EXHIBIT 4.4
BANK LEUMI USA BANK HAPOALIM B.M.
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As of January 12, 2006
Delta Galil USA Inc.
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Ladies and Gentlemen:
Reference is made to that certain Second Amended and Restated Credit
and Security Agreement (the "Credit Agreement") dated as of December 9, 2004
among Delta Galil USA Inc., a Delaware corporation having an office at ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), Bank Leumi
USA, a New York banking corporation as agent for the Banks party thereto (the
"Agent"), having an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and
each of the Persons named in Schedule 1.1 annexed thereto (each a "Bank" and
collectively, the "Banks").
Pursuant to the Credit Agreement, the Borrower executed a Term Note in
favor of the Agent, as agent for the Banks, in the principal sum of $70,000,000
and a Third Amended and Restated Revolving Note in favor of the Agent, as agent
for the banks, in the principal sum of $60,000,000. The Borrower has requested,
and the Banks have agreed, to amend the Credit Agreement to provide, among other
things (i) for an extension of the Maturity Date and (ii) payment of revised
letter of credit and acceptance fees as set forth herein.
Accordingly, the parties hereby agree as follows:
1. CAPITALIZED TERMS. Capitalized terms used in this letter agreement
(this "Amendment No. 1") and not otherwise defined herein, shall have the
meanings defined in the Credit Agreement.
2. AMENDMENTS TO THE CREDIT AGREEMENT. Upon fulfillment of the
conditions specified in Paragraph 11 hereof (the "Effective Date"), the Credit
Agreement is hereby amended as follows:
(a) The definitions of "Maturity Date," "Revolving LIBOR Loan
Rate," and "Term Loan Rate" contained in Section 1.1 of the Agreement are hereby
deleted in their entirety and amended to read as follows:
""MATURITY DATE" shall mean the earlier to occur of (i) May
15, 2006, and (ii) the date of acceleration pursuant to Section 10.1 of this
Agreement."
"REVOLVING LIBOR LOAN RATE" shall mean the LIBOR Rate plus one and
four-tenths of one (1.40%) percent.
"TERM LOAN RATE" shall mean the LIBOR Rate plus one and sixty-five
hundredths (1.65%) percent."
(b) The amount "$3,500,000" contained in Section 2.4.2 of the
Credit Agreement is hereby deleted in such instance and replaced by the amount
"$1,937,500"; and the amount "Three Million Five Hundred Thousand ($3,500,000)
Dollars" contained in the first paragraph of the form of Term Note annexed to
the Credit Agreement as EXHIBIT A is hereby deleted in such instance and
replaced by the amount "One Million Nine Hundred Thirty-Seven Thousand Five
Hundred ($1,937,500) Dollars."
(c) Section 2.11.1 is hereby deleted in its entirety and replaced as
follows:
"2.11.1 LETTERS OF CREDIT. Subject to the terms and conditions
hereof, the Agent, as a Bank, shall issue, or cause one or more of the other
Banks to issue, letters of credit ("Letters of Credit") on behalf of the
Borrower; provided, however, that the Agent will not issue or cause to be issued
any Letters of Credit to the extent that the face amount of such Letters of
Credit would then cause the Outstanding Revolving Loan Balance plus the
outstanding Letters of Credit and Acceptances to exceed the lesser of (a) the
Revolving Loan Commitment or (b) the Borrowing Base. In the event that the
Banks, in their sole discretion, at the request of the Borrower, agree to issue
a Letter of Credit having an expiry date after the Maturity Date, such Letters
of Credit shall be entitled to all the benefits and entitlements of this
Agreement and the other Loan Documents, including the Security Agreements. In
the event there is a draw against a Letter of Credit, which is not reimbursed as
provided in the applicable reimbursement agreement or otherwise, the amount of
the draw shall be deemed a Revolving Loan for the purposes of the Revolving
Facility Amount. All disbursements or payments related to Letters of Credit
shall bear interest at the applicable Prime Loan Rate; Letters of Credit that
have not been drawn upon shall not bear interest."
