SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): March 11, 1997
THE HE-RO GROUP, LTD.
(Exact name of registrant as specified in its charter)
Delaware 1-10860 13-3615898
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(State or other jurisdiction Commission (I.R.S. Employer
of incorporation or organization) file number Identification No.)
550 Seventh Avenue New York, NY 10018
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(Address of principal executive offices) (Zip Code)
(212) 840-6047
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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THE HE-RO GROUP, LTD. AND SUBSIDIARIES
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On March 11, 1997, Della Rounick ("Mrs. Rounick"), the Co-Chairman of the
Board of Directors of The He-Ro Group, Ltd. (the "Registrant") and sole
executrix of the Estate of Herbert Rounick (the "Estate") executed an
irrevocable proxy authorizing Messrs. Ronald LaBow ("Mr. LaBow") and Stewart E.
Tabin, the President and Vice President, respectively, of Stonehill Investment
Corp. ("Stonehill") to vote the 4,430,748 shares of common stock of the
Registrant, par value $.01 per share (the "Common Stock") currently owned by
Mrs. Rounick and the Estate (which shares represent 66% of the Common Stock
currently outstanding) in favor of the transactions contemplated by that certain
Stock Purchase Agreement dated as of March 11, 1997 (the "Agreement") by and
among the Registrant, Mrs. Rounick, Oleg Cassini ("Mr. Cassini"), Stonehill and
Oleg Cassini, Inc. (" OCI"). Under the terms of the Agreement, among other
things, the Registrant has agreed to issue and sell to (i) Stonehill 6,869,332
shares of Common Stock, (which shares when issued will represent approximately
20% of the then issued and outstanding shares of Common Stock) for a purchase
price of $4,000,000 payable in cash at the Closing (as defined in the Agreement)
and (ii) to Cassini 20,000,000 shares of its Common Stock (which shares when
issued will represent approximately 60% of the then issued and outstanding
shares of Common Stock) for (a) $3,000,000, of which $1,000,000 is payable in
cash at the Closing and the balance is payable by the delivery on the Closing of
two non-interest bearing promissory notes of Mr. Cassini payable to the
Registrant each in the principal amount of $1,000,000, one of which will be due
on the first anniversary of the Closing and the second of which will be due on
the second anniversary of the Closing and both of which will be secured by the
shares of Common Stock to be issued to Mr. Cassini, and (b) the execution and
delivery by OCI of a certain Management License Agreement pursuant to which on
and after the Closing, the Registrant will manage the day to day operations and
supervise five of OCI's existing license agreements and any future license
agreements relating to women's apparel in exchange for half of the royalties
collected under such license agreements. Under the terms of the Agreement,
Stonehill and Mr. Cassini will have the right to require the Company to register
their shares of Common Stock under certain circumstances. In addition, pursuant
to the Agreement, the Estate has agreed to sell to Stonehill all but $1,000,000
of the approximately $6,000,000 of subordinated debt owing from the Registrant
to the Estate. Upon the Closing of the transactions described in the Agreement,
the 4,430,748 shares of Common Stock owned by Mrs. Rounick and the Estate will
represent 13% of the Common Stock to be outstanding on the Closing Date after
the issuance of shares to Stonehill and Mr. Cassini.
The Agreement also provides that on the Closing Date, (i) the members of
the Registrant's existing Board of Directors will have resigned, (ii) the
Registrant's Board of Directors will be expanded from three to seven members
consisting of Mr. Cassini, Mr. LaBow, the President and principal stockholder of
Stonehill, the Registrant's Chief Executive Officer, a designee of Mrs. Rounick
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and the balance to be designated by Mr. Cassini and/or Mr. LaBow, (iii) Mr.
Cassini will be named Chairman of the Board; and (iv) the Registrant will be
renamed Oleg Cassini Group International, Ltd. In addition, based upon the
information contained in the Schedule 13D dated March 21, 1997 filed by Messrs.
LaBow and Steward E. Tabin, the Registrant understands that Mr. Cassini will
also provide a three-year voting trust to Mr. LaBow at the Closing.
The Closing is subject to, among other things, approval by the Registrant's
stockholders of (i) an amendment to the Registrant's Certificate of
Incorporation to change the name of the Registrant and to increase the number of
shares of Common Stock which the Registrant is authorized to issue and (ii) the
issuance of the above referenced shares of Common Stock to Stonehill and Mr.
Cassini. The transactions contemplated by the Agreement are also subject to
other third party and regulatory approvals and certain other closing conditions.
Accordingly, there can be no assurance that the Registrant will consummate the
transactions contemplated by the Agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
9. Irrevocable Proxy dated March 11, 1997 of Della Rounick.
20. Press release of Registrant dated March 12, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, The
He-Ro Group, Ltd. has duly caused this Current Report on Form 8-K to be signed
on its behalf by the undersigned thereto duly authorized.
