<PAGE>
As Filed with the Securities and Exchange Commission on November 8, 1994
REGISTRATION NO. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FORSTMANN & COMPANY, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
GEORGIA 58-1651326
- --------------------------------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1185 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 642-6900
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
---------------------------------
CHRISTOPHER L. SCHALLER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
FORSTMANN & COMPANY, INC.
1185 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 642-6900
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
-------------------------------------
With a copy to:
JANE S. POLLACK, ESQ. JAMES L. SMITH, III, ESQ.
Vice President, Secretary Troutman Sanders
and General Counsel 600 Peachtree Street, N.E.
Forstmann & Company, Inc. Suite 5200
1185 Avenue of the Americas NationsBank Plaza
New York, New York 10036 Atlanta, Georgia 30308-2216
-------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS
REGISTRATION STATEMENT AS DETERMINED BY MARKET CONDITIONS.
---------------------------------------
If the only securities being registered on this Form are being offered pursuant to 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, other than securities offered only in connection with dividend or interest reinvestment plans,
check the following box. X
---------------------------------------
CALCULATION OF REGISTRATION FEE
<CAPTION>
===========================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH OFFERING AGGREGATE AMOUNT OF
CLASS OF SECURITIES AMOUNT TO PRICE OFFERING REGISTRATION
TO BE REGISTERED BE REGISTERED PER UNIT* PRICE* FEE
<S> <C> <C> <C> <C>
Common Stock 30,000 Shares $6.75 $202,500 $70
=============================================================================================================================
* Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933.
-------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER
BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
</TABLE>
<PAGE>
PROSPECTUS
30,000 SHARES
FORSTMANN & COMPANY, INC.
COMMON STOCK
($.001 PAR VALUE)
The 30,000 shares (the "Shares") of Common Stock, $.001 par value (the
"Common Stock"), of Forstmann & Company, Inc. ("Forstmann" or the "Company")
offered hereby are being offered for the account of Resolution Trust
Corporation (in its capacity as receiver for Columbia Savings & Loan
Association F.A.), a shareholder of the Company (the "Selling Shareholder").
The Company will not receive any proceeds from the sale of the Shares. See
"Selling Shareholder."
The Selling Shareholder, directly, or through agents, broker-dealers or
underwriters designated from time to time, may sell the Shares from time to
time on terms to be determined at the time of sale. To the extent required,
the number of Shares to be sold, the names of any agent or broker-dealer or
underwriter and any applicable commission or discount with respect to any
particular offer will be set forth in an accompanying Prospectus Supplement.
The Selling Shareholder reserves the sole right to accept or reject, in whole
or in part, any proposed purchase of the Shares to be made directly or
through agents. The Company has agreed to bear all expenses (other than
commissions, underwriting discounts or brokerage fees and fees and expenses
for any counsel, accountants or other experts of the Selling Shareholder) in
connection with the registration and sale of the Shares. See "Plan of
Distribution."
The Common Stock of the Company is included in the NASDAQ National Market
under the trading symbol "FSTM". On November 4, 1994, the closing sale price
of the Common Stock as reported on the NASDAQ National Market was $6.50 per
share.
The Selling Shareholder, and any agents or broker-dealers that participate
with the Selling Shareholder in the distribution of the Shares, may be deemed
to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and any commissions received by them and any
profit on their resale of the Shares may be deemed to be underwriting
commissions or discounts under the Securities Act. See "Plan of
Distribution" herein for indemnification arrangements among the Company and
the Selling Shareholder.
SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SECURITIES
OFFERED HEREBY.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
---------------
The date of this Prospectus is ______________________, 1994.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by the Company with the
Commission can be inspected and copied at the office of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, or at its
Regional Offices located at 7 World Trade Center, 13th Floor, New York, New
York 10048, and Suite 1400, 500 West Madison Street, Chicago, Illinois 60661,
and copies of such materials can be obtained from the Public Reference
Section of the Commission, at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. The Common Stock is included in the NASDAQ National
Market, and reports, proxy statements and other information concerning the
Company can also be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (the "Registration Statement") filed by the Company with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus omits certain of the information contained in the Registration
Statement as permitted by the rules and regulations of the Commission, and
reference is hereby made to the Registration Statement and related exhibits
for further information with respect to the Company and the securities
offered hereby. Any statements contained herein concerning the provisions of
any document are not necessarily complete, and in each instance reference is
made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been previously filed by the Company with
the Commission and are hereby incorporated by reference in this Prospectus as
of their respective dates:
(a) Annual Report on Form 10-K for the fiscal year ended October 31,
1993;
(b) Quarterly Report on Form 10-Q for the three months ended January 30,
1994;
(c) Quarterly Report on Form 10-Q for the three months ended May 1,
1994;
(d) Quarterly Report on Form 10-Q for the three months ended July 31,
1994; and
2
<PAGE>
(e) The description of Common Stock in the Company's Registration
Statement on Form 8-A filed on February 12, 1992, and any amendments
or reports filed for the purpose of amending such description.
Additionally, all documents filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date of this Prospectus and prior to the termination of the offering
of the securities made hereby shall be deemed to be incorporated by reference
in this Prospectus and to be a part hereof from the date of filing of such
documents. Any statements contained in a document incorporated or deemed to
be 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 or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide, upon request, without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, on the
written or oral request of such person, a copy of any or all of the documents
incorporated herein by reference (other than certain exhibits to such
documents which are not specifically incorporated by reference in such
documents). Requests for such copies should be directed to: Forstmann &
Company, Inc., 1185 Avenue of the Americas, New York, New York 10036
(telephone (212) 642-6900) Attention: Jane S. Pollack, Corporate Secretary.
---------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR A SUPPLEMENT TO THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE HEREBY, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDER OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY STATE OR
OTHER JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. THE
DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------
3
<PAGE>
THE COMPANY
Forstmann is a leading designer, marketer and manufacturer of
innovative, high-quality fabrics which are used primarily in the production
of brand name and private label apparel for men and women. Forstmann's
fabrics are used in suits, dresses, sportswear, trousers, sportcoats and
outerwear made by some of the world's leading apparel manufacturers. The
Company also produces interior textiles and specialty fabrics.
The Company provides high-quality, value-added fabrics to its customers,
who are demanding increasingly high levels of service and innovation from
their suppliers. The Company currently offers over 10,000 different fabrics
serving the needs of the apparel, interior textile and specialty markets. To
create fabrics to meet shifting consumer tastes and stringent product
specifications, the Company works in partnership with its customers through
extensive product development and design efforts. To support its customer-
oriented marketing strategy, the Company's manufacturing operations can
accommodate relatively short production runs of these customized fabrics.
The principal executive offices of the Company are located at 1185
Avenue of the Americas, New York, New York 10036, and its telephone number is
(212) 642-6900.
INVESTMENT CONSIDERATIONS
Prospective purchasers of Shares should consider carefully the factors
set forth below, as well as the other information contained in this
Prospectus, in evaluating an investment in the Shares.
INDEBTEDNESS AND LIQUIDITY
The Company is highly leveraged and its debt service requirements are
substantial. The Company's outstanding long-term debt, including the current
portion thereof, as of July 31, 1994 was approximately $174.7 million,
approximately $30.0 million of which was attributable to the Company's Senior
Secured Floating Rate Notes due October 30, 1997 (the "Senior Secured
Notes"), approximately $73.2 million of which was outstanding under the five-
year $100 million senior secured credit facility with General Electric
Capital Corporation ("GECC"), as agent and lender (the "Loan Agreement"),
approximately $61.1 million (including $4.5 million of unamortized debt
premium) of which was attributable to the Company's 14-3/4% Senior
Subordinated Notes due April 15, 1999 (the "Subordinated Notes") and
approximately $10.4 million of which was attributable to equipment financing
and capital lease obligations. As of July 31, 1994, the Company's debt-to-
equity ratio (calculated by dividing long-term debt, including the current
portion thereof, by shareholders' equity) was 4.49. The Company's ability to
make scheduled payments with respect to its indebtedness will depend on its
future financial and operating performance, which in turn will be subject to
prevailing economic conditions and to financial, business and other factors
beyond its control. In addition, the Company's available
4
<PAGE>
cash flow is required to be applied to service senior indebtedness.
Accordingly, such funds applied to service senior indebtedness will not be
available to pay cash dividends on the Common Stock.
The Company believes that, based upon its current operations, including
its on-going cost-reduction efforts and operating strategy, it will have
sufficient cash flow from operations and additional borrowings under the Loan
Agreement to pay interest requirements relating to its indebtedness. If the
Company's cash flow and capital resources, however, are insufficient to fund
its debt service obligations, the Company may be required to refinance a
portion of its debt or sell assets. There can be no assurance that such
refinancing or sale of assets could be suc cessfully accomplished.
COVENANT RESTRICTIONS
Cash distributions on the Company's capital stock, including the Common
Stock and the Company's 5% Senior (Pay-in-Kind) Preferred Stock, par value
$1.00 per share, are prohibited by the Loan Agreement and restricted by the
indenture for the Senior Secured Notes (the "Senior Note Indenture") and the
indenture for the Subordinated Notes. The Loan Agreement and Senior Note
Indenture also contain a number of restrictive covenants limiting the
Company's ability to incur other indebtedness and make capital expenditures
in excess of certain amounts. There can be no assurance that such
restrictions will not adversely affect the Company's ability to conduct its
operations or finance its capital needs. Borrowings under the Loan Agreement
and the Senior Note Indenture are secured by substantially all of the assets
of the Company.
FLUCTUATIONS IN RAW MATERIAL PRICES
The Company's primary raw material is wool. The price of wool is
subject to the usual forces of supply and demand that affect the price of any
commodity. The Company purchases approximately 80% of its wool from
Australia. Wool prices have increased recently, a trend which the Company
expects to continue. The Company's foreign wool purchases are denominated in
U.S. dollars and, therefore, the Company generally does not incur any
currency exchange risk on outstanding contracts. However, future changes in
the relative exchange rates between the United States dollar and the
Australian dollar can materially affect the Company's results of operations.
