0001341004-07-002035.txt : 20070703 0001341004-07-002035.hdr.sgml : 20070703 20070703171553 ACCESSION NUMBER: 0001341004-07-002035 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20070703 DATE AS OF CHANGE: 20070703 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DELTA GALIL INDUSTRIES LTD CENTRAL INDEX KEY: 0001081022 STANDARD INDUSTRIAL CLASSIFICATION: WOMEN'S, MISSES', CHILDREN'S & INFANTS' UNDERGARMENTS [2340] IRS NUMBER: 000000000 STATE OF INCORPORATION: L3 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-50724 FILM NUMBER: 07961799 BUSINESS ADDRESS: STREET 1: 2 KAUFMAN ST CITY: TEL AVIV STATE: L3 ZIP: 67021 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GMM Capital LLC CENTRAL INDEX KEY: 0001315159 IRS NUMBER: 726232404 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 950 THIRD AVENUE STREET 2: SUITE 2805 CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 212-688-8288 MAIL ADDRESS: STREET 1: 950 THIRD AVENUE STREET 2: SUITE 2805 CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D/A 1 nyc614576.htm AMENDMENT NO. 4

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 13D

(Amendment No. 4)

Under the Securities Exchange Act of 1934

DELTA GALIL INDUSTRIES LTD.

__________________________________________________________________________________

(Name of Issuer)

ORDINARY SHARES, PAR VALUE NIS 1 PER SHARE

__________________________________________________________________________________

(Title of Class of Securities)

None

________________________________________________________________________________

(CUSIP Number)

Isaac Dabah

GMM Capital, LLC

c/o IID LLC

1450 Broadway

New York, NY 10018

(212) 688-8288

____________________________________________________________________

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

With a copy to:

Thomas W. Greenberg, Esq.

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

(212) 735-3000

July 1, 2007

_________________________________________________________________________

(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 that 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. o

The information required on 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, as amended (the "Exchange Act") or otherwise subject to the liabilities of that section of the Exchange Act but shall be subject to all other provisions of the Exchange Act (however, see the Notes).

1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) GMM Capital, LLC I.R.S. Identification No.: 72-6232404
2.	Check the Appropriate Box if a Member of a Group (See Instructions)			(a) o (b) o
3.	SEC USE ONLY
4.	Source of Funds (See Instructions) AF, BK
5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o
6.	Citizenship or Place of Organization Delaware
Number of Shares Beneficially Owned by Each Reporting Person with		7.	Sole Voting Power 0
		8.	Shared Voting Power 7,855,115(1)
		9.	Sole Dispositive Power 0
		10.	Shared Dispositive Power 7,855,115(1)
11.	Aggregate Amount Beneficially Owned by Each Reporting Person 7,855,115(1)
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o
13.	Percent of Class Represented by Amount in Row (11) 41.9%(2)
14.	Type of Reporting Person (See Instructions) OO

(1) This amount includes 2,500,000 shares that the Reporting Persons have the right to acquire from the Lautman Group (as defined herein), pursuant to the Share Purchase Agreement, dated July 1, 2007, by GMM Capital and the Lautman Group, as described in this Statement. Such acquisition is expected to be consummated on July 5, 2007.

(2) Based on 18,740,878 ordinary shares outstanding, excluding 1,206,802 ordinary shares held by the Company and excluding 166,031 ordinary shares held by a trustee in connection with Delta Galil's stock option plans.

1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) GMM Trust I.R.S. Identification No.: 72-6232404
2.	Check the Appropriate Box if a Member of a Group (See Instructions)			(a) o (b) o
3.	SEC USE ONLY
4.	Source of Funds (See Instructions) OO
5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o
6.	Citizenship or Place of Organization New Jersey
Number of Shares Beneficially Owned by Each Reporting Person with		7.	Sole Voting Power 0
		8.	Shared Voting Power 7,855,115(1)
		9.	Sole Dispositive Power 0
		10.	Shared Dispositive Power 7,855,115(1)
11.	Aggregate Amount Beneficially Owned by Each Reporting Person 7,855,115(1)
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o
13.	Percent of Class Represented by Amount in Row (11) 41.9%(2)
14.	Type of Reporting Person (See Instructions) OO

(1) This amount includes 2,500,000 shares that the Reporting Persons have the right to acquire from the Lautman Group, pursuant to the Share Purchase Agreement, dated July 1, 2007, by GMM Capital and the Lautman Group, as described in this Statement. Such acquisition is expected to be consummated on July 5, 2007.

