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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _______)*
ORCHARD SUPPLY HARDWARE STORES CORPORATION
--------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
----------------------------------------------------
(Title of Class of Securities)
685691107
------------------------------------------
(CUSIP Number)
William M. Wardlaw
11100 Santa Monica Blvd., Suite 1900
Los Angeles, CA 90025 (310) 444-1822
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
December 29, 1993
------------------------------------------------------
(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 copes 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 1 of 46 SEC 1746 (12-91)
<PAGE>
SCHEDULE 13D
- ----------------------- ----------------------
CUSIP No. 685691107 Page 2 of 46 Pages
- ----------------------- ----------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
FS Equity Partners III, L.P., a Delaware limited partnership
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 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
3,213,023 (See Item 5)
OWNED BY
-------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -------------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,213,023 (See Item 5)
- --------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,213,023
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
43.1%
- --------------------------------------------------------------------------------
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. 685691107 Page 3 of 46 Pages
- ----------------------- ----------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
FS Equity Partners II, L.P., a California limited partnership
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -------------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,213,023 (See Item 5)
OWNED BY
-------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -------------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,213,023 (See Item 5)
- --------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,213,023
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
43.1%
- --------------------------------------------------------------------------------
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. 685691107 Page 4 of 46 Pages
- ----------------------- ----------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
Freeman Spogli & Co., a California general partnership
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -------------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,213,023 (See Item 5)
OWNED BY
-------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -------------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,213,023 (See Item 5)
- --------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,213,023
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
43.1%
- --------------------------------------------------------------------------------
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. 685691107 Page 5 of 46 Pages
- ----------------------- ----------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
FS Capital Partners, L.P., a California limited partnership
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -------------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,213,023 (See Item 5)
OWNED BY
-------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -------------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,213,023 (See Item 5)
- --------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,213,023
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
43.1%
- --------------------------------------------------------------------------------
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. 685691107 Page 6 of 46 Pages
- ----------------------- ----------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
FS Holdings, Inc., a California corporation
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -------------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,213,023 (See Item 5)
OWNED BY
-------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -------------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,213,023 (See Item 5)
- --------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,213,023
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
43.1%
- --------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- --------------------------------------------------------------------------------
*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. 685691107 Page 7 of 46 Pages
- ----------------------- ----------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
Bradford M. Freeman
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -------------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,213,023 (See Item 5)
OWNED BY
-------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -------------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,213,023 (See Item 5)
- --------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,213,023
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
43.1%
- --------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- --------------------------------------------------------------------------------
*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. 685691107 Page 8 of 46 Pages
- ----------------------- ----------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
Ronald P. Spogli
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -------------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,213,023 (See Item 5)
OWNED BY
-------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -------------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,213,023 (See Item 5)
- --------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,213,023
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
43.1%
- --------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- --------------------------------------------------------------------------------
*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. 685691107 Page 9 of 46 Pages
- ----------------------- ----------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
William M. Wardlaw
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -------------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,213,023 (See Item 5)
OWNED BY
-------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -------------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,213,023 (See Item 5)
- --------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,213,023
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
43.1%
- --------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- --------------------------------------------------------------------------------
*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. 685691107 Page 10 of 46 Pages
- ----------------------- ----------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
J. Frederick Simmons
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -------------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,213,023 (See Item 5)
OWNED BY
-------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -------------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,213,023 (See Item 5)
- --------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,213,023
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
43.1%
- --------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- --------------------------------------------------------------------------------
*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. 685691107 Page 11 of 46 Pages
- ----------------------- ----------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
John M. Roth
- --------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
SEC USE ONLY
3
- --------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- --------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- --------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF -0-
SHARES -------------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,213,023 (See Item 5)
OWNED BY
-------------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING -0-
PERSON -------------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,213,023 (See Item 5)
- --------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,213,023
- --------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
12 CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
43.1%
- --------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- --------------------------------------------------------------------------------
*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 Issuer.
This Schedule 13D relates to the Common Stock, $.01 par value per
share, CUSIP Number 685691107 (the "Common Stock"), of Orchard Supply
Hardware Stores Corporation, a Delaware corporation ("Issuer"), having its
principal executive offices at 6450 Via del Oro, San Jose, California
95119.
Item 2. Identity and Background.
A. Identity of Filing Persons. This Schedule 13D is filed on
behalf of FS Equity Partners III, L.P., a Delaware limited partnership
("FSEP III"), FS Equity Partners II, L.P., a California limited partnership
("FSEP II"), Freeman Spogli & Co., a California general partnership
("FS&Co."), FS Capital Partners, L.P., a California limited partnership
("Capital Partners"), FS Holdings, Inc., a California corporation
("Holdings"), Bradford M. Freeman ("Freeman"), Ronald P. Spogli ("Spogli"),
William M. Wardlaw ("Wardlaw"), J. Frederick Simmons ("Simmons") and John
M. Roth ("Roth") (FSEP III, FSEP II, FS&Co., Capital Partners, Holdings,
Freeman, Spogli, Wardlaw, Simmons and Roth are collectively referred to
hereinafter as the "Filing Persons"). Holdings is the general partner of
Capital Partners which is the general partner of FSEP III. Freeman,
Spogli, Wardlaw, Simmons and Roth are the directors, executive officers and
sole shareholders of Holdings. FS&Co. is the general partner of FSEP II.
Freeman, Spogli, Wardlaw, Simmons and Roth are the general partners of
FS&Co. The Filing Persons are members of a group.
Under the definition of "beneficial owner" ("Beneficial Owner
Definition") provided under Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Act"), FS&Co., Freeman, Spogli,
Wardlaw, Simmons and Roth may be deemed to beneficially own the shares of
Common Stock held by FSEP II by virtue of the fact that FS&Co., as the
general partner of FSEP II, and Freeman, Spogli, Wardlaw, Simmons and Roth,
as the general partners of FS&Co., share with FSEP II the voting and
dispositive power with respect to shares of Common Stock held or acquired
by FSEP II.
FSEP III has its principal business address and its principal
office at 11100 Santa Monica Boulevard, Suite 1900, Los Angeles, California
90025. FSEP III was formed to make private equity investments.
FSEP II has its principal business address and its principal
office at 11100 Santa Monica Boulevard, Suite 1900, Los Angeles, California
90025. FSEP II was formed by FS&Co. to make private equity investments.
FS&Co. has its principal business address and its principal
office at 11100 Santa Monica Boulevard, Suite 1900, Los Angeles, California
90025. FS&Co. is a Los Angeles-based merchant banking firm which organizes
the transactions in which FSEP II is the principal investor.
Capital Partners has its principal business address and its
principal office at 11100 Santa Monica Boulevard, Suite 1900, Los Angeles,
California 90025. Capital Partners was formed to organize and manage the
transactions in which FSEP III is the principal investor.
Page 12 of 46
<PAGE>
Holdings has its principal business address and its principal
office at 11100 Santa Monica Boulevard, Suite 1900, Los Angeles, California
90025. Holdings was formed to organize and manage the transactions in
which FSEP III is the principal investor.
Each of Freeman, Spogli, Wardlaw and Simmons has his business
address and his principal office at 11100 Santa Monica Boulevard, Suite
1900, Los Angles, California 90025. Roth has his business address and his
principal office at 599 Lexington Avenue, 18th Floor, New York, New York
10022. The principal occupation of each of Freeman, Spogli, Wardlaw,
Simmons and Roth is to serve as a general partner of FS&Co. and as a
director and executive officer of Holdings.
