-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DCxe2m/5VVf6FIIORPflQgPgzTCv11qwR16NQ63cw0xiUfFJdR52dumLNthOlUwY h6pc5DN/jgCT5ezAeHpz3Q== 0001047469-97-000685.txt : 19971015 0001047469-97-000685.hdr.sgml : 19971015 ACCESSION NUMBER: 0001047469-97-000685 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19970830 FILED AS OF DATE: 19971014 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: NANTUCKET INDUSTRIES INC CENTRAL INDEX KEY: 0000069623 STANDARD INDUSTRIAL CLASSIFICATION: MEN'S & BOYS' FURNISHINGS, WORK CLOTHING, AND ALLIED GARMENTS [2320] IRS NUMBER: 580962699 STATE OF INCORPORATION: DE FISCAL YEAR END: 0225 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08509 FILM NUMBER: 97695069 BUSINESS ADDRESS: STREET 1: 105 MADISON AVE CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 212-889-5656 MAIL ADDRESS: STREET 1: 105 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10016 FORMER COMPANY: FORMER CONFORMED NAME: NANTUCKET LINGERIE INC DATE OF NAME CHANGE: 19690715 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 30, 1997. Commission File Number: 1-8509 NANTUCKET INDUSTRIES, INC. -------------------------- (Exact name of registrant as specified in its charter) Delaware 58-0962699 - -------- ---------- (State of other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 510 Broadhollow Road, Suite 300, Melville, New York 11747 --------------------------------------------------------- (Address of principal executive offices) (Zip Code) (516) 293-3172 -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days. X YES NO ----- ---- APPLICABLE ONLY TO CORPORATE ISSUERS: As of October 6, 1997, the Registrant had outstanding 3,238,796 shares of common stock not including 3,052 shares classified as Treasury Stock. NANTUCKET INDUSTRIES, INC. AND SUBSIDIARIES QUARTERLY REPORT FOR QUARTER ENDED AUGUST 30, 1997 --------------------------------------------- I N D E X ---------- Part I.--FINANCIAL INFORMATION PAGE - ------------------------------ ----- Consolidated balance sheets........................ 3 Consolidated statements of operations.............. 4 Consolidated statements of cash flows.............. 5 Notes to consolidated financial statements......... 6-11 Management's discussion and analysis of financial condition and results of operations...... 12-13 Part II.- OTHER INFORMATION............................. 14-15 Signature............................................... 16 Nantucket Industries, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS
AUGUST 31, MARCH 1, 1997 1997 ------------- --------- (UNAUDITED) (1) ASSETS CURRENT ASSETS Cash.................................................................................. $ 14,775 $ 7,941 Accounts receivable, less reserves of $157,000 and $149,000, respectively............. 3,362,591 5,872,734 Inventories (Note 4).................................................................. 6,316,775 7,826,440 Other current assets.................................................................. 500,114 506,171 ------------- --------- Total current assets................................................................ 10,194,255 14,213,286 PROPERTY, PLANT AND EQUIPMENT--NET...................................................... 3,173,027 3,204,037 OTHER ASSETS--NET....................................................................... 536,896 645,880 ------------- --------- $ 13,904,178 $18,063,203 ------------- --------- ------------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt.................................................. $ 535,297 $ 510,864 Current portion of capital lease obligations.......................................... 49,761 -- Accounts payable...................................................................... 1,018,209 1,081,133 Accrued salaries and employee benefits................................................ 83,246 348,361 Accrued unusual charge (Note 7)....................................................... 465,000 465,000 Accrued expenses and other liabilities................................................ 660,609 530,850 Accrued royalties..................................................................... 600,989 368,860 Income taxes payable (Note 5)......................................................... 1,909 1,909 ------------- --------- Total current liabilities........................................................... 3,415,020 3,306,977 LONG-TERM DEBT.......................................................................... 5,756,710 8,566,011 CAPITAL LEASE OBLIGATIONS, NET OF CURRENT PORTION....................................... 147,197 ACCRUED UNUSUAL CHARGE (Note 7)......................................................... 66,863 270,868 CONVERTIBLE SUBORDINATED DEBENTURES (Note 6)............................................ 2,760,000 2,760,000 ------------- --------- 12,145,790 14,903,856 COMMITMENTS AND CONTINGENCIES (Note8) STOCKHOLDERS' EQUITY (Note 6) Preferred stock, $.10 par value; 500,000 shares authorized, of which 5,000 shares have been designated as non-voting convertible with liquidating preference of $200 per share and are issued and outstanding................................................ 500 500 Common stock, $.10 par value; authorized 20,000,000 shares; issued 3,241,848 at August 30, 1997 and March 1, 1997.......................................................... 324,185 324,185 Additional paid-in capital............................................................ 12,364,503 12,364,503 Deferred issuance cost................................................................ (169,441) (183,772) Accumulated deficit................................................................... (10,741,422) (9,326,132) ------------- --------- 1,778,325 3,179,284 Less 3,052 shares at August 30, 1997 and March 1, 1997 of common stock held in treasury, at cost............................................................................... 19,937 19,937 ------------- --------- 1,758,388 3,159,347 ------------- --------- $ 13,904,178 $18,063,203 ------------- --------- ------------- ---------
- ------------------------ (1) Derived from audited financial statements. The accompanying notes are an intergral part of these statements 3 Nantucket Industries, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
TWENTY-SIX WEEKS ENDED THIRTEEN WEEKS ENDED ---------------------------- -------------------------- AUGUST 30, AUGUST 31, AUGUST 30, AUGUST 31, 1997 1996 1997 1996 ------------- ------------- ------------ ------------ Net sales.............................................. $ 11,561,289 $ 14,662,655 $ 5,203,953 $ 7,974,742 Cost of sales.......................................... 8,902,519 11,880,131 4,282,920 6,168,991 ------------- ------------- ------------ ------------ Gross profit......................................... 2,658,770 2,782,524 921,033 1,805,751 Selling, general and administrative expenses........... 3,431,841 3,723,534 1,530,817 1,958,051 ------------- ------------- ------------ ------------ Operating loss....................................... (773,071) (941,010) (609,784) (152,300) Interest expense....................................... 642,219 554,390 315,557 282,701 ------------- ------------- ------------ ------------ Net loss............................................. ($ 1,415,290) ($ 1,495,400) ($ 925,341) ($ 435,001) ------------- ------------- ------------ ------------ ------------- ------------- ------------ ------------ Net loss per share (Note 3)............................ ($ 0.45) ($ 0.51) ($ 0.29) ($ 0.15) ------------- ------------- ------------ ------------ ------------- ------------- ------------ ------------ Weighted average common shares outstanding............. 3,238,796 3,010,774 3,238,796 3,032,752 ------------- ------------- ------------ ------------ ------------- ------------- ------------ ------------
The accompanying notes are an integral part of these statements. 4 Nantucket Industries, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS
TWENTY-SIX WEEKS ENDED ---------------------------- AUGUST 30, AUGUST 31, 1997 1996 ------------- ------------- Cash flows from operating activities Net (loss) income.................................................................. ($ 1,415,290) ($ 1,495,400) Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities Depreciation and amortization.................................................... 200,709 152,434 Provision for doubtful accounts.................................................. 24,000 60,000 Gain on sale of fixed assets..................................................... (5,491) Provision for obsolete and slow moving inventory................................. 88,906 265,000 Decrease (increase) in assets Accounts receivable............................................................. 2,486,143 (501,161) Inventories..................................................................... 1,420,759 704,770 Other current assets............................................................ 6,057 53,486 (Decrease) increase in liabilities Accounts payable................................................................ (62,924) (627,537) Accrued expenses and other liabilities.......................................... 96,773 (85,663) Income taxes payable............................................................ (1,025) Accrued unusual charge.......................................................... (204,005) (204,004) ------------- ------------- Net cash provided by (used in) operating activities.............................. 2,635,637 (1,679,100) ------------- ------------- Cash flows from investing activities Dispositions of property, plant and equipment...................................... 68,402 68,453 Decrease in other assets........................................................... 108,984 990 ------------- ------------- Net cash provided by investing activities........................................ 