EXHIBIT 3.6
CERTIFICATE OF DESIGNATION
OF
SERIES C PREFERRED STOCK
OF
EMPIRE OF CAROLINA, INC.
(PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW)
Empire of Carolina, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Company"),
hereby certifies that the following resolution was adopted by the Board of
Directors of the Company (the "Board of Directors" or the "Board") as required
by Section 151 of the General Corporation Law at a meeting duly called and held
on June 10, 1997;
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of the Company in accordance with the provisions of
the Company's Restated Certificate of Incorporation, as amended to date (the
"Certificate of Incorporation"), the Board of Directors hereby creates a series
of Preferred Stock, par value $.01 per share (the
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"Preferred Stock"), of the Company and hereby states the designation and number
of shares, and fixes the relative rights, preferences and limitations thereof,
as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series C Preferred Stock" (the "Series C Preferred
Stock") and the authorized number of shares constituting the Series C Preferred
Stock shall be 1,500. The stated value of each share of the Series C Preferred
Stock (the "Stated Value") shall be $10,000. Such shares may be issued only in
connection with the sale of shares by the Company pursuant to the Securities
Purchase Agreement dated as of May 5, 1997, as amended, among the Company, HPA
Associates, LLC and EMP Associates LLC (the "Securities Purchase Agreement") and
the execution of that certain agreement dated June 17, 1997 by and among 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 IRDA, 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
Affiliates") regarding the release by the WPG Affiliates of the Company's
obligations and liabilities to the WPG Affiliates under the Debenture Purchase
Agreement, dated December 2, 1994 and the Registration Rights Agreement dated
December 22, 1994.
Section 2. Dividends. The holder of shares of the Series C
Preferred Stock (the "Series C Stockholders") shall be entitled to receive,
when, as and if declared by the Board of Directors, out of the assets of the
Company legally available therefor, dividends, distributions and offers of
subscription, if any, equivalent (both in amount and
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kind) to the dividends and distributions and offers of subscription, if any,
paid and offers of subscription made available to the holders of the number of
shares of Common Stock into which the Series C Preferred Stock may be converted
pursuant to Section 6 hereof, provided that if any dividend is declared in
shares of Common Stock or any other security into which the Series C Preferred
Stock is from time to time convertible, rather than payment of such dividend to
holders of Series C Preferred Stock, the number of shares of Common Stock or
such other security into which the Series C Preferred Stock may be converted
shall be adjusted in accordance with the provisions of Section 6 hereof.
Section 3. Voting Rights. Except as otherwise expressly
provided herein or in the Certificate of Incorporation or the Amended and
Restated By-laws of the Company, or as may otherwise be required by law, the
Series C Stockholders, by virtue of their ownership thereof, shall have no
voting rights.
(a) in addition to any class votes required by law, the
affirmative vote of the holders of at least a majority of the outstanding shares
of the Series C Preferred Stock, voting separately as a class, in person or by
proxy, at a special or annual meeting of stockholders called for the purpose,
shall be necessary to:
(i) amend, alter or repeal any of the provisions of
the Certificate of Incorporation of the Company or the
Certificate of Designation of the Series A Preferred Stock
(the "Series A Certificate of Designation") to change the
conversion ratio (or rights of adjustment therein) rights to
receive dividends or distributions or liquidation preference
thereof in such a manner as to favor the
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Series A Preferred Stock over the Series C Preferred Stock
(except as necessary to reflect differences in conversion
ratios);
(ii) authorize any exchange, conversion or
reclassification of the Series A Preferred Stock into other
capital stock or securities of the Company (whether through
recapitalization, merger, consolidation, exchange,
reorganization or otherwise) in terms different from those
applicable to the Series A Preferred Stock (except to the
extent that such terms differ to reflect differences in the
conversion ratios of the Series C Preferred Stock and the
Series A Preferred Stock into Common Stock) except for
conversion of the Series A Preferred Stock into Common Stock
of the Company in accordance with Section 6 of the Series A
Certificate of Designation;
(iii) authorize any repurchase, redemption,
retirement, defeasance or similar transaction (or set aside
property of the Company for any such purpose) (a "Stock
Redemption") in respect of the Series A Preferred Stock prior
to the conversion of all Series C Preferred Stock, unless
there shall have been a Stock Redemption in respect of a
prorata portion of the Series C Preferred Stock on the same
relative terms (in relation to the conversion ratios of the
Series A Preferred Stock and the Series C Preferred Stock into
Common Stock), such prorata portion to be determined by
multiplying the number of shares of Series C Preferred Stock
then outstanding by the fraction the numerator of which is the
number of shares of Series A Preferred Stock subject to such
Stock Redemption at such time and the denominator of which is
the number of shares of Series A Preferred Stock then
outstanding;
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(iv) amend, alter or repeal any of the provisions of
the Certificate of Incorporation of the Company or the
Certificate of Designation of the Series C Preferred Stock
(the "Series C Certificate of Designation") to increase the
number of shares of Series C Preferred Stock that are
authorized for issuance;
(v) amend, alter or repeal any of the provisions of
the Certificate of Incorporation of the Company of the Series
C Certificate of Designation in a manner which would
materially and adversely affect any right, preference,
privilege or voting power of the Series C Preferred Stock or
any holder thereof.