During the last five years, none of the Filing Persons have been
convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or was 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. Freeman, Spogli, Wardlaw, Simmons and Roth are each a citizen
of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
On December 29, 1993, FSEP III agreed to purchase, subject to
certain customary conditions, 800,000 shares of the 6% Cumulative
Convertible Preferred Stock of the Issuer (the "Preferred Stock"). The
purchase price for these shares is $19,400,000, which funds will be drawn
from the working capital of FSEP III. 325,000 shares of the Preferred
Stock have been designated "Series 1 Preferred Stock" and 475,000 shares
have been designated "Series 2 Preferred Stock." Shares of Series 1
Preferred Stock are convertible at any time at the option of the holder,
unless previously redeemed, into shares of Common Stock of the Issuer at an
initial conversion rate of 1.6 shares of Common Stock for each share of
Series 1 Preferred Stock, subject to adjustment upon certain circumstances.
The Series 2 Preferred Stock will be convertible upon the same terms and
conditions as the Series 1 Preferred Stock upon the approval by the
stockholders of the Issuer of an increase in the Issuer's authorized shares
of Common Stock in an amount sufficient to allow for full conversion of the
Series 2 Preferred Stock. Since the shares of Series 1 Preferred Stock are
convertible at any time at the option of the holder, each of the Filing
Persons may be deemed to be the beneficial owner of the 520,000 shares of
Common Stock that the Series 1 Preferred Stock is convertible into in
addition to the 2,693,023 shares of Common Stock currently held by FSEP II.
In May 1989, FSEP II purchased 901,680 shares of the Issuer's
Series A Preferred Stock, $.01 par value per share (the "Series A Preferred
Stock"), at a purchase price of $10.00 per share and 1,502,800 shares of
Common Stock at a purchase price of $8.33 per share. On April 6, 1993, the
Issuer paid a portion of the accrued but unpaid dividends on the Series A
Preferred Stock in additional shares of Series A Preferred Stock and then
amended its Certificate of Incorporation to reclassify its Series A
Preferred Stock into shares of Common Stock. As a result, FSEP II
currently holds an aggregate of 2,693,023 shares of Common Stock.
Page 13 of 46
<PAGE>
Item 4. Purpose of Transaction.
FSEP III and FSEP II have acquired the shares of Preferred Stock
and Common Stock, respectively, for investment purposes only. While there
are no current agreements or understandings to acquire any capital stock of
the Issuer, other than those arising out of their ownership of the
Preferred Stock and Common Stock, FSEP III and FSEP II continue to have an
interest in, and may hold discussions in the future concerning, the
acquisition, either directly from the Issuer or from existing stockholders,
of shares of the Issuer's Common Stock or securities convertible into such
shares, in each case only upon agreement as to mutually acceptable terms.
Subject to the foregoing and except for the arrangements
described in Items 5 and 6 hereof, neither FSEP III, FSEP II, FS&Co.,
Capital Partners, Holdings, Freeman, Spogli, Wardlaw, Simmons nor Roth
presently have any plans or proposals which relate to or would result in:
(a) The acquisition of additional securities, or disposition of
securities, of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
(c) The sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
(d) Any change in the present board of directors or management
of the Issuer, including any plans or proposals to change the number or
term of directors or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or
dividend policy of the Issuer;
(f) Any other material change in the Issuer's business or
corporate structure;
(g) Changes in the Issuer's charter, bylaws or instruments
corresponding thereto or any actions which may impede the acquisition of
control of the Issuer by any person;
(h) Causing any class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation of a registered national securities
association;
(i) A class of equity securities of the Issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4) of the Act; or
(j) Any similar action to any of those enumerated above.
Item 5. Interest in Securities of The Issuer.
(a) The percentages of outstanding Common Stock reported in this
Item 5(a) are based on the assumption that there are 6,929,973 shares of
Common Stock outstanding, which is the number of outstanding shares
Page 14 of 46
<PAGE>
reported by the Issuer in its Registration Statement No. 33-51437 on Form
S-1 as filed with the Securities and Exchange Commission on December 29,
1993.
As of December 29, 1993, each of the Filing Persons may be
deemed to be the beneficial owner of the 520,000 shares of Common Stock
that the shares of Series 1 Preferred Stock held by FSEP III will be
convertible into and the 2,693,023 shares of Common Stock held by FSEP II,
which in the aggregate represent approximately 43.1% of the outstanding
Common Stock. FSEP III, Capital Partners and Holdings disclaim beneficial
ownership of the shares of Common Stock held by FSEP II. FSEP II and
FS&Co. disclaim beneficial ownership of the shares of Common Stock issuable
upon conversion of the Preferred Stock to FSEP III.
(b) The responses of the Filing Persons to Items (7) through
(11) of the portions of the cover pages of this Schedule 13D which relate
to the shares of Common Stock beneficially owned are herein incorporated by
reference.
(c) As described in the response to Item 3 of this Schedule 13D,
on December 29, 1993, FSEP III agreed to purchase, subject to certain
customary conditions, 800,000 shares of Preferred Stock. The purchase
price for these shares is $19,400,000, which funds will be drawn from the
working capital of FSEP III. 325,000 shares of the Preferred Stock have
been designated "Series 1 Preferred Stock" and 475,000 shares have been
designated "Series 2 Preferred Stock." Shares of Series 1 Preferred Stock
are convertible at any time at the option of the holder, unless previously
redeemed, into shares of Common Stock of the Issuer at an initial
conversion rate of 1.6 shares of Common Stock for each share of Series 1
Preferred Stock, subject to adjustment upon certain circumstances. The
Series 2 Preferred Stock will be convertible upon the same terms and
conditions as the Series 1 Preferred Stock upon the approval by the
stockholders of the Issuer of an increase in the Issuer's authorized shares
of Common Stock in an amount sufficient to allow for full conversion of the
Series 2 Preferred Stock. Since the shares of Series 1 Preferred Stock are
convertible at any time at the option of the holder, each of the Filing
Persons may be deemed to be the beneficial owner of the 520,000 shares of
Common Stock that the Series 1 Preferred Stock is convertible into in
addition to the 2,693,023 shares of Common Stock currently held by FSEP II.
In May 1989, FSEP II purchased 901,680 shares of Series A
Preferred Stock at a purchase price of $10.00 per share and 1,502,800
shares of Common Stock at a purchase price of $8.33 per share. On April 6,
1993, the Issuer paid a portion of the accrued but unpaid dividends on the
Series A Preferred Stock in additional shares of Series A Preferred Stock
and then amended its Certificate of Incorporation to reclassify its
Series A Preferred Stock into shares of Common Stock. As a result, FSEP II
currently holds an aggregate of 2,693,023 shares of Common Stock.
(d) The partners in FSEP III have certain rights, pursuant to
the partnership agreement of FSEP III, to receive a portion of the
proceeds, if any, paid to FSEP III from the sale of securities. The
partners in FSEP II have certain rights, pursuant to the partnership
agreement of FSEP II, to receive a portion of the proceeds, if any, paid to
FSEP II from the sale of securities. No other person is known by the
Filing Persons to have the right to receive or the power to direct the
Page 15 of 46
<PAGE>
receipt of dividends from, or the proceeds from the sale of the Common
Stock beneficially owned by the Filing Persons.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of The Issuer.
The Filing Persons have executed a Joint Reporting Agreement
dated December 29, 1993, which is attached hereto as Exhibit 1 and
incorporated herein by reference, pursuant to which they have agreed to
file one joint statement of behalf of all of them with respect to the
subject matter of this Schedule 13D.
On December 29, 1993, the Issuer and FSEP III entered into a
Securities Purchase Agreement, which is attached hereto as Exhibit 2 and
incorporated herein by reference, which provides for FSEP III's acquisition
of 800,000 shares of Preferred Stock of the Issuer for a purchase price of
$19,400,000.
The Issuer and FSEP III will enter into a Registration Rights
Agreement, substantially in the form attached hereto as Exhibit 3 and
incorporated herein by reference, pursuant to which the Issuer will grant
to FSEP III certain rights to register the shares of Common Stock into
which the shares of Preferred Stock are convertible.
