Exhibit 2
FORM OF
SHAREHOLDERS AGREEMENT
Made and executed as of the _______________
by and between
N.D.R.L Investments (1998) Ltd., a private limited company
organized under the laws of Israel, whose registered office
is situated at 0 Xxxxxxx Xxxxxx, Xxx Xxxx (hereinafter
"NDRL") and Nichsei Adinoam Ltd., a private limited company
organized under the laws of Israel, whose registered office
is situated at 0 Xxxxxxx Xxxxxx, Xxx Xxxx (hereinafter
"Nichsei Adinoam"), Xxxx Xxxxxxx of 00 Xxxxx Xxxxx Xx. Xxx
Xxxx (hereinafter "Xxxx") and Xxx Xxxxxxx of 00 Xxxxxxxxxx
Xx., Xxx Xxxx (hereinafter "Xxxxxxx") (hereinafter jointly
and severally, "the Xxxxxxx Group"),
of the first part
and
GMM Capital LLC, a Delaware limited liability company
(hereinafter "GMM"), and Xxxxx Xxxxx (hereinafter "Xxxxx")
(hereinafter jointly and severally, "the Xxxxx Group" and
collectively with the Xxxxxxx Group, the "Parties")
of the second part
WHEREAS the Parties are shareholders in Delta Galil Industries Limited
(hereinafter referred to as "the Company" or "Delta Galil");
and
WHEREAS the issued share capital of the Company is NIS 19,947,849
divided into 19,947,849 Ordinary Shares of a nominal value
of NIS 1 each (hereinafter "Shares") of which 1,206,802 are
held by Delta Galil as treasury stock; and
WHEREAS On the date hereof, GMM holds, beneficially and of record,
4,256,537 Shares acquired from Xxxx Xxx International
Corporation (hereinafter, "SLIC"); and
WHEREAS On the date hereof, NDRL and Nichsei Adinoam hold beneficially
and of record (in the aggregate) 4,644,993 Shares; and
WHEREAS The Xxxxxxx Group and GMM wish to coordinate the exercise of
their rights as shareholders in the Company, in accordance
with and subject to the terms and conditions specified
hereinafter; and
WHEREAS in accordance with the Shareholders' Agreement dated
December 31,1998 between certain members of the Xxxxxxx
Group, Xxxx Xxx Corporation and SLIC, GMM has become a party
to that agreement (hereinafter the "Existing Shareholders'
Agreement"); and
WHEREAS GMM and the Xxxxxxx Group have agreed to amend and restate
the Existing Shareholders' Agreement in accordance with the
terms and provisions contained herein (as so amended and
restated, this "Agreement");
WHEREAS Xxxxx agrees to guarantee in favor of The Xxxxxxx Group the
performance by Xxxxx of all of GMM's obligations under
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, and subject to the terms and conditions set forth herein,
the Parties hereto agree as follows:
1. Representations and Warranties of the Xxxxxxx Group
(a) Each of the members of the Xxxxxxx Group is duly organized, validly
existing, and in good standing under the laws of Israel.
(b) Each of the members of the Xxxxxxx Group has full power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by each of the members of the Xxxxxxx Group and
constitutes the valid and legally binding obligation of each of the
members of the Xxxxxxx Group, enforceable in accordance with its
terms and conditions. Each of the members of the Xxxxxxx Group need
not give any notice, make any filing, or obtain any authorization,
consent, exemption, waiver or approval from any third party in order
to execute and deliver this Agreement, perform its obligations
hereunder and consummate the transactions contemplated hereby.
(c) Neither the execution, delivery nor the performance by each of the
members of the Xxxxxxx Group of this Agreement, nor the consummation
of the transactions contemplated hereby, will:
(1) violate or conflict with (i) any law or other restriction of
any governmental entity to which such member of the Xxxxxxx
Group is subject or (ii) any provision of its Memorandum of
Association and Articles; or
(2) conflict with, result in a breach of, constitute a default (or
an event which, with notice or lapse of time or both, would
constitute a default) under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract,
lease, license, instrument or other arrangement to which the
such member of the Xxxxxxx Group is a party or by which it is
bound or to which any of its assets is subject.
