Unassociated Document
As
filed with the Securities and Exchange Commission on April 15,
2010
Registration
No. 333-163345
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
AMENDMENT
NO. 1 TO
FORM
S-3
REGISTRATION
STATEMENT UNDER
THE
SECURITIES ACT OF 1933
FREDERICK’S
OF HOLLYWOOD GROUP INC.
(Exact
name of registrant as specified in its charter)
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New
York
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13-5651322
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|
(State
or Other Jurisdiction of Incorporation or
Organization)
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(I.R.S.
Employer Identification Number)
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1115
Broadway
New
York, New York 10010
(212)
798-4700
(Address,
Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's
Principal Executive Office)
Thomas
J. Lynch
Chairman
of the Board and Chief Executive Officer
Frederick’s
of Hollywood Group Inc.
1115
Broadway
New
York, New York 10010
(212)
798-4700
(Name,
Address, Including Zip Code, and Telephone Number, Including Area
Code,
of Agent for Service)
Copies to:
David
Alan Miller, Esq.
Jeffrey
M . Gallant, Esq.
Graubard
Miller
405
Lexington Avenue, 19th
Floor
New
York, New York 10174
Telephone:
(212) 818-8800
Fax:
(212) 818-8881
Approximate
date of commencement of proposed sale to the public: From time to time after the effective
date of this registration statement.
If the
only securities being registered on this form are being offered pursuant to
dividend or interest reinvestment plans, other than securities offered only in
connection with dividend or interest reinvestment plans, please check the
following box. ¨
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the
following box. x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
If this
Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. ¨
If this
Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large
accelerated filer ¨
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Accelerated
filer ¨
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Non-accelerated
filer ¨
(Do
not check if a smaller reporting company)
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Smaller
reporting company x
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CALCULATION
OF REGISTRATION FEE
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Title of each class of securities to be
registered
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Amount to be
Registered(1)
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Proposed
Maximum
Offering Price
Per Security(2)
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Proposed
Maximum
Aggregate
Offering Price
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Amount of
Registration
Fee
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Common
Stock, par value $0.01 per share
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29,339,708 |
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$ |
1.17 |
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$ |
34,327,458.36 |
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$ |
2,447.55 |
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Total
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$ |
2,447.55 |
(3)
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(1)
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In
the event of a stock split, reverse stock split, stock dividend or similar
transaction involving our common stock, the number of shares registered
shall automatically be adjusted to cover the additional shares of common
stock issuable pursuant to Rule 416 under the Securities Act of 1933, as
amended.
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(2)
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Estimated
solely for purposes of calculating the registration fee in accordance with
Rule 457(c) under the Securities Act of 1933, using the average of the
high and low prices as reported on the NYSE Amex on April 9, 2010, which
was $1.17 per share.
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(3)
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A
filing fee of $1,405.71 has previously been
paid.
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The
registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The
information in this prospectus is not complete and may be changed. The selling
securityholders may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and neither Frederick’s of Hollywood
Group Inc. nor the selling securityholders are soliciting offers to buy these
securities in any state where the offer or sale is not permitted.
Subject
to Completion, dated April 15, 2010
Frederick’s
of Hollywood Group Inc.
29,339,708
Shares of Common Stock
This
prospectus relates to the resale of up to 29,339,708 shares of our common stock
by the selling shareholders set forth in this prospectus under the heading
“Selling Shareholders” beginning on page 8 of this
prospectus.
We
will not receive any proceeds from the sale of our shares by the selling
shareholders; however, we may receive payment in cash upon exercise of warrants
held by such selling shareholders. We will also immediately retire,
without the payment of additional consideration, $14.3 million principal amount
and accrued interest of the Tranche C debt and $8.8 million of Series A
Preferred Stock and accrued dividends that are being exchanged and converted for
shares of our common stock as described in this prospectus.
The
securities are being registered to permit the selling shareholders to sell the
securities from time to time in the public market. The selling shareholders may
sell the securities through ordinary brokerage transactions or through any other
means described under the heading “Plan of Distribution” beginning on page
10. We do not know when or in what amount the selling shareholders
may offer the securities for sale. The selling shareholders may sell any, all or
none of the securities offered by this prospectus.
Our
common stock is traded on the NYSE Amex under the symbol “FOH.” The last
reported sale price of our common stock on the NYSE Amex on April 9, 2010 was
$1.15 per share.
Investing in our common stock
involves a high degree of risk. See the section titled “Risk Factors”
beginning on page 3.
We
may amend or supplement this prospectus from time to time by filing amendments
or supplements as required. You should read the entire prospectus and any
amendments or supplements carefully before you make your investment
decision.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The
date of this prospectus is _______ ___, 2010.
FREDERICK’S
OF HOLLYWOOD GROUP INC.
TABLE
OF CONTENTS
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PROSPECTUS
SUMMARY
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1
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RISK
FACTORS
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3
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FORWARD-LOOKING
STATEMENTS
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7
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USE
OF PROCEEDS
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7
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SELLING
SHAREHOLDERS
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8
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PLAN
OF DISTRIBUTION
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10
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LEGAL
MATTERS
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11
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INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRMS
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11
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WHERE
YOU CAN FIND MORE INFORMATION
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11
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You may
only rely on the information contained in this prospectus or that we have
referred you to. We have not authorized anyone to provide you with different
information. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the common stock
offered by this prospectus. This prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any common stock in any circumstances in
which such offer or solicitation is unlawful. Neither the delivery of this
prospectus nor any sale made in connection with this prospectus shall, under any
circumstances, create any implication that there has been no change in our
affairs since the date of this prospectus or that the information contained by
reference to this prospectus is correct as of any time after its date. In this
prospectus, references to “Frederick’s of Hollywood Group Inc.,” “the Company,”
“we,” “us,” and “our,” refer to Frederick’s of Hollywood Group Inc., a New York
corporation, and its subsidiaries.
PROSPECTUS
SUMMARY
Overview
Frederick’s
of Hollywood Group Inc. is a New York corporation incorporated on April 10,
1935. On January 28, 2008, we consummated a merger with FOH Holdings, Inc., a
privately-held Delaware corporation (“FOH Holdings”). As a result of the
transaction, FOH Holdings became our wholly-owned subsidiary. FOH Holdings is
the parent company of Frederick’s of Hollywood, Inc. Upon consummation of the
merger, we changed our name from Movie Star, Inc. to Frederick’s of Hollywood
Group Inc.
As a
merged company, we conduct our business through two operating divisions that
represent two distinct business reporting segments: the multi-channel
retail division and the wholesale division. We believe this method of
segment reporting reflects both the way our business segments are managed and
the way each segment’s performance is evaluated. The retail segment
includes our retail stores, catalog and website operations. The
wholesale segment includes our wholesale operations in the United States and
Canada.
Through
our multi-channel retail division, we sell women’s intimate apparel and related
products under our proprietary Frederick’s of Hollywood® brand
exclusively through our predominantly mall-based specialty retail stores in the
United States, which we refer to as “Stores,” and through our catalog and
website at www.fredericks.com, which we refer to collectively as
“Direct.” As of January 23, 2010, we operated 132 Frederick’s of
Hollywood stores nationwide.