Capital Partners is the sole general partner of FSEP III under an
Amended and Restated Agreement of Limited Partnership dated as of
August 25, 1993, as amended (the "FSEP III Agreement"). The FSEP III
Agreement provides for the formation of FSEP III as a partnership to invest
the funds of the partnership in private equity investments. Capital
Partners, as general partner of FSEP III, has the exclusive right and power
to manage the business and affairs of the partnership, including the power
to purchase and dispose of the Common Stock owned by FSEP III. The general
partner and limited partners of FSEP III have certain rights to receive the
proceeds of the sales of securities, if any, in accordance with the FSEP
III Agreement. Holdings is the sole general partner of Capital Partners
and has the exclusive right and power to manage the business and affairs of
Capital Partners. Freeman, Spogli, Wardlaw, Simmons and Roth are the
directors, executive officers and sole shareholders of Holdings.
FS&Co. is the sole general partner of FSEP II under an Amended
and Restated Agreement of Limited Partnership dated as of June 17, 1988, as
amended (the "FSEP II Agreement"). The FSEP II Agreement provides for the
formation of FSEP II as a partnership to invest the funds of the
partnership in private equity investments. FS&Co., as general partner of
FSEP II, has the exclusive right and power to manage the business and
affairs of the partnership, including the power to purchase and dispose of
any securities of the Issuer owned by FSEP II. The general partner and
limited partners of FSEP II have certain rights to receive the proceeds of
the sales of securities, if any, in accordance with the FSEP II Agreement.
Freeman, Spogli, Wardlaw, Simmons and Roth are limited partners of FSEP II.
Freeman, Spogli, Wardlaw, Simmons and Roth are the sole general
partners of FS&Co. under an Amended and Restated General Partnership
Agreement dated as of September 6, 1990, as amended (the "FS&Co.
Page 16 of 46
<PAGE>
Agreement"). The FS&Co. Agreement provides for the formation of FS&Co. as
a general partnership to invest the funds of the partnership in private
equity investments. Freeman, Spogli, Wardlaw, Simmons and Roth, as the
sole general partners of FS&Co., have the exclusive right and power to
manage the business and affairs of FS&Co.
Item 7. Material to be Filed as Exhibits.
The Filing Persons file as exhibits the following:
Exhibit 1. Joint Reporting Agreement among FSEP III, FSEP II,
FS&Co., Capital Partners, Holdings, Freeman, Spogli, Wardlaw, Simmons and
Roth dated December 29, 1993 (appears at page 20).
Exhibit 2. Securities Purchase Agreement dated as of
December 29, 1993 by and between the Issuer and FSEP III (appears at page
23).
Exhibit 3. Form of Registration Rights Agreement by and between
the Issuer and FSEP III (appears at page 31).
Page 17 of 46
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: December 29, 1993
FS EQUITY PARTNERS III, L.P.,
a Delaware limited partnership
By: FS Capital Partners, L.P.
Its: General Partner
By: FS Holdings, Inc.
Its: General Partner
By: /s/ William M. Wardlaw
------------------------------
William M. Wardlaw
Title: Vice President and Secretary
FS EQUITY PARTNERS II, L.P.,
a California limited partnership
By: Freeman Spogli & Co.
Its: General Partner
By: /s/ William M. Wardlaw
--------------------------
William M. Wardlaw
Title: General Partner
FREEMAN SPOGLI & CO.,
a California general partnership
By: /s/ William M. Wardlaw
------------------------------
William M. Wardlaw
Title: General Partner
Page 18 of 46
<PAGE>
FS CAPITAL PARTNERS, L.P.,
a California limited partnership
By: FS Holdings, Inc.
Its: General Partner
By: /s/ William M. Wardlaw
-----------------------------
William M. Wardlaw
Title: Vice President and Secretary
FS HOLDINGS, INC.,
a California corporation
By: /s/ William M. Wardlaw
-----------------------------
William M. Wardlaw
Title: Vice President and Secretary
BRADFORD M. FREEMAN
/s/ Bradford M. Freeman
--------------------------
RONALD P. SPOGLI
/s/ Ronald P. Spogli
--------------------------
WILLIAM M. WARDLAW
/s/ William M. Wardlaw
--------------------------
J. FREDERICK SIMMONS
/s/ J. Frederick Simmons
--------------------------
JOHN M. ROTH
/s/ John M. Roth
--------------------------
Page 19 of 46
<PAGE>
JOINT REPORTING AGREEMENT
In consideration of the mutual covenants herein contained, each
of the parties hereto represents to and agrees with the other party as
follows:
(a) Such party is eligible to file a statement or statements on
Schedule 13D pertaining to the Common Stock, $.01 par value per share, of
Orchard Supply Hardware Stores Corporation, to which this agreement is an
exhibit, for filing of the information contained herein.
(b) Such party is responsible for timely filing of such
statement and any amendments thereto and for the completeness and accuracy
of the information concerning such party contained herein, provided that no
such party is responsible for the completeness or accuracy of the
information concerning the other parties making the filing, unless such
party knows or has reason to believe that such information is inaccurate.
(c) Such party agrees that such statement is filed by and on
behalf of each party and that any amendment thereto will be filed on behalf
of each such party.
This agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original instrument, but all of such
counterparts together shall constitute but one agreement.
Dated: December 29, 1993
FS EQUITY PARTNERS III, L.P.,
a Delaware limited partnership
By: FS Capital Partners, L.P.
Its: General Partner
By: FS Holdings, Inc.
Its: General Partner
By: /s/ William M. Wardlaw
-------------------------------
William M. Wardlaw
Title: Vice President and Secretary
EXHIBIT 1
Page 20 of 46
<PAGE>
FS EQUITY PARTNERS II, L.P.,
a California limited partnership
By: Freeman Spogli & Co.
Its: General Partner
By: /s/ William M. Wardlaw
-----------------------------
William M. Wardlaw
Title: General Partner
FREEMAN SPOGLI & CO.,
a California general partnership
By: /s/ William M. Wardlaw
-----------------------------
William M. Wardlaw
Title: General Partner
FS CAPITAL PARTNERS, L.P.,
a California limited partnership
By: FS Holdings, Inc.
Its: General Partner
By: /s/ William M. Wardlaw
----------------------------
William M. Wardlaw
Title: Vice President and Secretary
FS HOLDINGS, INC.,
a California corporation
By: /s/ William M. Wardlaw
----------------------------
William M. Wardlaw
Title: Vice President and Secretary
BRADFORD M. FREEMAN
/s/ Bradford M. Freeman
---------------------------------
Page 21 of 46
<PAGE>
RONALD P. SPOGLI
/s/ Ronald P. Spogli
---------------------------------
WILLIAM M. WARDLAW
/s/ William M. Wardlaw
---------------------------------
J. FREDERICK SIMMONS
/s/ J. Frederick Simmons
---------------------------------
JOHN M. ROTH
/s/ John M. Roth
---------------------------------
Page 22 of 46
<PAGE>
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT is entered into as of
December 29, 1993, by and among ORCHARD SUPPLY HARDWARE STORES CORPORATION,
a Delaware corporation ("Company"), and FS EQUITY PARTNERS III, L.P., a
California limited partnership (the "Purchaser").
In consideration of the mutual promises, covenants and conditions
set forth below, the parties hereby agree as follows:
1. DEFINITIONS.
1.1 "Agreement" and the words "herein," "hereof," "hereunder"
and words of similar import shall mean this Securities Purchase Agreement
as it may be amended, supplemented or otherwise modified from time to time.
1.2 "Closing Date" shall mean such date as shall be mutually
agreed upon by the parties hereto, but which in no event shall be any later
than May 30, 1994.
1.3 "Common Stock" shall mean any and all common stock, $.01
par value, of Company issued and issuable to Purchaser upon conversion of
the Preferred Stock.
1.4 "Governmental Actions" shall mean authorizations,
approvals, consents, waivers, exceptions, licenses, filings, registrations,
permits, notarizations, special leases and other requirements of any
Governmental Person.
1.5 "Governmental Person" shall mean any national, state or
local government, any political subdivision or any governmental,
quasi-governmental, judicial, public or statutory instrumentality,
authority, body or entity, including the Federal Deposit Insurance
Corporation, any central bank or any comparable authority.
