<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement
Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [X]
Filed by the Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only
(as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 14a-11(c) or Rule 14a-12
FREDERICK'S OF HOLLYWOOD, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
Class A Capital Stock, $1.00 par value per share, and Class B
Capital Stock, $1.00 par value per share
2) Aggregate number of securities to which transaction applies:
9,729,927 shares of Class A and Class B Capital Stock
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
$69,735,865, representing (a) the sum of all shares outstanding
multiplied by $7.75, plus (b) the product of (i) the difference
between $7.75 and the exercise price of each option whose exercise
price is less than or equal to
<PAGE> 2
SCHEDULE 14A INFORMATION
Proxy Statement
Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [X]
Filed by the Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only
(as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 14a-11(c) or Rule 14a-12
FREDERICK'S OF HOLLYWOOD, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
Class A Capital Stock, $1.00 par value per share, and Class B
Capital Stock, $1.00 par value per share
2) Aggregate number of securities to which transaction applies:
9,729,927 shares of Class A and Class B Capital Stock
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
$69,735,865, representing (a) the sum of all shares outstanding
multiplied by $7.75, plus (b) the product of (i) the difference
between $7.75 and the exercise price of each option whose exercise
price is less than or equal to
<PAGE> 3
$7.75, and (ii) the number of shares subject to each such option, plus
(c) the product of (i) $.05 and (ii) the number of shares subject to
options whose exercise price exceeds $7.75.
4) Proposed maximum aggregate value of transaction:
$69,735,865
5) Total fee paid:
$3,010 (Revised fee of $13,947 less amount previously paid of $10,397)
[ ] Fee paid previously with preliminary materials.
[X] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $10,937
2) Form, Schedule or Registration Statement No.: Schedule 14A
Consent Solicitaion
3) Filing Party: Frederick's of Hollywood, Inc.
4) Date Filed: August 4, 1997
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<PAGE> 4
[FREDERICK'S LOGO]
September 18, 1997
Dear Stockholder:
Since the mailing to you of the Consent Solicitation Statement dated August
6, 1997 (the "Consent Solicitation Statement"), the price to be paid to all
holders of Class A and Class B Capital Stock of Frederick's of Hollywood, Inc.,
a Delaware corporation (the "Company"), pursuant to the merger described below
has been increased from $6.14 to $7.75 per share. Accordingly, we are seeking
your consent as a holder of the outstanding Class A Capital Stock and/or Class B
Capital Stock of the Company, to the following two proposals: (i) an amendment
to the Certificate of Incorporation of the Company (the "Certificate Amendment")
to delete certain provisions thereof; and (ii) the merger (the "Merger") of
Royalty Acquisition Corp., a Delaware corporation (the "Purchaser"), with and
into the Company (with the Company being the surviving corporation) pursuant to
an Agreement and Plan of Merger (as amended, the "Merger Agreement"), dated as
of June 15, 1997, as amended as of July 28, 1997, and as further amended as of
September 8, 1997, among the Company, Royalty Corporation, a Delaware
corporation (the "Parent"), and the Purchaser, which is a direct subsidiary of
the Parent. Following the Merger, the Company will become a wholly owned
subsidiary of Parent. Stockholders of record as of July 21, 1997 are entitled to
consent to the adoption and approval of the Certificate Amendment, the Merger
Agreement and the Merger.
As of the date hereof, as a result of the Stock Purchase Agreement and
Supplement (as hereinafter defined), the Parent has the right to acquire and has
been given a proxy to vote approximately 43.4% and 53.5%, respectively, of all
outstanding shares of the Class A and Class B Capital Stock of the Company. As
of the date hereof, the Purchaser and its affiliates have also made open-market
purchases of an additional percentage of the Class A Capital Stock of the
Company such that they now beneficially own 50.04% of the Class A Capital Stock
of the Company, although Purchaser does not have the right to vote such
additional shares in favor of the Merger.
THE CONSENTS WHICH WERE FORWARDED TO YOU WITH THE CONSENT SOLICITATION
STATEMENT DATED AUGUST 6, 1997 WILL BE CANCELLED AND WILL BE OF NO FURTHER FORCE
AND EFFECT. IN ORDER TO GIVE YOUR CONSENT TO THE PROPOSALS, YOU MUST COMPLETE,
DATE AND SIGN THE ENCLOSED NEW CONSENT CARD(S) AND RETURN THEM NO LATER THAN
9:00 A.M. (EASTERN DAYLIGHT TIME) ON SEPTEMBER 29, 1997.
THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES THAT THE CERTIFICATE
AMENDMENT AND THE MERGER ARE IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE
COMPANY. ACCORDINGLY, THE BOARD HAS UNANIMOUSLY APPROVED THE CERTIFICATE
AMENDMENT, THE MERGER AGREEMENT, AS AMENDED, AND THE MERGER AND RECOMMENDS THAT
THE COMPANY'S STOCKHOLDERS CONSENT TO THE CERTIFICATE AMENDMENT, THE MERGER
AGREEMENT, AS AMENDED, AND THE MERGER.
This letter serves to supplement and modify the information set forth in
the Consent Solicitation Statement in order to (i) describe certain events which
have taken place since the August 6, 1997 date thereof, the most important of
which is the adoption by the Board of Directors of the Company (the "Board") of
a Second Amendment to the Merger Agreement (the "Second Amendment") (attached
hereto as Annex A) providing for an increase in the price to be paid to all
holders of Class A and Class B Capital Stock of the Company (the "Merger Price")
from $6.14 to $7.75 per share; and (ii) revise certain information contained
<PAGE> 5
therein respecting the "Minority Protection Transaction" provisions of the
Company's Certificate of Incorporation to be deleted if the Certificate
Amendment is approved.
INCREASE IN THE MERGER PRICE
The increase in the Merger Price was the result of negotiations
precipitated by two unsolicited offers to purchase all of the stock of the
Company at a price in excess of $6.14 per share, which offers were received
after the Consent Solicitation Statement was mailed.
On August 21, 1997, six days before the anticipated closing date of the
Merger as announced in the Consent Solicitation Statement, the Company and its
two principal stockholders (the "Principal Stockholders") received an
unsolicited written offer to purchase all of the stock of the Company for $7.00
per share in cash from a party (the "First Bidder") which had made several bids
previously, each of which had been rejected by the Board based on, among other
factors, the findings of Janney Montgomery Scott Inc. ("JMS"), the Company's
financial advisor. The First Bidder had initially requested information from JMS
in June of 1996, had put forth an expression of interest in July of 1996, and,
despite repeated requests from JMS, did not put forth a bid until nearly nine
months later. In February of 1997, the Company received a letter from the First
Bidder indicating that in order for the First Bidder to commence negotiations
with the Company, the Company would be required to execute a six-month
standstill agreement and pay a $2 million break-up fee if the Company were sold
or agreed to be sold during the term of the agreement. This letter, however,
contained no reference or commitment as to price, structure or financing of a
transaction with the Company. These conditions were entirely unacceptable to the
Board and JMS and caused them to have reservations with regard to dealing with
the First Bidder. In April of 1997, JMS received a cash bid of $5.80 per share
from the First Bidder, which bid contained a financing and due diligence
contingency. After negotiations with JMS, the offer was increased to a range of
$6.00 to $6.25 per share. In May of 1997, the First Bidder made a bid of $6.50
per share in cash for 80% of the Company's stock. This bid was rejected by the
Board because it was not for all outstanding shares and because, although the
First Bidder had obtained expressions of interest from several identified
financial sources by the end of May, the expressions of interest were still
contingent upon lenders' and investors' satisfactory due diligence prior to
becoming firm financial commitments. In addition, the equity component of the
bid was significantly less than the equity component in the Purchaser's bid and
the bid was to be syndicated over a large number of partners.
Upon receipt of the First Bidder's new $7.00 offer, the Board asked JMS to
ascertain whether the offer was adequately financed and the extent of any
contingencies related thereto. On August 22, JMS advised the Board that the
First Bidder intended to finance approximately fifty percent of its offer
through equity investments by five investors and approximately fifty percent
through secured debt. JMS, reporting on the financial aspects of the
transaction, advised the Board that its preliminary findings indicated that the
financing of the offer appeared to be credible. However, JMS noted that the
offer (i) was subject to financing contingencies, principally that certain of
the equity sources and the senior debt provider required that there be no
material adverse change in the condition (financial or otherwise) of the Company
from that contained in information previously provided to the First Bidder in
the Spring of 1997, and that the principal outside equity investor reserved the
right to change the economic terms of the acquisition to which it had
preliminarily committed, (ii) did not represent any significant monetary risk to
the First Bidder, as, in light of the materials provided to the Company, none of
the financing sources appeared to have required the payment of any commitment
fees, (iii) would expose the Company to break-up fees under the Merger Agreement
if the offer were accepted and the Merger Agreement were terminated, and (iv) if
accepted, could impose a delay in closing a transaction.
