EXHIBIT 4.4
MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement (this "AGREEMENT") is made effective as
of July 30, 2003, by and between Tefron Ltd. ("TEFRON") having its registered
offices in 28 Chida Street Bnei-Brak, Israel (number with Registrar of
Companies: 52 - 004340 - 7), Shiran & Partners - Consulting, Entreprenuership
and Financing Ltd. (the "MANAGEMENT COMPANY") having its registered offices in
RAMOT HASHAVIM______________, Israel (number with Registrar of Companies: 51 -
_______ - _) and Mr. Yosef Shiran ("MR. SHIRAN") (collectively the "PARTIES"),
WHEREAS Tefron is interested in receiving from the Management Company
Management Services to be provided solely through Mr. Shiran who
controls the Management Company and also serves as its director
and is being employed by it, all as detailed in this Agreement; and
WHEREAS The Management Company is interested in providing the 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 "Management Services" shall have the
following meaning: All services, duties, tasks and responsibilities that are
usually exercised by a Chief Executive Officer 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, and
(without derogating from the above) shall also include economic and tax
consulting services. Without derogating from the above, the Management Services
shall include providing the Management Services to Tefron and its subsidiaries
and / or affiliates in connection with its activities in Israel and abroad, all
as required by Tefron.
2. REPRESENTATIONS AND WARRANTIES OF THE MANAGEMENT COMPANY AND OF MR. SHIRAN
The Management Company and Mr. Shiran hereby represent and warrant, jointly and
severally, as follows:
2.1. The Management Company has the ability, expertise, experience and
means to supply the Management Services and it is not prohibited in
any way from abiding to all of its commitments and obligations
under this Agreement.
2.2. Mr. Shiran is an employee of the Management Company. The Management
Company is a private company and Mr. Shiran is its controlling
shareholder and also serves as its director.
3. PROVIDING THE MANAGEMENT SERVICES
3.1. The Management Company shall provide the Management Services to
Tefron only through Mr. Shiran in person.
3.2. The Management Company and Mr. Shiran shall exercise authority
customarily performed, undertaken and exercised by persons situated
in a similar capacity, as determined by the Board of Directors of
Tefron and / or the Chairman of the Board of Directors or the
President of Tefron in their sole discretion.
3.3. The Management Company undertake to grant the Management Services
and perform its duties herein skillfully, in a responsible,
faithful, competent and diligent manner, and to use the knowledge,
experience and means at its disposal for the benefit of Tefron and
to cooperate with Tefron.
3.4. The Management Company and Mr. Shiran 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 fulfill their functions.
3.5. The Management Company and Mr. Shiran shall not engage in any other
employment or business activities without the prior consent of the
Chairman of the Board of Directors of Tefron. Notwithstanding the
above, Tefron grants Mr. Shiran its consent to continue to engage
in his hi-tech business as long as this engagement does not
encounter or affect its obligations under this Agreement.
3.6. The Management Company and Mr. Shiran undertake to devote total
attention and full time to the business and affairs of Tefron as
required to discharge the responsibilities assigned to it under
this Agreement.
4. CONSIDERATION AND SCALE OF SERVICES
4.1. In consideration for the Management Services to be provided
according to this Agreement and to all other obligations of the
Management Company and of Mr. Shiran, Tefron shall pay the
Management Company US$26,663 (twenty six, six hundred and sixty
three US Dollars) plus NIS 2,065 (two thousand and sixty five new
Israeli Shekels) per month , 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 Mr.
Shiran are entitled in return for the fulfillment of their
obligations under this Agreement.
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4.2. The Consideration for each month shall be paid at the beginning of
the following month, and no later than the 15th 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 direct expenses incurred by it on behalf of Tefron
and/or in connection with the performance of its duties, 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. Without derogating from the
generality of the above, Tefron shall reimburse the Management
Company, once a month, for its telephone bills. Tefron will grant
or make available to the Management Company, for the purposes of
the performance of its position, a cellular telephone. Tefron will
promptly reimburse the Management Company for any and all expenses
reasonably related to using and maintaining the phone.
4.4. In addition to the Consideration detailed above, the Management
Company shall be entitled to an annual Grant, which shall be
determined by Tefron's audit committee (the "Committee") of the
Board of Directors (the "Annual Grant"). The following terms and
conditions shall apply to the Annual Grant:
4.4.1. The Annual Grant will not be higher than 2.5% of Tefron's
Net Profit, as defined hereunder, and not lower than 1.5%
of such Net Profit. In any case that the Committee shall
determine that the Annual Grant should be higher than 1.5%
of the Net Profit, its decision will be subject to
approvals of both the Board of Directors and the General
Meeting of the Shareholders of Tefron, unless such
approvals will no longer be required under applicable law.
4.4.2. For the purpose of this section, "Net Profit" means the
outcome of the following calculation:
Net Profit = P * (14,500,000 / N).
P = Tefron's net profit as determined by Tefron's yearly
approved audited reports, after deducting tax, and without
taking into consideration special profits or losses (except
special profits which resulted from Mr. Shiran's actions,
which will be taken into consideration), or profits or
losses which are not derived from the ordinary operation of
Tefron.
N = Tefron's issued stock (in NIS par value) at the end of
the year for which the Grant is paid, plus the Option
Shares (in NIS par value) of all Options which are under
Tefron's approved stock Option plans at the end of the said
year (whether issued at that time, or not).
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4.4.3. The Annual Grant will be paid for each calendar year in
which Mr. Shiran acted asTefron's Chief Executive Officer.