1.6 "Governmental Rule" shall mean any law, rule, regulation,
ordinance, order, code, interpretation, judgment, decree, directive,
guideline, policy or similar form of decision of any Governmental Person.
1.7 "Lien" shall mean (a) any lien, charge, mortgage, deed of
trust, security interest, pledge, equity, claim, easement, right of way,
covenant, condition or restriction, assignment of revenues or rights or
encumbrance of any kind; (b) the interest of a vendor or lessor under a
conditional sale agreement, capital lease or other title retention
agreement; or (c) any agreement to give, or any notice reflecting, any of
the foregoing.
EXHIBIT 2
Page 23 of 46
<PAGE>
1.8 "Material Adverse Effect" shall mean a material adverse
effect on the business or financial condition of Company and its
subsidiaries, taken as a whole.
1.9 "Operative Documents" shall mean this Agreement and the
Registration Rights Agreement.
1.10 "Orchard Supply" shall mean Orchard Supply Hardware
Corporation, a Delaware corporation and Subsidiary of the Company.
1.11 "Person" shall mean any corporation, trust, partnership,
individual, association, or other entity.
1.12 "Preferred Stock" shall mean the Series 1 Stock and the
Series 2 Stock.
1.13 "Purchase Price" shall mean $19,400,000.
1.14 "Securities" shall mean the Common Stock and the Preferred
Stock.
1.15 "Registration Rights Agreement" shall mean that certain
Registration Rights Agreement by and between Company and Purchaser.
1.16 "Series 1 Stock" shall mean the 325,000 shares of 6%
Cumulative Convertible Preferred Stock, Series 1, $.01 par value, of
Company to be issued to the Purchaser pursuant to this Agreement.
1.17 "Series 2 Stock" shall mean the 475,000 shares of 6%
Cumulative Convertible Preferred Stock, Series 2, $.01 par value, of
Company to be issued to the Purchaser pursuant to this Agreement.
2. AUTHORIZATION AND ISSUANCE OF THE SECURITIES.
2.1 Authorization. Subject to the terms and conditions
contained herein, Company has authorized the filing with the Delaware
Secretary of State of a Certificate of Designation substantially in the
form of the draft attached hereto as Exhibit A (the "Certificate of
Designation"), has reserved 520,000 shares of Common Stock for issuance
upon the conversion of the Series 1 Stock and will, upon obtaining the
stockholder approval to increase the number of authorized shares of Common
Stock as set forth in Section 7.1 hereof, reserve 760,000 shares of Common
Stock for issuance upon the conversion of the Series 2 Stock. Prior to the
Closing Date, Company will file the Certificate of Designation with the
Delaware Secretary of State.
2.2 Purchase and Sale. Subject to the terms and conditions
contained herein, Company agrees to sell to Purchaser, and Purchaser agrees
to purchase from Company, the Preferred Stock. The execution and delivery
of the Registration Rights Agreement and the closing of the sale and
purchase of the Preferred Stock (the "Closing") will take place at the
offices of Riordan & McKinzie, 300 South Grand Ave., Suite 2900,
Page 24 of 46
<PAGE>
Los Angeles, California 90071 at 10:00 a.m. on the Closing Date, or at such
time and place as the parties may agree. At the Closing, Company will
deliver to Purchaser the Preferred Stock, registered in Purchaser's name,
against payment of the Purchase Price by certified check, by wire transfer
of immediately available funds, or by any combination of the foregoing.
3. CONDITIONS OF PURCHASER'S OBLIGATIONS.
The obligation of Purchaser to purchase from Company the
Preferred Stock and to consummate the transactions contemplated on the
Closing Date is subject to the satisfaction on or before the Closing Date
of the following conditions, all or any of which may be waived in writing
by Purchaser; provided, however, that satisfaction of Article 3 shall not
be a condition precedent to the Purchaser's obligation to purchase the
Preferred Stock after the consummation by Orchard Supply of the sale of
Senior Notes pursuant to that certain Registration Statement No. 33-51437
(the "Senior Note Offering").
3.1 Representations and Warranties. The representations and
warranties in Article 5 shall be true and correct in all material respects
at and as of the Closing Date as though then made, except to the extent of
changes caused by the transactions expressly contemplated herein.
3.2 No Material Adverse Effect. There shall have been no
Material Adverse Effect since the date of this Agreement in respect of the
business, condition or prospects, financial or otherwise, or assets of the
Company, and the Company shall not have suffered any loss (whether or not
insured) as a result of any legislative or regulatory change, revocation of
any license or rights to do business, fire, explosion, accident, casualty,
labor trouble, flood, drought, riot, storm, condemnation or act of God or
other public force or otherwise, which has a Material Adverse Effect.
4. CONDITIONS OF COMPANY'S OBLIGATIONS.
The obligation of Company to issue the Preferred Stock to
Purchaser and to enter into this Agreement is subject to the satisfaction
on or before the Closing Date of the following conditions, all or any of
which may be waived in writing by Company:
4.1 Representations and Warranties. The representations and
warranties in Article 6 shall be true and correct at and as of the Closing
Date as though then made, except to the extent of changes caused by the
transactions expressly contemplated herein.
4.2 Delivery of Purchase Price. Purchaser shall have tendered
to Company the Purchase Price.
Page 25 of 46
<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF COMPANY.
Company represents and warrants that:
5.1 Corporate Existence and Power. Company is a corporation
duly incorporated, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, has full corporate power and
authority required to carry on its business as now conducted and proposed
to be conducted and is in good standing and duly licensed or qualified to
transact business in each other jurisdiction necessary to carry on its
present business and operations except where the failure to be so licensed
or qualified would not have a Material Adverse Effect.
5.2 New Issue Shares. The Preferred Stock has been duly
authorized and, when issued as contemplated hereby at the Closing, will be
validly issued, fully paid and non-assessable. There are no preemptive
rights or other rights to subscribe for or to purchase any shares of
Preferred Stock pursuant to the Company's certificate of incorporation,
bylaws or other governing documents or any agreement or other instrument to
which the Company or Orchard Supply is a party or by which either of them
may be bound (collectively, "Preemptive Rights"). Upon issuance, the
Preferred Stock will have the rights, preferences and limitations set forth
in the Certificate of Designation. Upon conversion of the Preferred Stock
into shares of Common Stock, such shares of Common Stock will have been
duly authorized, validly issued and fully paid and non-assessable and not
subject to any Preemptive Rights.
5.3 Corporate and Governmental Action; No Contravention. The
execution, delivery and performance by Company of the Operative Documents
and the consummation of the transactions contemplated by such documents are
within the corporate power and authority of Company and have been duly
authorized by all necessary corporate action on the part of Company and do
not and will not require any Governmental Actions other than any that have
already been undertaken and do not contravene, or constitute a default
under, any provision of any applicable Governmental Rule or of the
Certificate of Incorporation or bylaws of Company or of any agreement,
judgment, injunction, order, decree or other instrument binding upon
Company or result in the creation or imposition of any Lien on any assets
of Company.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to and agrees with Company
that:
6.1 Investor Representations.
The Purchaser is purchasing the Preferred Stock pursuant to this
Agreement not with a view to or in connection with a distribution or resale
of any of such securities in violation of any applicable securities laws.
Purchaser acknowledges that such securities may bear appropriate legends.
Purchaser (i) is familiar with the business of the Company; (ii) has had an
Page 26 of 46
<PAGE>
opportunity to discuss with representatives of the Company the condition of
and prospects for the continued operation and financing of the Company and
such other matters as Purchaser has deemed appropriate in considering
whether to invest in the Preferred Stock; and (iii) has been provided
access to all available information about the Company requested by
Purchaser.