This Amendment No. 4 to Schedule 13D (this "Statement") relates to the ordinary shares, par value 1 NIS per share ("Ordinary Shares"), of Delta Galil Industries Ltd., an Israeli corporation (the "Company"). This Statement amends (i) the initial statement on Schedule 13D, filed on August 17, 2005 (the "Initial Statement") jointly on behalf of GMM Capital, LLC ("GMM Capital"), a Delaware limited liability company and GMM Trust, a trust formed under the laws of the State of New Jersey ("GMM Trust", and together with GMM Capital, the "Reporting Persons"), (ii) Amendment No. 1 to the Initial Statement filed by the Reporting Persons on August 18, 2005 (the "First Amendment"), (iii) Amendment No. 2 to the Initial Statement filed by the Reporting Persons on August 30, 2005 (the "Second Amendment") and (iv) Amendment No. 3 to the Initial Statement filed by the Reporting Persons on April 25, 2006 (the "Third Amendment" and collectively with the Initial Statement, Amendment No. 1 and Amendment No. 2, the "Original Statement"). Capitalized terms used but not defined herein have the meanings ascribed to them in the Original Statement. The Original Statement is hereby amended as follows:

Item 3. Source and Amount of Funds or Other Consideration.

Item 3 is hereby supplemented as follows:

On July 1, 2007, GMM Capital entered into an Agreement (the "Share Purchase Agreement") with N.D.R.L. Investments (1998) Ltd. and Nichsei Adinoam Ltd. (the "Lautman Group"), affiliates of Dov Lautman, to acquire 2,500,000 Ordinary Shares (the "Purchased Shares") owned by the Lautman Group for an aggregate purchase price of not less than US$21,250,000 (US$8.50 per share) and not more than US$25,000,000 (US$10.00 per share) (the "Consideration"), as more fully described in Item 4 of this Statement. GMM Capital intends to fund the purchase price through bank loans which will be secured by the Purchased Shares. The acquisition is expected to be consummated on July 5, 2007. Since the Third Amendment, the Reporting Persons have acquired an additional 67,472 Ordinary Shares which were acquired for cash through open market purchases for an aggregate purchase price of $484,702.84, including brokerage fees and commissions.

Item 4. Purpose of Transaction.

Item 4 is hereby supplemented as follows:

Upon the closing of the transactions contemplated by the Share Purchase Agreement, GMM Capital will purchase 2,500,000 Ordinary Shares of Delta Galil in exchange for a payment to the Lautman Group of an amount equal to US$16,250,000 (US$6.50 per share). GMM Capital has agreed to pay to the Lautman Group an additional amount of not less than US$5,000,000 (an additional US$2.00 per share) and not more than US$8,750,000 (an additional US$3.50 per share) not later than December 31, 2008. Such amount shall be comprised of two components: the "Minimum Balance" and the "Additional Balance". The Minimum Balance shall be an amount of US$5,000,000 (equal to US$2.00 per share). The Additional Balance (if any) shall be determined as follows: If in any 60 consecutive calendar day period between July 1, 2007 and December 31, 2008, the closing price exceeds US$8.50 on all Tel Aviv Stock Exchange trading days during such 60 calendar day period, the Additional Balance shall be calculated by multiplying 2,500,000 by the difference between (a) the lowest closing price during such 60-day period and (b) US$8.50. If there shall be more than one 60-day period during which the closing price exceeds US$8.50 between July 1, 2007 and December 31, 2008, the Additional Balance shall be the highest amount resulting from the formula. Notwithstanding the foregoing, in no event shall the Additional Balance exceed a total amount of US$3,750,000 (or US$1.50 per share). If prior to December 31, 2008, GMM Capital sells Ordinary Shares such that GMM Capital holds, after such sale,

less than 2,500,000 Ordinary Shares, then the Minimum Balance shall be payable within seven days thereafter. The Share Purchase Agreement is filed as Exhibit 6 to this Statement.

