EXHIBIT 99(p)
AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT
NANTUCKET INDUSTRIES, INC.
105 Madison Avenue
New York, New York 10016
As of August 15, 1996
Congress Financial Corporation
1133 Avenue of the Americas
New York, New York 10036
Gentlemen:
Congress Financial Corporation ("Lender") and Nantucket Industries,
Inc. ("Borrower") have entered into certain financing arrangements pursuant to
which Lender may make loans and advances and provide other financial
accommodations to Borrower as set forth in the Loan and Security Agreement,
dated March 21, 1994, between Lender and Borrower, as amended by Amendment No.E1
to Loan and Security Agreement, dated MayE31, 1996 and Amendment No. 2 to Loan
and Security Agreement, dated July 31, 1996 (as amended hereby and as the same
may hereafter be further amended, modified, supplemented, extended, renewed,
restated or replaced, the "Loan Agreement," and together with all agreements,
documents and instruments at any time executed and/or delivered in connection
therewith or related thereto, collectively, the "Financing Agreements").
Borrower has requested that Lender, among other things, consent to the
sale of approximately 250,000 shares of common stock of Borrower and two (2)
12.5% Convertible Subordinated Debentures issued by Borrower to the Investor (as
defined below) in the aggregate principal amount of $2,760,000 and to permit a
lien on certain real property of Borrower to secure the indebtedness evidenced
by such debentures. Lender is willing to agree to the foregoing, subject to the
terms and conditions contained herein.
In consideration of the foregoing, the respective agreements and
covenants contained herein, and other good and valuable consideration, the
adequacy and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Definitions.
(a) Additional Definitions. As used herein, the following
terms shall have the respective meanings given to them below and the Loan
Agreement shall be deemed and is hereby amended to include, in addition and not
in limitation, each of the following definitions:
(i) "Debentures" shall mean, individually and
collectively (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (A) the Convertible
Subordinated Debenture, dated of even date herewith, by Borrower payable to
Investor in the original principal amount of $1,168,150 and (B) the Convertible
Subordinated Debenture, dated of even date herewith, by Borrower payable to
Investor in the original principal amount of $1,591,850.
(ii) "Insolvency Event" shall mean any distribution,
division or application, partial or complete, voluntary or involuntary, by
operation of law or otherwise, of all or part of the assets of Borrower or the
proceeds thereof to the creditors of Borrower or readjustment of the obligations
and indebtedness of Borrower, whether by reason of liquidation, bankruptcy,
arrangement, receivership, assignment for the benefit of creditors, marshalling
of assets of Borrower or any other action or proceeding involving the
readjustment of all or any part of the indebtedness or other obligations of
Borrower or the application of the assets of Borrower to the payment or
liquidation thereof, or the dissolution, suspension or other winding up of
Borrower's business.
(iii) "Investor" shall mean NAN Investors, L.P., a
Delaware limited partnership, and its successors and assigns.
(iv) "Investor Agreements" shall mean, collectively,
the following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (A) the Common Stock and
Convertible Subordinated Debenture Purchase Agreement, dated of even date
herewith, between Borrower and Investor, (B) the Debentures, (C)Ethe Deed to
Secure Debt, Security Agreement and Assignment of Leases and Rents, dated of
even date herewith, by Borrower in favor of Investor with respect to the Real
Property of Borrower in Cartersville, Georgia, and (D)Eall agreements, documents
and instruments at any time executed and/or delivered by Borrower or any other
person to, with, to or in favor of Investor in connection with or related to the
foregoing.
(v) "Payment Default" shall mean an Event of Default
as a result of the failure of Borrower to make any payment due under the Loan
Agreement or any of the other Financing Agreements, whether at the maturity
thereof or upon proper demand therefor, or upon the acceleration thereof or
otherwise.
(vi) "Securities Laws" shall mean the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended, and all
rules, regulations and interpretations issued pursuant thereto or in connection
therewith, and all state and local securities statutes, rules and regulations,
as the same now
-2-
exist or may hereafter be amended, modified, interpreted, recodified or
supplemented.
(b) Interpretations. For purposes of this Amendment, unless
otherwise defined herein, all terms used herein, including, but not limited to,
those terms used and/or defined above, shall have the respective meanings
assigned to such terms in the Loan Agreement.
