UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
EMPIRE OF CAROLINA, INC.
(Name of Issuer)
Common Stock, par value $0.10 per share
(Title of Class of Securities)
292007101
(CUSIP Number)
EDWIN C. LAURENSON, ESQ.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
(212) 373-3000
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
June 17, 1997
(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 to this Schedule 13D, and is filing this
schedule because of Rule 13d-(b)(3) or (4), check the following box [ ].
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2
CUSIP No. 292007101
1 NAME OF REPORTING PERSON
James J. Pinto
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OR ORGANIZATION
DELAWARE
7 SOLE VOTING POWER
NUMBER OF 2,736,752
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 2,736,752
REPORTING 10 SHARED DISPOSITIVE POWER
PERSON -0-
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,078,252
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.34%
14 TYPE OF REPORTING PERSON
IN
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3
CUSIP No. 292007101
1 NAME OF REPORTING PERSON
TelCom Partners L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [X]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OR ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF 562,500
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH 562,500
REPORTING 10 SHARED DISPOSITIVE POWER
PERSON -0-
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
562,500
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.85%
14 TYPE OF REPORTING PERSON
PN
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4
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This statement relates to the common stock, par value $.10 per share
("Common Stock"), of Empire of Carolina, Inc., a Delaware corporation (the
"Company"). The address of the Company's principal executive office is 5150
Linton Boulevard, Delray Beach, Florida 33484. The shares of Common Stock that
are the subject of this statement are issuable upon conversion into Common Stock
of shares of the Company's Series A Preferred Stock, par value $.01 per share
(the "Series A Preferred Stock"), initially at a conversion rate of one share of
Common Stock for each $1.25 Stated Amount of Series A Preferred Stock, and
warrants (the "Warrants") to purchase shares of Common Stock at a price of
$1.325 per share, subject to adjustment in certain instances.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is filed jointly by James J. Pinto and TelCom
Partners L.P., a limited partnership ("TelCom") of which James J. Pinto is the
sole general partner.
James J. Pinto is President of Private Finance Group Corp., 235
Sunrise Avenue, Palm Beach Florida 33480, whose principal business address is
also at that location. TelCom is an investment partnership with the same
address. Mr. Pinto's present principal occupation is to act as a private
investor. Mr. Pinto is a citizen of the United States. TelCom is a limited
partnership organized under the laws of the State of Delaware.
The response to Items 2(d) and (e) of Schedule 13D is negative with
respect to Mr. Pinto and TelCom.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The total original purchase price for the Series A Preferred Stock
and Warrants owned by Mr. Pinto and TelCom was $1,250,000. Such amount was
provided by Mr. Pinto from his personal funds as a capital contribution to HPA
Associates, LLC ("HPA") in connection with the purchase by HPA of a $2,500,000
bridge note (the "Bridge Note") on May 6, 1997 pursuant to the Securities
Purchase Agreement (as further described in Item 4). 1,352,752 of the Warrants
now held directly by Mr. Pinto, and all 62,500 Warrants held by TelCom, were
issued at the time of HPA's purchase of the Bridge Note and were transferred to
Mr. Pinto and TelCom, at HPA's direction, at the time of the closing of the
Additional Investment under the Securities Purchase Agreements. The Series A
Preferred Stock held by
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Mr. Pinto (24,500 shares) and by TelCom (62,500 shares) was obtained by them at
the direction of HPA, upon HPA's conversion of the Bridge Note into Series A
Preferred Stock at the closing of the Principal Financing under the Securities
Purchase Agreement. In connection with the Additional Investment, Mr. Pinto
agreed, through HPA, to the reallocation of 38,000 shares of Series A Preferred
Stock and 38,000 Warrants to other investors, which shares and Warrants were
transferred to the Company for reissuance to such other investors in return for
total consideration to Mr. Pinto, payed by such other investors, of $380,000.
See Exhibit 6 to this Statement. In addition, in connection with the Additional
Investment under the Securities Purchase Agreement, HPA was entitled to receive
1,250,000 Warrants, 625,000 of which were issued directly to Mr. Pinto without
receipt of additional consideration.
ITEM 4. PURPOSE OF TRANSACTION.
The purpose of the transaction was to provide funds necessary to
finance the Company's continued operation, to strengthen the Company's
management and to make a profitable investment.
The text of Item 5 of the Company's filing on Form 8-K, filed on
June 30, 1997, is hereby incorporated herein by reference (and attached hereto)
to describe the components of the transaction pursuant to which the Series A
Preferred Stock and Warrants were issued by the Company. In addition to the
matters described therein, pursuant to the Securities Purchase Agreement
described therein the Company has committed to cause its certificate of
incorporation to be amended to provide that the Company's Board of Directors
shall consist of no more than eight persons, as specified from time to time by
the Company's Board of Directors. Pursuant to the Subscription Agreement that
governed the purchase of Series A Preferred Stock and Warrants in the private
placement thereof, the purchasers of Series A Preferred Stock are obligated to
vote, and have granted a proxy over their shares to Mr. Pinto and Charles S.
Holmes (who is, with Mr. Pinto, also a Managing Director of HPA) to vote (the
"Proxy"), their Shares of Series A Preferred Stock in favor of such proposal. In
addition, Mr. Pinto intends to vote the shares of Series A Preferred Stock held
by him and TelCom in favor of such proposal.
The Certificate of Designation of the Series A Preferred Stock
provides that any expansion of the Company's Board of Directors beyond five must
be approved by the holders of the Series A Preferred Stock. Following the
closing of the purchase of the Bridge Note under the Securities Purchase
Agreement, Charles S. Holmes and Lenore Schupak were named directors of the
Company (Ms. Schupak at HPA's request but to serve as an independent director of
the Company), and Mr. Holmes was appointed to a committee made up of Mr. Holmes
and Steven A. Geller, then Chairman and Chief Executive Officer of then Company,
that was given the responsibility for the approval of expenditures by the
Company. Mr. Holmes was elected Chairman of the Company's Board of Directors,
replacing Steven A. Geller in
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that office, on June 24, 1997. In addition, prior to the execution of the
Securities Purchase Agreement, the Company approved a general plan to reduce its
costs and expenses by approximately $8 million substantially in a form that had
been proposed by HPA. It is also anticipated that, at the Company's annual
meeting of the stockholders, the holders of Company's Series A Preferred Stock
will be asked to approve an expansion of the number of the Company's directors
to six and that Mr. Pinto will be nominated to be elected to the Board of
Directors. Mr. Pinto intends to vote his shares of Series A Preferred Stock held
by him and TelCom in favor of such increase in board size and in favor of his
election as a director.