Upon the consummation of the transactions contemplated by the Share Purchase Agreement, GMM Capital and the Lautman Group will enter into a new Shareholders Agreement which will supersede and replace the Shareholders Agreement dated August 30, 2005. The new Shareholders Agreement will provide, among other things, that the Lautman Group has agreed to grant GMM Capital a right of first refusal over transfers of Ordinary Shares by the Lautman Group, subject to certain exceptions. The form of new Shareholders Agreement is filed as Exhibit 7 to this Statement.

GMM Capital has requested all current members of the board of directors of the Company to continue to serve as directors. In the event that any such members of the board of directors do not wish to continue to serve, GMM Capital intends to use its voting power in the Company to elect directors designated by GMM Capital to the Company's board of directors in order to replace directors who do not wish to continue to serve. The Reporting Persons may maintain their investment at current levels or acquire additional Ordinary Shares or other securities of the Company, or sell all or a part of their investment at any time. Other than as set forth above, the Reporting Persons have no present plans or intentions which would result in or relate to any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D of the Securities Exchange Act of 1934, as amended. However, the Reporting Persons may, at any time and from time to time, review or reconsider their position with respect to the Company, and formulate (and modify) plans or proposals with respect to any such matters.

Item 5. Interest in Securities of the Issuer.

Item 5 is amended and restated in its entirety as follows:

(a) Based upon information set forth in the Company's Report on Form 20-F for the period ending December 31, 2006, there were 18,740,878 Ordinary Shares outstanding as of March 25, 2007, excluding 1,206,802 shares held by the Company as treasury shares and 166,031 shares held by a trustee in connection with the Company's stock option plans. The Reporting Persons may be deemed to beneficially own 7,855,115 Ordinary Shares, or 41.9% of the outstanding Ordinary Shares, consisting of 5,355,115 Ordinary Shares owned by the Reporting Persons prior to this Amendment, plus 2,500,000 shares that the Reporting Persons have a right to acquire upon the consummation of the transactions contemplated by the Share Purchase Agreement. The persons set forth on Schedule I to the Initial Statement do not beneficially own any Ordinary Shares and expressly disclaim beneficial ownership of the Ordinary Shares deemed beneficially owned by the Reporting Persons.

(b) Upon the consummation of the transactions contemplated by the Share Purchase Agreement, the Reporting Persons will share the power to vote or to direct to vote and will share the power to dispose or to direct the disposition of all 7,855,115 Ordinary Shares that may be deemed beneficially owned by them. As a result of its ownership of GMM Capital, GMM Trust may be deemed to control the power to vote or direct the disposition of such Ordinary Shares. The persons set forth on Schedule I to the Initial Statement do not have the power to vote or to direct to vote or the power to dispose or to direct the disposition of any other Ordinary Shares and expressly disclaim beneficial ownership of the Ordinary Shares deemed beneficially owned by the Reporting Persons.

(c) Other than as set forth in item 3 and item 4 above, during the past sixty days, there were no purchases of the shares of Common Stock, or securities convertible into or exchangeable for Ordinary Shares, by the Reporting Persons or any person or entity controlled by the Reporting Persons or any person or entity for which the Reporting Persons possess voting control over the securities thereof or, to the knowledge of the Reporting Persons, any person set forth on Schedule I to the Initial Statement. During such sixty day period, there were no sales of the shares of Common Stock, or securities convertible into or exchangeable for shares of Common Stock, by the Reporting Persons or any person or entity controlled by the Reporting Persons or any person or entity for which the Reporting Persons possess voting control over the securities thereof or, to the knowledge of the Reporting Persons, any person set forth on Schedule I to the Initial Statement.