(d) Section 2.11.4 is hereby deleted in its entirety and replaced as
follows:
"Section 2.11.4 LETTER OF CREDIT FEES. The Borrower shall pay the
following fees to the Agent with respect to each Letter of Credit issued
hereunder: (i) in the case of a commercial Letter of Credit, (A) an issuance fee
equal to one-quarter of one percent (0.25%) of the face amount of each such
Letter of Credit, such fee to be payable on the date of issue thereof for the
account of the Banks in accordance with their Pro Rata Share; (B) a processing
fee equal to the greater of (a) $200, or (b) one-eighth of one percent (0.125%)
of the face amount of each such Letter of Credit, such fee to be payable on the
date of issue thereof for the account of the Issuing Bank, (C) on the last
Business Day of each fiscal quarter of the Borrower, an exposure fee equal to
one percent (1%) per annum (such fee to be calculated on the basis of a 360-day
year for the actual number of days elapsed) of the average face amount
outstanding during such quarter of all commercial Letters of Credit issued
hereunder, such fee to be for the account of the
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Banks in accordance with their Pro Rata Share, (D) on any draw under any such
Letter of Credit, a payment and negotiation fee equal to $300, such fee to be
payable on the making of a draw under such Letter of Credit for the account of
the Issuing Bank, (ii) in the case of a standby Letter of Credit, (A) an
issuance fee equal to the product of (1) the maximum face amount of such Letter
of Credit, TIMES (2) one and four tenths of one (1.40%) percent, times (3) the
period from the date of issuance of such Letter of Credit to its stated maturity
date divided by 360, such fee to be payable on the date of issue thereof for the
account of the Banks in accordance with their Pro Rata Share, and (B) on any
draw under any such Letter of Credit, a payment and negotiation fee equal to
$300, such fee to be payable on the making of a draw under such Letter of Credit
for the account of the Issuing Bank, and (iii) in the case of any amendment to a
standby Letter of Credit or a commercial Letter of Credit, an amendment fee
equal to the greater of (a) $200, or (b) one-eighth of one percent (0.125%) of
the face amount of such Letter of Credit, such fee to be payable on the
effective date of such amendment and retained by the Issuer for its own account,
and any and all reasonable fees and expenses as required by the Issuer in
connection with any such Letter of Credit, including, without limitation, in
connection with the opening, amendment or renewal of any such Letter of Credit
and any acceptances created thereunder, and shall reimburse the Agent for any
and all reasonable fees and expenses, if any, paid by the Agent or any Issuer.
All such fees and expenses shall be deemed earned in full on the date when the
same are due and payable hereunder and shall not be subject to rebate or
proration upon the termination of this Agreement for any reason. Any such fee or
expense in effect at the time of a particular transaction shall be the charge
for that transaction, notwithstanding any subsequent change in the Issuer's
prevailing fee or expense for that type of transaction. Following the occurrence
and during the continuance of an Event of Default, upon demand the Borrower will
cause cash to be deposited and maintained in an account with each Bank, as cash
collateral pursuant to this Agreement, in an amount equal to each Bank's Pro
Rata Share of the outstanding Letters of Credit plus two (2%) percent, and the
Borrower hereby irrevocably authorizes each Bank, in its discretion, on the
Borrower's behalf and in the Borrower's name, to open such an account and to
make and maintain deposits therein, and authorize the Agent to utilize the
proceeds of Accounts or other Collateral or any other funds of the Borrower
coming into the Agent's possession at any time to fund such accounts."