177,386 69,443 ------------- ------------- Cash flows from financing activities Prepayment of short-term debt...................................................... -- (800,000) Payments of capital lease obligations.............................................. (21,321) -- Issuance of common stock........................................................... -- 641,419 Issuance of convertible subordinated debentures.................................... -- 2,760,000 Increase in deferred finance costs................................................. -- (255,560) Repayments of revolving credit financing, net...................................... (2,784,868) (736,202) ------------- ------------- Net cash provided by (used in) financing activities.............................. (2,806,189) 1,609,657 ------------- ------------- NET INCREASE IN CASH............................................................ $ 6,834 $ 0 Cash at beginning of period......................................................... 7,941 15,085 ------------- ------------- Cash at end of period............................................................... $ 14,775 $ 15,085 ------------- ------------- ------------- ------------- SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION: Cash paid during the period: Interest.......................................................................... $ 395,873 $ 494,675 ------------- ------------- ------------- ------------- Income taxes...................................................................... -- -- ------------- ------------- ------------- -------------
The accompanying notes are an integral part of these statements 5 NANTUCKET INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TWENTY-SIX WEEKS ENDED AUGUST 30, 1997 AUGUST 31, 1996 (unaudited) NOTE 1-RESTRUCTURING AND LIQUIDITY MATTERS The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 8, Levi Strauss & Co., the parent company of Brittania Sportswear Ltd.. a licensor which accounted for 49% of the Company's fiscal 1997 sales, announced their intention to sell Brittania. In light of the actions announced by Levi's, K-Mart, the largest retailer of the Brittania brand and the Company's largest customer accounting for approximately $11 million of the Company's fiscal 1997 sales of Brittania product, advised the Company that it would no longer continue its on-going commitment to the Brittania trademark. In response, the Company filed a $37 million lawsuit against Levi Strauss & Co. In addition, the Company has incurred significant losses which have generally resulted in the Company using rather than providing cash from its operations. As a result of the Brittania matter and the continuing losses, there can be no assurance that the Company can continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should the Company be unable to continue in existence. There can be no assurance that the ultimate impact or resolution of these matters will not have a materially adverse effect on the Company or on its financial condition. In view of the issues described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon the continued operations of the Company, which in turn is dependent upon the Company's ability to maintain the financing of its working capital requirements on a continuing basis and to improve its future operations. The Company has funded its operating losses by refinancing its debt in fiscal 1995 and increasing its capital through (a) the sale of $1 million of non-voting convertible preferred stock to management in fiscal 1995; (b) the fiscal 1995 sale of treasury stock which increased equity by $2.9 million and (c) the completion, in August, 1996, of a $3.5 million private placement (Note 6). The Company has been implementing a restructuring strategy to improve operating results and enhance its financial resources which included reducing costs, streamlining its operations and closing its Puerto Rico plant. In addition, Management has implemented 6 additional steps to reduce its operating costs which it believes are sufficient to provide the Company with the ability to continue in existence. Major elements of these action plans include: The transfer of all domestic manufacturing requirements to foreign manufacturing contracting facilities. The final phase of this program was completed by the middle of the 1998 fiscal year. On September 30, 1997, the Company sold its 152,000 sq. ft. Cartersville, GA facility and relocated to more appropriate space for its packaging and distribution activities. (See Note 9). Staff reductions associated with the transfer of manufacturing to offshore contractors, efficiencies and reduced volume. The relocation, in May, 1997, of executive offices and showrooms to more appropriate, lower cost facilities. Management believes these action plans will result in a $2.5 million reduction from fiscal 1997 overhead spending levels. NOTE 2-CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheet as of August 30, 1997 and the consolidated statements of operations for the twenty-six and thirteen week periods and statements of cash flows for the twenty-six weeks ended August 30, 1997 and August 31, 1996 have been prepared by the Company without audit. In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation of the financial position of the Company and its subsidiaries at August 30, 1997 and the results of their operations for the twenty-six and thirteen week periods and cash flows for the twenty-six weeks ended August 30, 1997 and August 31, 1996 have been made on a consistent basis. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 1997 Annual Report on Form 10-K. The results of operations for the periods presented are not necessarily indicative of the operating results for the full year. 7 NOTE 3-NET LOSS PER COMMON SHARE In February, 1997, the Financial Accounting Standards Board issued a Financial Accounting Standard No. 128, "Earnings per Share", which is effective for financial statements for both interim and annual periods ending after December 15, 1997. Early adoption of the new standard is not permitted. The new standard eliminates primary and fully diluted earnings per share and requires presentation of basic and diluted earnings per share together with disclosure of how the per share amounts were computed. The adoption of this standard will not have any impact on the disclosure of per share results in the financial statements. Net loss per common share is computed by dividing net loss by weighted average common shares outstanding during each year. Incremental shares from assumed conversions relating to the Convertible Subordinated Debentures, Stock Options and Warrants are not included since the effect would be antidilutive. NOTE 4-INVENTORIES Inventories are summarized as follows:
AUGUST 30, AUGUST 31, 1997 1996 ---------- ---------- Raw Materials....................... $ 789,597 $1,469,835 Work in Process..................... 1,699,212 4,161,763 Finished Goods...................... 3,827,966 3,555,271 ---------- ---------- $6,316,775 $9,186,869
NOTE 5-INCOME TAXES At August 30, 1997 the Company had a net deferred tax asset approximating $6,000,000 which is fully reserved until it can be utilized to offset deferred tax liabilities or realized against taxable income. The Company had a net operating loss carryforward for book and tax purposes of approximately $12,500,000. Accordingly, no provision for income taxes has been reflected in the accompanying financial statements. Certain tax regulations relating to the change in ownership may limit the Company's ability to utilize its net operating loss carryforward if the ownership change, as computed under such regulations, exceeds 50%. Through August 30, 1997 the change in ownership was approximately 46%. 8 NOTE 6-PRIVATE PLACEMENT August 15, 1996, the Company completed a $3.5 million private placement with an investment partnership. Terms of this transaction included the issuance of 250,000 shares and $2,760,000 12.5% convertible subordinated debentures which are due August 15, 2001. The convertible subordinated debentures are secured by a second mortgage on the Company's manufacturing and distribution facility located in Cartersville, GA. In conjunction with the sale of this property on September 30, 1997 (Note 9), the Company prepaid $707,000 of these debentures. The debentures, after giving effect to the prepayment related to the sale of the Company's facility referred to above, are convertible into the Company's common stock over the next five years as follows: Conversion Shares................... 305,000 176,967 Conversion Price ................... $3.83 $5.00 The agreement grants the investor certain registration rights for the shares issued and the Conversion Shares to be issued. The difference between the purchase price of the shares issued and their fair market value aggregated $197,500. This was reflected as deferred issue costs and will be amortized over the expected 5 year term of the subordinated convertible debentures. Costs associated with this private placement aggregated $409,000 including $104,000 relating to the shares issued which have been charged to paid in capital. The remaining balance of $305,000 will be amortized over the 5 year term of the debentures. The Company utilized $533,333 of the proceeds to prepay all of its obligations pursuant to its Credit Agreement dated March 21, 1994 with Chemical Bank. NOTE 7-UNUSUAL CHARGE In March, 1994, the Company terminated the employment contracts of its Chairman and Vice Chairman. In accordance with the underlying agreement, they are to be paid an aggregate of approximately $400,000 per year in severance, as well as certain other benefits, through February 28, 1999. The present value of these payments, $1,915,000, was accrued at February 26, 1994. 