<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
FLAGSTAR COMPANIES, INC.
------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.50 PER SHARE
---------------------------------------
(Title of Class of Securities)
873098 10 7
-----------
(CUSIP Number)
Paul Raether with a copy to:
TW Associates, L.P., KKR Associates, Randall C. Bassett, Esq.
KKR Partners II, L.P., Latham & Watkins
C D Associates, L.P. and 633 West Fifth Street, Suite 4000
C D GP, LLC Los Angeles, California 90071
c/o Kohlberg, Kravis Roberts & Co. (213) 485-1234
9 West 57th Street
New York, New York 10019
(212) 750-8300
----------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 31, 1996
----------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 873098 10 7 PAGE 2 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TW ASSOCIATES, L.P.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
N/A
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
5 REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
DELAWARE
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 34,848,333
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 34,848,333
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
34,848,333
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [_]
N/A
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
61.0%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 873098 10 7 PAGE 3 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KKR PARTNERS II, L.P.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
N/A
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
5 REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
DELAWARE
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 151,666
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 151,666
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
151,666
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [_]
N/A
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
0.3%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 873098 10 7 PAGE 4 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KKR ASSOCIATES
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
N/A
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
5 REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
NEW YORK
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
34,999,999
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
34,999,999
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
34,999,999
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [_]
N/A
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
61.0%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 873098 10 7 PAGE 5 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
C D ASSOCIATES, L.P.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
5 REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
DELAWARE
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 3,035,840
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 3,035,840
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,035,840
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [_]
N/A
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
7.1%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 873098 10 7 PAGE 6 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
C D GP, LLC
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
5 REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
DELAWARE
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,035,840
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,035,840
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,035,840
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [_]
N/A
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
7.1%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
00
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
This Amendment No. 1 to Schedule 13D ("Amendment No. 1") amends the
Schedule 13D dated November 16, 1992 filed by TW Associates, L.P., KKR Partners
II, L.P. and KKR Associates (the "Schedule 13D"), relating to the Common Stock,
par value $.50 per share (the "Common Stock"), of Flagstar Companies, Inc., a
Delaware corporation and formerly known as TW Holdings, Inc. (the "Company").
This Amendment No. 1 is the first amendment to the Schedule 13D to be filed in
EDGAR format. The Company's five-for-one reverse stock split occurred in June
1993.
ITEM 2. IDENTITY AND BACKGROUND.
Item 2 to Schedule 13D is hereby amended and restated in full to read
in its entirety as follows:
(a) - (c) This statement is being filed jointly by (i) TW Associates,
L.P., a Delaware limited partnership ("Associates"), (ii) KKR Partners II, L.P.,
a Delaware limited partnership ("KKR Partners II"), (iii) KKR Associates, a New
York limited partnership ("KKR Associates"), (iv) C D Associates, L.P., a
Delaware limited partnership ("CD Associates") and (v) C D GP, L.L.C., a
Delaware limited liability company ("CDGP"). KKR Associates is the sole general
partner of Associates and KKR Partners II. CDGP is the sole general partner of
CD Associates. Associates, KKR Partners II, KKR Associates, CD Associates and
CDGP are hereinafter collectively referred to as the "Reporting Persons." The
agreement among the Reporting Persons relating to the joint filing of this
Amendment No. 1 is attached as Exhibit 1 hereto.
Messrs. Henry R. Kravis, George R. Roberts, Robert I. MacDonnell,
Paul E. Raether, Michael W. Michelson, James H. Greene, Jr., Michael T. Tokarz,
Edward A. Gilhuly, Perry Golkin, Clifton S. Robbins and Scott M. Stuart are the
general partners of KKR Associates. Messrs. Kravis and Roberts are the managing
members of CDGP. The other members of CDGP are Messrs. MacDonnell, Raether,
Michelson, Greene, Tokarz, Gilhuly, Golkin, Robbins and Stuart. The principal
occupation or employment of each of Messrs. Kravis and Roberts is as a managing
member of KKR & Co. L.L.C. ("KKR & Co."), which is the general partner of
Kohlberg Kravis Roberts & Co., L.P. ("KKR"), a private investment firm. The
addresses of KKR & Co. and KKR are 9 West 57th Street, New York, New York 10019
and 2800 Sand Hill Road, Suite 200, Menlo Park, California 94025. The principal
occupation or employment of each of Messrs. MacDonnell, Raether, Michelson,
Greene, Tokarz, Golkin, Robbins, Stuart and Gilhuly is as a member of KKR & Co.
The address of the principal business and principal office of
each of the Reporting Persons is 9 West 57th Street, Suite 4200, New York, New
York 10019 and 2800 Sand Hill Road, Suite 200, Menlo Park, California 94025. The
business address of Messrs. Kravis, Raether, Tokarz, Golkin, Robbins and Stuart
is 9 West 57th Street, Suite 4200, New York, New York, 10019; the business
address of Messrs. Roberts, MacDonnell, Michelson, Greene and Gilhuly is 2800
Sand Hill Road, Suite 200, Menlo Park, California 94025.
The principal businesses of Associates, KKR Partners II and KKR
Associates is investing, directly or indirectly through partnerships or other
entities, in the Company and other issuers. The principal businesses of CD
Associates and CDGP is investing in securities of the Company and, potentially,
other issuers.
1
<PAGE>
(d) None of the Reporting Persons, nor, to the best of their
knowledge, any of the other persons named in this Item 2 has, during the last
five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) None of the Reporting Persons, nor, to the best of their
knowledge, any of the individuals referred to in paragraphs (a) - (c) above has,
during the last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
(f) Each of Messrs. Kravis, Roberts, MacDonnell, Raether, Michelson,
Greene, Tokarz, Gilhuly, Golkin, Robbins and Stuart is a United States citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 to Schedule 13D is hereby amended to include the following:
The source of the $151,792 to be used for CD Associates' purchase (as
described in Item 4 below) of Common Stock was capital contributions by CDGP and
the limited partners of CD Associates.