(d) Except as expressly set forth in this Section, none of the members
of the Xxxxxxx Group makes any representation or warranty, express
or implied, at law or in equity, in respect of itself or Delta Galil
or any of their respective assets, liabilities or operations,
including, without limitation, with respect to merchantability or
fitness for any particular purpose, and any such other
representations or warranties are hereby expressly disclaimed.
2. Representations and Warranties of GMM
(a) GMM is a limited liability company duly organized, validly existing,
and in good standing under the laws of Delaware. The sole
shareholder of GMM is a Trust, the beneficiaries of which are the
children of Xxxxxx and Xxxxx Xxxxx and the Trustees of which are
Xxxxxx and Xxxxx Xxxxx.
(b) GMM has full power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. This Agreement has been duly
executed and delivered by GMM and constitutes the valid and legally
binding obligation of GMM, enforceable in accordance with its terms
and conditions. GMM need not give any notice, make any filing, or
obtain any authorization, consent, exemption, waiver or approval
from any government or governmental entity in order to execute and
deliver this Agreement, perform its obligations hereunder and
consummate the transactions contemplated hereby.
(c) Neither the execution, delivery nor the performance by GMM of this
Agreement, nor the consummation of the transactions contemplated
hereby, will:
(1) violate or conflict with any law or other restriction of any
governmental entity to which GMM is subject or any provision of
its certificate of formation or limited liability company
agreement; or
(2) conflict with, result in a breach of, constitute a default (or
an event which, with notice or lapse of time or both, would
constitute a default) under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract,
lease, license, instrument or other arrangement to which GMM is
a party or by which it is bound or to which any of its assets
is subject.
(d) Except as expressly set forth in this Section, GMM does not make any
representation or warranty, express or implied, at law or in equity,
in respect of itself or its affiliates or any of their respective
assets, liabilities or operations, and any such other
representations or warranties are hereby expressly disclaimed.
3. Board Representation and Chief Executives
Each of the Xxxxxxx Group and each of the Xxxxx Group hereby agrees and
undertakes, during the term of this Agreement, to exercise all rights
and powers available to them by virtue of their shareholdings in the
Company to procure that:
(a) GMM shall be entitled to nominate Directors on the Board of
Directors of the Company (hereinafter "the Board") in a number not
exceeding the number of Directors of the Board, as changed from time
to time (excluding the Outside Directors, as required under the
Israeli Companies Law) multiplied by 0.3, with fractions resulting
from such calculation rounded up to the next whole number; and the
rest of the Directors shall be nominated by the Xxxxxxx Group.
(b) At least one of the Directors nominated by GMM as aforesaid shall be
a member of the Balance Sheet Committee of the Board and, at GMM's
request, of any other Committee of the Board in respect of which
such request has been made.
(c) If at any time GMM shall in writing indicate that it wishes another
person or persons to be a Director or Directors in place of the
Director or Directors appointed upon GMM's nomination as aforesaid,
such person or persons shall be appointed in place of the Director
or Directors appointed as aforesaid.
(d) If at any time the Xxxxxxx Group shall in writing indicate that it
wishes another person or persons to be a Director or Directors in
place of the Director or Directors appointed upon the Xxxxxxx
Group's nomination as aforesaid, such person or persons shall be
appointed in place of the Director or Directors appointed as
aforesaid.
(e) The Company shall not, during the term of this Agreement, issue,
allot or grant options over or conversion rights into its unissued
share capital: (i) unless with the prior written consent of GMM or
(ii) unless within the framework of a pro rata distribution of fully
paid-up bonus shares.
(f) New appointments of a Chief Executive of the Company shall be made
with the written consent of GMM, which consent shall not be
unreasonably withheld.