The Company does not currently have available sufficient shares of
Common Stock to issue such shares to all persons who are entitled thereto upon
the conversion of currently outstanding preferred stock and exercise of the
Warrants. Accordingly, the Company has agreed to propose, at its next annual
meeting of stockholders, an increase in the number of shares of Common Stock
authorized for issuance to 60,000,000 shares. Pursuant to the Proxy, purchasers
of Series A Preferred Stock in the Private Placement are required to vote such
shares in favor of such increase in authorized Common Stock, and Mr. Pinto
expects to vote the shares of Series A Preferred Stock held by him and TelCom in
favor of such increase.
Also in connection with the Securities Purchase Agreement, the
Company amended its Rights Agreement to permit investments by HPA and affiliates
thereof, as described in the answer to Item 5 of the Company's current report on
Form 8-k filed on May 8, 1997, which is attached hereto and incorporated herein
by reference.
Other than as set forth above or in the materials incorporated
herein by reference, Mr. Pinto and TelCom have no plans with respect to any
matter specified in Item 4 of Schedule 13D or any similar action to those
enumerated therein.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Mr. Pinto has the right to acquire 196,000 shares, and TelCom
has the right to acquire 500,000 shares, of Common Stock at any time upon
conversion of all or any portion of the 24,500 and 62,500 shares of Series A
Preferred Stock held respectively by them. In addition, Mr. Pinto and TelCom
have the respective rights, as owners of Warrants, to acquire all or any portion
of 1,982,752 and 62,500 shares of Common Stock at a price of $1.375 per share at
any time prior to the expiration of the Warrants on May 6, 2003. Accordingly,
based upon calculations made in accordance with Rule 13d-3(d) and information
provided by the Company that 7,653,564 shares of Common Stock are currently
outstanding, Mr. Pinto has sole voting and/or dispositive power over the
equivalent of 2,736,752 shares of Common Stock (or 26.34% of the Common Stock),
and TelCom has sole voting and/or dispositive power over the equivalent of
562,500 shares of Common Stock (or 6.85% of the Common Stock). There are
currently 1,600,000 shares of Series A
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Preferred Stock outstanding, with respect to which Mr. Pinto has voting and
dispositive power over 87,000 shares (or 5.44% of the class) (including TelCom's
shares) and TelCom has voting and dispositive power over 62,500 shares (or 3.91%
of the class). The currently outstanding shares of Series A Preferred Stock may
be converted into 12,800,000 shares of Common Stock, with the result that Mr.
Pinto has voting power, when the currently outstanding Series A Preferred Stock
is combined with the currently outstanding Common Stock, over 3.41% of the
combined classes and TelCom has voting power over 2.45% of the combined classes.
(b) Mr. Pinto has sole power to vote and dispose of the Series A
Preferred Stock and Warrants held by him and by TelCom, in the latter case on
behalf of TelCom, which also has the sole power, acting through Mr. Pinto as
general partner, to vote and dispose of all Warrants and Shares of Series A
Preferred Stock held by it.
In addition, with respect to matters governed by the Proxy
only, Mr. Pinto shares with Charles S. Holmes the right to vote 1,138,000 shares
of Series A Preferred Stock, which confer voting power over the equivalent of
9,104,000 shares of Common Stock. Calculated in accordance with Rule 13d-3(d),
such shares constitute 54.33% of the class of Common Stock; and such shares
possess 44.51% of the combined voting power held by all currently outstanding
shares of Common Stock and Series A Preferred Stock. Mr. Pinto disclaims any
other beneficial ownership over such shares and disclaims any agreement,
arrangement or understanding to act jointly with Mr. Holmes except with respect
to voting the shares of Series A Preferred Stock governed by the Proxy in favor
of the matters that are the subject thereof.
(c) See Items 3 and 4 above.
Paragraphs (d) and (e) of Item 5 of Schedule 13D are not applicable
to this filing.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
See Items 3 and 4 above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Certificate of Designation relating to Series A Preferred Stock,
incorporated by reference to the Company's filing on Form 8-K, dated June 30,
1997.
2. Certificate of Designation relating to Series C Preferred Stock,
incorporated by reference to the Company's filing on Form 8-K, dated June 30,
1997.
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8
3. Form of Warrant Certificate to purchase common stock of the
Company, issued May 6, 1997, incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1997.
4. Warrant Amendment dated as of May 6, 1997 to Warrant Certificate
issued May 6, 1997 among the Company, HPA and EMP Associates, LLC ("EMP"),
incorporated by reference to the Company's filing on Form 8-K, dated June 30,
1997.
5. Warrant Agreement dated as of June 17, 1997 between the Company
and the holders from time to time of the Warrants, incorporated by reference to
the Company's filing on Form 8-K, dated June 30, 1997.
6. First Amendment dated as of May 5, 1997 to Rights Agreement,
dated as of September 11, 1996 between the Company and American Stock Transfer
Company as Rights Agents incorporated by reference to the Company's filing on
Form 8-K, dated May 8, 1997.
7. Second Amendment dated as of June 12, 1997, to Rights Agreement,
dated as of September 11, 1996, between the Company and American Stock Transfer
& Trust Company as Rights Agent, incorporated by reference to the Company's
filing on Form 8-K, dated June 30, 1997.
8. Form of Promissory Note from the Company to Smedley
Industries, Inc. Liquidating Trust in the amount of $2,500,000, incorporated by
reference to the Company's filing on Form 8-K, dated June 30, 1997.
9. Securities Purchase Agreement dated as of May 5, 1997 among the
Company, HPA and EMP, incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 1997.
10. Amendment No. 1 dated as of June 5, 1997 to Securities Purchase
Agreement dated as of May 5, 1997 among the Company, HPA and EMP, incorporated
by reference to the Company's filing on Form 8-K, dated June 30, 1997.