Pursuant to a Warrant Agreement dated November 16, 1992, the Warrants
to purchase 14,935,000 and 65,000 shares of Common Stock issued to Associates
and KKR Partners II, respectively, on November 16, 1992 became exercisable on
March 31, 1995. Each warrant entitles the holder thereof to purchase one share
of Common Stock at an exercise price of $17.50, subject to adjustment.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 of Schedule 13D is hereby amended to include the following:
CD Associates acquired the 3,035,840 shares of Common Stock for
investment purposes pursuant to a Stock Purchase Agreement dated as of December
31, 1996 (the "CD Purchase Agreement"), among CD Associates and DLJ Capital
Corporation. A copy of the CD Purchase Agreement is attached hereto as Exhibit
2 and is incorporated herein by reference.
Paragraphs 4 and 5 of Item 4 of Schedule 13D are hereby amended to
read in their entirety as follows:
The Reporting Persons intend to review their investments in the
Company on a continuing basis and, depending upon price and availability,
subsequent developments affecting the Company, the Company's business and
prospects, other investment and business opportunities available to the
Reporting Persons, general stock market and economic conditions, tax
considerations and other factors deemed relevant, the Reporting Persons may
decide to increase or decrease the size of their investments in the Company.
Except as described herein and in Item 6 below, neither the Reporting
Persons, nor, to the best of their knowledge, any of the other persons named in
Item 2, has any present plan or proposal which relates to, or could result in,
any of the events referred to in paragraphs (a) through (j), inclusive, of Item
4 of Schedule 13D. However, the Reporting Persons will continue to review the
business of the Company and, depending upon one or more of the factors referred
to above, may in the future determine to take one or more of such actions.
2
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE COMPANY.
Paragraph (a) of Item 5 of Schedule 13D is hereby amended to include
the following:
Each of Associates and KKR Partners II owns 34,848,333 and 151,666
shares of Common Stock, respectively, which constitutes approximately 61.0%
and 0.3%, respectively, of the 42,434,669 outstanding shares of Common
Stock as reported in the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996.
CD Associates owns 3,035,840 shares of Common Stock (the "CD Stock").
The CD Stock constitutes approximately 7.1% of the 42,434,669 outstanding
shares of Common Stock as reported in the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996.
Paragraph (b) of Item 5 of Schedule 13D is hereby amended to include
the following:
CD Associates, acting through its sole general partner, CDGP has the
sole power to vote or direct the vote, and to dispose or to direct the
disposition of, the CD Stock. As a result CDGP may be deemed to
beneficially own the shares of Common Stock directly owned by CD
Associates. Each of Messrs. Kravis and Roberts, as a managing member of
CDGP, and each of Messrs. MacDonnell, Raether, Michelson, Greene, Tokarz,
Gilhuly, Golkin, Robbins and Stuart, as the other members of CDGP, may be
deemed to beneficially own the shares of Common Stock beneficially owned by
CDGP, but disclaim any such ownership.
The Reporting Persons may be deemed to be a group in relation to their
respective investments in the Company. The Reporting Persons do not affirm
the existence of a group.
Paragraph (c) of Item 5 of Schedule 13D is hereby amended to include
the following:
Except as stated in Amendment No. 1, there have not been any
transactions in the shares of Common Stock effected by or for the account
of the Reporting Persons during the 60 days prior to the date of this
Amendment No. 1.
Paragraph (d) of Item 5 of Schedule 13D is hereby amended to read in
its entirety as follows:
Except as stated in this Item 5, to the best knowledge of the
Reporting Persons, no other person has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of the
shares of Common Stock and Warrants owned by Associates, KKR Partners II
and CD Associates, respectively.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE COMPANY.
Item 6 of Schedule 13D is hereby amended to include the following:
Pursuant to Amendment No. 3 to the New Stockholders' Agreement,
the parties thereto entered into the amendment to terminate the New
Stockholders' Agreement as to GTO, as more particularly set forth
therein and incorporated by reference herein.
CD PURCHASE AGREEMENT
---------------------
The CD Purchase Agreement sets forth CD Associates' agreement to
purchase 3,035,840 shares of Common Stock at a purchase price of $.05
in cash per share. A copy of the CD Purchase Agreement is filed as
Exhibit 2 hereto and is incorporated by reference herein.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
1. Joint Filing Agreement dated as of January 2, 1997.
3
<PAGE>
2. Purchase Agreement dated as of December 31, 1996, among C D
Associates, L.P. and DLJ Capital Corporation.
3. Schedule 13D dated November 16, 1992.
4. Amendment No. 2 to New Stockholders' Agreement (incorporated by
reference herein to Exhibit 10 to the Quarterly Report on Form
10-Q for the quarter ended March 31, 1993 of the Company).
5. Amendment No. 3 to New Stockholders' Agreement (incorporated by
reference herein to Exhibit 10.6 to the 1994 Form 10-K of the
Company).
4
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
TW ASSOCIATES, L.P.
By: KKR Associates
General Partner
By: /s/ Paul E. Raether
-----------------------------------
Name: Paul E. Raether
Title: General Partner
KKR PARTNERS II, L.P.
By: KKR Associates
General Partner
By: /s/ Paul E. Raether
-----------------------------------
Name: Paul E. Raether
Title: General Partner
KKR ASSOCIATES
By: /s/ Paul E. Raether
-----------------------------------
Name: Paul E. Raether
Title: General Partner
C D ASSOCIATES, L.P.
By: C D GP, LLC
General Partner
By: /s/ Paul E. Raether
-----------------------------------
Name: Paul E. Raether
Title: Member
C D GP, LLC
By: /s/ Paul E. Raether
-----------------------------------
Name: Paul E. Raether
Title: Member
Dated: January 2, 1997
5
<PAGE>
EXHIBIT LIST
1. Joint Filing Agreement dated as of January 2, 1997.
2. Purchase Agreement dated as of December 31, 1996, among C D Associates,
L.P. and DLJ Capital Corporation.
3. Schedule 13D dated November 16, 1992.
4. Amendment No. 2 to New Stockholders' Agreement (incorporated by reference
herein to Exhibit 10 to the Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993 of the Company).