(e) Section 2.12 is hereby deleted in its entirety and replaced as
follows:
"SECTION 2.12 ACCEPTANCES. Subject to the terms and conditions of this
Agreement, upon the request of the Borrower, the Issuer will accept drafts
presented by the beneficiary of a commercial Letter of Credit, which drafts (i)
are being presented to the Agent in accordance with the terms of a commercial
Letter of Credit, and (ii) name the Issuer as drawee and the beneficiary as
payee and otherwise are in a form acceptable to the Issuer in its sole
discretion (each an "Acceptance" and collectively, "Acceptances"). In the event
that the Issuer, in its sole discretion, but with the consent of the Banks
(which consent shall may be withheld for any reason or no reason) and at the
request of the Borrower, agrees to issue an Acceptance having an expiry date
after the Maturity Date, such Acceptances shall be entitled to all the benefits
and entitlements of this Agreement and the other Loan Documents, including
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the Security Agreements. The Borrower shall pay the Agent for the benefit of the
Banks in accordance with their Pro Rata Share a fee on each Acceptance at a rate
equal to one and four tenths of one (1.40%) percent of the full amount of such
Acceptance from the date the Acceptance is created to the date of its maturity,
such fee to be calculated on the basis of a 360-day year for the actual number
of days elapsed, and to be payable on the date the Acceptance is created. In
addition, the Borrower shall pay a fronting fee equal to the greater of (a)
$200, or (b) one-eighth of one percent (0.125%) of the face amount of such
Acceptance, such fee to be payable on the date of creation of such Acceptance
and any other reasonable costs or expenses of the Issuer."
(f) Clause (i) of Section 3.1.9 of the Credit Agreement is amended
in its entirety to read as follows: "(i) an executed Unlimited Guaranty from
Delta Galil dated as of January 6, 2006, of all of the obligations of the
Borrowers to the Banks, which is governed by New York law."
(g) Section 12.15 is hereby deleted in its entirety and replaced
as follows:
"SECTION 12.15 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNITY.
All representations and warranties contained in this Agreement or any other Loan
Documents and the indemnification obligations of the Borrower pursuant to
Section 12.2 hereunder shall survive the execution and delivery of this
Agreement and the making and repayment of the Loans and the termination of this
Agreement."
3. PREPAYMENT. Concurrently with the execution and delivery of this
Amendment No. 1, Borrower shall prepay a portion of the principal sum of the
Term Loan then outstanding in the amount equal to $25,000,000, such prepayment
to be applied pro rata to all installments due on the Term Note. Accordingly,
following the application of such prepayment, the amount due with respect to
each installment on the Term Note shall be $1,937,500 and the Term Note is
hereby deemed amended to read consistent with the amendments to the form of Term
Note annexed to the Credit Agreement as EXHIBIT A effectuated pursuant to this
Amendment No.1.
4. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants as
follows (which representations and warranties shall survive the execution and
delivery of this Amendment No. 1):
(a) The Borrower has taken all necessary action to authorize the
execution, delivery and performance of this Amendment No. 1.
(b) This Amendment No. 1 has been duly executed and delivered by the
Borrower and the consent attached hereto has been duly executed and delivered by
each Guarantor. This Amendment No. 1 and the Credit Agreement (as amended by
this Amendment
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No. 1) hereby constitute the legal, valid and binding obligation of the
Borrower, enforceable against it in accordance with their respective terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting the enforcement of creditors' rights generally and by
general equity principles.
(c) No consent or approval of any person, firm, corporation or
entity, and no consent, license, approval or authorization of any governmental
authority is or will be required in connection with the execution, delivery,
performance, validity or enforcement of this Amendment No. 1 other than any such
consent, approval, license or authorization which has been obtained and remains
in full force and effect or where the failure to obtain such consent, approval,
license or authorization which has been obtained and remains in full force and
effect.
(d) After giving effect to this Amendment No. 1, the Borrower is in
compliance with all of the various covenants and agreements set forth in the
Credit Agreement and each of the other Loan Documents.
(e) After giving effect to this Amendment No. 1, no event has
occurred and is continuing which constitutes a Default or an Event of Default.
(f) All representations and warranties contained in the Credit
Agreement and each of the other Loan Documents are true and correct in all
material respects as of the date hereof, except to the extent that any
representation or warranty relates to a specified date, in which case such are
true and correct in all material respects as of the specific date to which such
representations and warranties relate.
