Exhibit 4.2
EMPLOYMENT AGREEMENT
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THIS AGREEMENT (the "Agreement") is made as of August 5, 2002 by and
between Tefron Ltd. (the "Company") and Xx. Xxxx Xxxxxxxxxx, EC Passport
number 248932 (the "Employee") (collectively, the "Parties").
W I T N E S S E T H
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WHEREAS, the Parties desire to establish the terms of employment of the
Employee as the Company's President, effective as of August 5th, 2002
(the "Effective Date") on such term and conditions set forth in this
Agreement;
NOW THEREFORE, in consideration of the respective agreements of the
parties contained in this Agreement, the parties agree as follows:
1. RECITALS
The recitals and the Exhibits to this Agreement constitute an integral
part hereof.
2. EMPLOYMENT
2.1 ENGAGEMENT. This Agreement shall rule the terms of employment of
the Employee as the Company's President for a period of three
(3) years commencing on the Effective Date (the "term of this
Agreement"), unless previously terminated pursuant to section 8
below. Employee will perform the duties, undertakes the
responsibilities and will exercise the authority customarily
performed, undertaken and exercised by persons situated in a
similar capacity, as determined by the Board of Directors of the
Company and/or the Chairman of the Board of Directors.
2.2 FULL EFFORTS. Excluding periods of vacation and sick leave to
which the Employee is entitled, the Employee agrees to devote
total attention and full time to the business and affairs of the
Company as required to discharge the responsibilities assigned to
him under this Agreement. Accordingly, during the term of his
employment, the Employee will not engage in any other employment
or business activities for himself or any other person, without
the prior written consent of the Board of Directors of the
Company.
2.3 MANAGEMENT DUTIES. The Employee's duties are in the nature of
management duties that demand a special level of honesty,
loyalty and fiduciary duty and responsibility and accordingly,
the Law of Work Hours and Rest - 1951 will not apply to this
Agreement. He will (i) notify the Chairman of the Board of
Directors of the Company, promptly of and will immediately cease
any activity/matter which may create a conflict of interest
between him and the Company and (ii) report to the Chairman of
the Board of Directors of the Company, immediately any
information that reaches him, which may be of assistance or
advantageous to the Company, within
the Company's business. Notwithstanding anything to the contrary
contained herein, the provisions of this sub-paragraphs 2.2 and 2.3
shall not apply to Saturdays and religious holidays.
2.4 Notwithstanding anything of the forgoing, it is agreed that the
Employee's position in Macpell Industries Ltd. shall not be considered
as a breach of this Section 2 or any other section of this Agreement.
3. BASE SALARY
In consideration for the performance of his duties hereunder, the
Company on or before the ninth (9) day of the month, will pay the
Employee, monthly in arrears (in respect to the previous month salary),
a monthly base salary of $US20,000 (twenty thousands) (gross) ("Base
Salary"). The Base salary shall be paid in N.I.S as calculated based on
the rate of exchange of the N.I.S and the $US last published by the Bank
of Israel in the month for which the salary is paid.
4. EMPLOYEE BENEFITS
The Company will give or cause to be given the following employee
benefits ("Employee Benefits"):
4.1 SICK LEAVE. The Employee will be entitled to fully paid sick
leave pursuant to the Sick Pay Law - 1976.
4.2 VACATION. The Employee will be entitled to annual vacation of 23
working days at full pay. For the purposes of this Agreement
"working day" means any day that the employees of the Company
customarily work. Vacation days may be accumulated in amounts up
to and including 90 vacation days. At the option of the
Employee, vacation days may be converted into cash payments in
an amount equal to the proportionate part of the Base Salary and
related social benefits for such days.
4.3 MANAGER'S INSURANCE (BITUACH MENAHALIM). The Company will
contribute, for the benefit of the Employee, an amount equal to
13.33% (8.33% to a severance plan + 5% to a pre-tax savings
plan) of the Employee's monthly Base Salary to an insurance
company of the Employee's choice, as premium for such plans. In
addition, the Company will deduct and transfer to such insurance
company from each of the Employee's monthly Base Salary payment
an amount equal to 5% of such payment (to a pre-tax savings
plan), as the Employee's contribution to such plan. Upon the
Employee's ceasing to be employed by the Company, the right to
receive the benefits of the plans purchased with the foregoing
premiums will be automatically assigned to the Employee.
The above mentioned contributions to manager's insurance for
severance pay coverage shall apply for all purposes instead of
the severance pay, in accordance with Section 14 of the
Severance Pay Law (1963), and the Employee will not be entitled
to any additional payment from the Company in this regard. The
parties shall request the Labor Ministry approval for the
foregoing under the above mentioned Section 14 of the Severance
Pay Law (1963).
