EXHIBIT 4.3
CONSULTING AND MANAGEMENT SERVICES AGREEMENT
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This Consulting and Management Services Agreement (this "AGREEMENT") is made as
of August 5, 2002, by and between Tefron Ltd. ("TEFRON") having its registered
offices in 00 Xxxxx Xxxxxx Xxxx-Xxxx, Xxxxxx, Xxx Xxxx Delight Ltd. (the
"MANAGEMENT COMPANY") having its registered offices in 00 Xxxxxxx Xx. Xxxxxxxxx
Xxxxxxx 00000, Xxxxxx (number with Registarar of Companies: 51 - 295156 - 7) and
Xx. Xxxx Xxxxxxx ("XX. XXXXXXX") from 0 Xxxxxx Xx. Xxxx Xxxx, Xxxxxx
(collectively the "PARTIES"),
WHEREAS Tefron is interested in receiving from the Management Company
Consulting and Management Services to be provided solely through
Xx. Xxxxxxx who, through a wholly owned company, wholly owns the
Management Company and also serves as its director, all as
detailed in this Agreement; and
WHEREAS The Management Company and Xx. Xxxxxxx are interested in
providing the Consulting and Management Services to Tefron, as
detailed in this Agreement; and
WHEREAS The Parties have agreed to settle their rights and obligations
in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, In consideration of the foregoing and of the promises,
agreements, representations, warranties, and covenants herein contained, the
Parties hereby agree as follows:
1. DEFINITIONS
For the purpose of this Agreement, the term "Consulting and Management Services"
shall have the following meaning:
All services, duties, tasks and responsibilities that are usually exercised by
an operative Chairman of the Board of Directors of a public industrial company
with a scope of business similar to the one of Tefron, and as shall be required
by Tefron and determined from time to time by its Board of Directors. Without
derogating from the above, the Consulting and Management Services shall include,
inter alia, the following:
A. Participating, advising and managing the strategic and periodic business
plans of Tefron.
B. Managerial, financial, marketing and strategic counselling to Tefron.
C. Providing such Consulting and Management Services in connection with
Tefron's activities in Israel and abroad, as required by Tefron.
D. Providing such Consulting and Management Services to Tefron's subsidiaries
or affiliates, as required by Tefron.
2. REPRESENTATIONS AND WARRANTIES OF THE MANAGEMENT COMPANY AND OF XX. XXXXXXX
The Management Company and Xx. Xxxxxxx hereby represent and warrant,
jointly and severally, as follows:
2.1 The Management Company and Xx. Xxxxxxx have the ability, expertise,
experience and means to supply the Consulting and Management Services and
they are not prohibited in any way from abiding to all of their commitments
and obligations under this Agreement.
2.2 The Management Company is a private company and Xx. Xxxxxxx (through a
wholly owned company) is its sole shareholder and also serves as its
director.
3. PROVIDING THE CONSULTING AND MANAGEMENT SERVICES
3.1 The Management Company shall provide the Consulting and Management Services
to Tefron only through Xx. Xxxxxxx personally.
3.2 The Management Company and Xx. Xxxxxxx undertake to devote as much time as
shall be required for the adequate fulfillment of the duties included in
the Consulting and Management Services, and as shall requested by Tefron
from time to time.
3.3 The Management Company and Xx. Xxxxxxx undertake to grant the Consulting
and Management Services and perform their duties herein skillfully, in a
responsible, faithful, competent and diligent manner, and to use the
knowledge, experience and means at their disposal for the benefit of Tefron
and to cooperate with Tefron.
3.4 The Management Company and Xx. Xxxxxxx shall act in accordance with the
policies and resolutions of the Board of Directors of Tefron as shall be
determined from time to time, with regard to the manner they fulfil their
functions.
3.5 Subject to the positions and activities listed on SCHEDULE 3.5 attached
hereto, already disclosed to Tefron Ltd. and its Board of Directors, the
Management Company and Xx. Xxxxxxx undertake that during the entire
duration of the Agreement, they shall refrain from working or engaging in
any other manner in any other employment, function, business or occupation,
which in any manner may constitute a conflict of interests with their
position under this Agreement, either directly or indirectly and whether
for consideration or otherwise, unless they fully disclose their new
conflicting interest to the Board of Directors of Tefron at the first
possible time and shall act according to the instructions of the Board of
Directors and subject to any relevant rules of law.
3.6 Other than the consideration specified in section 4 hereunder, and fees
paid by Tefron to Xx. Xxxxxxx as chairman of it Board of Directors, the
Management Company and Xx. Xxxxxxx undertake not to accept any payment or
other benefit from any third party, including Tefron and its subsidiaries,
in any direct or indirect connection with their position in Tefron and/or
in respect thereof. Should the Management Company or Xx Xxxxxxx fail to
abide by the forgoing undertaking, any payment or benefit any of them may
receive shall be the sole and exclusive property of Tefron.