5. Amendment No. 3 to New Stockholders' Agreement (incorporated by reference
herein to Exhibit 10.6 to the 1994 Form 10-K of the Company).
6
<PAGE>
Exhibit 1
---------
JOINT FILING AGREEMENT
PURSUANT TO RULE 13d-1(f)(1)
----------------------------
The undersigned acknowledge and agree that the foregoing statement on
Schedule 13D is filed on behalf of each of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on behalf
of each of the undersigned without the necessity of filing additional joint
acquisition statements. The undersigned acknowledge that each shall be
responsible for the timely filing of such amendments, and for the completeness
and accuracy of the information concerning him or it contained therein, but
shall not be responsible for the completeness and accuracy of the information
concerning the other, except to the extent that it knows or has reason to
believe that such information is inaccurate.
Dated: January 2, 1997
TW ASSOCIATES, L.P.
By: KKR Associates
General Partner
By: /s/ Paul E. Raether
--------------------------------------
Name: Paul E. Raether
Title: General Partner
KKR PARTNERS II, L.P.
By: KKR Associates
General Partner
By: /s/ Paul E. Raether
--------------------------------------
Name: Paul E. Raether
Title: General Partner
KKR ASSOCIATES
By: /s/ Paul E. Raether
--------------------------------------
Name: Paul E. Raether
Title: General Partner
7
<PAGE>
C D ASSOCIATES, L.P.
By: C D GP, LLC
General Partner
By: /s/ Paul E. Raether
--------------------------------------
Name: Paul E. Raether
Title: Member
C D GP, LLC
By: /s/ Paul E. Raether
--------------------------------------
Name: Paul E. Raether
Title: Member
8
<PAGE>
Exhibit 2
---------
STOCK PURCHASE AGREEMENT
AGREEMENT dated as of December 31, 1996 by and between DLJ Capital
Corporation (the "SELLER") and C D Associates, L.P. ("PURCHASER").
The parties hereto agree as follows:
1. Purchase and Sale. Upon the terms and subject to the conditions of
-----------------
this Agreement, the SELLER agrees to sell to PURCHASER and PURCHASER agrees to
purchase from the SELLER the number of shares of common stock of Flagstar
Companies, Inc. (the "Company"), par value $.50 per share (the "Securities") as
are set forth on Schedule 1 hereto at the Closing (as defined below). The
purchase price to be paid by PURCHASER for the Securities (the "Purchase Price")
is $.05 per share multiplied by the number of Securities to be purchased by
PURCHASER from the SELLER. The Purchase Price shall be paid as provided in
Section 2 hereof.
2. Closing. The closing (the "Closing") of the purchase and sale of the
-------
Securities hereunder shall take place at the offices of SELLER, at 277 Park
Avenue, New York, New York on December 31, 1996 or at such other time or place
as the parties hereto may agree, At the Closing:
(a) PURCHASER shall deliver to the SELLER the Purchase Price by check or
wire transfer.
(b) SELLER shall deliver to PURCHASER certificates for the number of
Securities indicated opposite the SELLER'S name on Schedule 1, accompanied by
duly executed instruments of transfer or assignments in blank with signatures
appropriately guaranteed.
3. Title to and Validity of Securities. SELLER represents and warrants
-----------------------------------
to PURCHASER that it has full and legal and beneficial ownership of the
Securities, free and clear of any Liens (as defined below), other than
limitations under (i) applicable securities laws and (ii) that certain
Stockholders Agreement dated as of August 11, 1992, by and among the Company,
SELLER, TW Holdings, Inc., and the other parties signatories thereto, as amended
(the "Stockholders Agreement"); and when the Shares are delivered to PURCHASER
against payment therefor as contemplated hereby, PURCHASER will acquire good and
valid title to the Shares free and clear of any Lien, other than limitations
under (i) applicable securities laws, and (ii) the Stockholders Agreement.
4. Non-Contravention. SELLER represents and warrants to PURCHASER that
-----------------
the execution, delivery and performance of this agreement by SELLER will not
contravene or conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding upon or
applicable to SELLER; (ii) will not require any consent, approval or other
action or constitute a default under any agreement or other
9
<PAGE>
instrument binding upon SELLER and (iii) will not result in the creation or
imposition of a Lien on the Securities. For purposes hereof, Lien means any
mortgage, lien, pledge, charge, security interest, right of first offer or
refusal, adverse claim or other encumbrance of any kind in respect of such
asset.
5. Purchase for Investment.
-----------------------
PURCHASER acknowledges that the Securities have not been registered
under the Securities Act of 1933, as amended (the "Act") or any state securities
laws and that the purchase and sale of the Securities contemplated hereby is to
be effected pursuant to an exemption from the registration requirements imposed
by such laws. In this regard, PURCHASER is purchasing the Securities to be
purchased by it hereunder for its own account and not with a view to, or for
sale in connection with, any distribution thereof in violation of the Act.
PURCHASER is an "Accredited investor" (as defined in Regulation D under the
Act), has sufficient knowledge and experience in business matters so as to be
capable of evaluating the merits and risks of its investment in such Securities
and is capable of bearing the economic risks of such investment. PURCHASER has
had access to any information it deems necessary in order to make its decision
to purchase the Securities and has had the opportunity to ask questions and
receive answers concerning the Company. PURCHASER was not formed for the
specific purpose of acquiring the Securities.
6. Certain Understandings.
----------------------
(a) PURCHASER and SELLER understand and acknowledge that such parties may
be in possession of material non-public information regarding the Company.
(b) PURCHASER acknowledges to SELLER that PURCHASER is an affiliate of KKR
Associates and its affiliates (collectively, "KKR") and that KKR is an
approximately 47% shareholder and an "affiliate" (as such term is defined in
Rule 405 under the Securities Act of 1933, as amended) of the Company.
7. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the law of the State of New York, without regard to the
conflicts of law rules of such state.
8. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both oral and written, between the parties
with respect to the subject matter hereof.
9. Notices. All notices, requests and other communications to any party
-------
hereunder shall be in writing (including facsimile transmissions) and shall be
given:
10
<PAGE>
if to PURCHASER, to: C D Associates, L.P.