(g) The prior approval of GMM and of the Xxxxxxx Group shall be required
for actions by Delta Galil or its subsidiaries with respect to (i)
acquisitions, dispositions or licenses of assets or businesses,
other than in the ordinary course of business consistent with past
practice, in a transaction or series of related transactions
involving consideration with a value of more than 5% of the total
consolidated assets of Delta Galil, (ii) public issuances or private
placements of bonds or similar debt securities or the payment of
dividends in any fiscal year, in a transaction or series of related
transactions, in either case in excess of 5% of the total
consolidated assets of Delta Galil, (iii) the approval of the annual
capital expenditure budget of Delta Galil and any material
modification thereof, if the aggregate amount contemplated by such
capital expenditure budget to be spent in 2006 exceeds the aggregate
amount of depreciation expense for 2005, or if the aggregate amount
contemplated by such capital expenditure budget to be spent in any
fiscal year starting of 2007 onwards, exceeds by more than 10%, the
aggregate amount of depreciation expense for the immediately
preceding fiscal year, and (iv) any merger, consolidation,
recapitalization or equivalent transaction involving Delta Galil
(other than any such merger or consolidation solely between Delta
Galil and one or more of its subsidiaries or solely between the
subsidiaries of Delta Galil, provided that the equity securities of
Delta Galil are unaffected thereby) or the commencement of any
bankruptcy or insolvency proceedings or liquidation or winding up of
Delta Galil.
(h) The approval of the annual operating budget of Delta Galil and any
material modification thereof shall require the approval of a
majority of the Board of Directors of Delta Galil.
4. The Xxxxxxx Group shall cause Xxxxx Xxxxx and GMM`s director designees to
be appointed to the Board of Directors of Delta Galil as soon as
practicable following the execution of this Agreement and the resignation
from the Board of Directors of Delta Galil of the directors designated by
Xxxx Xxx International Corporation and Xxxx Xxx Corporation, and for so
long as he serves on the Board of Directors, Xxxxx Xxxxx shall have the
title of non-executive Deputy Chairman of the Board of Directors.
5. Rights of First Refusal; Requirements Concerning the Disposal of Shares
Any transfer of Shares held by the Parties on the date hereof (subject to
Section 16(f)) shall be subject to the following:
a) Any Party proposing to transfer all or any of its Shares of the Company
(the "Offeror") shall notify the other Party in writing offering to sell
such Shares to such other Party (the "Offer"), which notice shall state
(i) the number of such Shares proposed to be transferred (the "Offered
Shares"), (ii) the name of the proposed purchaser thereof (except with
respect to sales of shares on the TASE or NASDAQ) and (iii) the terms of
the proposed transfer and the transferring Party's bona fide intention to
transfer the Shares on such terms. If the Offeror submits an Offer to
sell the Offered Shares on the TASE (or NASDAQ), then the price of the
Offer will be three percent (3%) below the weighted average of the
closing market price of the Shares on the TASE (or NASDAQ, as the case
may be) during the three (3) trading days immediately preceding the date
of the Offer (the "Average Price").
b) The other Party may accept such Offer in respect of all but not less than
all of the Offered Shares, by giving a written notice to that effect to
the Offeror (hereinafter the "Purchase Notice") within forty-five (45)
days after being served with the Offer with respect to an Offer that is
not by way of a sale on the TASE or NASDAQ, and within two (2) business
days, with respect to a proposed sale on the TASE or NASDAQ (the "Offer
Notice Period").
c) The delivery to the Offeror of the Purchase Notice as aforesaid will be
deemed to constitute a binding agreement between the Offeror and the
other Party as to the purchase of the Offered Shares, free and clear of
any liens or other encumbrances, at the price and on the terms set forth
in the Offer.
d) The other Party shall pay the relevant price of the Offered Shares within
twenty-one (21) days from the receipt of the Purchase Notice (or on a
later date, if such date is specified in the Offer), or if the Offeror
submits an Offer to sell the Offered Shares on the TASE (or NASDAQ), then
the price of the Offer shall be paid immediately, in each case against
receipt of a duly executed Share Transfer Deed (or Deeds) and Share
certificates (as appropriate) for the Offered Shares.