2. Encumbrances. SectionE9.8(f) of the Loan Agreement is hereby deleted
in its entirety and replaced with the following:
"(f) the security interests and liens of Investor on the Real
Property of Borrower located in Cartersville, Georgia pursuant to the
Investor Agreements (as in effect on the date of the execution thereof)
to secure the indebtedness of Borrower to Investor to the extent such
indebtedness is permitted under Section 9.9(e) hereof, which security
interests and liens are junior and subordinate in priority to the
security interests and liens of Lender pursuant to and to the extent
set forth in the Intercreditor and Subordination Agreement between
Investor and Lender;"
3. Indebtedness. Section 9.9(e) of the Loan Agreement is hereby deleted
in its entirety and replaced with the following:
"(e) indebtedness of Borrower to Investor pursuant to the
Debentures not to exceed the principal amount of $2,760,000, less the
aggregate amount of all repayments of principal or conversions of such
indebtedness into common stock of Borrower in respect thereof, plus
interest thereon at the rate provided for in the Debentures (as in
effect on the date of the execution thereof), which indebtedness is
subject to, and subordinate in right of payment to, the right of Lender
to receive the prior indefeasible payment in full of all of the
Obligations in accordance with the terms of the Intercreditor and
Subordination Agreement between Investor and Lender; provided, that,
(i) Borrower shall not, directly or indirectly, make any payments in
respect of such indebtedness, except, that, unless and until the
occurrence of an Event of Default, Borrower may make regularly
scheduled payments of principal and interest in respect of such
indebtedness in accordance with the terms of the Debentures as in
effect on the date of execution thereof (and not any prepayments
pursuant to the exercise of the option by Investor to require the
mandatory redemption of such indebtedness upon the occurrence of a
Change of Control (as such term is defined in the Debentures) unless
any such prepayments are made with the net cash proceeds of a cash
equity contribution to Borrower received by
-3-
Borrower on or about the time of such prepayment or with the net cash
proceeds of loans received by Borrower (other than Loans) on or about
the time of such prepayment which are used to replace such
indebtedness, in each case on terms and conditions acceptable to
Lender), provided, that, if the Event of Default is not a Payment
Default, Borrower may make regularly scheduled payments in respect of
such indebtedness in accordance with the terms of the Debentures as in
effect on the date of the execution thereof (and not any prepayments
pursuant to the exercise of the option by Investor to require the
mandatory redemption of such indebtedness upon the occurrence of a
Change of Control (as such term is defined in the Debentures) unless
any such prepayments are made with the net cash proceeds of a cash
equity contribution to Borrower received by Borrower on or about the
time of such prepayment or with the net cash proceeds of loans received
by Borrower (other than Loans) on or about the time of such prepayment
which are used to replace such indebtedness, in each case on terms and
conditions acceptable to Lender) after the date which is one hundred
seventy-nine (179) days after the date of written notice by Lender to
Investor of such Event of Default which is not a Payment Default,
unless a Payment Default exists or any Insolvency Event has occurred or
any sale of all or substantially all of Borrower's assets has occurred
and (B) notwithstanding that any Event of Default has occurred,
Investor may receive and retain payments in respect of such
indebtedness with the net proceeds from the sale or other disposition
of the Real Property located in Cartersville, Georgia in excess of
$1,750,000 up to an amount equal to the lesser of (1) the then
outstanding amount of such indebtedness or (2) $2,760,000 plus accrued
and unpaid interest on the principal amount of such indebtedness, (ii)
Borrower shall not, directly or indirectly, (A) make any non-mandatory
payments in respect of such indebtedness or (B) amend, modify, alter or
change the terms of the Investor Agreements unless (1) Lender has
received prior written notice of such amendment, modification,
alteration or change, (2) such amendment, modification, alteration or
change does not in any manner adversely affect Lender or any rights of
Lender as determined in good faith by Lender and confirmed by Lender to
Borrower in writing and (3) such amendment, modification, alteration or
change does not accelerate the maturity date or amortization of such
indebtedness, increase the amount of such indebtedness, the interest
rate or any fees or charges or any collateral with respect to such
indebtedness or make any terms related thereto more restrictive or
burdensome as determined in good faith by Lender or
-4-
(C) redeem, retire, defease, purchase or otherwise acquire such
indebtedness, or set aside or otherwise deposit or invest any sums for
such purpose, except, that, Borrower may convert such indebtedness into
common stock of Borrower in accordance with the terms of the Investor
Agreements (as in effect on the date of the execution thereof), and