INDUSTRY ECONOMIC CONDITIONS
The Company grants credit to certain customers, primarily in the men's
and women's apparel industries. The ability of such customers to honor their
debts is somewhat dependent upon the financial conditions that exist in the
apparel business sector. Due in part to some of the Company's customers'
going out of business or filing for protection under Title 11 of the United
States Code (the "Federal Bankruptcy Code"), the Company recognized an
allowance for uncollectible accounts receivable of $2.7 million, $1.8 million
and $1.6 million in Fiscal 1993, the thirty-nine week period ended August 1,
1993 and the thirty-nine week period ended July
5
<PAGE>
31, 1994, respectively. Although the Company is not aware that any of its
other customers intend to liquidate or file petitions for reorganization,
there can be no assurance that such an event will not occur.
VARIABILITY OF RESULTS DUE TO SEASONALITY
The Company's business is seasonal. The Company receives the majority
of its orders to manufacture from December through April, and most shipments
occur from February through July. Accordingly, the Company recognizes
greater revenues, though not cash flow, from February through July. Thus,
the Company's quarterly operating results may be subject to significant
fluctuations as a result of this seasonality.
CONCENTRATION OF SHARE OWNERSHIP
Odyssey Partners, L.P., a Delaware limited partnership ("Odyssey
Partners"), beneficially owns 2,832,713 shares of Common Stock, constituting
approximately 50.7% of the Common Stock currently outstanding. Currently, a
general partner of Odyssey and a former general partner of Odyssey (who
continues to hold an interest in the Common Stock held by Odyssey) are
members of the Company's Board of Directors. The six-member Board of
Directors currently has one vacancy, resulting from the resignation therefrom
of an employee of Odyssey. The Company's By-Laws permit remaining members of
the Board of Directors to fill the vacancy for the unexpired remainder of the
term. As a result of its equity ownership and the fact that two members of
the Company's current Board of Directors are either Odyssey's designees or
have an interest in Odyssey's holdings of Common Stock, Odyssey has been and
is in a position to influence and control the management and policies of the
Company. Also as a result of its equity ownership, Odyssey has the ability
to elect the members of the Board of Directors, although the Company's By-
Laws provide that two of the Directors must be independent of Odyssey as well
as independent of the Company and any other affiliates of the Company.
POTENTIAL ADVERSE EFFECTS OF FUTURE SALES OF SHARES; REGISTRATION RIGHTS
Sales of substantial amounts of Common Stock in the public market after
the offering made hereby could adversely affect the market price of the
Common Stock. The 2,832,713 shares of Common Stock owned by Odyssey have
been held by it for over two years and are eligible for resale under Rule 144
promulgated under the Securities Act. The Company has agreed to grant
registration rights to Odyssey with respect to 1,215,000 of such shares. If
Odyssey, by exercising its registration rights, causes a large number of
shares to be registered and sold in the public market, or if Odyssey sells a
large number of shares pursuant to Rule 144, such sales may have a material
adverse effect on the market price for the Common Stock.
6
<PAGE>
COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS
By the nature of its operations, the Company's manufacturing facilities
are subject to various federal, state and local environmental laws and
regulations, including the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act and the Comprehensive Environmental Response,
Compensation and Liability Act. Although the Company occasionally has been
subject to proceedings and orders pertaining to emissions into the
environment, the Company believes that it is in substantial compliance with
existing environmental laws and regulations. The Company has accrued
reserves for environmental matters based on information presently available.
Based on this information and the Company's established reserves, the Company
does not believe that these environmental matters will have a material
adverse effect on either the Company's financial condition or results of
operations. However, there can be no assurance that the costs associated
with environmental matters will not increase in the future.
COMPETITION
The textile business in the United States is highly competitive and the
Company competes with many other textile companies, some of which are larger
and have greater resources than the Company. The Company competes with both
domestic and foreign manufacturers primarily on an item-by-item basis.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares offered hereby. All of the proceeds from the sale of the Shares
offered hereby will be received by the Selling Shareholder.
THE SELLING SHAREHOLDER
All of the Shares offered hereby are beneficially owned by the Selling
Shareholder and were acquired by the Selling Shareholder in connection with
the settlement of its claims in the Dissenters' Rights Litigation (as
hereinafter defined). The Selling Shareholder does not beneficially own any
shares of Common Stock or other securities of the Company other than the
Shares. Since the Selling Shareholder may sell all, or some or none of the
Shares, no estimate can be made of the aggregate number of Shares that are to
be offered hereby or that will be beneficially owned by the Selling
Shareholder upon completion of the offering contemplated by this Prospectus.
In September, 1991, the Office of Thrift Supervision of the United
States Department of Treasury appointed the Resolution Trust Corporation as
receiver for Columbia Savings & Loan Association F.A., a shareholder of the
Company. During Fiscal 1992, the Company completed a restructuring and
recapitalization whereby the Company (i) completed a merger with an
affiliated company (the "Merger") which had the effect of a reverse stock
split, (ii) exchanged
7
<PAGE>
certain of its obligations for cash and unregistered shares of Common Stock
and (iii) completed an initial public offering of Common Stock (the "1992
Recapitalization"). Record owners or beneficial holders of an aggregate of
1,473,562 shares of the Company's common stock, $.001 par value, outstanding
prior to the Merger (of which the Selling Shareholder held approximately 86%)
and the Company's non-voting common stock, $.001 par value, outstanding prior
to the Merger (collectively, the "Pre-Merger Stock"), which Pre-Merger Stock
after the Merger became the equivalent of approximately 626 shares of Common
Stock, were deemed to have dissented from the Merger. In April 1992, based,
in part, upon the advice of the Company's investment bankers regarding the
fair value of the Pre-Merger Stock, the Company offered to pay the defendants
approximately $0.004 per share (an aggregate of approximately $6,100) for
their Pre-Merger Stock. The Company's offers were not accepted. In July
1992, the Company commenced a civil action against the dissenting
shareholders under the Georgia Business Corporation Code (the "Dissenters'
Rights Litigation"). On September 9, 1994 the Company and the Selling
Shareholder entered into a settlement agreement (the "Settlement Agreement")
pursuant to which the Selling Shareholder released all claims and actions it
had in the Dissenters' Rights Litigation and transferred its Pre-Merger Stock
to the Company in exchange for the payment by the Company of $475,000 and the
issuance to the Selling Shareholder of the Shares. On November 4, 1994, the
Company settled the Dissenters' Rights Litigation as to the remaining
defendants, agreeing to pay such defendants an aggregate of approximately
$365,000 in cash (the "Settlement Amount") on or before January 3, 1995. The
Company also agreed to pay the costs of the court-appointed appraiser, but
the parties will pay their respective fees and costs, including attorneys
fees, expert fees and costs of litigation. The Loan Agreement between the
Company and General Electric Capital Corporation ("GECC") was amended as of
November 4, 1994 to specifically allow for the payment by the Company of the
Settlement Amount, thus eliminating the need for the further consent of GECC.
Except as described above, the Selling Shareholder has had no other material
relationship with the Company.
Pursuant to the requirements of the Settlement Agreement, the Company
has entered into a Registration Rights Agreement dated September 9, 1994 with
the Selling Shareholder (the "Registration Rights Agreement") pursuant to
which the Company has filed the Registration Statement covering the Shares.
Pursuant to the Registration Rights Agreement, the Company is obligated to
use all reasonable efforts to cause the Registration Statement to become
effective under the Securities Act within 90 days after receipt by the
Company of the request by the Selling Shareholder for registration (which
occurred on September 16, 1994) and to keep the registration statement
continuously effective until the earlier of (i) the date on which all of the
Shares have been sold pursuant thereto and (ii) September 9, 1997, as such
date may be extended pursuant to the terms of the Registration Rights
Agreement. The Company has agreed to bear all expenses (other than
commissions, underwriting discounts or brokerage fees and fees and expenses
for any counsel, accountants or other experts of the Selling Shareholder) in
connection with the registration and sale of the Shares. Any of the Shares
sold pursuant to this Prospectus will no longer be entitled to the benefits
of the Registration Rights Agreement.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Shareholder on
the NASDAQ National Market or any national securities exchange or automated
interdealer quotation system on which shares of Common Stock are then listed,
through negotiated transactions or otherwise at prices and on terms then
prevailing or at prices related to the then current market price or at
negotiated prices. The Selling Shareholder may effect sales of the Shares
directly or by or through agents, brokers, dealers or underwriters and the
Shares may be sold by one or more of
8
<PAGE>
the following methods: (a) underwritten public offerings; (b) ordinary
brokerage transactions; (c) purchases by a broker-dealer as principal and
resale by such broker-dealer for its account pursuant to this Prospectus; (d)
in "block" sales; (e) through the writing of options on the Shares; (f)
through transactions negotiated directly with purchasers; and (g) through
competitive bidding. At the time a particular offer is made, a supplemental
prospectus, if required, will be distributed that sets forth the name or
names of any agents, broker-dealers or underwriters, any commissions and
other terms constituting compensation and any other required information. Any
such supplemental prospectus will be filed by the Company with the Commission
pursuant to Rule 424(c) under the Securities Act. In effecting sales, broker-
dealers engaged by the Selling Shareholder and/or the purchasers of the
Shares may arrange for other broker-dealers to participate. Broker-dealers
will receive commissions, concessions or discounts from the Selling
Shareholder and/or the purchasers of the Shares in amounts to be negotiated
immediately prior to the sale. In addition, any Shares covered by this
Prospectus which qualify for sale pursuant to Rule 144 under the Securities
Act may be sold under Rule 144 rather than pursuant to this Prospectus.
The Selling Shareholder and any broker-dealer who acts in connection
with the sale of the Shares hereunder may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, and any
compensation received by them and any profit on any resale of the Shares as
principals might be deemed to be underwriting discounts and commissions under
the Securities Act.
In order to comply with the securities laws of certain states, if
applicable, the Shares may be sold only through registered or licensed
brokers or dealers. In addition, in certain states, the Shares may not be
sold unless they have been registered or qualified for sale in such states or
an exemption from such registration or qualification requirement is available
and is complied with.