3.7 Subject to the foregoing, the Management Company and Xx. Xxxxxxx shall be
entitled to engage in their own affairs and businesses, provided that
during the term of this Agreement, the Management Company's and Xx.
Xxxxxxx'x engaging in any other business shall not detrimentally affect the
affairs and business of Tefron, and further provided that they will, at all
times, give full priority to the needs of Tefron and will fully comply with
all the terms and conditions of this Agreement. Tefron is aware that the
Management Company and Xx. Xxxxxxx have other additional business and that
they will be likely from time to time devote their time to these business
affairs, subject to the condition that such other involvement shall in no
way adversely affect the performance of their functions on behalf of Tefron
and under this Agreement.
3.8 Notwithstanding anything of the forgoing, it is agreed that Xx. Xxxxxxx'x
position in Macpell Industries Ltd (and its subsidiaries) ("MACPELL") shall
not be considered as a breach of any of the sub-sections of this Section 3.
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4. CONSIDERATION AND SCALE OF SERVICES
4.1 In consideration for the Consulting and Management Services to be provided
according to this Agreement and to all other obligations of the Management
Company and of Xx. Xxxxxxx, Tefron shall pay the Management Company
US$15,000 (fifteen thousand US dollars) (the "Compensation") per month plus
41% cost (equivalent to the cost Tefron would have paid for a similar
senior management wage), plus VAT as applicable by law (the
"Consideration"). Subject to Section 4.3 herein, this Consideration shall
constitute the sole consideration to which the Management Company or Xx.
Xxxxxxx are entitled in return for the fulfillment of their obligations
under this Agreement.
4.2 The Consideration for each month shall be paid at the beginning of the
following month, and no later than the 10th day of such following month,
but in any event only after the Management Company had issued Tefron an
appropriate tax invoice. Tefron shall withhold from the Consideration any
amounts which it is obligated to withhold under any tax or other applicable
law.
4.3 Tefron will promptly reimburse the Management Company for any and all
reasonable vehicle expenses and out-of-pocket expenses incurred by it
directly and exclusively on behalf of Tefron (including, inter alia,
telephone and business travel expenses), provided that it produces written
receipts for such expenses, and that the reimbursement of said expenses
shall be in accordance with Tefron's policy for its management personnel.
5. RELATIONSHIP BETWEEN THE PARTIES
5.1 It is agreed upon and declared that the Management Company and Xx. Xxxxxxx
are providing the Consulting and Management Services as an independent
contractor, and there shall not be any employer employee relations between
Tefron and the Management Company or anyone on its behalf including Xx.
Xxxxxxx and / or anyone else on behalf of the Management Company.
5.2 It is further clarified that Xx. Xxxxxxx chose the legal framework through
which he would provide his services to Tefron, and chose not to be Tefron's
employee but its independent contractor. Therefore, the Consideration Xx.
Xxxxxxx is entitled to (through his Management Company) is equal to the
total consideration and benefits he would have been entitled to if he were
to be Tefron's employee. It is therefore agreed that the Consideration paid
to the Management Company has been calculated under the assumption that
there shall not be employer employee relations between the Parties and / or
anyone on their behalf, and that the Compensation embodies all the benefits
that Xx. Xxxxxxx would have been entitled to had he been Tefron's employee.
5.3 The Management Company shall allocate and pay (on its account) to Xx.
Xxxxxxx any and all allocations and payments required according to any
applicable law with regard to the Consulting and Management Services to be
provided according to this Agreement, including social benefits, severance
pay etc., and the Management Company shall arrange all needed and customary
insurance coverage with regard to the those services.
5.4 In the event that a competent court shall determine that there were
employer employee relations between Tefron (or anyone on its behalf) and
Xx. Xxxxxxx (or anyone else on behalf of the Management Company) during the
term of this Agreement, then Xx. Xxxxxxx'x rights and benefits (such as to
severance pay and to any other applicable social benefit) shall be
determined based on a base salary as high as 70.92% of the Compensation
(the "Base Salary"). Furthermore, in this event the amounts due to Xx.
Xxxxxxx as xxxxxxxxx pay or for other applicable social benefits, will be
reduced in the amount in which the payments according to this Agreement
(the Compensation paid throughout its term) exceeded the Base Salary that
would have been paid throughout the same term.