6.2 Partnership and Governmental Action; No Contravention.
The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein: (i) are within
Purchaser's partnership power and authority; (ii) have been duly authorized
by all necessary action on its part; (iii) do not and will not require any
Governmental Actions other than any that have already been undertaken; and
(iv) do not contravene, or constitute a default under, any provision of any
applicable Governmental Rule or of the Agreement of Limited Partnership of
Purchaser or of any agreement, judgment, injunction, order, decree or other
instrument binding upon Purchaser.
7. MISCELLANEOUS.
7.1 Use of Proceeds. The Company shall, unless Purchaser
consents in writing prior to any other use, invest the Purchase Price as
common equity in Orchard Supply, which shall use such proceeds to redeem
all of its outstanding 14.5% Senior Subordinated Discount Notes. Pending
such redemption, Orchard Supply may use the invested funds for general
corporate purposes.
7.2 Stockholder Approval. The Company agrees to (i) seek, and
use its best efforts to obtain, approval of its stockholders at its 1994
Annual Meeting of Stockholders to amend the Company's charter to authorize
the issuance of additional shares of Common Stock in an amount at least
sufficient to allow the conversion of all outstanding shares of Series 2
Stock and (ii) use its best efforts to cause such meeting to be held on or
before June 14, 1994. Freeman Spogli & Co., as general partner of FS
Equity Partners II, L.P. ("FSEP II"), agrees to cause all shares of Common
Stock which it has the power to vote to be voted in favor of such amendment
and further agrees not to permit the transfer of any shares of Common Stock
held by FSEP II without obtaining the agreement, reasonably acceptable to
Company, of the transferee or transferees to vote in favor of such
amendment. Promptly upon receipt of such approval, the Company will file a
listing application with the Nasdaq National Market with respect to shares
of Common Stock issuable upon such conversion and will file a Notification
Form for Listing of Additional Shares with the National Association of
Securities Dealers, Inc. with respect to such shares.
7.3 Registration Rights Agreement. On or prior to the
consummation of the Senior Note Offering, the Company shall have executed
and delivered to Purchaser or its counsel the Registration Rights
Agreement, which agreement shall be effective as of the Closing Date.
7.4 Consent to Amendments. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended and
Page 27 of 46
<PAGE>
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if it has obtained the written
consent of Purchaser; provided, however, that any amendment after the
consummation of the Senior Note Offering but prior to the Closing Date
shall also require the written consent of Lehman Brothers Inc. No course
of dealing between Company and the holder of any Security issued pursuant
to this Agreement or any delay in exercising any rights hereunder or under
Company's certificate of incorporation will operate as a waiver of any
rights of any such holder.
7.5 Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by any
party in connection herewith will survive the execution and delivery of
this Agreement, regardless of any investigation made by Purchaser or on
behalf of Purchaser.
7.6 Successors and Assigns. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement
by or on behalf of any of the parties hereto shall bind and inure to the
benefit of the respective successors and assigns of the parties hereto
whether so expressed or not.
7.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original,
any one of which need not contain the signatures of more than one party,
but all such counterparts when taken together shall constitute a single
instrument.
7.8 Notices. Except as otherwise provided herein, any notice
or demand which, by the provisions hereof, is required or which may be
given to or served upon the parties hereto shall be in writing and, if by
telegram, telecopy or telex, shall be deemed to have been validly served,
given or delivered when sent, if by personal delivery, shall be deemed to
have been validly served, given or delivered upon actual delivery and, if
mailed, shall be deemed to have been validly served, given or delivered
three business days after deposit in the United States mails, as registered
or certified mail, with proper postage prepaid and addressed to the party
or parties to be notified, at the following addresses (or such other
address(es) as a party may designate for itself by like notice):
If to Company: Orchard Supply Hardware Stores
Corporation
6450 Via Del Oro
San Jose, California 95119
Attention: President
If to Purchaser: FS Equity Partners III, L.P.
c/o Freeman Spogli & Co.
11100 Santa Monica Boulevard
Suite 1900
Los Angeles, California 90025
Attention: J. Frederick Simmons
Page 28 of 46
<PAGE>
7.9 Governing Law. This Agreement shall be governed by the
laws of California, without regard to conflicts of laws principles.
7.10 Specific Performance. Each party's obligation under this
Agreement is unique. If any party should default in its obligations under
this Agreement, the parties each acknowledge that it would be extremely
impracticable to measure the resulting damages; accordingly, the
nondefaulting party, in addition to any other available rights or remedies,
may sue in equity for specific performance and the parties each expressly
waive the defense that a remedy in damages will be adequate.
Page 29 of 46
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their proper and duly authorized
officers or representatives as of the date first written above.
COMPANY:
ORCHARD SUPPLY HARDWARE
STORES CORPORATION,
a Delaware corporation
By: /s/ STEPHEN M. HILBERG
------------------------------
Name: Stephen M. Hilberg
Title: Vice President-Finance
and Chief Financial
Officer
PURCHASER:
FS EQUITY PARTNERS III, L.P.
By: FS CAPITAL PARTNERS, L.P.,
General Partner
By: FS HOLDINGS, INC.
General Partner
By: /s/ J. FREDERICK SIMMONS
-----------------------------
Name: J. Frederick Simmons
Title: Vice President
and Treasurer
Acknowledged and accepted as to Section 7.2 of this Agreement
imposing obligations on Freeman Spogli & Co.
FREEMAN SPOGLI & CO.
By: /s/ J. FREDERICK SIMMONS
----------------------------
Name: J. Frederick Simmons
Title: General Partner
Page 30 of 46
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of __________, 1994 by and between Orchard Supply Hardware
Stores Corporation, a Delaware corporation (the "Company"), and FS Equity
Partners III, L.P., a California limited partnership (the "Purchaser").
This Agreement is made pursuant to the Purchase Agreement, dated
as of December 29, 1993 (the "Purchase Agreement"), between the Company and
the Purchaser. In order to induce the Purchaser to enter into the Purchase
Agreement, the Company has agreed to provide the registration rights set
forth in this Agreement. This Agreement shall be effective as of the
Closing Date (as defined in the Purchase Agreement).
The parties hereby agree as follows:
1. Definitions
Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
Advice: See the last paragraph of Section 4 hereof.
Common Stock: The common stock, par value $.01 per share, of the
Company.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Preferred Shares: The 800,000 shares of the Company's 6%
Cumulative Convertible Preferred Stock being issued and sold pursuant
to the Purchase Agreement.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the
Securities Act) in the form contained in such Registration Statement
at the time it became effective, except that if the final prospectus
for use in connection with an offering of Restricted Securities
differs from the form of prospectus included as part of the
Registration Statement at the time it was declared effective, then
such final prospectus, as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion
of the Restricted Securities covered by such Registration Statement
and all other amendments and supplements to the Prospectus, including
post-effective amendments and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
EXHIBIT 3
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Registration Expenses: See Section 5 hereof.
Registration Statement: Any registration statement of the
Company which covers any of the Restricted Securities pursuant to the
provisions of this Agreement, including the Prospectus, any amendments
and supplements to such registration statement, including post-
effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such
registration statement.
Restricted Securities: Any and all Preferred Shares and any and all
shares of Common Stock (including any and all shares issued or issuable
upon the conversion of the Preferred Shares), upon original issuance
thereof and at all times subsequent thereto, owned by the Purchaser or its
affiliates, or their successors and assigns, until, as to each such
Preferred Share and share of Common Stock, (i) it has been effectively
registered under the Securities Act and disposed of in accordance with the
Registration Statement covering it or (ii) it is distributed pursuant to
Rule 144 (or any similar provisions then in force) under the Securities
Act.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
Shelf Registration: See Section 3 hereof.
Special Counsel: Such law firm, if any, as may be designated by
the holders of the majority of the Restricted Securities.
2. Securities Subject to this Agreement
(a) Restricted Securities. The securities entitled to the
benefits of this Agreement are the Restricted Securities.
