EXHIBIT 10.41
AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT
AMENDMENT, dated as of June 5, 1997, to Securities Purchase Agreement
(the "Securities Purchase Agreement") dated as of May 5, 1997 among EMPIRE OF
CAROLINA, INC., a Delaware corporation (the "Company"), HPA ASSOCIATES, LLC, a
Delaware limited liability company ("HPA"), and EMP ASSOCIATES LLC, a Delaware
limited liability company.
Capitalized terms used in this Amendment that are not otherwise defined
herein have the meanings given to them in the Securities Purchase Agreement. In
recognition of certain changes in circumstances since the execution of the
Securities Purchase Agreement, the parties thereto wish to modify the Securities
Purchase Agreement as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
1. Modification of Permanent Financing.
1.1 The definition of "Permanent Financing Final Date" is
hereby amended to provide that such term means June 16, 1997.
1.2 HPA and EMP acknowledge that the Company has exercised the
Additional Financing Option pursuant to a letter of notification dated May 14,
1997. Notwithstanding the exercise of the Additional Financing Option, however,
the Notes shall be convertible upon the occurrence of the Permanent Financing on
or prior to the Permanent Financing Final Date.
1.3 As part of the Permanent Financing, HPA and EMP shall each
be required to convert the entire principal amount of their Notes into Series A
Preferred Stock in accordance with the terms of the Securities Purchase
Agreement and the Notes.
2. Modification of Additional Financing.
2.1 The definition of "Additional Financing Final Date" is
hereby amended to provide that such term means June 30, 1997.
2.2 Section 2.2.2.1 of the Securities Purchase Agreement is
hereby amended by inserting the following parenthetical phrase after the word
"Company" in the seventh line thereof, "(it being understood that, subject to
the satisfaction or waiver of the conditions to closing set forth herein, HPA
guaranties such purchase, such obligation being primary and not contingent upon
the availability of other Additional Preferred Stock Purchasers)".
78
2.3 Section 2.2.2.3 of the Securities Purchase Agreement is
hereby deleted.
3. Provision for Further Financing.
3.1 The following new definitions are added:
"FURTHER FINANCING CLOSING DATE" means the date agreed upon by
HPA and the Company, not later than the Further Financing Final Date, as
the date for the closing of the Further Financing.
"FURTHER FINANCING FINAL DATE" means December 31, 1997.
3.2 The following new provisions are added to the Securities
Purchase Agreement as Section 2.2.3:
2.2.3 Further Financing.
2.2.3.1 Subject to the terms and
conditions herein set forth, on the Further Financing Closing Date, the
Company shall issue to HPA and such other persons who may agree to acquire
(the "FURTHER PREFERRED STOCK PURCHASERS"), and the Further Preferred
Stock Purchasers shall acquire from the Company, an additional aggregate
amount of up to $5,000,000 of Series A Preferred Stock (the "FURTHER
FINANCING"), and the Company shall issue, pro rata in relation to the
proportion of $5,000,000 of Series A Preferred Stock that is purchased in
the Further Financing, to such Person or Persons as may be specified by
HPA (including HPA itself), an additional 2,500,000 Warrants (the "FURTHER
WARRANTS").
2.2.3.2 If, on the Further
Financing Final Date, sufficient Further Preferred Stock Purchasers are
ready, willing and able to close on the Further Financing and the
condition to closing specified in Section 3.6.1 hereof has been satisfied,
but the Company fails to close on such Further Financing on the Further
Financing Final Date despite such potential Further Preferred Stock
Purchasers' readiness to do so, the Company shall issue to such Persons as
HPA may designate (including HPA itself) the Further Warrants, promptly
after the Further Financing Final Date; provided that if such failure to
close by the Company is attributable to a failure by the Company to be
able to satisfy the conditions to closing set forth in Section 3.1.1, the
Company shall not be required to issue such Warrants unless such failure
to satisfy such condition was deliberately caused by the Company, in whole
or in part, for the purpose of preventing the Company from being able to
satisfy such condition to closing.
2.2.3.3 If sufficient Further
Preferred Stock Purchasers are ready, willing and able to close on the
full amount of Further Financing on the Further Financing Final Date and
the condition to closing specified in Section 3.6.1 hereof has been
satisfied, (i) the Company shall issue such amount of Series A Preferred
Stock as may be requested by those Further Preferred Stock Purchasers who
do wish to
79
purchase Series A Preferred Stock in the Further Financing, together with
the appropriate pro rata portion of the Further Warrants (as specified by
HPA), (ii) the parties shall have no further obligation to one another
under this Agreement with regard to the provision of financing and the
issuance of additional securities, but (iii) the obligations of the
parties pursuant to Articles 7 through 11 shall continue.
2.2.3.4 All funds raised to fund
the Further Financing shall be held in escrow at a bank reasonably
acceptable to the Company and HPA pending the closing of the Further
Financing and shall not be withdrawable therefrom until the earlier to
occur of the closing of the Further Financing, the failure to pass,
acknowledged as such by the Company, of a resolution seeking the
stockholder approval specified in Section 3.6.1. and the Further Financing
Final Date. Persons who have contributed such funds into such escrow shall
receive a fee from the Company, payable upon the withdrawal of such funds
from escrow, at the rate of 7% per annum from the date of contribution to
the date of such withdrawal; and the Company shall be entitled to receive
any amount earned upon the investment of such funds (subject to any charge
made by the bank at which such escrow is held).
3.3 The following provision is added to the Securities
Purchase Agreement:
3.6 Condition to Closing on Further
Financing. The following shall be a condition to the closing of the
Further Financing:
3.6.1. Stockholder Approval. The
issuance of the Series A Preferred Stock and the Further Warrants in the
Further Financing, on the terms set forth in Section 2.2.3.1, shall have
been approved by the Company's stockholders, by vote of a majority of
votes cast thereon.
3.4 Section 11.15 (Expenses) of the Securities Purchase
Agreement is hereby amended by adding the words "and the Further Financing"
before the comma in the next to last line thereof.
4. Restructuring of Senior Loan Agreement. HPA (i) acknowledges
that satisfactory (but not definitive) negotiations have occurred toward the
satisfaction of the conditions to the closing of the Permanent Financing on the
Permanent Financing Closing Date that are set forth in Section 3.4.2 of the
Securities Purchase Agreement and (ii) hereby waives the further satisfaction of
such conditions. In consideration of such waiver, the Company shall use its best
efforts to cooperate with HPA in connection with the effectuation of a written
agreement modifying the Senior Loan Agreement in form and substance satisfactory
to HPA.
5. Parties Bound. The parties acknowledge that EMP has no
interest in the Further Financing and is not a party to the agreements set forth
in Section 3 of this Amendment No. 1.
80
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective officers hereunto duly authorized as
of the date first written above.
================================================================================
EMPIRE OF CAROLINA, INC.
By /s/ Steve Geller
-----------------------
Name: Steve Geller
Title: Chairman & Chief
Executive Officer
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
================================================================================
81