<PAGE> 1
--------------------------
OMB APPROVAL
--------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
TEFRON LTD.
- --------------------------------------------------------------------------------
(Name of Issuer)
ORDINARY SHARES, PAR VALUE NIS 1.0 PER SHARE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
M87482 10 1 (ORDINARY SHARES)
- --------------------------------------------------------------------------------
(CUSIP Number)
AVI RUIMI
THE FINANCIAL GROUP INVESTMENT HOUSE LTD.
ALVOR TOWER
46 ROTHCHILD BLVD.
TEL AVIV, 66883, ISRAEL
011-972-3-5664080
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
FEBRUARY 15, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box [ ]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
AMENDMENT NO. 1
TO
STATEMENT ON SCHEDULE 13D
PURSUANT TO RULE 13d-1 UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Pursuant to Rule 13d-2 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the undersigned hereby file this Amendment No. 1
to Statement on Schedule 13D with the Securities and Exchange Commission (the
"Commission") with respect to the Ordinary Shares, par value NIS 1.0 per share
(the "Tefron Ordinary Shares") of Tefron Ltd. (the "Issuer"). In this Amendment,
the undersigned amend and restate the entire text of Items 3 and 4, and
supplement the text of Item 7.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The purchases of Macpell shares made under the Macpell Purchase
Agreement (described below in Item 4) have been funded as described in this
paragraph. The purchase made on December 29, 1999, was in the amount of
$1,750,000. The purchase made on January 31, 2000 was in the amount of
$5,233,260. The purchase made on February 15, 2000 was in the amount of
$6,983,260. The purchases made under the Macpell Purchase Agreement were funded
substantially as follows: approximately seventy percent (70%) of the purchase
price was financed through a non-recourse bank loan to Ruimi with semiannual
interest payments commencing on August 15, 2000 and annual principal payments of
ten percent per year commencing on February 15, 2002 with the full balance due
on February 15, 2007, with a variable interest rate dependent on alternative
selected (current rate for dollar loans would be approximately 7.1%), and
secured by the Macpell shares; and the remaining thirty percent (30%) of the
purchase price was funded through borrowings on personal credit lines of Ruimi
(current interest rates of approximately 9.0% and 12.3%), and other personal
funds of Ruimi.
The source of funds for the transactions described in Item 5 part (c)
was Ruimi's personal funds.
ITEM 4. PURPOSE OF TRANSACTION
On December 28, 1999, Ruimi entered into an agreement with Arwol
Holdings, Ltd. ("Arwol") providing for Ruimi to acquire shares of Macpell on
three separate dates (the "Macpell Purchase Agreement"). On December 29, 1999,
Ruimi acquired 454,227 shares of Macpell. Combined with the 110,286 Macpell
shares acquired by Ruimi prior to December 29, 1999, Ruimi had as of December
29, 1999, a 3.6% ownership interest in Macpell. On January 31, 2000, Ruimi
acquired an additional 1,539,623 shares of Macpell, giving Ruimi an aggregate
13.5% ownership interest in Macpell. On February 15, 2000, Ruimi acquired an
additional 1,993,850 shares of Macpell, giving Ruimi an aggregate 26.3%
ownership interest in Macpell. All of Ruimi's Macpell shares are or will be
owned by Condo.
Page 2 of 5 Pages
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Under a series of agreements dated August 27, 1997, December 21, 1997,
September 4, 1998 and January 24, 2000 among Zigi Rabinowitz ("Rabinowitz"),
Arye Wolfson ("Wolfson") and Tabriz Anstalt Limited NV ("Tabriz") (together, the
"Tabriz Agreements"), Rabinowitz and Wolfson were granted an option to acquire
1,695,690 Tefron Ordinary Shares from Tabriz (the "Tabriz Agreement Shares").
Ruimi has entered into an agreement with Rabinowitz and Wolfson (the "Option
Agreement"), pursuant to which Ruimi has an option to acquire 565,230 of the
Tabriz Agreement Shares (the "Option Agreement Shares"). Ruimi has the right to
acquire the Option Agreement Shares, and if he does not elect to exercise the
option, he can be required to purchase the Option Agreement Shares, if the
average daily closing price of Tefron Ordinary Shares on the New York Stock
Exchange is at least $15.40 for the 30 to 60 day period prior to August 29,
2000.
Macpell owns 4,388,210 Tefron Ordinary Shares, approximately 34.5% of
the outstanding Tefron Ordinary Shares, and is a party to the Tefron
Shareholders' Agreement (described in Item 6, below). Pursuant to that
agreement, Macpell is entitled to name five members of the Issuer's board of
directors (the "Macpell Directors"), which currently consists of eight persons.
Ruimi and Arwol have entered into an agreement (the "Macpell Shareholders'
Agreement") effective January 31, 2000, pursuant to which Ruimi has been granted
the right to appoint one of the Macpell Directors. In addition, the Macpell
Shareholders' Agreement provides that Ruimi can gain the right to appoint an
additional member of the Issuer's board of directors if he acquires, pursuant to
the Option Agreement, the Option Agreement Shares. The Macpell Shareholders'
Agreement contains a right of first refusal in the event that either party
wishes to sell its shares, and a tag-along right if either party finds a buyer
outside of the Macpell Shareholders' Agreement who is willing to purchase the
Macpell shares. It also provides that the parties to the Macpell Shareholders'
Agreement shall retain their ownership of at least 50% of the Macpell shares
they own as of the date the agreement was executed. The Macpell Shareholders'
Agreement also provides that the vote of the holders of 75% of the Macpell
shares is required for Macpell to (i) enter another line of business, (ii)
merge, consolidate or dispose of its substantial assets, (iii) purchase, lease
or acquire another substantial company, (iv) wind-up Macpell, (v) make decisions
regarding the allotment of Macpell shares, and (vi) declare dividends. The
Macpell Shareholders' Agreement specifically permits the sale of Macpell shares
by Arwol to Zigi Rabinowitz or a company controlled by Zigi Rabinowitz, provided
that Zigi Rabinowitz agrees to be bound by the terms and conditions of the
Macpell Shareholders' Agreement.
The purpose of the acquisition of shares of Macpell and Tefron by the
Reporting Persons was for investment. Except as otherwise described herein or in
Item 6 of this Statement on Schedule 13D, the Reporting Persons do not have any
plans or proposals which relate to or would result in (a) the acquisition by any
person of additional securities of the Issuer, or the disposition of securities
of the Issuer, (b) an extraordinary corporate transaction, such as a merger,
reorganization, or liquidation, involving the Issuer or any of its securities,
(c) a sale or transfer of a material amount of the assets of the Issuer or any
of its subsidiaries, (d) any change in the present board of directors or
management of the Issuer, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the Issuer's board of
directors, (e) any material change in the present capitalization or dividend
policy of the Issuer, (f) any other material change in the Issuer's business or
corporate structure, (g) changes in the Issuer's charter, bylaws, or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Issuer by
Page 3 of 5 Pages
<PAGE> 4
any person, (h) causing a class of the securities of the Issuer to be delisted
from a national securities exchange or to cease to be authorized to be quoted in
an inter-dealer quotation system of a registered national securities
association, (i) a class of equity securities of the Issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4) of the Exchange Act
or (j) any action similar to any of those enumerated above. Although the
Reporting Persons have not formulated a present plan or proposal to acquire
additional shares of the Issuer or dispose of shares of the Issuer, the
Reporting Persons may from time to time acquire additional securities of the
Issuer or Macpell or dispose of securities of the Issuer or Macpell on terms
satisfactory to such persons.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The Reporting Persons files the following exhibit with this Amendment
No. 1 to the Statement on Schedule 13D dated February 15, 2000:
Exhibit 11. Supplement to General Conditions dated as of January 30,
2000 for Avi Ruimi and Condo Overseas Inc. with respect to financing of
purchases of Macpell shares.
Page 4 of 5 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
FEBRUARY 29, 2000 /s/ AVI RUIMI
- ---------------------------- -----------------------------------
Date Avi Ruimi
Omnia Business Ltd.