3. Demand Registration
(a) Upon the written request of a holder of Restricted Securities,
the Company shall be obligated to effect the registration under the Act of the
Restricted Securities, all in accordance with the following provisions of this
Agreement; provided, however, that the obligation of the Company to effect such
registration shall not be deemed to have been satisfied until the registration
statement with respect thereto has become effective under the Act and only so
long as no stop order suspending the effectiveness of the registration statement
or the qualification or registration of any of the Restricted Securities for
sale in any jurisdiction in which the Company shall be required pursuant to
Section 5(i) to register or qualify such Restricted Securities shall not have
been issued and no proceedings for that purpose shall have been initiated or
threatened by the Commission or any similar state agency.
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(b) Whenever the Company shall be requested pursuant to Section 3(a)
to effect the registration of Restricted Securities under the Act, the Company
shall, as provided in Section 5, effect the registration under the Act of the
Restricted Securities which the Company has been requested to register pursuant
to Section 3(a), all to the extent requisite to permit the disposition by
Purchaser of the Restricted Securities so registered.
(c) If the holder of Restricted Securities, requesting registration
of Restricted Securities pursuant to Section 3(a), advises the Company that it
intends to publicly offer or distribute Restricted Securities to be covered by
the Registration Statement pursuant to a firm commitment underwriting with an
investment banking firm or firms selected by such holder and approved by the
Company, such approval not to be unreasonably withheld, the Company shall enter
into the same underwriting agreement with such underwriter or underwriters as
shall such holder, containing representations, warranties and agreements not
substantially different from those customarily made by an issuer in underwriting
agreements with respect to secondary distributions.
(d) The Company shall not be obligated to effect a registration
under Section 3(a): (i) during the period starting with the date 30 days
prior to the Company's good faith estimated date of filing of, and ending
on a date 180 days following the effective date of, a Registration
Statement pertaining to an underwritten public offering of securities for
the account of the Company; provided, however, that the Company is actively
endeavoring in good faith to cause such Registration Statement to become
effective and that the Company's estimate of the date of filing such
Registration Statement is made in good faith; or (ii) if the Company is
engaged in or contemplating a material financing or acquisition which, in
the good faith opinion of the Company's Board of Directors as set forth in
a resolution, would be materially adversely affected by the exercise of the
rights set forth in Section 3(a); provided, however, that the Company shall not
be entitled to delay the registration for more than 120 days in reliance on this
clause (d)(ii) and that the Company is actively endeavoring in good faith to
consummate such material financing or acquisition. The Company shall be not
entitled to claim the benefits of this Section 3(d) if the Company had
previously invoked it within the prior 60 days.
4. "Piggyback" Registrations
(a) If the Company at any time, from time to time, proposes to
file with the Commission a Registration Statement under the Act (other than
a registration statement on Form S-4 or S-8, or any form substituting
therefore, or filed in connection with an exchange offer) relating to any
of its equity securities, it will at each such time give written notice to
each holder of Restricted Securities of its intention so to do. Upon the
written request of a holder, the Company will use its best efforts to cause each
Registrable Security which the Company has been requested to register by such
holder to be included in such Registration Statement under the Act, all to the
extent required to permit the sale or other disposition by such
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holder of the Restricted Securities so registered. Notwithstanding the
foregoing, if the managing underwriter or underwriters, if any, of the offering
to be effected pursuant to such Registration Statement delivers a written
opinion to such holder that the total number of shares of Common Stock which it
and any other persons or entities intend to include in such offering would
adversely affect the success of such offering, then the number of Restricted
Securities to be offered for the account of such holder shall be reduced to the
extent necessary to reduce the total number of shares of Common Stock to be
included in such offering to the number recommended by such managing underwriter
or excluded in their entirety, as the case may be; provided, however, that if
the number of Restricted Securities to be offered for the account of such holder
shall be reduced in accordance with this sentence, the Company shall not be
permitted to include in such registration securities of the Company other than
(i) securities to be issued by the Company but only if such registration is an
underwritten primary registration on behalf of the Company, (ii) up to the full
number of Restricted Securities and securities of any other persons or entities
exercising similar registration rights requested to be included in such
registration in excess of the number of securities the Company proposes to sell
which, in the opinion of such managing underwriter, can be sold (allocated pro
rata between the holders of Restricted Securities and such other persons or
entities on the basis of the total amount of Restricted Securities and such
other securities requested or intended to be included in such registration, and
pro rata among such holders of Restricted Securities and other persons or
entities, respectively, on the basis of the number of securities requested to be
included therein by each such holder); provided, however, that if the other
persons requested to be included in such registration are exercising rights
granted pursuant to a Warrant to Purchase Shares of Common Stock of Orchard
Holding Corporation (the "Warrant") issued pursuant to the Note Purchase
Agreement dated as of October 15, 1992, then all such shares requested to be
included by such person must be included prior to including any Restricted
Securities, so long as the requesting holder is part of the "Control Group" (as
defined in the Warrant) and (iii) shares of Common Stock held by holders
exercising the first demand registration right granted to them by the Company
with respect to such shares. In the event that the contemplated distribution
does not involve an underwritten public offering, such determination that the
inclusion of such Restricted Securities shall adversely affect the success of
the offering shall be made by the Company in its reasonable discretion.
(b) If all or substantially all of the securities (other than
the Restricted Securities) to be registered for sale pursuant to a Registration
Statement, the intention to file which caused a notice to be given pursuant to
Section 4(a), are to be offered for sale for the account of the Company and are
to be distributed by or through an underwriter or underwriters of recognized
standing pursuant to underwriting terms appropriate for such transactions, then
each holder of Restricted Securities agrees that if such holder has made a
request to register Restricted Securities pursuant to Section 4(a), such holder
shall forbear from selling Restricted Securities to the public (except as part
of such underwritten registration) for a period
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of 5 business days prior to and 90 days following the effective date of the
registration statement to which reference is made in Section 4(a).