Over the weekend (August 23 and 24), the Board met twice to consider the
First Bidder's offer and the pending Merger pursuant to the existing Merger
Agreement with the Purchaser and the Parent. On August 23, the Board was
informed that the Parent was seeking to purchase the shares owned by the
Principal Stockholders and all other stockholders for $6.90 per share. On August
25, the Parent and the Principal Stockholders entered into an agreement (the
"Stock Purchase Agreement") pursuant to which the Parent agreed (i) to purchase
all of such holders' shares (which constitute approximately 43.4% and 53.5%,
respectively, of all outstanding shares of the Class A Capital Stock and Class B
Capital Stock of the
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Company) for $6.90 per share, and (ii) to pay $6.90 per share for the shares of
all other stockholders upon closing of the Merger. On August 25, the Company
issued a press release publicly disclosing the terms of the Stock Purchase
Agreement. On August 26, the Board reaffirmed its conclusion that the Merger
between the Purchaser and the Company, as supplemented by the Stock Purchase
Agreement pursuant to which all stockholders would receive $6.90 per share, was
in the best interests of the Company's stockholders. The Board based its
conclusion on its and JMS's prior dealings with the First Bidder and its and
JMS's concern regarding the credibility of the First Bidder, the deficiencies of
the First Bidder's offer noted above and the financial and legal certainties of
proceeding with the Merger with the Purchaser.
On August 27, the originally anticipated closing date of the Merger, the
Company received an unsolicited written offer to purchase all of the stock of
the Company for $7.75 per share from The Veritas Capital Fund, L.P. (the "Second
Bidder") which had not made a bid previously.
On August 28, the Board met twice to discuss the Second Bidder's offer. JMS
informed the Board that its preliminary findings indicated that the offer
appeared to be credible from a financial point of view and was to be financed
solely by the equity of the Second Bidder. The Board authorized JMS to arrange
for representatives from the First Bidder and the Second Bidder to meet with
representatives of the Company for further discussion and due diligence.
On September 2, Hugh V. Hunter, who was both a director of the Company and
a co-trustee of the Principal Stockholders, resigned from the Board. Subsequent
to such resignation, the remaining members of the Board were and continue to be
George W. Townson, William J. Barrett, Richard O. Starbird and Merle A.
Johnston.
Also on September 2, the Board approved a memorandum (the "Transaction
Memorandum") outlining the conditions that the First and Second Bidder were
required to satisfy in order for the Company to further consider such bidders'
offers, and forwarded it to the First and Second Bidder. The requirements
outlined in the Transaction Memorandum were intended to communicate the minimum
requirements that the Board deemed necessary for it to consider another offer in
light of the risk of jeopardizing the Merger with the Purchaser and/or incurring
a termination fee to be paid to the Purchaser if another offer were accepted.
The Transaction Memorandum required that each bidder deliver to the Company by
noon on Thursday, September 4 (i) a forfeitable deposit of $2.5 million, and
(ii) an executed merger agreement substantially in the same form as the Merger
Agreement, with specified modifications regarding price, capitalization,
financing, due diligence and remedies and damages. Each such bidder was also
informed orally that it must make its final, best offer by the September 4
deadline. The First Bidder visited the Company on September 2 and the Second
Bidder visited the Company on September 3, in each case to perform final due
diligence before making its final bid pursuant to the Transaction Memorandum.
The Purchaser was not required to comply with the Transaction Memorandum since
the Purchaser and the Company were already parties to the Merger Agreement.
On September 3, the Principal Stockholders and the Parent entered into a
Supplement to Stock Purchase Agreement (the "Supplement") which modified and
clarified certain terms of the Stock Purchase Agreement. The Supplement (i)
confirmed and clarified the unconditional obligation of the Principal
Stockholders to sell and Parent to buy the shares under the Stock Purchase
Agreement, even if the Merger Agreement were terminated, (ii) acknowledged the
Parent's right to pay for and receive the shares prior to consummation of the
Merger, (iii) provided certain indemnification to the Principal Stockholders in
connection with the Stock Purchase Agreement, (iv) confirmed the Parent's
obligation to use its best efforts to consummate the Merger, and (v) provided
that if the Parent were to resell the purchased shares prior to March 1, 1998 to
an unaffiliated third party for more than $6.90 per share, the difference would
be paid to the Principal Stockholders.
By September 4, neither the First nor Second Bidder had complied with all
of the requirements outlined in the Transaction Memorandum; however, the Second
Bidder provided a mark-up of the Merger Agreement, and, on September 5, counsel
to the Company received $2.5 million from the Second Bidder to be held in escrow
pending execution of a definitive agreement or earlier demand by the Second
Bidder. The Second Bidder proposed to consummate the transaction by a tender
offer followed by a merger, conditioned upon the Board granting the Second
Bidder an option to purchase authorized but unissued Class A Capital Stock of
the
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Company at a price of $7.75 per share in order to dilute the voting power of the
stock subject to the Stock Purchase Agreement and the Supplement. The Second
Bidder proposed to aggregate the shares acquired pursuant to such dilutive
option together with the shares that it would seek to acquire pursuant to the
tender offer to obtain a majority of the shares of the Class A Capital Stock of
the Company and reduce significantly the percentage of the Company's stock that
the Purchaser had the right to acquire pursuant to the Stock Purchase Agreement
and the Supplement. On September 5, the Board met to discuss the proposal of the
Second Bidder and authorized its counsel to proceed with negotiations with the
Second Bidder. However, the Board had significant concerns about the
uncertainties and risks from a practical and legal standpoint of consummating a
transaction with the Second Bidder and, in particular, whether the dilutive
option demanded by the Second Bidder could withstand legal scrutiny. The Board
was advised by its Delaware counsel that the Delaware courts had never approved
such an option and had described it as a "radical step," and, accordingly, that
there was a substantial risk that issuing such an option was not permissible
under Delaware law.
On September 6, Purchaser offered to increase the Merger Price for all of
the shares of the Company's Class A and Class B Capital Stock to $7.75 per share
subject to certain conditions, including termination of all other negotiations.
The Board met to discuss the offer and authorized counsel to negotiate the
principal terms thereof. Subsequently, the Company received a letter in which
the Purchaser represented that the additional funds necessary to consummate the
Merger at $7.75 per share would be contributed by financing sources identified
in the Consent Solicitation Statement. The Purchaser intends to fund the
additional purchase price ratably from such sources, including up to an
additional $3.7 million of equity financing.
Upon further negotiation by counsel, the final terms of the Purchaser's
offer were presented to the Board on September 6. At the meeting, JMS rendered
its oral opinion that the $7.75 Merger Price was fair to the stockholders of the
Company from a financial point of view. JMS based its opinion on (i) its
analysis of the various factors which it had previously considered in its
opinion rendered on June 15, 1997 which is included in the Consent Solicitation
Statement as Annex D; (ii) its determination that the analysis made in
connection with its prior opinion was not materially affected by financial
information it received subsequently, including information contained in the
Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1997; and
(iii) the agreement by the Principal Stockholders to sell their shares to the
Parent pursuant to the Stock Purchase Agreement and the Supplement which
effectively provided the Parent with a controlling position. JMS has
subsequently issued its written opinion, which is attached hereto as Annex B,
that the $7.75 Merger Price is fair, from a financial point of view, to the
minority stockholders whose investment decision is being addressed by the
Consent Solicitation Statement and by this Supplement.