9 West 57th St, Suite 4200
New York, NY 10019
Attention: Mr. Paul Raether
Fax: 212-750-0003
if to SELLER, to: DLJ Capital Corporation
277 Park Avenue
New York, New York 10172
Attention: Nicole S. Arnaboldi
Fax: (212) 892-7272
10. Counterparts. This Agreement may be signed in any number of
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by as of the day and year first above written.
C D ASSOCIATES, L.P.
By: CD GP, LLC
Its General Partner
By: /s/ Henry R. Kravis
------------------------------
Member
DLJ CAPITAL CORPORATION
By: /s/ Thomas E. Siegler
------------------------------
Name: Thomas E. Siegler
Title: Secretary and Treasurer
11
<PAGE>
SCHEDULE 1
----------
<TABLE>
<CAPTION>
NAME OF SELLER CERTIFICATE NO. NUMBER OF SECURITIES PURCHASE PRICE
- -------------- --------------- -------------------- --------------
<S> <C> <C> <C>
DLJ Capital Corporation FC 0240 3,030,668 $151,533.40
DLJ Capital Corporation FC 1923 2,076 $ 103.80
DLJ Capital Corporation (DTC) 3,096 $ 154.80
</TABLE>
Total Purchase Price: $151,792
12
<PAGE>
Exhibit 3
---------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
TW HOLDINGS, INC.
-----------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.10 PER SHARE
---------------------------------------
(Title of Class of Securities)
873098 10 7
-----------
(CUSIP Number)
Paul Raether with a copy to:
TW Associates, L.P., KKR Associates, and Erica H. Steinberger
KKR Partners II, L.P., Latham & Watkins
c/o Kohlberg, Kravis Roberts & Co. 885 Third Avenue
9 West 57th Street New York, New York 10022
New York, New York 10019 (212) 906-1200
(212) 750-8300
---------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 16, 1992
---------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [x]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 873098 10 7 PAGE 2 OF 136 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TW ASSOCIATES, L.P.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
5 REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
DELAWARE
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 99,566,667
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 99,566,667
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
99,566,667
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
47%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 873098 10 7 PAGE 3 OF 136 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KKR PARTNERS II, L.P.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
5 REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
DELAWARE
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 433,333
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 433,333
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
433,333
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
0.2%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 873098 10 7 PAGE 4 OF 136 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KKR ASSOCIATES
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
5 REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
NEW YORK
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
100,000,000
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
100,000,000
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
100,000,000
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
47.2%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Item 1. Security and Company.
- ------ --------------------
This statement relates to the Common Stock, par value $.10 per share
(the "Common Stock"), of TW Holdings, Inc., a Delaware corporation (the
"Company"), whose principal executive offices are at 203 East Main Street,
Spartanburg, South Carolina 29319-9966.
Item 2. Identity and Background.
- ------ -----------------------
(a) This statement is being filed jointly by (i) TW Associates, L.P.,
a Delaware limited partnership ("Associates"), (ii) KKR Partners II, L.P., a
Delaware limited partnership ("KKR Partners II"), and KKR Associates, a New York
limited partnership ("KKR Associates"). KKR Associates is the sole general
partner of Associates and KKR Partners II. Messrs. Henry R. Kravis, George R.
Roberts, Robert I. MacDonnell, Paul E. Raether, Michael W. Michelson and Saul A.
Fox are the general partners of KKR Associates. Associates, KKR Partners II and
KKR Associates are hereinafter collectively referred to as the "Reporting
Persons."
(b) The address of the principal business and principal office of each
of Associates, KKR Partners II and KKR Associates is 9 West 57th Street, Suite
4200, New York, New York, 10019. The business address of Messrs. Kravis and
Raether is 9 West 57th Street, New York, New York, 10019; the business address
of Messrs. Roberts, MacDonnell, Michelson and Fox is 101 California Street, San
Francisco, California 94111.
(c) The principal businesses of Associates, KKR Partners II and KKR
Associates is investing in securities. The present principal occupation of
employment of each of Messrs. Kravis, Roberts, MacDonnell, Raether, Fox and
Michelson is as a general partner of Kohlberg Kravis Roberts & Co. ("KKR"), a
private merchant banking firm the addresses of which are 9 West 57th Street,
Suite 4200, New York, New York 10019, and 101 California Street, San Francisco
94111.
(d) None of the Reporting Persons, nor, to the best of their
knowledge, any of the individuals referred to in paragraph (a) above has, during
the last five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) None of the Reporting Persons, nor, to the best of their
knowledge, any of the individuals referred to in paragraph (a) above has, during
the last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
(f) Each of the individuals referred to in paragraph (a) above is a
United States citizen.
Item 3. Source and Amount of Funds or Other Consideration.
- ------ -------------------------------------------------
The source of funds for the purchase of the Common Stock and Warrants
(as defined below) was capital contributions by KKR Associates and the limited
partners of Associates and KKR Partners II in the aggregate amount of
$300,000,000.
5
<PAGE>
Item 4. Purpose of Transaction.
- ------ ----------------------
Associates and KKR Partners II purchased the Common Stock and Warrants
for investment in connection with a recapitalization (the "Recapitalization") of
the Company and obtaining control of the Company through majority representation
on its Board of Directors. On August 11, 1992, the Company entered into a Stock
and Warrant Purchase Agreement (the "Purchase Agreement") with Associates,
pursuant to which, on November 16, 1992, Associates and KKR Partners II (as an
assignee of Associates) purchased 100 million newly issued shares of the Common
Stock and warrants (the "Warrants") to purchase an additional 75 million shares
for an aggregate purchase price of $300,000,000 (the "Investment"). A copy of
the Purchase Agreement is attached hereto as Exhibit 2 and incorporated herein
by reference.
