EXHIBIT 99(t)
NANTUCKET INDUSTRIES, INC.
September 30, 1997
NAN Investors, L.P.
c/o Fundamental Capital Corp.
291 Ocean Avenue
Lawrence, New York 11559
Attention: Murray Forman
Re: 200 Cook Street, Cartersville, GA (the "Property")
Dear Murray:
In connection with the delivery by NAN Investors, L.P. ("NAN") of a
Quitclaim Deed (the Quitclaim Deed) with respect to the Deed to Secure Debt,
Security Agreement and Assignment of Leases and Rents, filed for record as of
August 19, 1996 by the Company in favor of NAN (the "Mortgage"), Nantucket
Industries, Inc. (the "Company") hereby confirms to you as follows:
1. The Company is currently in default under the two Convertible
Subordinated Debentures payable to NAN, dated August 15, 1996 (collectively: the
"Debentures"), in the original principal amounts of $1,168,150 and $1,591,850,
respectively, among other things for failure by the Company to make timely
payment of the interest payment due under the Debentures on August 15, 1997 (the
"Interest Payment Default").
2. Furthermore, the Company acknowledges that it has no right of
prepayment under the Debentures and that the proposed sale by the Company of the
Property represents an additional Event of Default by the Company under the
Debentures (the "Property Sale Default"). Finally, the Company acknowledges that
it has no right to demand that NAN release the Mortgage on the Property except
in connection with the full and complete repayment and satisfaction of the
Debentures.
3. NAN hereby agrees to (a) extend the cure period under Section
8(a)(ii) of each of the Debentures with respect to the Interest Payment Default
(but not with respect to any other interest payment due under the Debentures)
until November 30, 1997, provided, however, that (i) such extension shall be
automatically terminated upon the occurrence of any other default or Event of
Default under either of the Debentures, the Common Stock and Convertible
Subordinated Debenture Purchase Agreement, dated as of August 13, 1996 (the
"Purchase Agreement"), or this agreement, and (ii) the amount of the Interest
Payment Default, together with interest thereon calculated at an annual rate of
12.5% per annum, shall be payable upon the expiration of such cure period
extension, (b) waive the Property Sale Default by the Company under the
Debentures, (c) release of the Mortgage by delivery to the Company of the
Quitclaim Deed, and (d) the partial prepayment of one of the Debentures in
accordance with the terms of this agreement.
4. In consideration of NAN's aforesaid agreement, the Company agrees as
follows:
(a) Concurrently with the closing of the Property's sale, the
Company shall pay to NAN all of the net sales proceeds from the sale of the
Property (the gross sales proceeds less a $1,750,000 payment to Congress
Financial Corporation in satisfaction of its first mortgage on the Property, a
6% brokerage commission and transfer taxes and legal fees actually incurred in
connection with the sale), provided that (i) the net sales proceeds so delivered
to NAN shall be in an amount not less than $883,000 (the "Proceeds Payment"),
and (ii) the Proceeds Payment shall be received by NAN no later than by October
1, 1997. The Proceeds Payment shall be made concurrently with the closing of the
sale of the Property by means of a wire transfer or transfers of same day funds
to an account or accounts specified in writing by NAN to the Company or its
representatives.
(b) The Proceeds Payment shall be treated as if it were a
prepayment under Section 4(b) of the Debenture in the original principal amount
of $1,591,850 (the "Prepaid Indenture"), and accordingly, only 80% of the
Proceeds Payment shall be applied to the reduction of the principal amount due
under the Prepaid Debenture, with the balance to be deemed a prepayment premium
pursuant to Section 4(b) of such Prepaid Indenture.
(c) Any land not currently being sold by Nantucket shall remain
encumbered by the Mortgage.
5. On or before October 31, 1997, the Company shall cause its Board of
Directors to be reconstituted to include the following members: Mr. Stephen
Samberg, Mr. Robert Rosen, Mr. Warren Cole, Mr, Kenneth Klein, and two other
members who shall be satisfactory to NAN in NAN's sole discretion. The Company
shall be entitled to add Mr. Richard Ryan, or another person unaffiliated with
the Company or its shareholders with standing in the business or financial
communities, as an additional Board member.
6. Following October 31, 1997, the Company shall employ only such
executive officers (defined as officers earning an annual salary or draws on
account of commissions in excess of $100,000), other than the Chief Executive
Officer, as shall be reasonably satisfactory to NAN. In addition, the Company
shall, by October 31, 1997, cause another person or persons, satisfactory to NAN
in NAN's sole discretion (the "Manager"), to become the chief operating officer
of the Company and an authorized signatory on all of the Company's bank
accounts. All withdrawals from the Company's bank accounts and all agreements,
obligations or instruments to which the Company shall become a party or by which
any of its assets shall be bound following the Manager's appointment shall
require the signature of both the Chief Executive Officer of the Company and the
Manager.
7. Within 5 days of resolution or settlement of its litigation against
Levi's and receipt of any payment therefrom (the "Trigger Date"), the Company
shall offer to prepay all or any portion of the amounts then outstanding under
the Debentures at a price equal to 125% of the aggregate principal amount
thereof, together with any interest accrued and unpaid thereon up to and
including the prepayment date. At the Company's option, up to $500,000 of such
amount may be payable in the form of a seven-year debenture on terms otherwise
substantially equivalent to those of the Debentures, with the balance to be
payable in cash. The provisions of Section 4(b) of the Debentures shall apply,
mutatis mutandis, to such offer and prepayment (with the Trigger Date to be
treated as a Change of Control under such Section).
8. The Company acknowledges the indebtedness represented by the
Debentures and confirms that the Company has no claims or rights of action of
any kind against NAN, NAN (GP) Investors, L.P., Fundamental Capital Corp.
or any of their respective officers, directors, partners or shareholders.
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9. The Company acknowledges that NAN's consent to the arrangements
herein shall not be construed as NAN's agreement to any amendment of the terms
of the Debentures or the Purchase Agreement, a waiver by NAN of any default by
the Company under the Debentures (other than the Property Sale Default) or the
Purchase Agreement, or a waiver by NAN of any other of its rights under the
Debentures or under the Purchase Agreement.
If the foregoing correctly sets forth the terms of our agreement, please
so indicate by signing in the space indicated below.
Very truly yours,
Nantucket Industries, Inc.
By:/s/ Stephen Samberg
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Title:Chief Executive Officer
We agree to the foregoing.
NAN Investors, L.P.
By: NAN (GP) Investors, L.P.
General Partner
By: Fundamental Capital Corp.
General Partner
By:/s/ Murray Forman
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