Date: March 26, 1997 THE HE-RO GROUP, LTD.
(Registrant)
By: /s/ Sam D. Kaplan
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Name: Sam D. Kaplan
Title: Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
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EXHIBIT 9
IRREVOCABLE PROXY
Della Rounick ("DR") individually and as sole executrix of the Estate of
Herbert Rounick (the "Estate") have entered into a certain agreement dated as of
March 11, 1997 (the "Agreement") by and between Stonehill Investment Corp., a
New York corporation ("Stonehill"), Oleg Cassini Inc. ("Cassini") (Stonehill and
Cassini are sometimes heretofore collectively referred to as the "Purchasers"),
Oleg Cassini, Inc. ("O.C.I.") and The He-Ro Group, Ltd. (the "Company").
WHEREAS as an inducement for the Purchasers to enter into the Agreement, DR
individually and as sole executrix of the Estate of Herbert Rounick, as the
beneficial and record owners of 4,430,748 shares of common stock of the Company
(the "Shares") has agreed to vote all of the Shares in favor of the transactions
and other matters requiring stockholder vote of the Company as contemplated by
the Agreement and has agreed to execute this Proxy for the benefit of the
Purchasers and as an inducement for them to enter into the Agreement. It is
intended that this Proxy shall be binding upon DR, the Estate and their
respective heirs, successors and assigns.
Accordingly, KNOW ALL MEN BY THESE PRESENCE that DELLA ROUNICK and THE
ESTATE OF HERBERT ROUNICK jointly and severally hereby appoint Ronald LaBow and
Stewart E. Tabin, individually as their proxies, with full power of substitution
and grants to each of Ronald LaBow and Stewart E. Tabin complete control over
all rights to vote or consent (including rights to be present or absent for
quorum purposes) with respect to any and all shares of common stock of the
Company which Della Rounick and the Estate of Herbert Rounick may own or hold
during the term of this Proxy, with respect to all matters which may come before
meetings of the stockholders of the Company (or actions by written consent in
lieu of meetings with respect to the transactions contemplated by the Agreement
which require stockholder vote including, but not limited to, an increase in the
capitalization of the Company, the amendment of the certificate of incorporation
of the Company changing the name of the Company and the election of directors of
the Company. This Proxy shall expire on the earlier of (i) the closing of the
transactions contemplated by the Agreement, (ii) May 31 , 1997 or (iii) the
earlier termination of the Agreement. Della Rounick and the Estate of Herbert
Rounick hereby affirm that this Proxy is given for the purpose of and should be
construed so as to effectuate the purposes set forth above, and that this Proxy
is coupled with an interest and is irrevocable during the term hereof.
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IN WITNESS WHEREOF, Della Rounick and the Estate of Herbert Rounick,
individually and executor of the Estate of Herbert Rounick have executed this
Proxy this 11 day of March, 1997.
By: /s/ Della Rounick
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Della Rounick
ESTATE OF HERBERT ROUNICK
By: /s/ Della Vasiliki Pasvantidou Rounick
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Della Rounick, Executrix
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Exhibit 20
FOR IMMEDIATE RELEASE
Contact: Mitch Simbal
201-601-1800
NEW YORK, NY, March 12, 1997 -- The He-Ro Group, Ltd. (NYSE:HRG) announced today
that the Company has signed a purchase agreement with Oleg Cassini, Oleg
Cassini, Inc. ("OCI") and Stonehill Investment Corporation ("Stonehill"),
pursuant to which Mr. Cassini and Stonehill will invest $7,000,000 in cash in
the Company and OCI will contribute certain licensing income to the Company in
connection with a license management agreement, for which they will receive 80%
of the Company's common stock.
The Company will use the proceeds of this investment for a reduction and
restructuring of debt, additional working capital and strategic growth. The
Company will be renamed Oleg Cassini Group International, Ltd. Oleg Cassini will
be named Chairman of the Board.
The Company will continue to develop its core business, Black Tie by Oleg
Cassini, Niteline and its retail outlet stores. In addition, Mr. Cassini will
direct and oversee all future growth and development plans including the
potential expansion into global markets, the creation of additional fashion
divisions under the Oleg Cassini label, the development of full-line retail
boutiques and strategic acquisitions.
The transaction is subject to certain third party and regulatory approvals and
certain other closing conditions. Consequently, there can be no assurance that
the Company will consummate this transaction.
William J. Carone, Co-Chairman of the Board of the Company, commenting on the
pending transaction, stated, "Oleg Cassini will bring to the Company image,
prestige and design acumen, which will aid the Company in its continuing efforts
to return to profitability."
The He-Ro Group, Ltd. produces and markets a line of ladies evening and special
occasion wear under its proprietary labels, including NITELINE by Della
Roufogali, and under the licensed designer label, BLACK TIE by Oleg Cassini.