Through
our wholesale division, we design, manufacture, source, distribute and sell
women’s intimate apparel to mass merchandisers, specialty and department stores,
discount retailers, national and regional chains, and direct mail catalog
marketers throughout the United States and Canada.
Recent
Events
Debt
Exchange and Preferred Stock Conversion Agreement
On
February 1, 2010, we entered into a Debt Exchange and Preferred Stock Conversion
Agreement (“Exchange and Conversion Agreement”) with Fursa Capital Partners LP,
Fursa Master Rediscovered Opportunities L.P., Blackfriars Master Vehicle LLC –
Series 2, and Fursa Master Global Event Driven Fund L.P (collectively, “Fursa”),
the holders of approximately $14.3 million principal amount of our long term
debt outstanding including accrued interest (the “Tranche C debt”) and
approximately $8.8 million of our Series A preferred stock including accrued
dividends (“Series A Preferred Stock”). Pursuant to the Exchange and
Conversion Agreement, Fursa agreed to exchange and convert the entire $14.3
million principal amount and accrued interest of the Tranche C debt and all $8.8
million of their outstanding shares of Series A Preferred Stock and accrued
dividends into shares of our common stock at an effective price of approximately
$2.66 per share. Upon the closing of the transaction, we will also
issue to Fursa three, five and seven-year warrants, each to purchase 500,000
shares of common stock (for an aggregate of 1,500,000 shares of common
stock).
The
consummation of the transaction is subject to shareholder approval at our annual
meeting of shareholders to be held on May 12, 2010. We expect to
consummate the transaction as soon as practicable once shareholder approval is
obtained. Pursuant to the Agreement, Fursa has agreed to “sterilize”
their vote by committing to vote the shares of our common stock and Series A
Preferred Stock held by Fursa on the date of the Agreement in accordance with
the vote of a majority of votes cast at the meeting, excluding the shares held
by Fursa. Additionally, as described below, on March 16, 2010, we
issued an aggregate of 2,907,051 shares of our common stock in a private
placement to accredited investors pursuant to the terms of a securities purchase
agreement. These investors agreed to appoint Thomas J. Lynch, our
Chairman and Chief Executive Officer, or Thomas Rende, our Chief Financial
Officer, to vote their shares purchased in the private placement at the meeting
in connection with the Agreement. Messrs. Lynch and Rende intend to
vote these shares in favor of approval of the Exchange and Conversion
Agreement.
Assuming
the consummation of the transaction contemplated by the Exchange and Conversion
Agreement occurs on May 18, 2010, the principal amount and accrued interest of
the Tranche C debt and the outstanding shares of Series A Preferred Stock and
accrued dividends will be converted into an aggregate of 8,664,373 shares of our
common stock and we will issue Fursa immediately exercisable warrants to
purchase an aggregate of 1,500,000 shares of our common
stock. Accordingly, Fursa’s beneficial ownership of our common stock
will increase from approximately 33.0% to approximately 47.4%.
Pursuant
to the terms of the Exchange and Conversion Agreement, we are registering
for resale under this prospectus the shares of common stock that Fursa will
receive upon exchange and conversion of the Tranche C debt and Series A
Preferred Stock, together with the shares issuable upon exercise of the warrants
to be issued to Fursa. As there are no further conditions to the
consummation of the Exchange and Conversion Agreement that are within the
control of Fursa, the shares of common stock and warrants to be issued pursuant
to the Exchange and Conversion Agreement are expected to be issued promptly
after our annual meeting of shareholders if shareholder approval of the Exchange
and Conversion Agreement is obtained.
Private
Placement
On
March 16, 2010, we completed a private placement of 2,907,051 shares of our
common stock at $1.05 per share, raising total gross proceeds of approximately
$3,050,000 (the “Private Placement”). The investors in the Private
Placement also received two-and-a-half year Series A warrants to purchase up to
an aggregate of 1,162,820 shares of common stock at an exercise price of $1.25
per share, and five-year Series B warrants to purchase up to an aggregate of
1,162,820 shares of common stock at an exercise price of $1.55 per
share.
Avalon
Securities Ltd. (“Avalon”) acted as placement agent in the Private
Placement. Upon the closing of the Private Placement, we paid Avalon
approximately $198,000 in cash commissions and issued to Avalon and its
designees warrants to purchase an aggregate of 218,030 shares of common stock at
an exercise price of $1.21 per share. Except for the exercise price,
these warrants are identical to the Series B warrants issued to investors in the
Private Placement.
We
agreed to register for re-sale the shares of common stock received or to be
received by the investors in the Private Placement, as well as Avalon and its
designees. Those shares are registered for resale on a different
prospectus.
Registration
Rights Agreement
In
connection with the consummation of our merger with FOH Holdings in January
2008, we entered into a registration rights agreement (“Registration Rights
Agreement”) with Fursa, Tokarz Investments, LLC (“Tokarz Investments”) and TTG
Apparel LLC (“TTG Apparel”). Pursuant to the Registration Rights Agreement,
we agreed to register for resale the shares of our common stock held by these
entities in certain situations. This prospectus relates to the resale
by such entities of their shares of our common stock.
Corporate
Information
Our
principal executive offices are located at 1115 Broadway, New York, New York
10010 and our telephone number is (212) 798-4700. Our retail division corporate
office is located at 6255 Sunset Boulevard, Los Angeles, California 90028 and
its telephone number is (323) 466-5151. Our retail website is www.fredericks.com
and our corporate website is www.fohgroup.com. We
do not intend for information contained in our websites to be a part of this
prospectus.
RISK
FACTORS
You
should carefully consider the risks described below as well as other information
provided to you in this document, including information in the section of this
document entitled “Forward Looking Statements.” The risks and
uncertainties described below are not the only ones facing
us. Additional risks and uncertainties not presently known to us or
that we currently believe are immaterial may also impair our business
operations. If any of the following risks actually occur, our
business, financial condition or results of operations could be materially
adversely affected, the value of our common stock could decline, and you may
lose all or part of your investment.
Risks
Relating to Our Business
General
economic conditions, including continued weakening of the economy, may affect
consumer purchases of discretionary items, which could adversely affect our
sales.
The intimate apparel industry
historically has been subject to cyclical variations, recessions in the general
economy and future economic outlook. Throughout fiscal year 2009 and
the first six months of fiscal 2010, there was significant deterioration in the
global financial markets and economic environment, which we believe negatively
impacted consumer spending at many retailers, including us. Our
results are dependent on a number of factors impacting consumer spending,
including general economic and business conditions; consumer confidence; wages
and employment levels; the housing market; consumer debt levels; availability of
consumer credit; credit and interest rates; fuel and energy costs; energy
shortages; taxes; general political conditions, both domestic and abroad; and
the level of customer traffic within department stores, malls and other shopping
and selling environments. Consumer purchases of discretionary items,
including our products, may decline during recessionary periods and at other
times when disposable income is lower. A continued or incremental
downturn in the U.S. economy, an uncertain economic outlook or an expanded
credit crisis could continue to adversely affect our business and our revenues
and profits.