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4.4 DISABILITY INSURANCE. The Company will contribute, for the
benefit of the Employee, an amount equal to 2.5% of the
Employee's monthly Salary to an insurance company of the
Employee's choice, as premium for disability insurance.
4.5 EDUCATIONAL FUND (KEREN HISHTALMUT). The Company will
contribute, for the benefit of the Employee, an amount equal to
7.5% of the Employee's monthly Base Salary to an educational
fund of the Employee's choice. In addition, the Company will
deduct and transfer to such educational fund from each of the
Employee's monthly Base Salary payment an amount equal to 2.5%
of such payment, as the Employee's contribution to such fund.
4.6 RECUPERATION PAYMENTS (D'MEI HAVRA'AH). The Employee will be
entitled to recuperation payments as required by law.
5. VEHICLE
5.1 The Company will grant or make available to the Employee, for
the purposes of the performance of his position and for his
private use, an appropriate vehicle, in accordance with the
Company's policy for its senior personnel.
5.2 The Employee undertakes to take care of the vehicle made
available to him and to service it to the Company's
satisfaction. The Company will promptly reimburse the Employee
for any and all expenses reasonably related to using and
maintaining the vehicle, including the cost of repairs,
maintenance, registration, insurance, gasoline and parking,
provided that the Employee produces written receipts for such
expenses. The Company shall bear the tax resulting from said
benefit and reimbursement.
6. EXPENSES
The Company will promptly reimburse the Employee for any and all
reasonable direct expenses incurred by him on behalf of the Company
and/or in connection with the performance of his duties, provided that
he produces written receipts for such expenses, and that the
reimbursement of said expenses shall be in accordance with the Company's
policy for its management personnel. Without derogating from the
generality of the above, the Company shall reimburse the Employee, once
a month, for his home telephone bills, but the Employee shall bear the
tax resulting from said reimbursement.
The Company will grant or make available to the Employee, for the
purposes of the performance of his position and for his private use, a
cellular telephone. The Company will promptly reimburse the Employee for
any and all expenses reasonably related to using and maintaining the
phone.
7. BONUS
Once a year, the audit committee (the "Committee") of the Board of
Directors will determine the amount to be paid as a bonus for the
Employee (the "Yearly Bonus"). The bonus will be no higher than 2.5% of
the Company's Net Profit, as defined hereunder, and no lower than 1.5%
of such Net Profit. In any case that the Committee shall determine that
the bonus should be higher than 1.5% of the Net Profit, its decision
will be subject to approvals of both the
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Board of Directors and the General Meeting of the Shareholders of the
Company, unless such approvals will no longer be required under
applicable law. By way of clarification but not by way of limitation, to
the extent a bonus is paid it will not be taken into account for the
purposes of calculating the payment of Employee Benefits and severance
benefits.
For the purpose of this section, "Net Profit" means the outcome of the
following calculation:
Net Profit = P * (14,500,000 / N).
P = the Company's net profit as determined by the Company's yearly
approved audited reports, after deducting tax, and without taking into
consideration special profits or losses (except special profits which
resulted from the Employee's actions, which will be taken into
consideration), or profits or losses which are not derived from the
ordinary operation of the Company.
N = the Company's issued stock (in NIS par value) at the end of the year
for which the bonus is paid, plus the Option Shares (in NIS par value)
of all Options which are under the Company's approved stock Option plans
at the end of the said year (whether issued at that time, or not).
The yearly bonus will be paid for each calendar year in which the
Employee worked as the Company's President according to this Agreement
(the first bonus payment will be paid during the year 2003 for the year
beginning in 1.1.2002). In case of a year in which the Employee will
work only part of the calendar year, he will be entitled to a
proportional partial bonus.
The yearly bonus will be paid no later than March 31st of each year,
unless the approval of the shareholders of the Company is required in
which event such bonus shall be paid no later than 30 days after the
receipt of such shareholders approval (the "Payment Date"). However,
during each year of this agreement, the Chief Executive Officer of the
Company may authorize the payment of up to three (3) quarterly
installments on account of said yearly bonus, based on the reviewed
quarterly financial statements of the Company for each quarter of such
year and in amounts of no more than 1.5% of the relevant periodic Net
Profit of the Company. No later than the Payment Date of each year, the
Company will calculate the accurate yearly bonus based on the audited
yearly financial statements of the Company, and will pay the Employee
the balance between such yearly bonus and the amounts pre-paid to the
Employee during each of the said year's quarters. In case that the
yearly bonus will be lower than the amounts pre-paid to the Employee
during that year on account of the bonus, the Employee shall immediately
and no later than 30 days from the Payment Date, re-pay the Company the
said balance, linked to the higher between the US Dollar or the Israeli
Consumer Index plus yearly interest of 4%.