The Board then agreed to the terms of the Purchaser's offer to the
exclusion of all other offers and authorized counsel to negotiate an amendment
to the Merger Agreement. The Board did so for the following reasons: (i) the
existence of the Stock Purchase Agreement and Supplement pursuant to which
Parent had the right to acquire a near majority of the outstanding Class A
Capital Stock and a majority of the Class B Capital Stock of the Company; (ii)
Parent's expressed intention to acquire such shares regardless of any action the
Board may have taken with respect to any third parties; (iii) Parent's expressed
intention to vote the shares to be acquired by it pursuant to the Stock Purchase
Agreement and Supplement against any transaction the Board may have approved
with any such third party; (iv) the high level of comfort of the Board with
respect to Parent's ability to consummate the transactions contemplated by the
Merger Agreement, including, but not limited to, the Parent's ability to pay the
increased Merger Price; and (v) the Board's significant concerns about the
uncertainties and risks from a practical and legal standpoint of consummating a
transaction with any other bidder and the resulting consequences to the
stockholders of the Company. The Board also concluded that it was in the best
interests of the Company's stockholders for the Board to accept the Purchaser's
offer, and, in that regard, not to pursue further negotiations with the Second
Bidder, based on the Board's judgment that, given the foregoing information and
circumstances, as well as the fact that the Second Bidder had been told to make
its best and final offer, and given the advice of Delaware counsel that it was
the Board's duty to act reasonably to seek the best value obtainable for the
Company's stockholders, the Purchaser's offer was the best offer reasonably
available to the stockholders.
On September 8, the Board reviewed and approved the Second Amendment to the
Merger Agreement (attached hereto as Annex A). The principal terms of the Second
Amendment are as follows: (i) all holders
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of Class A and Class B Capital Stock of the Company are to be paid $7.75 per
share in cash at the closing of the Merger; (ii) the ability of directors,
officers, employees and agents of the Company to speak to or negotiate with any
other bidder is prohibited; (iii) the fee to be paid by the Company if the
Company terminates the Merger Agreement or accepts another offer is increased to
$4.5 million; (iv) Parent has the right to be an observer at subsequent Board
meetings; (v) if any option to purchase stock of the Company is granted to any
other party, the Parent has the right to receive an identical option; (vi) the
time period in which the Merger may be consummated has been extended to November
15, 1997, and Parent has the option, under specified conditions, to extend such
period for two additional six month periods; and (vii) the parties agree to use
reasonable best efforts to consummate the Merger as soon as possible.
On September 11, the Company received an unsolicited, non-binding amendment
to the Second Bidder's offer increasing the price to $9.00 per share. On
September 12, the Board met and unanimously resolved not to respond to such
amended offer based upon, among other reasons: (i) the Company's contractual
obligations in the Second Amendment pursuant to which the directors, officers,
employees and agents of the Company are prohibited from considering any other
offer, a breach of which could result in the obligation of the Company to pay a
$4.5 million termination fee; (ii) information that the Purchaser and its
affiliates have acquired 195,000 shares of the Class A Capital Stock of the
Company in the open market, which shares, when added to the shares covered by
the Stock Purchase Agreement and the Supplement, represent more than a majority
of both the Class A and Class B Capital Stock of the Company and that the
Purchaser and its affiliates would not vote in favor of any other bid to acquire
the Company; and (iii) the Board's continuing concern regarding the legality and
practicality of issuing a dilutive option to the Second Bidder.
As a consequence of the increase of the Merger Price from $6.14 to $7.75,
(i) the following current executive officers of the Company will receive an
increase in the consideration payable in connection with cancellation of options
held by each of them, resulting in a total consideration as indicated
parenthetically after each of their names: George W. Townson ($375,938), John B.
Hatfield ($148,812), Nitin G. Parikh ($75,812), Robert R. Genest ($76,375), and
Geric B. Johnson ($24,582); and (ii) the expected total amount of JMS's fee will
be $820,000 ($130,000 of which has already been paid for preparation of a due
diligence and offering memorandum and JMS's fairness opinion.)
REVISION OF DESCRIPTION OF MINORITY PROTECTION TRANSACTION PROVISIONS
It has come to the Company's attention that the following sentence which
begins on page 17 of the Consent Solicitation Statement is inaccurate:
"Consequently, anyone, except the Company's Employee Stock Ownership Plan, who
acquires more than 10% of the outstanding shares of Class A Capital Stock and
does not acquire a percentage of the Class B Capital Stock outstanding at least
equal to the percentage of Class A Capital Stock that the person acquired (a
"Related Person") will be allowed to vote only those shares of Class A Capital
Stock just acquired constituting 10% of the outstanding Class A Capital Stock."
This sentence summarizes the formula applicable under the "Minority Protection
Transaction" provisions of the Company's Certificate of Incorporation (Section
1(e)) for determining the extent to which shares of Class A Capital Stock
acquired by any person or group of persons acting in concert may be deemed
"excess shares" and therefore may not be voted by such acquiror. The summary
indicates that the formula is more "dilutive" of such acquiror's voting power
than is actually the case under the precise terms of the formula. The formula
and the other terms of the "Minority Protection Transaction" provisions of
Section 1(e) will be deleted from the Company's Certificate of Incorporation if
the Company's stockholders consent to the adoption of the Certificate Amendment.
The following is a revised summary of the formula which hereby replaces in
its entirety the sentence quoted above:
"Consequently, any person or group of persons acting in concert,
except the Company's Employee Stock Ownership Plan, which has
acquired more than 10% of the outstanding shares of Class A
Capital Stock (other than upon original issuance by the Company
and certain other exceptions) and has not also acquired shares
of the Class B Capital Stock may be deemed to hold "excess
shares" of Class A Capital Stock which may not be voted
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<PAGE> 9
by such acquiror. The extent to which such shares of Class A Capital
Stock are deemed excess shares depends on whether the acquiror has
acquired shares of Class B Capital Stock. For example, pursuant to the
applicable formula in Section 1(e)(1), if such person acquired 40% of
the Class A Capital Stock and 30% of the Class B Capital Stock, such
person would be entitled to vote all such shares of Class A Capital
Stock, but if such person acquired 40% of the Class A Capital Stock and
only 20% of the Class B Capital Stock, such person would be entitled to
vote only 30% of the Class A Capital Stock outstanding. If the acquiror
elects to acquire shares of Class B Capital Stock in order to reduce the
number of excess shares it would otherwise be deemed to hold, such
acquiror must comply with the "fair price" requirements of the Company's
Certificate of Incorporation, which provide that a "fair price" has been
paid for the Class B Capital Stock when such shares have been acquired
at a price equal to the greater of (i) the highest per share price paid
by the acquiror, in cash or in non-cash consideration, for any shares of
Class A Capital Stock acquired in the six-month period ending on the
date such person acquired shares of Class A Capital Stock which
subjected such person to Section 1(e) of the Company's Certificate of
Incorporation or (ii) the highest closing market sale price of the Class
A Capital Stock during the 30-day period preceding and following the
acquisition of shares of Class B Capital Stock."
NEW CONSENTS
Because the information provided in this letter could influence your
decision to consent to the two proposals set forth in the Consent Solicitation
Statement, as supplemented and modified hereby, the Company has decided to
resolicit your consent and extend the deadline for obtaining these new consents
to 9:00 A.M. (Eastern Daylight Time) on Monday, September 29, 1997, which may be
extended by the Board without further notice (the "Deadline").
CONSEQUENTLY, THE CONSENTS WHICH WERE FORWARDED TO YOU WITH THE CONSENT
SOLICITATION STATEMENT DATED AUGUST 6, 1997 WILL BE CANCELLED AND WILL BE OF NO
FURTHER FORCE AND EFFECT. IN ORDER TO GIVE YOUR CONSENT TO THE PROPOSALS, YOU
MUST COMPLETE, DATE AND SIGN THE ENCLOSED CONSENT CARD(S) AND RETURN THEM IN THE
ENCLOSED ENVELOPE(S) NO LATER THAN 9:00 A.M. (EASTERN DAYLIGHT TIME) ON
SEPTEMBER 29, 1997. YOUR FAILURE TO CONSENT WILL HAVE THE SAME EFFECT AS A VOTE
AGAINST THE CERTIFICATE AMENDMENT, THE MERGER AGREEMENT, AS AMENDED, AND THE
MERGER.
The new forms of consent for the Certificate Amendment, the Merger
Agreement, as amended, and the Merger are enclosed with this Supplemental
Consent Solicitation Statement and are color coded as follows: holders of Class
A Capital Stock will receive a white card with a black stripe at the top
thereof, and holders of Class B Capital Stock will receive a white card with no
stripe at the top thereof.
Once the consent has been submitted, in order to revoke it, you must
execute and deliver prior to the Deadline a written revocation to the Company,
at the office of the Secretary, either by letter at 6608 Hollywood Boulevard,
Los Angeles, California 90028, or by facsimile at (213) 463-8847. A revocation
may be in any written form provided that it clearly states that the consent is
no longer effective.