/s/ AVI RUIMI
-----------------------------------
By: Avi Ruimi, Authorized Officer
Condo Overseas Inc.
/s/ AVI RUIMI
-----------------------------------
By: Avi Ruimi, Authorized Officer
Page 5 of 5 Pages
<PAGE> 1
EXHIBIT 11
This exhibit is a fair and accurate English translation of a foreign language
document.
/s/ AVI RUIMI
-------------------------
Avi Ruimi
SUPPLEMENT TO GENERAL CONDITIONS
Date: 30.1.2000
Bank
Dear Sir,
Further to the General Conditions for opening a credit account in foreign
currency and in Israel currency signed by us in the past and/or hereafter
(hereinafter - "the Terms of Operation") and with reference to the credits to be
made available to us thereunder for the partial financing of the acquisition of
4,097,986 ordinary shares of a nominal value of NS 1.- each in Macpell
Industries Ltd. (hereinafter - "Macpell"), which constitute about 26.33% of the
capital and about 26.33% of the voting power in Macpell (hereinafter
collectively - "the Shares to be Acquired" or the "Shares");
(It is expressly stated that the partial financing of the acquisition of the
Shares to be Acquired includes both partial financing of the acquisition of
3,987,700 ordinary shares of a nominal value of NS 1.- each in Macpell under the
purchase agreement as hereinafter defined, and partial financing of the
acquisition of 110,286 ordinary shares of a nominal value of NS 1.- each in
Macpell in stock exchange transactions.
It is further expressly stated that if the `second stage of the sale
transaction' does not materialize as specified in clause 4 of the purchase
agreement as hereinafter defined, the total shares to be acquired under the
purchase agreement shall be 2,104,136)
1. In this document, the expressions hereinafter specified shall have the
meaning set opposite them -
"the Bank" Bank
"Nuco" Condo Overseas Inc., which is a foreign
company registered in Panama and which prior
to the date of acquisition of the Shares to
be Acquired did not engage in any activity,
except for holdings of shares of the Local
Authority Treasury Ltd. (hereinafter - "the
Authority Treasury") and did not undertake to
any body any financial obligation whatsoever,
except in respect of the Authority Treasury,
and did not create any charge in favor of
<PAGE> 2
any third party whatsoever, except for a
charge of the Authority Treasury shares to
secure the financing of the acquisition
thereof, and it has no other creditors and/or
other bodies to whom it owes any money.
"The Credits" or the
"Credit" This expression includes all the credits
placed in the past and hereinafter at the
disposal of Nuco for the purpose of financing
the acquisition by Nuco of the Shares to be
Acquired (principal, interest and
linkage/exchange rate differentials) as
provided in clause 3 below and any other
credit made available now and hereafter for
the payment of such credits, in whole or in
part.
"The Nuco Owners" Mr. Avi Ruimi - the (indirect) holder of the
controlling interest of 100% of all the
rights in Nuco.
"The Shareholders" Nuco - about 26.33% of the capital and voting
power in Macpell and Riza Holdings Ltd. and
Arwol Holdings Ltd. - about 52.66% of the
capital and voting power in Macpell.
"The Sellers" Arwol Holdings Ltd.
"The Purchase Agreement" An agreement of 28.12.99 between the Sellers
and Avi Ruimi and/or a corporation under his
control to acquire shares in Macpell.
"The Macpell Shareholders
Agreement" An agreement of 28.12.99 between the Sellers
and Avi Ruimi and/or a corporation under his
control to regulate the relationship between
them as shareholders in Macpell.
"The Tefron Shareholders
Agreement" An Agreement of 17.9.97 between shareholders
in Tefron Ltd. (Macpell, Discount Investment
Company Ltd. and others) to regulate the
relationship between them as shareholders in
Tefron Ltd.
"Dividends" within the meaning of this term in the
Companies Law, 5759-1999.
"The Trustee" The Trust Company of Bank or any other
trustee to the Bank's satisfaction.
<PAGE> 3
""Charge of Shares" means a charge on the Shares and the rights
in respect thereof, including the rights,
options, moneys and assets due or issued in
lieu of the Shares or in respect or by virtue
thereof, including bonus shares, Preferred
rights, rights to securities of any class
whatsoever in any corporation whatsoever or
otherwise, and including all the dividends in
cash or in specie given in respect thereof,
and , and on the management fee payable to
Nuco and/or the holders of the controlling
interest therein by virtue of their being
holders of the controlling interest therein,
and on all the rights in Macpell and against
other shareholders therein which the law
and/or the memorandum and/or articles of
association of Macpell and/or any agreement
between the shareholders confer upon Nuco
that they shall be chargeable as aforesaid by
virtue of its holding of the shares.
The Shares to be Acquired shall be deposited
in a securities trust to be managed by Nuco
and/or Avi Ruimi at the branch of the Bank,
same being registered in the name of the
Nominees Company of the Bank in the Central
Branch of the bank, and they shall be charged
in favor of the Bank immediately upon the
depositing thereof by way of a deposit by a
Pledge of Shares Deed provided by the Bank.
Nuco undertakes that within 21 days from the
Bank's demand, the Shares to be Acquired
shall be deposited in a securities deposit to
be managed in the Trustee's name at the
branch of the Bank, same being registered in
the name of the Nominees Company of the Bank
in the Central Branch of the bank. Moreover,
Nuco undertakes that immediately upon the
transfer of the Shares in the Trustee's name,
a Deed of Pledge of Shares and an agreement
with the Trustee shall be executed, all in
the forms provided by the Bank.
(The securities deposit in which the Shares
will be deposited will hereinafter be
referred to as - "the said Security Deposit")
All the rights in the said Security Deposit
shall be charged in the Bank's favor. The
charges will be created by means of documents
in such form and under such conditions as the
Bank and the Trustee may request, and by the
presentation of any approval and/or consent
in such form and under such conditions as the
Bank may require in order
<PAGE> 4
to secure to the Bank's satisfaction, the
ownership of Nuco and/or the Nuco Owners, as
the case may be, of the Shares and the
validity, preference and priority of the
charges in the Bank's favor over any other
right, and the due registration of the
charges with the Registrar of Companies or
the Registrar of Pledges, as the case may be.
"The Credit Agreement" means, this document, the Terms of Operation
and the applications to make available the
credits signed now and/or hereafter by Nuco
in respect of the credit.
"The Unpaid Balance of
the Credit" means, at any time, the unpaid balance of the
principal of the credit with the amounts of
interest and commissions accumulated by that
date and not yet debited to the credit
account, and such amounts as aforesaid as
have not matured and have not been paid.
"Tangible Equity Capital" the issued and paid up capital of the Company
with accumulated profits, various funds, and
the balance of the amounts of the
Shareholders' Loans, less intangible assets
as e.g., deferred expenses, prepaid expenses,
goodwill, patents, trade marks, trade names,
copyright etc.
"The Shares' Market Value" The value of the Shares on the stock exchange
on which they are traded, fixed at the
closing rate of the Shares on the business
day immediately preceding the date of the
relevant calculation made pursuant to this
Agreement.
2. General
2.1 Nuco declares that as of the date of its signing this Document, all
the conditions and presentations set out therein are being complied
with and insofar as conditions are concerned which are to be
complied with thereafter, there is no bar to the fulfillment thereof
and/or compliance therewith fully and in time. Moreover, Nuco
declares that it duly acquired the Shares to be Acquired, that all
the preliminary conditions for the acquisition thereof were
fulfilled, all the resolutions, approvals, and permits required
under any law in respect of the acquisition of the Shares to be
Acquired, Nuco's signing of the Credit Agreement, the charging of
the Shares in the Bank's favor and the signing of the documents
required therefor were passed, effected and received.
2.2 Every document which has to be presented and/or executed in the
Bank's favor shall be in such form and under such conditions as
agreed upon with
<PAGE> 5
the Bank, and after receipt of the approval of the passing of an
appropriate resolution of the proper organ in the corporation
executing the document and accompanied by an advocate's
certification of the validity of the resolutions under any law.
2.3 Nuco shall ensure the receipt of the consents required which are not
dependent on the Bank, from any body for the purpose of the
implementation of the provisions in this Document.