Pursuant to the Registration Rights Agreement between the Company and
the Selling Shareholder, the Company has filed the Registration Statement, of
which this Prospectus forms a part, with respect to the sale of the Shares.
The Company has agreed to use its reasonable efforts to keep the Registration
Statement continuously effective until the earlier of (i) the date on which
all the Shares have been sold pursuant thereto and (ii) September 9, 1997, as
such date may be extended pursuant to the terms of the Registration Rights
Agreement.
Pursuant to the terms of the Registration Rights Agreement, the Company
and the Selling Shareholder have agreed to indemnify each other and certain
other parties, including underwriters, if any, for certain liabilities,
including liabilities under the Securities Act, in connection with the
registration of the Shares.
9
<PAGE>
LEGAL MATTERS
The legality of the Shares offered hereby is being passed upon for the
Company by Troutman Sanders, Atlanta, Georgia.
EXPERTS
The financial statements and related financial statement schedules
incorporated in this Registration Statement by reference from the Company's
Annual Report on Form 10-K for the year ended October 31, 1993 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the
periods ended January 30, 1994 and January 31, 1993, May 1, 1994 and May 2,
1993 and July 31, 1994 and August 1, 1993, which are incorporated herein by
reference, Deloitte & Touche LLP have applied limited procedures in
accordance with professional standards for a review of such information.
However, as stated in their reports included in the Company's Quarterly
Reports on Form 10-Q for the quarters ended January 30, 1994, May 1, 1994 and
July 31, 1994, and incorporated by reference herein, they did not audit and
they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information
should be restricted in light of the limited nature of the review procedures
applied. Deloitte & Touche LLP are not subject to the liability provisions
of Section 11 of the Securities Act of 1933 for their reports on the
unaudited interim financial information because those reports are not
"reports" or a "part" of the registration statement prepared or certified by
an accountant within the meaning of Sections 7 and 11 of the Act.
10
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid in connection with the issuance and distribution
of the securities being registered, other than underwriting discounts and
commissions, are as follows:
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee.................................... $ 70
Legal Fees and Expenses................................. 84,000
Miscellaneous........................................... 5,000
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Total.................................................... $89,070
=======
</TABLE>
All of the above items are estimates except the SEC Registration Fee. All of
such estimated expenses will be borne by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is incorporated under the laws of the State of Georgia. The
Company's Articles of Incorporation provide that, to the fullest extent
permitted by Georgia law (as it exists or may be amended), a director of the
Company will not be liable to the Company or any of its shareholders for
damages caused by the director's action or inaction in his capacity as a
director, provided the director acted in good faith and in a manner which he
believed to be in the best interests of the Company.
Section 14-2-851 of the Georgia Business Corporation Code (the "GBCC")
provides that a corporation may indemnify or obligate itself to indemnify an
individual made a party to a proceeding because he is or was a director
against liability incurred in the proceeding if he acted in a manner he
believed in good faith to be in or not opposed to the best interests of the
corporation and, in the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful. Under the GBCC, a director's
conduct with respect to an employee benefit plan for a purpose he believed in
good faith to be in the interests of the participants in and beneficiaries of
the plan is conduct that satisfies the requirements of the GBCC. The GBCC
further provides that the termination of a proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its
equivalent is not, of itself, determinative that the director did not meet
the standard of conduct required under the GBCC. Under the GBCC, a
corporation may not indemnify a director in connection with a proceeding by
or in the right of the corporation in which the director was adjudged liable
to the corporation or in connection with any other proceeding in which he was
adjudged liable on the basis that personal benefit was
II-1
<PAGE>
improperly received by him. Indemnification permitted under the GBCC in
connection with a proceeding by or in right of a corporation is limited to
reasonable expenses incurred in connection with the proceeding.
In addition, under the GBCC, unless limited by its articles of
incorporation, to the extent that a director of a corporation has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he was a party, or in defense of any claim, issue, or matter therein,
because he is or was a director of the corporation, the corporation shall
indemnify the director against reasonable expenses incurred by him in
connection therewith. The Company's Articles of Incorporation have no such
limitation.
Section 14-2-857 of the GBCC provides that, unless a corporation's
articles of incorporation provide otherwise, an officer of a corporation who
is not a director is entitled to mandatory indemnification to the extent that
such officer has been successful, on the merits or otherwise, in the defense
of any proceeding to which he is a party, or in defense of any claim, issue
or matter therein, because he is or was an officer of the corporation. In
addition, a corporation may indemnify and advance expenses to an officer,
employee or agent who is not a director to the extent it is consistent with
public policy, provided by its articles of incorporation, by-laws, general or
specific action of its board of directors or contract. The Company's
Articles of Incorporation have no such limitation.
Article X of the Amended and Restated By-Laws of the Company (the "By-
Laws") provides that each director or officer of the Company, and each person
who at its request has served as an officer or director of another
corporation, partnership, joint venture, trust or other enterprise will be
indemnified by the Company against those expenses which are allowed by the
laws of the State of Georgia and which are reasonably incurred in connection
with any action, suit or proceeding, pending or threatened, in which such
person may be involved by reason of his being or having been a director or
officer of the Company or of such other enterprises. Such indemnification is
required to be made only in accordance with the laws of the State of Georgia
and subject to the conditions prescribed above.
The By-Laws further provide that the Company may purchase and maintain
insurance on behalf of any such directors and officers against any
liabilities asserted against such persons whether or not the Company would
have the power to indemnify such directors and officers against such
liability under the laws of the State of Georgia. If any expenses or other
amounts are paid by way of indemnification, other than by court order, action
by shareholders or by an insurance carrier, the Company is required to
provide notice of such payment to its shareholders in accordance with the
provisions of the laws of the State of Georgia.
On February 7, 1994, the Company approved indemnity agreements with each
of its directors and certain of its executive officers, which provides that
the indemnitee will be entitled to receive indemnification to the full extent
permitted by law for all expenses, judgements, fines, penalties and
settlement payments incurred by the indemnitee in actions brought against the
indemnitee in connection with any act taken in the indemnitee's capacity, and
within the
II-2
<PAGE>
indemnitee's scope of authority, as a director or executive officer of the
Company. Such indemnity agreements also require the Company to maintain its
current level of directors and officers' liability insurance for so long as
the indemnitee may be subject to any possible, threatened or pending action,
except to the extent that the cost of such insurance is more than 150% of the
annualized cost thereof in fiscal year 1994.
The Company's Articles of Incorporation include a provision eliminating
liability for monetary damages for any breach of fiduciary or other duty as a
director, except for (1) any appropriation, in violation of his duties, of
any business opportunity of the Company, (2) acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(3) any transaction for which the director received an improper personal
benefit, and (4) certain unlawful distributions. The Company's By-Laws
provide that the directors and the officers of the Company will be
indemnified against all expenses which are allowed by the laws of the State
of Georgia and which are reasonably incurred in connection with any action,
suit or proceeding, pending or threatened, in which such person may be
involved by reason of his being or having been a director or officer of the
Company. The foregoing provisions of the Articles of Incorporation may
reduce the likelihood of derivative litigation against the Company's
directors and may discourage or deter shareholders or management from
instituting a lawsuit against the Company's directors for breaches of their
fiduciary duties, even though such an action, if successful, might otherwise
have benefitted the Company and its shareholders.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
------ --------
<C> <S>
5.1 - Opinion of Troutman Sanders as to the legality of
the securities being registered.
15.1 - Letter of Deloitte & Touche LLP, independent
auditors regarding unaudited interim financial
information.
23.1 - Consent of Troutman Sanders (contained in Exhibit
5.1).
23.2 - Consent of Deloitte & Touche LLP, independent
auditors.
24.1 - Powers of attorney (see page II-5).
99.1 - Registration Rights Agreement between the Company
and the Selling Shareholder dated September 9,
1994.
99.2 - Eighth Amendment to Loan Agreement dated as of,
August 29, 1994 among General Electric Capital
Corporation and the Company.
99.3 - Ninth Amendment to Loan Agreement dated as of
November 4, 1994 among General Electric Capital
Corporation and the Company.
</TABLE>
II-3
<PAGE>
ITEM 17. UNDERTAKINGS.
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 of 1933; (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; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change in such
information in the Registration Statement; provided, however, that the
registrant need not file a post-effective amendment to include the
information required to be included by subsection (i) or (ii) if such
information is contained in periodic reports filed by the registrant pursuant
to Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement; (2) that, for the purpose of
determining any liability under the Securities Act of 1933, 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; and (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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 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 of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described under Item 15 above,
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 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 Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York on the
31st day of
October , 1994.
FORSTMANN & COMPANY, INC.
By: /s/Christopher L. Schaller
----------------------------------------------
Christopher L. Schaller
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Forstmann & Company,
Inc. do hereby constitute and appoint Christopher L. Schaller, William B.
Towne, and Jane S. Pollack and each and any one of them, our true and lawful
attorneys-in-fact and agents, to do any and all acts and things in our names
and on our behalf in our capacities as directors and officers and to execute
any and all instruments for us and in our name in the capacities indicated
below, which said attorneys and agents, or any of them, may deem necessary or
advisable to enable said Corporation to comply with the Securities Act of
1933 and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this registration statement,
including specifically, but without limitation, power and authority to sign
for us or any of us in our names in the capacities indicated below, any and
all amendments (including post-effective amendments) hereto; and we do hereby
ratify and confirm all that said attorneys and agents, or any of them, shall
do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated below on October 31, 1994:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/Christopher L. Schaller
----------------------------------
Christopher L. Schaller President and Chief Executive Officer and
Director (Principal Executive Officer)
</TABLE>
[Signatures continued on next page.]
II-5
<PAGE>
[Signatures continued from previous page.]
<TABLE>
<S> <C>
/s/William B. Towne
---------------------------------
William B. Towne Executive Vice President and Chief
Financial Officer (Principal Financial and
Accounting Officer)
/s/Stephen Berger
---------------------------------
Stephen Berger Director
/s/Cameron Clark, Jr.
--------------------------------
Cameron Clark, Jr. Director
/s/Steven M. Friedman
-------------------------------
Steven M. Friedman Director
/s/F. Peter Libassi
----------------------------------
F. Peter Libassi Director
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<C> <S>
5.1 Opinion of Troutman Sanders as to the legality of
the securities being registered.
