AMENDMENT NO. 2 AND WAIVER
To
CREDIT AGREEMENT
This
AMENDMENT NO. 2 AND WAIVER dated as of November 10, 2005 (this
"Amendment"), is by
and among HAMPSHIRE GROUP, LIMITED (the "Borrower"),
HAMPSHIRE DESIGNERS, INC., GLAMOURETTE FASHION MILLS, INC.,
ITEM-EYES, INC., the
Banks party hereto and
HSBC Bank USA,
National Association,
as Agent for the
Banks.
RECITALS:
A.
The Borrower, the Guarantors, the Banks and the Agent have
entered into
a Credit Agreement
and Guaranty dated as of August 15,
2003, as amended by
Amendment No. 1
thereto dated as of
December 29, 2004 (as
amended, the "Loan
Agreement").
B.
The Borrower
has requested that the Banks waive a default of Loan
Agreement arising
from the Borrower's violation of Section 9.10 of the Loan
Agreement regarding Restricted Payments and agree to amend Section
9.10 to avoid
any subsequent
violation of such
covenant caused by any
further purchases
by
Borrower of its own stock.
C.
The Banks are
agreeable to such
waiver and the
amendment on the terms
and subject to the conditions set forth herein.
NOW,
THEREFORE,
in consideration of the foregoing and
for other good and
valuable consideration
whose receipt and
sufficiency
are acknowledged, the
Borrower, the Guarantors, the Banks and the Agent hereby agree as
follows:
Section 1. Definitions. Each capitalized term used but not
defined in this
Amendment shall have the meaning ascribed to such term in the Loan
Agreement.
Section 2. Amendment of Loan Agreement.
2.01 Section 9.10 of the Loan Agreement is hereby amended by
deleting
the number
"$1,500,000" appearing
in clause (i) thereof,
and substituting
the
number "$10,000,000" therefore.
Section 3. Waiver.
3.01 Section 9.10 of the Loan Agreement prohibits the Borrower from
repurchasing treasury
stock in an aggregate amount of more than $1,500,000
from
and after the date of the Loan Agreement, net amounts received by
Borrower upon the sale of its capital stock, including capital stock which
may
be sold. As a result of its repurchase of treasury
stock on or before
November 7, Borrower
had an aggregate
net purchase of
treasury stock of
-1-
<PAGE>
approximately
$3,000,000, thereby
violating Section 9.10 of the Loan
Agreement. The Required Banks hereby agree to
waive compliance
with such
Section 9.10 of the Loan Agreement from the repurchase of treasury stock
occurring on or before November 7, 2005 for the repurchase only and
not for
any
future calculation of the aggregate amount of net repurchases.
Notwithstanding
anything to the contrary, the waiver provided herein shall
apply only provided no
other Default or Event
of Default is continuing as
of
the date hereof.
3.02 The waiver set forth herein is effective only in this one
instance, and is not
intended to waive
compliance with such
covenant for
any
future periods.
Such waiver is limited precisely as written and is
subject to the
satisfaction of the
terms and conditions
stated below for
the
effectiveness of this Amendment.
Section 4.
Acknowledgements, Confirmations and Consent.
4.01 The Borrower and the Guarantors acknowledge and confirm that
the
Liens granted
pursuant to the
Security Documents to which it is a
party
continue to secure the Obligations.
4.02 Each Guarantor
consents in all
respects to the execution by the
Borrower of this Amendment and acknowledges and confirms that the
Guaranty
by
such Guarantor,
as set forth in Article V of the Loan Agreement,
guarantees the full payment and performance of all of the
obligations, and
remains in full force and effect in accordance with its terms.
Section 5. Representations and Warranties. The Borrower and each
Guarantor,
as the case may be, each represents and warrants to the Lenders and
the Agent as
follows:
5.01 After
giving effect to this Amendment, (i) each of the
representations and
warranties
set forth in Article VII of the Loan
A