9 NOTE 8-LITIGATION Phoenix Matter- In September 1993, the Company filed an action against the former owners of Phoenix Associates, Inc. ("Phoenix"). The Company is seeking compensatory damages of approximately $4,000,000 plus declaratory and injunctive relief for acts of alleged securities fraud, fraudulent conveyances, breach of fiduciary trust and unfair competition in connection with the acquisition of the common stock of Phoenix. Additionally, the Company has filed a demand for arbitration which seeks compensatory damages of $4,000,000, rescission of the stock purchase agreement, rescission of an employment agreement and other matters, all on account of alleged breaches of the stock purchase agreement, fraudulent misrepresentation and breach of fiduciary duties. In November 1993, the former owners of Phoenix filed counterclaims against the Company alleging improper termination with regard to their employment agreement and breach of the stock purchase agreement. The former owners have filed for damages of approximately $9,000,000. The actions remain in their preliminary stage. The Company considers the damages in the claim to be insupportable and believes it will likely prevail on its defenses to such counterclaims. The Company is subject to other legal proceedings and claims which arise in the ordinary course of its business. In the opinion of management, the Phoenix litigation and other legal proceedings and claims will be successfully defended or resolved without a material adverse effect on the consolidated financial position or results of operation to the Company. No provision has been made by the Company with respect to the aforementioned litigation as of August 30, 1997. Brittania Matter- Since September, 1988, the Company has been a licensee of Brittania Sportswear, Ltd., a wholly-owned subsidiary of Levi Strauss & Co. to manufacture and market men's underwear and other products under the trademarks "Brittania" and "Brittania from Levi Strauss & Co.". Sales under this license aggregated $14.9 million in fiscal 1997, $14.6 million in fiscal 1996 and $14.2 million in fiscal 1995. As of January 1, 1997, the license was renewed for a 5 year term, including automatic renewals of 2 years if certain minimum sales levels are achieved. On January 22, 1997, Levi's announced their intention to sell Brittania. In light of the actions announced by Levi's, K-Mart, the largest retailer of the Brittania brand and the Company's largest customer accounting for approximately $11 million of the Company's fiscal 1997 sales of Brittania product, advised the Company that it would no longer continue its on-going commitment to the Brittania trademark. The Company has filed a $37 million lawsuit against Levi Strauss & Co. and Brittania Sportswear, Ltd. alleging that it was fraudulently induced into entering into the new license agreement by Levi's action, in the spring of 1996, linking Brittania with Levi's 10 including the marketing of a new trademark "Brittania from Levi Strauss & Co." In reliance on these actions and in anticipation of the continuing support by Levi's of the Brittania brand, the Company severed its long-standing relationship with a competing brand and developed new packaging to reflect the new marketing effort. There can be no assurance that the ultimate resolution of these matters will not have a materially adverse impact on the Company or on its financial condition. NOTE 9-SALE OF MANUFACTURING FACILITY On September 30, 1997 the Company completed the consolidation of its facilities and sold its 152,000 sq. foot manufacturing and distribution facility in Cartersville, GA. to Mimms Enterprises, a Real Estate Investment General Partnership, for cash aggregating $2,850,000. The Company will reflect a gain on the sale in its third fiscal quarter of approximately $615,000. The proceeds were used to repay the $525,000 financing secured by this property and to prepay $707,000 of the convertible subordinated debentures secured by a second mortgage on this property. The remaining net proceeds were utilized to reduce the revolving credit financing. The Company will be leasing 60,000 square feet of this facility through December 31, 1997. The Company expects to relocate to appropriate space in Georgia on January 1, 1998. This facility was sold in conjunction with the Company's decision to transfer its manufacturing requirements to foreign manufacturing contracting facilities. It is anticipated that the annualized savings from this transaction, comprised of interest and occupancy costs, will exceed $125,000 per year. NOTE 10-NEW ACCOUNTING PRONOUNCEMENTS In June, 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive Income" (SFAS 130) and Statement of Financial Accounting Standard No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS 131). The Company will implement SFAS 130 and SFAS 131 as required in the fiscal year which will end February, 1999, which require the Company to report and display certain information related to comprehensive income and operating segments, respectively. Adoption of SFAS 130 and SFAS 131 will not impact the Company's financial position or results of operations. 11 NANTUCKET INDUSTRIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Sales Net sales for the quarter ended August 30, 1997 decreased 35% from prior year levels to $5,203,000. This decline, associated with lower unit volumes, reflects a $1.3 million increase of the Company's GUESS? products and a 53% decline from prior levels of the Company's men's fashion underwear products. The decline in the sales of the men's products is generally related to the phase-out of sales of Brittania product associated with the actions announced by Levi's to dispose of the Brittania brand. The increase in the sales of GUESS? products reflects increased sales as the Company increased the number of department store locations carrying the product and increased sales from the introduction of new fashion products. Gross Margin Gross profit margins for the quarter ended August 30, 1997 decreased to 18% from the prior year levels of 23%. This reflects the impact of the disposal of certain extraneous raw materials in anticipation of the consolidation of the Company's facilities which was finalized on September 30, 1997 when the Company sold its 152,000 square foot manufacturing facility. Gross profit margins excluding this non-recurring disposal of raw materials would have increased to approximately 25% reflecting the benefit of increased utilization of the lower cost off-shore manufacturing facilities. The current fiscal year reflects reduced levels of factory overhead. Selling, general and administrative expenses Selling, general and administrative expenses were 29% of sales for the quarter ended August 30, 1997 and 24% of sales for the prior year period. This considers the impact of the lower sales volume on fixed cost levels. Selling expenses reflect the impact of the higher variable cost elements associated with the increase in GUESS? product sales. The Company has reduced general and administrative expenses in the second fiscal quarter by over $300,000 from prior year levels. Additional improvements will be reflected for the rest of the current fiscal year as the benefits of lower occupancy costs and reduced staffing levels are realized. Interest Expense Interest expense for the second fiscal quarter increased $33,000 from prior year levels reflecting increases in the prime rate and the higher rates associated with the $2.7 million Convertible Subordinated Debentures. This was offset by reductions from year end levels of the outstanding 12 revolving credit facility of $2.8 million for the six months to date, including $217,000 in the second fiscal quarter. Liquidity and Capital Resources The Company has incurred significant losses in recent years which have generally resulted in the Company using rather than providing cash from its operations. In March, 1994 the Company was successful in refinancing its credit agreements with (i) a three year $15,000,000 revolving credit facility with Congress Financial; (ii) a $2,000,000 Term Loan Agreement with Chemical Bank; and (iii) an additional $1,500,000 Term Loan with Congress replacing the Industrial Revenue Bond financing of the Cartersville, Georgia manufacturing plant. Additionally, the Company has increased its equity over the past three years through (i) a $1,000,000 investment by the Management Group in fiscal 1995; (ii) the $2.9 million sale of 490,000 shares of common treasury stock to GUESS?, Inc. and certain of its affiliates; and (iii) the $3.5 million private placement which included the issuance of 250,000 shares and $2,760,000 convertible subordinated debentures. These transactions, combined with its stronger credit facilities, enhanced the Company's liquidity and capital resources. The Company utilized the proceeds of the $3.5 million private placement to prepay existing debt. Overall, the Company has reduced its total long term debt by $2.8 million from levels at March 1, 1997. Working capital levels have declined $4.1 million from March 1, 1997 levels reflecting reductions in receivables and inventories utilized to reduce debt levels. The $1.5 million reduction in inventory levels reflects the Company's continuing strategy of replacing domestic manufacturing with off shore contractors. The Company believes that the amended Congress credit facility, combined with the $3.5 million private placement, provides adequate financing flexibility to fund its operations at current levels. However, Congress Financial Corp. has temporarily limited $325,000 of the Company's borrowing availability pending a review of the valuation of the Company's inventories. In the opinion of the Company's management, this review will substantiate the inventory values and allow the Company to borrow a substantial portion of this temporary limitation. Until such review is completed, the Company's financial resources will be strained. The Company believes that the moderate rate of inflation over the past few years has not had significant impact on sales or profitability. Any statements