11. Buddy L Settlement Agreement, dated as of June 17, 1997 between
the Company and Smedley Industries, Inc. Liquidating Trust, incorporated by
reference to the Company's filing on Form 8-K, dated June 30, 1997.
12. Letter of the Company to Pellinore Securities Corp., Axiom
Capital Management, Inc., and Commonwealth Associates, Inc., regarding the
registration rights provisions affecting the Series A Preferred Stock,
incorporated by reference to the Company's filing on Form 8-K, dated June 30,
1997.
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13. Buddy L Registration Rights Agreement dated as of June 17, 1997
between the Company and Smedley Industries, Inc. Liquidating Trust, incorporated
by reference to the Company's filing on Form 8-K, dated June 30, 1997.
14. WPG Registration Rights Agreement dated as of June 17, 1997
between the Company and WPG Corporate Development Associates IV, L.P., WPG
Corporate Development Associates IV (Overseas), Ltd., Weiss, Peck & Greer, as
trustee under Craig Whiting IRA, Peter B. Pfister, Weiss, Peck & Greer, as
Trustee under Nora Kerppola IRA, Westpool Investment Trust Plc. Eugene M.
Matalene, Jr., Richard Hochman, and Glenbrook Partners, L.P. (collectively, the
"WPG-Affiliated Entities), incorporated by reference to the Company's filing on
Form 8-K, dated June 30, 1997.
15. WPG Release Agreement dated as of June 17, 1977 between the
Company and the WPG-Affiliated Entities, incorporated by reference to the
Company's filing on Form 8-K, dated June 30, 1997.
16. Warrant Allocation Agreement, dated as of May 24, 1997, by
and between HPA, EMP, Pellinore Securities Corp. and Axiom Capital Management,
Inc.
17. Warrant Allocation Letter, dated June 3, 1997, between HPA
and Commonwealth Associates, Inc.
18. Designation Letter dated June 18, 1997 relating to the issuance
of Series A Preferred Stock and Warrants at the direction of HPA.
19. Letter Agreement dated June 18, 1997 between the Company,
Commonwealth Associates, Inc. and HPA with regard an allocation of 38,000 shares
of Preferred Stock and 38,000 Warrants to customers purchasing shares of Series
A Preferred Stock and Warrants in private placement.
20. Form of Supplement to Subscription Agreement, setting forth
the Proxy.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in the statement is true, complete and correct.
Date: June 30, 1997
/s/ James J. Pinto
-------------------------------
James J. Pinto
TELCOM PARTNERS L.P.
/s/ James J. Pinto
-------------------------------
James J. Pinto
General Partner
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EXHIBIT INDEX
Exhibit No.
The Company's Response to Item 5 of Form 8-K, filed May 8, 1
1997.
The Company's Response to Item 5 of Form 8-K, filed June 30, 2
1997.
Warrant Allocation Agreement, dated as of May 24, 3
1997, by and between HPA, EMP, Pellinore Securities
Corp. and Axiom Capital Management, Inc.
Warrant Allocation Letter, dated June 3, 1997, between HPA 4
and Commonwealth Associates, Inc.
Designation Letter dated June 18, 1997, relating to the 5
issuance of Series A Preferred Stock and Warrants at the
direction of HPA.
Letter Agreement dated June 18, 1997 between the Company, 6
Commonwealth Associates, Inc. and HPA with regard an
allocation of 38,000 shares of Preferred Stock and 38,000
Warrants to customers purchasing shares of Series A
Preferred Stock and Warrants in private placement.
Form of Supplement to Subscription Agreement 7
Joint Filing Agreement 8
EXHIBIT 1
ITEM 5. OTHER EVENTS.
On May 8, 1997, the Registrant issued the press release attached hereto
as Exhibit 99, which press release is hereby incorporated by reference herein,
announcing the execution of a definitive securities purchase agreement with
private investors to invest up to $16 million for newly issued convertible
preferred stock, the funding by such private investors of a short-term $5
million bridge loan, the adoption of an amendment to the Registrant's
Stockholder Rights Agreement to facilitate such investment and certain related
matters. The American Stock Exchange has advised the Company that the proposed
transaction does not require stockholder approval under applicable Exchange
rules. The First Amendment to the Registrant's Stockholder Rights Agreement is
attached hereto as Exhibit 4.6, and is hereby incorporated by reference herein.
EXHIBIT 2
ITEM 5. OTHER EVENTS.
On June 17, 1997, pursuant to a Securities Purchase Agreement
dated as of May 5, 1997, as amended by Amendment No. 1 to the Securities
Purchase Agreement, dated as of June 5, 1997 (the "Securities Purchase
Agreement"), among Empire of Carolina, Inc., a Delaware corporation (the
"Company"), HPA Associates, LLC ("HPA") and EMP Associates, LLC ("EMP"),
the Company issued to HPA, EMP and other accredited investors (as defined
in Rule 501 under the Securities Act of 1933, as amended) ("Accredited
Investors") 1,100,000 shares of the Company's Series A preferred stock,
$.01 par value per share, $10 face value per share (the "Series A
Preferred Stock") and 5,000,000 warrants to purchase shares of the
Company's common stock, $.10 par value per share (the "Common Stock") (the
"Principal Investment"). On June 18, 1997, the Company issued to HPA and
other Accredited Investors an additional 500,000 shares of the Series A
Preferred Stock and an additional 2,500,000 warrants (the "Additional
Investment"). The investors in the Principal Investment and Additional
Investment are collectively referred to herein as the "Purchasers". The
total shares of Series A Preferred Stock issued to Purchasers in
connection with the foregoing was 1,600,000 and the total number of
warrants issued was 7,500,000. The total gross proceeds from the sale of
such securities was $16,000,000 (the "Purchase Price"). $5,000,000 of the
Purchase Price was non-cash consideration represented by the conversion of
$5 million of 12% bridge notes funded by HPA and EMP in May 1997 in
connection with the execution of the Securities Purchase Agreement.