15.1 Letter of Deloitte & Touche LLP, independent
auditors, regarding unaudited interim financial
information.
23.1 Consent of Troutman Sanders (contained in Exhibit
5.1).
23.2 Consent of Deloitte & Touche LLP, independent
auditors.
24.1 Powers of attorney (see page II-5).
99.1 Registration Rights Agreement between the Company
and the Selling Shareholder dated September 9, 1994.
99.2 Eighth Amendment to Loan Agreement dated as of,
August 29, 1994 among General Electric Capital
Corporation and the Company.
99.3 Ninth Amendment to Loan Agreement dated as of
November 4, 1994 among General Electric Capital
Corporation and the Company.
</TABLE>
<PAGE>
EXHIBIT 5.1
November 7, 1994
Forstmann & Company, Inc.
1185 Avenue of the Americas
New York, New York 10036
Gentlemen:
We have acted as counsel to Forstmann & Company, Inc. (the
"Company") in connection with the proposed offering and sale by the
Resolution Trust Corporation (in its capacity as receiver for Columbia
Savings & Loan Association F.A.) (the "Selling Shareholder"), of up to 30,000
shares (the "Shares") of the Company's Common Stock, par value $.001 per
share (the "Common Stock").
In the capacity described above, we have examined originals (or
copies certified or otherwise identified to our satisfaction) of the
Company's Registration Statement on Form S-3 (the "Registration Statement"),
the form of Common Stock certificate, the Certificate of Incorporation and
Bylaws of the Company as in effect on the date hereof, the Settlement
Agreement dated September 9, 1994, between the Company and the Selling
Shareholder pursuant to which the Selling Shareholder acquired the Shares,
the Registration Rights Agreement dated September 9, 1994 between the Company
and the Selling Shareholder, corporate and other documents, records and
papers, certificates of public officials and certificates of officers of the
Company. In such examination we have also assumed the genuineness of all
signatures, the authenticity of all documents submitted to us and the
genuineness and conformity to original documents of documents submitted to us
as certified or photostatic copies.
On the basis of such examination, it is our opinion that the Shares
are duly and validly issued and outstanding, fully paid and non-assessable
shares of Common Stock of the Company.
We are members of the Bar of the State of Georgia. In expressing
the opinions set forth above, we are not passing on the laws of any
jurisdiction other than the laws of the State of Georgia and the Federal law
of the United States of America.
<PAGE>
Forstmann & Company, Inc
November 7, 1994
Page 2
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to this firm under the
heading "Legal Matters" in the related prospectus.
Very truly yours,
/s/Troutman Sanders
<PAGE>
EXHIBIT 15.1
November 7, 1994
Forstmann & Company, Inc.
1185 Avenue of the Americas
New York, NY 10036
Dear Sirs:
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of Forstmann & Company, Inc. for the periods ended
January 30, 1994 and January 31, 1993, May 1, 1994 and May 2, 1993, and July
31, 1994 and August 1, 1993, as indicated in our report and the reports of
Deloitte & Touche dated March 4, 1994, May 25, 1994, and August 26, 1994
(September 12, 1994 as to Notes 5 and 6), respectively; because we did not
perform an audit, we expressed no opinion on that information.
We are aware that our report and the reports of Deloitte & Touche referred to
above, which were included in your Quarterly Reports on Form 10-Q for the
quarters ended January 30, 1994, May 1, 1994, and July 31, 1994, are being
used in this Registration Statement.
We also are aware that the aforementioned reports, pursuant to Rule 436(c)
under the Securities Act of 1933, are not considered a part of the
Registration Statement prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of Sections 7 and
11 of that Act.
Yours Truly
/s/Deloitte & Touche LLP
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Forstmann & Company, Inc. on Form S-3 of the reports of Deloitte & Touche
dated December 9, 1993 (which express an unqualified opinion and include an
explanatory paragraph discussing the quasi-reorganization and the adoption
of Statement of Financial Accounting Standards No. 109) included in the
Annual Report on Form 10-K of Forstmann & Company, Inc. for the year ended
October 31, 1993. We also consent to the reference to us under the heading
"Experts" in such Registration Statement.
/s/Deloitte & Touche LLP
Atlanta, Georgia
November 7, 1994
<PAGE>
EXHIBIT 99.1
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (the "Agreement") is made and entered
into as of the 9th day of September, 1994, by and between Forstmann &
Company, Inc., a Georgia corporation (the "Company"), and Resolution Trust
Corporation, in its capacity as receiver for Columbia Savings & Loan
Association F.A. ("RTC").
WHEREAS, RTC was the holder of approximately 1,265,000 Dissenting Shares of
Pre-Merger Common Stock (the "Dissenting Shares");
WHEREAS, the Company and RTC have entered into a Settlement Agreement dated
September 9, 1994 (the "Settlement Agreement") to compromise and settle all
disputed and contested issues and claims related to the Dissenting Shares in
consideration of the payment by the Company to RTC of $475,000 in cash and
the issuance by the Company to RTC of 30,000 shares (the "Common Shares") of
the Company's unregistered Common Stock, par value $.001 per share (the
"Common Stock");
WHEREAS, the Company and RTC desire to provide for the registration of the
Common Shares held by RTC under the Securities Act of 1933, as amended (the
"Securities Act"), under certain circumstances as further set forth herein;
NOW, THEREFORE, in consideration of the following mutual covenants and
agreements, and subject to the terms and conditions set forth herein, the
parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Certain Definitions. Except as otherwise defined herein,
-------------------
capitalized terms in this Agreement shall have the meaning set forth in the
Settlement Agreement. The following terms shall have the following meanings
when used in this Agreement:
(a) "Commission." The term "Commission" shall mean the Securities
----------
and Exchange Commission or any other federal agency at the time administering
the Securities Act.
(b) "Common Shares." The term "Common Shares" shall have the
-------------
meaning set forth in the preamble.
(c) "Common Stock." The term "Common Stock" shall have the meaning
------------
set forth in the preamble.
<PAGE>
(d) "Company." The term "Company" shall mean Forstmann & Company,
-------
Inc. and the successors to the business of Forstmann & Company, Inc. by
merger, consolidation or sale of substantially all of its assets.
(e) "Investor." The term "Investor" shall mean RTC, so long as RTC
--------
holds the Registrable Stock, and any other holder of the Registrable Stock
who has agreed with the Company in writing to be bound by this Agreement.
(f) "Offering." The term "Offering" shall mean the public offering
--------
of the Registrable Stock, including on a continuous or delayed basis pursuant
to a shelf offering as permitted under Rule 415 promulgated under the
Securities Act.
(g) "Prior Agreement." The term "Prior Agreement" shall mean that
---------------
certain Common Stock Registration Rights Agreement dated as of November 19,
1990, by and between the Company and certain holders of the Company's Common
Stock named therein.
(h) "Register." The terms "register," "registered" and
--------
"registration" refer to a registration effected by preparing and filing a
registration statement with the Securities and Exchange Commission
("Commission") in compliance with the Securities Act.
(i) "Registrable Stock." The term "Registrable Stock" shall mean
-----------------
(i) the Common Shares and (ii) any securities of the Company issued or
issuable with respect to the Common Shares by reason of a stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. Each share of Registrable
Stock shall continue to be Registrable Stock only for the duration of the
Registration Period (as herein defined) and only in the hands of (y) RTC, and
(z) any transferee or assignee of RTC which acquires all of the Common Shares
then owned by RTC from RTC in a transaction exempt from registration under
the Securities Act and which agrees with the Company in writing to be bound
by this Agreement.
(j) "Registration Period." The term "Registration Period" shall
-------------------
mean, with respect to any Investor and the shares of Registrable Stock then
held by such Investor, that period beginning on the date hereof and ending on
the third anniversary of the delivery of the Common Shares to RTC, subject to
extensions as provided in Section 2.7.
(k) "Registration Statement." The term "Registration Statement"
----------------------
shall mean a registration statement relating to any shares of the Registrable
Stock which is prepared and filed with the Commission under the Securities
Act and in accordance with the terms and conditions of this Agreement.
2
<PAGE>
(l) "RTC." The term "RTC" shall include its successors.
---
(m) "Securities Act." The term "Securities Act" shall have the
--------------
meaning set forth in the preamble.
ARTICLE II.
SECURITIES REGISTRATION
2.1 Registration on Request. At any time during the Registration
-----------------------
Period, upon the written request of an Investor requesting that the Company
effect the registration (including a shelf registration under Rule 415 under
the Securities Act) under the Securities Act of all of the Registrable Stock
held by such Investor and specifying the intended method or methods of
disposition thereof, the Company will, within 120 days (not more than 45 days
if the Registration Statement is on Form S-3) after it receives such written
request, prepare and file a Registration Statement with respect to the
Registrable Stock for disposition in accordance with the intended method or
methods of disposition stated in such written request, and the Company will
thereafter use all reasonable efforts to cause such Registration Statement to
become effective within 180 days (90 days if the Registration Statement is on
Form S-3) after the date on which it receives such written request; provided,
---------
however, that the Company shall not be required to effect more than one
-------
registration pursuant to this Section 2.1. In the event that any offering
pursuant to a Registration Statement filed under this Section 2.1 is to be an
underwritten offering, the Investor shall have the right to select the
underwriter for such offering, subject to the approval of the Company which
approval shall not be unreasonably withheld. The Investor shall not be
required to use an underwriter.