contained in this report which are not historical facts are forward-looking statements that involve risks and uncertainties. Please refer to the business risks and uncertainties discussed elsewhere in this report and in the Company's recent report on Form 10-K. 13 PART II Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K Item 6(a) Exhibits 10(y) Filed Herewith Purchase and Sale Agreement dated as of July 31, 1997 by and among Mimms Investments, a Georgia general partnership and Nantucket Industries, Inc. regarding the sale of the Registrant's property located at 200 Cook Street, Cartersville, GA. 10(y)(i) Filed Herewith Amendment dated August 14, 1997 to Purchase and Sale Agreement dated as of July 31, 1997 by and among Mimms Investments, a Georgia general partnership and Nantucket Industries, Inc. regarding the sale of the Registrant's property located at 200 Cook Street, Cartersville, GA. 10(y)(ii) Filed Herewith Amendment dated August 27, 1997 to Purchase and Sale Agreement dated as of July 31, 1997 by and among Mimms Investments, a Georgia general partnership and Nantucket Industries, Inc. regarding the sale of the Registrant's property located at 200 Cook Street, Cartersville, GA. 14 10(ii)(iii) Filed Herewith Amendment No. 4 dated March 18, 1997, to Loan and Security Agreement dated as of March 21, 1994, among Nantucket Industries, Inc. and Congress Financial Corp. 10(ii)(iv) Filed Herewith Amendment No. 5 dated March 31, 1997, to Loan and Security Agreement dated as of March 21, 1994, among Nantucket Industries, Inc. and Congress Financial Corp. 10(ii)(v) Filed Herewith Amendment No. 6 dated May 4, 1997, to Loan and Security Agreement dated as of March 21, 1994, among Nantucket Industries, Inc. and Congress Financial Corp. Item 27 Financial Data Schedule Filed Herewith 15 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NANTUCKET INDUSTRIES, INC. (Registrant) By: October 14, 1997 s/Ronald S. Hoffman ------------------------- Vice President - Finance (Chief Accounting Officer) 16 EX-10.(Y) 2 PURCHASE AND SALE AGREEMENT - ------------------------------------------------------------------------------- PURCHASE AND SALE AGREEMENT By and Between NANTUCKET INDUSTRIES, INC. ("Seller") and MIMMS INVESTMENTS ("Purchaser") For 200 COOK STREET CARTERSVILLE, BARTOW COUNTY, GEORGIA ("Property") - ------------------------------------------------------------------------------- TABLE OF CONTENTS Page No. 1. Earnest Money 1 2. Purchase Price and Method of Payment 1 3. Closing 1 4. Seller's Covenants 2 5. Items to be Delivered by Seller Prior to or at Closing 2 6. Title Objections 3 7. Survey 4 8. Inspection by Purchaser 4 9. Casualty and Condemnation 5 10. Items to be Delivered by Purchaser at Closing 5 11. Application of Earnest Money and Remedies upon Default 6 12. Broker's Commission 6 13. Notices 6 14. Tax Free Exchange 7 15. Assignability 8 16. Contingencies 8 17. Acceptance 9 18. Miscellaneous 9 (i) PURCHASE AND SALE AGREEMENT This Purchase and Sale Agreement (hereinafter referred to as the "Agreement") is made and entered into as of this day of July, 1997, by and between NANTUCKET INDUSTRIES, INC. a Delaware corporation (hereinafter referred to as "Seller") and MIMMS INVESTMENTS, a Georgia general partnership composed of David A. Mimms, Malon D. Mimms, Jr. and Robert C. Mimms (hereinafter referred to as "Purchaser"). WITNESSETH In consideration of the mutual covenants herein contained, Seller hereby agrees to sell, and Purchaser hereby agrees to purchase, all that tract or parcel of land lying and being in the City of Cartersville in Land Lots 527 and 554 of the 4th District and Third Section of Bartow County, Georgia, being improved property known as 200 Cook Street, Cartersville, Georgia and being more particularly described on Exhibit "A" attached hereto and incorporated herein by reference, together with all improvements thereon, including, but not limited to, an approximately 152,500 square foot office/warehouse facility on 24.67 acres, and all easements and appurtenances thereto, including, without limitation, all electrical, mechanical, plumbing, heating, air conditioning and all other systems and fixtures owned by Seller located thereon (hereinafter referred to as the "Property"), on the following terms and conditions: 1. EARNEST MONEY. Within two (2) business days following the Effective Date of this Agreement (as hereinafter defined) Purchaser shall pay to Chicago Title Insurance Company (hereinafter referred to as the "Escrow Agent") the sum of $75,000.00 as Earnest Money (hereinafter referred to as the "Earnest Money"), which Earnest Money shall be held in an interest bearing account and applied to and credited against the purchase price at closing or otherwise paid to Seller or refunded to Purchaser in accordance with the terms and provisions of this Agreement. Interest earned on said Earnest Money shall be equally divided between Seller and Purchaser at Closing or paid to the recipient of the Earnest Money in the event of either party's default under or termination of this Agreement. In the event of any dispute between Seller and Purchaser with respect to the Earnest Money, the Escrow Agent shall have the right to pay the same into the registry of a Court of competent jurisdiction, whereupon Escrow Agent's obligations hereunder shall terminate. 2. PURCHASE PRICE AND METHOD OF PAYMENT. The purchase price for the Property shall be TWO MILLION EIGHT HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS (2,850,000.00), to be paid as follows: ALL CASH OR IMMEDIATELY AVAILABLE FUNDS AT CLOSING. 3. CLOSING. (a) The purchase and sale hereunder shall be closed on or before the thirtieth (30th) day of September, 1997 at such time and place which is mutually agreeable to Seller and Purchaser, provided, however, that in the event the parties are unable to agree on an earlier time and place of closing, the closing shall take place at 10:00 a.m. on September 30, 1997 at the offices of Thompson, O'Brien, Kemp & Nasuti, P.C.; (b) At closing, Seller shall pay the transfer tax on the Deed from Seller to Purchaser and one-half (1/2) of any escrow fees. Purchaser shall pay all inspection and closing costs, including, but not limited to, title examination costs, title insurance premiums, recording costs, appraisal fees, engineering fees and one-half (1/2) of any escrow fees. Seller and Purchaser shall each pay their respective attorney's fees; (c) Ad valorem taxes, rents and all other items of income and expense in connection with the operation of the Property shall be prorated between Seller and Purchaser as of the date of closing. In the event the Property is subject to or affected by any assessment for water, sewer or other utilities as of the date of closing, which assessment is or shall be a charge or lien against the Property, such assessment, regardless of when due and payable, shall be deemed due and payable for purposes of this Agreement and shall be paid in full at closing by Seller. Subject to the foregoing, ad valorem taxes will be prorated at closing on the basis of the current year's tax bill, or, if unavailable, the preceding year's tax bill. If the actual taxes for the year of closing are more or less than the amount prorated, then, within ten (10) days after request for payment, such taxes shall be re-prorated to reflect the actual amount of taxes due for the calendar year in which the closing occurs; and (d) Seller shall deliver possession of the Property to Purchaser on the closing date. 4. SELLER'S COVENANTS. Seller hereby covenants with Purchaser as follows: (a) That as of the date of closing, there will be no unpaid water bill, sanitation bills or special assessments either as to Seller or any tenant now or formerly occupying the premises; (b) That as of the date of closing, there will be no executory contracts for any services affecting the Property except as may be specifically requested of Seller by Purchaser in writing, or which may not be canceled upon thirty (30) days notice without penalty or premium; and (c) That except for the leases described in Paragraph 16 hereof, Seller shall not enter into any leases or contracts with respect to the Property subsequent to the Effective Date of this Agreement without the prior written consent of Purchaser. 5. ITEMS TO BE DELIVERED BY SELLER PRIOR TO OR AT CLOSING. Contemporaneous with the execution of this Agreement by Seller, Seller shall deliver to Purchaser all information in Seller's possession or control related to the Property as follows: copies of the following documents or information: year-end property statements of utility charges and real estate taxes for 1995 and 1996, the most recent 1997 year-to-date property statement of utility charges and real estate taxes, the 1997 operating budget, copies of all contracts affecting the Property, contracts and documentation, plans and specifications, surveys, certificates of occupancy, soil or subsurface condition reports, engineering studies, marketing studies, ADA studies, environmental studies, owner's title policy, building measurement reports, property management agreements, property leasing agreements, any notices from governmental agencies regarding condemnation and 2 compliance of the Property with applicable laws, codes, rules and regulations and any other materials requested by Purchaser. At closing, Seller shall deliver to Purchaser the following: (a) A Limited Warranty Deed from Seller to Purchaser, conveying good and marketable fee simple title to the Property, free and clear of all liens, restrictions and encumbrances other than (i) ad valorem taxes for the current year which are not yet due and payable, (ii) easements and restrictions of record, and (iii) the "Permitted Exceptions" identified in Section 6 herein; (b) An Owner's Affidavit in form and substance satisfactory to the Title Company (as hereinafter defined); (c) An Affidavit, in form and substance satisfactory to the title insurance company, stating Seller's taxpayer identification number, that Seller is a "United States person", as defined by Internal Revenue code Section 1445(f)(3) and Section 7701(g), and that the purchase of the Property by Purchaser pursuant to this Agreement is not subject to the withholding requirements of Section 1445(a) of the Internal Revenue Code; (d) Instruments required by law, in form reasonably satisfactory to Purchaser, reflecting the proper authority of Seller to consummate the transaction contemplated by this Agreement; (e) An Affidavit of Georgia residency or such alternative information as is required to allow Purchaser to withhold the proper amount under O.C.G.A. Section 48-7-128; (f) A Settlement Statement executed by Seller; and (g) Any and all other documents reasonably required by Purchaser, the closing attorney and/or the Title Company. 