The Series A Preferred Stock is convertible into Common Stock at
an initial conversion price of $1.25 per share (subject to adjustment in
certain circumstances) and the exercise price per share of the warrants is
$1.375 per share (subject to adjustment in certain circumstances). The
Series A Preferred Stock has the right, as a class of stock of the
Company, to designate two directors and is entitled to vote on all matters
presented to stockholders on an as if converted basis. Purchasers also
received certain registration rights. The Certificate of Designation
relating to the Series A Preferred Stock, the Warrant Amendment to Warrant
Certificate, the related Warrant Agreement, and the Letter of the Company
regarding the registration rights and provisions affecting the Series A
Preferred Stock are being filed herewith as Exhibits 3.5, 4.7, 4.8, and
10.43, respectively, and are incorporated herein by reference.
Pursuant to the Securities Purchase Agreement, all closing
conditions set forth in the Securities Purchase Agreement were met or
waived prior to the Principal Investment, including the following:
o The Company's 9% convertible debentures issued to
affiliates of Weiss, Peck & Greer in the original
principal amount of $15 million were exchanged by the
holders thereof for newly-issued shares of Series C
Preferred Stock of the Company with an aggregate Stated
Value (as defined) of $15 million. Such holders also
released, among other things, their claims to accrued
and unpaid interest, fees and expenses. Each share of
Series C Preferred Stock is
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convertible at any time, at the option of the holder
thereof, into fully paid and nonassessable shares of
Common Stock at a rate of one share of Common Stock for
each $2.00 of Stated Value of Series C Preferred Stock
(subject to adjustment in certain circumstances). Except
as otherwise expressly provided in the Charter or the
By-laws of the Company, the Certificate of Designation
relating to the Series C Preferred Stock, or as may
otherwise be required by law, the Series C Stockholders,
by virtue of their ownership thereof, have no voting
rights. The Certificate of Designation relating to the
Series C Preferred Stock, the WPG Release Agreement and
the WPG Registration Rights Agreement are being filed
herewith as Exhibits 3.6, 10.45 and 10.46, respectively,
and are incorporated herein by reference.
o The successor to the seller under the Company's
agreement to purchase the assets of Buddy L waived or
released the claim to certain earn out, price protection
and registration rights in exchange for: (i) $100,000 in
cash; (ii) 250,000 shares of Common Stock of the
Company; (iii) a $2.5 million 9% note from the Company's
major subsidiary, and guaranteed by the Company,
providing for $625,000 principal payments on the first
four anniversaries of the closing date of the Preferred
Stock Investment (which note includes certain
affirmative and negative covenants which could in
certain circumstances accelerate payments with respect
to such note); and (iv) certain other benefits,
including registration rights. The Buddy L Settlement
Agreement, the Buddy L Promissory Note and the Buddy L
Registration Rights Agreement are being filed herewith
as Exhibits 10.42, 4.10 and 10.44, respectively, and are
incorporated herein by reference.
o The bank lenders under the Company's Credit Agreement
were to have agreed to certain amendments to the Credit
Agreement as a closing condition. This condition was
waived by HPA. The Company's senior lenders agreed,
however, to extend the May 31, 1997 deadline for receipt
of $6 million of additional equity financing to June 30,
1997 (which deadline was satisfied upon the closing of
the Principal Investment), and have orally advised the
Company that they will agree to the adoption of a
proposed amendment to the Credit Agreement to convert
the current portion of the term loan to a one year and a
day obligation and have agreed to engage in further
discussions with the Company following the completion of
the Principal Investment.
On June 12, 1997, the Company and American Stock Transfer & Trust
Company, a New York corporation, as Rights Agent (the "Rights Agent"),
adopted the Second Amendment (the "Second Amendment") to the Rights
Agreement dated as of September 11, 1996 (the "Rights Agreement") between
the Company and the Rights Agent, as amended by the First Amendment
thereto dated as of May 5, 1997. The Second Amendment, among other things,
amends the definition of "Acquiring Person" in Section 1(a) of the Rights
Agreement to base the 15% threshold specified therein on the aggregate
number of "Fully- Diluted Common Shares" (as defined in the Second
Amendment) of the Company. The
<PAGE>
Second Amendment is attached as Exhibit 4.9 hereto, and is incorporated
herein by reference.
On June 19, 1997, the Company issued the press release attached
hereto as Exhibit 99.1, which press release is hereby incorporated by
reference herein, announcing the closing of the Principal Investment and
the Additional Investment.
As of May 23, 1997, the Company had 7,403,564 shares of Common
Stock outstanding. Immediately following the closing of the Additional
Investment, the Company had 7,653,564 shares of Common Stock outstanding
and the Purchasers in the aggregate represent approximately 63% of the
total voting power on matters presented to the Company's stockholders, in
each case without giving effect to the exercise of any warrants, stock
options or other derivative securities issued by the Company. If all of
the Series A Preferred Stock and Series C Preferred Stock issued pursuant
to the Securities Purchase Agreement were converted, all outstanding
warrants and stock options were exercised and all authorized shares of
Common Stock under the Company's employee benefit plans were issued, the
Purchasers in the aggregate would represent approximately 53% of the total
voting power on matters presented to the Company's stockholders. However,
to the knowledge of the Company, immediately following the consummation of
the Additonal Investment, no Purchaser beneficially owns securities
representing 10% or more of the voting power on matters to be presented to
the Company's stockholders or would have such voting power on a
fully-diluted basis.
On June 24, 1997, the Company issued the press release attached
hereto as Exhibit 99.2, which press release is hereby incorporated by
reference herein, announcing the election of Charles S. Holmes to replace
Steve Geller as Chairman of the Board of Directors of the Company.
In addition to the securities offered in connection with the
Principal Investment and Additional Investment, the Company intends to
offer for sale 500,000 additional shares of Series A Preferred Stock and
500,000 warrants to purchase shares of Common Stock) at an initial
exercise price of $1.375 per share. In connection with the sale of such
additional securities, an additional 2,000,000 warrants to purchase shares
of Common Stock will be allocated as follows: 750,000 warrants to the
placement agents who place the additional securities in addition to a 6%
cash commission payable upon closing of the sale of such additional
securities and 1,250,000 warrants to HPA. The additional securities will
be offered pending and conditioned upon receiving stockholder approval.
The offering of such additional securities will have a significant
dilutive effect upon stockholders of the Company, including the
Purchasers. There can be no assurance that the sale of such additional
securities will be approved by the stockholders or consummated. Reference
is made to Amendment No. 1 to the Securities Purchase Agreement filed as
Exhibit 10.41 hereto for additional information regarding the sale of such
additional securities, which exhibit is incorporated herein by reference.