Concurrently with the Investment or immediately thereafter, the
principal components of the Recapitalization were consummated. The components
of the Recapitalization are described more fully under the caption "The
Investment Proposal -- Overview of the Recapitalization" in the Company's
Information Statement, filed with the Securities and Exchange Commission on
October 28, 1992 (the "Information Statement"). As part of the Recapitalization,
(i) the Company's bylaws were amended to increase the maximum number of
directors from 9 to 15 and to set the size of the Board at 10, (ii) two of the
independent members of the Board and two representatives of Gollust, Tierney &
Oliver ("GTO") on the Board resigned and (iii) six directors designated by
Associates (the "Associates' Designees") were elected. As stated by the Company
in the Information Statement, the purpose of the Recapitalization was to
establish a capital structure that provides the Company greater flexibility to
fund capital expenditures, to reduce its outstanding debt over the next few
years and to take advantage of opportunities for further growth.
Concurrently with the execution of the Purchase Agreement, GTO and
certain related entities (collectively, the "GTO Group"), DLJ Capital
Corporation ("DLJ Capital"), Jerome J. Richardson ("Richardson"), Associates
(collectively, the "Stockholder Parties") and the Company entered into a
Stockholders' Agreement (the "New Stockholders' Agreement"), a copy of which is
attached hereto as Exhibit 3 and incorporated herein by reference. Concurrently
with the consummation of the Investment, the Company, Associates and KKR
Partners II entered into a Warrant Agreement, which was amended by a Technical
Amendment, dated as of September 30, 1992 (as amended, the "Warrant Agreement"),
a copy of which is attached hereto as Exhibit 4 and incorporated herein by
reference. Information concerning the Purchase Agreement, the Warrant Agreement
and the New Stockholders' Agreement is contained in Item 6 below and
incorporated herein by reference.
Associates and KKR Partners II intend to review their investment in
the Company on a continuing basis and, depending upon the price and availability
of the Common Stock, subsequent developments affecting the Company, the
Company's business and prospects, other investment and business opportunities
available to Associates and KKR Partners II, general stock market and economic
conditions, tax considerations and other factors deemed relevant, may decide to
increase or decrease the size of their investment in the Company, subject to
certain restrictions set forth in the Purchase Agreement and the New
Stockholders' Agreement which are described in response to Item 6.
Except as described herein and in Item 6 below, neither the Reporting
Persons, nor, to the best of their knowledge, any of the individuals referred to
in paragraph (a) of Item 2, has any present plan or proposal which relates to,
or could result in, any of the events referred to in paragraphs (a) through (j),
inclusive, of Item 4 of Schedule 13D. However, Associates and KKR Partners II
will
6
<PAGE>
continue to review the business of the Company and, depending upon one or more
of the factors referred to above, may in the future determine to take one or
more of such actions.
Item 5. Interest in Securities of the Company.
- ------ -------------------------------------
(a) Associates owns 99,566,667 shares of the Common Stock (the
"Associates' Stock") and warrants (the "Associates' Warrants") to purchase an
additional 74,675,000 shares of the Common Stock, and KKR Partners II owns
433,333 shares of the Common Stock (the "Partners' Stock") and warrants (the
"Partners' Warrants") to purchase an additional 325,000 shares of Common Stock.
The Associates' Stock constitutes approximately 47% and Partners' Stock
constitutes approximately 0.2% of the total number of outstanding shares of
Common Stock of the Company on October 27, 1992 as reported by the Company in
the Information Statement, without giving effect to the exercise of any Warrants
(which are exercisable after December 31, 1994, subject to certain extensions
which are described in the response to Item 6).
(b) Associates and KKR Partners II, acting through their sole general
partner, KKR Associates, have the sole power to vote or direct the vote, and to
dispose or to direct the disposition of, Associates' Stock and Partners' Stock,
respectively. As a result, KKR Associates may be deemed to beneficially own the
shares of Common Stock directly owned by Associates and KKR Partners II. Each
of Messrs. Kravis, Roberts, MacDonnell, Raether, Michelson and Fox, as a general
partner of KKR Associates, may be deemed to beneficially own the shares of
Common Stock and Warrants of the Company beneficially owned by KKR Associates,
but disclaims any such ownership.
(c) Except for the Investment, there have not been any transactions in
the Common Stock effected by or for the account of the Reporting Persons during
the past 60 days.
(d) Excepts as stated in this Item 5, to the best knowledge of the
Reporting Persons, no other person has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
shares of Common Stock and Warrants owned by Associates and KKR Partners II,
respectively.
(e) Not applicable
Item 6. Contracts, Arrangements, Undertakings or Relationships with Respect to
- ------ ----------------------------------------------------------------------
Securities of the Company.
-------------------------
The following descriptions are qualified in their entirety by reference to
the agreements attached as exhibits hereto and incorporated herein by reference.
For purposes of this Item 6, Associates and KKR Partners II are collectively
referred to as the "Purchaser".
THE PURCHASE AGREEMENT
Arrangements and Understandings with Respect to the Securities of the
---------------------------------------------------------------------
Company. In addition to providing for the Investment, the Purchase Agreement
- -------
provides that the Purchaser will not, directly or indirectly, sell, assign,
pledge, hypothecate or otherwise transfer any of the Common Stock, the Warrants
or the Common Stock issuable upon exercise of the Warrants (the "Warrant
Shares") prior to December 31, 1994 (or such later day by which the GTO Group is
required to dispose of certain shares of its Common Stock pursuant to certain
provisions of the New Stockholders' Agreement or
7
<PAGE>
March 31, 1995 if the GTO Group has complied with such provisions), except (i)
in connection with a sale of or acceptance of an offer to purchase 90% or more
of the outstanding shares of Common Stock, (ii) in connection with a merger or
other similar extraordinary corporate transaction involving an entity which
immediately prior thereto is not an affiliate of the Purchaser or any partner
thereof or the Company which modifies the outstanding Common Stock and which
results in a change of control of the Company, (iii) or to any affiliate of the
Purchaser or any partner thereof who agrees to be bound by the provisions of the
New Stockholders' Agreement and the Warrant Agreement.