5. Registration Procedures
In connection with the registration obligations of the Company
pursuant to and in accordance with the provisions of Sections 3 and 4 of
this Agreement, the Company shall effect such registrations to permit the
sale of such Restricted Securities in accordance with the intended method
or methods of disposition thereof, and pursuant thereto the Company shall
as expeditiously as possible:
(a) prepare and file with the SEC, as soon as practicable,
a Registration Statement or Registration Statements on any appropriate form
under the Securities Act, which form shall be available for the sale of the
Restricted Securities by the holders thereof in accordance with the
intended method or methods of distribution thereof, and use its best
efforts to cause each such Registration Statement to become effective and
remain effective as provided herein; provided, however, that before filing
a Registration Statement or Prospectus or any amendments or supplements
thereto, including documents incorporated or deemed to be incorporated
therein by reference, the Company shall furnish to Special Counsel and to
any holder which has requested a copy of the same, copies of all such
documents proposed to be filed (excluding exhibits unless otherwise
requested), which documents will be subject to the review of Special
Counsel and any such holders, and the Company shall not file any such
Registration Statement or amendment thereto or any Prospectus or any
supplement thereto (including such documents which, upon filing, would be
incorporated or deemed to be incorporated by reference therein) to which
the holders of a majority of the Restricted Securities covered by such
Registration Statement shall reasonably object on a timely basis; provided,
however, that the Company shall be entitled in all events to take such
actions which, in the opinion of counsel for the Company are required to
comply with applicable law;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period; cause the related Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the Securities
Act; and comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement
as so amended or to such Prospectus as so supplemented;
(c) notify the selling holders of Restricted Securities and
their Special Counsel, promptly, and (if requested by any such Person)
confirm such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment related to such Restricted
Securities has been filed, and, with respect to a Registration Statement or
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any post-effective amendment related to such Restricted Securities, when
the same has become effective, (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related Prospectus
or for additional information, (iii) of the issuance by the SEC of any stop
order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) of the receipt by the
Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Restricted
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose, (v) of the happening of any event which
makes any statement made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue or which requires the making of any changes in
a Registration Statement or related Prospectus so that such documents will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or, in the case of a
Prospectus, necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (vi) of the
Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate;
(d) use every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement, or the
lifting of any suspension of the qualification (or exemption from
qualification) of any of the Restricted Securities for sale in any
jurisdiction, at the earliest possible moment;
(e) if requested by the holders of a majority of the
Restricted Securities, as promptly as practicable (i) incorporate in a
Prospectus supplement or post-effective amendment such information as such
holders agree should be included therein as may be required by applicable
law, (ii) make all required filings of such Prospectus supplement or such
post-effective amendment as promptly as is reasonably practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment, and (iii) supplement or
make amendments to any Registration Statement if requested by the holders
of a majority of the Restricted Securities covered by such Registration
Statement; provided, however, that the Company shall not be required to
take any actions in this Section 5(e) which are not, in the opinion of
counsel for the Company, in compliance with applicable law;
(f) upon request of a selling holder of Restricted
Securities, furnish to such selling holder of Restricted Securities,
without charge, a copy of the Registration Statement or Registration
Statements and any post-effective amendment thereto, including financial
statements and schedules, all documents incorporated therein by reference
and all exhibits (including those incorporated by reference), at the
earliest practicable time under the circumstances before the filing of such
documents with the SEC;
(g) furnish to each selling holder of Restricted Securities
and Special Counsel, without charge, at least one conformed copy of the
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Registration Statement or Registration Statements and any post-effective
amendment thereto, including financial statements and schedules, all
documents incorporated therein by reference or deemed incorporated therein
by reference and all exhibits, if requested (including those previously
furnished or incorporated by reference), at the earliest practicable time
under the circumstances after the filing of such documents with the SEC;
(h) deliver to each selling holder of Restricted Securities
and its Special Counsel, without charge, as many copies of the Prospectus
or Prospectuses (including each preliminary prospectus) and any amendment
or supplement thereto as such holder may reasonably request; the Company
consents to the use of such Prospectus or any amendment or supplement
thereto by each of the selling holders of Restricted Securities in
connection with the offering and sale of the Restricted Securities covered
by such Prospectus or any amendment or supplement thereto;
(i) prior to any public offering of Restricted Securities,
to register or qualify or cooperate with the selling holders of Restricted
Securities, the underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Restricted Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions as any
seller or underwriter reasonably requests in writing; keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Restricted Securities covered by
the applicable Registration Statement; provided, however, that the Company
will not be required to (a) qualify generally to do business in any
jurisdiction where it is not then so qualified or (b) take any action which
would subject it to general service of process in any such jurisdiction
where it is not then so subject;
(j) cooperate with the selling holders of Restricted
Securities to facilitate the timely preparation and delivery of
certificates representing Restricted Securities after the same have been
sold pursuant to a Registration Statement, which certificates shall not
bear any restrictive legends;
(k) use its best efforts to cause the Restricted Securities
covered by the applicable Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
reasonably necessary to enable the seller or sellers thereof to consummate
the disposition of such Restricted Securities;
(l) upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi) above, prepare a supplement or post-effective
amendment to the applicable Registration Statement or a supplement to the
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Restricted Securities being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or omit
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to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading;
(m) use its best efforts to cause all Restricted Securities
covered by such Registration Statement to be (i) listed on each securities
exchange, if any, on which similar securities issued by the Company are
then listed, or (ii) authorized to be quoted on the National Association of
Securities Dealers Automated Quotation System ("Nasdaq") or the National
Market of Nasdaq if the securities so qualify;
(n) provide a CUSIP number for each of the Restricted
Securities not later than the effective date of the Initial Shelf
Registration; and
(o) use its best efforts to comply with all applicable
rules and regulations of the SEC and make generally available to its
securityholders earning statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder no later than
45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) commencing on the
first day of the first fiscal quarter of the Company after the effective
date of a Registration Statement, which statements shall cover said
12-month periods.
The Company may require each seller of Restricted Securities as
to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Restricted Securities as the
Company may from time to time reasonably request in writing and the Company
may exclude from such registration the Restricted Securities if any holder
fails to furnish such information within a reasonable time after receiving
such request.
Each holder of Restricted Securities agrees by acquisition of
such Restricted Securities that, upon receipt of any notice from the
Company of the happening of any event of the kind described in
Section 5(c)(ii)-(vi) hereof, such holder will forthwith discontinue
disposition of such Restricted Securities covered by such Registration
Statement or Prospectus until such holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(l) hereof, or
until it is advised in writing (the "Advice") by the Company that the use
of the applicable Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated or deemed to be
incorporated by reference in such Prospectus.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company including, without
limitation, (i) all registration and filing fees, including fees and
expenses incurred in connection with compliance with securities or Blue Sky
laws and determination of the eligibility of the Restricted Securities for
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investment under the laws of such jurisdictions, in each case, as the
holders of a majority of the Restricted Securities may designate, subject
to the limitations set forth herein, (ii) printing expenses (including
expenses of printing certificates for the Restricted Securities and of
printing prospectuses), (iii) messenger, telephone and delivery expenses,
(iv) fees and disbursements of counsel for the Company and Special Counsel
for the sellers of the Restricted Securities, and (v) fees and expenses of
all other Persons retained by the Company (all such expenses being herein
called "Registration Expenses"), shall be borne by the Company whether or
not any of the Registration Statements becomes effective. The Company
shall, in any event, pay the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the Restricted
Securities pursuant to Section 5(m) hereof and the fees and expenses of any
Person, including special experts, retained by the Company.
7. Indemnification
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless each holder of Restricted Securities and each
Person who controls such holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) against any losses,
claims, damages, liabilities or expenses, joint or several, to which such
holder or such controlling person may become subject under the Securities
Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof as contemplated below) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any preliminary prospectus,
the Prospectus or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state in any of them a
material fact required to be stated therein or necessary to make the
statements in any of them not misleading, or arise out of or are based in
whole or in part on any failure of the Company to perform its obligations
hereunder or under law; and will reimburse, to the extent and subject to
the limitations and conditions set forth below, each holder and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by such holder or such controlling person in connection
with investigating, defending, settling, compromising or paying any such
loss, claim, damage, liability, expense or action; provided, however, that
the Company will not be liable in any such case (i) to the extent that any
such loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any preliminary prospectus,
the Prospectus or any amendment or supplement thereto in reliance upon and
in conformity with the information furnished to the Company in writing by
such holder expressly for use therein, or (ii) if the Company has advised
such holder of an event described in Section 5(c)(v) or (vi) and such loss,
claim, damage, liability or expense is caused solely by such holder having
sold Restricted Securities notwithstanding such notice prior to receipt of
a supplement or amended prospectus pursuant to Section 5(1) and the
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omission or misstatement was caused by such event and corrected in the
supplement or amended prospectus; provided further, however, that the
Company shall not be liable in any such case to the extent that any such
losses, claims, damages, liabilities or expenses arise out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any preliminary prospectus if (i) such holder failed to
send or deliver a copy of the Prospectus with or prior to the delivery of
written confirmation of the sale of Restricted Securities to the person
asserting such Loss who purchased such Restricted Securities which are the
subject thereof and (ii) the Prospectus would have corrected such untrue
statement or omission or alleged untrue statement or alleged omission. In
addition to its other obligations under this Section 7(a), the Company
agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based
upon any statement or omission, or any alleged statement or omission, or
failure to perform its obligations hereunder, all as described in this
Section 7(a), they will reimburse each holder (and, to the extent
applicable, each controlling person) on a quarterly basis for all
reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the Company's
obligation to reimburse each holder (and, to the extent applicable, each
controlling person) for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is
so held to have been improper, each holder (and, to the extent applicable,
each controlling person) shall promptly return it to the Company together
with interest, compounded daily, determined on the basis of the prime rate
(or other commercial lending rate for borrowers of the highest credit
standing) announced from time to time by Bank of America NT&SA, San
Francisco, California (the "Prime Rate"). Any such interim reimbursement
payments which are not made to a holder (and, to the extent applicable,
each controlling person) within 30 days of a request for reimbursement,
shall bear interest at the Prime Rate from the date of such request. This
indemnity agreement will be in addition to any liability which the Company
may otherwise have. The Company shall also indemnify underwriters, dealer
managers and similar securities industry professionals participating in the
distribution and each Person who controls such Persons (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) to
the same extent as provided above, and subject to the same obligation to
repay the Company as provided above, with respect to the indemnification of
the holders of Restricted Securities. The Company shall in no event be
liable for any losses, damages, costs or expenses relating to or arising
out of any settlement effected without the Company's written consent (which
shall not be unreasonably withheld).