<PAGE>
The foregoing descriptions of documents are summaries that do not
purport to be complete and are qualified in their entirety by reference to
the actual terms and provisions of such documents filed as exhibits
hereto.
EXHIBIT 3
EXECUTION VERSION
WARRANT ALLOCATION AGREEMENT
Agreement dated as of June 5, 1997 by and between HPA Associates,
LLC ("HPA"), EMP Associates LLC ("EMP"), Pellinore Securities Corp.
("Pellinore") and Axiom Capital Management Inc. ("Axiom") (Pellinore and Axiom
hereinafter being collectively referred to as the "Pellinore Placement Agents"),
in connection with the placement of $6,000,000 of Series A Preferred Stock
("Series A Preferred Stock") to be issued by Empire of Carolina, Inc.
("Empire").
HPA and EMP are parties to a Securities Purchase Agreement with
Empire dated as of May 5, 1997 (as it may be amended from time to time, the
"Securities Purchase Agreement"). Defined terms used in this Agreement that are
not otherwise defined have the meanings given to them in the Securities Purchase
Agreement. Pursuant to the Securities Purchase Agreement and Empire's exercise
of the option to obtain the Additional Financing specified thereunder, and
subject to the terms and conditions thereof, HPA and EMP have agreed to
purchase, or identify purchasers for, $11,000,000 of Series A Preferred Stock
(including Series A Preferred Stock to be acquired upon conversion of the Notes
issued in the Bridge Financing, as defined below) at the closing of the
Permanent Financing.
In conjunction with the sale of the Series A Preferred Stock and the
provision of earlier financing, effective May 6, 1997 (the "Bridge Financing"),
pursuant to which HPA and EMP purchased the Notes of and from Empire, HPA and
EMP received 5,000,000 Warrants to purchase common stock of Empire at a price of
$1.375 per share (the "Initial Warrants").
<PAGE>
2
HPA, EMP and the Pellinore Placement Agents desire to allocate the
Initial Warrants, in the manner herein provided, upon the occurrence of the
Permanent Financing.
Now, therefore, in consideration of the premises, the parties hereto
hereby agree as follows:
1. ALLOCATION OF INITIAL WARRANTS TO EMP.
1.1 Provided that, pursuant to the Securities Purchase
Agreement, HPA's and EMP's right to retain the Initial Warrants is not forfeited
as a result of a failure of the Permanent Financing to occur under the
circumstances specified in Section 2.2.1.3 of the Securities Purchase Agreement,
upon the closing of the Permanent Financing EMP shall be entitled to retain
841,734 of the Initial Warrants.
1.2 The Pellinore Placement Agents shall undertake, in
accordance with a placement agency agreement to be entered into between them and
Empire (as further described in Section 3), to use their best efforts to obtain
purchasers for $6,000,000 stated amount of Series A Preferred Stock (the
"Pellinore Placement"). A total of 600,000 Initial Warrants ("Incentive
Warrants") shall be sold to purchasers pursuant to the Pellinore Placement,
allocated at the ratio of 100 Warrants for each $1,000 of stated amount of
Series A Preferred Stock purchased. If HPA or any Pellinore Placement Agent (or
any affiliated party of any of them) purchases Series A Preferred Stock in the
Pellinore Placement for its own account, such purchaser shall be entitled to
receive the same allocation of Incentive Warrants as any other purchaser of
Series A Preferred Stock in the Pellinore Placement.
<PAGE>
3
1.3 In addition, the Pellinore Placement Agents shall be
entitled to be reallocated Initial Warrants, out of those held by HPA, in
connection with the Pellinore Placement at the rate of 56,377 Initial Warrants
("Further Warrants") for each $1,000,000 stated amount of Series A Preferred
Stock placed by them, PROVIDED that Series A Preferred Stock shall not be deemed
to have been placed by the Pellinore Placement Agents to the extent that HPA
Referred Parties (as defined in Section 1.4) purchase, together with purchases,
if any, by HPA, Charles S. Holmes or James J. Pinto (the "HPA Parties") acting
as principals, more than $2,000,000 of Series A Preferred Stock in the Pellinore
Placement.
1.4 The HPA Parties shall refer potential purchasers ("HPA
Referred Parties") of Series A Preferred Stock to the Pellinore Placement Agents
until such time as HPA Referred Parties have committed to purchase at least
$2,000,000 stated amount of Series A Preferred Stock through the Pellinore
Placement Agents, PROVIDED that the Pellinore Placement Agents shall not be
required to accept such referrals. The Pellinore Placement Agents acknowledge,
however, that no warranty of any kind is offered by the HPA Parties that any
such referrals will lead to the placement of shares of Series A Preferred Stock
to HPA Referred Parties. The Pellinore Placement Agents shall be entitled to
receive all placement agency fees payable and Further Warrants to be reallocated
in connection with such placements of Series A Preferred Stock to HPA Referred
Parties, PROVIDED that the Pellinore Placement Agents acknowledge that HPA
Referred Parties may be represented by securities brokers unaffiliated with HPA
and that the Pellinore Placement Agents agree to pay a portion of the Placement
Fee (as defined in Section 3) to such
<PAGE>
4
securities brokers, in order to place sales of Series A Preferred Stock to HPA
Preferred Parties, of 1% of the 6% commission for the $2,000,000 so referred.
1.5 Pursuant to the terms of the Securities Purchase Agreement
and the Notes, EMP has the right to convert all or any portion of the $2,500,000
Note purchased by it in the Bridge Financing (the "EMP Note") into Series A
Preferred Stock on a dollar-for-dollar basis. EMP shall be obligated to so
convert the full amount of the EMP Note at the earliest time that EMP is
permitted to do so under the Securities Purchase Agreement, and upon doing so
EMP shall be entitled to an allocation of 312,500 Initial Warrants.
2. ALLOCATION OF BALANCE OF WARRANTS. The balance of the Initial
Warrants, as well as all Additional Warrants issuable pursuant to the Securities
Purchase Agreement, shall be either retained by HPA or allocated to other
placement agents, for division among purchasers of Series A Preferred Stock and
such placement agents, in HPA's discretion, PROVIDED that HPA acknowledges that
it currently intends to allocate 1,250,000 Warrants to Commonwealth Associates,
which is expected to serve as placement agent in the sale of $5,000,000 of
Series A Preferred Stock in the Additional Financing.
