SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 6, 1998
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KINGS ROAD ENTERTAINMENT, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-14234 95-3587522
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1901 Avenue of the Stars, Suite 1545, Los Angeles, CA 90067
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 552-0057
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N/A
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(Former name or former address, if changed since last report)
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Item 1. Changes in Control of Registrant
Pursuant to a Stock Acquisition Agreement dated November 6, 1998 (the
"Agreement"), FAB Capital Corporation ("FAB") purchased 421,949 shares, MBO
Music Verlag GmbH ("MBO") purchased 373,350 shares, Western Union Leasing Ltd.
("Western") purchased 159,461 shares and RAS Securities Corp. ("RAS") purchased
100 shares of the common stock, $.01 par value ("Common Stock"), of Kings Road
Entertainment, Inc. (the "Company") from the Estate of Stephen Friedman (the
"Estate"), and FAB simultaneously purchased 7,500 shares of Common Stock from
Mr. Christopher Trunkey, the Chief Financial Officer of the Company. Pursuant to
the Agreement, each of the Estate and Mr. Trunkey sold 90% of the shares of
Common Stock owned by it and him. Together, FAB, MBO, Western and RAS (the
"Acquirors") purchased 962,360 shares of Common Stock, representing 50.3% of the
1,911,748 shares outstanding on such date. The Company's Board of Directors had
approved the Acquirors' purchases of such shares from the Estate and Mr.
Trunkey. The purchase price for each such purchase was $2.35 per share or
$2,261,546 in the aggregate. RAS is expected to become a wholly-owned subsidiary
of FAB upon the consummation of a pending transaction. Mr. Christoph Martin is
the sole trustee and shareholder of Western and Mr. Michael Berresheim is the
sole shareholder of MBO.
Pursuant to the Agreement, the existing members of the Company's Board
of Directors (Kenneth Aguado, Martin Davidson and Susan Aguado) resigned and
elected in their place Phillip Cook as Chairman of the Board and James Leaderer
as a member of the Board. In addition, Mr. Aguado resigned as Chief Executive
Officer of the Company and Mr. Cook was appointed President and Mr. Leaderer was
appointed Senior Vice President of the Company.
Phillip Cook, age 44 and a citizen of Australia, has been the Chairman
of FAB since March 1998. He has also served, since December 1995, as Chairman of
Essential Resources, Inc. and, since January 1986, as a private investment
banking consultant. James Leaderer, age 44, has served since November 1997 as a
Vice President Investment Banking and as a Director of RAS. From June 1991 to
November 1997, he served as President and Chief Executive Officer of Woodside
Assurance, Inc., located in Arlington, Texas, a company which purchases, sells
and restructures non-performing loans.
As described below, FAB, MBO and Western borrowed $991,580.15,
$877,372.50 and $374,733.35, respectively, to fund their respective purchases of
shares from the Estate. FAB used internal working capital ($17,625) to acquire
7,500 shares of Common Stock from Mr. Trunkey as did RAS ($235) to acquire 100
shares of Common Stock from the Estate. FAB, MBO and Western borrowed an
aggregate of $2,243,686 as follows: $1,500,000 from Riverrock Ltd.; $200,000
from Long Valley Associates; and $543,686 from North American International
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Capital, Inc. FAB, MBO and Western borrowed 44.2%, 39.1% and 16.7%,
respectively, of the amount loaned by each of these lenders. The entire amount
loaned by North American International Capital, Inc. was first borrowed by FAB
and FAB in turn loaned $212,673 to MBO and $90,835 to Western. FAB, MBO and
Western each has repaid such loans described above.
In addition, Music Action Ltd., a German corporation ("MAC"), agreed
that it will, as soon as practicable but in any event within 120 days after
November 6, 1998, make or cause to be made an offer to each of the Company's
shareholders, other than the Acquirors, the Estate and Mr. Trunkey, for the
purchase of up to ninety percent (90%) of such shareholder's shares at the price
of $2.35 per share (the "Purchase Offer"). MAC has agreed that, in the event the
Purchase Offer is not made within ninety (90) days after November 6, 1998, it
will deposit $1,800,000 into escrow to be applied toward the Purchase Offer. FAB
has agreed to make the $1,800,000 deposit into escrow in the event MAC does not
do so.
Also pursuant to the Agreement, the Company entered into a consulting
agreement with Kenneth Aguado which provides him with a fee of $10,000 per
month, plus certain other incentive fees for projects, for a term of one year,
renewable by mutual consent of the parties.
Effective November 9, 1998, the Company acquired 20% of the common
stock of Immediate Entertainment Group, Inc., a Nevada corporation
("Immediate"), at a price of $2.50 per share, paid with a combination of stock
of the Company and cash. Pursuant to such transaction, Western sold 400,000
Immediate shares for $419,650.00 and 246,957 shares of Common Stock; FAB sold
1,057,885 Immediate shares for $1,109,853.60 and 653,131 shares of Common Stock;
and MBO sold 935,350 Immediate shares for $981,299.07 and 577,479 shares of
Common Stock. The Company also entered into a non-binding Letter of Intent with
Immediate pursuant to which Immediate will merge into a newly formed, wholly
owned subsidiary of the Company in a proposed tax-free transaction. The merger
is conditioned upon the negotiation and execution of definitive final agreements
and the satisfaction of any legal requirements including the consent of
shareholders, if required. Michael Berresheim is the Chairman of Immediate and
the sole shareholder of MBO.
As a result of the transactions described above, FAB beneficially owns
1,082,580 shares of Common Stock (31.9% of the outstanding), MBO beneficially
owns 950,829 shares of Common Stock (28.1% of the outstanding), Western
beneficially owns 406,418 shares of Common Stock (12.0% of the outstanding) and
RAS beneficially owns 100 shares of Common Stock, which together constitute
2,439,927 shares, or 72.0% of the 3,389,315 shares outstanding.
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Item 7. Exhibits
Exhibit
Numbers Exhibit
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10(a)* Stock Acquisition Agreement, dated
November 6, 1998, by and among the
Estate of Stephen Friedman, RAS
Securities Corp., Kings Road
Entertainment, Inc., FAB Capital
Corporation and Christopher Trunkey.
10(b)* Stock Purchase Agreement, dated November
9, 1998, by and among, Western Union
Leasing Ltd., FAB Capital Corporation,
MBO Music Verlag GmbH, Kings Road
Entertainment, Inc. and Immediate
Entertainment Group, Inc.
10(c)* Form of Demand Promissory Note and
Pledge Agreement, dated November 9,
1998, entered into by each of
Riverrock Ltd. and Long Valley
Associates with FAB Capital
Corporation, MBO Music Verlag GmbH
and Western Union Leasing Ltd. and
North American International
Capital, Inc. with FAB Capital
Corporation.
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* Incorporated herein by reference to the exhibits with the identical
exhibit number filed with the Schedule 13D, dated November 13, 1998, relating to
the acquisition of the Company's securities by FAB, MBO, Western, RAS, Mr.
Berresheim and Mr. Martin.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KINGS ROAD ENTERTAINMENT, INC.
By: /s/
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Phillip Cook,
President
Date: November 20, 1998
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