(b) Indemnification by Holders of Restricted Securities.
In connection with any Registration Statement in which any holder of
Restricted Securities is participating, such holder of Restricted
Securities shall furnish to the Company in writing such information as the
Company reasonably requests for use in connection with any Registration
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Statement or Prospectus and agrees to indemnify the Company, each of its
directors, each of its officers who signed the Registration Statement and
each Person who controls the Company (within the meaning of Section 15 of
the Securities Act and Section 20 of the Exchange Act), against any losses,
claims, damages, liabilities or expenses to which the Company or any such
director, officer or controlling person may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
holder), insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof as contemplated below) arise out of or are
based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus, or any amendment or supplement thereto, in
reliance upon and in conformity with the information furnished to the
Company in writing by such holder expressly for use therein; and will
reimburse the Company, or any such director, officer or controlling person
for any legal and other expense reasonably incurred by the Company or any
such director, officer or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action. In addition to its other
obligations under this Section 7(b), each holder severally agrees that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, described in this
Section 7(b) which relates to information furnished to the Company in
writing by such holder expressly for use therein, it will reimburse the
Company (and, to the extent applicable, each officer, director or
controlling person) on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding, notwithstanding
the absence of a judicial determination as to the propriety and
enforceability of the holder's obligation to reimburse the Company (and, to
the extent applicable, each officer, director or controlling person) for
such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. To the extent
that any such interim reimbursement payment is so held to have been
improper, the Company (and, to the extent applicable, each officer,
director or controlling person) shall promptly return it to the holder
together with interest, compounded daily, determined on the basis of the
Prime Rate. Any such interim reimbursement payments which are not made to
the Company (and, to the extent applicable, each officer, director or
controlling person) within 30 days of a request for reimbursement, shall
bear interest at the Prime Rate from the date of such request. This
indemnity agreement will be in addition to any liability which such holder
may otherwise have. In no event shall the liability of any selling holder
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of Restricted Securities hereunder be greater in amount than the dollar
amount of the proceeds (net of payment of all expenses) received by such
holder upon the sale of the Restricted Securities giving rise to such
indemnification obligation. The Company (and, to the extent applicable,
each officer, director or controlling person) shall be entitled to receive
indemnities from underwriters, dealer managers and similar securities
industry professionals participating in the distribution to the same extent
as provided above with respect to information so furnished in writing by
such Persons expressly for use in any Prospectus or Registration Statement.
(c) Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party under this Section of notice of the
commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
for contribution or otherwise than under the indemnity agreement contained
in this Section or to the extent it is not prejudiced as a proximate result
of such failure. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified
party; provided, however, if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party
shall have been advised by legal counsel that there may be a conflict
between the positions of the indemnifying party and the indemnified party
in conducting the defense of any such action or that there may be legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party,
the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties.
Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval
by the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with
the defense thereof unless (i) the indemnified party shall have employed
such counsel in connection with the assumption of legal defenses in
accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for
the expenses of more than one separate counsel representing the indemnified
parties who are parties to such action) or (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after
notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
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<PAGE>
(d) Contribution. If the indemnification provided for in
this Section 7 is required by its terms but is for any reason (other than
as provided above) held to be unavailable to or otherwise insufficient to
hold harmless an indemnified party under subsections (a), (b) or (c) in
respect of any losses, claims, damages, liabilities or expenses referred to
herein, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein in such
proportion as is appropriate to reflect the relative fault of the Company
and the holders in connection with the statements or omissions or
inaccuracies in the representations and warranties herein which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of the Company and
the holders 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 the Company or the holders and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable
by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include, subject to the
limitations set forth in subsection (c) of this Section 7, any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth
in subsection (c) of this Section 7 with respect to notice of commencement
of any action shall apply if a claim for contribution is to be made under
this subsection (d); provided, however, that no additional notice shall be
required with respect to any action for which notice has been given under
subsection (c) for purposes of indemnification. The Company and the
holders agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined solely by pro rata allocation
(even if the holders were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to in this subsection. Notwithstanding the
provisions of this subsection (d), an indemnifying party which is a selling
holder of Restricted Securities shall not be required to contribute any
amount in excess of the amount by which the total price at which the
Restricted Securities sold by such indemnifying party and distributed to
the public were offered to the public exceeds the amount of any damages
which such indemnifying party 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 misrepresentation (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.
8. Miscellaneous
(a) Remedies. In the event of a breach by the Company of
any of its obligations under this Agreement, each holder of Restricted
Securities, in addition to being entitled to exercise all rights granted by
law, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
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<PAGE>
compensation for any loss incurred by reason of a breach by it of any of
the provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.
(b) Actions Affecting Restricted Securities. The Company
agrees to act in good faith with respect to its obligations hereunder and
the Company shall not take any action, or fail to take such action which
has the primary effect of materially adversely affecting the rights of
holders of Restricted Securities hereunder.
(c) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the
written consent of holders of a majority of the Restricted Securities.
Whenever a waiver, modification, supplement or amendment hereof is sought,
with respect to the Restricted Securities, only the person legally entitled
to vote with respect to a Restricted Security shall be entitled to vote
thereon.
(d) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telex, telecopier, or overnight air courier
guaranteeing next day delivery:
If to Company: Orchard Supply Hardware Stores
Corporation
6450 Via Del Oro
San Jose, California 95119
Attention: President
If to Purchaser: FS Equity Partners III, L.P.
c/o Freeman Spogli & Co.
11100 Santa Monica Boulevard
Suite 1900
Los Angeles, California 90025
Attention: J. Frederick Simmons
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back if telexed; when receipt acknowledged, if telecopied; and the
next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
(e) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of
the parties, including without limitation, subsequent holders of Restricted
Securities; provided that each successor shall have signed a supplement
hereto agreeing to be bound by the provisions hereof.
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<PAGE>
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Governing Law and Submission to Jurisdiction. THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAWS PERTAINING
TO CONFLICTS OF LAWS) OF THE STATE OF CALIFORNIA.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their best efforts to find
and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such which may be
hereafter declared invalid, void or unenforceable.
(j) Entire Agreement. This Agreement, together with the
other documents to which the parties hereto are parties, is intended by the
parties as a final expression of their agreement and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There
are no restrictions, promises, warranties or undertakings, other than those
set forth or referred to herein, with respect to the registration rights
granted by the Company with respect to the securities sold pursuant to the
Purchase Agreement. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(k) Attorneys' Fees. In any action or proceeding brought
to enforce any provision of this Agreement, or where any provision hereof
is validly asserted as a defense, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to its costs and expenses
and any other available remedy.
(l) Securities Held by the Company or Its Affiliates.
Whenever the consent or approval of holders of a specified percentage of
Restricted Securities is required hereunder, Restricted Securities held by
the Company or any of its affiliates (as such term is defined in Rule 405
under the Securities Act) shall not be counted in determining whether such
consent or approval was given by the holders of such required percentage.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
COMPANY:
ORCHARD SUPPLY HARDWARE STORES
CORPORATION
By: _________________________________
Name:
Title:
PURCHASER:
FS EQUITY PARTNERS III, L.P.
By: FS CAPITAL PARTNERS, L.P.,
General Partner
By: FS HOLDINGS, INC.
General Partner
By: ____________________________
Name:
Title:
LPS\RM\ORCHARD\COMMON.STK
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