6. Title Objections. (a) Within thirty (30) days following the Effective Date, Purchaser shall obtain and deliver to Seller a commitment for the issuance of a standard ALTA form owner's policy of title insurance (the "Title Commitment"), in the amount of the purchase price, issued by Chicago Title Insurance Company (the "Title Company"). Subject to Purchaser's right to make title objections as provided hereinafter in this paragraph, the exceptions shown on Schedule B, Section 2 of the Title Commitment shall be deemed the "Permitted Exceptions" for all purposes of this Agreement. The leases set forth in paragraph 16 hereof, and any applicable zoning ordinances, other land use laws and regulations together with taxes for the current tax year shall also be deemed Permitted Exceptions. Simultaneously with the delivery of the Title commitment to Seller, Purchaser has the right to deliver to Seller a written statement of any objections to Seller's title. Seller agrees not to further encumber the Property from and after the Effective Date of this Agreement without the prior written consent of Purchaser, which consent shall not be unreasonably withheld. For purposes of this Agreement, the marketability of title to the Property shall be determined under Georgia law, as supplemented by the title standards of the State Bar of Georgia. If Purchaser notifies Seller of any objections to the 3 marketability of title, Seller, at Seller's expense, shall have five (5) business days to notify Purchaser as to which objections Seller shall correct prior to closing. If Seller does not elect to correct such objections prior to closing, then, at the option of Purchaser, Purchaser may (a) terminate this Agreement by providing written notice of such termination to Seller on or before the expiration of the Inspection Period, whereupon the Earnest Money shall be returned to Purchaser and this Agreement shall be null and void and of no further force or effect, and the parties shall have no further rights, duties, liabilities or obligations hereunder, or (b) proceed to close and take title to the Property subject to such objectionable matter, which shall be deemed a Permitted Exception. If said objections are cured on or before the date of closing, Purchaser shall be obligated to close unless a later encumbrance shall be filed of record on or before the date of closing. Seller shall have the same right to cure or obtain affirmative insurance against said later encumbrance. If such later encumbrance is cured, Purchaser shall thereupon be obligated to close. If any objections to title are not timely made of if Seller is not properly notified, as hereinafter provided, all such objections shall be deemed waived. Purchaser agrees that Seller shall have no obligation to cure any title objections, other than mechanic's or materialman's liens encumbering the Property arising from any act or omission of Seller. For purposes of this Agreement, a title objection shall be deemed cured if the title insurance is induced to remove the item objected to from the Title Commitment such that it no longer appears as an exception thereon or affirmative title insurance coverage is obtained or made available to the Purchaser insuring the objected item at no additional expense to or indemnity from Purchaser. The entire premium and expenses for the Title Commitment and the Owner's policy of title insurance shall be borne by Purchaser, and (b) To enable Seller to make conveyance as herein provided, Seller may at Closing use the Purchase Price or any portion thereof to clear title to any or all encumbrances or interests. 7. Survey. Within thirty (30) days following the date of execution of this Agreement by Seller and Purchaser, Purchaser shall have a survey made of the Property and provide Seller with objections to any matter affecting the Property disclosed by the survey, including objections to title based upon the survey. Any such objections shall be governed by the preceding paragraph. The cost of any survey shall be borne by Purchaser. 8. Inspection by Purchaser. (a) Purchaser shall have the right to inspect the Property at reasonable times and upon reasonable notice to Seller, to determine the suitability of same for Purchaser's intended use. In the event Purchaser, in Purchaser's sole discretion, determines that the Property is not suitable for the uses intended by Purchaser, Purchaser shall have the right to terminate this Agreement by delivering written notice of such termination to Seller within thirty (30) days following the date of execution of this Agreement by Seller and Purchaser (the ""Inspection Period''); (b) In the event of Purchaser's termination of this Agreement, the Earnest Money shall be promptly returned to the Purchaser, whereupon this Agreement shall be null and void and of no further force or effect, and the parties shall have no further rights, duties, liabilities or obligations hereunder, and 4 (c) During the Inspection Period, Purchaser shall have the right, at Purchaser's expense, to inspect the Property for the presence of hazardous materials, including taking samples for laboratory examination, and such other inspection or testing as is necessary in completing a Phase II Environmental Assessment of the Property. In the event such inspection and/or testing reveals any material violations of applicable state and/or federal environmental regulations, Purchaser may terminate this Agreement as provided in subparagraph (a) above, in which event the Earnest Money shall be returned to Purchaser, and the parties shall have no further rights, duties, liabilities, or obligations hereunder. 9. Casualty and Condemnation. (a) At closing, Seller shall deliver to Purchaser the Property in the same condition as exists on the date of execution of this Agreement by Seller and Purchaser, normal wear and tear excepted. If the Property, or any portion thereof, is damaged or destroyed by fire or other casualty prior to the closing, and the amount of the damages exceeds $75,000.00, then, at the option of Purchaser, exercised by delivery to Seller of written notice of such election on or before the fifteenth (15th) day following the date on which Purchaser receives from Seller written notice of such damage or destruction, this Agreement shall terminate and the Earnest Money shall be returned to Purchaser. In the event Purchaser does not elect to terminate the Agreement, this Agreement shall remain in full force and effect, the Seller, at closing, shall transfer and assign to Purchaser all of Seller's right, title and interest in and to the insurance proceeds when, as, and if, received by Seller (without contribution as to deductible) by reason of such damage or destruction; and (b) If, at any time prior to closing, any action or proceeding is filed or overtly threatened in writing, under which the Property, or any material portion thereof, may be taken pursuant to any law, ordinance or regulation or by condemnation or the right of eminent domain, then, at the option of Purchaser, exercised by delivery to Seller of written notice of such election on or before the fifteenth (15th) day following the date on which Purchaser receives from Seller written notice that such suit has been filed or is threatened, this Agreement shall terminate and the Earnest Money shall be returned to Purchaser. In the event Purchaser does not elect to terminate the Agreement, this Agreement shall remain in full force and effect, and Seller, at closing, shall transfer and assign to Purchaser all of Seller's right, title and interest in and to any net proceeds actually received when received (net of attorney's fees) by reason of such taken, or sale in lieu thereof. 10. Items to be Delivered by Purchaser at Closing. At Closing, Purchaser shall deliver to Seller the following: (a) The purchase price in accordance with the terms of Paragraph 2 hereof; (b) An Assignment and Assumption Agreement by and between Seller and Purchaser of all Leases affecting the Property; which agreement shall include an indemnification of Purchaser by Seller against any liability in connection with the Property arising prior to the Closing Date and an indemnification of Seller by Purchaser against any liability in connection with the Property arising after the Closing Date; 5 (c) A Settlement Statement executed by Purchaser; and (d) Instruments required by law and/or Purchaser's general partnership agreement, in form reasonably satisfactory to Seller reflecting the proper authority of Purchaser to consummate the transaction contemplated by this Agreement. 