2.2 Registration Procedures.
-----------------------
(a) In connection with the registration by the Company of shares of
the Registrable Stock pursuant to Section 2.1 above, the Company shall:
(i) prepare and file with the Commission a Registration Statement
with respect to such securities on such form as the Company deems appropriate
(except that if a shelf offering is to be requested by RTC, the Registration
Statement shall be on Form S-3, or its successor form, if eligible) and use
all reasonable efforts to cause such Registration Statement to become and
remain effective as provided herein;
(ii) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectuses used in
connection therewith as may be necessary to keep such Registration Statement
continuously effective and current and to comply with the provisions of the
Securities Act
3
<PAGE>
with respect to the sale or other disposition of all shares covered by such
Registration Statement, including such amendments and supplements as may be
necessary to reflect the intended method of disposition from time to time of
the Investor whose shares of the Registrable Stock are included in any
registration pursuant to Section 2.1, until the earliest of (a) such time as
all of the securities covered by such Registration Statement have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof or (b) the end of the Registration Period;
(iii) promptly notify (but in no event later than one business day
after such event) the Investor and confirm such advice in writing, (a) when
such Registration Statement and each post-effective Amendment and Supplement
have been filed and when they become effective, and (b) of the entry of any
stop order suspending the effectiveness of such Registration Statement or the
initiation of any proceedings for that purpose (in which event the Company
shall make every reasonable effort to correct the deficiency that may cause
the entry of a stop order) , and, if such stop order shall be entered, the
Company shall use its reasonable efforts to obtain the lifting thereof at the
earliest practicable moment;
(iv) furnish to the Investor promptly, but in no event later than
one (1) business day after the filing thereof with the Commission (a) a copy
of the Registration Statement; (b) a copy of any amendment (including any
post-effective amendment) to such Registration Statement; and (c) a conformed
copy of the Registration Statement as declared effective by the Commission
and of each post-effective amendment thereto, including financial statements
and all exhibits and reports incorporated therein by reference;
(v) furnish to each Investor (and, if applicable, each
underwriter) such number of copies of each prospectus, including preliminary
prospectuses, and such other documents, as the Investor (and, if applicable,
the underwriter) may reasonably request in order to facilitate the public
sale or other disposition of the shares of Registrable Stock owned by it;
(vi) use all reasonable efforts to register or qualify the shares
of Registrable Stock covered by such Registration Statement under such other
securities or Blue Sky or other applicable laws of such jurisdictions as the
Investor shall reasonably request to enable such Investor to consummate the
public sale or other disposition of the shares of Registrable Stock owned by
Investor; provided that the Company shall not be required in connection
--------
therewith or as an election thereto to qualify to do business or to file a
general consent to service of process in any such jurisdiction, or to
maintain the effectiveness of any such registration or qualification for any
4
<PAGE>
period during which it is not required to maintain the effectiveness of the
related Registration Statement under the Securities Act as set forth in
Section 2.2(a)(ii);
(vii) use all reasonable efforts to cause all such Registrable
Stock to be listed on each securities exchange or other securities trading
market on which Common Stock issued by the Company is then listed;
(viii) enter into such customary agreements (including an
underwriting agreement with respect to underwritten offerings) in form and
substance reasonably acceptable to the Company (which underwriting agreements
may provide for indemnification of and to underwriters on terms other than as
provided in Section 2.5 hereof) and take such other customary actions as the
Investor (or underwriter) may reasonably request in order to expedite or
facilitate the disposition of such Registrable Stock (including compliance
with the Company's undertakings contained in the underwriting agreement; and
(ix) make reasonably available for inspection by the Investor, any
underwriter participating in any disposition of the Registrable Stock, and
any attorney, accountant or other agent retained by any such seller or
underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and use all reasonable efforts to cause the
Company's officers, directors and employees to supply all information
reasonably requested by such Investor, underwriter, attorney, accountant or
agent in connection with the registration contemplated by Section 2.1 above,
in each case as and to the extent necessary to permit the Investor to conduct
a reasonable investigation within the meaning of the Securities Act. To
minimize disruption and expense to the Company during the course of the
registration process, the Investor will act through a single law firm and a
single accounting firm and will enter into confidentiality agreements with
the Company in form and substance reasonably satisfactory to the Company and
the Investor prior to receiving any confidential or proprietary information
of the Company;
(x) provide Investor (and, if applicable, the underwriters) with a
copy of all documents to be filed with the Commission, including the
Registration Statement and all Amendments for review and comment by the
Investor at least forty-eight (48) hours prior to any filings pursuant to
Sections 2.1 and 2.11;
(xi) use reasonable efforts to maintain the qualification or
listing of the class of Registrable Stock with NASDAQ, or a national stock
exchange;
5
<PAGE>
(xii) promptly (but in no event later than one business day after
receipt) provide Investor with a copy of all written correspondence to and
from the Commission or order of the Commission, including members of the
Commission's staff; and
(xiii) cooperate with the Investor and managing underwriter, if
any, to facilitate the timely preparation and delivery of the certificates
representing the Registrable Stock to be sold and the removal of any
restrictive legend thereon; and enable such Registrable Stock to be in such
denominations and registered in such names as the Investor may request by
written notice to the Company at least two business days prior to the
settlement(s) pursuant to a takedown of any sale of Registrable Stock by the
Investor.
(b) The Investor shall furnish to the Company in writing such
information as the Company may reasonably request from the Investor for use
in preparing the Registration Statement (and the prospectus included therein)
and performing its other obligations hereunder.
(c) During such time as the Investor may be engaged in a
distribution of the Registrable Stock, the Investor shall comply with Rules
10b-6 and 10b-7 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and pursuant thereto, shall, among other
things: (w) not engage in any stabilization activity in connection with the
securities of the Company in contravention of such Rules; (x) distribute the
Registrable Stock solely in the manner described in the Registration
Statement; (y) cause to be furnished to each underwriter, broker or agent
through whom the Registrable Stock may be offered, or to the offeree if an
offer is not made through a broker, such copies of the prospectus and any
amendment or supplement thereto and documents incorporated by reference
therein as may be required by law; and (z) not bid for or purchase any
securities of the Company or attempt to induce any person to purchase any
securities of the Company other than as permitted under the Exchange Act and
the Securities Act.
(d) The parties acknowledge that time is of the essence in the
preparation and filing of the Registration Statement and all amendments and
supplements thereto.
2.3 Effective Registration Statement. A request that a Registration
--------------------------------
Statement be filed pursuant to Section 2.1 will not be deemed to have been
effected under Section 2.1 unless the Registration Statement has become
effective. At any time prior to the Registration Statement becoming
effective, the Investor may for any reason withdraw its request for
registration. If the Investor withdraws its request for registration of the
Registrable Stock prior to the effective date of such Registration Statement
and reimburses the Company for the
6
<PAGE>
reasonable out-of-pocket expenses incurred by the Company in connection with
such Registration Statement, the Investor shall not be deemed to have
exercised its right to require the Company to register the Registrable Stock
pursuant to Section 2.1
2.4 Expenses of Registration. All expenses incurred in effecting any
------------------------
registration and/or sale of the Registrable Stock pursuant to Section 2.1
hereof, including, without limitation, all registration and filing fees,
printing expenses, expenses of compliance with Blue Sky laws, fees and
disbursements of counsel for the Company, expenses of any audits incidental
to or required by any such registration, and expenses of all marketing and
promotional efforts requested by any underwriter shall be borne by the
Company; provided, however, that the Investor shall bear all underwriting
-----------------
discounts or brokerage fees or commissions relating to the sale of its
Registrable Stock and all fees and expenses of its own counsel, accountants
and other experts with respect to any registration and/or sale of the
Registrable Stock under Section 2.1 hereof.
2.5 Indemnification.
---------------
(a) The Company shall indemnify and hold harmless the Investor,
each underwriter (as defined in the Securities Act), each other selling agent
who may be deemed to be an underwriter, and each controlling person of any
Investor, underwriter or other selling agent, if any (within the meaning of
the Securities Act), from and against any losses, claims, damages or
liabilities, joint or several (or actions in respect thereof) ("Losses"), to
which such indemnified party may be subject under the Securities Act, under
any other statute or at common law, but only to the extent such Losses arise
out of or are based upon (i) any untrue statement (or alleged untrue
statement) of any material fact contained in (x) any Registration Statement
under which Registrable Stock held by such Investor was registered under the
Securities Act or offered for sale, (y) any preliminary prospectus (if used
prior to the effective date of such Registration Statement), or (z) any final
prospectus or any post-effective amendment or supplement thereto (if used
during the period the Company is required to keep the Registration Statement
effective), in each case, effective on the effective date of such
Registration Statement or post-effective amendment, or the date of such
prospectus, including any preliminary prospectus, or supplement (the
"Disclosure Documents"), (ii) any omission (or alleged omission) to state in
any of the documents referred to in subparagraph 2.5(a)(i) a material fact
required to be stated therein or necessary to make the statements made
therein not misleading or (iii) any violation by the Company of the
Securities Act or any Blue Sky law, or any rule or regulation promulgated
under the Securities Act or any Blue Sky law, or any other law, applicable to
the Company in connection with the sale, registration or qualification of any
shares of Registrable Stock
7
<PAGE>
held by such Investor; and the Company shall reimburse each such indemnified
party for any legal or other expenses reasonably incurred by such party in
connection with investigating or defending any such loss, claim, damage,
liability or action, whether or not resulting in any liability, or in
connection with any investigation or proceeding by any governmental agency or
instrumentality relating to any such claims with respect to any offering of
securities pursuant to this Article II, but excluding any amounts paid in
settlement of any action, suit, arbitration, proceeding, litigation, or
investigation (collectively "Litigation"), commenced or threatened, if such
settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld; provided, however, that the
Company shall not be liable to any Investor, underwriter, other selling agent
or controlling person in any such case to the extent that any such Losses
arise out of or are based upon (i) an untrue statement or omission or alleged
omission of a material fact (y) made in any such Disclosure Documents in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such indemnified party expressly for use in the
preparation thereof, or (z) made in any preliminary prospectus if a copy of
the final prospectus was not delivered to the person alleging any loss,
claim, damage or liability for which Losses arise at or prior to the written
confirmation of the sale of such Registrable Stock to such person and the
untrue statement or omission concerned had been corrected in such final
prospectus and copies thereof had timely been delivered by the Company to
such indemnified party; or (ii) the use of any prospectus by the indemnified
person after such time as the Company has advised such indemnified party in
writing that the filing of a post-effective amendment or supplement thereto
is required, and such prospectus should no longer be delivered except the
prospectus as so amended or supplemented, or the use of any prospectus after
such time as the obligation of the Company to keep the same current and
effective has expired; provided further that, in accordance with the policy
of the Commission, any obligation of the Company to provide indemnification
hereunder to a person who is a director, officer or controlling person of the
Company, is subject to the limitation that, in the event of any claim for
indemnification hereunder by any such person (other than a claim for payment
by the Company of expenses incurred by such person in the successful defense
of any action, suit or proceeding), the Company will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of competent jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act and the Company and such person shall be governed by the final
adjudication of such issue.