If
we cannot compete effectively in the retail and wholesale apparel industries,
our business, financial condition and results of operations may be adversely
affected.
The intimate apparel industry is highly
competitive, both on the retail and wholesale levels. Our retail
division competes with a variety of retailers, including national department
store chains, national and international specialty apparel chains, apparel
catalog businesses and online apparel businesses that sell similar lines of
merchandise. Many of Frederick’s of Hollywood’s competitors have
greater financial, distribution, logistics, marketing and other resources
available to them and may be able to adapt to changes in customer requirements
more quickly, devote greater resources to the design, sourcing, distribution,
marketing and sale of their products, generate greater national brand
recognition or adopt more aggressive pricing policies. If we are
unable to overcome these potential competitive disadvantages, such factors could
have an adverse effect on our business, financial condition and results of
operations.
The wholesale industry is characterized
by a large number of small companies manufacturing and selling unbranded
merchandise, and by several large companies which have developed widespread
consumer recognition of the brand names associated with merchandise manufactured
and sold by these companies. In addition, some of the larger
retailers to whom our wholesale division has historically sold its products have
sought to expand the development and marketing of their own brands and to obtain
intimate apparel products directly from the same or similar sources from which
our wholesale division obtains its products. Many of these companies
have greater financial, technical and sourcing capabilities than we
do. If our wholesale division does not continue to provide high
quality products and reliable services on a timely basis at competitive prices,
we may not be able to continue to compete in the wholesale intimate apparel
industry. If we are unable to compete successfully, we could lose one
or more of our significant customers which, if not replaced, could negatively
impact sales and have an adverse effect on our business, financial condition and
results of operations.
The
failure to successfully order and manage inventory to reflect customer demand
and anticipate changing consumer preferences and buying trends may adversely
affect our revenue and profitability.
Our success depends, in part, on
management’s ability to anticipate and respond effectively to rapidly changing
fashion trends and consumer tastes and to translate market trends into
appropriate, saleable product offerings. Generally, merchandise must
be ordered well in advance of the applicable selling season and the extended
lead times may make it difficult to respond rapidly to new or changing product
trends or price changes. If we are unable to successfully anticipate,
identify or react to changing styles or trends and we misjudge the market for
our products or our customers’ purchasing habits, then our product offerings may
be poorly received by the ultimate consumer and may require substantial
discounts to sell, which would reduce sales revenue and lower profit
margins. In addition, we will incur additional costs if we need to
redesign our product offerings. Brand image also may suffer if
customers believe that we are unable to offer innovative products, respond to
the latest fashion trends, or maintain product quality.
Our
inability to consummate a financing for the amount and within the time period
required under our financing agreement with our senior lender, absent a waiver
of such requirement, will constitute an event of default under our senior
revolving credit facility.
In September and October 2009, we
amended our revolving credit facility with our senior lender to provide for a
$2.0 million bridge facility to be repaid upon the earlier of August 1, 2010 and
the consummation of a financing in which we receive net proceeds of at least
$4.4 million. We did not receive that amount in the Private
Placement. Unless we receive the amount of proceeds required by our
credit facility by August 1, 2010, we will be in violation of a covenant under
our credit facility. If such violation is not waived by our senior
lender, it will constitute an event of default.
We
are required to raise additional financing under our senior revolving credit
facility and may not be able to obtain it on favorable terms, or at all, which,
in addition to violating a covenant under our credit facility, could limit our
ability to operate and dilute the ownership interests of existing
shareholders.
Since the Private Placement did not
yield net proceeds of at least $4.4 million, we are required to raise additional
funds under our senior credit facility. We cannot be certain that we
will be able to obtain such additional financing on favorable terms, or at
all. Further, if we obtain additional funding through the issuance of
equity, shareholders may experience dilution or the new equity securities may
have rights, preferences or privileges senior to those of existing holders of
common stock. Future financings may place restrictions on how we
operate our business. If we cannot raise funds on acceptable terms,
if and when needed, we may be required to curtail our operations significantly,
which could adversely affect our business.
We
depend on key personnel and we may not be able to operate and grow the business
effectively if we lose the services of any key personnel or are unable to
attract qualified personnel in the future.
We are dependent upon the continuing
service of key personnel and the hiring of other qualified
employees. In particular, we are dependent upon the management and
leadership of Thomas J. Lynch, our Chairman and Chief Executive Officer, Linda
LoRe, our President, and Thomas Rende, our Chief Financial Officer. The loss of
any of them or other key personnel could affect our ability to operate the
business effectively.
Our
retail division historically has depended on a high volume of mall traffic, the
lack of which would hurt our business.
Most Frederick’s of Hollywood stores
are located in shopping malls. Sales at these stores are influenced,
in part, by the volume of mall traffic. Frederick’s of Hollywood
stores benefit from the ability of the malls’ “anchor” tenants, generally large
department stores, and other area attractions to generate customer traffic in
the vicinity of its stores and the continuing popularity of malls as shopping
destinations. A decline in the desirability of the shopping
environment of a particular mall, whether due to the closing of an anchor tenant
or competition from non-mall retailers, or recessionary economic conditions that
consumers have been experiencing, could reduce the volume of mall traffic, which
could have an adverse effect on our business, financial condition and results of
operations.
If
leases for Frederick’s of Hollywood stores cannot be negotiated on reasonable
terms, our growth and profitability could be harmed.
The growth in our retail division’s
sales is significantly dependent on management’s ability to operate retail
stores in desirable locations with capital investments and lease costs that
allow for the opportunity to earn a reasonable return. Desirable
locations and configurations may not be available at a reasonable cost, or at
all. If we are unable to renew or replace our store leases or enter
into leases for new stores on favorable terms, our growth and profitability
could be harmed.
Our
wholesale business historically has been concentrated on one key customer, and a
significant decrease in business from or the loss of this key customer could
substantially reduce revenues.
Sales to Walmart accounted for
approximately 32% of wholesale sales for the fiscal year ended July 25, 2009 and
approximately 2% of wholesale sales for the six months ended January 23,
2010. We do not have a long-term contract with Walmart and,
therefore, our wholesale business is subject to significant unpredictable
increases and decreases in sales depending upon the size and number of orders we
receive from Walmart. We experienced a significant decrease in
Walmart business during fiscal year 2009 and the first half of fiscal year 2010,
which impacted our revenues. Our inability to increase our Walmart
orders during the remainder of fiscal year 2010 and beyond could have a material
adverse effect on our business, financial condition and results of
operations.
The
extent of our foreign sourcing and manufacturing may adversely affect our
business, financial condition and results of operations.