2.4 All the conditions and obligations set out in this Document and the
securities specified therein shall be in force so long as the full
amounts due now and hereafter to the Bank under the Credit Agreement
are not discharged. After the discharge of all the amounts as
aforesaid, the conditions and obligations in the Credit Agreement
shall be revoked and the Bank undertakes to do everything required
for the revocation and release of the securities.
3. The Credits and their Conditions
3.1 The principal of the Credit shall in no case exceed the amount of
10,046,950 USA dollars (ten million and forty six thousand and nine
hundred and fifty USA dollars). The Credit shall be made available
in USA dollars and shall be paid in USA dollars, and will be made
available as long-term credit for a period of up to 7 years from the
date it is made available.
It is expressly stated that any Credit paid will not be made
available again.
3.2 Subject to the fulfillment of all the conditions required under this
Document for making the Credit available, the Credit will be made
available to Nuco in two stages as follows:
3.2.1 By 31.1.00, an amount not exceeding 5,158,668 USA dollars
(hereinafter - "the First Amount") will be made available
simultaneously with the transfer of 2,104,136 ordinary
shares of a nominal value of NS 1.- each in Macpell to the
said Security Deposit and the charge thereof in the Bank's
favor to the bank's satisfaction.
It is hereby expressly stated that the making available of
the Credit specified in clause 3.2.1 is also conditional
upon the following conditions:
A. On the date the Credit is made available, the ratio of
the market value of the Shares to be charged under
clause 3.2.1 to the total of the Credit made available
under the said clause shall be not less than 1.2.
<PAGE> 6
B. By 31.1.00, Nuco shall deposit an amount being not
less than 74,592 USA dollars in account No. (330)
410218/72 operated in its name at Branch 654 in the
Bank. The said money shall be applied in financing the
acquisition of 13.53% of the issued and paid up share
capital of Macpell.
Nuco hereby instructs the Bank to transfer on that
same date an amount of 5,233,260 USA dollars to
account No. 51661 operated in the name of the Sellers
at the Branch of Bank (hereinafter - "the Sellers'
Account").
3.2.2 By 15.2.00, an additional amount not exceeding 4,888,282 USA
dollars (hereinafter - "the Second Amount") will be made
available simultaneously with the transfer of 1,993,850
ordinary shares of a nominal value of NS 1.- each in Macpell
to the said Security Deposit and the charge thereof in the
Bank's favor to the bank's satisfaction.
It is hereby expressly stated that the making available of
the Credit specified in clause 3.2.2 is also conditional
upon the following conditions:
A. On the date the Credit is made available, the ratio of
the market value of the Shares to be charged under
this clause and under clause 3.2.1 to the total of the
Credit made available under this clause and under
clause 3.2.1 shall be not less than 1.2.
B. By 15.2.00, Nuco shall deposit an additional amount
being not less than 2,094,978 USA dollars in account
No. (330) 410218/72 Branch 654 operated in its name.
The said money shall be applied in financing the
acquisition of 12.8% of the issued and paid up share
capital of Macpell.
It is expressly stated that on the date the Second amount is
made available, the principal of the First Amount with
accumulated interest shall be added to the principal of the
Second Amount, and they will be deemed to be one Credit.
Nuco hereby instructs the Bank to transfer on that same date
an amount of 6,983,260 USA dollars to the Sellers' Account.
In order to eliminate any doubt, it is expressly stated that
all the funds made available to Nuco by the Nuco Owners for
the purpose specified in this clause, shall be against the
relevant allotment of issued and paid up share capital in
Nuco or as a Shareholders' Loan subordinated to the Credit.
<PAGE> 7
In order to eliminate any doubt, it is expressly stated that
should it appear that any presentation or declaration made
to the Bank by Nuco or any person on its behalf is, in the
Bank's opinion, inconsistent with factual condition, the
Credit mentioned in clause 3.2.2 will not be made available.
3.3 The principal of the Credit shall be repaid in 6 installments. The
first installment shall commence at the end of 24 months from the
date of 15.2.2000 and the additional installments shall be paid in
yearly installments, each installment becoming payable at the end of
12 months from the date of the preceding installment.
10% of the principal of the original Credit shall be repaid by each
one of the first five installments (namely, 50% of the principal of
the original Credit shall be repaid by the first five installments
collectively) and the Unpaid Balance of the Principal of the Credit
will be repaid by the sixth installment.
3.4 Interest on the Unpaid Balance of the Principal of the Credit shall
accumulate every three months and be paid every six months
(hereinafter - "Date of Determination of Interest"), commencing at
the end of six months from 15.2.2000.
3.5 The annual interest rate shall be according to the amount of the
Unpaid Balance of the Principal of the Credit as set out in the
table below:
<TABLE>
<CAPTION>
The Unpaid Balance of the Principal
of the Credit Interest Rate
USA dollars millions Annual
----------------------------------------------------------
<S> <C> <C>
1 Higher than 7 L + 1.2%
2 Higher than 5 to 7 (inclusive) L + 1%
3 Higher than 4 to 5 (inclusive) L + 0.95%
4 Higher than 3 to 4 (inclusive) L + 0.8%
5 Up to 3 (inclusive) L + 0.65%
</TABLE>
It is expressly stated that on the interest fixing date on which the
Unpaid Balance of the Principal of the Credit will be reduced to a
lower level (hereinafter in this clause - "the Determining Date"),
the interest will be fixed for the next quarter commencing on the
Determining Date (for example: if on any interest fixing date
whatsoever, the Unpaid Balance of the Principal of the Credit is
reduced from 7.5 million dollars to 6.5 million dollars, then, the
interest rate for the next quarter will be reduced to L + 1%).
It is expressly stated the reduction of interest is conditional upon
Nuco's meeting all the conditions of this Document and all the
conditions of the Credit Agreement.
<PAGE> 8
3.6 Subject to Nuco's complying with all the conditions of this Document
and all the conditions of the Credit Agreement to the Bank's
satisfaction, Nuco shall be entitled to request that on the interest
fixing dates, Credit shall be placed at its disposal in exchange for
the present Credit and Nuco shall be entitled to request that on
31.1.2000, the Credit shall be made available in one of the
following tracks:
index linked Credit or unlinked shekel Credit or on-call loans
It is expressly stated that the terms of the various Credits shall
be as agreed between the parties and, if the parties do not come to
any agreement, the Credit track will not be changed.
Subject to the said provisions, the change of any Credit track is
also conditional upon compliance with the following conditions
cumulatively:
A. Written notice thereof shall be delivered to the Bank 7
business days in advance.
B. Nuco shall sign such application forms for making Credit
available as are normally used in the Bank for the purpose of
the Credit requested, to be accompanied by the appropriate
company resolutions.
The interest rates in whichever track will be determined according
to the following margins:
<TABLE>
<CAPTION>
The annual margin interest
rate exceeding sources cost
available to the Bank at the
time for the purpose of
making the requested
Credit available (amount,
class, currency and for
The Unpaid Balance of the the period requested), as
Principal of the determined by the Bank
CreditUSA dollars millions (hereinafter - "the Margin")
-----------------------------------------------------------------------------------
<S> <C> <C>
1 Higher than 7 1.2%
2 Higher than 5 to 7 (inclusive) 1%
3 Higher than 4 to 5 (inclusive) 0.95%
4 Higher than 3 to 4 (inclusive) 0.8%
5 Up to 3 (inclusive) 0.65%
</TABLE>
For indication purposes only: As of 20.1.2000 at 10:00 a.m., the sources cost
for Credit on a daily basis for unlinked shekels in respect of on-call loans
was 10.8%.
3.7 In order to eliminate any doubt, it is expressly stated that all the
payments which Nuco is obligated to pay to the Bank under the Credit
documents in
<PAGE> 9
respect of the Credit principal, interest, commissions and other
charges will be fully paid to the Bank in time pursuant to the
Credit documents. In order to eliminate any doubt, it is expressly
stated that if Nuco is charged in respect of any tax or charge
whatsoever (including the deduction at source of any tax or charge
as aforesaid), same will not affect the repayment of the Credit in
full. It is expressly stated that nothing provided above shall
obligate Nuco to pay any tax or charge which the Bank itself is
bound to pay in respect of its own business.