The Company shall have the right to set off, at it's descretion, any
debt due to the Company from the employee in connection with this
section 7, from any amount of any kind what so ever due to the employee
from the Company.
8. TERMINATION
The Employee's employment with the Company may be terminated under any
of the following conditions:
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8.1 DISABILITY. The Company may terminate the Employee's employment
in the event that he becomes disabled. For purposes of this
section 8, "disabled" and/or "disability" means any physical
and/or mental condition which impairs the Employee's ability to
perform his duties for a period of at least 6 months.
8.2 FOR CAUSE. The Employee's employment with the Company will
terminate upon the Company's 30 days prior written notice, in
any and/or all of the following cases ("For Cause"):
(i) a fundamental breach by the Employee of this Agreement;
and
(ii) a breach by the Employee of his fiduciary or trust
duties towards the Company; and
(iii) the conviction of the Employee in respect of an offense
involving ignominy and/or a felony which effects the
management's capability; and
(iv) ownership of an interest in a business in direct
competition with the Company;
8.3 WITHOUT CAUSE. The Employee's employment with the Company will
terminate upon the Company's or the Employee's 90 days prior
written notice. Each of the Parties may give such notice upon
its sole discretion.
Notwithstanding the above, if the Company terminates this
Agreement according to this sub-section, the Employee will be
entitled to an additional 180 days notice (a total of 270 days
notice). The Employee will be entitled to the Base Salary
(according to Section 3) and to all other benefits according to
Sections 4, 5, 7 and 11 during the said notice period.
8.4 COMPANY PROPERTY. Upon expiration or termination (or the date
indicated in the Notice in the case of termination Without
Cause) of the Employee's Employment, the Employee will transfer
his position to his replacement in an orderly manner and will
return to the Company all the documents, professional
literature, vehicle, equipment and/or other property belonging
to the Company.
9. CONFIDENTIALITY
9.1 INFORMATION. The Employee recognizes and acknowledges that the
business information, technical information, methods, data,
developments, designs, inventions, improvements, trade secrets
and works authorship, which the Company owns, plans, develops
and/or produces and/or any other information obtained/received
by him within the scope of his work and/or in connection with
the Company and/or its business are confidential and the
property of the Company ("Information"). The term "Information",
as used in this Agreement, will not include information which is
within the public domain, provided that the source of
Information to the public domain is not the Employee or someone
else who owns a confidentiality duty to the Company, and will
not include information brought to the Company by the Employee.
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9.2 NON-DISCLOSURE. Except as directed by the Company, and in the
ordinary course of the Company's business, the Employee will
not, other than for the sole benefit of the Company, disclose,
disseminate, transfer and/or use the Information.
9.3 OWNERSHIP OF CREATIONS. The Employee undertakes to maintain
absolute confidentiality in respect of all information about any
discoveries, designs, developments, inventions, improvements
and/or ideas ("Creations") made or acquired by him while
engaged/affiliated with the Company, which are within the
Company's business, and which came to the Employee's awareness
as a result of his employment with the Company. The Employee
further recognizes and acknowledges that any and all Creations
made and/or acquired by him while engaged/affiliated with the
Company, whether or not made and/or acquired by him (i) during
work hours (ii) at the premises of the Company (iii) with the
assistance of information/material provided to him by the
Company and/or (iv) at the request of the Company, are and will
be the exclusive property of the Company and the Employee will
have no right thereto. Upon request, the Employee will, at the
request and expenses of the Company, execute any and all
instruments required to vest complete title and ownership to the
Creations in (or to clarify that complete title and ownership
belongs to) the Company and/or necessary to legal protect the
Creations in Israel and abroad. The Employee will perform all
such actions without receiving any additional compensation
therefor.
9.4 DURATION/SURVIVABILITY. All of the undertakings and obligations
of the Employee, set forth in this section 9, will commence on
the date the Employee was first engaged by/became affiliated
with the Company, will continue throughout his engagement
by/affiliation with the Company, will survive the termination of
this Agreement and his employment with the Company, and except
as prohibited or limited by law, will be valid without
limitation in time. In the event the duration of such
undertakings and obligations is prohibited or limited by law,
such undertakings and obligations will remain in effect
throughout his engagement by the Company, and for two (2) years
thereafter.