(d) No person (other than the Reporting Persons) is known by the Reporting Persons to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Ordinary Shares referenced in the Original Statement or this Statement.

(e)

Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Item 6 is hereby supplemented as follows:

The information described in Item 4 of this Statement is hereby incorporated by reference.

Item 7. Material to be Filed as Exhibits.

Item 7 is supplementally amended as follows:

6.	Agreement, dated July 1, 2007, between N.D.R.L. Investments (1998) Ltd. and Nichsei Adinoam Ltd., and GMM Capital LLC

7.	Form of Shareholders Agreement, dated July 5, 2007, between N.D.R.L. Investments (1998) Ltd. and Nichsei Adinoam Ltd., and GMM Capital LLC

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth herein is true, complete and correct.

GMM CAPITAL LLC

By:	/s/ Isaac Dabah
	Name:	Isaac Dabah
	Title:	Executive Director

GMM TRUST

By:	/s/ Isaac Dabah
	Name:	Isaac Dabah
	Title:	Trustee

Dated: July 3, 2007

EXHIBIT INDEX

6.	Agreement, dated July 1, 2007, between N.D.R.L. Investments (1998) Ltd. and Nichsei Adinoam Ltd., and GMM Capital LLC

7.	Form of Shareholders Agreement, dated July 5, 2007, between N.D.R.L. Investments (1998) Ltd. and Nichsei Adinoam Ltd., and GMM Capital LLC

EX-99 2 july1_2007agmt.htm AGREEMENT

A G R E E M E N T

Entered into and executed on July 1, 2007

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 2 Kaufman Street, Tel Aviv (hereinafter "NDRL") and Nichsei Adinoam Ltd., a private limited company organized under the laws of Israel, whose registered office is situated at 2 Kaufman Street, Tel Aviv (hereinafter "Nichsei Adinoam") (hereinafter, jointly and severally, the "Lautman Group"),

of the first part,

GMM Capital LLC, a limited liability company, organized and existing under the laws of the State of Delaware, with registered offices at 1450 Broadway, New York City, New York (hereinafter "GMM"),

of the second part

WHEREAS

Delta Galil Industries Ltd (hereinafter "Delta Galii" or "The Company") is a company incorporated and existing under the laws of Israel; and

WHEREAS

the issued share capital of Delta Galil is NIS 20,113,711 divided into 20,113,711 Ordinary Shares of a nominal value of NIS 1 each (hereinafter "Ordinary Shares"), of which 1,206,802 shares are held by Delta Gaul as treasury stock, 166,031 are held by a trustee in connection with its stock option plans; 5,355,115 Ordinary Shares are held by GMM; 4,644,993 Ordinary Shares are held, beneficially and of record, by the Lautman Group: and the remaining shares are held by other parties; and

WHEREAS

GMM desires to acquire from the Lautman Group, and the Lautman Group wishes to sell to GMM, pursuant to this Agreement, 2,500,000 Ordinary Shares of Delta Galil (hereinafter "the Transferred Shares"), all as more fully set out in 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.	Recitals

The recitals to this Agreement and all attachments hereto comprise an integral part hereof.

2.	Definitions

In this Agreement, each of the following terms shall bear the meaning assigned to it below:

2.1

"Shareholders Agreement" shall mean that certain agreement dated August 30, 2005 between GMM, Dabah, NDRL, Nichsei Adinoam, Noam Lautman and Dov Lautman attached hereto as Exhibit A.

2.2

The "Closing Price" on any date shall be the closing price as reported by the Tel Aviv Stock Exchange, as expressed in U.S. dollars by conversion at the representative exchange rate last published by the Bank of Israel prior to such date. Should the Bank of Israel ceases to publish the exchange rate, the rate of exchange will be the average of the selling price and the buying price of checks and transfers in US Dollars by Bank Hapoalim B.M. on the day prior to such day.