IF YOU WISH TO EXERCISE YOUR APPRAISAL RIGHTS, YOU MUST NOT CONSENT TO THE
MERGER AGREEMENT, AS AMENDED, AND THE MERGER, AND YOU MUST FOLLOW CERTAIN
PROCEDURES, ALL AS MORE FULLY DESCRIBED ON ANNEX C ATTACHED HERETO.
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Copies of the Consent Solicitation Statement that was mailed on August 6,
1997 may be obtained by request from John B. Hatfield, Executive Vice President,
Secretary and Chief Financial and Administrative Officer of the Company, (213)
466-5151, or through the internet at the Securities Exchange Commission's
website (http://www.sec.gov) (CIK Code 38868).
By Order of the Board of Directors,
/s/ JOHN B. HATFIELD
-----------------------------------
John B. Hatfield
Secretary
YOUR CONSENT IS IMPORTANT.
PLEASE SIGN AND RETURN THE ENCLOSED
CONSENT(S) PROMPTLY IN THE ENCLOSED ENVELOPE(S).
TO APPROVE THE CERTIFICATE AMENDMENT, THE MERGER AGREEMENT AND THE MERGER,
YOU SHOULD COMPLETE, DATE AND SIGN THE ENCLOSED CONSENT CARD(S) AND RETURN THEM
NO LATER THAN 9:00 A.M. (EASTERN DAYLIGHT TIME) ON SEPTEMBER 29, 1997.
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<PAGE> 11
ANNEX A
SECOND AMENDMENT
TO
AGREEMENT AND PLAN OF MERGER
THIS SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER (the "Second
Amendment"), dated this 8th day of September, 1997, to the AGREEMENT AND PLAN OF
MERGER (the "Original Merger Agreement"), dated as of June 15, 1997, as amended
by that certain FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (the "First
Amendment"), dated as of July 28, 1997 (the Original Merger Agreement as so
amended by such First Amendment, the "Merger Agreement"), by and among
FREDERICK'S OF HOLLYWOOD, INC., a Delaware corporation (the "Company"), ROYALTY
ACQUISITION CORP., a Delaware corporation ("Buyer"), and ROYALTY CORPORATION, a
Delaware corporation ("Parent"), is entered into by and among the Company, Buyer
and Parent. All capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Merger Agreement.
RECITALS
WHEREAS, the Company, Buyer and Parent have entered into the Merger
Agreement providing for the merger of Buyer with and into the Company (the
"Merger"), with the Company surviving the Merger;
WHEREAS, the Company, Buyer and Parent amended the Original Merger
Agreement pursuant to the First Amendment;
WHEREAS, pursuant to the Original Merger Agreement, each issued and
outstanding share of Class A Capital Stock and Class B Capital Stock of the
Company would have been converted into the right to receive $6.14 per share;
WHEREAS, Parent and the Frederick N. Mellinger Trust and the Harriet R.
Mellinger Trust (the "Trusts") are parties to that certain Stock Purchase
Agreement made as of August 25, 1997, as amended by that certain Supplement to
Stock Purchase Agreement made as of September 3, 1997 (such Stock Purchase
Agreement, as so amended by such Supplement to Stock Purchase Agreement, the
"Stock Purchase Agreement");
WHEREAS, pursuant to the Stock Purchase Agreement, the Trusts have agreed
to sell to Parent, and Parent has agreed to purchase from the Trusts, 1,283,259
shares of the Class A Capital Stock of the Company, representing approximately
43.4% of the issued and outstanding shares of the Class A Capital Stock of the
Company, and 3,159,104 shares of the Class B Capital Stock of the Company,
representing approximately 53.5% of the issued and outstanding shares of the
Class B Capital Stock of the Company;
WHEREAS, the purchase price for such shares under the Stock Purchase
Agreement is $6.90;
WHEREAS, subsequent to the Original Merger Agreement and in connection with
the Stock Purchase Agreement, Buyer agreed to increase the Merger Price to $6.90
per share of Class A Capital Stock and Class B Capital Stock;
WHEREAS, the Company has received one or more unsolicited bids from third
parties offering to pay over $6.90 per share of Class A Capital Stock and Class
B Capital Stock;
WHEREAS, in light of such circumstances, the Company has inquired whether
Parent would be willing to increase the Merger Price for each share of Class A
Capital Stock and Class B Capital Stock held by stockholders of the Company
other than the Trusts (the "Remaining Stockholders");
WHEREAS, in order to consummate the Merger Agreement with the Company,
Parent has indicated its willingness to increase the Merger Price to $7.75 per
share of Class A Capital Stock and Class B Capital Stock if, and only if, the
Company rejects all other bids and agrees to amending the Merger Agreement in
the manner set forth herein;
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WHEREAS, the Board of Directors of the Company has determined that it is in
the best interests of the Company's stockholders to agree to such amendment in
light of the following circumstances, among others: (1) the existence of the
Stock Purchase Agreement and Parent's right to acquire a near majority of the
outstanding Class A Capital Stock and a majority of the Class B Capital Stock
pursuant thereto; (2) Parent's expressed intention to acquire such shares
regardless of any action the Board of Directors may take with respect to any
third parties; (3) Parent's expressed intention to vote the shares to be
acquired by it pursuant to the Stock Purchase Agreement against any transaction
the Board of Directors of the Company may approve with any such third party; (4)
the high level of comfort the Board of Directors of the Company has with respect
to Parent's ability to consummate the transactions contemplated by the Merger
Agreement, including but not limited to Parent's ability to pay the Merger Price
(as increased hereby); and (5) concerns by the Board of Directors regarding the
likelihood of the consummation of any transaction with any such third party and
the resulting consequences to the Remaining Stockholders; and
WHEREAS, in light of the foregoing and other developments and
circumstances, the Company, Buyer and Parent desire to further amend the Merger
Agreement in the manner set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto agree as follows:
1. Status of Merger Agreement. Except as specifically set forth herein,
the Merger Agreement shall remain in full force and effect and shall not be
waived, modified, superseded or otherwise affected by this Second Amendment.
This Second Amendment shall not be construed as a release, waiver or
modification of any of the terms, conditions, representations, warranties,
covenants, rights or remedies set forth in the Merger Agreement, except as
specifically set forth herein.
2. Amendments to Merger Agreement. The Merger Agreement is hereby amended
in the following respects:
(a) Amendment to Section 2.1. The dollar amount "$6.14" is hereby
deleted and replaced with the dollar amount "$7.75".
(b) Amendment to Section 6.2. Section 6.2 is hereby deleted in its
entirety and replaced as follows:
"(a) The Company shall cause its directors (even if any of them
should resign), John B. Hatfield, attorneys at Loeb & Loeb, attorneys at Morris,
Nichols, Arsht & Tunnell and representatives of Janney Montgomery Scott
(collectively, the "Restricted Persons") not to, and shall use its best efforts
to cause all other officers, home office management employees, representatives
and agents of the Company (including, without limitation, all accountants and
all other attorneys and investment bankers) (collectively, the "Company
Representatives") not to, engage in any discussions or negotiations, or
otherwise have any form of contact (whether in person, by phone, written
communication, electronically or otherwise), with any person or entity
(including, without limitation, any person or entity that has contacted the
Company prior to the date hereof) and their respective affiliated and related
entities) other than Parent and Buyer (and their agents and representatives)
with respect to any proposal (whether solicited or unsolicited, whether
previously made, currently in existence or arising in the future) with respect
to any acquisition of all or any material portion of the Company by means of a
merger, consolidation or other business combination involving the Company or its
subsidiaries or acquisition of all or a material portion of the assets or
capital stock of the Company or any of its subsidiaries (an "Acquisition
Transaction"). In the event that the Company or any of the Company
Representatives shall receive any form of communication (whether written, oral,
electronic or otherwise) from any person (other than Parent or Buyer and their
agents and representatives) acting on behalf of any person or entity interested
in any Acquisition Transaction, the Company shall, and the Company shall cause
the Company Representatives to, immediately terminate such contact upon
ascertaining that such contact involves an Acquisition Transaction. In the event
any Company Representative shall be contacted in person, whether by phone or
face-to-face or otherwise, by any person (other than Parent or Buyer and their
agents and representatives) acting on behalf of any person or entity interested
in any Acquisition Transaction, such Company Representative shall state 'I am
prohibited from discussing anything with you', or words to such effect, and
shall cease all discussions and contact with such person. Any telephone call
from any such person
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shall not be returned, and all other inquiries (whether in written, oral,
electronic or other form) shall not be answered, without the prior written
consent of Parent. Neither Parent nor Buyer shall be entitled to terminate this
Agreement as a result of any inadvertent breach of the foregoing provisions by
any Restricted Person, unless a reasonable possibility exists that the direct or
indirect consequence of such breach (together with any other such inadvertent
breaches) may be the inability of one or more of the parties hereto to
consummate the Merger in accordance with the terms of this Agreement. The
Company shall arrange a meeting on Monday, September 8, 1997, among all of the
officers of the Company (those officers who are not at the Company's
headquarters shall attend by telephone, if available) and at which
representatives of Parent may attend in person or by phone. At such meeting,
George W. Townson shall inform such officers of the requirements set forth above
in this Section 6.2(a) and shall instruct such officers to comply with such
requirements to the letter, and shall further instruct such officers to inform
the other directors and home office management employees of the Company of such
requirements and to instruct such employees to comply with such requirements to
the letter. Notwithstanding the foregoing, the Company Representatives may, on
the date hereof and only on the date hereof, contact any person or entity that
has previously made a proposal for an Acquisition Transaction solely to inform
such person or entity that an agreement between the Company, Parent and Buyer
has been executed, which agreement provides for the payment of $7.75 per share
for all of the Class A and Class B Capital Stock of the Company owned by the
Remaining Stockholders. The Company Representatives may not go into any further
detail.