Substantially all of our products are
manufactured outside the United States. As a result of the magnitude
of foreign sourcing and manufacturing, our retail and wholesale businesses are
subject to the following risks:
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political
and economic instability in foreign countries, including heightened
terrorism and other security concerns, which could subject imported or
exported goods to additional or more frequent inspections, leading to
delays in deliveries or impoundment of goods, or to an increase in
transportation costs of raw materials or finished
product;
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·
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the
imposition of regulations and quotas relating to imports, including quotas
imposed by bilateral textile agreements between the United States and
foreign countries, including China, where we conduct
business;
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the
imposition of duties, taxes and other charges on
imports;
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significant
fluctuation of the value of the U.S. dollar against foreign
currencies;
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·
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restrictions
on the transfer of funds to or from foreign countries;
and
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·
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violations
by foreign contractors of labor and wage standards and resulting adverse
publicity.
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If these risks limit or prevent us from
selling, manufacturing or acquiring products from foreign suppliers, our
operations could be disrupted until alternative suppliers are found, which could
negatively impact our business, financial condition and results of
operations.
Our
wholesale business operates on very tight delivery schedules. If
there are delays and expected delivery dates cannot be met, it could negatively
affect our profitability.
If there is a delay in the delivery of
goods and delivery schedules cannot be met, then our wholesale customers may
cancel their orders or request a reduced price for the delivery of their
orders. If orders are canceled, it would result in an
over-inventoried position and require the sale of inventory at low or negative
gross profits, which would reduce our profitability. We may also
incur extra costs to meet customer delivery dates, which would also reduce our
profitability.
Any
disruptions at our distribution centers could materially affect our ability to
distribute products, which could lead to a reduction in our revenue and/or
profits.
Our distribution centers in Phoenix, AZ
and Poplarville, MS serve our retail and wholesale customers. There is no backup
facility or any alternate distribution arrangements in place. If we
experience disruptions at either of our distribution centers that impede the
timeliness or fulfillment of the products to be distributed, or either
distribution center is partially or completely destroyed, becomes inaccessible,
or is otherwise not fully usable, whether due to unexpected circumstances such
as weather conditions or disruption of the transportation systems or
uncontrollable factors such as terrorism and war, it would have a material
adverse effect on our ability to distribute products, which in turn would have a
material adverse effect on our business, financial condition and results of
operations.
The
failure to upgrade information technology systems as necessary could have an
adverse effect on our operations.
Some of our information technology
systems, which are primarily utilized to manage information necessary to price
and ship products, manage production and inventory and generate reports to
evaluate business operations, are dated and are comprised of multiple
applications, rather than one overarching state-of-the-art system. Modifications
involve replacing legacy systems with successor systems, making changes to
legacy systems or acquiring new systems with new functionality. If we
are unable to effectively implement these systems and update them where
necessary, this could have a material adverse effect on our business, financial
condition and results of operations.
The
processing, storage and use of personal data could give rise to liabilities as a
result of governmental regulation, conflicting legal requirements or differing
views of personal privacy rights.
The collection of data and processing
of transactions through our Frederick’s of Hollywood e-commerce website and call
centers require us to receive and store a large amount of personally
identifiable data. This type of data is subject to legislation and
regulation in various jurisdictions. We may become exposed to
potential liabilities with respect to the data that we collect, manage and
process, and may incur legal costs if our information security policies and
procedures are not effective or if we are required to defend our methods of
collection, processing and storage of personal data. Future
investigations, lawsuits or adverse publicity relating to our methods of
handling personal data could adversely affect our business, financial condition
and results of operations due to the costs and negative market reaction relating
to such developments.
Our
collection and remittance of sales and use tax may be subject to audit and may
expose us to liabilities for unpaid sales or use taxes, interest and penalties
on past sales.
We sell Frederick’s of Hollywood
products through three channels: retail specialty stores, mail order catalogs
and our e-commerce website. We have historically operated these
channels separately and account for sales and use tax
separately. Currently, our mail order and e-commerce subsidiaries
collect and pay sales tax to the relevant state taxing authority on sales made
to residents in any state in which we have a physical presence. Our
retail subsidiaries are periodically audited by state government
authorities. It is possible that one or more states may disagree with
our method of assessing and remitting these taxes, including sales tax on
catalog and e-commerce sales. We expect to challenge any and all
future assertions by state governmental authorities or private litigants that we
owe sales or use tax, but we may not prevail. If we do not prevail,
we could be held liable for additional sales and use taxes, interest and
penalties which could have an adverse effect on our profitability.
We could be sued
for trademark infringement, which could force us to incur substantial costs and
devote significant resources to defend the litigation.
We use many trademarks and product
designs in our businesses and believe these trademarks and product designs are
important to our business, competitive position and success. As
appropriate, we rely on trademark and copyright laws to protect these designs
even if not formally registered as marks, copyrights or
designs. Third parties may sue us for alleged infringement of their
proprietary rights. The party claiming infringement might have
greater resources than us to pursue its claims, and we could be forced to incur
substantial costs and devote significant management resources to defend the
litigation. Moreover, if the party claiming infringement were to
prevail, we could be forced to discontinue the use of the related trademark,
patent or design and/or pay significant damages, or to enter into expensive
royalty or licensing arrangements with the prevailing party, assuming these
royalty or licensing arrangements are available at all on an economically
feasible basis, which they may not be.
If
we cannot protect our trademarks and other proprietary intellectual property
rights, our business may be adversely affected.
We may experience difficulty in
effectively limiting unauthorized use of our trademarks and product designs
worldwide, which may cause significant damage to our brand name and our ability
to effectively represent ourselves to our agents, suppliers, vendors and/or
customers. We may not be successful in enforcing our trademark and
other proprietary rights and there can be no assurance that we will be
adequately protected in all countries or that we will prevail when defending our
trademark and proprietary rights.
Our
stock price has been highly volatile.
The trading price of our common
stock has been highly volatile. During the quarter ended January 23,
2010, the closing sale prices of our common stock on the NYSE Amex ranged from
$1.08 to $1.56 per share and the closing sale price of our common stock on April
9, 2010 was $1.15 per share. Since the closing date of the merger on
January 28, 2008, our stock price closed at a high of $4.10 on January 29, 2008
and a low of $0.14 on March 3, 2009. Our stock price is subject to
wide fluctuations in response to a variety of factors,
including:
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·
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quarterly
variations in operating results;
|
|
|
·
|
general
economic conditions;
|
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·
|
sales
of a substantial amount of our common stock;
and
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·
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other
events or factors that are beyond our
control.
|
Any negative change in the public’s
perception of the prospects of the retail industry could further depress our
stock price regardless of our results. Other broad market
fluctuations may lower the trading price of our common
stock. Following significant declines in the market price of a
company’s securities, securities class action litigation may be instituted
against that company. Litigation could result in substantial costs
and a diversion of management’s attention and resources.
There
will be a significant number of shares of common stock eligible for sale, which
could depress the market price of our stock.
Following the effective date of the
registration statements covering the shares of common stock issued in the
Private Placement, pursuant to the Exchange and Conversion Agreement and the
Registration Rights Agreement, a large number of shares of common stock will be
available for sale in the public market. This could harm the market
price of our stock. Further, shares may be offered from time to time
in the open market pursuant to Rule 144 under the Securities Act of 1933, as
amended (“Securities Act”), and these sales may depress the market for our
common stock.