5. WAIVER. The Banks hereby waive any violation by the Borrower of the
provisions of Sections 8.18, 8.19 and 8.20 of the Credit Agreement solely for
the period ending December 31, 2005. This waiver is limited as written and shall
not be deemed (i) to be an amendment of or consent under or waiver of any other
term or condition of the Loan Documents or (ii) prejudice any right or rights
which the Banks now have or may have in the future, under or in connection with
the Loan Documents.
6. CONTINUANCE. The Credit Agreement and the other Loan Documents
(including the Term Note) are, and shall continue to be, in full force and
effect and are hereby ratified and confirmed in all respects, except that after
giving effect to this Amendment No. 1, all references in the Credit Agreement to
"this Agreement," "hereto," "hereof," "hereunder" or words of like import
referring to the Credit Agreement shall mean the Credit Agreement as amended by
this Amendment No. 1.
7. PAYMENT OF COSTS; AMENDMENT FEE. Concurrently with its execution and
delivery of this Amendment No. 1, the Borrower shall pay to the Bank all costs
and expenses (including attorneys' fees and disbursements) incurred by the Bank
in connection with the preparation, execution and delivery of this Amendment No.
1 and related documents, including, without
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limitation an amendment fee in the principal sum of $30,000 (the "Amendment
Fee"). The Amendment Fee shall be for the account of the Banks in accordance
with their Pro Rata Share.
8. COUNTERPARTS. This Amendment No. 1 may be executed in one or more
counterparts, each of which shall constitute an original, but all of which taken
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment No. 1 by facsimile shall be
effective as delivery of a manually executed signature page hereto.
9. GUARANTY FROM DELTA GALIL. Concurrently with the execution and delivery
of this Amendment No. 1 by the Borrower, Delta Galil shall execute and deliver
to the Banks a Unlimited Guaranty in the form annexed to this Amendment No. 1 as
EXHIBIT A (the "Delta Galil New York Guaranty"). The Delta Galil New York
Guaranty shall replace in its entirety the guaranty referred to in clause (i) of
Section 3.1.9 of the Credit Agreement.
10. DELIVERY OF DOCUMENTS. Within ninety (90) days from the Effective
Date, the Borrower shall deliver to the Agent for the benefit of the Banks all
documents and information required to be delivered under the Credit Agreement
then due or outstanding, including, without limitation, all documents and
information required to be delivered pursuant to Section 3.2 of the Credit
Agreement.
11. CONDITIONS PRECEDENT. The obligation of the Banks to execute and
deliver this Amendment No. 1 is conditioned upon receipt by the Banks of (i)
this Amendment No. 1 executed by all of the parties hereto, (ii) the Consent
attached hereto executed by each Guarantor, (iii) the Delta Galil New York
Guaranty, (iv) prepayment of $25,000,000 of the amount outstanding under the
Term Loan, (v) payment of the Amendment Fee and (vi) payment of all outstanding
legal fees and disbursements of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ & Kuh, LLP in
connection with the preparation of this Amendment No. 1.
12. GOVERNING LAW/ENTIRE AGREEMENT. This Amendment No. 1 shall be
construed in accordance with and governed by the laws of the State of New York
(other than the conflicts of laws principles thereof). This Amendment No. 1
contains the entire agreement of the parties with respect to the subject matter
contained herein and may not be amended or modified except pursuant to a written
instrument executed by the party sought to be bound thereby.
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If the foregoing correctly sets forth our understanding and agreement,
kindly indicate your acceptance thereof by signing below.
Very truly yours,
BANK LEUMI USA
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
BANK HAPOALIM, B.M.