2.3

"TASE" shall mean the Tel Aviv Stock Exchange.

3.	The Sale

3.1

The Lautman Group hereby agrees to sell to GMM and GMM hereby agrees to acquire from the Lautman Group 2,500,000 (two million five hundred thousand) Ordinary Shares of Delta Galil held by the Lautman Group, for the total amount of not less than US$21,250,000 (US$8.50 per share) and not more than US$ 25,000,000 (US$10.00 per share), as set out in this Section (hereinafter, "the Consideration").

3.1.1

GMM shall pay to the Lautman Group, on account of the Consideration, at the Closing, an amount of US$16,250,000 (US$6.50 per share) (the "Initial Consideration") against delivery by the Lautman Group to GMM of a Share Transfer Deed(s), duly signed by the Lautman Group, for the Transfer of 2,500,000 Ordinary Shares of Delta Galil to GMM.

3.1.2

GMM shall pay to the Lautman Group, the balance of the Consideration (the "Balance"), an amount of not less than US$5,000,000 (an additional US$2.00 per share) and not more than US$8,750,000 (an additional US$ 3.50 per share) not later than December 31, 2008, as determined in accordance with Section 3.1.3 below.

3.1.3

The Balance shall be composed of two components: The Minimum Balance and the Additional Balance. The Minimum Balance shall be an amount of US$5,000,000 (equal to US$2.00 per share). The Additional Balance (if any) shall be determined as follows: If in any 60 consecutive calendar day period between the date hereof and December 31, 2008, the Closing Price exceeds US$8.50 on all TASE trading days during such 60 calendar day period, the Additional Balance shall be calculated by multiplying 2,500,000 by the difference between (a) the lowest Closing

Price during such 60-day period and (b) US$8.50. If there shall be more than one 60-day period during which the Closing Price exceeds $8.50 as set out above from the date hereof and December 31, 2008, the Additional Balance shall be the highest amount resulting from the said formula.

Notwithstanding the aforesaid, in no event shall the Additional Balance exceed a total amount of US$3,750,000 (or $1.50 per share).

3.2

If prior to December 31, 2008, GMM sells Ordinary Shares such that GMM holds, after such sale, less than 2,500,000 Ordinary Shares, then the Minimum Balance shall be payable within seven days thereafter. For the avoidance of doubt, the Additional Balance shall be paid not later than December 31, 2008.

3.3

The Consideration shall be paid by GMM in U.S. Dollars, to a bank account(s) to be designated by the Lautman Group and shall not be subject to any set-off.

4.	Representations and Warranties of the Lautman Group

4.1

Each of the members of the Lautman Group is duly organized, validly existing, and in good standing under the laws of Israel.

4.2

Each of the members of the Lautman 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 Lautman Group and constitutes the valid and legally binding obligation of each of the members of the Lautman Group, enforceable in accordance with its terms and conditions. Each of the members of the Lautman 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.

4.3

Neither the execution, delivery nor the performance by each of the members of the Lautman Group of this Agreement, nor the consummation of the transactions contemplated hereby, will:

4.3.1

violate or conflict with (i) any law or other restriction of any governmental entity to which such member of the Lautman Group is subject or (ii) any provision of its Memorandum of Association and Articles; or

4.3.2

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 Lautman Group is a party or by which it is bound.

4.4

The Lautman Group holds has a good and valid title, right and interest to its Transferred Shares of Delta Galil, free and clear of any mortgage, pledge, lien, encumbrance, charge, claim to title, option, warrant, purchase right, right of first refusal, restriction on use or transfer under any instrument or agreement, or any other encumbrance of any nature whatsoever.

4.5

Transfer of the Transferred Shares by the Lautman Group to GMM as contemplated by this Agreement will transfer good and marketable title, right and interest thereto to GMM, free and clear of any mortgage, pledge, lien, encumbrance, charge, claim to title, option, warrant, purchase right, right of first refusal, restriction on use or transfer under any instrument or agreement, or any other encumbrance of any nature whatsoever (other than any restriction, if any, which may apply in respect of the Ordinary Shares to be acquired by GMM hereby, in accordance with any applicable law, including, but not limited to, the regulations of the SEC and of the TASE.