e) If the other Party fails to notify the Offeror in writing of the
acceptance of the Offer within the Offer Notice Period, the other Party
will be deemed to have rejected the Offer and the Offeror may sell, to
the person named as the purchaser in the Offer, the Offered Shares at a
price and on terms which are not less favorable to the Offeror than those
of the Offer, during a forty-five (45) day period following the expiry of
the Offer Notice Period. If the Offer was to sell the Offered Shares on
the TASE (or NASDAQ), then there will be no limitation as to the price of
the Shares to be sold and the other party shall have the right to sell
the same amount of Shares on the TASE (or NASDAQ) within the same 45 day
period, without being subject to the Right of First Refusal as specified
in this Section 5. If the Offeror fails to sell the Offered Shares under
those terms during the forty-five (45) day period, the right of the
Offeror to sell the Offered Shares will again be subject to the Right of
First Refusal as specified in Section 5 (a) above. Notwithstanding the
foregoing, in the event of any sale that is to be made on the TASE (or
NASDAQ), if the per share price of the Shares at or prior to the time of
such sale declines by more than 15% from the Average Price set forth in
the Offer, then the Offeror will be required to either (i) again comply
with the provisions of Sections 5(a)-(d) above prior to effecting the
sale of such Shares pursuant to Section 5(e) or (ii) withdraw its Offer
and not sell its Shares pursuant to this Section 5(e).
f) Notwithstanding anything to the contrary contained herein, each of the
Parties may transfer, sell or otherwise assign any of its Shares to: (i)
such Party's spouse, siblings, ancestors, and descendents (whether
natural or adopted), any spouses of such siblings, ancestors or
descendants ("Relatives"), or any trust for the benefit of such
Shareholder or any of the foregoing; provided however that such person or
trust agrees in writing to be bound by the terms of this Agreement; (ii)
a person or entity that Controls or is Controlled by such shareholder or
any of their Relatives; (iii) in the case of a transfer by a limited
partnership, to any of its limited partners or general partners on the
date of execution of this Agreement in the same proportion as their
ownership interest in the limited partnership, or to an affiliated
limited partnership managed by the same management company on the date of
execution of this Agreement or to the partners thereof on the date of
execution of this Agreement in the same proportion as their ownership
interest in the affiliated limited partnership; (iv) in the case of a
body corporate, to its shareholders on the date of execution of this
Agreement and their Relatives in the same proportion as their ownership
interest on the date of execution of this Agreement in the body
corporate; (v) with respect to any member of the Xxxxxxx Group to any
other member of the Xxxxxxx Group; (vi) with respect to GMM, one transfer
of up to ten percent (10%) of its total shareholding in the Company on
the date hereof to third parties designated by GMM: (vii) a transfer by
any Party of not more than 200,000 shares in any twelve (12) month
period; or (viii) a transfer by any Party of any shares to a recognized
charitable organization (each, a "Permitted Transferee"), provided that,
in each case referred to in subsections (i) - (v) of this paragraph
above, concurrently with such transfer, such Permitted Transferee shall
agree in writing to assume all the obligations of such transferring Party
under this Agreement and provided further that, in each case referred to
in subsections (i) - (v), Xxxxxxx, GMM and Xxxxx, as the case may be,
shall continue to guarantee the performance of the obligations hereunder
by such Permitted Transferee. For the purpose of this clause, "Control"
shall mean holding of 70% or more of the outstanding issued share capital
(or other voting securities) of the relevant entity.
g) Notwithstanding the aforesaid, any pledge of the Shares to a creditor of
a Party, and in the event Shares are sold by or on behalf of a creditor
of a Party, such sale will not be subject to these right of first refusal
provisions, provided, however, that the said creditor is a bank,
insurance company or other financial institution and the credit was
granted to the said Party for acquiring the Shares which are sold by the
bank, insurance company or other financial institution.