(b) The Company shall use its best efforts immediately to advise
Parent and Buyer orally (to be confirmed in writing if requested by Parent or
Buyer) of the receipt of any inquiries or proposals (whether written, oral,
electronic or otherwise) relating to an Acquisition Transaction, including the
terms of any such inquiries or proposals, and the actions the Company or its
representatives propose to take with respect thereto, shall immediately provide
copies of any such inquiries or proposals to Parent and Buyer, and shall not
take any action with respect thereto without Parent's prior written consent."
(c) Amendment to Section 10.1. Clause (b) of Section 10.1 is hereby
deleted in its entirety and replaced as follows:
"by any party if, without any material breach by such terminating
party of its obligations under this Agreement, the Merger shall not have
occurred on or before 5:00 p.m. (Los Angeles time) on November 15, 1997 (the
"Merger Deadline"); provided, however, that Parent may, at its option, extend
the Merger Deadline up to two times, in each case for an additional six-month
period (such that, upon the exercise of the first option, the Merger Deadline
would be extended to May 15, 1998, and upon exercise of the second option, the
Merger Deadline would be extended to November 15, 1998). Any such extension
shall be exercised by delivery by Parent to the Company, at least ten (10) days
prior to the then operative Merger Deadline, of written notice exercising
Parent's option to extend the Merger Deadline; provided, however, that Parent
shall not be entitled to extend any Merger Deadline unless (i) any court of
competent jurisdiction in the United States or other governmental body in the
United States shall have issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the Merger, or (ii) any
administrative action, inquiry, investigation or proceeding shall have been
commenced by any court or governmental body that has requested the Merger be
delayed, and the Company, Parent or Buyer has agreed to comply with such
request; or (iii) such extension is for purposes of the Company's, Parent's or
Buyer's complying with applicable law relating to consummation of the Merger;
provided, however, that as soon as the event causing the extension under
subclause (i), (ii) or (iii) has been eliminated or complied with, the Company,
Parent and Buyer shall then consummate the Merger as soon as legally
permissible. In the written notice delivered by Parent to the Company, Parent
shall specify the basis for the extension under subclause (i), (ii) or (iii) of
the immediately preceding sentence and shall also confirm that it reasonably
believes it continues to have the necessary financing to consummate the Merger;"
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(d) Amendment to Section 10.2.
(1) Clause (b) of Section 10.2 is hereby amended by adding the
following at the end thereof and before the commencement of Clause (c) thereof:
"provided, however, that the foregoing shall not apply to any breach
of Section 6.2 hereof, and in the event of any breach of said Section 6.2,
Parent or Buyer may immediately terminate this Merger Agreement;"
(2) Section 10.2 is amended by adding the following sentence to
the end thereof:
"Nothing set forth in the immediately preceding sentence shall be construed
to indicate that the Board shall be entitled to take the actions described by
Clauses (e) or (f) thereof."
(e) Amendment to Section 10.3. Clause (d) of Section 10.3 is hereby
deleted in its entirety, and the word "or" shall be inserted before Clause (c)
thereof.
(f) Amendment to Section 10.6. Clause (a) of Section 10.6 is hereby
amended by replacing the words "the actual out-of-pocket fees and expenses
reasonably incurred and paid by such terminating party in connection with the
Merger and the transactions contemplated by this Agreement, such amount not to
exceed $750,000" with "Four Million, Five Hundred Thousand Dollars ($4,500,000)
as compensation and liquidated damages for lost opportunities and reimbursement
for out-of-pocket expenses (which out-of-pocket expenses alone Parent and Buyer
estimate exceed One Million, Two Hundred Thousand Dollars ($1,200,000))."
(g) Amendments to Section 10.7.
(1) Clause (a) of Section 10.7 is hereby deleted in its entirety
and replaced as follows:
"In the event this Agreement is terminated by Parent or Buyer
pursuant to Section 10.2(e) or 10.2(f) hereof, or Section 10.2(b) hereof as a
result of a breach by the Company of Section 6.2 hereof, the Company shall pay
to Buyer the sum of Four Million, Five Hundred Thousand Dollars ($4,500,000)
immediately upon demand by Buyer, as compensation and liquidated damages for
lost opportunities and reimbursement of out-of-pocket expenses (which
out-of-pocket expenses alone Parent and Buyer estimate exceed One Million, Two
Hundred Thousand Dollars ($1,200,000))."
(2) Clause (b) of Section 10.7 is hereby amended by deleting: (i)
"Seven Hundred Fifty Thousand Dollars ($750,000)" in Clause (i) thereof and
replacing such amount with "Four Million, Five Hundred Thousand Dollars
($4,500,000)"; and (ii) "One Million Dollars ($1,000,000)" in Clause (ii)
thereof and replacing such amount with "Four Million, Five Hundred Thousand
Dollars ($4,500,000)". In addition, the following sentence shall be added to the
end of Section 10.7(b): "Notwithstanding the foregoing, in the event of the
termination of this Agreement pursuant to Section 10.2(c) as a result of the
failure of the condition set forth in Section 7.1 to be satisfied, Buyer shall
not be entitled to any payment under this Section 10.7(b) unless Parent shall
have used its best efforts to cause the shares of Class A and Class B Capital
Stock that Parent is entitled to purchase pursuant to the Stock Purchase
Agreement to be voted in favor of the Merger, and the Company shall not have
taken any position or action to cause the Class A or Class B Common Stock of the
Company not to be voted in favor of the Merger. If the Company takes any such
position or action and the Merger is not approved, Buyer shall be entitled to
such fee of Four Million, Five Hundred Thousand Dollars ($4,500,000)."
(h) Amendment to Article X. A new Section 10.9 is hereby added to the
Merger Agreement as follows:
"Section 10.9 Termination Not Effective Except Upon Payment of
Fees. No termination of this Agreement by the Company shall be effective unless
and until Parent and Buyer have received payment in full of the amounts, if any,
required under this Article X."
3. Representations and Warranties of the Company, Buyer and Parent. Each of
the Company, Buyer and Parent represents and warrants that its execution,
delivery and performance of this Second Amendment
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has been duly authorized by all necessary corporate action and this Second
Amendment is the legal, valid and binding obligation of such entity, enforceable
against such entity in accordance with its terms. The Company further represents
and warrants to Buyer and Parent that (a) the Company will deliver to Parent
within three (3) business days following the date hereof true and complete
copies of resolutions adopted and approved by the Board of Directors
reconfirming approval of the Merger Agreement, including without limitation, the
Merger Agreement as amended by this Second Amendment, and the transactions
contemplated thereby; and (b) no action has been taken by the Board of Directors
of the Company subsequent to the date and time thereof that modifies or affects
such resolutions or the matters approved thereby.