4.6

Except with respect to the Shareholders Agreement, there are no options, warrants, calls, rights, commitments or agreements of any kind to which any member of the Lautman Group is a party or by which the such member of the Lautman Group (or the Transferred Shares owned by it) is bound which contain any obligations of such member of the Lautman Group, relating to the sale, issuance or the granting of rights to acquire, any of the Transferred Shares held by them or obligating such member of the Lautman Group to grant, extend or enter into any such option, warrant, call, right, commitment or agreement in respect of the Transferred Shares.

4.7

Except with respect to the Shareholders Agreement, no member of' the Lautman Group is a party to any voting trust, proxy, or other agreement or understanding with respect to the manner it which it may or should vote of any of the Transferred Shares owned by them.

5.	Representations and Warranties of GMM

5.1

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 Ivette and Isaac Dabah and the Trustees of which are Ivette and Isaac Dabah.

5.2

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.

5.3

Neither the execution, delivery nor the performance by GMM of this Agreement, nor the consummation of the transactions contemplated hereby, will:

5.3.1

5.3.2

5.4

GMM is familiar with the assets, liabilities and businesses of Delta Galil.

6.	Disclaimer of Representations and Warranties

Except as expressly set forth in Section 4 above, neither member of the Lautman 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.

7.	Payments

Without derogating from any other remedy which the Lautman Group may be entitled to, any amount payable as aforesaid not paid on the due date, as herein set forth, shall bear interest at 2% above the LIBOR rate for one month deposits, from the date of which such amounts first become due, and until payment of the entire amount due to the Lautman Group on account of principal and interest.

8.	The Parties’ Covenants

8.1

Each of the Parties will use its reasonable best efforts to take all action and to do, and to assist and cooperate with the other Party in doing, all things necessary, proper, or advisable to consummate and make effective the transactions contemplated by this Agreement.

8.2

Each of the Parties will make the necessary filings to the TASE and to the SEC. In the event any additional filings made or notices shall be required, the relevant Party will notify the other Party thereof and each of the Parties will use its reasonable best efforts to obtain any authorizations, consents, and approvals of governmental entities in connection with the transaction contemplated hereby as promptly as practicable following the date hereof. Each Party will cooperate in all respects with the other Party in connection with the foregoing, keep the other

Party informed of any communications (including meetings and conferences) with governmental entities regarding the transaction contemplated hereby and permit the other Party to review any such communication and consult with and consider the views of each other in advance of making such communications.

9.	The Closing

The closing of the transaction contemplated by this Agreement (the "Closing") shall take place at the offices of Shiboleth, Yisraeli, Roberts, Zisman & Co and Moshe H. Neeman, Ben-Artzi & Co. at 4 Berkowitz Street, Tel Aviv at 11:00 A.M. on July 5, 2007, or such other date as the Parties may mutually determine (the "Closing Date").

10.

Deliveries at the Closing

At the Closing:

10.1

GMM will transfer the Initial Consideration, an amount of US$16,250,000, to the bank account(s) designated by the Lautman Group;

10.2

the Lautman Group will deliver to GMM a duly executed Share Transfer Deed (or Deeds) for the transfer of 2,500,000 shares of Delta Galil to GMM;

10.3

the Lautman Group will deliver to GMM a stock certificate(s) representing 2,500,000 Ordinary Shares owned by the Lautman Group, in the name of GMM;

10.4

the relevant parties shall execute an amendment to the Shareholders Agreement, as set forth in Exhibit B attached hereto;

10.5

Dov Lautman shall resign as a member of the Board of Directors of Delta Galil;

10.6

Each Party will deliver to the other Party all such other certificates, documents and instruments as reasonably requested by such other Party in connection with the consummation of the transaction contemplated hereby.

11.

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.

12.