11. Application of Earnest Money and Remedies upon Default. (a) Upon the closing of the purchase and sale hereunder, the Earnest Money shall be applied to and credited toward the purchase price; (b) If the purchase and sale hereunder is not closed by reason of Seller's default hereunder, the Earnest Money shall be refunded to Purchaser upon demand and Purchaser shall have the right to (i) file suit for specific performance of this Agreement or (ii) file suit for damages sustained by Purchaser as a result of Seller's breach of this Agreement; and (c) If the purchase and sale hereunder is not closed by reason of Purchaser's default hereunder, then, as full liquidated damages for such default by Purchaser, the Earnest Money shall be immediately paid to Seller. It is specifically understood and agreed that payment of the Earnest Money to Seller, as liquidated damages, shall be Seller's sole and exclusive remedy hereunder, and Seller is hereby specifically waiving and relinquishing any and all other remedies at law or in equity. The parties acknowledge that the actual amount of the damages which Seller would sustain as a result of Purchaser's breach of this Agreement are difficult or impossible to estimate, and that the payment of Earnest Money to seller represents the parties' best estimate of Seller's damages in the event of such breach and is not to be construed as a penalty or forfeiture. The said stipulated sum is a reasonable pre-estimate of the probable loss resulting from such a breach. 12. Broker's Commission. Seller and Purchaser acknowledge that Brannen Goddard Company ("Broker") represents only the interest of Seller in this transaction. Seller agrees to pay a six percent (6%) commission to Broker at Closing. Seller and Purchaser hereby represent to each other that no other real estate broker or agent was involved in negotiating the transaction contemplated herein. The parties agree to indemnify and hold the other party harmless from and against any and all causes, claims, demands, losses, liabilities, fees, commissions, settlements, judgments, damages, expenses and fees (including attorney's fees and court costs) in connection with any claim for commissions, fees, compensation or other charges relating in any way to this transaction, or the consummation thereof, which may be made by any person, firm or entity as a result of the acts of said party or said party's representatives. Purchaser hereby acknowledges that any brokerage commission arising on account of the leases described in Paragraph 16 hereof shall be the Purchaser's responsibility, and Purchaser and Seller agree to execute at closing an Assignment and Assumption Agreement with respect to the Lease Commission Agreement associated with said leases. 13. Notices. All notices permitted or required to be made hereunder shall be in writing, signed by the party giving such notice and delivered via facsimile (with a copy by first class mail), personal delivery, overnight mail or first class mail to the other party at the address shown below. Such notice shall be deemed effective as of the date of facsimile transmission, personal delivery of such 6 notice, receipt of such notice by overnight mail, or receipt of such notice by first class mail. It is hereby expressly understood and agreed that in the event any date on which notice is required to be made hereunder falls on a Saturday, Sunday or legal holiday, then the date on which such notice or election is required to be given or made hereunder shall for all purposes be deemed to be the next business day. Seller's Address: Nantucket Industries, Inc. 510 Broadhollow Road, Suite 300 Melville, New York 11747 Attn: Ronald S. Hoffman Fax No.: 516-293-3318 with a copy to: Lane Altman & Owens LLP 101 Federal Street Boston, Massachusetts 02110 Attn: Sally E. Michael Fax No.: 617-345-0400 Purchaser's Address: Mimms Investments 85-A Mill Street, Suite 100 Roswell, Georgia 30075 Attn: Malon D. Mimms, Jr. Fax No.: 770-552-1100 with a copy to: Thompson, O'Brien, Kemp & Nasuti, P.C. 4845 Jimmy Carter Boulevard Norcross, Georgia 30093 Attn: Betty H. Morris Fax No.: 770-925-8597 Broker's Address: Brannen Goddard Company 3390 Peachtree Road, N.E. Atlanta, Georgia 30336 Attn: Mark Sheffield Fax No.: 404-816-3939 14. TAX FREE EXCHANGE. Both Seller and Purchaser shall have the right to cause the Closing to occur as part of a "like-kind" exchange pursuant to the provisions of Section 1031 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder. Seller and Purchaser agree to cooperate with each other in effecting a qualifying like-kind exchange; provided, however, if either party (the "Electing Party") elects to effect a qualifying like-kind exchange: (a) The other party shall not be obligated to incur any costs, expenses, losses, liabilities or damages greater than those such party would have incurred had the Electing Party not elected to effect a like-kind exchange, and the Electing Party shall indemnify the other party against same; 7 (b) In no event shall the other party be required to acquire title to any other property, whether by deed or contract right, for the benefit of the Electing Party or its assignee; Seller and Purchaser make no representations to each other that the sale or purchase, respectively, of the Property will qualify for tax free exchange treatment. 15. Assignability. This Agreement may be assigned by Purchaser at or before closing to any partnership, trust, corporation, limited liability company or other legal entity currently existing or subsequently formed or incorporated which is wholly owned and controlled by any one or more of the general partners of Purchaser. Furthermore, Purchaser may assign this Agreement to a Trustee/Escrow Agent in order to effect the acquisition of the Property as "replacement property" in connection with a "like kind" exchange, as such terms are defined in Section 1031 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder, provided Purchaser satisfies the conditions identified in Paragraph 14 regarding such "like-kind" exchange. Purchaser shall designate such assignee in writing at least ten (10) days prior to the Closing Date. 16. Contingencies. The consummation of the purchase and sale of the Property and the obligations of Seller and Purchaser are contingent upon the following: (a) Seller's ability to obtain, prior to expiration of the Inspection Period, a fully executed Warehouse Lease with Academic Book Services ("Lessee") on terms acceptable to Seller and Purchaser; and (b) Purchaser's ability to obtain, prior to expiration of the Inspection Period, the consent of Seller to a conditional Lease from Seller to Purchaser, to include the following stipulations: (i) Seller ("Nantucket") may lease approximately 60,000 square feet of space ("Leased Space") in the rear of the Property for Ten Thousand Seven Hundred Fifty and No/100 Dollars ($10,750.00) per month from October 1, 1997 through December 31, 1997; (ii) Nantucket will be responsible for paying its proportionate share of all taxes, insurance, utilities, maintenance and any other expenses associated with the Leased Space; and (iii) Nantucket must vacate the Property on or before December 31, 1997. In the event Purchaser, in Purchaser's sole discretion, determines that the above contingencies have not been satisfied, Purchaser shall have the right to terminate this Agreement by delivering written notice of such termination to Seller within thirty (30) days following the Effective Date. 8 17. Acceptance. Acceptance of the Deed by Purchaser shall constitute full performance and discharge of every agreement and obligation of Seller hereunder except for its obligations under the lease described in Paragraph 16(b) hereof. 18. Miscellaneous. (a) Time is of the essence of this Agreement; (b) This Agreement shall be binding upon and shall inure to the benefit of Seller and Purchaser, their respective successors, successors in title, legal representatives, heirs and assigns; (c) This Agreement shall be construed and enforced in accordance with the laws of the State of Georgia. If any provision hereof is held to be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of any other provision hereof, (d) This Agreement contains the entire agreement of the parties hereto concerning the subject matter hereof, and no representations, inducements, promises or agreements, oral or otherwise, not expressly set forth herein shall be of any force or effect. This Agreement may not be modified except by written modification executed by all parties hereto; (e) All titles or captions of the paragraphs set forth in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof; and (f) This Agreement and the warranties and representations set forth herein shall not be merged into the documents executed at closing but shall survive the closing and remain in full force and effect; (g) The effective date of this Agreement (the "Effective Date") shall be the date of execution of this Agreement by Seller and Purchaser. In the event this Agreement is executed by Seller and Purchaser on different dates, the Effective Date shall be the date of execution by the party signing last. [SIGNATURES ON FOLLOWING PAGE] 9 SELLER: NANTUCKET INDUSTRIES, INC., a Delaware corporation By: /s/ Ronald Hoffman -------------------------- Name: Ronald Hoffman ------------------------- Title: V.P. ------------------------ [CORPORATE SEAL] Date of Execution: ------------ PURCHASER: MIMMS INVESTMENTS, a Georgia general partnership By: /s/ Malon D. Mimms, Jr. (Seal) -------------------------- Malon D. Mimms, Jr. General Partner Date of Execution: 7/25/97 ------------ 10 EX-10.(Y)(I) 3 AMENDMENT TO PURCHASE AND SALE AGREEMENT Exhibit 10(y)(i) AMENDMENT TO PURCHASE AND SALE AGREEMENT WHEREAS, NANTUCKET INDUSTRIES, INC. ("Seller") and MIMMS INVESTMENTS ("Purchaser") entered into a Purchase and Sale Agreement (the "Agreement") on July 31, 1997 regarding the purchase and sale of real property known as 200 Cook Street, Cartersville, Bartow County, Georgia (the "Property"); and WHEREAS, the parties desire to amend certain provisions of the Agreement; NOW, THEREFORE, the parties hereby amend the Agreement as follows: 1. The second sentence of Section 8(a) of the Agreement is hereby amended to read as follows: "In the event Purchaser, in Purchaser's sole discretion, determines that the Property is not suitable for the uses intended by Purchaser, Purchaser shall have the right to terminate this Agreement by delivering written notice of such termination to Seller on or before September 4, 1997 (the "Inspection Period Deadline")." 