4. Board Observation Right. From and after the date hereof and until
termination of the Merger Agreement in accordance with its terms, the Company
hereby grants to Parent the right to appoint, in its sole discretion, one person
to act as an observer (the "Observer") at all meetings of the Board of Directors
held on or after the date hereof (whether such meetings are held in person, by
telephone, electronically or otherwise). In connection therewith, the Company
shall (a) provide to Parent all information (including, without limitation,
notices of meetings of the Board of Directors of the Company) that the Company
shall provide to any member of the Board of Directors, in such person's capacity
as such, concurrently with the delivery of such information to any such director
and (b) permit, and make arrangements for, a person designated by Parent in
writing as the Observer to attend any such meeting of the Board of Directors in
an easily accessible manner. Until the termination of the Merger Agreement in
accordance with its terms, at least twenty-four (24) hours prior to executing
any action by written consent, the Board of Directors shall provide a true and
complete copy of such proposed consent to the Observer. Nothing set forth in the
immediately preceding sentence shall limit the obligations of the Company under
this Section 4 to provide copies of any proposed written consent to the Observer
concurrently with the delivery thereof to members of the Board of Directors.
5. Grant of Option Upon the Occurrence of Certain Events.
In the event that the Company shall issue or grant to any person or entity
any option, warrant or other right to purchase or acquire any other rights in
any shares of Class A Capital Stock, Class B Capital Stock, any other capital
stock or any other securities of the Company, concurrently therewith, solely by
operation of this Section 5, and with no further action on the part of the
Company or its Board of Directors, Parent shall receive an identical option,
warrant or right, as the case may be, to purchase the same securities or rights
described therein in the identical amounts, at the identical purchase price and
on the identical provisions issued or granted to such other person or entity.
Nothing set forth herein shall limit or otherwise affect any rights Parent and
Buyer may have under the Merger Agreement or otherwise as a result of the
Company's having issued or granted any such option, warrant or right to any such
person or entity.
6. Press Release. As promptly as possible following the execution of this
Second Amendment, the Company shall issue a press release in a form acceptable
to Parent that shall include a statement announcing that the Board has
reapproved the Merger Agreement at a price of $7.75 per share, a statement
reconfirming the existence of the Stock Purchase Agreement, a statement that the
Board of Directors has rejected the most recent unsolicited bid, and such other
statements as may be requested by Parent and accepted by the Company (which
acceptance will not be unreasonably withheld).
7. Best Efforts. The parties reconfirm their intentions and agree to use
their reasonable best efforts to consummate the Merger as soon as possible. In
connection therewith, the Company agrees to contact the Securities and Exchange
Commission (the "Commission") as promptly as possible following the execution of
this Second Amendment, to apprise the Commission of the execution of this Second
Amendment, the issuance of the press release required by Section 6 hereof, and
all material developments that have happened since the Commission was last
contacted by the Company or it last contacted the Company. One or more
representatives of Parent, at Parent's election, shall be entitled, and the
Company shall cause its representatives to allow such representative(s) of
Parent, to participate in such telephone conversation with the Commission (and
any future telephone or in person meetings with the Commission, other than
unexpected telephone calls from the Commission that are answered by a Company
representative at the time the Commission places such call). The Company shall
provide copies of any materials to be filed or otherwise supplied to the
Commission to Parent sufficiently in advance of such filing or submission for
Parent to
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comment on such materials before such filing, and shall make such changes as
Parent shall reasonably request prior to such filing or submission. Other than
the obligations and rights described in the second sentence hereof, the Company
shall have the same obligations set forth above with respect to the Commission,
and Parent shall have the same rights set forth above with respect thereto, with
respect to all other governmental authorities, the New York Stock Exchange, the
National Association of Securities Dealers and any other similar organization
that may assert jurisdiction or an interest in the transactions contemplated by
the Merger Agreement.
8. Defense of Proceedings. In the event any claim, action, suit, hearing,
arbitration, governmental investigation or other proceeding (whether public or
private) is brought or threatened by any governmental authority or any other
person or entity against the Company, and/or any director, officer, employee,
representative or agent of the Company (a "Proceeding"), in connection with the
Merger Agreement (including, without limitation, this Second Amendment) or any
of the transactions contemplated by the Merger Agreement (including, without
limitation, this Second Amendment), the Company shall immediately advise Parent
of the commencement, or threat, of any such Proceeding and shall provide to
Parent a summary of any orally communicated threats, and a copy of all written
materials received in connection with any such proceeding or threat, including,
without limitation, any complaints, briefs, orders, correspondence and similar
materials. Parent shall be entitled to participate in (but not control) the
defense of any such action, with its own counsel, at its own expense. The
Company shall not settle any such Proceeding, or threatened Proceeding, without
the prior written consent of Parent, not to be unreasonably withheld.
9. Executed Merger Documents. Promptly after the date hereof, the parties
shall use their best efforts to prepare such additional documents as may be
necessary to consummate the Merger, and the Company shall execute such
documents, and shall cause its directors, officers and employees to execute such
documents, as shall be reasonably requested by Parent, and shall deposit such
documents with counsel for Parent until such time as any additional waiting
period that may be imposed by the Commission expires; provided, however, that
all documents and monies relating to termination agreements, employment,
non-competition and consulting agreements, and resignations shall be exchanged
and delivered in accordance with the Merger Agreement. The parties intend that
all such documents (other than the documents referred to in the proviso in the
immediately preceding sentence) be prepared, executed and delivered to such
counsel such that no further action by the Company's Board of Directors,
officers or other representatives shall be necessary upon the expiration of any
such additional waiting period for the Merger to be consummated, except for such
actions as may be required in connection with the documents referred to in the
proviso in the immediately preceding sentence. Nothing set forth herein shall
limit or affect the Company's obligations under Section 7 hereof or Section 6.4
of the Merger Agreement even after delivery of such executed documents.
10. Counterparts. This Second Amendment may be executed in any number of
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument.
11. Governing Law. This Second Amendment shall be governed by the laws of
the State of Delaware (regardless of the laws that might otherwise govern under
applicable Delaware principles of conflicts of law) as to all matters, including
but not limited to matters of validity, construction, effect, performance and
remedies.
[SIGNATURE PAGE FOLLOWS THIS PAGE]
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IN WITNESS, WHEREOF, the Company, Buyer and Parent have caused this Second
Amendment to be signed by their respective duly authorized officers as of the
date first written above.
COMPANY:
FREDERICK'S OF HOLLYWOOD, INC.
By: /s/ GEORGE W. TOWNSON
- -------------------------------------------------
Title: President
BUYER:
ROYALTY ACQUISITION CORP.
By: /s/ DAVID E. LIPSON
- -------------------------------------------------
Title: Chairman and President
PARENT:
ROYALTY CORPORATION
By: /s/ DAVID E. LIPSON
- -------------------------------------------------
Title: Chairman and President
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ANNEX B
JANNEY MONTGOMERY SCOTT INC.
26 Broadway
New York, New York 10004
September 18, 1997
Board of Directors
Frederick's of Hollywood, Inc.
6608 Hollywood Boulevard
Hollywood, California 90028
Board of Directors:
You have requested our opinion as to the fairness, from a financial point
of view, to the minority stockholders (the "Stockholders") of Frederick's of
Hollywood, Inc. ("FOH" or the "Company"), to whose investment decision the
Consent Solicitation Statement dated August 6, 1997 and the Supplement dated
September 18, 1997 are addressed, of the $7.75 cash price per share to be paid
to such Stockholders (the "Consideration") in the proposed merger pursuant to
the Agreement and Plan of Merger dated June 15, 1997 as amended ("Merger
Agreement") entered into between FOH and Royalty Acquisition Corp. ("Buyer"), an
entity formed by Knightsbridge, Inc. (the "Proposed Transaction"). The terms and
conditions of the Proposed Transaction are more fully set forth in the Merger
Agreement.
Janney Montgomery Scott Inc. ("JMS"), as part of its investment banking
business, is regularly engaged in the valuation of businesses and their
securities in connection with the preparation of fairness opinions, mergers and
acquisitions, rights offerings, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate, and other purposes.
In connection with our opinion, we have reviewed the Merger Agreement as
amended, the Consent Solicitation Statement dated August 6, 1997, the Supplement
thereto dated September 18, 1997, the Knightsbridge letter of September 12,
1997, and certain financial and other information of FOH, including certain
internal analyses, reports, forecasts and other information. We have held
discussions with senior management of FOH concerning the current operations,
financial condition and prospects of FOH. In addition, we have (i) reviewed the
price and trading histories of FOH's two classes of common stock and compared
those prices and trading histories with those of publicly traded companies we
deemed relevant; (ii) compared the financial positions and operating results of
FOH with those of publicly traded companies we deemed relevant; (iii) compared
certain financial terms of the Proposed Transaction to certain financial terms
of selected other business combinations we deemed relevant; (iv) performed a net
present value calculation on a three year forecasted income statement provided
to JMS by the Company; and (v) conducted such other financial studies, analyses
and investigations, and reviewed such other factors, as we deemed relevant.