FORWARD-LOOKING
STATEMENTS
When
used in this prospectus, the words or phrases “will likely result,” “management
expects” or “we expect,” “will continue,” “is anticipated,” “estimated,”
“believes,” “could,” “possibly,” “probably,” “anticipates,” “projects,” “may,”
or “should” or other variations or similar words are intended to identify
“forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. Readers are cautioned not to place
undue reliance on any such forward-looking statements. No assurances
can be given that the future results anticipated by the forward-looking
statements will be achieved.
Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected. In assessing forward-looking statements
contained herein, readers are urged to carefully read those
statements. Among the factors that could cause actual results to
differ materially are: competition; business conditions and industry growth;
rapidly changing consumer preferences and trends; general economic conditions;
large variations in sales volume with significant customers; addition or loss of
significant customers; continued compliance with government regulations; loss of
key personnel; labor practices; product development; management of growth;
increases of costs of operations or inability to meet efficiency or cost
reduction objectives; timing of orders and deliveries of products; and foreign
government regulations and risks of doing business abroad.
A
description of key factors that have a direct bearing on our results of
operations is provided above under “Risk Factors” beginning on page 3 of this
Prospectus.
USE
OF PROCEEDS
All
shares of our common stock offered by this prospectus are being registered for
the account of the selling shareholders. We will not receive any of the proceeds
from the sale of these shares; however, we may receive payment in cash upon
exercise of warrants held by such selling shareholders. We expect to use any
cash proceeds received from the exercise of the warrants, if any, for general
working capital purposes. We will also immediately retire, without
the payment of additional consideration, $14.3 million principal amount and
accrued interest of the Tranche C debt and $8.8 million of Series A Preferred
Stock and accrued dividends that are being exchanged and converted for shares of
our common stock as described in this prospectus.
SELLING
SHAREHOLDERS
The
following table provides certain information with respect to the selling
shareholders’ beneficial ownership of our common stock after the consummation of
the transaction contemplated by the Exchange and Conversion Agreement (assuming
a May 18, 2010 closing date) and as adjusted to give effect to the sale of all
of the shares offered by this prospectus. Except as otherwise indicated, the
number of shares reflected in the table has been determined in accordance with
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended. Unless otherwise indicated, each of the selling shareholders possesses
sole voting and investment power with respect to the securities
shown.
The
percentage of beneficial ownership before the offering indicated below is based
on 38,001,082 shares of our common stock outstanding after the consummation of
the transaction contemplated by the Exchange and Conversion Agreement (assuming
a May 18, 2010 closing date), which is comprised of 29,336,709 shares of our
common stock outstanding on April 9, 2010 plus 8,664,373 shares of our common
stock to be issued in the transaction.
| |
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Beneficial Ownership
Before Offering
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|
Shares
Offered
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|
Beneficial Ownership
After Offering
|
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|
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|
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|
|
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|
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Fursa
Master Global Event Driven Fund LP(1)
|
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12,512,174 |
(2)
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32.0 |
% |
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|
12,512,174 |
|
|
|
0 |
|
|
|
0 |
% |
|
Fursa
Master Rediscovered Opportunities Fund L.P.(1)
|
|
|
3,735,553 |
(3)
|
|
|
9.7 |
% |
|
|
3,735,553 |
|
|
|
0 |
|
|
|
0 |
% |
|
Blackfriars
Master Vehicle LLC – Series 2(1)
|
|
|
1,723,419 |
(4)
|
|
|
4.5 |
% |
|
|
1,723,419 |
|
|
|
0 |
|
|
|
0 |
% |
|
Fursa
Capital Partners LP(1)
|
|
|
897,725 |
(5)
|
|
|
2.4 |
% |
|
|
897,725 |
|
|
|
0 |
|
|
|
0 |
% |
|
Tokarz
Investments, LLC(6)
|
|
|
8,704,515 |
(7)
|
|
|
22.7 |
% |
|
|
8,704,515 |
|
|
|
0 |
|
|
|
0 |
% |
|
TTG
Apparel, LLC(6)
|
|
|
1,766,322 |
|
|
|
4.6 |
% |
|
|
1,766,322 |
|
|
|
0 |
|
|
|
0 |
% |
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(1)
|
Fursa
Alternative Strategies, LLC (“Fursa”) may be deemed to beneficially own
these shares on behalf of the above-referenced private affiliated
investment funds and separately managed accounts over which Fursa
exercises discretionary investment authority. William F.
Harley, Chief Investment Officer of Fursa, exercises voting and
dispositive power over shares beneficially owned by Fursa. Mr.
Harley also is a member of our board of
directors.
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(2)
|
Includes
(a) 317,538 shares of common stock issuable upon exercise of currently
exercisable warrants, (b) 4,825,148 shares of common stock to be issued
upon exchange and conversion of the Tranche C debt and Series A Preferred
Stock pursuant to the Exchange and Conversion Agreement and (c) 835,343
shares of common stock issuable upon exercise of warrants to be issued
upon consummation of the transaction contemplated by the Exchange and
Conversion Agreement. These securities are subject to a Pledge
Agreement between Fursa Master Global event Driven Fund LP and Scotia
Capital (USA) Inc.
|
|
(3)
|
Includes
(a) 2,237,384 shares of common stock to be issued upon exchange and
conversion of the Tranche C debt and Series A Preferred Stock pursuant to
the Exchange and Conversion Agreement and (b) 387,342 shares of common
stock issuable upon exercise of warrants to be issued upon consummation of
the transaction contemplated by the Exchange and Conversion
Agreement.
|
|
(4)
|
Includes
(a) 1,102,609 shares of common stock to be issued upon exchange and
conversion of the Tranche C debt and Series A Preferred Stock pursuant to
the Agreement and (b) 190,887 shares of common stock issuable upon
exercise of warrants to be issued upon consummation of the transaction
contemplated by the Exchange and Conversion Agreement
.
|
|
(5)
|
Includes (a)
499,232 shares of common stock to be issued upon exchange and conversion
of the Tranche C debt and Series A Preferred Stock pursuant to the
Agreement and (b) 86,428 shares of common stock issuable upon exercise of
warrants to be issued upon consummation of the transaction contemplated by
the Exchange and Conversion Agreement
..
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(6)
|
Michael
T. Tokarz is the sole controlling person and manager of each of TTG
Apparel and Tokarz Investments.
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(7)
|
Includes
317,538 shares of common stock issuable upon exercise of
warrants.
|
Each
selling shareholder provided us with information with respect to its share
ownership. Because the selling shareholders may sell all, part or
none of their shares, we are unable to estimate the number of shares that will
be held by each selling shareholder upon resale of shares of common stock being
registered hereby. We have, therefore, assumed for the purposes of
the registration statement related to this prospectus that the selling
shareholders will sell all of their shares. See “Plan of
Distribution.”