By: /s/ ▇▇▇▇ ▇▇▇
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Name: ▇▇▇▇ ▇▇▇
Title: Senior Vice President
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
AGREED TO:
DELTA GALIL USA INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President for Finance and Secretary
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CONSENT
Each of the undersigned hereby confirms that:
It is fully informed as to the amendment, dated as of even date herewith
("Amendment No. 1") to the Second Amended and Restated Credit and Security
Agreement, dated as of December 9, 2004 (the "Credit Agreement"). Capitalized
terms used herein and not defined shall have the meanings defined in the Credit
Agreement.
It has executed and delivered a Guarantee in favor of the Banks, wherein
and whereby, the undersigned, among other things, unconditionally guaranteed to
the Banks payment when due, whether by acceleration or otherwise of any and all
Obligations of the Borrower to the Banks, including interest and attorneys'
fees, costs and expenses of collection incurred by the Banks in enforcing any of
the Obligations.
Notwithstanding the Amendment No. 1 and the effectiveness of the
agreements contained therein, the Guarantee of the undersigned is in full force
and effect, has not been terminated, rescinded, amended or modified, and the
undersigned has no defenses or offsets with respect to its obligations to the
Banks under its Guarantee. The provisions of this Consent relating to Delta
Galil Industries, Ltd. shall be deemed made after giving effect to Paragraph 9
of Amendment No. 1.
Dated as of: January 6, 2006
AUBURN HOSIERY ▇▇▇▇▇, INC. BURLEN CORP.
By:_________________________________ By:_____________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Treasurer and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Treasurer and Assistant
Secretary Secretary
DELTA GALIL INDUSTRIES LTD.
By:_________________________________
▇▇▇▇▇ ▇▇▇▇▇▇, Chief Executive
Officer
BANK LEUMI USA BANK HAPOALIM B.M.
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As of May 9, 2006
Delta Galil USA Inc.
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Ladies and Gentlemen:
Reference is made to the Second Amended and Restated Credit and Security
Agreement (the "Credit Agreement"), dated as of December 9, 2004, among Delta
Galil USA Inc., a Delaware corporation having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), Bank Leumi USA, a New York
banking corporation as agent for the Banks party thereto (the "Agent"), having
an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and each of the Persons
named in Schedule 1.1 annexed thereto (each a "Bank" and collectively, the
"Banks"), as amended by Amendment No. 1 thereto, dated as of January 12, 2006.
The Borrower has requested, and the Banks have agreed, to amend the Credit
Agreement to provide, among other things, for (i) an extension of the Maturity
Date and (ii) the amendment to certain financial covenants contained in the
Credit Agreement, all as set forth herein.
Accordingly, the parties hereby agree as follows:
3. CAPITALIZED TERMS. Capitalized terms used in this letter agreement
(this "Amendment No. 2") and not otherwise defined herein, shall have the
meanings defined in the Credit Agreement.
4. AMENDMENTS TO THE CREDIT AGREEMENT. Upon fulfillment of the conditions
specified in Paragraph 9 hereof (the "Effective Date"), the Credit Agreement is
hereby amended as follows:
(a) The definitions of "Loan Documents" and "Maturity Date"
contained in Section 1.1 of the Agreement are hereby deleted in their entirety
and amended to read as follows:
""LOAN DOCUMENTS" shall mean, this Agreement, the Revolving Note,
the Term Note, the Pledge Agreement, the Borrower Pledge Agreement, the Real
Estate Collateralization Documents, the Security Agreements, the Trademark
Security Agreements, the guarantees and any other agreements executed and
delivered by each Guarantor, and all other agreements,
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instruments and documents, including, without limitation, security agreements,
loan agreements, notes, mortgages, deeds of trust, intercreditor agreements,
assignment of leases, pledges, powers of attorney, consents, assignments,
collateral assignments, letter agreements, contracts, notices, financing
statements, account opening documents, and all other writings, all of which must
be in form and substance satisfactory to the Agent, heretofore, now, or
hereafter executed by or on behalf of the Borrower or any Guarantor and
delivered to the Agent or any Bank pursuant to or in furtherance of this
Agreement, together with all agreements, instruments and documents referred to
therein or contemplated thereby and as now in effect or as at any time amended,
modified or changed.