4. Documents, Presentations and Approvals required prior to making any amount
whatsoever available in respect of the Credit.
Prior to making any amount whatsoever available in respect of the
Credit, the Bank shall be provided with all the documents,
presentations and approvals as follows:
4.1 Approvals from Nuco's lawyer as follows:
4.1.1 An approval according to which, all the resolutions,
approvals, permits and the preliminary conditions required
under any law were passed, received and fulfilled pursuant
to Nuco's incorporation documents, in respect of the
acquisition of the Shares from the Sellers, receipt of the
Credit from the Bank, the charging of the Shares in the
Bank's favor and the signing of all the documents required
for the said purpose.
4.1.2 A legal opinion according to which, there is no need to
receive the approval of the Controller of restrictive
practices for the transaction of the acquisition of the
Shares forming the subject of the Purchase Agreement,
notwithstanding that the provisions in clause 7.1 of the
Purchase Agreement state that the transaction is subject to
the receipt of the said approval.
4.1.3 An approval of a lawyer in respect of the legal status of
Nuco in the form hereto attached and marked by the letter
"A". The said lawyer shall also certify that pursuant to the
law of the state in which Nuco was incorporated (Panama), it
is not necessary to register the charge of the Shares also
in Panama.
4.2 documents, approvals and presentations to be provided by Nuco:
4.2.1 Nuco confirms by its signing this Document that it duly
acquired the Shares to be Acquired and that the Purchase
Agreement constitutes no infringement by Nuco and/or Macpell
and/or Tefron against any third party whatsoever and that
the Shares to be Acquired are enforceable without any
limitation, except for the provisions in clause 4.2.7 below.
<PAGE> 10
4.2.2 A statement specifying the structure of ownership in Nuco
and all the shareholders in Macpell and in all the companies
held thereby, either directly or indirectly, (including
Tefron Ltd. (hereinafter - "Tefron") and Alba Waldensian
Ltd. (hereinafter - "Alba"). For the purpose of the
provisions in this clause, hereto is attached a drawing
marked by the letter "B". Nuco's signature on this Document
constitutes confirmation of the provisions in this
sub-clause.
4.2.3 Nuco confirms by its signing this Document that the
condition specified in clause 7.5 of the Agreement of the
shareholders in Macpell was completely fulfilled.
4.2.4 The balance sheet as of 31.7.99 of the Nuco Company has been
drawn up according to generally accepted accounting
principles.
4.2.5 Nuco's declaration by its signing this Document, according
to which there exists no valid agreement between the
shareholders as defined in clause 1 or any part thereof in
Macpell related to their holdings in Macpell and/or
subsidiaries of Macpell and/or associated companies and/or
affiliated companies, except for the agreement between the
shareholders in Macpell and except for the agreement between
the shareholders in Tefron.
4.2.6 Nuco's confirmation by its signing this Document, according
to which it is not aware that any event and/or fault or
failure and the like occurred in Macpell and/or Tefron,
which is related either directly or indirectly to
"Bug-2000".
4.2.7 An approval and consent in the form hereto attached and
marked as annex "C", signed by the shareholders in Macpell,
with their signature certified by a lawyer.
4.3 Upon signing this Document and as a condition to its entering into
force, Nuco shall pay to the Bank an obligation and a drafting of
document commission fee in shekels or foreign currency, at Nuco's
choice, in the amount of 25,000 USA dollars.
5. Accelerated payment
5.1 The accelerated payment of the Credit or any part thereof may be
made by Nuco subject to the following cumulative conditions:
5.1.1 The amount of the payment shall be not less than a quarter
of a million USA dollars.
<PAGE> 11
5.1.2 The accelerated payment shall be made only on an interest
fixing date as defined in clause 4.1 above.
5.1.3 Notwithstanding the aforesaid, should Nuco request that the
accelerated payment be made not on interest fixing dates,
then, Nuco shall also pay to the Bank an accelerated payment
commission as normally charged in the Bank at that time for
Credit of the same class and for the same period and to
favored clients of the same class.
5.1.4 Prior written notice thereof of 7 business days shall be
given to the Bank before the expected date of payment.
5.1.5 On the date of accelerated payment, Nuco shall pay to the
Bank the principal amount of the accelerated payment, with
interest in respect thereof and the expenses up to that
date.
5.1.6 The financing source for the accelerated payment shall not
be through finance secured by the Shares (including an
obligation to charge the Shares in order to secure the
financing). The condition mentioned in this clause 5.1.6
shall be in force during the first year from the execution
of this Document.
5.2 It is expressly stated that if the source for the accelerated
payment is through funds derived from the charged shares as e.g.,
dividends and management fee and the like, the Shares will not be
released from the charge, irrespective of the ratio of the stock
exchange value of the charged shares to the Unpaid Balance of the
Principal of Credit.
5.3 Insofar as the financial source for the accelerated payment is not
through funds received in respect of the shares as provided in
clause 5.2 above nor through the sale of shares as provided in
clause 5.4 below but from Nuco's own resources or from the own
resources of the holders of the controlling interest in Nuco, the
Bank will agree to release from the charge such part of the charged
Shares to be Acquired which is equal to the amount of the repayment
made, divided by the Unpaid Balance of the Principal of Credit prior
to the payment, provided that the ratio of the market value of the
balance of the Shares remaining charged after the release of the
Shares, to the Unpaid Balance of the Principal of Credit after the
accelerated payment, shall be not lower than the ratio of the
average market value of the Shares in the course of the last seven
business days immediately preceding the payment, to the average
Unpaid Balance of the Principal of Credit in those days, and in any
case, the said ratio shall be not lower than 1.25.
The provisions in this clause is subject to Nuco's complying with
all the conditions of this Document and all the conditions of the
Credit agreement, to the Bank's satisfaction.
<PAGE> 12
5.4 Insofar as Nuco requests to effect an accelerated payment through
the sale of a part of the charged shares and, for such purpose,
requests the Bank to release a part of the charged shares from the
charge, the Bank will agree to release part of the shares from the
charge, subject to all the following conditions:
5.4.1 All the proceeds obtained from the said sale of the shares
shall be applied in payment of the Credit and the provisions
in clause 8 below shall apply in respect thereof. .
5.4.2 The proceeds obtained from the sale of the shares shall be
not less than 80% of the average market value of the shares
during the last seven days immediately preceding the
payment.
5.4.3 The ratio of the market value of the Shares remaining
charged in the Bank's favor after the said sale, to the
Unpaid Balance of the Principal of Credit after the
accelerated payment, shall be not lower than the ratio of
the average market value of the Shares in the course of the
last seven business days immediately preceding the payment,
to the average Unpaid Balance of the Principal of Credit in
those days, and in any case, the said ratio shall be not
lower than 1.25
5.4.4 Until the date of release of the shares, Nuco shall comply
with all the conditions of this Document and all the
conditions of the Credit Agreement, to the Bank's
satisfaction.
5.5 It is expressly stated that the various interest rates specified in
clauses 3.5 and 3.6 shall also apply to the reduction of the Unpaid
Balance of the Principal of Credit as a result of accelerated
payment, subject to Nuco's complying with all the conditions
specified in this Document and in the Credit documents, and subject
to all the conditions required for accelerated payment specified
above.
5.6 It is expressly stated that any amount paid for the purpose of the
accelerated payment shall be credited on account of the Credit
according to one of the following alternatives, at Nuco's choice,
provided that Nuco shall inform the Bank within the period of
delivery of prior notice as provided in clause 5.1.4 above, which of
the alternatives it elects.
5.6.1 on account of the installments which are payable on the latest
dates, the Credit period will be shortened accordingly.
5.6.2 On account of each one of the installments remaining due, so
that the principal amount of each payment will be reduced and
no change will take place in the payment dates and the Credit
period. The Bank shall provide to Nuco a new payment-schedule
and the new schedule shall be binding upon Nuco.