6. No sale or transfer under Section 5 (e) above, other than sale of Shares
to the public on the TASE or on NASDAQ in accordance with Section 5
above, to any third party shall be permitted or of any effect unless and
until the proposed purchaser or transferee referred to therein undertakes
in writing towards the other parties to this Agreement, in the event that
the Offeror shall have sold or transferred as aforesaid all the Shares
held by it in the Company, to be bound by all the provisions of this
Agreement as if it were a party hereto in place of the Offeror; in the
event that the Offeror shall have sold or transferred as aforesaid a part
of the Shares held by it in the Company then each of them is to be bound
as aforesaid as regards the Shares held by it in the Company. For the
avoidance of doubt it is hereby clarified that once a party hereunder has
sold all of its Shares in the Company in accordance with Section 5 above,
such party shall be released from all obligations arising hereunder after
the date of such sale.
7. Any transfer of the Control in any entity which holds, directly or
indirectly, Shares in Delta Galil to any party which is not a Permitted
Transferee referred to in subsections (i) - (v) of Section 5 (f) of this
Agreement shall be deemed to be a transfer of the Shares of Delta Galil
held by such entity, and will be subject to the Right of First Refusal
specified in section 5 of this Agreement. In such event, the said Party
shall be obligated to send to the other Party, prior to the transfer of
Control, an Offer with respect to the Shares held by such Party which
will be subject to all the terms applied with respect to an Offer that is
not by way of a sale on the TASE or NASDAQ, provided that the price in
respect of such Shares shall be deemed to be the weighted average of the
closing market price of the Shares on the TASE during the three (3)
trading days immediately preceding the date of the Offer.
8. Duration
(a) This Agreement shall continue in full force and effect until the
first date of the following dates, in which event this Agreement
shall cease to have any further force or effect:
(1) The date on which GMM (together with its Permitted Transferees
of the type referred to in clauses (i)-(v) of Section 5(f))
cease to hold shares of the Company in aggregate conferring on
them at least ten percent (10%) of the equity rights in the
Company; provided, however, that the Xxxxxxx Group shall
exercise all rights and powers available to it by virtue of its
shareholdings in the Company to procure that Xxxxx, personally,
shall be entitled to be nominated as a Director to the Board,
as long as GMM holds Shares in the Company, or
(2) the date on which the Xxxxxxx Group (together with its
Permitted Transferees of the type referred to in clauses
(i)-(v) of Section 5(f)) cease to hold shares of the Company in
aggregate conferring on them at least ten percent (10%) of the
equity rights in the Company; provided, however, that GMM
(together with its Permitted Transferees of the type referred
to in clauses (i)-(v) of Section 5(f)) shall then hold shares
of the Company in aggregate conferring on them at least 2.5
times the then holdings of the Xxxxxxx Group (together with its
Permitted Transferees of the type referred to in clauses
(i)-(v) of Section 5(f)) in the Company; and further provided,
that GMM shall exercise all rights and powers available to it
by virtue of its shareholdings in the Company to procure that
The Xxxxxxx Group shall be entitled to nominate one Director to
the Board, as long as any member of the Xxxxxxx Group holds
Shares in the Company,
(b) Notwithstanding the provisions of Sections 3(a) and 3(c) above, the
Xxxxxxx Group shall have the right to object to the appointment of a
director nominated by any successor to GMM's interest in the Shares
other than GMM and its Permitted Transferees, or an entity directly
or indirectly controlled by it, provided such objection is made on
reasonable grounds.
9. Non-Competition
Without derogating from any applicable Law, for so long as Xxxxx or
Xxxxxxx (or their respective designees) continue to serve on the Board of
Directors of the Company, such Party shall not, directly or indirectly,
engage or participate in any business that is principally engaged in the
manufacture or sale of intimate apparel, Men's underwear or socks which,
directly or indirectly, competes with the Company in the categories of
intimate apparel, Men's underwear or socks; provided, however, that
nothing in this Section 9 shall restrict either Party from holding any
debt or equity interest in any entity, so long as such Party is not an
executive officer of such entity.