In case of a year in which Mr. Shiran will act asTefron's
Chief Executive Officer for only part of the calendar year,
the Management Company will be entitled to a proportional
part of the Annual Grant.
4.4.4. The Annual Grant will be paid no later than March 31st of
each year, unless the approval of the shareholders of
Tefron is required in which event such Grant shall be paid
no later than 30 days after the receipt of such
shareholders approval (the "Payment Date").
5. RELATIONSHIP BETWEEN THE PARTIES
5.1. It is agreed upon and declared that the Management Company is
providing the 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 Mr.
Shiran and / or anyone else on behalf of the Management Company.
5.2. It is further clarified that Mr. Shiran chose the legal framework
through which the Management Services be provided to Tefron (i.e.:
by his Management Company as an independent contractor). Therefore,
the Consideration the Management Company is entitled to is equal to
the total consideration and benefits Mr. Shiran 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.
5.3. For the avoidance of doubt, it is hereby clarified that as Mr.
Shiran's employer, the Management Company shall allocate and pay
(on its account) to Mr. Shiran any and all allocations and payments
required according to any applicable law with regard to his
employment in the Management Company, including with regard to the
Management Services to be provided according to this Agreement,
including social benefits, severance pay etc. (all, with respect to
the salary to which Mr. Shiran is or will be entitled to receive
from the Management Company according to their employment
agreement), 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 Mr. Shiran (or anyone else on behalf of the Management
Company) during the term of this Agreement, then Mr. Shiran's
rights and benefits (such as to severance pay and to any other
applicable social benefit) shall be determined based on a base
salary of US $ 20,000 (twenty thousand US Dollars) (the "Base
Salary"). Furthermore, in this event the amounts due to Mr. Shiran
as severance 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 Mr. Shiran, 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, all 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
[month], [day], 2003 (the "EFFECTIVE DAY").
6.2. The termination of this Agreement as stated in Sections 6.1, 6.3
and 6.4 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.
6.3. 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"):
6.3.1. A fundamental breach by the Management Company and/or Mr.
Shiran of this Agreement;
6.3.2. A breach by Mr. Shiran of his fiduciary or trust duties
towards Tefron.
6.3.3. The conviction of the Management Company and/or Mr. Shiran
in respect of an offense involving ignominy and/or a felony
which effects the management's capability.
6.3.4. Ownership by the Management Company and/or Mr. Shiran of an
interest in a business in direct competition with Tefron.
6.4. Notwithstanding anything herein, this Agreement shall be terminated
upon Tefron's or the Management Company's 90 days prior written
notice. Each of the Parties (Tefron or the Management Company) may
give such notice upon its sole discretion. Notwithstanding the
above, if Tefron terminates this Agreement according to this
sub-section, the Management Company will be entitled to an
additional 180 days notice (a total of 270 days notice). The
Management Company will be entitled to the Consideration during the
said notice period.
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
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 and Mr. Shiran shall transfer his position
to his replacement in an orderly manner and will return to Tefron
all documents, copies or recorded information in any form or
material which came to its possession in connection with the
Management Services.
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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 Mr. Shiran.
8. CONFIDENTIALITY AND INTELLECTUAL PROPERTY
8.1. The Management Company and Mr. Shiran 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,
and all other details concerning the activities of 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 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 Mr. Shiran or someone else who owns a
confidentiality duty to Tefron, and will not include information
brought to Tefron by the Management Company or by Mr. Shiran.
8.2. Except as directed by Tefron, and in the ordinary course of
Tefron's business, the Management Company and Mr. Shiran will not,
other than for the sole benefit of Tefron, disclose, disseminate,
transfer and/or use the Information. Further, the Management
Company and Mr. Shiran 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 Mr.
Shiran 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 Management Services
under this Agreement or as a result of Mr. Shiran's prior
engagements with Tefron (either as employee, consultant, board
member or manager). The Management Company and Mr. Shiran 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 them by Tefron and/or (iv) at the
request of Tefron, are and will be the exclusive property of Tefron
and the Management Company and Mr. Shiran will have no right
thereto. The Management Company and Mr. Shiran 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 Mr. Shiran will perform all such actions
without receiving any additional compensation therefor.
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8.4. A breach of Article 8 by the Management Company or Mr. Shiran shall
be considered a material breach of this Agreement.
8.5. All of the undertakings and obligations of the Management Company
and Mr. Shiran set forth in this section 8, will commence on the
date Mr. Shiran 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.
9. NON COMPETITION
9.1. 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 Management Company and Mr.
Shiran 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 Tefron's business. Without prejudice to
the generality of the foregoing, Mr. Shiran 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.
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 Mr. Shiran 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 Mr. Shiran 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.
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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 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 Mr. Shiran 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 Mr. Shiran himself or to a company which is, directly
or indirectly, controlled by Mr. Shiran or, subject to the receipt
of the prior approval of Tefron's Audit Committee, to a company
which is, directly or indirectly, controlled by Mr. Shiran.
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 Option Agreements
between Tefron and Mr. Shiran entered as of January 1, 2001 and as
of August 5th 2002. No provision of this Agreement may be modified,
waived or discharged unless done so in writing and signed by all
Parties.
10.8. 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.
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IN WITNESS WHEREOF, the undersigned authorized representatives of the parties
affixed their signatures:
/s/ Arie Wolfson /s/ Yosef Shiran /s/ Yosef Shiran
/s/ Sigi Rabinowicz
Tefron Ltd. Shiran & Partners - Consulting, Mr. Yosef Shiran
Entreprenuership and
Financing Ltd.
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