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5.5 The Management Company and Xx. Xxxxxxx, jointly and severally, shall
compensate Tefron and / or anyone on its behalf upon request in the event
that Tefron shall suffer expenses or damages of any kind and / or any
amount shall be rewarded as a result of a determination that there were
employer employee relations between the Parties and / or anyone on their
behalf.
6. THE TERM OF THE AGREEMENT
6.1 The terms and conditions of this Agreement shall apply as of August 5th,
2002 (the "EFFECTIVE DAY").
6.2 Each party shall be entitled to terminate this Agreement by giving the
other party a written notice ninety (90) days in advance without the need
for an explanation.
6.3 The termination of this Agreement as stated in Sections 6.1 and 6.2 is
without any remedy, indemnification, compensation or reward. This Section
shall not prevent any of the Parties from seeking any remedy from the other
party due to a breach of this Agreement.
6.4 Notwithstanding anything herein, Tefron shall be entitled to terminate this
Agreement by a written notice of at least 30 days in advance, in any and/or
all of the following cases ("For Cause"):
6.4.1 The Management Company and/or Xx. Xxxxxxx breached this Agreement in
a material fashion and did not remedy such material breach within a
reasonable period after receipt of a written demand to do so.
6.4.2 The Management Company and/or Xx. Xxxxxxx have been convicted
(peremptory rule) in respect of an offense involving ignominy and/or
a felony which effects the management's capability.
6.4.3 The Management Company and/or Xx. Xxxxxxx have ownership of an
interest in a business in competition with Tefron not disclosed to
the Board of Tefron.
6.4.4 Should Xx. Xxxxxxx be unavailable to render the Consulting and
Management Services on behalf of the Management Company for any
reason whatsoever for a continuous period in excess of 5 consecutive
weeks or in the event of termination of his employment relationship
with the Management Company, unless such termination is in accordance
with section 10.6 (b) below.
6.5 Tefron is entitled at its own exclusive discretion to pay the Consideration
for part or the entire notice period as determined in this Article 6 above,
and accordingly to end the provision of the Consulting and Management
Services earlier than at the end of the relevant notice period.
6.6 In the event the Agreement is terminated for any reason whatsoever, the
Management Company shall ensure the orderly transfer to Tefron of any
document, copies or recorded information in any other form or any other
material which came to its possession in connection with the Consulting and
Management Services (For the sake of avoiding any doubt, It is hereby
clarified that such orderly transfer of information shall not apply to any
information that came into the attention of Xx. Xxxxxxx through his
capacity as shareholder in Tefron, or through his capacities in Macpell).
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7. TAXES
Each party shall bear all the taxes that any applicable law cast upon it in
connection with this Agreement. Tefron shall not bear any tax which is
applicable to the Management Company or to Xx. Xxxxxxx.
8. CONFIDENTIALITY AND INTELLECTUAL PROPERTY
8.1 The Management Company and Xx. Xxxxxxx recognize and acknowledge that the
business information, financial data, commercial data, technical
information, trade secrets, methods, data, developments, designs,
inventions, improvements and works authorship, which Tefron owns including
Tefron's plans, developments and/or products are all confidential details
concerning the activities of the Tefron group and its business in Israel
and abroad, whether existing today or planned for the future, including its
property, proprietary rights, including patents, title, installations,
obligations, transactions, financial condition, plans, business operations
and relationship with its employees, suppliers, customers and authorities
and/or any other information obtained/received by either of them within the
scope of the Consulting and Management Services and/or in connection with
Tefron and/or its business are confidential and the property of Tefron
("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 Management
Company or Xx. Xxxxxxx or someone else who owns a confidentiality duty to
the Company, and will not include information brought to Tefron by the
Management Company or by Xx. Xxxxxxx.
8.2 Except as directed by Tefron, and in the ordinary course of Tefron's
business, the Management Company and Xx. Xxxxxxx will not, other than for
the sole benefit of the Tefron, disclose, disseminate, transfer and/or use
the Information. Further, the Management Company and Xx. Xxxxxxx will
maintain the confidentiality of the contents of this Agreement, unless
otherwise is required by applicable law.
8.3 Without derogating from the above, the Management Company and Xx. Xxxxxxx
undertake to maintain absolute confidentiality in respect of all
Information about any discoveries, designs, developments, inventions,
improvements and/or ideas ("Creations") made or acquired by either of them
while engaged/affiliated with Tefron, which are within Tefron's business,
and which came to the their awareness as a result of them providing the
Consulting and Management Services under this Agreement or as a result of
Xx. Xxxxxxx'x prior engagements with Tefron (either as employee,
consultant, board member or manager). The Management Company and Xx.