(b) In connection with the registration and/or sale of any shares
of Registrable Stock pursuant to this Agreement, the
8
<PAGE>
Investor having its shares of the Registrable Stock included in such
registration shall, and (except as to clause (iii) below and Section
2.2(a)(viii)) shall cause any underwriter retained by it who participates in
the offering to, severally, but not jointly, indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed such
Registration Statement and each controlling person of the Company (within the
meaning of the Securities Act), against any Losses, joint or several, to
which such indemnified party may become subject under the Securities Act,
under any other statute or at common law, but only to the extent such Losses
arise out of or are based upon (i) any untrue statement (or alleged untrue
statement) of any material fact contained in any of the Disclosure Documents
or any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, if the statement or omission was made in reliance upon and in
conformity with written information furnished to the Company by such
indemnifying party expressly for use in the preparation thereof; (ii) the use
by such indemnifying party of any prospectus (y) after such time as the
Company has advised such indemnifying party in writing that the filing of a
post-effective amendment or supplement thereto is required and such
prospectus should no longer be delivered, except the prospectus as so amended
or supplemented, or (z) after such time as the obligation of the Company to
keep the Registration Statement effective and current has expired and the
Company has notified the indemnifying party of such expiration date, or (iii)
any information given or representation made by such indemnifying party in
connection with the sale of Registrable Stock which is not contained in and
not in conformity with the prospectus (as amended or supplemented at the time
of the giving of such information or making of such representation); and such
indemnifying party shall reimburse each such indemnified party for any legal
and other expenses reasonably incurred by such party in investigating or
defending any such loss, claim, damage, liability or action, whether or not
resulting in any liability, or in connection with any investigation or
proceeding by any governmental agency or instrumentality relating to any such
claims with respect to any offering of securities pursuant to this Article
II, but excluding any amounts paid in settlement of any Litigation, commenced
or threatened, if such settlement is effected without the prior written
consent of such indemnifying party. The Investor's liability hereunder shall
not exceed in the aggregate the net proceeds it has received from the sale of
the Registrable Stock, after all expenses.
(c) If the indemnification provided for in Section 2.5(a) or (b)
above is unavailable to an indemnified party in respect of any Losses
referred to therein, then the intended indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such Losses
in such proportion
9
<PAGE>
as is appropriate to reflect the relative fault of the intended indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such Losses, as well as
any other relevant equitable considerations. The relative fault of the
intended indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by (or omitted to be supplied
by) the intended indemnifying party or by the indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Investor agree that it would not be just and
equitable if contribution pursuant to this Section 2.5(c) were determined by
pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities or actions in respect
thereof referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 2.5(c), no Investor shall be required to
contribute any amount in excess of the amount by which the net proceeds
(after all expenses) from the sale of the Registrable Stock sold by it
exceeds the amount of any damages which such Investor has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(d) Promptly after receipt by an indemnified party under Section
2.5(a) or (b) above of notice of the commencement of any action or
proceeding, such indemnified party shall, if a claim in respect thereof is to
be made under such Section, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
shall not relieve it from any liability which it may have to any indemnified
party otherwise than under such Section except to the extent that it has not
been prejudiced as a proximate result of such failure. In case any such
action or proceeding shall be brought against any indemnified party, and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the
extent that it may wish, to assume the defense thereof, in each case jointly
with any other indemnifying party and with counsel
10
<PAGE>
reasonably satisfactory to such indemnified party; provided, however, that,
------------------
if the defendants in any such action include both the indemnified party and
the indemnifying party and representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding, the
indemnified party or parties shall have the right to select separate counsel
to defend such action (in which case the indemnifying party shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties). Upon the permitted assumption by the indemnifying party of
the defense of such action, and approval by the indemnified party of counsel,
the indemnifying party shall not be liable to such indemnified party under
this Section 2.5 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof (other than
reasonable costs of investigation) unless (i) the indemnified party shall
have employed separate counsel in accordance with the proviso to the next
preceding sentence, (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time, or (iii) the indemnifying party
has authorized in writing the employment of counsel for the indemnified party
at the expense of the indemnifying party. It is understood, however, that
the indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any action or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
law firm (in addition to any local counsel) for all indemnified parties.
2.6 Assignment and Transfer of Registration Rights. The rights of any
----------------------------------------------
Investor under this Agreement may be transferred or assigned only to a
transferee or assignee which acquires all of the Common Shares RTC then owns
from RTC in a transaction which is exempt from registration under the
Securities Act and which agrees with the Company in writing to be bound by
this Agreement and, in any event, only in connection with a transfer of
securities which remain Registrable Stock hereunder after giving effect to
such transfer, and not to any other or subsequent transferee or assignee of
any such securities, and any such permitted transfer or assignment shall be
effective only upon the receipt by the Company of written notice of such
transfer or assignment and an instrument, in substantially the form attached
hereto as Exhibit A, pursuant to which such transferee or assignee agrees to
be bound by the provisions of this Agreement.
2.7 Holdback Agreements.
-------------------
(a) Notwithstanding any provision of this Agreement to the
contrary, in the event the Company notifies the Investor that the
11
<PAGE>
Company intends to file a Registration Statement in connection with an
underwritten offering (other than a shelf offering) by the Company of any of
its Common Stock after six months from the date of this Agreement, the
Investor shall refrain from selling or otherwise distributing any Registrable
Stock within the period requested in writing by the managing underwriter for
such offering, which period shall begin no earlier than two days (subject to
prior written notice thereof) prior to the effective date of such
Registration Statement and shall end no later than 90 days after such
effective date (the "Offering Restricted Period"); provided, however, that
-------- -------
Investor shall not be required to refrain from selling in connection with any
offering unless Odyssey Partners, L.P. ("Odyssey") (including its affiliates
and successors) and all of the directors and officers of the Company are also
required to refrain from selling for a comparable period with respect to any
shares not registered for sale by them in such offering. The foregoing
holdback agreement by the Investor shall be applicable only to the first such
underwritten offering in any twelve-month period. If a Registration
Statement filed pursuant to Section 2.1 is in effect on the first date of the
Offering Restricted Period, the Company's obligation under Section 2.2(a)(ii)
to keep such Registration Statement current and effective shall be extended
for a number of days equal to the Offering Restricted Period, or, if earlier,
until the date on which all of the Registrable Stock has been disposed of.
(b) Notwithstanding anything set forth herein to the contrary, in
the event that the Company notifies the Investor in writing that the Company
desires to amend the Registration Statement or to supplement the prospectus
in order to disclose material information required to be disclosed in the
prospectus included in such Registration Statement, as then in effect, in
order to correct an untrue statement of a material fact or to disclose an
omitted material fact that is required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, the Investor shall refrain from selling Registrable Stock until the
Company notifies the Investor in writing that the required amendment or
supplement has been filed with the Commission (the "Disclosure Restricted
Period"). If a Registration Statement filed pursuant to Section 2.1 is
effective on the first date of the Disclosure Restricted Period, the
Company's obligation under Section 2.2(a)(ii) to keep such Registration
Statement current and effective shall be extended for a number of days equal
to the Disclosure Restricted Period, or, if earlier, until the date on which
all of the Registrable Stock has been disposed of. The Company shall use its
reasonable efforts to file such amendment or supplement as promptly as
practicable after the Company decides to amend the Registration Statement or
supplement the prospectus.
12
<PAGE>
(c) Notwithstanding any provision of this Agreement to the
contrary, in the event the Company notifies the Investor that it has received
a notice pursuant to Section 4(b)(1) of the Prior Agreement (which notice by
the Company shall state the date on which it received such notice pursuant to
Section 4(b)(1) of such Prior Agreement and shall include a copy of the
notices given pursuant to such Prior Agreement), the Investor shall
thereafter refrain from selling or otherwise distributing any Registrable
Stock in accordance with the Prior Agreement, as and to the extent set forth
in such notice by the Company, for the period ending 20 days after receipt by
the Company of such notice pursuant to Section 4(b)(1) of such Prior
Agreement (the "Prior Agreement Restricted Period"). If a Registration
Statement filed pursuant to Section 2.1 is effective on the first date of the
Prior Agreement Restricted Period, the Company's obligation under Section
2.2(a)(ii) to keep such Registration Statement current and effective shall be
extended for a number of days equal to the Prior Agreement Restricted Period,
or, if earlier, until the date on which all of the Registrable Stock has been
disposed of.
2.8 SEC Filings. The Company will use commercially reasonable efforts
-----------
to timely file all reports required to be filed by it under the Exchange Act
and the rules and regulations adopted thereunder to the extent required to
enable the sale of the Registrable Stock pursuant to a Registration Statement
filed on Form S-3 or pursuant to Rule 144 promulgated under the Securities
Act for the period commencing on the date hereof and ending on the earlier of
(i) the last day of the Registration Period or (ii) the sale by the Investor
of all of the Registrable Stock.
2.9 Other Registration Rights Agreements. The Company represents that,
------------------------------------
except for the Prior Agreement and certain registration rights it has agreed
to grant to Odyssey but has not yet negotiated or documented, it has not
heretofore granted any registration rights with respect to Common Stock. The
Company further represents and agrees that it will not, during the
Registration Period, enter into any agreement which prohibits or precludes
the Company from registering Common Stock of the Investor, except as
expressly contemplated by this Agreement.
2.10 SEC Form S-3 and Correspondence.
-------------------------------
(a) The Company represents that, on the date hereof, it meets the
eligibility requirements for the use of Form S-3 adopted under the Securities
Act in transactions involving secondary offerings and will use commercially
reasonable efforts to remain eligible to use such form.
