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                                                                     Exhibit 4.2

                              EMPLOYMENT AGREEMENT
                              --------------------

        THIS AGREEMENT (the "Agreement") is made as of August 5, 2002 by and
        between Tefron Ltd. (the "Company") and Mr. Sigi Rabinowicz, EC Passport
        number 248932 (the "Employee") (collectively, the "Parties").

                               W I T N E S S E T H
                               -------------------

        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

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        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/
------------------------------------        ------------------------------------
           Tefron Ltd.                                Sigi Rabinowicz

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