UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1 )*
Frederick's of Hollywood, Inc.
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(Name of Issuer)
Class A Common Stock, $1.00 par value
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(Title of Class of Securities)
35582420-2
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(CUSIP Number)
David E. Lipson, Chairman
Royalty Corporation, a Delaware Corporation
225 W. Washington St., Ste. 2150
Chicago, IL 60606
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and communications)
September 9, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
Note. Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: September 10 1997
ROYALTY CORPORATION
By: /S/ David E. Lipson
-----------------------------------------
David E. Lipson Chairman of the Board
and President
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: September 10, 1997
MONROE HOLDINGS, L.L.C., by MONROE
PROPERTY COMPANY, MANAGER
By: /s/ David E. Lipson
----------------------------------
David E. Lipson, General Partner of
MONROE PROPERTY COMPANY
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: September 10, 1997
1995 INVESTMENTS, L.L.C., by DEL
1995 TRUST
By: /s/ Laurence E. Lipson
---------------------------------
Laurence E. Lipson, Trustee
By: /s/ Suzanne L. Saxman
-------------------------------------
Suzanne L. Saxman, Trustee
By: /s/ Nadine E. Lipson
----------------------------------
Nadine E. Lipson, Trustee
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: September 10, 1997
ECC SPICE, L.L.C., by EASTON CAPITAL
CORP., MANAGER
By: /s/ John H. Friedman
------------------------------------
John H.. Friedman, President
<PAGE>
EXHIBIT 7(c)(ii)
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 inquired
whether Parent would be willing to increase the $6.90 Merger Price for the
Class A Capital Stock and Class B Capital Stock;
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;
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 of the Company
regarding the likelihood of the consummation of any transaction with any
such third party and the resulting consequences to the stockholders
of the Company; 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), officers, home office management employees, representatives
and agents (including, without limitation, its attorneys (including, without
limitation, attorneys at Loeb & Loeb and attorneys at Morris, Nichols,
Arsht & Tunney), accountants and investment bankers (including, without
limitation, its representatives at Janney Montgomery Scott)) (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 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 Company Representative, 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 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 its
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;"
(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 adding
the following sentences to the end of Section 10.7(b): "The Company shall not
take any position to cause the Class A or Class B Capital Stock of the Company
not to be voted in favor of the Merger. If the Company takes any such
position and the Merger is not approved, Buyer shall be entitled to a fee of
Four Million, Five Hundred Thousand Dollars ($4,500,000). Notwithstanding
the foregoing, in the event the termination of this Agreement pursuant to
Section 10.2(c) is 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."
(h) Amendment to Article X. A new Section 10.9 is hereby added to t
he Merger Agreement as follows:
"Section 10.9 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. Nothing in this Agreement shall require the Company to pay
Parent and Buyer together more than Four Million, Five Hundred Thousand Dollars
($4,500,000) upon termination of this Agreement."
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
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 a
ccessible 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 of a substantive nature with respect to the
Merger, 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
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 a
ll 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: BUYER:
FREDERICK'S OF HOLLYWOOD, INC. ROYALTY ACQUISITION CORP.
By: _________________________ By: ______________________
Title: President Title: Chairman and President
PARENT:
ROYALTY CORPORATION
By: ______________________
Title: Chairman and President