(iii) Borrower shall furnish to Lender all notices, demands or other
materials in connection with such indebtedness sent by Borrower or on
its behalf, concurrently with the sending thereof, or receive by
Borrower or on its behalf, promptly after the receipt thereof, as the
case may be;"
4. Sale of Stock. Section 9.7(b)(i) of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
"(i) the issuance of 250,000 shares of common stock by
Borrower to Investor and the issuance of an additional 623,370 shares
of common stock by Borrower to Investor upon the conversion of the
indebtedness evidenced by the Debentures to common stock of Borrower to
Investor in accordance with the terms of the Investor Agreements as in
effect on the date of the execution thereof (or such greater number of
shares as may be required under the terms of the Debentures as in
effect on the date of the execution thereof based on an adjustment to
the conversion price as a result of the issuance of any additional
shares of common stock of Borrower after the date of the execution of
the Debenture),"
5. Repayment of Indebtedness to Chemical. Notwithstanding anything to
the contrary contained in Section 9.9(e) of the Loan Agreement as in effect
immediately prior to the effective date hereof, but subject to the terms and
conditions contained herein, Borrower may repay all of the outstanding
indebtedness of Borrower to Chemical pursuant to the Chemical Agreements;
provided, that, (a) the total amount paid by Borrower to Chemical in respect of
all such indebtedness shall not exceed the aggregate amount of $550,000, (b) as
of the date hereof, all of the outstanding indebtedness of Borrower to Chemical
has been paid in full, and (c) Lender shall have received, in form and substance
satisfactory to Lender, all releases, terminations and such other documents as
Lender may request to evidence and effectuate the termination by Chemical of the
Chemical Agreements, including, but not limited to, (i) UCC termination
statements for all UCC financing statements previously filed by Chemical, as
secured party, and Borrower, as debtor, and (ii) satisfactions of all mortgages
and deeds to secured debt by Borrower in favor of Chemical in form acceptable
for recording in the appropriate governmental office, (iii) the Promissory Note,
-5-
dated March 21, 1994, by Borrower payable to Chemical in the original principal
amount of $2,000,000, marked "canceled" or "paid in full", and (iv) termination
and reassignment agreements by Chemical in favor of Borrower with respect to
trademarks, patents and related assets previously assigned as collateral by
Borrower to Chemical in form acceptable for recording with the United States
Patent and Trademark Office (collectively, the "Chemical Release Agreements").
6. Additional Representations and Warranties. Each of Borrower and
Guarantor represents, warrants and covenants with and to Lender as follows,
which representations, warranties and covenants are continuing and shall survive
the execution and delivery hereof, and the truth and accuracy of, or compliance
with each, together with the representations, warranties and covenants in the
other Financing Agreements, being a continuing condition of the making of Loans
by Lender to Borrower:
(a) The failure of Borrower to comply with the covenants,
conditions and agreements contained herein or in any other agreement, document
or instrument at any time executed and/or delivered by Borrower with, to or in
favor of Lender shall constitute an Event of Default under the Financing
Agreements.
(b) No Event of Default or act, condition or event which with
notice or passage of time or both would constitute an Event of Default exists or
has occurred as of the date of this Amendment (after giving effect to the
amendments to the Financing Agreements made by this Amendment).
(c) This Amendment has been duly executed and delivered by
Borrower and Guarantor and is in full force and effect as of the date hereof and
the agreements and obligations of Borrower and Guarantor contained herein
constitute legal, valid and binding obligations of Borrower and Guarantor
enforceable against Borrower and Guarantor in accordance with their respective
terms.
(d) Neither the execution and delivery of the Investor
Agreements, nor the consummation of the transactions contemplated by the
Investor Agreements, or compliance with the provisions thereof, shall result in
the creation or imposition of any lien, charge or incumbrance upon any of the
Collateral, other than the Real Property of Borrower located in Cartersville,
Georgia.
(e) Each of the Debentures has been duly authorized, issued
and delivered by Borrower pursuant to the Investor Agreements and the Investor
Agreements have been duly authorized, executed and delivered and the
transactions contemplated thereunder have been performed in accordance with
their terms by the respective parties thereto in all respects, including the
fulfillment (not merely the waiver) of all conditions precedent set forth
therein.
-6-
(f) All actions and proceedings required by the Investor
Agreements, applicable law or regulations, including, without limitation, all
Securities Laws, have been taken, and the transactions required thereunder have
been duly and validly taken and consummated.