We have assumed and relied upon, without independent verification, the
accuracy and completeness of the information reviewed by us for purposes of this
opinion. With respect to financial forecasts, we assumed that they have been
reasonably prepared on a basis reflecting the best currently available
information and judgment of the future financial performance of FOH. We have not
made any independent valuation or appraisal of the assets or liabilities of the
Company, nor have we been furnished with such valuations or appraisals.
Our opinion is necessarily based on financial, economic, market and other
conditions as they exist on, and information made available to us as of, the
date hereof. It should be understood that, although subsequent developments may
affect this opinion, we do not have any obligation to update, revise or reaffirm
this opinion. Payment of JMS' Fairness Opinion fee is not contingent upon the
conclusion reported. JMS has been paid in
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full for its Fairness Opinion and no additional payment is due on account of
this Fairness Opinion. In our role as investment banker to the Company, JMS will
be paid an additional fee upon completion of the Transaction.
It should be understood that this letter is for the information of the
Board of Directors in connection with its consideration of the Proposed
Transaction and does not constitute a recommendation to any Stockholder on the
Proposed Transaction, and that our Fairness Opinion may be included as an
Exhibit to any supplemental consent solicitation statement which may be
distributed in connection with the Proposed Transaction.
Based upon and subject to the foregoing, it is our opinion, as of the date
hereof, the Consideration is fair, from a financial point of view, to the
minority stockholders of FOH.
Sincerely yours,
JANNEY MONTGOMERY SCOTT INC.
By: /s/ HERBERT M. GARDNER
--------------------------------------
Herbert M. Gardner
Senior Vice President
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ANNEX C
APPRAISAL RIGHTS FOR DISSENTING STOCKHOLDERS
Holders of shares of Class A and/or Class B Capital Stock of the Company
(collectively, "Company Capital Stock") are entitled to appraisal rights under
Section 262 of the DGCL ("Section 262"), provided that they comply with the
requirements established by Section 262.
Section 262 is reprinted in its entirety at the end of this description of
appraisal rights. THIS DISCUSSION AND SECTION 262 SHOULD BE REVIEWED CAREFULLY
BY ANY HOLDER WHO WISHES TO EXERCISE STATUTORY APPRAISAL RIGHTS OR WHO WISHES TO
PRESERVE THE RIGHT TO DO SO, AS FAILURE TO COMPLY WITH THE PROCEDURES SET FORTH
HEREIN OR THEREIN WILL RESULT IN THE LOSS OF APPRAISAL RIGHTS.
A record holder of shares of Company Capital Stock who makes the demand
described below with respect to such shares, and who otherwise complies with the
statutory requirements of Section 262 will be entitled to an appraisal by the
Delaware Court of Chancery, (the "Delaware Court") of the fair value of his or
her shares of Company Capital Stock. All references in this summary of appraisal
rights to a "stockholder" or "holders of shares of Company Capital Stock" are to
the record holder or holders of shares of Company Capital Stock.
Under Section 262, where a merger is accomplished pursuant to Section 228
of the Delaware General Corporation Law, either before or within 10 days after
the effective date of the merger, each constituent corporation (or, after the
effective date of the merger, the surviving corporation) must notify each
stockholder of each constituent corporation entitled to appraisal rights of the
merger and that appraisal rights are available to such stockholders and include
in each such notice (the "Notice") a copy of Section 262.
Company stockholders electing to exercise their appraisal rights under
Section 262 must not have consented to the adoption of the Merger Agreement and
the Merger. However, a stockholder's failure to consent to the adoption of the
Merger Agreement and the Merger shall not constitute a waiver of such
stockholder's appraisal rights. Holders of shares of Company Capital Stock who
desire to exercise their appraisal rights must deliver a written demand for
appraisal to the Company within 20 days after the date of mailing of the Notice.
A demand for appraisal must be executed by or on behalf of the stockholder of
record and must reasonably inform the Company of the identity of the stockholder
of record and that such stockholder intends thereby to demand appraisal of his
or her shares of Company Capital Stock. A written demand must satisfy the
foregoing requirements. Mere indication by a stockholder on the consent enclosed
with this Consent Solicitation Statement that such stockholder does not consent
to the adoption of the Merger Agreement and the Merger shall not constitute a
valid written demand for appraisal.
A stockholder who elects to exercise appraisal rights should mail or
deliver his or her written demand to: Secretary, Frederick's of Hollywood, Inc.,
6608 Hollywood Boulevard, Hollywood, California 90028.
A person having a beneficial interest in shares of Company Capital Stock
that are held of record in the name of another person, such as a broker,
fiduciary, depositary or other nominee, must act promptly to cause the record
holder to follow the steps summarized herein properly and in a timely manner to
perfect appraisal rights. If the shares of Company Capital Stock are owned of
record by a person other than the beneficial owner, including a broker,
fiduciary (such as a trustee, guardian or custodian), depositary or other
nominee, such demand must be executed by or for the record owner. If the shares
of Company Capital Stock are owned of record by more than one person, as in a
joint tenancy or tenancy in common, such demand must be executed by or for all
joint owners. An authorized agent, including an agent for two or more joint
owners, may execute the demand for appraisal for a stockholder of record;
however, the agent must identify the record owner and expressly disclose the
fact that, in exercising the demand, such person is acting as agent for the
record owner. If a stockholder holds shares of Company Capital Stock through a
broker who in turn holds the shares through a central securities depository
nominee such as Cede & Co., a demand for appraisal of such shares must be made
by or on behalf of the depository nominee and must identify the depository
nominee as record holder.
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<PAGE> 21
A record holder, such as a broker, fiduciary, depositary or other nominee,
who holds shares of Company Capital Stock as a nominee for others, may exercise
appraisal rights with respect to the shares held for all or less than all
beneficial owners of shares as to which such person is the record owner. In such
case, the written demand must set forth the number of shares covered by such
demand. Where the number of shares is not expressly stated, the demand will be
presumed to cover all shares of Company Capital Stock outstanding in the name of
such record owner.
Within 120 days after the effective time of the Merger (the "Effective
Time"), either the Company or any stockholder who has complied with the required
conditions of Section 262 may file a petition in the Delaware Court, with a copy
served on the Company in the case of a petition filed by a stockholder,
demanding a determination of the fair value of the shares of all dissenting
stockholders. There is no present intent on the part of the Company to file an
appraisal petition and stockholders seeking to exercise appraisal rights should
not assume that the Company will file such a petition or that the Company will
initiate any negotiations with respect to the fair value of such shares.
Accordingly, holders of Company Capital Stock who desire to have their shares
appraised should initiate any petitions necessary for the perfection of their
appraisal rights within the time periods and in the manner prescribed in Section
262. Within 120 days after the Effective Time, any stockholder who has
theretofore complied with the applicable provisions of Section 262 will be
entitled, upon written request, to receive from the Company a statement setting
forth the aggregate number of shares of Company Capital Stock not consenting to
the Merger Agreement and the Merger and with respect to which demands for
appraisal were received by the Company and the number of holders of such shares.
Such statement must be mailed within 10 days after the written request therefor
has been received by the Company.
If a petition for an appraisal is timely filed, at the hearing on such
petition, the Delaware Court will determine which stockholders are entitled to
appraisal rights. The Delaware Court may require the stockholders who have
demanded an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Delaware Court may dismiss
the proceedings as to such stockholder. Where proceedings are not dismissed, the
Delaware Court will appraise the shares of Company Capital Stock owned by such
stockholders, determining the fair value of such shares exclusive of any element
of value arising from the accomplishment or expectation of the Merger, together
with a fair rate of interest, if any, to be paid upon the amount determined to
be the fair value.