The Purchaser has agreed, pursuant to the Purchase Agreement, not to
engage in a Rule 13e-3 Transaction (as defined in Rule 13e-3 under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act")), prior to
March 31, 1995 without the approval of a majority of the disinterested directors
of the Company and an opinion from an investment banking firm selected by such
directors that the terms of the transaction are fair, from a financial point of
view, to the Company's unaffiliated shareholders. If there is, at any relevant
time, only one disinterested director, such director's approval will be
required; if there are two disinterested directors, then the approval of both
directors will be required. "Disinterested director" is not defined in the
Purchase Agreement. It is anticipated that such term will be interpreted in
accordance with Delaware law and will depend on the facts and circumstances in
existence at the time of any proposed transaction, and that the representatives
of the GTO Group and DLJ Capital may constitute "disinterested directors."
In connection with the Recapitalization and as contemplated by the
Purchase Agreement, the Company caused its subsidiary TW Services, Inc., a
Delaware corporation ("TWS"), to (i) consummate exchange offers (the "Exchange
Offers") whereby it exchanged cash and new notes for all of its outstanding 17%
Senior Subordinated Discount Debentures Due 2001 (the "17% Debentures") and 15%
Subordinated Debentures Due 2001 (the "15% Debentures"), (ii) to call for
redemption all of the 17% Debentures and, pursuant to the Purchaser's request,
15% Debentures which were not acquired pursuant to the Exchange Offers, (iii)
issue $300,000,000 principal amount of new senior unsecured notes and (iv) call
for redemption and defease its outstanding 14.75% Senior Notes Due 1998, and
agreed to issue options to Richardson to purchase shares of common stock of the
Company.
Fees and Expenses; Indemnification. Pursuant to the Purchase Agreement,
----------------------------------
the Company paid to KKR a fee of $15,000,000 on the Closing Date (as defined in
the Purchase Agreement) for financial advisory services rendered in connection
with the Recapitalization. In addition, the Company expects to pay to KKR an
annual advisory fee, which would initially be approximately $1.25 million per
year, for management consulting and financial advisory services to the Company
as needed from time to time following the Recapitalization. To the extent KKR
advises the Company with respect to certain specific transactions or financings,
KKR may request and receive customary financial advisory fees for such services.
Pursuant to the Purchase Agreement, the Company has agreed to reimburse the
Purchaser for all reasonable out-of-pocket costs and expenses, including,
without limitation, all fees of attorneys, accountants and financial advisors
incurred by the Purchaser or on its behalf in connection with the transactions
contemplated by the Purchase Agreement (including, without limitation, the
Recapitalization).
Pursuant to the Purchase Agreement, the Company has agreed to indemnify and
hold harmless the Purchaser and its affiliates, directors, officers, advisers,
agents and employees from all claims arising out of, or in connection, with the
Recapitalization.
8
<PAGE>
THE NEW STOCKHOLDERS' AGREEMENT
Board of Directors. Pursuant to the New Stockholders' Agreement, in
------------------
addition to agreeing to vote all shares of Common Stock owned by it to elect the
present Board, a majority of which are Associates' Designees, each Stockholder
Party has agreed to cause the Board of Directors to be increased to eleven
members no later than the 1993 annual meeting of shareholders, to elect an
additional independent director and (subject to certain adjustments in the event
that holders of the Company's $2.25 Series A Cumulative Convertible Exchangeable
Preferred Stock become entitled to, and do, elect two directors) thereafter to
nominate and vote all shares of Common Stock owned by it to elect as directors
(a) the six persons designated by Associates, (b) Richardson, so long as he is
Chief Executive Officer of the Company, (c) one representative to be designated
by each of the GTO Group and DLJ Capital, so long as each, respectively, owns at
least 2% of the outstanding shares of Common Stock on a fully diluted basis, and
(d) two independent directors.
Restrictions on Transfer of Shares. The New Stockholders' Agreement
----------------------------------
provides that the GTO Group and DLJ Capital will not, directly or indirectly,
sell, assign, pledge, encumber, hypothecate or otherwise transfer any shares of
Common Stock except (a) in a public sale on or after June 30, 1993, in the case
of the GTO Group, and December 31, 1994, in the case of DLJ Capital (or, in
certain circumstances, March 31, 1995) in compliance with the Securities Act of
1933, as amended (the "Securities Act"), (b) with the prior written consent of
the Company thereafter, (c) in connection with a sale of or acceptance of an
offer to purchase 90% or more of the outstanding shares of Common Stock, (d) in
connection with a merger or other similar extraordinary corporate transaction
which modifies the Company's outstanding Common Stock, or (e) in connection with
certain transfers to affiliates who agree to be bound by the provisions of the
New Stockholders' Agreement, in the case of the GTO Group. If the GTO Group
complies with certain provisions of the New Stockholders' Agreement pursuant to
which it may be obligated to make certain dispositions of shares of Common Stock
owned by it, the GTO Group will be permitted to distribute any remaining shares
of Common Stock owned by it to its investors between January 1, 1995 and March
31, 1995. In addition, DLJ Capital may make transfers not in excess of 10% of
the shares of Common Stock owned by DLJ Capital on June 25, 1992 pursuant to
compensation plans in existence on such date. The GTO Group has agreed,
pursuant to the New Stockholders' Agreement, not to acquire additional shares of
Common Stock.
Richardson has agreed to comply with the transfer restrictions and rights
as set forth in the New Stockholders' Agreement and in the shareholder agreement
(the "Richardson Shareholder Agreement") which he has entered into with the
Company. The Richardson Agreement provides that Richardson may not transfer his
Common Stock until after the fifth anniversary of the Closing Date, unless
Richardson's employment terminates by reason of death or disability and, under
certain circumstances, as a result of a termination of his employment by the
Company without cause. Under certain conditions, the Richardson Agreement
requires the Company to repurchase, provides the Company a right to repurchase
and gives the Company a right of first refusal to purchase Common Stock held by
Richardson. The New Stockholders' Agreement provides that the restrictions on
transfer of Common Stock contained in the Richardson Shareholder Agreement shall
not be amended, modified or supplemented, including by means of any amendment,
modification or supplement to any other provision of the Richardson Shareholder
Agreement, and the Company has agreed not to grant any waiver of any of its
rights thereunder, if such amendment, modification, supplement or waiver
adversely affects, or is reasonably likely to affect adversely, the interests of
any of the Stockholder Parties except with the prior written approval of each
such Stockholder Party.