<PAGE> 13
6. Securities
As security for the Credit, the following securities shall be provided to
the Bank before making available any amount whatsoever in respect of the
Credit:
6.1 A fixed charge ranking first in order of priority, unlimited in
amount, signed by Nuco on all the Shares to be Acquired, same being
owned by Nuco and free from any right of any other body whatsoever,
and a fixed charge ranking first in order of priority, on all the
rights of Nuco against the sellers and transferees under the Macpell
Shareholders Agreement. The Credits shall be made available against
the depositing of all the said shares in the said Securities Deposit
and the charging thereof in the Bank's favor and subject to the
provisions in clause 3.2 above.
For the purpose of this Document, "other body" when related to Nuco,
means any person or corporation or partnership other than Nuco.
6.2 A charge on all the moneys received in the special deposit as
hereinafter defined, by a special Letter of Set-off in the form
normally used in the Bank.
6.3 Nuco declares that it has not granted to any body whatsoever any
right of first refusal and/or option and/or any other right with
respect to the shares in Macpell, except for the rights set out in
the Macpell Shareholders Agreement, and it undertakes not to grant
same to any body whatsoever, without receiving therefor the Bank's
prior consent in writing.
6.4 It is hereby agreed that if on any date whatsoever before payment of
the Credit in full, the shares charged will confer any rights
whatsoever to acquire additional shares and/or other additional
rights in Macpell and/or rights to securities of any class
whatsoever in any corporation whatsoever and/or to assets in specie,
Nuco shall be entitled to sell such rights on the stock exchange or
use them subject to the conditions hereinafter specified:
6.4.1 if the rights are sold on the stock exchange, the proceeds
thereof shall be applied in the accelerated payment of the
Credit as specified in clause 5 above or that the provisions
of clause 8 below shall apply to the proceeds.
6.4.2 If the rights are used and/or the options are exercised (the
shares acquired by the use and/or exercise under this
clause, together with the additional securities obtained as
a result thereof, if any, will hereinafter be referred to as
- "Securities Block"), the pledge under clause 6 shall apply
to the whole Securities Block. Nuco shall perform everything
required in order to confer upon the Bank priority and
preference in respect of the Securities Block over other
creditors and, without derogating from the generality of the
aforesaid, charge the Securities Block in the Bank's favor
<PAGE> 14
without any limit, by a fixed charge ranking first in order
of priority and deposit them in the said Securities Deposit
immediately upon the receipt thereof.
6.5 The shareholders in Nuco declare and undertake by their signing at
the bottom of this Document, that they neither created nor will
create in favor of any body whatsoever any charge of any kind and
class whatsoever on their shares in Nuco and that they neither
conferred nor will confer upon any body whatsoever any right of any
kind and class whatsoever with respect to their shares in Nuco;
unless they receive the bank's prior consent in writing thereto.
7. Additional Obligations of Nuco
Nuco undertakes that until the final payment of the Credits in full and if
it does not receive the Bank's prior consent in writing to act otherwise,
then:
7.1 it will neither take nor agree to the taking of any step which will
affect its rights in the Macpell shares charged in the Bank's favor
as provided in clause 6 above and/or the Bank's rights as the
chargees thereof and/or which may cause either directly or
indirectly the suspension of trading in the Macpell shares on the
Tel-Aviv stock exchange and/or on any stock exchange on which they
are traded and/or the delisting thereof.
7.2 Except as provided in clause 4.2.7, it will not agree to any
modification of the Macpell Shareholders Agreement and/or to any
waiver of its rights under the Macpell Shareholders Agreement
without receiving the Bank's prior consent in writing. The bank
confirms that it will grant the approval requested within 3 days
from the date on which it receives the said request, subject to the
fact that at its discretion, the modification of the agreement does
not affect in any way whatsoever its rights as a pledgee.
7.3 It will not engage in any other activity except for the holding of
the Shares to be Acquired and the shares of the Local Authority
Treasury Ltd.. Moreover, Nuco shall incur no expenses of any kind
and class whatsoever, except for payments of compulsory charges and
taxes under any law. legal advice, accountancy, insurance, fees and
any other expense in the ordinary course of business of a company of
such a class.
In order to eliminate any doubt, dividends and/or management fee
received from Macpell shall not be applied in covering the said
expenses and payments.
7.4 It will not pay either directly or indirectly in any manner and form
whatsoever to any of the holders of interest therein and/or to a
company under their control or the control of any of them and/or any
member of their family (within the meaning of these expressions in
the Securities Law, 5728-1968) or to any one of them (or any third
party coming in their place or on their behalf), either in their
status as shareholders, holders of a
<PAGE> 15
position and/or holders of office or otherwise, in respect of
dividends, remuneration, expenses, management fees, consultation
fees and/or participation fee, in money or money equal, except for
payments originating in the Authority Treasury or the holding of
Authority Treasury shares.
7.5 Nuco undertakes not to sell and not to transfer in any other way,
any one of its assets and/or any one of its rights, and not to
charge in any form whatsoever and for any purpose whatsoever, any
one of its assets and/or any one of its rights, and it further
undertakes not to guarantee the obligation of any other person
and/or assume any financial obligation with respect to the
obligations of any other person whosoever, either alone or jointly
with others. Moreover, not to borrow from and not to lend to any
other person or body whosoever, except for the receipt of Credits as
aforesaid from the Bank.
The said provisions shall not apply to Nuco's holdings in the
Authority Treasury shares and Nuco shall be entitled to conclude any
transaction whatsoever with the Authority Treasury shares, and with
its holdings in the Macpell shares, in respect of which the Bank's
prior written approval is received for the sale thereof.
7.6 Nuco undertakes not to pass any resolutions for a voluntary winding
up, any change of the corporation's structure, its re-organization,
and not to perform and not to undertake to perform any merger with
another company/companies, any merger with the business of any other
company/companies, any compromise or arrangement within the meaning
in the Companies Ordinance or any other law enacted in addition
thereto and/or in place thereof and/or any application for an order
of stay of proceedings under the Companies Ordinance or any other
law enacted in addition thereto and/or in place thereof, without
receiving the Bank's prior consent in writing.
Moreover, Nuco undertakes that until the final payment of the
Credits in full, it will object in its status as a shareholder in
Macpell, to the passing by Macpell and/or Tefron of any of the
resolutions set out in this clause, without receiving the Bank's
prior consent in writing.
The provisions in this clause refer both to a merger under Part
Eight and Part Nine of the Companies Law, 5759-1999 and to any other
merger whereby, the Company's main assets are acquired by another
corporation or whereby are acquired shares of the Company conferring
upon the purchaser control in the company or whereby the company
acquires, either directly or indirectly, the main assets of another
corporation or shares of another corporation conferring upon it
control in that corporation (hereinafter - "the said Merger").
7.7 Nuco undertakes not to issue nor to allot shares and/or rights of
any kind and class whatsoever to any body whatsoever in any form and
manner
<PAGE> 16
whatsoever, and not to take any other action which may result in the
diminution of the ownership and voting rates of each one of the Nuco
Owners as specified in the definition of the Nuco Owners above, by a
rate exceeding 10% in relation to the holding rate of the Nuco
Owners' shares on the date of issue of this Document. It is
expressly stated that in any case, Avi Ruimi shall remain the
indirect holder of the controlling interest in Nuco.
7.8 Nuco undertakes not to acquire, not to finance any acquisition and
not to undertake to acquire or finance the acquisition of its shares
in any manner and form whatsoever, including and without derogating
from the generality of the aforesaid, by way of providing a
guarantee, either directly or indirectly, including through its
subsidiary or any other corporation under control, without receiving
the Bank's prior consent in writing thereto (hereinafter -
"Prohibited Acquisition of Shares"). Moreover, Nuco undertakes that
until the final payment of the Credits in full, it will object in
its status as a shareholder in Macpell, to the performance by
Macpell and/or Tefron of any Prohibited Acquisition of Shares,
without receiving the Bank's prior consent in writing.
7.9 Nuco undertakes that its Articles of Association will not contain a
clause whereunder any holder of office therein shall be exempted
from liability for breach of the duty of trust and/or a clause
whereby Nuco may exempt him from such liability.