10. Guarantee of GMM's Obligations
Xxxxx Xxxxx hereby guarantees the performance by GMM of all its
obligations hereunder. For the avoidance of doubt, Xxxxx'x said guarantee
shall expire on the date on which GMM shall be released of all
obligations under this Agreement or such obligations shall have otherwise
terminated in accordance with the terms of this Agreement.
11. No Partnership
Nothing herein contained shall be construed or deemed to constitute a
partnership between the parties and save as expressly set out herein none
of them shall have any authority to bind the others in any way.
12. Successors and Assignment
This Agreement shall be binding on, and enforceable against, and shall
inure to the benefit of, the personal representatives of, and other
successors in title to, each of the parties hereto. No Party may assign
either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of the other Party.
13. Waiver and Forbearance
No rights of any party shall be prejudiced or restricted by any
indulgence or forbearance to any other party or parties and no waiver by
any party in respect of any breach shall operate as a waiver in respect
of any subsequent breach.
14. Governing Law and Competent Court
The construction, validity and performance of this Agreement shall be
governed by the Laws of the State of Israel, and the competent courts of
Tel-Aviv shall have exclusive jurisdiction in all matters relating to
this Agreement.
15. Conflict of Terms
In the event of any ambiguity or conflict arising between the terms of
this Agreement and those of the Company's Memorandum and Articles of
Association, the terms of this Agreement shall prevail as between the
parties hereto.
16. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement
among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or
oral, to the extent they have related in any way to the subject
matter hereof. This Agreement shall replace the Existing
Shareholders Agreement.
(b) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
(c) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(d) Amendments. No modification or amendment of this Agreement may be
made except by an instrument in writing, signed by all the parties
hereto.
(e) Exercise of Rights by Xxxxxxx. Any right granted under this
Agreement to Xxxxxxx may be exercised by any member of the Xxxxxxx
Group for so long as such member of the Xxxxxxx Group is Controlled
by Xxxxxxx or by any of his Relatives.
(f) Non-Applicability of Agreement to Certain Shares. Notwithstanding
anything herein to the contrary, the provisions of Section 5 of this
Agreement shall not apply to any Shares owned or acquired by GMM or
its Permitted Transferees other than the Shares acquired by GMM from
SLIC.
17. Notices
Any notices or communications required or permitted hereunder shall be
deemed sufficiently given by any of the parties hereto to the other party
of such notice or communication is in writing and delivered personally or
sent by registered mail or by facsimile, as follows:
If to the Xxxxxxx Group, to it as follows:
Xxx Xxxxxxx
0 Xxxxxxx Xxxxxx
Xxx-Xxxx 00000
Xxxxxx
(Tel: 00-0000000)
(Fax: 00-0000000)
With a simultaneous copy to:
I. Xxxxxx Xxx-Xxxxxx, Hamou & co. Law Offices
148 Derech Xxxxxxxx Xxxxx
Tel Aviv
Att. Xxxxxx Xxxxx, Adv.
Fax: (00) 0000000
If to GMM, as follows:
GMM Capital LLC
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax:
With a simultaneous copy to:
Shiboleth, Yisraeli, Xxxxxxx & Xxxxxx
00 Xxxxxxxxxx Xxxxxx,
Xxx Xxxx
Att. Xxxxxxx X. Xxxxxxx, Adv.
Tel: (00) 0000000
Fax: (00) 0000000
Email: X.Xxxxxxx@xxxxxxxx.xxx
The above addresses shall also be respectively the addresses of the
parties hereto for service of legal documents of any kind.
Either party shall, from time to time, be entitled by notice in writing
to the other parties hereto, to change its aforesaid address to another
address, such notice shall come in to effect upon receipt thereof by the
other parties.
AS WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first above written.
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N.D.R.L. INVESTMENTS (1998) LTD. GMM Capital LLC
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NICHSEI ADINOAM LTD. XXXXX XXXXX
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XXXX XXXXXXX
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