2. Section 16(a) of the Agreement is hereby amended to read as follows: "Seller's ability to obtain, prior to the Inspection Period Deadline, a fully executed Warehouse Lease with Academic Book Services ("Lessee") on terms acceptable to Seller and Purchaser; and". 3. Section 16(b) of the Agreement is hereby amended to read as follows: "Purchaser's ability to obtain, prior to the Inspection Period Deadline, a fully executed Commercial Lease Agreement between Seller and Purchaser on terms acceptable to Seller and Purchaser." 4. The last sentence of Section 16 of the Agreement is hereby amended to read as follows: "In the event Purchaser, in Purchaser's sole discretion, determines that the above contingencies have not been satisfied, Purchaser shall have the right to terminate this Agreement by delivering written notice of such termination to Seller on or before the Inspection Period Deadline." 5. The following Section 19 is hereby added to the Agreement: "19. Indemnification for Roof Repairs. At Closing, Seller shall execute and deliver to Purchaser an Indemnity Agreement, whereby Seller agrees to indemnify and hold Purchaser harmless, through and including October 1, 1999, from and against any and all claims for roof repairs to the Property asserted by Academic Book Services and all reasonable costs associated therewith." 6. This Amendment (and any subsequent amendments to the Agreement) shall be effective upon the execution of same by Seller and Purchaser and delivery of same to the other by telecopy. 7. This Amendment (and any subsequent amendments to the Agreement) may be executed in counterparts, each of which together shall constitute one and the same instrument and shall be deemed an original. Except as amended herein, the Agreement is hereby ratified and confirmed in all respects. IN WITNESS WHEREOF, Seller and Purchaser have hereto set their hands and seals this 14th day of August, 1997. SELLER: NANTUCKET INDUSTRIES, INC. By: /s/ Ronald Hoffman ------------------------------------- Ronald Hoffman Vice President PURCHASER: MIMMS INVESTMENTS, a Georgia general partnership By: -------------------------------------- Malon D. Mimms, Jr. General Partner EX-10.(Y)(II) 4 2ND AMENDMENT TO PURCHASE AND SALE AGREEMENT Exhibit 10(y)(ii) SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT WHEREAS, NANTUCKET INDUSTRIES, INC. ("Seller") and MIMMS INVESTMENTS ("Purchaser") entered into a Purchase and Sale Agreement (the "Agreement") on July 31, 1997 regarding the purchase and sale of real property known as 200 Cook Street, Cartersville, Bartow County, Georgia (the "Property"), which Agreement was amended on August 14, 1997; and WHEREAS, the parties desire to further amend certain provisions of the Agreement; NOW, THEREFORE, the parties hereby amend the Agreement as follows: 1. The first and second sentences of Section 12 of the Agreement are hereby amended to read as follows: "Seller and Purchaser acknowledge that Brannen Goddard Company and Harris Properties, Inc. ("Brokers") represent only the interest of Seller in this transaction. Seller agrees to pay a six percent (6%) commission to Brokers at closing, with such commission being divided as follows: seventy-five percent (75%) to Brannen Goddard Company and twenty-five percent (25%) to Harris Properties, Inc." Except as amended herein, the Agreement, as previously amended, is hereby ratified and confirmed in all respects. IN WITNESS WHEREOF, Seller and Purchaser have hereto set their hands and seals this 27th day of August, 1997. SELLER: NANTUCKET INDUSTRIES, INC. By: /s/Ronald Hoffman -------------------------- Ronald Hoffman Vice President PURCHASER: MIMMS INVESTMENTS, a Georgia general partnership By: /s/Malon D. Mimms, Jr. -------------------------- Malon D. Mimms, Jr. General Partner EX-10.(II)(III) 5 AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT Exhibit 10(ii)(iii) AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT NANTUCKET INDUSTRIES, INC. 105 Madison Avenue New York, New York 10016 March 18, 1997 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. 1 to Loan and Security Agreement, dated May 31, 1996, Amendment No. 2 to Loan and Security Agreement, dated July 31, 1996, and Amendment No. 3 to Loan and Security Agreement, dated as of August 15, 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 consent to Borrower entering into certain lease financing arrangements with IBM Credit (as hereinafter defined), pursuant to which IBM Credit will finance the acquisition of certain equipment by Borrower to upgrade certain existing Equipment of Borrower and to permit a lien on such equipment to secure such indebtedness. 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, the following definitions: (i) "IBM Credit" shall mean IBM Credit Corporation, a New York corporation, and its successors and assigns. (ii) "IBM Capital Lease Agreement" shall mean the General Business Lease Agreement, dated as of the date hereof, between IBM Credit and Borrower, pursuant to which IBM Credit has agreed to finance the acquisition by Borrower of certain Equipment for the purpose of upgrading certain existing Equipment, as all of the foregoing Equipment is identified on Schedule A hereto, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. (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. Section 9.8(e) of the Loan Agreement is hereby deleted in its entirety and replaced with the following: "(e) (i) purchase money security interests in Equipment (including capital leases) and purchase money mortgages on real estate not to exceed $50,000 in the aggregate at any time outstanding so long as (A) such security interests and mortgages do not apply to any property of Borrower, other than the Equipment or real estate so acquired, and (B) the indebtedness secured thereby does not exceed the cost of the Equipment or real estate so acquired, as the case may be; and (ii) the security interests and liens of IBM Credit in Equipment subject to the IBM Capital Lease Agreement (as in effect on the date of the execution thereof) not to exceed $218,279 less the aggregate amount of all repayments in respect thereof, plus charges and fees, so long as (A) such security interests and liens of IBM Credit do not apply to any property of Borrower, other than the Equipment specifically identified in the IBM Capital Lease Agreement (as in effect on the date of the execution thereof) and (B) the indebtedness secured thereby does -2- not exceed the cost of the Equipment acquired pursuant to the IBM Capital Lease Agreement (as in effect on the date of the execution thereof);" 3. 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. 4. 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 a true, correct and complete copy of the IBM Capital Lease Agreement; and (c) 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. 5. 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 -3- 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. 6. 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. 7. 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). 8. 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. 9. 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 Hoffman -------------------------- Title: VP - Finance ----------------------- [SIGNATURES CONTINUE ON NEXT PAGE] -4- [SIGNATURES CONTINUED FROM PREVIOUS PAGE] ACKNOWLEDGED: NANTUCKET MILLS, INC. By: /s/ Ronald Hoffman -------------------------- Title: VP ------------------------ AGREED: CONGRESS FINANCIAL CORPORATION By: /s/ David Marisca -------------------------- Title: Vice President ------------------------ -5- EX-10.(II)(IV) 6 AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT Exhibit 10(ii)(iv) AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT NANTUCKET INDUSTRIES, INC. 105 Madison Avenue New York, New York 10016 As of March 31, 1997 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. 1 to Loan and Security Agreement, dated May 31, 1996 ("Amendment No. 1 to Loan Agreement"), Amendment No. 2 to Loan and Security Agreement, dated July 31, 1996, Amendment No. 3 to Loan and Security Agreement, dated as of August 15, 1996, and Amendment No. 4 to Loan and Security Agreement, dated as of March 18, 1997 (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 and Guarantor have requested (a) certain amendments to the lending formula(s) applicable to Eligible Inventory with respect to packaged finished goods and unpackaged finished goods for Supplemental Loans during the Supplemental Loan Period and (b) that Lender waive a certain Event of Default arising from Borrower's failure to maintain Working Capital for the month of January 1997 in the amount set forth in the Loan Agreement. 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. 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. Amendments regarding Supplemental Loans. (a) Borrower, Guarantor and Lender agree that, effective as of March 31, 1997, the lending formula(s) with respect to the Eligible Inventory for Supplemental Loans during the Supplemental Loan Period contained in Section 6 of Amendment No. 1 to Loan Agreement is hereby amended by deleting all references to "ten (10%) percent" contained therein and substituting "five (5%) percent" in its place. (b) Borrower and Guarantor hereby acknowledge (i) the reduction in the lending formula pursuant to the Loan Agreement with respect to Eligible Inventory constitutes a permanent reduction in the lending formula for Supplemental Loans during the existing Supplemental Loan Period and all subsequent Supplemental Loan Periods, (ii) the continuing rights of Lender pursuant to the Loan Agreement to reduce further the lending formula with respect to Eligible Inventory, establish Availability Reserves and determine the criteria for Eligible Inventory for Supplemental Loans during this or any subsequent Supplemental Loan Period, (iii) the continuing rights of Lender pursuant to the Loan Agreement to reduce the lending formula with respect to Eligible Accounts and Eligible Inventory with respect to any other categories of Inventory, establish Availability Reserves and determine the criteria for Eligible Inventory during the Supplemental Loan Period or any other time, and (iv) that nothing contained in this Amendment shall in any way limit the right of Lender at any time to make any further reductions to the lending formulas or limit or affect Lender's other rights and remedies upon an Event of Default or an event, act or condition which with notice or passage of time or both would constitute an Event of Default. 