Moreover, Nuco undertakes that until the final payment of the
Credits in full, it will object in its status as a shareholder in
Macpell, to the inclusion by Macpell and/or Tefron of any such
clause in its Articles of Association.
7.10 Nuco declares and undertakes that until the final payment of the
Credits in full, it will object in its status as a shareholder in
Macpell, to the undertaking by Macpell and/or Tefron of any
obligations whatsoever, restricting their ability to distribute
dividends, except where the undertaking is required by any law,
regulation or request of a competent authority. Moreover, Nuco
hereby declares and undertakes that as of the date of its execution
of this Document, Macpell and/or Tefron have not undertaken to any
body whatsoever any obligations restricting their ability to
distribute dividends.
7.11 In addition to the said provisions, Nuco undertakes that until the
final payment of the Credits in full, the following financial
conditions will be maintained pursuant to the financial statements
of the relevant companies:
7.11.1 Tefron - on the basis of consolidated financial statements -
annual - quarterly, as the case may be:
7.11.1.1 the tangible equity capital of Tefron shall be not
lower at any time than the rate of 30% of its
total balance
<PAGE> 17
sheet and, in any case, not less than the amount
of 60 million USA dollars.
7.11.1.2 The ratio of the aggregate amount of Tefron's
obligations to the banks and all the other
financing bodies of any class whatsoever
(hereinafter - "the Various Financing Bodies") to
the EBITDA shall not exceed 6 at any time.
7.11.2 Macpell - on the basis of the financial statements of the
company only:
7.11.2.1 the tangible equity capital of Macpell shall be
not lower at any time than the rate of 30% of its
total balance sheet and, in any case, not less
than the amount of 16.5 million USA dollars.
7.11.2.2 The annual net profit of Macpell shall be not less
than the amounts set opposite each year:
In the year 2000: an amount of 5.5 million USA
dollars
In the year 2001. an amount of 7 million USA
dollars
In the year 2002. An amount of 8.5 million USA
dollars
In the year 2003. An amount of 9 million USA
dollars
It is expressly stated that insofar as the net profit
in the year 2000 will be reduced in consequence of the
write-off of the investment in New Horizon in the year
2000, then, the minimum annual profit for this year
shall be not less than 2 million USA dollars.
7.12 The total amount of the accounting and flow consequences, directly
or indirectly, to the Macpell Group as a result of the closing down
of the "New Horizon" plant (including the consequences with respect
to the support of the Investment Center by way of grants to the
Macpell Group investments) will, in the Bank's opinion, not exceed 4
million USA dollars.
7.13 Nuco hereby declares and undertakes that as of the date of signing
this Document, it is not in violation of the said conditions and/or
any of the other conditions and/or dates specified in this
Supplement.
8. Funds resulting from the holding of shares
8.1 It is expressly stated that all the moneys which Nuco and/or the
Nuco Owners will receive from their holdings in the Macpell Shares,
and without derogating from the generality of the aforesaid, any
proceeds
<PAGE> 18
received from the sale of shares and/or moneys of dividend and/or
management fee etc. (hereinafter - "the said Moneys"), will be
applied in payment of the Credit only, including linkage and/or
exchange rate differentials, if any, and interest in respect thereof
in full.
8.2 Should the date of receipt of the said Moneys not fall on the
interest fixing date, the said Moneys less the tax chargeable
thereon shall be deposited in a money deposit in the Bank in Nuco's
name (hereinafter - "the Special Deposit"), carrying interest at the
highest rate prevailing in the Bank at that time in respect of
deposits of such class and in such amount. The said deposit will be
charged in the Bank's favor by a fixed charge ranking first in order
of priority by means of the documents and under the conditions
prevalent in the Bank. Any amount as aforesaid shall be applied in
payment on the interest fixing date nearest to the date of the
deposit of the Moneys in the Special Deposit.
8.3 If Nuco will choose to pay the Credit or any part thereof by way of
accelerated payment in place of depositing the moneys in the Special
Deposit, Nuco shall be charged an accelerated payment commission as
specified in clause 5.1.3.
9. Reports
In this clause, the expression "financial statements" shall have the
following meaning:
The annual and quarterly consolidated financial statements (as the case
may be) of the companies: Macpell and/or Tefron Ltd. and/or Alba
(hereinafter - "the said Companies") drawn up according to generally
accepted accounting principles; whilst the quarterly statements are
reviewed by a qualified independent accountant and the annual statements
are audited by a qualified independent accountant, with the addition of
the notes to the statements and the directors' reports.
9.1 Nuco shall deliver to the Bank the following statements:
9.1.1 By and not later than 30.5 of each year, the financial
statements of the said Companies and not later than a week
from the date of publication thereof, while the balance
sheet included therein is related to 31.12 of the preceding
year, and the quarterly financial statements of the said
Companies immediately upon the publication of each statement
as aforesaid.
9.1.2 Nuco's financial statements, immediately upon the
publication thereof and, in any case, not later than 30.5 in
each year in respect of the preceding year.
9.1.3 A copy of each report of any class whatsoever delivered by
the said Companies to the Israeli Securities Authority
and/or the American Securities Commission as the case may
be, and/or the
<PAGE> 19
Israeli and/or American stock exchange, as the case may be,
immediately after delivery thereof to the aforesaid.
9.1.4 An immediate notice in writing, immediately upon the receipt
or delivery by any of the shareholders of an offer in
respect of the sale/purchase of shares of any of the said
Companies, provided that the said offer comes to the
knowledge of Nuco and/or Mr. Avi Ruimi.
9.2 Nuco shall provide the Bank with the working papers in respect of
the examinations which it made with respect to Macpell as specified
in clause 4.4 of the Purchase Agreement and they are attached as
annex "D", and it confirms that it is not aware of any incorrect
detail therein.
The Bank confirms that as of the date on which the Credit is made
available, it does not require any further details beyond those
included in annex "D", and this, without derogating from the
provisions in clause 9.6 below.
9.3 Nuco shall provide the Bank with the business plans of Macpell and
Tefron (including their profitability forecasts) (hereinafter - "the
Plans") once in a year, immediately upon the drawing of the plans.
Moreover, it shall provide the Bank with an updating of the plans on
a half-yearly basis, and at a higher frequency in any case in which
changes occur in the plans.
9.4 Nuco shall provide the Bank immediately with any information which
it receives in respect of the extension and/or non-extension of the
validity of the Tefron Shareholders Agreement as specified in clause
9 of the said Agreement.
9.5 Nuco shall report to the Bank on any meeting of the Board of
Directors of Nuco and of Macpell and of Tefron, on the agenda of
which there is a resolution and/or recommendation to distribute or
an obligation to distribute a dividend and any other distribution as
defined in the Companies Law, 5759-1999 and/or the distribution of
bonus shares, and on any resolution for the allotment of shares
and/or securities convertible into shares in the relevant company
and/or a publication of a prospectus for the issue of shares and/or
securities convertible into shares and/or any undertaking or offer
to allot the shares and/or securities convertible into shares and/or
any undertaking or offer to allot the shares and/or securities
convertible into shares in the relevant company and/or on any
intention to perform a merger, re-construction and/or arrangement in
the relevant company.
9.6 In addition, Nuco shall from time to time provide the Bank with such
reports, information and clarifications as it may be required
thereby.
10. Call for immediate payment
<PAGE> 20
In addition to the events specified in clause 22 of the Terms of
Operation, the Bank shall be entitled to demand the immediate payment of
all the Unpaid Balance of the Credit with a penalty for the immediate
payment (and in case the Bank has not yet made any Credit available, it
shall not be obligated to make any Credit available), if any one of the
following events occur:
10.1 If any change occurs in the ownership and voting rates of any of the
Nuco Owners as against those specified in the definition of Nuco
Owners, by a rate exceeding 10% in relation to the Nuco Owners'
holding rate on the date of issue of this Document or in any case in
which Avi Ruimi ceases to hold the controlling interest in Nuco
and/or if a reduction occurs in the ownership and voting rates of
any of the shareholders as against those specified in the definition
of the shareholders so that they cease to be a party to the Macpell
Shareholders Agreement. In the event of the transfer of control in
consequence of the death of Mr. Ruimi, the Bank's right as aforesaid
shall be suspended for 250 days, during which the Credit will not be
made immediately payable, unless other causes are created for
immediate payment under clause 10.1, including a transfer of control
by the heirs and/or the administrators of the estate under this
clause 10.1.