9
<PAGE>
The New Stockholders' Agreement provides that no Stockholder Party will
grant any irrevocable proxy or any other proxy inconsistent with the New
Stockholders' Agreement or enter into or agree to be bound by any voting trust
with respect to any shares of Common Stock nor will any Stockholder Party enter
into any stockholder agreements or arrangements of any kind with any person with
respect to any shares of Common Stock (whether or not such agreements or
arrangements are with other Stockholder Parties or holders of Common Stock not
parties to the New Stockholders' Agreement), including agreements or
arrangements with respect to the acquisition, disposition or voting (if
applicable) of any shares of Common Stock, except the New Stockholders'
Agreement, nor will any Stockholder Party act, for any reason, as a member of a
group in concert with any other persons in connection with the acquisition,
disposition or voting (if applicable) of any shares of Common Stock, except to
the extent consistent with the New Stockholders' Agreement.
Registration Rights. The New Stockholders' Agreement provides that, on or
-------------------
after June 30, 1993, the GTO Group may make two written requests to the Company
for registration of all or part of the shares of Common Stock owned by the GTO
Group (the "GTO Registrable Securities") under the Securities Act. The New
Stockholders' Agreement further provides that, at any time after December 31,
1994 (which date shall be extended by one day for each day on which, during the
period from and including July 1, 1993 through September 30, 1994, the Company
does not maintain an effective shelf registration as described below and on
which the closing price of the Common Stock exceeds $4.00 per share) or March
31, 1995 (if the GTO Group shall have complied with certain provisions of the
New Stockholders' Agreement described below pursuant to which the GTO Group may
be obligated to sell certain of its shares of Common Stock), (a) DLJ Capital may
make two written requests to the Company for registration under the Securities
Act of all or part of the shares of Common Stock owned by DLJ Capital, and (b)
the holders of a majority of all shares of Common Stock and Warrants and all
shares of Common Stock issued or issuable to the Purchaser upon exercise of any
Warrant (the "Purchaser Registrable Securities") may make five written requests
to the Company for registration under the Securities Act of all or part of the
Purchaser Registrable Securities. GTO, DLJ Capital and the Purchaser also have
certain "piggyback" registration rights to include their securities, subject to
certain limitations, in any other registration statement filed by the Company
(other than the shelf registration described below and certain demand
registrations by the GTO Group) for its own account or pursuant to any of the
foregoing requests, or otherwise. If the Purchaser exercises its demand or
"piggyback" registration rights and Richardson is then employed by the Company,
Richardson has the right to have included in any registration statement relating
to the exercise of such rights by the Purchaser the same percentage of his
Common Stock as the fully-diluted percentage of Purchaser Registrable Securities
registered thereunder. If at any time Richardson shall have the right to
participate in a "piggyback" registration and Richardson elects not to exercise
such "piggyback" registration rights, he may make one written request to the
Company for registration under the Securities Act at the Company's expense, for
the percentage of shares of Common Stock that he had the right to include, but
did not so include, in such one or more registrations pursuant to his
"piggyback" registration rights based on fully diluted ownership. Whenever the
Company effects a registration pursuant to the registration rights provisions of
the New Stockholders' Agreement, the Company (i) has agreed, and the Stockholder
Parties have agreed if requested, not to effect any public sale or distribution
of securities similar to those being registered, or any securities convertible
into or exchangeable or exercisable for such securities, for a period of time
prior to and after such registration statement becomes effective, and (ii) will
be required to pay the costs of such registration of securities, except that
each selling shareholder will bear its pro rata share of customary underwriting
discounts and commissions, the customary fees and expenses and its counsel and
applicable transfer taxes. The New Stockholders' Agreement contains customary
indemnification and contribution provisions relating
10
<PAGE>
to the exercise of the holders of Registrable Securities of their registration
rights thereunder. The Company may, but is not required to, file a shelf
registration with respect to up to 50% of the GTO Registrable Securities.
Company's Right to Compel Sale by the GTO Group. If during the period from
-----------------------------------------------
June 30, 1993 through December 31, 1993 the closing price of the Common Stock
shall have exceeded $4.00 per share for fifteen consecutive trading days and a
registration statement with respect to GTO Registrable Securities shall have
been effective for any fifteen consecutive trading days during such period on
which the closing price of the Common Stock shall have exceeded $4.00 per share,
then the GTO Group is obligated to dispose of at least 20% of the GTO
Registrable Securities owned by the GTO Group on the date of the New
Stockholders' Agreement, subject to certain adjustments. If the GTO Group fails
to comply with such requirement, then the Company can compel the GTO Group to
sell an amount of Common Stock to satisfy such requirement during the first
quarter of 1994.
If during the period from January 1, 1994 through September 30, 1994, the
closing price of the Common Stock shall have exceeded $4.00 per share for twenty
consecutive trading days and a registration statement with respect to GTO
Registrable Securities shall have been effective for any twenty consecutive
trading days during such period on which the closing price of the Common Stock
shall have exceeded $4.00 per share, then the GTO Group is obligated to dispose
of a percentage of shares of Common Stock equal to the difference between (i)
50% of the GTO Registrable Securities owned by the GTO Group on the date of the
New Stockholders' Agreement, and (ii) the percentage of GTO Registrable
Securities disposed of by the GTO Group during the period from June 30, 1993
through December 31, 1993. If the GTO Group fails to comply with such
requirement, the Company can compel the GTO Group to sell an amount of Common
Stock to satisfy such requirement during the fourth quarter of 1994.
Termination. Subject to certain qualifications, the New Stockholders'
-----------
Agreement will terminate upon the sale of all shares of Common Stock now owned
or hereafter acquired by the GTO Group, DLJ Capital, Richardson or by the
Purchaser. In any event, the provisions of the New Stockholders' Agreement with
respect to voting arrangements and restrictions will terminate no later than ten
years from the date of the New Stockholders' Agreement in accordance with
applicable law, subject to extension by the agreement of the remaining parties
to the New Stockholders' Agreement.