Release from undertakings

The Lautman Group is not aware of any personal guarantee made by Dov Lautman or by Noam Lautman on behalf of Delta Galil, its activities and/or on behalf of any of Delta Galil's subsidiaries or their respective activities. Should any such guarantee exist, GMM shall exercise its reasonable best efforts, if it will be in a position to do so, to cause Delta to release Dov and/or Noam from any such guarantee, upon request by any member of the Lautman Group.

13.

Miscellaneous

13.1

Press Releases and Public Announcements. No Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior approval of the other Party; provided, however, that any Party may make any disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly-traded securities (in which case the disclosing Party will, prior to making such disclosure, use its best efforts to advise the other Party as promptly as practicable, allow the other Party reasonable time to comment on such disclosure and consider the views of the other Party in respect of such disclosure).

13.2

No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns.

13.3

Entire Agreement. This Agreement (including the documents referred to herein) 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.

13.4

Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign this Agreement nor any of its rights, interests, or obligations hereunder without the prior written approval of the other Party.

13.5

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.

13.6

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.

13.7

Brokers' Fees. No Party has a liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transaction contemplated by this Agreement for which the other Party could become liable or obligated.

14.

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 iF in writing and delivered personally or sent by registered mail or by facsimile, as follows and if given by the Lautman Group is given either by Dov Lautman or by Noam Lautman:

14 Openheimer Street

Tel Aviv

Israel

(Tel: 03-6414703)

(Fax: 03-7441150)

With a simultaneous copy to:

I. Amihud Ben-Porath, Hamou & Co. Law Offices

148 Derech Menachem Begin

Tel Aviv

Att. Shmuel Hamou, Adv.

Tel: (03) 6061616

Fax: (03) 6061606

If to GMM, as follows:

1450 Broadway

26^th floor

New York City, NY 10018

Tel: (646) 572-3002

Fax: (212) 688-8268

With a simultaneous copy to:

Shiboleth, Yisraeli, Roberts, Zisman & Co. and Moshe H. Neeman,

Ben-Artzi & Co.

4 Berkowitz Street,

Tel Aviv

Att. Richard M. Roberts, Adv.

Tel. (03) 7778420

Fax: (03) 7778444

Email: R.Roberts@shibolet.com

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.

15.

Amendments

No modification or amendment of this Agreement may be made except by an instrument in writing, signed by all the parties hereto.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first above written.

/s/ Dov Lautman

_______________________________

N.D.R.L Investments (1998) Ltd

/s/ Isaac Dabah

___________________________________
GMM Capital LLC

/s/ Dov Lautman

_________________________
Nichsei Adinoam Ltd.

EX-99 3 july5_2007shrldragmt.htm SHAREHOLDERS AGREEMENT

SHAREHOLDERS AGREEMENT

Entered into and executed on July 5, 2007

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 2 Kaufman Street, Tel Aviv (hereinafter "NDRL") and Nichsei Adinoam Ltd., a private limited company organized under the laws of Israel, whose registered office is situated at 2 Kaufman Street, Tel Aviv (hereinafter "Nichsei Adinoam") (hereinafter jointly and severally, "the Lautman Group"),

of the first part

and

GMM Capital LLC, a Delaware limited liability company of 1450 Broadway, New York, New York, 10018 (hereinafter "GMM"),

of the second part

(GMM collectively with the Lautman Group are hereinafter referred to as the "Parties")

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 20,113,711 divided into 20,113,711 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, the Lautman Group holds beneficially and of record (in the aggregate) 2,144,993 Shares; and

WHEREAS

the Parties, with the agreement of Isaac Dabah, Dov Lautman and Noam Lautman have agreed to replace and restate the Shareholders' Agreement amongst them dated August 30, 2005 in accordance with the terms and provisions contained herein (as so restated, 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.	Right of First Refusal; Requirements Concerning the Disposal of Shares

Any transfer of the Shares held by the Lautman Group on the date hereof, shall be subject to the following:

(a)