3. COMMISSIONS AND FEES.
3.1 PAYMENT OF COMMISSIONS. The Pellinore Placement Agents
shall enter into a placement agency agreement with Empire providing, in
accordance with the terms of the Securities Purchase Agreement, for the payment
by Empire of a placement agency fee equal to 6% of the dollar amount of Series A
Preferred Stock sold through the Pellinore Placement Agents (the "Placement
Fee"),
<PAGE>
5
including the Series A Preferred Stock that may be received upon conversion of
the EMP Note in the amount of $2,500,000.
3.2 COUNSEL FEES. Out of the proceeds of the Placement Fee so
payable to the Pellinore Placement Agents, they shall pay Empire's counsel,
Sonnenschein Nath & Rosenthal, $20,000 in consideration of such counsel's legal
services to Empire in connection exclusively with the placement of the Series A
Preferred Stock.
4. VOTING OF INITIAL WARRANTS UNTIL THE PERMANENT FINANCING. The
parties acknowledge that at the closing of the Bridge Financing, a certificate
representing 1,562,500 Initial Warrants was issued to EMP and a certificate
representing 3,437,500 Initial Warrants was issued to HPA (the "Initial Warrant
Certificates"). If any matter is submitted to a vote of holders of the Initial
Warrants prior to the closing of the Permanent Financing, EMP and HPA shall each
be entitled to vote the number of Warrants represented by the Initial Warrant
Certificates.
5. FAILURE OF PERMANENT FINANCING TO OCCUR DUE TO FAILURE TO MEET
CERTAIN CLOSING CONDITIONS. If, in accordance with section 2.2.1.1 of the
Securities Purchase Agreement, Permanent Financing Stock Purchasers are ready,
willing and able to purchase $11,000,000 of Series A Preferred Stock (including
through the conversion of the Notes issued in the Bridge Financing) in the
Permanent Financing, but such purchase is not closed as a result of a failure of
other closing conditions provided in section 3 of the Securities Purchase
Agreement to be met, HPA and EMP shall be entitled to retain the 5,000,000
Initial Warrants pursuant to the terms of the Securities Purchase Agreement. If
such circumstances occur, HPA shall be entitled to
<PAGE>
6
retain 3,437,500 Initial Warrants and EMP shall be entitled to retain 1,562,500
Initial Warrants, as represented by the Initial Warrant Certificates currently
held by each of them.
6. RESTRICTIONS ON, AND REQUIREMENTS OF, TRANSFER. Until the earlier
of (i) the failure of the Permanent Financing to close as described in Section 5
or (ii) the occurrence of the closing of the Permanent Financing and the
reallocation of the Initial Warrants in accordance with the provisions of this
Agreement, EMP shall not sell, pledge, hypothecate or otherwise in any way
transfer ("Transfer") ownership, or any incident thereof, of any Initial
Warrants represented by the Initial Warrant Certificate held by it, and HPA
shall not Transfer ownership, or any incident thereof, of 529,996 of the Initial
Warrants represented by the Initial Warrant Certificate held by it (it being
understood that such restriction upon HPA is imposed because the maximum number
of Initial Warrants to which EMP and the Pellinore Placement Agents are entitled
pursuant hereto (either for their own account or for transmission to third
parties) is 2,092,496, or 529,996 greater than the 1,562,500 Initial Warrants
represented by the Initial Warrant Certificate held by EMP). HPA and EMP shall
transfer, between each other or to third parties, such number of Initial
Warrants represented by their Initial Warrant Certificates as may be necessary
to effectuate the allocations provided hereby.
<PAGE>
7
IN WITNESS WHEREOF this agreement is executed as set forth below as
of the date first written above.
HPA ASSOCIATES, LLC
By: /s/ Charles S. Holmes
----------------------------------
Name: Charles S. Holmes
Title: Managing Director
EMP ASSOCIATES LLC
By: EMP Management LLC
as Managing Member
By: /s/ J. Richard Messina
----------------------------------
Name: J. Richard Messina
Title: Manager
PELLINORE SECURITIES CORP.
By: /s/ J. Richard Messina
----------------------------------
Name: J. Richard Messina
Title: President
AXIOM CAPITAL MANAGEMENT INC.
By: /s/ Mark D. Martino
----------------------------------
Name: Mark D. Martino
Title: Managing Director
EXHIBIT 4
COMMONWEALTH ASSOCIATES 733 Third Avenue, New York, NY 10017 212 297-5600
Investment Banking
Via Facsimile
Mr. Charles S. Holmes
President
HPA Associates, LLC
328 El Vedado Road
Palm Beach, FL 33480 June 3, 1997
Dear Mr. Holmes:
This will confirm that Commonwealth Associates ("Commonwealth") intends to act
as placement agent for Empire of Carolina ("Empire"). In its capacity as agent,
Commonwealth is entering into this agreement with HPA Associates, LLC, its
affiliates, successors, subsidiaries or assigns (collectively the "Company" or
"HPA"), who has previously entered into a Securities Purchase Agreement with
Empire whereby, among other points and conditions, Empire has agreed to issue
warrants to HPA. In its capacity as agent in a proposed private placement of
Preferred Stock and detachable warrants in a placement of $5,000,000 (the
"Transaction"), Commonwealth is to receive 150,000 Empire Warrants from HPA for
every $1,000,000 it raises. HPA will also ensure that the investors introduced
by Commonwealth will receive 100,000 warrants for each $1,000,000 invested in
the Transaction. The Transaction is to be placed by Commonwealth on a best
efforts basis to accredited investors. The terms and conditions of the
Transaction are substantially defined and set forth in Exhibit I attached
hereto.
Fees
- ----
In consideration for the provision of its services, the Company agrees to pay
Commonwealth the following fees (the "Transaction Fees"):
(i) Warrants to purchase the number of shares as agreed to on the attached
Exhibit 1 (150,000 per $1,000,000 raised). The exercise price of such warrant
price shall be equal to $1 3/8;
Additionally, HPA acknowledges that Commonwealth will receive a cash fee
equivalent to 6% of the gross proceeds raised (i.e., 6% of up to $5,000,000).