10.2 If in the Bank's opinion, Nuco loses the control in Macpell
(including loss of the existing control under the Macpell
Shareholders Agreement) or if, in the Bank's opinion, Macpell loses
the control in Tefron (including loss of the existing control under
the Tefron Shareholders Agreement) or if the holding rate of the
Sellers in Macpell and/or the holding rate of Riza Holdings Ltd. in
Macpell is reduced so that any of them ceases to be a party to the
Macpell Shareholders Agreement, unless:
A. The holdings of the Sellers or of Riza were acquired by Nuco
(or another corporation controlled by Avi Ruimi);
or:
B. If the holdings of the Sellers or of Riza were acquired by a
body unsatisfactory to the Bank, Nuco shall be obligated to
pay the Credit within one year from the date on which it was
called for repayment, and this, without derogating from the
Bank's right to demand the immediate payment of the Credit due
to the other causes in this clause 10, if any of the causes
occur.
10.3 If at any time an event occurs which, in the Bank's opinion, worsens
or materially jeopardizes the Bank's ability to recover the Credits
in full and in time and/or in the Bank's opinion, worsens or
materially jeopardizes the value of the securities given to the Bank
as security for the Credits, the Bank will demand the immediate
payment of the Unpaid Balance of the Credit at the end of five
business days from the date of the notice to Nuco, unless during the
said period, Nuco makes good everything required in the Bank's
opinion.
<PAGE> 21
In order to eliminate any doubt, it is expressly stated
that the provisions in this clause refer to all classes of
deterioration which, in the Bank's opinion. are relevant, and not
only to a deterioration in the value of the shares on the stock
exchange specified in clause 11 below.
10.4 If an application for the suspension of proceedings is submitted
pursuant to section 233 of the Companies Law or any other additional
or other law against any of the said Companies or against a material
subsidiary (5% of the amount of the balance sheet) of any of the
said Companies, and same is not removed within 45 days.
10.5 The suspension of trading in the Macpell shares on the Tel-Aviv
stock exchange or the suspension of trading in the Tefron shares on
the stock exchange in the USA during seven consecutive business days
or the delisting thereof.
10.6 If on the agenda of the preliminary meeting in Macpell (as defined
in clause 4.2 of the Macpell Shareholders Agreement) or if on the
agenda of the general meeting and/or the Board of Directors of Nuco
and/or Macpell and/or Tefron Ltd., a resolution is included in
respect of the following subjects: a resolution pursuant to section
233 of the Companies Law (New Version) or any other law replacing it
or enacted in addition thereto, a resolution for a voluntary winding
up, a resolution for a merger and/or changes in the rights conferred
by the shares and/or a resolution in respect of the dilution of
shares and/or any resolution for any other act of the Company
related to a matter which, in the Bank's opinion, the said acts
and/or resolutions are liable to reduce the value of the shares and
rights to be charged to the Bank.
10.7 If any resolution is passed in Nuco and/or Macpell and/or Tefron
with respect to the said merger as defined in clause 7.6 above or
with respect to a Prohibited Acquisition of Shares as provided in
clause 7.8 above, without receiving the Bank's prior written consent
therefor.
10.8 If Nuco and/or Macpell and/or Tefron violate and/or in the Bank's
opinion, fail to comply with any of its obligations set out in any
of the documents signed and/or to be signed thereby in respect of
making the Credit available by the Bank, or if, in the Bank's
opinion, it appears that any of the presentations and/or
declarations of Nuco and/or Macpell and/or Tefron under any of the
documents signed and/or to be signed thereby in respect of making
the Credit available by the Bank, is not true.
It is expressly stated that failure to comply with any of the
financial conditions set out in clause 7.11 above shall not
constitute a cause for immediate repayment, except insofar as such
failure at a rate exceeding 30% of the value/item appearing in any
of the financial conditions specified in the said clause.
<PAGE> 22
10.9 Clause 22 of the Terms of Operation specifying the events conferring
upon the Bank the right to demand immediate repayment, shall provide
that any event therein specified occurring to Nuco and/or Macpell
and/or Tefron Ltd., shall confer upon the Bank a right to demand the
immediate payment of the Credits and, for this purpose, wherever
"the Clients" are mentioned, same shall be deemed as if "the Clients
and/or Macpell and/or Tefron Ltd." are stated.
10.10 The following amendments shall be inserted in clause 22 of the Terms
of Operation:-
A. Sub-clause (a) - "If the Clients do not pay to the Bank any
amount whatsoever due from them under this Document or
according to the application for the receipt of Credit within
3 business days from the date prescribed for the payment
thereof or within 3 business days from the date of the Bank's
first demand under clause 25 below".
B. In clause (b), "7 days" shall be replaced by "21 days".
C. Sub-clause (g) shall be deleted.
D. Sub-clause (h) the word "event" shall be followed by the word
"material".
11. Supplement of Securities
Without derogating from the causes for accelerated payment set out above
and further to the provisions in clause 10.1 above with respect to the
reduction in the value of the securities given to the Bank as security for
the Credit, it is expressly stated as follows:
11.1 In the event in which the determining ratio as hereinafter defined
will be during seven consecutive business days lower than 1.25 and
higher than 1.15, Nuco shall be obligated within three days from the
end of the said seven business days, to notify the Bank in writing
whether it intends to supplement additional securities to its
satisfaction, so that the ratio of the aggregate value of the total
securities to the Unpaid Balance of the Credit, shall be in the
Bank's opinion, higher than 1.25.
Should Nuco inform the Bank within the said three days, that it
intends to supplement securities, then, it shall be obligated,
within four business days, to supplement the securities at the rate
stated above. Should Nuco inform the Bank that it does not intend to
supplement securities or if the Bank receives no notice from Nuco in
this respect during the said three days, the Bank shall be entitled
at the end of the said three days, to demand the immediate payment
of the Unpaid Balance of the Credit without any notice or any prior
notice.
11.2 In the event in which the determining ratio as hereinafter defined
will be during four consecutive business days lower than and/or
equal to 1.15 and higher (inclusively) than 1.10, Nuco shall be
obligated within two days from the end of the said four business
days, to notify the Bank in writing whether it intends to supplement
additional securities to its satisfaction, so
<PAGE> 23
that the ratio of the aggregate value of the total securities to the
Unpaid Balance of the Credit, shall be in the Bank's opinion. higher
than 1.25. Should Nuco inform the Bank within the said two days,
that it intends to supplement securities, then, it shall be
obligated, within two business days, to supplement the securities at
the rate stated above. Should Nuco inform the Bank that it does not
intend to supplement securities or if the Bank receives no notice
from Nuco in this respect during the said two days, the Bank shall
be entitled at the end of the said two days, to demand the immediate
payment of the Unpaid Balance of the Credit without any notice or
any prior notice.
11.3 In the event in which the determining ratio as hereinafter defined
will be during two consecutive business days lower than 1.10, Nuco
shall be obligated within one day from the end of the said two
business days, to notify the Bank in writing whether it intends to
supplement additional securities to its satisfaction, so that the
ratio of the aggregate value of the total securities to the Unpaid
Balance of the Credit, shall be in the Bank's opinion. higher than
1.25.
Should Nuco inform the Bank within the said day, that it intends to
supplement securities, then, it shall be obligated, within two
business days, to supplement the securities at the rate stated
above. Should Nuco inform the Bank that it does not intend to
supplement securities or if the Bank receives no notice from Nuco in
this respect during the said day, the Bank shall be entitled at the
end of the said day, to demand the immediate payment of the Unpaid
Balance of the Credit without any notice or any prior notice.