Although the Company believes that the $7.75 Merger Price (the "Share
Consideration") is fair, no representation is made as to the outcome of the
appraisal of fair value as determined by the Delaware Court and stockholders
should recognize that such an appraisal could result in a determination of a
value higher or lower than, or the same as, the Share Consideration. Moreover,
the Company does not anticipate offering more than the Share Consideration to
any stockholder exercising appraisal rights and reserves the right to assert, in
any appraisal proceeding, that, for purposes of Section 262, the "fair value" of
a share of Company Capital Stock is less than the Share Consideration. In
determining "fair value" the Delaware Court is required to take into account all
relevant factors. In Weinberger v. UOP, Inc., 457 A.2d 701 (Del. 1983), the
Delaware Supreme Court stated, among other things, that "proof of value by any
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in an
appraisal proceeding. Section 262 provides that "fair value" is to be "exclusive
of any element of value arising from the accomplishment or expectation of the
merger." In Weinberger, the Delaware Supreme court held that "elements of future
value, including the nature of the enterprise, which are known or susceptible of
proof as of the date of the merger and not the product of speculation, may be
considered." In Cede & Co. v. Technicolor, Inc., 684 A.2d 289 (Del. 1996), the
Delaware Supreme Court stated that "Section 262 is very narrow, designed to
eliminate use of pro forma data and projections of a speculative variety
relating to the completion of a merger. [citing Weinberger]. That narrow
exclusion does not encompass known elements of value, including those which
exist on the date of the merger because of a majority acquiror's interim action
in a two-step cash-out transaction."
Holders of shares of Company Capital Stock considering seeking appraisal
should recognize that the fair value of their shares determined under Section
262 could be more than, the same as or less than the Share
C-2
<PAGE> 22
Consideration which they are entitled to receive if they do not seek appraisal
of their shares. The cost of the appraisal proceeding may be determined by the
Delaware Court and taxed against the parties as the Delaware Court deems
equitable in the circumstances. Upon application of a dissenting stockholder of
the Company, the Delaware Court may order that all or a portion of the expenses
incurred by any dissenting stockholder in connection with the appraisal
proceeding, including without limitation, reasonable attorneys' fees and the
fees and expenses of experts, be charged pro rata against the value of all
shares of stock entitled to appraisal.
Any holder of shares of Company Capital Stock who has duly demanded
appraisal in compliance with Section 262 will not be entitled to vote for any
purpose any shares subject to such demand or to receive payment of dividends or
other distributions on such shares, except for dividends or distributions
payable to stockholders of record at a date prior to the Effective Time.
At any time within 60 days after the Effective Time, any stockholder will
have the right to withdraw such demand for appraisal and to accept the Share
Consideration; after this period, the stockholder may withdraw such demand for
appraisal only with the consent of the Company. If no petition for appraisal is
filed with the Delaware Court within 120 days after the Effective Time,
stockholders' rights to appraisal shall cease, and all holders of shares of
Company Capital Stock will be entitled to receive the Share Consideration.
Inasmuch as the Company has no obligation to file such a petition, and the
Company has no present intention to do so, any holder of shares of Company
Capital Stock who desires such a petition to be filed is advised to file it on a
timely basis. Any stockholder may withdraw such stockholder's demand for
appraisal by delivering to the Company a written withdrawal of his or her demand
for appraisal and acceptance of the Share Consideration, except (i) that any
such attempt to withdraw made more than 60 days after the Effective Time will
require written approval of the Company and (ii) that no appraisal proceeding in
the Delaware Court shall be dismissed as to any stockholder without the approval
of the Delaware Court, and such approval may be conditioned upon such terms as
the Delaware Court deems just.
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
SEC. 262. APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251 (other than a merger effected pursuant to sec.
251(g) of this title), sec. 252, sec. 254, sec. 257, sec. 258, sec. 263 or sec.
264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent
C-3
<PAGE> 23
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation as
provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000
holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to sec. 228
or sec. 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall
C-4
<PAGE> 24
include in such notice a copy of this section; provided that, if the notice
is given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to all
such holders of any class or series of stock of a constituent corporation
that are entitled to appraisal rights. Such notice may, and, if given on or
after the effective date of the merger or consolidation, shall, also notify
such stockholder of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within twenty days after the
date of mailing of such notice, demand in writing from the surviving or
resulting corporation the appraisal of such holder's shares. Such demand
will be sufficient if it reasonably informs the corporation of the identity
of the stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given; provided that,
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
C-5
<PAGE> 25
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
C-6
<PAGE> 26
PLEASE DATE, SIGN AND MAIL YOUR
WRITTEN CONSENT BACK AS SOON AS POSSIBLE!
WRITTEN CONSENT OF STOCKHOLDER
CLASS A
FREDERICK'S OF HOLLYWOOD, INC.
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
PLEASE MARK YOUR
A [X] VOTES AS IN THIS
EXAMPLE.
FREDERICK'S OF HOLLYWOOD, INC.
WRITTEN CONSENT OF STOCKHOLDER
This consent is solicited on behalf of the Board of Directors and must be
received by the Company no later than 9:00 A.M., (Eastern Daylight Time) on
September 29, 1997, or such later date as may be extended by the Board of
Directors without further notice.
DOES NOT
The undersigned, as the record holder of CONSENTS CONSENT ABSTAINS
shares of Class A Capital Stock, par value
$1.00 per share (the "Class A Capital Stock"), [ ] [ ] [ ]
of Frederick's of Hollywood, Inc., a Delaware
corporation (the "Company"), hereby:
by written consent pursuant to section 228 of the Delaware General Corporation
Law with respect to all of the shares of the Company's Class A Capital Stock of
which the undersigned is the record holder on July 21, 1997, to an amendment to
the Company's Certificate of Incorporation which would delete Section 1(e)
of Article Fourth thereof.
DOES NOT
The undersigned, as the record holder of CONSENTS CONSENT ABSTAINS
shares of Class A Capital Stock of the
Company, hereby: [ ] [ ] [ ]
by written consent pursuant to section 228 of the Delaware General Corporation
Law with respect to all of the shares of the Company's Class A Capital Stock of
which the undersigned is the record holder on July 21, 1997, to the adoption of
the Agreement and Plan of Merger (the "Merger Agreement"), dated as of June 15,
1997, as amended, among the Company, Royalty Corporation, a Delaware
corporation, and Royalty Acquisition Corp., a Delaware corporation (the
"Purchaser"), and to the merger of the Purchaser into the Company (with the
Company being the surviving corporation) pursuant to the terms of the Merger
Agreement, as amended.
IN WITNESS WHEREOF, the undersigned has executed this Written Consent of
Stockholder on the date indicated below.
(Signature of Stockholder) ____________________________________
(Signature of Stockholder, if held jointly) ______________________________
Dated: _________________
<PAGE> 27
PLEASE DATE, SIGN AND MAIL YOUR
WRITTEN CONSENT BACK AS SOON AS POSSIBLE!
WRITTEN CONSENT OF STOCKHOLDER
CLASS B
FREDERICK'S OF HOLLYWOOD, INC.
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
PLEASE MARK YOUR
B [X] VOTES AS IN THIS
EXAMPLE.
FREDERICK'S OF HOLLYWOOD, INC.
WRITTEN CONSENT OF STOCKHOLDER
This consent is solicited on behalf of the Board of Directors and must be
received by the Company no later than 9:00 A.M., (Eastern Daylight Time) on
September 29, 1997, or such later date as may be extended by the Board of
Directors without further notice.
DOES NOT
The undersigned, as the record holder of CONSENTS CONSENT ABSTAINS
shares of Class B Capital Stock, par value
$1.00 per share (the "Class B Capital Stock"), [ ] [ ] [ ]
of Frederick's of Hollywood, Inc., a Delaware
corporation (the "Company"), hereby:
by written consent pursuant to section 228 of the Delaware General Corporation
Law with respect to all of the shares of the Company's Class B Capital Stock of
which the undersigned is the record holder on July 21, 1997, to an amendment to
the Company's Certificate of Incorporation which would delete Section 1(e)
of Article Fourth thereof.
DOES NOT
The undersigned, as the record holder of CONSENTS CONSENT ABSTAINS
shares of Class A Capital Stock of the
Company, hereby: [ ] [ ] [ ]
by written consent pursuant to section 228 of the Delaware General Corporation
Law with respect to all of the shares of the Company's Class B Capital Stock of
which the undersigned is the record holder on July 21, 1997, to the adoption of
the Agreement and Plan of Merger (the "Merger Agreement"), dated as of June 15,
1997, as amended, among the Company, Royalty Corporation, a Delaware
corporation, and Royalty Acquisition Corp., a Delaware corporation (the
"Purchaser"), and to the merger of the Purchaser into the Company (with the
Company being the surviving corporation) pursuant to the terms of the Merger
Agreement, as amended.
IN WITNESS WHEREOF, the undersigned has executed this Written Consent of
Stockholder on the date indicated below.
(Signature of Stockholder) ____________________________________
(Signature of Stockholder, if held jointly) ______________________________
Dated: _________________