Except with respect to a transfer to a Permitted Transferee as specified below, any member of the Lautman Group proposing to transfer all or any of the Shares held by it (the "Offeror") shall notify GMM in writing offering to sell such Shares to GMM (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 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)

GMM 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 five (5) business 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 one (1) business day, with respect to a proposed sale on the TASE or NASDAQ (the "Offer Notice Period"). Notwithstanding the aforesaid, with respect to the sale of Shares on the TASE or NASDAQ; or in the event that the Offeror advises GMM, in the Offer Notice, that the Offer is made, based upon an agreement of the Offeror with a person that is willing to purchase less than the full number of Shares being offered, GMM may accept the Offer within the Offer Notice Period, with respect to part of the Offered Shares.

(c)

The delivery to the Offeror of the Purchase Notice as aforesaid will constitute a binding agreement between the Offeror and GMM as to the purchase and sale of the Offered Shares to GMM, free and clear of any liens or other encumbrances, at the price and on the terms set forth in the Offer.

(d)

With respect to any Offer accepted by GMM, GMM shall pay the relevant price of the Offered Shares within fourteen (14) 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 within five (5) business days of the Purchase Notice, 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 GMM fails to notify the Offeror in writing of the acceptance of the Offer within the Offer Notice Period, GMM 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 Offeror shall have the right to sell the same number 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. 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 1 (a) above. Notwithstanding the foregoing, in the event of any sale that is to be made on the TASE (or NASDAQ), if after making the Offer, but prior to the sale 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 1(a)-(d) above prior to effecting the sale of such Shares pursuant to Section 1(e) or (ii) withdraw its Offer and not sell its Shares pursuant to this Section 1(e).

(f)

Notwithstanding anything to the contrary contained herein, the Lautman Group may transfer, sell or otherwise assign any of its Shares to: (i) Dov Lautman, Noam Lautman, their's spouse, siblings, ancestors, and descendents (whether natural or adopted), any spouses of such siblings, ancestors or descendants ("Relatives"), or any trust (including "Hekdesh") for the benefit or under the control of such Shareholder or Relatives or any of the foregoing; (ii) a person or entity that Controls or is Controlled by such shareholder or any of their Relatives; (iii) 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; (iv) to any member of the Lautman Group; (v) a transfer by any Party of any shares to a recognized charitable organization, or (vi) one (or more) transfer(s) of up to 200,000 Shares in any twelve (12) month period commencing the date hereof. (each, a "Permitted Transferee").

No sale or transfer under Section 1 (e)(i-iv), to any Permitted Transferee shall be permitted or of any effect unless and until the proposed purchaser or transferee referred to therein undertakes in writing towards GMM, to be bound by all the provisions of this Section 1 as if it were a party hereto in place of the Offeror.

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 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 1 of this Agreement. In such event, the said Party shall be obligated to send to GMM, 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 Price (as defined in the Agreement between the Parties dated July 1, 2007) of the Shares on the TASE during the three (3) trading days immediately preceding the date of

the Offer. 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.

4.	Duration

This Agreement shall continue in full force and effect until the earlier of the following, upon which event this Agreement shall cease to have any further force or effect:

(i)

The date on which GMM ceases to hold at least twenty percent (20%) of the Shares of the Company; or

(ii)

the date on which the Lautman Group (together with its Permitted Transferees of the type referred to in clauses (i)-(iv) of Section 1(f) holds less than 500,000 Shares of the Company

5.	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.

6.	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.

7.	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 Shareholders Agreement – dated August 30, 2005.

(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.

8.	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 set out in the Agreement between the Parties dated July 1, 2007.

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.

_______________________________

N.D.R.L INVESTMENTS (1998) LTD

___________________________________
GMM CAPITAL LLC

________________________________
NICHSEI ADINOAM LTD.

CONSENT

We, the undersigned, hereby agree to

this Agreement

_______________________________

DOV LAUTMAN

___________________________________
ISAAC DABAH

________________________________
NOAM LAUTMAN