11.4 In order to eliminate any doubt, it is expressly stated that in any
case in which the Bank will be entitled to demand the immediate
payment of the Unpaid Balance of the Credit, the Bank shall also be
entitled to enforce the charged shares.
It is emphasized that the enforcement of the charged shares is the
right of the Bank and, insofar as the Bank chooses not to enforce
the charged shares, Nuco shall have no claim or demand against the
Bank.
11.5 It is further expressly stated that if the determining ratio will be
on any date whatsoever lower than 1.25, the Bank shall be entitled
to raise the margin on the Credit by one grade, so that the margin
rate will be at the rate which preceded the reduction of the margin
according to the table specified in clauses 3.5 and 3.6 above, until
the date on which the determining rate exceeds 1.25.
The "Determining Ratio" under this clause is the ratio of the market value
of the shares charged in the Bank's favor, as it is on the relevant date,
to the Unpaid Balance of the Credit at that time.
12. Non Recourse
<PAGE> 24
12.1 Notwithstanding the provisions in the Terms of Operation and/or in
any other document signed in the past and/or hereafter by Nuco, it
is hereby expressly stated and agreed that the Credits are made
available to Nuco without the bank's right of recourse to Nuco and
the Nuco Owners, all subject to the provisions below.
12.2 Notwithstanding the provisions in clause 12.1 above, in any case in
which Nuco and/or the Nuco Owners and/or their successors or any one
on their behalf raise any claims against the validity of the charge
on the Shares or against the enforcement of the said charge, in
whole or in part, or against the right to enforce it or recover
therefrom or in any case in which the Bank is obligated to return
the proceeds of the enforcement of the charge on the Shares, in
whole or in part, and in the case in which claims are raised as
aforesaid by a receiver, liquidator, trustee and the like and/or by
any third party whosoever and it is decided by a competent court
that the charge on the Shares is invalid or unenforceable, in whole
or in part, in such cases, the Bank's consent as provided in clause
12.1 above shall be void and the Bank shall be entitled to institute
any proceeding against Nuco and/or the Nuco Owners to collect the
amounts due thereto from them now and hereafter in respect of and in
connection with the Credit (in the case in which the Bank will be
obligated to return he proceeds of the enforcement of the charge -
in the amount which it is obligated to return).
12.3 Notwithstanding the provisions in clause 12.1 above, if Nuco
violates any of its obligations under this Document, according to
which the said Moneys as defined in clause 8.1 above will be applied
only in paying the Credit as specified, inter alia, in clause 8
above, the Bank shall be entitled to institute any proceeding
against Nuco and/or the Nuco Owners to collect the amounts due
thereto from them now and hereafter in respect of and in connection
with the Credit, up to the amount of the obligation which was
violated, at the Bank's exclusive discretion. In order to eliminate
any doubt, it is expressly stated that in such a case, the Bank
shall also have the right to demand the immediate payment of all the
Unpaid Balance of the Credit.
12.4 It is further clearly stated that subject to the provisions in
clause 3.7 above, in any case in which the said Moneys as defined in
clause 8.1 above, are not fully transferred to the Bank due to the
payment of any tax or charge whatsoever (as e.g., a receipt of
dividend chargeable by a withholding tax, so that Nuco's account
will be credited only with the amount remaining after the said
withholding), then, notwithstanding the provisions in clause 12.1
above, on the date of the demand of immediate payment of the Credit
(if so demanded), the Bank shall have a right of recourse against
Nuco and/or the Nuco Owners, in the amount of the tax or the charge
paid as aforesaid, with interest and linkage or exchange rate
differentials, subject to the conditions of the Credit, as from the
date on which the said tax or charge was paid.
<PAGE> 25
In order to eliminate any doubt, it is expressly stated that the
provisions in this clause is not conditional upon the prior
enforcement of the securities delivered now and/or hereafter to the
Bank.
12.5 Notwithstanding the provisions in clause 12.1 above, if Nuco
notifies the Bank, upon the occurrence of any of the events
specified in clause 11.1 to 11.3 above, that it intends to
supplement securities as provided in the said clauses, but will, in
fact, not provide the securities specified in the said clauses at
the rate and on the date required (or will not provide any
securities at all), then, notwithstanding the provisions in clause
12.1 above, on the date of the demand of immediate payment of the
Credit (if so demanded), the Bank shall have a right of recourse
against Nuco in the amount of the rate of securities requested under
clause 11 above.
13. Miscellaneous
13.1 The Bank's waiver of any prior breach or failure to comply with any
one or more of the obligations thereto under the Credit Agreement
and/or the securities and/or the failure to comply with any
condition whatsoever under this Document, shall not be deemed as a
consent to any additional breach or additional failure to comply
with any of the conditions or obligations as aforesaid, and the
Bank's refraining from exercising any right whatsoever granted
thereto under this Document or under any law, shall not be
interpreted as a waiver of such right. No relief or waiver of any
one of these conditions by the Bank shall be binding upon the Bank
and they shall not constitute a consent to the non-compliance of any
one of these conditions, unless made in writing by the Bank.
13.2 Insofar as the Credit is made available to Avi Ruimi at his request,
he shall sign this Document and undertake to the Bank all the
presentations and declarations and obligations by which Nuco is
obligated under this Document, and wherever "Nuco" is stated in
writing in this Document, same shall be deemed as if "Avi Ruimi" is
stated, mutatis mutandis, and immediately after Avi Ruimi transfers
the Shares and the Credit to Nuco or any other company wholly owned
by him, which meets the conditions specified in clause 13.3 below,
Avi Ruimi will be released of Nuco's obligations under this
Document, except for breaches caused by him during the period in
which he himself held Macpell shares.
13.3 Nuco's rights under this Document and/or the documents mentioned
therein or related thereto are not assignable or transferable in any
form whatsoever, except to another company fully controlled by Avi
Ruimi or in which his control percentage is at least 90%, to which
the Shares and the Credit will be transferred, provided that the
said company shall undertake to the Bank all the presentations and
declarations and obligations by which Nuco is obligated under this
Document.
<PAGE> 26
13.4 Subject to any law, Nuco and the Nuco Owners may not present this
Document to any body whatsoever, except with the Bank's prior
written consent.
13.5 Wherever a discrepancy exists between the provisions of this
Document and any other document signed by Nuco, the provisions of
this Document shall prevail.
13.6 Stamp duty, if any, payable in respect of this Document and any
other documents executed in connection therewith or thereunder,
shall be borne and paid by Nuco on time.
13.7 The headings of the clauses in this Document are inserted for
convenience only and they should not be considered in interpreting
the conditions of this Document.
13.8 The laws of the State of Israel shall apply to this Document and the
interpretation thereof.
In witness whereof the parties hereto have hereunto set their hand:
/s/ AVI RUIMI
--------------------------- ---------------------------
Condo Overseas Inc. Avi Ruimi
I, the undersigned, Avi Ruimi, agree to the aforesaid provisions in the Terms of
Operation and in the Supplement, and undertake, insofar as they are related to
me, to act accordingly.
Moreover, I undertake towards you by way of an irrevocable obligation, to pay
all of Nuco's debts and obligations to you immediately upon your first demand in
the circumstances in which, under clause 12 of the Supplement to the Terms of
Operation, you have a right of recourse to me.
It is expressly stated that save for the said circumstances in which you have a
right of recourse to me, I am not obligated to you to pay the Credit placed at
Nuco's disposal under this Document and I am also not a guarantor in respect
thereof.
In order to eliminate any doubt, it is hereby expressly stated that I shall not
have any request and/or claim and/or demand whatsoever in respect of any
security or bond received by the Bank in the past and/or in the future as
security for Nuco's debts and obligations due to you.
Moreover, I confirm that I am aware that in any case in which the Bank shall be
entitled to demand the immediate payment of the unpaid balance of the Credit,
the
<PAGE> 27
Bank will also be entitled to enforce the charged shares, and that the
enforcement of the charged shares is the Bank's right and, should the Bank chose
to enforce the charged shares, neither I nor Nuco will have any claim or demand
against you.
/s/ AVI RUIMI
---------------------------
Avi Ruimi