THE WARRANT AGREEMENT
Rights of Warrant Holder. Each Warrant entitles the holder thereof to
------------------------
purchase one fully paid and nonassessable Warrant Share at an initial exercise
price (the "Exercise Price") of $3.50, subject to adjustment as provided below.
Any or all of the Warrants may be exercised at any time after December 31, 1994
(or the date to which such date may be extended in accordance with certain
provisions of the New Stockholders' Agreement or March 31, 1995 if the GTO Group
has complied with such provisions) (the "Warrant Effectiveness Date") and until
November 16, 2000. Notwithstanding the foregoing, in the event (a) a sale of or
acceptance of an offer to purchase 90% or more of the outstanding shares of
Common Stock or (b) a merger or other similar extraordinary corporate
transaction involving an entity which immediately prior thereto is not an
affiliate of the Purchaser or any partner thereof or the Company which modifies
the outstanding Common Stock and which results in a change of control of the
Company occurs on or prior to the Warrant Effectiveness Date, each Warrant will
become exercisable immediately prior to such sale or acceptance or consummation
of such transaction.
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<PAGE>
Payment of the aggregate Exercise Price may be a made in case or, at the
election of a Warrant holder, by delivering other, unexercised Warrants, the
value of which will be deemed to be equal to the difference between the average
of the last reported sales prices of a share of Common Stock on each of the 30
trading days immediately preceding the date of exercise and the then current
Exercise Price.
The Exercise Price and the number of Warrant Shares issuable upon exercise
of each Warrant are subject to adjustment from time to time upon the occurrence
of certain stock dividends or distributions, stock splits, reverse stock splits
or stock reclassifications; certain issuances of rights, options or warrants to
all holders of Common Stock entitling them to purchase shares of Common Stock at
a price per share below the current market price per share (as defined) on the
record date; certain dividends or distributions to all holders of Common Stock
of any of the Company's assets, debt securities, preferred stock or any rights
or warrants to purchase any assets or securities of the Company; certain
issuances of Common Stock for a consideration per share less than the current
market price per share on the date the Company fixes the offering price of such
additional shares; and certain issuances of securities convertible into or
exchangeable for or exercisable for Common Stock for a consideration per share
of Common Stock initially deliverable upon conversion or exchange or exercise of
such securities less than the current market price per share on the date of
issuance of such securities.
The Board of Directors from time to time may reduce the Exercise Price by
any amount for any period of at least 20 days if the reduction is irrevocable
during such period; provided, however, that so long as the Purchaser or any of
-------- -------
its affiliates owns any Warrants, any such reduction may be made only by the
vote of a majority of the members of the Board of Directors of the Company
voting other than those designated by the Purchaser pursuant to the New
Stockholders' Agreement; and provided, further, that in no event shall the
-------- -------
Exercise Price be less than the par value of a share of Common Stock.
Item 7. Materials to be Filed as Exhibits.
- ------ ---------------------------------
1. There is filed herewith as Exhibit 1 a written agreement relating
to the filing of joint acquisition statements as required by Rule 13d-1(f)(1)
under the Act.
2. There is filed herewith as Exhibit 2 the Purchase Agreement.
3. There is filed herewith as Exhibit 3 the New Stockholders'
Agreement.
4. There is filed herewith as Exhibit 4 the Warrant Agreement.
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<PAGE>
SIGNATURES
----------
After reasonable inquiry and to the best of our knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
Dated: November 25, 1992
TW ASSOCIATES, L.P.
By: KKR Associates
General Partner
By: /s/ Henry R. Kravis
--------------------------------
Title: General Partner
Name: Henry R. Kravis
KKR PARTNERS II, L.P.
By: KKR Associates
General Partner
By: /s/ Henry R. Kravis
--------------------------------
Title: General Partner
Name: Henry R. Kravis
KKR Associates
By: /s/ Henry R. Kravis
--------------------------------
Title: General Partner
Name: Henry R. Kravis
13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
No. Description Page
- ------- ----------- ------------
<C> <S> <C>
1. Joint Acquisition Statement..............
2. Stock and Warrant Purchase Agreement, dated as
of August 11, 1992, by and between TW Holdings, Inc.,
a Delaware corporation and TW Associates, L.P.,
a Delaware limited partnership.............
3. Stockholders' Agreement, dated as of August 11, 1992,
by and among, TW Holdings, Inc., a Delaware
corporation, Gollust, Tierney & Oliver and certain
related entities, DLJ Capital Corporation, TW
Associates, L.P., a Delaware limited partnership, and
Jerome R. Richardson (as amended by a Technical
Amendment dated as of September 30, 1992).......
4. Warrant Agreement, dated as of November 16, 1992, by
and among, TW Holdings, Inc., a Delaware corporation,
TW Associates, L.P., a Delaware limited partnership,
and KKR Partners II, L.P., a Delaware limited
partnership......................
</TABLE>
14
<PAGE>
Exhibit 1
15
<PAGE>
JOINT ACQUISITION STATEMENT
PURSUANT TO RULE 13d-1(f)(1)
----------------------------
The undersigned acknowledge and agree that the foregoing statement on
Schedule 13D is filed on behalf of each of the undersigned and that all
subsequent amendments to this statement on Schedule 13D shall be filed on behalf
of each of the undersigned without the necessity of filing additional joint
acquisition statements. The undersigned acknowledge that each shall be
responsible for the timely filing of such amendments, and for the completeness
and accuracy of the information concerning him or it contained therein, but
shall not be responsible for the completeness and accuracy of the information
concerning the other, except to the extent that it knows or has reason to
believe that such information is inaccurate.
Dated: November 25, 1992
TW ASSOCIATES, L.P.
By: KKR Associates
General Partner
By: /s/ Henry R. Kravis
--------------------------------
Title: General Partner
Name: Henry R. Kravis
KKR PARTNERS II, L.P.
By: KKR Associates
General Partner
By: /s/ Henry R. Kravis
--------------------------------
Title: General Partner
Name: Henry R. Kravis
KKR Associates
By: /s/ Henry R. Kravis
--------------------------------
Title: General Partner
Name: Henry R. Kravis
16