Such cash fee is to be paid from the proceeds raised by Commonwealth.
In this Transaction, Commonwealth shall be responsible for its own expenses. No
fees shall be paid to any other broker or finder with the exception of Pellinore
Securities Corp., Axiom Capital Management, Inc. and (the "Co-Brokers") brokers
referred to the Co-Brokers by HPA. Commonwealth will agree to accept such
reasonable funds referred
<PAGE>
to it by HPA; on such funds, Commonwealth will pay a referral fee of 1.6% of
gross proceeds to such entity controlled by Francis Bodkin (d/b/a Westminster
Securities).
Should Commonwealth raise $5,000,000 in escrow, and the Company elects to not
use those funds raised by Commonwealth, HPA acknowledges that Commonwealth shall
be entitled to receive the Transaction Fees (i.e. the Warrants noted above) on
the monies in escrow, whether or not the Transaction results from the efforts of
Commonwealth, the Company, or third parties. Additionally, if HPA consummates
any equity or debt financing on or after the date hereof, but in any event
within twelve months from the date of this Agreement, with any party
Commonwealth introduces to the Company or the Transaction, then Commonwealth
shall be entitled to receive 6% of the gross proceeds of any such investment in
the Company by such party (a partial listing of such investors is attached as
Exhibit 2).
Resolution of Disputes
- ----------------------
This Agreement shall be interpreted and governed by the laws of the State of New
York. Any dispute arising out of or relating to this Agreement or the alleged
breach of it, shall be discussed between the parties in a good faith effort to
arrive at a mutual settlement of any such controversy. If such dispute cannot be
promptly so resolved, such dispute shall be settled by binding arbitration in
accordance with the commercial arbitration rules of the American Arbitration
Association, and judgment upon the award may be entered in any court having
jurisdiction of the controversy. The arbitrator shall be selected by the mutual
agreement of the parties. If they cannot so agree within twenty (20) days, the
arbitrator shall be selected by the American Arbitration Association. Unless
otherwise agreed by the parties, the place of any arbitration proceedings shall
be New York, New York. The costs of the proceedings shall be shared equally by
the disputing parties.
Please confirm that the foregoing is in accordance with our understanding by
signing and returning to Commonwealth the enclosed copy of this Agreement.
Very truly yours,
By: /s/ Michael S. Falk By: /s/ Robert Beuret
---------------------- -----------------------
Michael S. Falk Robert Beuret
Chairman Vice Chairman
Confirmed and Agreed to this 3rd day of June, 1997
HPA Associates, LLC
By: /s/ Charles S. Holmes
------------------------
Name: Mr. Charles S. Holmes
Title:
EXHIBIT 5
HPA ASSOCIATES, LLC
c/o Asset Management Associates of New York, Inc.
P.O. Box 2850
Southampton, NY 11969
June 18, 1997
EMPIRE OF CAROLINA, INC.
5150 Linton Blvd
Delray Beach, FL 33484
Attention: Lawrence Geller,
General Counsel and Secretary
Securities Purchase Agreement, dated as of May 5, 1997, as amended
by and among
Empire of Carolina, Inc., HPA Associates, LLC and EMP Associates LLC
Direction of Issuance
--------------------------------------------------------------------
Gentlemen:
We refer to the above-captioned agreement (the "Securities Purchase
Agreement") and to the following documents and instruments issued in connection
with the closings thereunder (terms used below that are defined in the
Securities Purchase Agreement having the same meaning herein).
1. Certificate for 2,887,504 Warrants issued to HPA on June 17,
1997;
2. Certificate for 20,000 Warrants issued to HPA on June 17,
1997;
3. Instruction Letter, dated June 18, 1997, pursuant to which HPA
has been allocated 1,176,250 Warrants in connection with the closing under the
Additional Financing;
4. Instruction Letter, dated June 18, 1997, pursuant to which HPA
has been allocated 73,750 Warrants in connection with the closing under the
Additional Financing;
5. Certificate for 230,000 shares of Series A Preferred Stock
issued to HPA on June 17, 1997;
<PAGE>
EMPIRE OF CAROLINA, INC. 2
6. Certificate for 20,000 shares of Series A Preferred Stock issued
to HPA on June 17, 1997; and
7. Letter Agreement, dated June 18, 1997, by and between HPA, the
Company and Commonwealth Associates, Inc. ("Commonwealth") pursuant to which, at
the request of Commonwealth, HPA has agreed to transfer 38,000 shares of Series
A Preferred Stock and 38,000 Warrants to the Company for retransfer at the
direction of Commonwealth.
Pursuant to such documents and instruments described above, HPA is
entitled to receive 4,119,504 Warrants. You are hereby directed to issue
certificates for such Warrants as follows: 2,078,752 Warrants in the name of
Charles S. Holmes, 1,978,252 Warrants in the name of James J. Pinto and 62,500
Warrants in the name of TelCom Partners L.P.
Pursuant to such documents and instruments described above, HPA is
also entitled to receive 212,000 shares of Series A Preferred Stock. You are
hereby directed to reissue, upon cancellation of the certificates for Series A
Preferred Stock referred to in items 5 and 6 above, certificates for shares of
Series A Preferred Stock as follows: 125,000 shares in the name of Charles S.
Holmes, 62,500 shares in the name of TelCom Partners L.P. and 24,500 shares in
the name of James J. Pinto.
Very truly yours,
HPA ASSOCIATES, LLC
By: /s/ James J. Pinto
----------------------------------
James J. Pinto
Managing Director
EXHIBIT 6
HPA ASSOCIATES, LLC
c/o Asset Management Associates of New York, Inc.
P.O. Box 2850
Southampton, NY 11969
June 18, 1997
EMPIRE OF CAROLINA, INC.
5150 Linton Blvd
Delray Beach, FL 33484
Attention: Lawrence Geller,
General Counsel and Secretary
COMMONWEALTH ASSOCIATES, INC.