Debt
Exchange and Preferred Stock Conversion Agreement
At the
closing of our merger with FOH Holdings in January 2008, we, Fursa and FOH
Holdings entered into a debt conversion agreement, pursuant to which a $7.5
million portion of the term loan owed by FOH Holdings and its subsidiaries to
Fursa was cancelled in exchange for the issuance of an aggregate of 3,629,325
shares of our Series A Preferred Stock. The Fursa term loan
originated in January 2003 from a term loan made to FOH Holdings and its
subsidiaries and the conversion of certain pre-petition claims against FOH
Holdings and certain of its subsidiaries upon their emergence from
bankruptcy. After the closing of the merger, the principal balance
remaining due on the term loan was approximately $12,192,000. This
remaining portion of the term loan is referred to in this prospectus as the
Tranche C debt.
The
Tranche C debt bears interest at the fixed rate of 7% per annum, with 1% payable
in cash monthly in arrears and 6% paid in kind monthly in arrears and added to
the outstanding principal balance. No payment of principal is
required until the maturity date of July 28, 2012, at which time the outstanding
principal is payable in full. The Tranche C debt is secured by
substantially all of our assets and is second in priority to our senior credit
facility with Wells Fargo Retail Finance II, LLC.
On
February 1, 2010, we entered into the Exchange and Conversion
Agreement with Fursa, pursuant to which Fursa agreed to exchange and
convert the entire $14.3 million principal amount and accrued interest of the
Tranche C debt and all $8.8 million of their outstanding shares of Series A
Preferred Stock and accrued dividends into shares of our common stock at an
effective price of approximately $2.66 per share. Upon the closing of
the transaction, we will also issue to Fursa three, five and seven-year
warrants, each to purchase 500,000 shares of common stock (for an aggregate of
1,500,000 shares of common stock).
The
consummation of the transaction is subject to shareholder approval at our annual
meeting of shareholders to be held on May 12, 2010. We expect to
consummate the transaction as soon as practicable once shareholder approval is
obtained. Assuming the consummation of the transaction contemplated
by the Exchange and Conversion Agreement occurs on May 18, 2010, the principal
amount and accrued interest of the Tranche C debt and the outstanding shares of
Series A Preferred Stock and accrued dividends will be converted into an
aggregate of 8,664,373 shares of our common stock and we will issue Fursa
immediately exercisable warrants to purchase an aggregate of 1,500,000 shares of
our common stock.
Pursuant
to the terms of the Exchange and Conversion Agreement, we are registering
for resale under this prospectus the shares of common stock that Fursa will
receive upon exchange and conversion of the Tranche C debt and Series A
Preferred Stock, together with the shares issuable upon exercise of the warrants
to be issued to Fursa. As there are no further conditions to the
consummation of the Exchange and Conversion Agreement that are within the
control of Fursa, the shares of common stock and warrants to be issued pursuant
to the Exchange and Conversion Agreement are expected to be issued promptly
after our annual meeting of shareholders if shareholder approval of the Exchange
and Conversion Agreement is obtained.
Registration
Rights Agreement
Prior
to our merger with FOH Holdings in January 2008, Fursa and Tokarz were the sole
stockholders of FOH Holdings. In connection with the merger, (a) we
issued to Fursa and Tokarz Investments an aggregate of 11,844,591 shares of
common stock in exchange for all of FOH Holdings’ outstanding common stock; and
(b) we raised $20 million of gross proceeds through (i) the issuance of an
aggregate of 752,473 shares of common stock upon exercise by our shareholders of
non-transferable subscription rights to purchase shares of common stock (the
“Rights Offering”) and (ii) the issuance of an aggregate of 4,929,346 shares of
common stock not subscribed for by our shareholders in the Rights Offering that
were purchased on an equal basis by Fursa and Tokarz Investments, who acted as
standby purchasers (the “Standby Purchase”). As sole consideration
for their commitments in connection with the Standby Purchase, we issued
warrants to Fursa and Tokarz Investments representing the right to purchase an
aggregate of 635,076 shares of common stock.
Prior to
the merger, FOH Holdings had a management fee arrangement with Tokarz
Investments and Fursa, whereby Tokarz Investments and Fursa received a combined
annual management fee of $200,000. The management fee arrangement
ended as of January 28, 2008, the closing date of the merger.
At the
closing of the merger, we entered into the Registration Rights Agreement
with Fursa (on its behalf and on behalf of certain accounts it manages), Tokarz
Investments and TTG Apparel. Subject to the specific conditions, these holders
are allowed to request that we prepare a registration statement with respect to
an underwritten offering of their shares of our common stock up to two times. In
connection with any such requested registration, we will select the underwriters
for such registration, subject to the reasonable consent of the requesting
party, and we may preempt such a demand to register shares if we elect to effect
an underwritten primary registration in lieu thereof. The holders are
also allowed to include their shares of our common stock on registration
statements effected by us pursuant to certain “piggyback” registration
rights. This prospectus also relates to the resale by Fursa, Tokarz
Investments and TTG Apparel of their shares of our common stock pursuant to the
Registration Rights Agreement.
PLAN
OF DISTRIBUTION
The
selling shareholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of the shares of
common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling shareholders may use any one or more of the
following methods when selling shares:
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·
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ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
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|
·
|
block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
|
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·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
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·
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privately
negotiated transactions;
|
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·
|
settlement
of short sales;
|
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·
|
broker-dealers
may agree with the selling shareholder to sell a specified number of such
shares at a stipulated price per
share;
|
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|
·
|
a
combination of any such methods of
sale;
|
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|
·
|
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
or
|
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|
·
|
any
other method permitted pursuant to applicable
law.
|
The
selling shareholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
Broker-dealers
engaged by the selling shareholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling shareholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
selling shareholders do not expect these commissions and discounts relating to
its sales of shares to exceed what is customary in the types of transactions
involved.
In
connection with the sale of our common stock or interests therein, the selling
shareholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
stock in the course of hedging the positions they assume. The selling
shareholders may also sell shares of our common stock short and deliver these
securities to close out its short positions, or loan or pledge the common stock
to broker-dealers that in turn may sell these securities. The selling
shareholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
The
shares will be sold only through registered or licensed brokers or dealers if
required under applicable state securities laws. In addition, in certain states,
the shares may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
The
selling shareholders and any broker-dealers that act in connection with the sale
of the shares might be deemed to be “underwriters” within the meaning of
Section 2(11) of the Securities Act, and any commissions received by such
broker-dealers and any profit on the resale of the shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act. The selling shareholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares against certain liabilities, including liabilities arising under
the Securities Act. If any of the selling shareholders is deemed to be an
“underwriter” within the meaning of Section 2(11) of the Securities Act,
such selling shareholder will be subject to the prospectus delivery requirements
of the Securities Act.
Under
applicable rules and regulations under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), any person engaged in the distribution of the
resale shares may not simultaneously engage in market making activities with
respect to our common stock for a period of two business days prior to the
commencement of the distribution. In addition, the selling shareholders may
be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including Regulation M, which may limit the timing
of purchases and sales of shares of our common stock by the selling shareholders
or any other person. We will make copies of this prospectus available to the
selling shareholders and have informed the selling shareholders of the need to
deliver a copy of this prospectus to each purchaser at or prior to the time of
the sale.