10. NON-COMPETITION
Throughout the entire term of this Agreement, and for a period
of two (2) years from the date of termination or expiry of this
Agreement ("Non-Compete Period"), the Employee undertakes not to
compete and/or place himself in a position of having an interest
in and/or being engaged by/within a person which competes with
the Company's business. Without prejudice to the generality of
the foregoing, the Employee undertakes that during the
Non-Compete Period he will not work, engage or advise, whether
as a salaried employee and/or as a self-employed person, for
remuneration or otherwise, in any subject and engagement if such
constitutes a competition with the Company.
11. OPTIONS
The Company shall provide to the Employee with a Share Option
Plan (the "Plan"), pursuant to which the Employee will receive
options (the "Options") for the purchase of 291,512 Ordinary
Shares of the Company, according to the Option Agreement
attached herein.
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12. GENERAL
12.1 NOTICE. All notice or other communications provided for by this
Agreement, will be given in writing, either by personal
delivery, registered mail (registered air mail if sent
internationally), postage prepaid, overnight courier service
(which provides a receipt evidencing delivery), or by facsimile
transmission to the person at their last known address or number
(or as otherwise designated by the person in writing). All
notices or communications given by courier service will be
deemed delivered on the third (3rd) business day after the
sending thereof; those given by personal delivery or by
facsimile transmission will be deemed delivered on the next
business day following transmission or delivery (the facsimile
transmission receipt will act as prima facie proof of delivery);
those given by mail will be deemed delivered on the seventh
(7th) business day after posting.
12.2 REMEDIES CUMULATIVE. Each right, powers, and remedy provided for
under this Agreement or now or hereafter existing at law, in
equity, by statute or otherwise, will be cumulative, and the
exercise (whether single or partial), delay, or forbearance in
exercising by any party of one or more of such rights, powers
and remedies will not act as a waiver or preclude the
simultaneous or later exercise by such party of any or all of
such rights, powers or remedies.
12.3 CONSTRUCTION. Except as specifically indicated, the section
numbers and captions appearing in this Agreement are inserted
only as a matter of convenience and are not in any way intended
to define, limit, construe or describe the scope or intent of
such sections or in any way affect the construction of the
Agreement. Words in the singular will be read and construed as
though in either gender and/or the plural and vice versa, where
the context so requires. The term "person", as used in this
Agreement, will be interpreted broadly to include, without
limitation, any individual, corporation, company, partnership,
joint venture, and/or entity.
12.4 SEVERABILITY. If any provision this Agreement, or application
thereof to any person or circumstances, will for any reason or
to any extent, be invalid or unenforceable, such invalidity or
unenforceability will not in any manner affect or render invalid
or unenforceable the remainder of this Agreement and the
application of that provision to other persons or circumstances
will not be affected, but rather will be enforced to the extent
permitted by law. In the event of the invalidity or
unenforceability of any provision of this Agreement or the
application thereof to any person or circumstances, the parties
will, at the request of any of the parties, negotiate in good
faith to agree on changes or amendments to this Agreement which
are required to effectuate the intent and purpose of this
Agreement in the light of the invalidity or unenforceability.
12.5 FURTHER ASSURANCES. Each party will cooperate, take such further
reasonable action and execute and deliver such further documents
as may be reasonably requested by any of the parties in order to
effectuate the intent and purposes of this Agreement and the
parties.
12.6 SUCCESSORS AND ASSIGNS.
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(a) The Company will be allowed to sell, assign, transfer and
otherwise assign its rights and obligations under the Agreement
to any entity in which it holds more than fifty-one percent
(51%) of the control of the company as determined by
shareholder's voting rights or representation on the decision
making body of the entity.
(b) As this Agreement is a personal engagement agreement, the
Employee may not sell, assign, transfer or otherwise convey the
rights or obligations under the Agreement
12.7 ENTIRE AGREEMENT. This Agreement contains the complete statement
of all of the agreements, understandings, representations and
arrangements between the parties with respect to the subject
matter hereof ("Prior Agreements"), and to the extent such Prior
Agreements exist, such Prior Agreements are merged herein and
will be considered superseded by this Agreement. Nothing in the
aforesaid shall derogate from the Employee's rights for amounts
of money already accrued for his benefit under social rights
provisions of the said Prior Agreements refering to employment
periods prior to the Effective Date. No provision of this
Agreement may be modified, waived or discharged unless done so
in writing and signed by both parties.
12.8 GOVERNING LAW. This Agreement and all and the rights and
obligations of the parties related to this Agreement will be
governed by and construed in accordance with the laws of the
State of Israel.
AS WITNESS THE HANDS OF THE PARTIES:
/s/ /s/
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Tefron Ltd. Xxxx Xxxxxxxxxx
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