(b) The Company shall provide the Investor with prompt written
notice of any public announcement of any sale, public or private, or of any
intended sale of capital stock of the Company
13
<PAGE>
and of the filing of any Registration Statement and all amendments and
supplements thereto covering shares of capital stock of the Company (except
sales of capital stock registered on Form S-4 or S-8), including shelf
registrations and secondary offerings.
2.11 Piggyback Registrations.
-----------------------
(a) If the Company proposes to register any of its Common Stock (or
securities convertible into Common Stock) for its own account or on behalf of
any shareholder, other than the Investor, for sale pursuant to an
underwritten offering, other than an underwritten shelf offering, the Company
shall give the Investor written notice of such proposed registration at least
20 days prior to the filing of such Registration Statement. At the written
request of the Investor delivered to the Company within ten days after
receipt of said notice, which request shall state the number of shares of
Registrable Stock that the Investor wishes to sell under said Registration
Statement, the Company shall use commercially reasonable efforts to cause the
registration of such shares ("Piggyback Registration").
(b) The Company may, for any reason and without the consent of any
Investor, determine at any time not to proceed with any registration referred
to in Section 2.11(a) and abandon the proposed offering, whereupon the
Company shall be relieved of any further obligations hereunder to proceed
with such registration or offering.
(c) The Company shall have the right, in its sole discretion, to
select the underwriter for any offering pursuant to a Registration Statement
filed pursuant to this Section 2.11.
(d) If the managing underwriter(s) of the Piggyback Registration
advise the Company or the holders of the Company's Common Stock who have
exercised their demand registration rights that the number of shares
requested to be included in the Registration Statement, in their opinion,
exceeds the maximum number which can be sold in the offering without (i)
creating a substantial risk that the proceeds or price per unit that will be
derived from such offering will be reduced or (ii) causing such offering to
be too large to be reasonably sold,
first there shall be included in the Registration Statement all of the
shares that the Company and the shareholder exercising demand
registration rights requested be included in the Registration
Statement,
then all of the shares of Registrable Stock proposed to be sold by the
Investor and all of the Common Stock proposed to be sold by Odyssey
and by holders of shares covered by the Prior Agreement shall be
included in the
14
<PAGE>
Registration Statement in proportion to the number of shares each
proposes to sell,
then all of the shares of Common Stock proposed to be sold by all
other shareholders who have requested pursuant to contractual
incidental or piggyback registration rights that shares be included in
the Registration Statement shall be so included in proportion to the
number of shares each such holder proposes to sell.
ARTICLE III.
MISCELLANEOUS
3.1 Notices. All notices, demands or other communications hereunder
-------
shall be in writing and shall be deemed given when delivered personally,
mailed by certified mail, return receipt requested, sent by overnight courier
service or telecopied, telegraphed or telexed (transmission confirmed), or
otherwise actually delivered:
If to the Company: Forstmann & Company, Inc.
1185 Avenue of the Americas
New York, New York 10036
Attention: Jane S. Pollack, Esq.
Telephone: (212) 642-6900
Facsimile: (212) 642-6992
If to RTC: Resolution Trust Corporation
801 17th Street, N.W.
Washington, D.C. 20434
Attention: Kathy Kalser, Assistant
Director, Office of
Securities Transactions
Telephone: (202) 416-4037
Facsimile: (202) 416-2855
With a copy to: Resolution Trust Corporation
Legal Division
1717 "H" Street, N.W.
Washington, D.C. 20006
Attention: Assistant General Counsel
for Securities and Finance
Telephone: (202) 736-0301
Facsimile: (202) 736-0331
15
<PAGE>
If to any other
Investor: At the address and numbers set forth in the
Company's records, marked for attention as
therein indicated;
or at such other address and numbers as may have been furnished by such
person in writing to the other parties, accompanied by a written request that
such address and numbers be used for the purpose of giving notices hereunder.
3.2 Severability and Governing Law. Should any Section or any part of
------------------------------
a Section within this Agreement be rendered void, invalid or unenforceable by
any court of law for any reason, such invalidity or unenforceability shall
not void or render invalid or unenforceable any other Section or part of a
Section in this Agreement. To the extent federal law does not control, this
Agreement and the parties' rights and obligations hereunder shall be governed
by and construed in accordance with the internal laws of the State of Georgia
without giving effect to its choice of law principles, but only to the extent
that applicable Georgia law would not frustrate the purposes of FIRREA or any
provision of this Agreement. Nothing in this Agreement shall require any
unlawful action or inaction by either party.
3.3 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
3.4 Captions and Section Headlines. Section titles or captions
------------------------------
contained in this Agreement are inserted as a matter of convenience and for
reference purposes only, and in no way define, limit, extend or describe the
scope of this Agreement or the intent of any provision hereof.
3.5 Singular and Plural, Etc. Whenever the singular number is used
------------------------
herein and where required by the context, the same shall include the plural,
and the neuter gender shall include the masculine and feminine genders.
3.6 Costs and Attorneys' Fees. In the event that any action, suit, or
-------------------------
other proceeding is instituted concerning or arising out of this Agreement,
the prevailing party shall recover all of such party's costs, and attorneys'
fees incurred in each and every such action, suit, or other proceeding,
including any and all appeals or petitions therefrom. As used herein,
"attorneys' fees" shall mean the full and actual costs of any legal services
actually rendered in connection with the matters involved, calculated on the
basis of the usual fee charged by the attorneys performing such services.
16
<PAGE>
3.7 Amendments and Waivers. This Agreement may not be changed, waived,
----------------------
discharged or terminated except by written agreement signed by the Company
and the Investor; provided, however, that no such amendment or waiver shall
affect the provisions of this Section 3.7 and no such waiver shall extend to
or affect any other obligation not expressly waived. No failure to exercise
and no delay in exercising, on the part of any party, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law. The failure of any party to
insist upon a strict performance of any of the terms or provisions of this
Agreement, or to exercise any option, right or remedy herein contained, shall
not be construed as a waiver or as a relinquishment for the future of such
term, provision, option, right or remedy, but the same shall continue and
remain in full force and effect.
3.8 Successors and Assigns. All rights, covenants and agreements of
----------------------
the parties contained in this Agreement shall, except as otherwise provided
herein, be binding upon and inure to the benefit of their respective
successors and assigns.
3.9 Entire Agreement. This Agreement and the Settlement Agreement of
----------------
even date contain the entire understanding of the parties and there are no
further or other agreements or understandings, written or oral, in effect
between the parties relating to the subject matter hereof unless expressly
referred to herein.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
FORSTMANN & COMPANY, INC.
By:___________________________
Name:
Title:
RESOLUTION TRUST CORPORATION, in its capacity
as receiver for Columbia Savings and Loan
Association F.A.
By:___________________________
Name:
Title:
18
<PAGE>
EXHIBIT A
---------
Forstmann & Company, Inc.
1185 Avenue of the Americas
New York, New York 10036
Attention: President
Re: Registration Rights Agreement ("Agreement") Dated September 9,
1994 between Resolution Trust Company, in its capacity as
receiver for Columbia Savings & Loan Association, F.A.
("RTC"), and Forstmann & Company, Inc. ("Company")
Gentlemen:
On [insert date] RTC, or its successor, did sell, assign and
transfer all of the shares of Common Stock of the Company that it then owned
which constituted Registrable Stock (as defined in the Agreement) to the
undersigned in a transaction which is exempt from registration under the
Securities Act of 1933, together with its rights, subject to the assumptions
of its obligations, under the Registration Rights Agreement.
The undersigned hereby agrees, as provided in paragraph 2.6 of the
Agreement, to be bound by the terms and conditions of the Agreement and the
Settlement Agreement dated September 9, 1994 between RTC and the Company, it
being understood that the undersigned, upon the sale of said Common Stock and
assignment of rights in the Agreement to it, shall be deemed to be the
Investor, as defined in the Agreement.
Very truly yours,
[Undersigned' Full Name]
By:_______________________________
Name:__________________________
Title:_________________________
19
<PAGE>
EXHIBIT 99.2
EIGHTH AMENDMENT TO LOAN AGREEMENT
----------------------------------
THIS EIGHTH AMENDMENT TO LOAN AGREEMENT (this "Amendment"), made and
entered into effective as of August 29, 1994, by and between FORSTMANN &
COMPANY, INC., a Georgia corporation ("Borrower"), and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation ("GE Capital"), as sole "Lender" under the
"Loan Agreement" hereinafter referred to and as agent for itself and the other
"Lenders" who may hereafter become parties to the Loan Agreement (GE Capital, in
such capacity, the "Agent").
RECITALS:
---------
A. Borrower and GE Capital, as a Lender and as Agent, entered into a
certain Loan Agreement, dated as of October 30, 1992, as amended (the "Loan
Agreement"; capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Loan Agreement) whereby, subject to the terms
and conditions set forth therein, GE Capital, as sole Lender thereunder, made
certain financial accommodations available to Borrower; and
B. Borrower and GE Capital, as Lender and Agent, desire to enter into this
Amendment in order to amend the Loan Agreement in certain respects as
hereinafter set forth.
In consideration of the premises and the mutual covenants and agreements
herein contained, the parties hereto covenant and agree as follows:
1. Amendment. Effective upon execution of this Amendment:
----------
(a) The Loan Amendment shall be deemed to be amended by adding the
following sentence at the end of the definition of "Adjusted Tangible Net Worth"
contained in Section 1.1 of the Loan Agreement:
Notwithstanding anything contained herein to the contrary, during the
period commencing on August 29, 1994 and ending on December 31, 1994,
there shall not be taken into account in calculating Borrower's
Adjusted Tangible Net Worth (a) the effect of Borrower's recognition of
accrued pension liabilities during such period from August 29, 1994
through December 31, 1994 or (b) the effect of settlement costs in the
amount of $931,000 incurred in connection with Borrower's settlement
with Resolution Trust Company of the lawsuit captioned Forstmann &
-----------
Company, Inc. v. Resolution Trust Company, et al., Civil Action File
--------------------------------------------------
No. 92-CV-1947-RHH, United States District Court for the Northern
District of Georgia, Atlanta Division.