LEGAL
MATTERS
The
legality of the common stock offered by this prospectus has been passed upon by
Graubard Miller, New York, New York.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRMS
The
financial statements incorporated in this prospectus by reference to the Annual
Report on Form 10-K for the fiscal year ended July 25, 2009 have been so
incorporated in reliance on the reports of MHM Mahoney Cohen CPAs (The New York
Practice of Mayer Hoffman McCann P.C.) and 25 MAD LIQUIDATION CPA, P.C.
(formerly known as Mahoney Cohen & Company, CPA, P.C.), each an independent
registered public accounting firm, with respect to the fiscal year given on the
authority of said firm as experts in auditing and accounting
WHERE
YOU CAN FIND MORE INFORMATION
We file
annual, quarterly and current reports, proxy statements and other information
with the SEC. Our SEC filings are available to the public over the Internet at
the SEC’s web site at http://www.sec.gov. You may also read and copy any
document we file at the SEC’s public reference room at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information about the public reference room. In addition, we make available on
or through our corporate web site copies of these reports as soon as reasonably
practicable after we electronically file or furnish them to the SEC. Our
corporate web site can be found at www.fohgroup.com.
The SEC
allows us to incorporate by reference the information we file with it, which
means that we can disclose important information to you by referring you to
those documents. Any statement contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus. Any information that we file after the date of this prospectus with
the SEC will automatically update and supersede the information contained in
this prospectus. This prospectus incorporates by reference our documents listed
below and any future filings we make with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act until all of the securities are
sold:
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·
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our
Annual Report on Form 10-K for the fiscal year ended July 25,
2009;
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·
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Amendment
No. 1 to our Annual Report on Form 10-K on Form 10-K/A for the year ended
July 25, 2009;
|
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|
·
|
our
Quarterly Report on Form 10-Q for the fiscal quarter ended October 24,
2009;
|
|
|
·
|
our
Quarterly Report on Form 10-Q for the fiscal quarter ended January 23,
2010;
|
|
|
·
|
our
Current Report on Form 8-K dated October 23,
2009;
|
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|
·
|
our
Current Report on Form 8-K dated November 25,
2009;
|
|
|
·
|
our
Current Report on Form 8-K dated December 8,
2009;
|
|
|
·
|
our
Current Report on Form 8-K dated February 1,
2010;
|
|
|
·
|
our
Current Report on Form 8-K dated March 9,
2010;
|
|
|
·
|
our
Current Report on Form 8-K dated March 16,
2010;
|
|
|
·
|
our
Definitive Proxy Statement on Schedule 14A dated April 6, 2010;
and
|
|
|
·
|
the
description of our common stock contained in our Registration Statement on
Form S-14 (File No. 2-70365), filed with the SEC pursuant to Section 12(b)
of the Exchange Act, including any amendment(s) or report(s) filed for the
purpose of updating such
description.
|
Potential
investors may obtain a copy of our SEC filings without charge by written or oral
request directed to Frederick’s of Hollywood Group Inc., Attention: Thomas
Rende, 1115 Broadway, New York, New York 10010, (212) 798-4700.
PART
II
INFORMATION
NOT REQUIRED IN THE PROSPECTUS
|
ITEM 14.
|
OTHER
EXPENSES OF ISSUANCE AND
DISTRIBUTION
|
The
following table sets forth the fees and expenses incurred or expected to be
incurred by Frederick’s of Hollywood Group Inc. in connection with the issuance
and distribution of the securities being registered hereby. All of the amounts
shown are estimated except the SEC registration fee. Estimated fees and expenses
can only reflect information that is known at the time of filing this
registration statement and are subject to future contingencies, including
additional expenses for future offerings.
|
SEC
registration fee
|
|
$ |
2,447 |
|
|
Legal
fees and expenses
|
|
|
10,000 |
|
|
Accounting
fees and expenses
|
|
|
2,000 |
|
|
Miscellaneous
expenses
|
|
|
553 |
|
|
Total
|
|
$ |
15,000 |
|
|
ITEM 15.
|
INDEMNIFICATION
OF DIRECTORS AND OFFICERS
|
Our
certificate of incorporation provides that we shall, to the fullest extent
permitted by Article 7 of the New York Business Corporation Law (“NYBCL”),
indemnify any and all persons whom we shall have power to indemnify under said
Article.
Section
722(a) of the NYBCL provides that a corporation may indemnify any person made,
or threatened to be made, a party to any action or proceeding (other than one by
or in the right of the corporation to procure a judgment in its favor), whether
civil or criminal, including an action by or in the right of any other
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise, which any director or officer of the corporation served in any
capacity at the request of the corporation, by reason of the fact that he, his
testator or intestate, was a director or officer of the corporation, or served
such other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise in any capacity, against judgments, fines, amounts paid in
settlement and reasonable expenses, including attorney’s fees actually and
necessarily incurred as a result of such action or proceeding, or any appeal
therein, if such director or officer acted in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interests of the corporation, and, in
criminal actions or proceedings, in addition, had no reasonable cause to believe
that his conduct was unlawful.
Section
722(c) of the NYBCL provides that a corporation may indemnify its directors and
officers in relation to an action by or in the right of the corporation to
procure a judgment in its favor in similar circumstances to those described in
the preceding paragraph against amounts paid in settlement and reasonable
expenses, including attorney’s fees, actually and necessarily incurred by him or
her in connection with the defense or settlement of such action, except that no
indemnification shall be made in respect of a threatened action, or a pending
action which is settled or otherwise disposed of, or any claim, issue or matter
as to which such person is adjudged liable to the corporation unless a court
determines that an indemnity is proper in the circumstances of the
case.
Section
721 of the NYBCL provides that, in addition to indemnification provided in
Article 7 of the NYBCL, a corporation may indemnify a director or officer by a
provision contained in the certificate of incorporation or by-laws or by a duly
authorized resolution of its shareholders or directors or by agreement, provided
that no indemnification may be made to or on behalf of any director or officer
if a judgment or other final adjudication adverse to the director or officer
establishes that his acts were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the cause of action, or
that such director or officer personally gained in fact a financial profit or
other advantage to which he was not legally entitled.
Section
723 of the NYBCL specifies the manner in which payment of indemnification under
Sections 722 and 721 of the NYBCL may be authorized by the corporation. It
provides that a corporation shall indemnify a person who has been successful, on
the merits or otherwise, in defending an action described in Section 722. In
other circumstances, unless ordered by a court upon application of a director or
officer under Section 724 of the NYBCL, indemnification as described above may
only be made if it is authorized in each specific case. The board of directors
can authorize indemnification, either acting as a quorum of disinterested
directors based upon a determination that the applicable standard of conduct has
been met or that indemnification is proper under the NYBCL, or based upon an
opinion by independent legal counsel that indemnification is proper in the
circumstances because the applicable standard of conduct has been met, or if the
shareholders find that the applicable standard of conduct has been
met.