(b) In addition to any class votes required by law or Section
3(a) hereof, the affirmative vote of the holders of at least a majority of the
outstanding shares of the Series C Preferred Stock and Series A Preferred Stock,
voting together as a class, in person or by proxy, at a special or annual
meeting of stockholders called for the purpose, shall be necessary to:
(i) authorize, create, increase the authorized or
issued number of shares of, or issue (including on conversion
or exchange of any convertible or exchangeable securities or
by reclassification):
(x) any shares of any class or classes or
series of the Company's capital stock having rights
senior or superior in preference to the Series A
Preferred Stock or the Series C Preferred Stock as to
any of dividends, voluntary or involuntary
liquidation, dissolution or winding up; or
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(y) any shares of any class or series of
stock that ranks on a parity with Series A Preferred
Stock or the Series C Preferred Stock as to any of
dividends, voluntary or involuntary liquidation,
dissolution or winding up.
(c) (i) The foregoing rights of holders of Series C Stock
("Series C Stockholders") to take any actions as provided in
this Section 3 may be exercised at any regular meeting of
stockholders or at a special meeting of stockholders held for
such purpose as hereinafter provided or at any adjournment
thereof, or by written consent pursuant to Section 228 of the
Delaware General Corporation Law.
(ii) At each meeting of stockholders at which the
Series C Stockholders have the right, voting separately as a
single series, or voting separately as series with holders of
Series A Preferred Stock of the Company, to take action
pursuant to Section 3(a) or Section 3(b), the presence in
person or by proxy of the holders of record of 50% of the
total number of shares of the Series C Preferred Stock, or, as
applicable, Series C Preferred Stock and Series A Preferred
Stock, then outstanding and entitled to vote on the matter
shall be necessary and sufficient to constitute a quorum. At
any such meeting or at any adjournment thereof, in the absence
of a quorum of the Series C Stockholders, or, as applicable,
holders of Series C Preferred Stock and Series A Preferred
Stock, the holders of a majority of such shares present in
person or by proxy shall have the power to adjourn the meeting
as to the actions to be taken by the Series C Stockholders, or
as applicable, holders of
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the Series C Preferred Stock and the Series A Preferred Stock,
from time to time and place to place without notice other than
announcement at the meeting until a quorum is present.
(iii) For the taking of any action as provided in
Sections 3(a) by the Series C Stockholders, or as provided in
Section 3(b) with respect to actions to be taken by holders of
Series C Preferred Stock and Series A Preferred Stock acting
together, each such holder shall have one vote for each share
of such stock standing in his or her name on the transfer
books of the Company as of any record date fixed for such
purpose or, if no such date be fixed, at the close of business
on the business day next preceding the day on which notice is
given, or if notice is waived, at the close of business on the
business day next preceding the day on which the meeting is
held. A business day shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in the City of
New York are authorized or required by law or executive order
to close.
Section 4. Reacquired Shares. Any shares of Series C Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation or in any other certificate of designation creating
a series of Preferred Stock or Preferred Stock or any similar stock or as
otherwise required by law.
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Section 5. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series C Preferred Stock
unless, prior thereto, the Series C Stockholders shall have received $10,000 per
share, or (B) to the holders of shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the Series C
Preferred Stock, except distributions made ratably on the Series C Preferred
Stock and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. The Series C Preferred Stock shall rank on a parity with the
Company's Series A Preferred Stock, issued pursuant to the terms of the
Securities Purchase Agreement (and Senior to the shares of Series B Preferred
Stock), which Series A Preferred Stock will have a stated value of no more than
an aggregate of $21,000,000 and senior to the shares of the Company's Series B
Preferred Stock.
Section 6. Conversion.
(a) Each share of Series C Preferred Stock shall be
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 as set forth in this Section 6 (the "Conversion Price").
(b) The Conversion Price shall be adjusted from time to time
in certain cases as follows: if the Company, at any time or from time to time,
(1) declares a dividend on the Common Stock payable in shares of Common Stock,
(2) subdivides the outstanding Common Stock, (3) combines the outstanding Common
Stock into a smaller number of
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shares or (4) issues any shares of its capital stock in respect of shares of
Common Stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then in each such case, the Conversion
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification shall be
adjusted to that price which will permit the number of shares of Common Stock
(or, in the case of (4), other capital stock into which shares of Common Stock
have been converted) into which Series C Preferred Stock may be converted to be
increased or reduced in the same proportion as the number of shares of Common
Stock (or, in the case of (4), capital stock into which shares of Common Stock
have been converted) are increased or reduced in connection with such dividend,
subdivision, combination or reclassification. Any such adjustment shall become
effective immediately after the record date of such dividend or the effective
date of such subdivision, combination or reclassification. Such adjustments
shall be made successively whenever any event listed above occurs. In the event
a dividend is declared but such dividend is not paid, the Conversion Price shall
be adjusted to the Conversion Price in effect immediately prior to the record
date of such dividend.