733 Third Avenue
New York, NY 10017
Securities Purchase Agreement, dated as of May 5, 1997, as amended
by and among
Empire of Carolina, Inc., HPA Associates, LLC and EMP Associates LLC
--------------------------------------------------------------------
Gentlemen:
We refer to the above-captioned agreement (the "Securities Purchase
Agreement"); terms that are defined in the Securities Purchase Agreement are
used with the same meaning in this letter. In the Additional Financing pursuant
to the Securities Purchase Agreement, the Company has previously agreed to issue
500,000 shares of the Company's Series A Preferred Stock to the Additional
Preferred Stock Purchasers for a total consideration, before the deduction of
commissions and other expenses, of $5 million in a private placement with
respect to which Commonwealth Associates, Inc. ("Commonwealth") is serving as
placement agent. In connection with the closing of the Permanent Financing under
the Securities Purchase Agreement, HPA has agreed to convert its Note, in the
amount of $2,500,000, into 250,000 shares of Series A Preferred Stock and will
receive certain allocations of Warrants in that connection and otherwise.
In consideration of the Company's and Commonwealth's agreement to
allocate an additional $200,000 of Series A Preferred Stock (or 20,000 shares of
Series A Preferred Stock), plus 20,000 Warrants, to Sintra Fund Ltd., an
additional $80,000 of Series A Preferred Stock (or 8,000 shares of Series A
Preferred Stock), plus 8,000 Warrants, to Mr. John Shaw and $100,000 of Series A
Preferred Stock (or 10,000 shares of Series A Preferred Stock), plus 10,000
Warrants, to Worldwide Fabrics L.P. in the Additional Financing, HPA agrees that
at the final closing of the Additional Financing, HPA shall, at Commonwealth's
request, transfer up to 38,000 shares of Series A Preferred Stock, and up to
38,000 Warrants (at a ratio of 1 Warrant for each share of Series A Preferred
Stock), to the Company for reissuance to such persons as the Company and
Commonwealth designate as purchasers thereof
<PAGE>
2
pursuant to the Company's Placement Agency Agreement with Commonwealth, in
consideration of the receipt of $10 for each such share and Warrant transferred,
payable either by the Company or Commonwealth as they may determine.
If you are in agreement with the foregoing, please countersign this
letter below.
Very truly yours,
HPA ASSOCIATES, LLC
By: /s/ Charles S. Holmes
-----------------------------
Name:
Title:Managing Director
AGREED TO AND ACCEPTED:
EMPIRE OF CAROLINA, INC.
By: /s/ Lawrence Geller
-----------------------------
Lawrence Geller
Secretary and General Counsel
COMMONWEALTH ASSOCIATES, INC.
By: /s/ Keith Rosenbloom
-----------------------------
Name: Keith Rosenbloom
Title: Managing Director
EXHIBIT 7
Name of Subscriber
--------------------
Investment Amount: $
-------------------
EMPIRE OF CAROLINA, INC.
SUPPLEMENT TO SUBSCRIPTION AGREEMENT
As of June 10, 1997
Empire of Carolina, Inc.
5150 Linton Boulevard
Delray Beach, Florida 33484
Attn: President
Ladies & Gentlemen:
Reference is made to a Subscription Agreement executed by the undersigned
(the "Subscriber") for Unit(s) offered pursuant to the Private Offering
Memorandum dated May 23, 1997 ("Memorandum") of Empire of Carolina, Inc.(the
"Company") covering the offering of up to 160 Units, at $100,000 per Unit. Each
of the Units consists of 10,000 shares of Series A Preferred Stock convertible
into Common Stock and a Warrant for 10,000 shares of Common Stock of the
Company.
The Subscriber:
(i) acknowledges that such Subscriber has received and read Supplement No.
I to the Memorandum dated June 10, 1997 and the Memorandum;
(ii) acknowledges that Supplement No. I describes material changes from
information set forth in the Memorandum;
(iii) hereby affirms its subscription as set forth in the Subscription
Agreement and consents to the acceptance of its subscription and issuance
and sale to it of Unit(s) at the initial or any subsequent closing of the
Offering in accordance with the Memorandum as amended by Supplement No. 1.
If any Subscriber does not wish to affirm its subscription, such
Subscriber must so advise the Placement Agents and the Company in writing
by 5:00 p.m. E.D.T. on Thursday, June 12, 1997;
(iv) shall be obligated, upon acquisition of shares of Series A Preferred
Stock pursuant hereto, to exercise the voting rights pertaining to such
shares, at the next annual meeting of the stockholders of the Company or
such subsequent stockholder meetings as may be necessary in order to
approve the matters
<PAGE>
2
specified hereafter, to amend the Company's certificate of incorporation
to provide that the Company may issue up to 60,000,000 shares of common
stock and to provide that the Company's Board of Directors shall consist
of up to eight members, as may be determined by the Board of Directors
from time to time. In furtherance thereof, the Subscriber hereby appoints
Charles Holmes and James Pinto, and each of them, as proxies, with full
power of substitution, to vote the shares of Series A Preferred Stock
being acquired by the Subscriber pursuant hereto as specified in the
preceding sentence, and to attend any meeting of stockholders required
therefor, hereby acknowledging that the proxy granted pursuant hereto is
coupled with an interest and is irrevocable;
(vi) if a U. S. Subscriber, has completed Internal Revenue Service form
W-9 and attached the original hereto;
(vii) if a non-U.S. Subscriber, has completed Internal Revenue Service
Form W-8 and attached the original hereto; and
(viii)acknowledges receipt and agrees to be bound by the terms of the
Registration Rights with respect to the Series A Preferred Stock, appended
hereto.
----------------------------------------------
Name of Subscriber (please print)
----------------------------------------------
Signature
----------------------------------------------
Capacity in which signed (if not an individual)
Exhibit 8
Joint Filing Agreement
In accordance with rule 13d-1(f) under the Securities Exchange Act
of 1934, the undersigned hereby agrees to the joint filing with all other
Reporting Persons (as such term is defined in the Schedule 13D referred to
below) on behalf of each of them of a statement on Schedule 13D (including
amendments thereto) with respect to the Common Stock, par value $0.10 per share,
of Empire of Carolina, Inc. and that this Agreement be included as an Exhibit to
such joint filing. This Agreement may be executed in any number of counterparts,
and in differing counterparts, each of which shall be deemed an original and all
of which, taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement
this 30th day of June, 1997.
/s/ James J. Pinto
----------------------------
James J. Pinto
TelCom Partners L.P.
By: /s/ James J. Pinto
-------------------------
Name: James J. Pinto
Title: General Partner