3. Amendments to Interest Rate. (a) Section 3.1(a) of the Loan Agreement is hereby amended, effective March 31, 1997, by deleting the rate "two and one-quarter (2-1/4%) percent" with respect to Term Loan B appearing in the second line on page 15 of the Loan Agreement and substituting the rate "two and three-quarters (2-3/4%) percent" in its place. The Term Promissory Note, dated June 8, 1994, by Borrower payable to Lender in the original principal amount of $1,500,000 evidencing Term Loan B is hereby amended by amending the term "Interest Rate" contained therein by deleting the rate "two and one-quarter (2-1/4%) percent" appearing in the first and second lines in the third paragraph on page 1 thereof and 2 substituting the rate "two and three-quarters (2-3/4%) percent" in its place. (b) Section 3.1(a) of the Loan Agreement is also hereby amended, effective as of March 31, 1997, by deleting the rate "one and three-quarters (1-3/4%) percent" with respect to all other non-contingent Obligations appearing in the fourth line on page 15 of the Loan Agreement and substituting the rate "two and three-quarters (2-3/4%) percent" in its place. The First Amended Term Note A evidencing Term Loan A is hereby amended, effective as of March 31, 1997, by amending the term "Interest Rate" contained therein by deleting the rate "one and three-quarters (1-3/4%) percent" appearing in the second line in the third paragraph on page 1 thereof and substituting the rate "two and three-quarters (2-3/4%) percent" in its place. The Amended Purchase Money Note One evidencing the Purchase Money Loan One is hereby amended by amending the term "Interest Rate" contained therein by deleting the rate "one and three-quarters (1-3/4%) percent" appearing in the second line in the third paragraph on page 1 thereof and substituting the rate "two and three-quarters (2-3/4%) percent" in its place. 4. Waiver of Working Capital of Default. (a) Effective as of March 1, 1997, Lender hereby waives the Event of Default arising solely out of Borrower's failure to maintain Working Capital for the period beginning January 1, 1997 and ending on January 31, 1997 in the amount required in Section 9.13 of the Loan Agreement. (b) Lender has not waived and is not hereby waiving, and has no intention of waiving any other Event of Default, which may have occurred prior to the date hereof, or may be continuing on the date hereof or any Event of Default which may occur after the date hereof, whether the same or similar to the Event of Default referred to herein or otherwise. Lender reserves the right, in its discretion, to exercise any or all of its rights and remedies arising under the Financing Agreements, applicable law or otherwise as a result of any other Events of Default which may have occurred prior to the date hereof, or are continuing on the date hereof, or any Event of Default which may occur after the date hereof, whether the same or similar to the Event of Default described herein or otherwise. The waiver contained herein shall not constitute a waiver of any Event of Default arising as a result of the failure of Borrower to comply with Section 9.13 of the Loan Agreement at any time after January 31, 1997. 5. Additional Representations and Warranties. Each of Borrower and Guarantor represents, warrants and covenants with and to Lender as follows, which representations, warranties and 3 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. 6. 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; and (b) 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. 7. Effect of this Amendment. Except as modified pursuant hereto, no other changes, waivers 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. 8. Further Assurances. The parties hereto shall execute and deliver such additional documents and take such additional 4 action as may be necessary or desirable to effectuate the provisions and purposes of this Amendment. 9. 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). 10. 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. 11. 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: Stephen Samberg -------------------------------------------- Title: C.E.O. ----------------------------------------- ACKNOWLEDGED: NANTUCKET MILLS, INC. By: Ronald Hoffman ---------------------------------- Title: V.P. - Finance ------------------------------- AGREED: CONGRESS FINANCIAL CORPORATION By: Daniel Manisca ---------------------------------- Title: Vice President ---------------------------------- 5 EX-10.(II)(V) 7 AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT Exhibit 10(ii)(v) AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT NANTUCKET INDUSTRIES, INC. 105 Madison Avenue New York, New York 10016 As of May 4, 1997 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. 1 to Loan and Security Agreement, dated May 31, 1996, Amendment No. 2 to Loan and Security Agreement, dated July 31, 1996, Amendment No. 3 to Loan and Security Agreement, dated as of August 15, 1996, Amendment No. 4 to Loan and Security Agreement, dated as of March 18, 1997, and Amendment No. 5 to Loan and Security Agreement, dated as of March 31, 1997 (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 waive the existing Event of Default under the Working Capital covenant and reduce, effective as of May 4, 1997, the amount of the Working Capital covenant Borrower is required to maintain, and 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. For purposes of this Amendment, unless otherwise defined herein, all terms used herein shall have the respective meanings assigned to such terms in the Loan Agreement. 2. Waiver. (a) Lender hereby waives the Event of Default arising as a result of the failure of Borrower to maintain Working Capital for the period from March 30, 1997, through and including May 3, 1997, in the amounts required under Section 9.13 of the Loan Agreement. (b) Lender has not waived and is not by this Amendment waiving, and has no intention of waiving any other Events of Default, that may have occurred prior to the date hereof, or may be continuing on the date hereof or any Event of Default that may occur after the date hereof (whether the same or similar to the Event of Default referred to in Section 2(a) hereof or otherwise) and Lender reserves the right, in its discretion, to exercise any or all of its rights and remedies arising under the Financing Agreements, applicable law or otherwise as a result of any other Event of Default that may have occurred prior to the date hereof, or is continuing on the date hereof or any Event of Default that may occur after the date hereof (whether the same or similar to the Event of Default described in Section 2(a) hereof or otherwise). The waiver contained in Section 2(a) hereof shall not constitute a waiver of any Event of Default arising as a result of the failure of Borrower to comply with Section 9.13 of the Loan Agreement at any time after May 3, 1997. 3. Working Capital. Effective as of May 4, 1997, Section 9.13 of the Loan Agreement is hereby deleted in its entirety and replaced with the following: "9.13 Working Capital. Borrower shall, at all times, maintain Working Capital of not less than $4,500,000." 4. Amendment Fee. In addition to all other fees, charges, interest and expenses payable by Borrower to Lender under the Financing Agreements, Borrower shall pay to Lender a fee for entering into this Amendment in the amount of $5,000, which amount is fully earned and payable as of the date hereof and may be charged directly to Borrower's loan account maintained by Lender. 5. 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 -2- 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. 6. 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; and (b) 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. 7. Effect of this Amendment. Except as modified pursuant hereto, no other changes or modifications to the Financing Arrangements 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 be construed as one agreement. 8. 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. 9. 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). 10. 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. 11. Counterparts. This Amendment may be executed in any number of counterparts, but all of such counterparts shall -3- 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 Hoffman ------------------------- Title: VP ---------------------- ACKNOWLEDGED: NANTUCKET MILLS, INC. By: /s/ Ronald Hoffman ------------------------- Title: VP ---------------------- AGREED: CONGRESS FINANCIAL CORPORATION By: /s/ Daniel Manisca ------------------------- Title: Vice President ---------------------- -4- EX-27 8 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS INFORMATION EXTRACTED FROM THE STATEMENTS DATED AUGUST 30, 1997 AS FILED IN FORM 10-Q FOR THE QUARTERLY PERIOD THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 3-MOS MAR-01-1997 AUG-30-1997 14,775 0 3,519,591 157,000 6,316,775 10,194,255 7,573,329 4,400,302 13,904,178 3,415,020 0 0 500 324,185 1,292,561 13,904,178 5,203,953 5,203,953 4,282,920 4,282,920 1,530,817 12,000 315,557 (925,341) 0 (925,341) 0 0 0 (925,341) (0.29) (0.29)
-----END PRIVACY-ENHANCED MESSAGE-----