(c) Conversion of the Series C Preferred Stock may be effected
by any Series C Stockholder upon the surrender to the Company at the Company's
principal executive office or at the office of any agent or agents of the
Company, as may be designated by the Board of Directors (the "Transfer Agent"),
of the certificate for such shares of the Series C Preferred Stock to be
converted (duly endorsed or assigned to the Company or in blank), or by transfer
of such shares to the Company's account through a securities clearing house,
accompanied by a written notice stating that such holder elects to
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convert all or a specified whole number of such shares in accordance with the
provisions of this Section 6 and specifying the name or names in which such
holder wishes the certificate or certificates for shares of Common Stock to be
issued. In case such notice specifies a name or names other than that of such
holder, such notice shall be accompanied by a payment of all transfer taxes
payable upon the issuance of shares of Common Stock in such name or names. Other
than such taxes, the Company shall pay any and all issue and other taxes (other
than taxes based on or measured by income or gain) that may be payable in
respect of any issue or delivery of shares of Common Stock upon conversion of
the Series C Preferred Stock pursuant hereto. As promptly as practicable, and in
any event within five business days after the surrender of such certificate or
certificates (or transfer of such shares through a clearing house) and the
receipt of such notice relating thereto and, if applicable, payment of all
transfer taxes (or the demonstration to the satisfaction of the Company that
such taxes have been paid), the Company shall deliver or cause to be delivered
(i) certificates representing the number of validly issued, fully paid and
nonassessable full shares of Common Stock equal to the number of shares of
Series C Preferred Stock that are being converted and (ii) if less than the full
number of shares of the Series C Preferred Stock evidenced by the surrender
certificate or certificates is being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by such
surrendered certificate or certificates less the number of shares being
converted. Such conversion shall be deemed to have been made at the close of
business on the date of giving of such notice and of such surrender of the
certificate or certificates (or transfer of such shares through a clearing
house) representing the shares of the Series C Preferred Stock to be converted
so that the rights of the holder thereof as to the shares being converted shall
cease except for the right to
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receive shares of Common Stock (or other capital stock in accordance with
Section 6(b)) in accordance herewith, and the person entitled to receive the
shares of Common Stock (or other capital stock in accordance with Section 6(b))
shall be treated for all purposes as having become the record holder of such
shares of Common Stock (or other capital stock in accordance with Section 6(b))
at such time.
(d) Except as specifically provided in Subsection 6(c), the
issuance and delivery of certificates for shares of Common Stock upon the
conversion of shares of Series C Preferred Stock shall be made without charge to
a Series C Stockholder for such certificates or for any tax in respect of the
issuance or delivery of such certificates or the securities represented thereby.
(e) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the shares of the Series C Preferred
Stock, such number of its shares of Common Stock, and such amount or number of
securities or other property (if the Series C Preferred Stock becomes
convertible into the same in accordance with the provisions of Section 6(b), as
are from time to time sufficient to effect the conversion of all outstanding
shares of the Series C Preferred Stock, and if at any time the number of
authorized by unissued shares of Common Stock is not sufficient to effect the
conversion of all then outstanding shares of the Series C Preferred Stock, the
Company shall take such corporate action as may, in the opinion of its counsel,
be necessary to increase the number of shares of its authorized but unissued
shares of Common Stock (or such securities or other property) to such number of
shares as shall be sufficient for such purpose, including, without limitation,
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engaging in best efforts to obtain the requisite shareholder approval of any
necessary amendment to the Certificate of Incorporation.
Section 7. Reports as to Adjustments. Upon any adjustment of
the Conversion Ratio then in effect and any increase or decrease in the number
of shares of Common Stock issuable upon the operation of the conversion set
forth in Section 6, then, and in each such case, the Company shall promptly
deliver to the Transfer Agent of the Series C Preferred Stock and Common Stock a
certificate signed by the President or a Vice President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company
setting forth in reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated and specifying the Conversion
Ratio then in effect following such adjustment and the increased or decreased
number of shares issuable upon the conversion set forth in Section 6. The
Company shall also promptly after the making of such adjustment give written
notice to the registered Series C Stockholder at the address of each holder as
shown on the books of the Company maintained by the Transfer Agent thereof,
which notice shall state the Conversion Ratio then in effect, as adjusted, and
the increased or decreased number of shares issuable upon the exercise of the
right of conversion granted by Section 6, and shall set forth in reasonable
detail the method of calculation of each and a brief statement of the facts
requiring such adjustment.
Section 8. Enforceability. If any provision of this
Certificate of Designation is held to be invalid or unenforceable, such holding
shall not affect the validity or enforceability of any other provision hereof.
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IN WITNESS WHEREOF, this Certificate of Designation is
executed on behalf of the Company by its Chairman of the Board of Directors and
attested by its Secretary as of the 12th day of June 1997.
/s/ Steven Geller
----------------------------------
Steve Geller
Chairman of the Board of Directors
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