Section
726 of the NYBCL permits the purchase and maintenance of insurance to indemnify
(1) the corporation for any obligation which it incurs as a result of the
indemnification of directors and officers under sections outlined above, (2)
directors and officers in instances in which they may be indemnified by the
corporation under such sections, and (3) directors and officers in instances in
which they may not otherwise be indemnified by the corporation under such
sections, provided the contract of insurance covering such directors and
officers provides, in a manner acceptable to the New York State superintendent
of insurance, for a retention amount and for co-insurance.
In
addition, Section 402(b) of the NYBCL provides that a corporation’s Certificate
of Incorporation may include a provision eliminating or limiting the personal
liability of its directors to the corporation or its shareholders for damages
for any breach of duty in such capacity, except liability if a judgment or final
adjudication establishes that the director’s acts or omissions were in bad faith
or involved intentional misconduct or a knowing violation of law or that he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled or that his acts violated Section 719 of the NYBCL or
liability if the act or omission occurred prior to the adoption of a provision
authorized by this section. Our certificate of incorporation contains a
provision explicitly authorizing a limitation on such liabilities as permitted
by Section 402(b).
Pursuant
to employment agreements with certain of our executives, we are obligated to
indemnify each executive and hold the executive harmless against all costs,
expenses (including, without limitation, fines, excise taxes and reasonable
attorneys’ fees) and liabilities (other than settlements to which we do not
consent, which consent shall not be unreasonably withheld) (collectively,
“Losses”) reasonably incurred by the executive in connection with any claim,
action, proceeding or investigation brought against or involving the executive
with respect to, arising out of or in any way relating to the executive’s
employment with us or service as an officer; provided, however, that we are not
required to indemnify the executive for Losses incurred as a result of the
executive’s intentional misconduct or gross negligence (other than matters where
the executive acted in good faith and in a manner the executive reasonably
believed to be in and not opposed to our best interests). We also
agreed to advance any and all expenses (including, without limitation, the fees
and expenses of counsel) reasonably incurred by the executive in connection with
any such claim, action, proceeding or investigation, provided the executive
first enters into an appropriate agreement for repayment of such advances if
indemnification is found not to have been available.
We
maintain a directors’ and officers’ insurance policy. The policy insures
directors and officers against unindemnified losses arising from certain
wrongful acts in their capacities as directors and officers and reimburses us
for those losses for which we have lawfully indemnified the directors and
officers. The policy contains various exclusions, none of which apply to this
offering.
A list of
exhibits filed herewith is contained in the exhibit index that immediately
precedes such exhibits and is incorporated herein by reference.
The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the
effective registration statement;
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement;
provided, however, that paragraphs
(a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the
registration statement is on Form S-3 or Form F-3 and the information required
to be included in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement, or is contained in a
form of prospectus filed pursuant to Rule 424(b) that is part of the
registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(5) That,
for the purpose of determining liability under the Securities Act to any
purchaser:
(i) If
the registrant is relying on Rule 430B:
(A) Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to
be part of the registration statement as of the date the filed prospectus was
deemed part of and included in the registration statement; and
(B) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as
part of a registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of
providing the information required by section 10(a) of the Securities Act shall
be deemed to be part of and included in the registration statement as of the
earlier of the date such form of prospectus is first used after effectiveness or
the date of the first contract of sale of securities in the offering described
in the prospectus. As provided in Rule 430B, for liability purposes of the
issuer and any person that is at that date an underwriter, such date shall be
deemed to be a new effective date of the registration statement relating to the
securities in the registration statement to which that prospectus relates, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such effective
date, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such effective date; or
(ii) If
the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and included in the
registration statement as of the date it is first used after effectiveness.
Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such date of first use.
(6) That,
for purposes of determining liability of the undersigned registrant under the
Securities Act to any purchaser in the initial distribution of the securities,
the registrant undertakes that in a primary offering of securities of the
registrant pursuant to this registration statement, regardless of the
underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the registrant will be a seller to the purchaser and
will be considered to offer or sell such securities to such
purchaser:
(i) Any
preliminary prospectus or prospectus of the registrant relating to the offering
required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the
registrant or used or referred to by the undersigned registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing
material information about the registrant or its securities provided by or on
behalf of the registrant; and
(iv) Any
other communication that is an offer in the offering made by the registrant to
the purchaser.
The
undersigned registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant’s annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan’s annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, hereunto duly authorized, in New York, New York on April 15,
2010.
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FREDERICK’S
OF HOLLYWOOD GROUP, INC
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By:
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/s/ Thomas Rende
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Name:
Thomas Rende
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Title: Chief
Financial Officer
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Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated.
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By:
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*
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Chairman
of the Board and Chief Executive Officer
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April
15, 2010
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Thomas
J. Lynch
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(Principal
Executive Officer)
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By:
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/s/ Thomas Rende
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Chief
Financial Officer (Principal Financial Officer
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April
15, 2010
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Thomas
Rende
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and
Principal Accounting Officer)
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By:
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*
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President
and Director
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April
15, 2010
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Linda
LoRe
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By:
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*
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Director
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April
15, 2010
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Peter
Cole
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By:
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*
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Director
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April
15, 2010
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John
Eisel
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By:
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*
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Director
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April
15, 2010
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William
F. Harley
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By:
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*
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Director
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April
15, 2010
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Michael
Salberg
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By:
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*
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Director
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April
15, 2010
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Joel
Simon
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By:
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*
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Director
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April
15, 2010
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Milton
J. Walters
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*By:
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/s/ Thomas Rende
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Thomas
Rende,
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as
Attorney in Fact
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EXHIBIT INDEX
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5.1
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Opinion
of Graubard Miller.*
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10.1
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Registration
Rights Agreement, dated as of January 28, 2008, by and among the Company,
Fursa, Tokarz Investments and TTG Apparel LLC (incorporated by reference
to Exhibit 10.3 of the Company’s Form 8-K filed on February 1,
2008).
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10.2
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Debt
Exchange and Preferred Stock Conversion Agreement, dated as of February 1,
2010, among the Company, Fursa Capital Partners LP, Fursa Master
Rediscovered Opportunities L.P., Blackfriars Master Vehicle LLC – Series 2
and Fursa Master Global Event Driven Fund L.P. (incorporated by reference
to Exhibit 10.1 of the Company’s Form 8-K filed on February 5,
2010).
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10.3
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Form
of Warrant to be issued to Fursa Capital Partners LP, Fursa Master
Rediscovered Opportunities L.P., Blackfriars Master Vehicle LLC – Series 2
and Fursa Master Global Event Driven Fund L.P. (incorporated by reference
to Exhibit A of Exhibit 10.1 of the Company’s Form 8-K filed
on February 5, 2010).
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23.1
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Consent
of MHM Mahoney Cohen CPAs (The New York Practice of Mayer Hoffman
McCann P.C.)*
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23.2
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Consent
of 25 MAD LIQUIDATION CPA, P.C. (formerly known as Mahoney Cohen
& Company, CPA, P.C.)*
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23.3
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Consent
of Graubard Miller (included in Exhibit 5.1).*
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24.1
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Power
of Attorney (included on the signature page to the registration
statement).**
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