(b) The Loan Agreement shall be deemed to be further amended by deleting
from Section 9.1(e) thereof the phrase "if the effect thereof (with or without
the giving of notice or lapse of time or both)" and substituting in lieu thereof
the following phrase:
"and in each case shall continue beyond the last day of any applicable
grace, notice and/or cure period, if the effect thereof"
2. Other Agreements.
-----------------
(a) Except as set forth expressly herein and above, all terms of the Loan
Agreement and the other Loan Documents shall be and remain in full force and
effect and shall constitute the legal, valid, binding and enforceable
obligations of Borrower to the Agent and Lenders, subject to Debtor Relief Laws.
In furtherance of the foregoing, Borrower acknowledges that from and after the
date hereof, it shall continue to be bound by all provisions of the Loan
Agreement as amended hereby. To the extent any terms and conditions in any of
the other Loan Documents shall contradict or be in conflict with any terms or
conditions of the Loan Agreement, after giving effect to this Amendment, such
terms and conditions are hereby deemed modified
<PAGE>
and amended accordingly to reflect the terms and conditions of the Loan
Agreement as modified and amended hereby.
(b) Borrower hereby affirms that each of the representations and warranties
of Borrower contained in the Loan Agreement or in any of the Loan Documents is
correct in all material respects on and as of the date hereof and after giving
effect to this Amendment (except to the extent that such representations and
warranties relate solely to an earlier date and except as affected by
transactions expressly contemplated by the Loan Agreement or this Amendment). In
addition, with respect to this Amendment, Borrower warrants and represents as
follows: The execution, delivery and performance by Borrower of this Amendment
and the other Loan Documents contemplated hereby (i) are within Borrower's
corporate power; (ii) have been duly authorized by all necessary of proper
corporate action; (iii) are not in contravention of any provision of Borrower's
articles of incorporation or bylaws; (iv) will not violate any law or
regulation, or any order or decree of any court or governmental instrumentality;
(v) will not require a consent or approval under, conflict with or result in the
breach or termination of, constitute a default under or accelerate any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which Borrower is a party or by which Borrower
or any of its property is bound; (vi) will not result in the creation of
imposition of any Lien upon any of the property of Borrower other than those in
favor of the Agent pursuant to the Loan Documents; and (vii) do not require the
authorization, consent, approval, order, license or permit from, or filing,
registration or qualification with, any Governmental Agency in order to
authorize or permit such execution, delivery and performance under applicable
Laws. This Amendment has been duly executed and delivered for the benefit of or
on behalf of Borrower and constitutes a legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms subject to
Debtor Relief Laws.
(c) Borrower hereby represents that, after giving effect to this Amendment,
--------------------------------------
no Default or Event of Default has occurred and is continuing as of the date
hereof.
(d) Borrower agrees to pay on demand all reasonable costs and out-of-pocket
expenses of GE Capital in connection with the preparation, execution, delivery
and enforcement of this Amendment, the closing hereof, and any other
transactions contemplated hereby, including the fees and out-of-pocket expenses
of King & Spalding, counsel to GE Capital.
(e) To induce the Agent and Lenders to enter into this Amendment, Borrower
hereby acknowledges and agrees that, as of the date hereof, there exists no
right of offset, defense or counterclaim in favor of Borrower as against the
Agent or Lenders with respect to the Obligations.
(f) The Amendment shall be governed by, and construed in accordance with
the laws of the State of New York applicable to contracts made and performed in
such State and all applicable laws of the United States of America.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed under seal by their respective officers thereunto duly authorized, as
of the date first above written.
FORSTMANN & COMPANY, INC.
By:/s/Rod J. Peckham
------------------------------
Rod J. Peckham, Vice President
and Treasurer
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and initial
Lender
By:/s/Rick Luck
------------------------------
Rick Luck
Vice President, GE Capital
Commercial Finance, Inc., being
duly authorized
<PAGE>
Exhibit 99.3
NINTH AMENDMENT TO LOAN AGREEMENT
---------------------------------
THIS NINTH AMENDMENT TO LOAN AGREEMENT (this "Amendment"), made and entered
into effective as of November 4, 1994, by and between FORSTMANN & COMPANY, INC.,
a Georgia corporation ("Borrower"), and GENERAL ELECTRIC CAPITAL CORPORATION, a
New York corporation ("GE Capital"), as sole "Lender" under the "Loan Agreement"
hereinafter referred to and as Agent for itself and the other "Lenders" who may
hereafter become parties to the Loan Agreement (GE Capital, in such capacity,
the "Agent").
RECITALS:
---------
A. Borrower and GE Capital, as a Lender and as Agent, entered into a
certain Loan Agreement, dated as of October 30, 1992, as amended (the "Loan
Agreement"; capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Loan Agreement) whereby, subject to the terms
and conditions set forth therein, GE Capital, as sole Lender thereunder, made
certain financial accommodations available to Borrower; and
B. Borrower and Ge Capital, as Lender and Agent, desire to enter into this
Amendment in order to amend the Loan Agreement in certain respects as
hereinafter set forth.
In consideration of the premises and the mutual covenants and agreements
herein contained, the parties hereto covenant and agree as follows:
1. Amendments: Effective upon execution of this Amendment:
-----------
(a) The Loan Agreement shall be deemed to be amended by deleting in its
entirety the definition of "Dissenters' Rights Payments" which appears in
Section 1.1 thereof and substituting in lieu thereof the following revised
definition of "Dissenters' Rights Payments":
Dissenters' Rights Payments" means, collectively, the following
----------------------------
payments and stock issuances to be made by Borrower in settlement of Borrower's
action pursuant to O.C.G.A. /S/ 14-2-13-1 et sec. captioned Forstmann &
------ -----------
Company, Inc. v. Resolution Trust Corporation, et al., Civil Action File No.
- ----------------------------------------------------
92-CV-1947-RHH, United States District Court for the Northern District of
Georgia, Atlanta, Division: (a) the payment by Borrower of Cash in an amount not
to exceed $500,000, and the issuance by Borrower of 30,000 shares of its common
stock, in each case, to the Resolution Trust Corporation, as Receiver for
Columbus Savings & Loan, a dissenting shareholder of Borrower and (b) the
payment by Borrower of Cash in an amount not to exceed $500,000 in the aggregate
to James E. Kjorlien, Gary M. Smith, Grace Brothers
<PAGE>
Ltd., The Henley Group and Randall D. Smith, Jeffrey A. Smith and Russell B.
Smith, as Trustees for Lake Trust, also dissenting shareholders of Borrower.
(b) The Loan Agreement shall be deemed to be further amended by adding at
the end of Section 6.20 thereof, the following sentence:
Notwithstanding anything contained in this Section 6.20 or elsewhere
in this Agreement to the contrary, Borrower's aggregate Capital Expenditures for
its Fiscal Year ending October 29, 1995 shall not exceed $10,500,000.
2. Other Agreements.
-----------------
(a) Except as set forth expressly herein and above, all terms of the Loan
Agreement and the other Loan Documents shall be and remain in full force and
effect and shall constitute the legal, valid, binding and enforceable
obligations of Borrower to the Agent and Lenders, subject to Debtor Relief Laws.
In furtherance of the foregoing, Borrower acknowledges that from and after the
date hereof, it shall continue to be bound by all provisions of the Loan
Agreement as amended hereby. To the extent any terms and conditions in any of
the other Loan Documents shall contradict or be in conflict with any terms or
conditions of the Loan Agreement, after giving effect to this Amendment, such
terms and conditions are hereby deemed modified and amended accordingly to
reflect the terms and conditions of the Loan Agreement as modified and amended
hereby.
(b) Borrower hereby affirms that each of the representations and
warranties of Borrower contained in the Loan Agreement or in any of the Loan
Documents is correct in all material respects on and as of the date hereof and
after giving effect to this Amendment (except to the extent that such
representations and warranties relate solely to an earlier date and except as
affected by transactions expressly contemplated by the Loan Agreement or this
Amendment). In addition, with respect to this Amendment, Borrower warrants and
represents as follows; The execution, delivery and performance by Borrower of
this Amendment and the other Loan Documents contemplated hereby (i) are within
Borrower's corporate power; (ii) have been duly authorized by all necessary or
proper corporate action; (iii) are not in contravention of any provision of
Borrower's articles of incorporation or bylaws; (iv) will not violate any law or
regulation, or any order or decree of any court or governmental instrumentality;
(v) will not require a consent or approval under, conflict with or result in the
breach or termination of constitute a default under or accelerate any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which Borrower is a party or by which Borrower
or any of its property is bound; (vi) will not result in the creation or
imposition of any Lien upon any of the property of Borrower other than those in
favor of the Agent pursuant to
<PAGE>
the Loan Documents; and (vii) do not require the authorization, consent,
approval, order, license or permit from, or filing, registration or
qualification with, any Governmental Agency in order to authorize or permit such
execution, delivery and performance under applicable Laws. This Amendment has
been duly executed and delivered for the benefit of or on behalf of Borrower and
constitutes a legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms subject to Debtor Relief Laws.
(c) Borrower hereby represents that, after giving effect to this
Amendment, no Default or Event of Default has occurred and is continuing as of
the date hereof.
(d) Borrower agrees to pay on demand all reasonable costs and out-of-
pocket expenses of GE Capital in connection with the preparation, execution,
delivery and enforcement of this Amendment, the closing hereof, and any other
transaction contemplated hereby, including the fees and out-of-pocket expenses
of King & Spalding, counsel to GE Capital.
(e) To induce the Agent and Lenders to enter into this Amendment,
Borrower hereby acknowledges and agrees that, as of the date hereof, there
exists no right of offset, defense or counterclaim in favor of Borrower as
against the Agent or Lenders with respect to the Obligations.
(f) This Amendment shall be governed by, and construed in accordance
with the laws of the State of New York applicable to contracts made and
performed in such State and all applicable laws of the United States of America.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed under seal by their respective officers thereunto duly authorized,
as of the date first above written.
FORSTMANN & COMPANY, INC.
By:/s/ Rod J. Peckham
-----------------------------
Rod J. Peckham,
Vice President and Treasurer
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and initial
Lender
By:/s/ Rick Luck
-----------------------------
Rick Luck,
Vice President, GE Capital
Commercial Finance, Inc., being
duly authorized