Xxxxxxx further recognize and acknowledge that any and all Creations made
and/or acquired by either of them while engaged/affiliated with Tefron,
whether or not made and/or acquired by him (i) during work hours (ii) at
the premises of Tefron (iii) with the assistance of information/material
provided to him by Tefron and/or (iv) at the request of Tefron, are and
will be the exclusive property of Tefron and the Management Company and Xx.
Xxxxxxx will have no right thereto. The Management Company and Xx. Xxxxxxx
will, at the request and expenses of Tefron, 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) Tefron
and/or as necessary to legally protect the Creations in Israel and abroad.
The Management Company and Xx. Xxxxxxx will perform all such actions
without receiving any additional compensation therefor.
8.4 A breach of Article 8 by the Management Company or Xx. Xxxxxxx shall be
considered a material breach of this Agreement.
8.5 All of the undertakings and obligations of the Management Company and Xx.
Xxxxxxx set forth in this section 8, will commence on the date Xx. Xxxxxxx
was first engaged by or became affiliated with Tefron, will continue
throughout his engagement by and affiliation with Tefron, will survive the
termination of this Agreement, and except as prohibited or limited by law,
will be valid without limitation in time.
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8.6 For the sake of avoiding any doubt, It is hereby clarified that this
Article 8 shall not apply to Information that came into the attention of
Xx. Xxxxxxx through its capacity as shareholder in Tefron, or through its
capacities in Macpell, and shall not apply to Creations made or acquired
through such capacities.
9. NON COMPETITION
9.1 Throughout the entire term of this Agreement ("Non-Compete Period"), the
Management Company and Xx. Xxxxxxx undertake not to compete and/or place
themselves in a position of having an interest in and/or being engaged
by/within a person which competes with the Tefron's business. Without
prejudice to the generality of the foregoing, Xx. Xxxxxxx 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 Tefron..
9.2 A breach of this Article 9 shall be considered a material breach of this
Agreement.
9.3 This Section shall be valid after the termination and/or expiration of the
Agreement for any reason.
9.4 Notwithstanding anything of the forgoing, it is agreed that Xx. Xxxxxxx'x
position in Macpell shall not be considered as a breach of any of the
sub-sections of this Section 9.
10. MISCELLANEOUS
10.1 NOTICE. All notice or other communications provided for by this Agreement,
will be given in writing, either by personal delivery, registered mail,
postage prepaid, 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 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. A notice given
by Tefron to Xx. Xxxxxxx shall be deemed as given to the Management Company
as well. A notice given by Tefron to the Management Company shall be deemed
as given to Xx. Xxxxxxx as well.
10.2 REMEDIES CUMULATIVE. Each right, power, 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.
10.3 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. 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.
10.4 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
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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.
10.5 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.
10.6 SUCCESSORS AND ASSIGNS.
(a) Tefron will be allowed to assign, transfer and otherwise convey its rights
and obligations under the Agreement to any entity in which it holds more than
fifty-one percent (51%) of shareholder's (or equivalent) voting rights.
(b) The Management Company and Xx. Xxxxxxx may not assign, transfer or
otherwise convey the rights or obligations under the Agreement. Notwithstanding
the above, the Management Company may assign or transfer all (but not part of)
its rights and obligations under the Agreement to Xx. Xxxxxxx himself or to a
company which is, (directly or indirectly), wholly owned by Xx. Xxxxxxx or,
subject to the receipt of the prior approval of Tefron's Audit Committee, to a
company which is, (directly or indirectly), controlled by Xx. Xxxxxxx.
10.7 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 above shall be deemed to derogate from the effect of the Option
Agreement between Tefron and Xx. Xxxxxxx entered as of the same date. No
provision of this Agreement may be modified, waived or discharged unless
done so in writing and signed by all Parties.
10.8 SET-OFF. Eiither party to this agreement may set off any amount due to such
party from the other party from any sum owed to the other party.
10.9 GOVERNING LAW. This Agreement and all and the rights and obligations of the
parties related to this Agreement will be exclusively governed by and
construed in accordance with the laws of the State of Israel.
IN WITNESS WHEREOF, the undersigned authorized representatives of the parties
affixed their signatures:
/s/ /s/ /s/
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Tefron Ltd. Xx. Xxxx Xxxxxxx New York Delight Ltd.
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SCHEDULE 3.5
LIST OF POSITIONS AND ACTIVITIES
Xxxx Xxxxxxx serves as:
1. Chairman of the Board of Directors of Tefron Ltd.
2. President and Chairman of Macpell Industries Ltd.
3. Director in New Net Assets (94) Ltd.
4. Director in Macpell Holdings Ltd.
5. Director in New Net Holdings Ltd.
6. Director in New York Delights Ltd.
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