"MATURITY DATE" shall mean the earlier to occur of (i) January 31,
2007, and (ii) the date of acceleration pursuant to Section 10.1 of this
Agreement."
(b) A new definition captioned "Borrower Pledge Agreement" is hereby
added to Section 1.1 of the Credit Agreement in its proper alphabetical order
and shall read as follows:
""BORROWER PLEDGE AGREEMENT" shall mean the Pledge and Assignment
Agreement substantially in the form of Exhibit K hereto, dated as of ________
__, 2006, from the Borrower to the Agent, as amended, modified or supplemented
from time to time."
(c) The seventh sentence of Section 2.2 is hereby deleted in its
entirety and replaced as follows:
"The Borrower may not give more than seven (7) Notices of Advance in
any one month."
(d) The first and second sentences of Section 2.11.1 are hereby
deleted in their entirety and replaced as follows:
"Subject to the terms and conditions hereof, the Agent, as a Bank,
shall issue, or cause one or more of the other Banks to issue, letters of credit
("Letters of Credit") on behalf of the Borrower; provided, however, that the
Agent will not issue or cause to be issued any Letters of Credit: (i) to the
extent that the face amount of such Letters of Credit would then cause the
Outstanding Revolving Loan Balance plus the outstanding Letters of Credit and
Acceptances to exceed the lesser of (a) the Revolving Loan Commitment or (b) the
Borrowing Base or (ii) which have an expiration date which is more than sixty
(60) days after the Maturity Date. At the request of the Borrower, the Agent,
with the consent of the Banks (which consent may be withheld for any reason or
no reason), may issue or cause to be issued a Letter of Credit having an expiry
date of greater than sixty (60) days after the Maturity Date. In the event a
Letter of Credit is issued having an expiry date after the Maturity Date, such
Letter of Credit shall be entitled to all the benefits and entitlements of this
Agreement and the other Loan Documents, including the Security Agreements."
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(e) The second sentence of Section 2.12 is hereby deleted in its
entirety and replaced as follows:
"No Acceptance shall have a maturity date which is later than (i)
ninety (90) days after its creation or (ii) sixty (60) days after the Maturity
Date. At the request of the Borrower, the Agent, with the consent of the Banks
(which consent may be withheld for any reason or no reason), may create or cause
to be created an Acceptance having a maturity date of greater than sixty (60)
days after the Maturity Date. In the event that an Acceptance is created having
a maturity date after the Maturity Date, such Acceptance shall be entitled to
all the benefits and entitlements of this Agreement and the other Loan
Documents, including the Security Agreements."
(f) The second sentence of Section 8.18 is hereby deleted in its
entirety and replaced as follows:
"Compliance with this covenant shall be measured on a quarterly
basis for a rolling twelve (12) month period; provided, however, that for the
2006 calendar year compliance with this covenant shall be measured on a
quarterly basis for a rolling three (3) month period."
Section 8.18 is hereby further amended by deleting the phrase "For the
twelve (12) month period ending March 31, 2006" and corresponding ratio "1.25 to
1.0".
Section 8.18 is hereby further amended by deleting the ratios for the
following periods and replacing such ratios as follows:
"PERIOD RATIO
For the three (3) month period ending June 30, 2006 1.0 to 1.0
For the three (3) month period ending September 30, 2006 1.0 to 1.0
For the three (3) month period ending December 31, 2006 1.0 to 1.0"
(g) Section 8.19 is hereby amended by deleting the ratios for the
following periods and replacing such ratios as follows:
"PERIOD RATIO
For the twelve (12) month period ending September 30, 2006 0.28 to 1.0
For the twelve (12) month period ending December 31, 2006 0.28 to 1.0"
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(h) Section 8.20 is hereby amended by deleting the ratios for the
following periods and replacing such ratios as follows:
"PERIOD RATIO
For the twelve (12) month period ending March 31, 2006 6.70 to 1.0
For the twelve (12) month period ending June 30, 2006 5.70 to 1.0"
(i) A new Exhibit K is hereby added to the Credit Agreement in the form
attached to this Amendment No. 2 as Exhibit K.
3. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants as
follows (which representations and warranties shall survive the execution and
delivery of this Amendment No. 2):
(a) The Borrower has taken all necessary action to authorize the
execution, delivery and performance of this Amendment No. 2.
(b) This Amendment No. 2 has been duly executed and delivered by the
Borrower and the consent attached hereto has been duly executed and delivered by
each Guarantor. This Amendment No. 2 and the Credit Agreement (as amended by
this Amendment No. 2) hereby constitute the legal, valid and binding obligation
of the Borrower, enforceable against it in accordance with their respective
terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium
and similar laws affecting the enforcement of creditors' rights generally and by
general equity principles.
(c) No consent or approval of any person, firm, corporation or
entity, and no consent, license, approval or authorization of any governmental
authority is or will be required in connection with the execution, delivery,
performance, validity or enforcement of this Amendment No. 2 other than any such
consent, approval, license or authorization which has been obtained and remains
in full force and effect or where the failure to obtain such consent, approval,
license or authorization would not have a Material Adverse Effect.
(d) After giving effect to this Amendment No. 2, the Borrower is in
compliance with all of the various covenants and agreements set forth in the
Credit Agreement and each of the other Loan Documents.
(e) After giving effect to this Amendment No. 2, no event has
occurred and is continuing which constitutes a Default or an Event of Default.
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(f) All representations and warranties contained in the Credit
Agreement and each of the other Loan Documents are true and correct in all
material respects as of the date hereof, except to the extent that any
representation or warranty relates to a specified date, in which case such are
true and correct in all material respects as of the specific date to which such
representations and warranties relate.
4. DEPOSIT. Concurrently with its execution and delivery of this Amendment
No. 2, (i) the Borrower shall deposit with the Agent $4,000,000, which amount
shall be pledged to the Bank in accordance with the terms and conditions of the
Borrower Pledge Agreement, in the form attached hereto as Exhibit K, and (ii)
the Borrower shall execute and deliver the Borrower Pledge Agreement to the
Agent.
5. CONTINUANCE. The Credit Agreement and the other Loan Documents
(including the Term Note) are, and shall continue to be, in full force and
effect and are hereby ratified and confirmed in all respects, except that after
giving effect to this Amendment No. 2, all references in the Credit Agreement to
"this Agreement," "hereto," "hereof," "hereunder" or words of like import
referring to the Credit Agreement shall mean the Credit Agreement as amended by
this Amendment No. 2.
6. PAYMENT OF COSTS; AMENDMENT FEE. Concurrently with its execution and
delivery of this Amendment No. 2, the Borrower shall pay (i) to the Banks all
costs and expenses (including attorneys' fees and disbursements) incurred by the
Banks in connection with the preparation, execution and delivery of this
Amendment No. 2 and related documents, and (ii) for the account of the Banks in
accordance with their Pro Rata Share, an amendment fee in the sum of $60,000
(the "Amendment Fee").
7. AMENDMENT TO SPRINGING GUARANTY FROM DELTA GALIL INDUSTRIES LTD.
Concurrently with the execution and delivery of this Amendment No. 2 by the
Borrower, Delta Galil Industries Ltd. ("Delta Galil") shall execute and deliver
to the Agents an amendment to the Springing Guaranty (the "Springing Guaranty"),
dated June 13, 2002, as amended by letter dated December 9, 2004, in the form
annexed to this Amendment No. 2 as EXHIBIT A (the "Guaranty Amendment").
8. OPINION WITH RESPECT TO GUARANTIES. On the date hereof, the Banks shall
have received (i) a written opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP,
special counsel to Delta Galil, in form and substance satisfactory to the Banks
and their counsel, relating to such matters as the Banks may reasonably request,
and (ii) an opinion from Israeli counsel substantially similar to the opinion
received by the Agent from I. ▇▇▇▇▇▇ ▇▇▇-▇▇▇▇▇▇, Hamou & Co. dated December 9,
2004, with respect to said Springing Guaranty.