(g) Neither the execution and delivery of the Investor
Agreements nor the consummation of the transactions therein contemplated, nor
compliance with the provisions thereof, has violated or shall violate any of the
Securities Laws or any other law or regulation or any order or decree of any
court or governmental instrumentality in any respect or does or shall conflict
with or result in the breach of, or constitute a default in any respect under,
any indenture, mortgage, deed of trust, security agreement, agreement or
instrument to which Borrower is a party or may be bound, including, or violate
any provision of the Certificate of Incorporation or By-Laws of Borrower.
(h) No court of competent jurisdiction has issued any
injunction, restraining order or other order which prohibits consummation of the
issuance of the Debentures and the transactions related to the other Investor
Agreements and no governmental or other action or proceeding has been threaten
or commenced, seeking any injunction, restraining order or other order which
seeks to avoid or otherwise modify the issuance of the Debentures, the execution
and delivery of the other Investor Agreements or the transactions related
thereto.
(i) Borrower has delivered to Lender, true, correct and
complete copies of the Investor Agreements and the Chemical Release Agreements.
7. Conditions to Effectiveness of Amendment. The effectiveness of the
other provisions of this Amendment shall be subject to the satisfaction of each
of the following additional conditions precedent:
(a) Lender shall have received, in form and substance
satisfactory to Lender, an executed original or executed original counterparts
of this Amendment, as the case may be;
(b) Lender shall have received, in form and substance
satisfactory to Lender, an intercreditor and subordination agreement between
Lender and Investor, as acknowledged by Borrower, providing for, among other
things, such parties relative rights and priorities with respect to the assets
and properties of Borrower and related matters, duly authorized, executed and
delivered by Investor and Borrower;
(c) all requisite corporate action and proceedings in
connection with this Amendment shall be in form and substance satisfactory to
Lender, and Lender shall have received all information and copies of all
documents, including, without
-7-
limitations, records of requisite corporate action and proceedings which Lender
may have reasonably requested in connection therewith, such documents where
requested by Lender or its counsel to be certified by appropriate corporate
officers or governmental authorities;
(d) Lender shall have received evidence satisfactory to Lender
that (i) all indebtedness of Borrower to Chemical has been duly and validly
repaid, and Borrower has no further obligations, liabilities or indebtedness in
connection with the Chemical Agreement, and (ii)EChemical has terminated and
released any and all security interests in, liens upon, rights of setoff against
and pledges of all of the assets and properties of Borrower;
(e) Lender shall have received all of the proceeds to be
received by Borrower pursuant to the issuance of the Debentures less the
payments to Chemical and the other payments for fees and expenses to be made as
of the date hereof pursuant to the terms of Investor Agreements (which amounts
will be applied to the Revolving Loans); and
(f) no Event of Default shall exist or have occurred and no
event shall have occurred or exist which with notice or passage of time or both
would constitute an Event of Default.
8. Effect of this Amendment. Except as modified pursuant hereto, no
other changes or modifications to the Financing Agreements are intended or
implied and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
effective date hereof. To the extent of conflict between the terms of this
Amendment and the other Financing Agreements, the terms of this Amendment shall
control. The Loan Agreement and this Amendment shall be read and construed as
one agreement.
9. Further Assurances. The parties hereto shall execute and deliver
such additional documents and take such additional action as may be necessary or
desirable to effectuate the provisions and purposes of this Amendment.
10. Governing Law. The validity, interpretation and enforcement of this
Amendment and any dispute arising out of the relationship between the parties
hereto in connection with this Amendment, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of law).
11. Binding Effect. This Amendment shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
-8-
12. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
Please sign the enclosed counterpart of this Amendment in the space
provided below whereupon this Amendment as so accepted by Lender, shall become a
binding agreement among Borrower, Guarantor and Lender.
Very truly yours,
NANTUCKET INDUSTRIES, INC.
By: /s/ Ronald S. Hoffman
--------------------------
Title: V.P.
-----------------------
ACKNOWLEDGED:
NANTUCKET MILLS, INC.
By: /s/ Ronald S. Hoffman
---------------------------
Title: V.P.
------------------------
AGREED:
CONGRESS FINANCIAL CORPORATION
By Daniel P. Maresca
----------------------------
Title: Assistant V.P.
------------------------
-9-