Frederick''s Of Hollywood Group (fka FOHL)

[detearing]

Parent and Merger Sub

On September 26, 2013, HGI Funding, LLC (“HGI Funding”), a wholly owned subsidiary of Harbinger Group Inc., TTG Apparel, LLC (“TTG”) and Tokarz Investments, LLC (“TKZ”), each of which is controlled by Michael Tokarz, and Fursa Alternative Strategies LLC (“Fursa”) and Arsenal Group, LLC (“Arsenal”), each of which is controlled by William F. Harley III, a member of the Company’s board of directors, entered into a non-binding consortium term sheet agreement. HGI, TTG, TKZ, Fursa and Arsenal are collectively referred to herein as the “Consortium Members.” Under the term sheet, the Consortium Members agreed, among other things, to jointly deliver a non-binding proposal (the “Proposal”) to the Company’s board of directors for the acquisition of all of the Company’s publicly held common stock in a “going private” transaction with the Company, and to use their commercially reasonable efforts to work together to structure, negotiate and do all things necessary or desirable, subject to the Company’s approval, to enter into definitive agreements in respect of the transactions contemplated under the Proposal. The result of their efforts was the Merger Agreement. Parent and Merger Sub were formed by the Consortium Members for the purpose of acquiring the Company pursuant to the Merger Agreement.

The Consortium Members, along with Mr. Harley, who is individually a party to the Rollover Agreement and the Voting Agreement (each as defined below), may be deemed to be members of a “group” within the meaning of Section 13(d)(3) of the Exchange Act of 1934, as amended (the “Exchange Act”). As a group, the Consortium Members may be deemed to beneficially own 89,682,683 shares, or 88.6%, of the Company’s common stock.

The Merger and the Merger Agreement

At the effective time of the Merger, Merger Sub will merge with and into the Company, with the Company surviving the merger as a subsidiary of Parent (the “Merger”), and each share of the Company’s common stock, other than certain excluded shares, including the Dissenting Shares and the Rollover Shares (each as defined below), will be converted into the right to receive $0.27 per share in cash, without interest and subject to any withholding taxes (the “Merger Consideration”).