunter By: /s/ David E. Lipson
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Hugh V. Hunter, Co-Trustee Davis E. Lipson
Chairman of the Board & President
BY: WELLS FARGO BANK, CO-TRUSTEE
By: /s/ Gary Newman, Vice President Trust
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By: /s/ Patricia A. Cassin
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THE HARRIET R. MELLINGER TRUST
By: /s/ Hugh V. Hunter
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Hugh V. Hunter, Co-Trustee
BY: WELLS FARGO BANK, CO-TRUSTEE
By: /s/ Gary Newman, Vice President Trust
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By: /s/ Patricia A. Cassin
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