9. CONDITIONS PRECEDENT. The obligation of the Banks to execute and
deliver this Amendment No. 2 is conditioned upon receipt by the Banks of (i)
this Amendment No. 2
6
executed by all of the parties hereto, (ii) the Consent attached hereto executed
by each Guarantor, (iii) the Guaranty Amendment, (iv) evidence satisfactory to
the Agent, in its sole discretion, that the Borrower has received a capital
contribution or loan from Delta Galil in the principal sum of $4,000,000, (v)
the Pledge Agreement in the form annexed hereto as Exhibit K and executed by the
Borrower, (vi) each of the opinions of counsel referenced in Paragraph 8 above,
(vii) payment of the Deposit, (viii) payment of the Amendment Fee, and (ix)
payment of all outstanding legal fees and disbursements of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ & Kuh, LLP in connection with the preparation of this
Amendment No. 2.
10. COUNTERPARTS. This Amendment No. 2 may be executed in one or more
counterparts, each of which shall constitute an original, but all of which taken
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment No. 2 by facsimile shall be
effective as delivery of a manually executed signature page hereto.
11. GOVERNING LAW/ENTIRE AGREEMENT. This Amendment No. 2 shall be
construed in accordance with and governed by the laws of the State of New York
(other than the conflicts of laws principles thereof). This Amendment No. 2
contains the entire agreement of the parties with respect to the subject matter
contained herein and may not be amended or modified except pursuant to a written
instrument executed by the party sought to be bound thereby.
12. MODIFICATIONS. This Amendment No. 2 cannot be amended, terminated or
modified, except pursuant to a writing executed by all parties to this Amendment
No. 2.
[SIGNATURE PAGE TO FOLLOW]
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If the foregoing correctly sets forth our understanding and agreement,
kindly indicate your acceptance thereof by signing below.
Very truly yours,
BANK LEUMI USA
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: First Vice President
BANK HAPOALIM, B.M.
By: /s/ ▇▇▇▇ ▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇
Title: Senior Vice President
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
AGREED TO:
DELTA GALIL USA INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President for Finance and Secretary
CONSENT
Each of the undersigned hereby confirms that:
It is fully informed as to the amendment, dated as of even date herewith
("Amendment No. 2") to the Second Amended and Restated Credit and Security
Agreement, dated as of December 9, 2004 (the "Credit Agreement"), as amended by
Amendment No. 1 thereto, dated as of January 12, 2006. Capitalized terms used
herein and not defined shall have the meanings defined in the Credit Agreement.
Each is a Guarantor and has executed and delivered a guarantee in favor of
the Banks, wherein and whereby, the undersigned, among other things,
unconditionally guaranteed to the Banks payment when due, whether by
acceleration or otherwise of any and all Obligations of the Borrower to the
Banks, including interest and attorneys' fees, costs and expenses of collection
incurred by the Banks in enforcing any of the Obligations (individually a
"Guarantee" and collectively, the "Guarantees"). The Delta Galil Guarantees are
part of the Guarantees.
Notwithstanding Amendment No. 2 and the effectiveness of the agreements
contained therein, each Guarantee is in full force and effect, has not been
terminated, rescinded, amended or modified, and the undersigned has no defenses
or offsets with respect to its obligations to the Banks under its Guarantee.
Each Bank shall have the right to proceed under any or all of such
Guarantees at any time or from time to time.
Dated as of: May 9, 2006
AUBURN HOSIERY ▇▇▇▇▇, INC. BURLEN CORP.
By:_________________________________ By:____________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Treasurer and Secretary Title: Vice President, Treasurer
and Assistant Secretary
DELTA GALIL INDUSTRIES LTD.
By:____________________________________
Name:
Title: