EXHIBIT 10.2

EXHIBIT D

 

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”). THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT (THE “WARRANT SHARES”) MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE SECURITIES ACT
OR UNDER STATE SECURITIES LAWS. THIS WARRANT AND THE WARRANT SHARES MAY NOT BE
PLEDGED, SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
THE EXPRESS PROVISIONS OF THIS WARRANT, AND NO SALE, ASSIGNMENT, TRANSFER, OR
OTHER DISPOSITION OF THIS WARRANT SHALL BE VALID OR EFFECTIVE UNLESS AND UNTIL
SUCH PROVISIONS SHALL HAVE BEEN COMPLIED WITH.

 

Date of Issuance: May 23, 2012

 

FREDERICK’S OF HOLLYWOOD GROUP INC.

 

Common Stock Purchase Warrant

 

(Void after May 23, 2015, May 23, 2017 and May 23, 2019)

 

Frederick’s of Hollywood Group Inc., a New York corporation (the “Company”), for
value received, hereby certifies and agrees that TTG Apparel, LLC or its
registered assigns (the “Registered Holder”), is entitled, subject to the terms
set forth below, to purchase from the Company, at any time or from time to time
on or after the date hereof (the “Date of Issuance”) and on or before May 23,
2015, May 23, 2017 and May 23, 2019 at not later than 5:00 p.m. New York time
(such date and time, the “Expiration Time”), Five Hundred Thousand (500,000)
[three warrants will aggregate to 1,500,000 shares] duly authorized, validly
issued, fully paid and nonassessable shares of the Company’s common stock, $0.01
par value per share (the “Common Stock”) at an initial exercise price equal to
$0.45, $0.53 and $0.60 per share, subject to adjustment in certain cases as
described herein. The shares purchasable upon exercise of this Warrant, and the
purchase price per share, are hereinafter referred to as the “Warrant Shares”
and the “Exercise Price,” respectively. The term “Warrant” as used herein shall
include this Warrant and any other warrants delivered in substitution or
exchange therefor, as provided herein.

 

This Warrant is issued pursuant to that certain Series A Preferred Stock
Purchase Agreement of even date herewith between the Company and the Registered
Holder (the “Purchase Agreement”). The Warrant Shares are entitled to the
benefits of the registration rights set forth in the Purchase Agreement.

 

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1.           Exercise.

 

1.1          Method of Exercise

 

(a)          This Warrant may be exercised by the Registered Holder, in whole or
in part, by surrendering this Warrant, with a Notice of Exercise in the form of
Annex A hereto (the “Notice of Exercise”) duly executed by such Registered
Holder or by such Registered Holder’s duly authorized attorney, at the principal
office of the Company set forth in Section 10 hereof, or at such other office or
agency as the Company may designate in writing pursuant to Section 10 hereof
(the “Company’s Office”), accompanied by payment in full with good, cleared
funds, in lawful money of the United States, of the Exercise Price payable in
respect of the number of shares of Warrant Shares purchased upon such exercise
or by surrendering the Warrant pursuant to Section 1.2 below.

 

(b)          Each exercise of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the day on which the appropriate
Annex form shall be received by the Company as provided in Section 1.1(a)
hereof. At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as provided
in Section 1.1(c) hereof shall be deemed to have become the holder or holders of
record of the Warrant Shares represented by such certificates.

 

(c)          As soon as practicable after the exercise of this Warrant, in full
or in part, and in any event within ten (10) days thereafter, the Company, at
its expense, will cause to be issued in the name of, and delivered to, the
Registered Holder, or as such Registered Holder (upon payment by such Registered
Holder of any applicable transfer taxes) may direct:

 

(i)          a certificate or certificates for the number of full Warrant Shares
to which such Registered Holder shall be entitled upon such exercise (or
evidence that such Warrant Shares have been issued in the name of the Registered
Holder in book entry form) plus, in lieu of any fractional share to which such
Registered Holder would otherwise be entitled, cash in an amount determined
pursuant to Section 3 hereof; and

 

(ii)         in case such exercise is in part only, a new warrant or warrants
(dated the date hereof) of like tenor, representing in the aggregate on the face
or faces thereof the number of Warrant Shares equal (without giving effect to
any adjustment therein) to the number of such shares called for on the face of
this Warrant minus the number of such shares purchased by the Registered Holder
upon such exercise or surrender as provided herein.

 

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1.2           Exercise by Surrender of Warrant. In addition to the method of
payment set forth in Section 1.1 and in lieu of any cash payment required
thereunder, the Warrant may be exercised by surrendering the Warrant in the
manner specified in this Section 1, together with irrevocable instructions to
the Company to issue in exchange for the Warrant the number of shares of Common
Stock equal to the product of (x) the number of Warrant Shares multiplied by (y)
a fraction, the numerator of which is the Market Value (as defined below) of the
Common Stock less the Exercise Price and the denominator of which is such Market
Value. As used herein, the phrase “Market Value” at any date shall be deemed to
be the volume weighted average of the last reported sale prices of the Common
Stock for the last ten (10) Trading Days prior to the date of exercise, as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading, or, if the Common Stock is traded “over
the counter”, by a quotation system (including the pink sheets or Nasdaq OTC
Electronic Bulletin Board) covering such trades or if the Common Stock is not
listed or admitted to trading on any national securities exchange or sold “over
the counter,” the average closing bid price as furnished by the Financial
Industry Regulatory Authority through Nasdaq or similar organization if Nasdaq
is no longer reporting such information, or if the Common Stock is not quoted on
Nasdaq or traded “over the counter,” as determined in good faith by resolution
of the Board of Directors of the Company, based on the best information
available to it. “Trading Day” shall mean a day during which trading in
securities generally occurs in the applicable securities market or on the
principal securities exchange or bulletin board on which the Common Stock is
then traded, listed or quoted.

 

2.          Shares to be Fully Paid; Reservation of Shares. The Company
covenants that all shares of Common Stock which may be issued upon the exercise
of the rights represented by this Warrant will, upon issuance by the Company, be
duly and validly issued, fully paid and nonassessable, and free from preemptive
rights and free from all taxes, liens, duties and charges with respect thereto
and, in addition, the Company covenants that it will from time to time take all
such action as may be requisite to assure that the par value per share of the
Common Stock is at all times equal to or less than the effective Exercise Price.
The Company further covenants that, from and after the Date of Issuance and
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved, free from
preemptive rights, out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the exercise of this Warrant, a sufficient
number of shares of Common Stock to provide for the exercise of the rights
represented by this Warrant. If at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the exercise
of this Warrant, the Company shall take any and all corporate action as is
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose. The Company will take
all such action within its control as may be necessary on its part to assure
that all such shares of Common Stock may be so issued without violation of any
applicable law or regulation, or of any requirements of any national securities
exchange upon which the Common Stock of the Company may be listed.

 

3.          Fractional Shares. The Company shall not be required upon the
exercise of this Warrant to issue any fractional shares, but shall make an
adjustment therefor in cash on the basis of the Market Value for each fractional
share of the Company’s Common Stock which would be issuable upon exercise of
this Warrant.

 

4.          Requirements for Transfer.

 

(a)          Warrant Register. The Company will maintain a register (the
“Warrant Register”) containing the names and addresses of the Registered Holder
or Registered Holders. Any Registered Holder of this Warrant or any portion
thereof may change its address as shown on the Warrant Register by written
notice to the Company requesting such change, and the Company shall promptly
make such change. Until this Warrant is transferred on the Warrant Register of
the Company, the Company may treat the Registered Holder as shown on the Warrant
Register as the absolute owner of this Warrant for all purposes, notwithstanding
any notice to the contrary, provided, however, that if and when this Warrant is
properly assigned in blank, the Company may, but shall not be obligated to,
treat the bearer hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.

 

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(b)          Warrant Agent. The Company may, by written notice to the Registered
Holder, appoint an agent for the purpose of maintaining the Warrant Register
referred to in Section 4(a) hereof, issuing the Common Stock issuable upon the
exercise of this Warrant, exchanging this Warrant, replacing this Warrant or any
or all of the foregoing. Thereafter, any such registration, issuance, exchange,
or replacement, as the case may be, may be made at the office of such agent.

 

(c)          Transfer. Subject to the provisions of applicable securities laws
and this Section 4, this Warrant and all rights hereunder are transferable, in
whole or in part, upon the surrender of this Warrant with a properly executed
Assignment Form in substantially the form attached hereto as Annex B (the
“Assignment”) at the principal office of the Company.

 

(d)          Exchange of Warrant Upon a Transfer. On surrender of this Warrant
for exchange, properly endorsed on the Assignment and subject to the provisions
of this Warrant and limitations on assignments and transfers as contained in
this Section 4, the Company at its expense shall issue to or on the order of the
Registered Holder a new warrant or warrants of like tenor, in the name of the
Registered Holder or as the Registered Holder (on payment by the Registered
Holder of any applicable transfer taxes) may direct, for the number of shares
issuable upon exercise hereof.

 

5.           Adjustment.

 

5.1           Stock Dividends – Split-Ups. If after the date hereof, and subject
to the provisions of Section 5.6 below, the number of outstanding shares of
Common Stock is increased by a stock dividend payable in shares of Common Stock,
or by a split-up of shares of Common Stock, or other similar event, then, on the
effective date of such stock dividend, split-up or similar event, the number of
shares of Common Stock issuable on exercise of each Warrant shall be increased
in proportion to such increase in outstanding shares of Common Stock.

 

5.2           Aggregation of Shares. If after the date hereof, and subject to
the provisions of Section 5.6, the number of outstanding shares of Common Stock
is decreased by a consolidation, combination, reverse stock split or
reclassification of shares of Common Stock or other similar event, then, on the
effective date of such consolidation, combination, reverse stock split,
reclassification or similar event, the number of shares of Common Stock issuable
on exercise of each Warrant shall be decreased in proportion to such decrease in
outstanding shares of Common Stock.

 

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5.3           Adjustments in Exercise Price. Whenever the number of shares of
Common Stock purchasable upon the exercise of the Warrants is adjusted, as
provided in Section 5.1 and 5.2 above, the Exercise Price shall be adjusted (to
the nearest cent) by multiplying such Exercise Price immediately prior to such
adjustment by a fraction (x) the numerator of which shall be the number of
shares of Common Stock purchasable upon the exercise of the Warrants immediately
prior to such adjustment, and (y) the denominator of which shall be the number
of shares of Common Stock so purchasable immediately thereafter.

 

5.4           Replacement of Securities upon Reorganization, etc. In case of any
reclassification or reorganization of the outstanding shares of Common Stock
(other than a change covered by Section 5.1 or 5.2 hereof or that solely affects
the par value of such shares of Common Stock), or in the case of any merger or
consolidation of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
that does not result in any reclassification or reorganization of the
outstanding shares of Common Stock), or in the case of any sale or conveyance to
another corporation or entity of all or substantially all of the assets or all
or substantially all other property of the Company, as an entirety or
substantially as an entirety, in connection with which the Company is dissolved,
the Warrant holders shall thereafter have the right to purchase and receive,
upon the basis and upon the terms and conditions specified in the Warrants and
in lieu of the shares of Common Stock of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights represented thereby,
the kind and amount of shares of stock or other securities or property
(including cash) receivable upon such reclassification, reorganization, merger
or consolidation, or upon a dissolution following any such sale or transfer,
that the Warrant holder would have received if such Warrant holder had exercised
his, her or its Warrant(s) immediately prior to such event; and if any
reclassification also results in a change in the number of shares of Common
Stock covered by Section 5.1 or 5.2, then such adjustment shall be made pursuant
to Sections 5.1, 5.2, 5.3 and this Section 5.4. The provisions of this
Section 5.4 shall similarly apply to successive reclassifications,
reorganizations, mergers or consolidations, sales or other transfers.

 

5.5           Notices of Changes in Warrant. Upon every adjustment of the
Warrant Price or the number of shares issuable upon exercise of a Warrant, the
Company shall give written notice thereof to the Warrant Agent, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease, if any, in the number of shares purchasable at such price upon the
exercise of a Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. Upon the
occurrence of any event specified in Sections 5.1, 5.2, 5.3 or 5.4, then, in any
such event, the Company shall give written notice to each Warrant holder, at the
last address set forth for such holder in the warrant register, of the record
date or the effective date of the event, which notice shall state the Exercise
Price resulting from such adjustment and the increase or decrease, if any, in
the number of shares purchasable at such price upon the exercise of a Warrant,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of such event.

 

5.6           Form of Warrant. The form of Warrant need not be changed because
of any adjustment pursuant to this Section 5, and Warrants issued after such
adjustment may state the same Exercise Price and the same number of shares as is
stated in the Warrants initially issued pursuant to this Agreement. However, the
Company may at any time in its sole discretion make any change in the form of
Warrant that the Company may deem appropriate and that does not affect the
substance thereof, and any Warrant thereafter issued or countersigned, whether
in exchange or substitution for an outstanding Warrant or otherwise, shall be in
the form as so changed.

 

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6.          No Impairment. The Company will not, by amendment of its Articles of
Incorporation, as amended, or through any reorganization, recapitalization, sale
or transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant but will at all times in good
faith carry out all such terms and take all such actions as may be reasonably
necessary or appropriate in order to protect the rights herein of the holder of
this Warrant against dilution or other impairment.

 

7.          Notices of Record Date, Etc. In case the Company shall take a record
of the holders of its Common Stock (or other stock or securities at the time
deliverable upon the exercise of this Warrant) for the purpose of entitling or
enabling them to receive any dividend or other distribution, or to receive any
right to subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right; or of any capital reorganization of
the Company, any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the surviving entity), or
any transfer of all or substantially all of the assets of the Company; or of the
voluntary or involuntary dissolution, liquidation or winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities at the
time deliverable upon the exercise of this Warrant) shall be entitled to
exchange their shares of Common Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up. The Company will use commercially reasonable efforts to cause such
notice to be mailed promptly, and in any event, at least ten (10) business days
prior to the record date or effective date for the event specified in such
notice unless such prior notice is waived by the Registered Holder in writing.

 

8.          No Rights of Shareholders. Subject to other Sections of this Warrant
and the provisions of the Purchase Agreement, the Registered Holder shall not be
entitled to vote, to receive dividends or subscription rights, nor shall
anything contained herein be construed to confer upon the Registered Holder, as
such, any of the rights of a shareholder of the Company, including without
limitation any right to vote for the election of directors or upon any matter
submitted to shareholders, to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
stock, change of par value or change of stock to no par value, consolidation,
merger, conveyance, or otherwise), to receive notices, or otherwise, until the
Warrant shall have been exercised as provided herein.

 

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9.          Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement reasonably satisfactory to the Company, or (in the case of
mutilation) upon surrender and cancellation of this Warrant, the Company will
issue, in lieu thereof, a new Warrant of like tenor.

 

10.         Mailing of Notices, Etc.

 

(i)          All notices, requests, consents, and other communications in
connection with this Warrant shall be in writing and shall be deemed delivered
(i) three (3) business days after being sent by registered or certified mail,
return receipt requested, postage prepaid, (ii) one (1) business day after being
sent via a reputable overnight courier service guaranteeing next business day
delivery in the Holder’s country or region, or (iii) on actual receipt if
delivered by facsimile or by hand, in each case delivery shall be made to the
intended recipient as set forth below:

 

If to the Company:

 

Frederick’s of Hollywood Group Inc.

6255 Sunset Blvd., 6th Floor

Hollywood, CA 90028

Facsimile No.: (323) 464-4219

Attention: Thomas J. Lynch, Chief Executive Officer

 

With a copy to:

 

Graubard Miller

405 Lexington Avenue

New York, New York 10174

Facsimile No.: (212) 818-8881

Attention: David Alan Miller, Esq.

 

If to the Registered Holder:

 

To the address set forth in the Warrant Register as described in Section 4
hereof

 

11.         Change or Waiver. Any term of this Warrant may be changed or waived
only by an instrument in writing signed by the party against which enforcement
of the change or waiver is sought.

 

12.         Headings. The headings in this Warrant are for purposes of reference
only and shall not limit or otherwise affect the meaning of any provision of
this Warrant.

 

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13.         Severability. If any provision of this Warrant shall be held to be
invalid and unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Warrant.

 

14.         Governing Law and Submission to Jurisdiction. This Warrant will be
governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflict or choice of laws of any jurisdiction.
The parties hereby agree that any action, proceeding or claim against it arising
out of, or relating in any way to this Warrant shall be brought and enforced in
the courts of the State of New York, and irrevocably submit to such
jurisdiction, which jurisdiction shall be exclusive.

 

15.         Supplements and Amendments. The Company and the Registered Holder
may from time to time supplement or amend this Warrant in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any provision herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Holder may deem necessary or desirable.

 

16.         Successors. All the covenants and provisions of this Warrant shall
be binding upon and inure to the benefit of the Company and the Registered
Holder and their respective successors and assigns hereunder.

 

17.         Benefits of this Warrant. Nothing in this Warrant shall be construed
to give to any person, entity or corporation other than the Company and the
Registered Holder of the Warrant Certificate any legal or equitable right,
remedy or claim under this Warrant; and this Warrant shall be for the sole and
exclusive benefit of the Company and the Registered Holder of the Warrant
Certificate.

 

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IN WITNESS WHEREOF, FREDERICK’S OF HOLLYWOOD GROUP INC. has caused this Warrant
to be signed by its duly authorized officers under its corporate seal and to be
dated on the day and year first written above.

 

  FREDERICK’S OF HOLLYWOOD GROUP INC.       By:     Name:  Thomas J. Lynch  
Title:    Chief Executive Officer

 

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ANNEX A

 

NOTICE OF EXERCISE FORM

 

To: Dated:

 

In accordance with the Warrant enclosed with this Form of Election to Purchase,
the undersigned hereby irrevocably elects to purchase _____________ shares of
common stock (“Common Stock”), $.01 par value per share, of Frederick’s of
Hollywood Group Inc. (“Company”) and encloses herewith $________ in cash,
certified or official bank check or checks or other immediately available funds,
which sum represents the aggregate Exercise Price (as defined in the Warrant)
for the number of shares of Common Stock to which this Form of Election to
Purchase relates, together with any applicable taxes payable by the undersigned
pursuant to the Warrant.

 

or

 

In accordance with the Warrant enclosed with this Form of Election to Purchase,
the undersigned hereby irrevocably elects to purchase ____________ shares of
common stock (“Common Stock”), $.01 par value per share, of Frederick’s of
Hollywood Group Inc. (“Company”) by surrender of the unexercised portion of the
attached Warrant (with a “Market Value” of $____).

 

The undersigned hereby represents, warrants to, and agrees with, the Company
that:

 

(i)          He/She/It is acquiring the Warrant Shares for his/her/its own
account and not with a view towards the distribution thereof;

 

(ii)         He/She/It has received a copy of all reports and documents required
to be filed by the Company with the Commission pursuant to the Securities
Exchange Act of 1934, as amended, within the last 12 months and all reports
issued by the Company to its shareholders;

 

(iii) He/She/It understands that he/she/it must bear the economic risk of the
investment in the Warrant Shares, which cannot be sold unless they are
registered under the Securities Act of 1933 (the “Securities Act”) or an
exemption therefrom is available thereunder and that the Company is under no
obligation to register the Warrant Shares for sale under the Securities Act;

 

(iv)        He/She/It is aware that the Company shall place stop transfer orders
with its transfer agent against the transfer of the Warrant Shares in the
absence of registration under the Securities Act or an exemption therefrom as
provided herein;

 

  Signature:           Address:   

 

 

 

 

ANNEX B

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED, _________________________________ hereby sells, assigns and
transfers all of the rights of the undersigned under the attached Warrant with
respect to the number of shares of Common Stock covered thereby set forth below,
unto:

 

Name of Assignee   Address   No. of Shares                              

 

  Dated:           Signature:            Dated:           Witness: