Document:

exhibit_4-17.htm

EXHIBIT 4.17

 

December 30, 2010

 

Nouvelle Seamless Intimates Inc.

9500 Meilleur Street

Suite 400

Montreal, Quebec

H2N 2B7

 

	
Re:

	
Consulting Services Engagement

 

Dear Sirs:

Tefron USA, Inc. ("Tefron") is pleased to engage the consulting services of Nouvelle Seamless Intimates Inc. (“Nouvelle”) in accordance with the following terms and conditions:

 

1.              Term. This Agreement shall commence as of January 1, 2011 (the “Effective Date”), and have an initial term of 24 months (the “Initial Term”). Unless written notice is given by either party at least 60 days prior to the expiry of the Initial Term, the term of this Agreement shall be extended for an additional period of 12 months (the “Renewal Term”). The Initial Term and any Renewal Term are hereinafter collectively referred to as the “Term”.

 

2.              Services. Nouvelle shall, throughout the Term, make available the services of Willy Lieberman to Tefron, who shall act as Tefron’s Director of Sales North-America Mass Market (the “Services”).

 

3.              Fees and Expenses. Subject to the terms hereof, Tefron shall pay Nouvelle fees for the Services as follows (“Fees”):

 

(i)             US $ 250,000 per year (prorated), paid on a monthly basis, in advance.

 

(ii)            0.3% of any Sales Revenues (as such term is hereinafter defined) from current customers of Nouvelle and from any new customers, which are not current or former customers of Tefron nor of its Affiliates (as such term is hereinafter defined), provided that such new customers are approved by the CEO of Tefron Ltd. in writing in advance. A monthly down payment of US $7,500 as remuneration for Sales Revenues shall be paid on the same date as item (i) above, and every quarter an actual accumulating calculation will be generated and payment will be paid accordingly.

 

For the purposes of this Agreement, “Sales Revenues” shall mean net sales revenues actually received and generated by Tefron and recorded and recognized by Tefron from sales of Tefron’s products and services to third parties in accordance with standard revenue recognition, allocation procedures, allowance methodologies and accounting methods consistently applied, which recognition, procedures and methodologies shall be in accordance with GAAP, less (i) any commissions to representatives, distributors, agents, consultants, etc., or other finders or distribution fees, (ii) discounts, refunds, rebates, charge backs, fees, credits or allowances granted including quantity, cash, bad debt and other trade discounts, etc., (iii) credits or allowances granted upon returns, rejections or recalls (due to spoilage, damage), retroactive price reductions, or billing corrections, (iv) invoiced freight, postage, shipping, shipping insurance, handling and other transportation costs, (v) taxes (including sales, value-added or excise taxes, but excluding withholding taxes), tariffs, customs duties, surcharges and other governmental charges incurred in connection with the services, production, sale, transportation, delivery, use, exportation or importation of products and not otherwise previously deducted, and (vi) any other customary adjustments related to products sold and reasonably allocated to such products as a portion of the total products sold, in accordance with GAAP. As used in this Agreement the term “Affiliate” of an entity shall mean any person or entity controlled by, controlling or under common control with the relevant entity.

 

  

  

  

 

(iii)           Nouvelle shall be reimbursed for hotel accommodation expenses of Mr. Willy Lieberman up to US $2,000 per month, against hotel invoice, within 9 days of presentation of such invoice.

 

(iv)           Nouvelle shall be reimbursed for all car expenses of Mr. Willy Lieberman up to an amount of US $1,100 per month, against relevant invoices, within 9 days of presentation of such invoices.

 

4.              Termination. Either party may terminate this Agreement with or without cause upon ninety (90) days prior written notice. Written notice shall be delivered by hand or by registered or certified mail, and addressed to the other party at the address first written above.  For the purpose of this Agreement, "cause" shall exist if Nouvelle or its agent Willy Lieberman: (i) breaches its representations or confidentiality obligations to Tefron or breaches its obligations not to compete with Tefron, (ii) engages in willful misconduct or acts in bad faith with respect to Tefron in connection with its engagement hereunder, (iii) is convicted of a felony or held liable by a court of competent jurisdiction for fraud against Tefron or otherwise, or (iv) continuously fails to render services in accordance with its assigned duties and responsibilities as set forth herein.

 

If this Agreement is terminated by Tefron without cause during the Initial Term, Tefron shall pay Nouvelle, concurrently with the effective date of such termination, an amount equal to the sum of:

 

(a) any Fees pursuant to item (i) of Section 3 hereof corresponding to the remainder of the Initial Term;

 

(b) an amount equal to the excess, if any, of $100,000 over the Fees earned by Nouvelle pursuant to item (ii) of Section 3 hereof; and

 

(c) an amount equal to US $1,100 per month remaining in the Initial Term.

 

If this Agreement is terminated by Tefron without cause during the Renewal Term, Tefron shall pay Nouvelle, (a) concurrently with the effective date of such termination, an amount equal to any Fees pursuant to item (i) of Section 3 hereof corresponding to period between the notice and the effective date of such termination, plus, (b) within 60 days following the end of the quarter in which the effective date of such termination occurs, any outstanding amounts earned by Nouvelle with respect to item (ii) of Section 3.

 

If this Agreement is terminated for cause, Tefron shall not be under any obligation to make further payments hereunder, except any amounts accrued and owing to Nouvelle hereunder as at the effective date of such termination, which amounts shall be paid to Nouvelle concurrently with the effective date of such termination.

 

During any notice period hereunder, Nouvelle shall continue to perform Services hereunder.

 

5.             Exclusivity. During the Term and for six months thereafter, Nouvelle agrees that it will not provide similar services to any of Tefron’s or its Affiliate's competitors.

 

  

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6.             Withholding of Taxes. Nouvelle is solely responsible for the withholding, reporting and payment of all taxes and levies associated with payments made hereunder to Nouvelle.  In the event that Tefron is required to pay or withhold any taxes or make any other payment with respect to Fees or Expenses, Tefron shall at its option (a) set off any outstanding payments due to Nouvelle hereunder by an amount equal to the amount of any such payment(s) required to be made by Tefron; and/or (b) issue an invoice to Nouvelle in an amount equal to such payment(s) required to be made by Tefron.  In either event, Nouvelle will reimburse Tefron in full and within ten (10) days of the date of Tefron’s invoice for any such payments made on Nouvelle’s behalf.

 

7.             Relationship of the Parties. None of Nouvelle’s employees shall be considered to be an employee, agent, partner, or other form of representative of Tefron or any Affiliate thereof.  In no event shall any employee of Nouvelle have any power or authority to act for, represent, or bind Tefron or any Affiliate thereof in any manner unless specifically authorized in writing by a Tefron corporate officer.  At no time shall any employee of Nouvelle purport to commit or obligate Tefron or its Affiliates in any way to Tefron’s customers or any other third party with respect to the Services or otherwise.

 

8.             Nouvelle’s Personnel.  All personnel supplied or utilized by Nouvelle shall be deemed employees of Nouvelle and will not be considered employees, agents, or subcontractors of Tefron or its Affiliates for any purpose whatsoever.  Nouvelle is and shall remain fully and exclusively liable for the actions or inactions of all such Nouvelle personnel while they are performing the Services.  Nouvelle shall pay and report as required, for all personnel assigned hereunder, applicable wages, federal and state income tax withholding, social security taxes, and unemployment insurance.  Nouvelle shall bear sole liability for any health or disability insurance, retirement benefits, or other welfare or pension benefits, if any, to which Nouvelle or any such personnel may be entitled.  Nouvelle shall, and shall cause its representatives and agents, to comply with all applicable Tefron employee policies and procedures and/or Tefron’s customer’s security procedures provided, however, that such compliance therewith shall not contravene the terms of this Section.

 

9.             Confidential Information.

 

(a)            During the performance of this Agreement, Nouvelle may have access to confidential and proprietary information relating to Tefron, its business or affairs, or the business and affairs of Tefron’s customer’s, licensors or suppliers (“Confidential Information”). Confidential Information shall specifically include, but not be limited to, information, whether in written, documentary, graphic, oral, electronic, computer readable or any other form whatsoever, relating to technical know-how, methods and procedures of operations, specifications, secret processes, systems of manufacture, equipment, apparatus, devices, drawings, procedure and reference manuals, materials, inventions, patented products and/or processes and developments in relation thereto, patent specifications and information in relation thereto, client lists, price lists, cost information, personnel plans, marketing and advertising plans and strategies, financial and accounting plans and information, projections or budgets, creative ideas and concepts, documents, memoranda, records, client files, video tapes, audio cassettes, diskettes, software, confidential or proprietary third party information, information on new products and services being researched or developed by Tefron, or the presentation, features, performance, utility or functionality of the same.  Confidential Information shall further be deemed to include any copies, data, information, or other material developed, arising, or derived from Confidential Information or any Tefron or Tefron customer proprietary data or material which may be directly or indirectly received by Nouvelle in conjunction with the Services to be performed hereunder.  The Fees, Expenses and other terms of this Agreement shall also constitute Confidential Information hereunder and Nouvelle expressly agrees not to discuss them with Tefron’s customers or others.

 

  

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(b)            Nouvelle shall not copy or use any Confidential Information except for the specific purpose stated herein.  Nouvelle agrees to use at least the same physical and other security measures as Nouvelle uses to protect Nouvelle’s own confidential technical information, which shall in no event be less than reasonable, in order to guard against any unauthorized use or disclosure of such Confidential Information. Nouvelle shall maintain the Confidential Information so as not to allow disclosure to any person, entity or third party, whether prior to, during or after the termination of this Agreement, other than to those third parties who may have an express need to know such Confidential Information in order for Nouvelle to fulfill its obligations hereunder.  Nouvelle shall inform any authorized third parties of Nouvelle’s obligations hereunder and shall use its best efforts to ensure compliance by such individuals.  Nouvelle will ensure that each of such authorized third parties, to whom Confidential Information will be disclosed, has agreed in a writing to protect and maintain, during and after their relationship with Nouvelle, the confidentiality of any third-party’s confidential information.  Such writing shall contain obligations that are no less protective than the degree of care that Nouvelle uses to protect Nouvelle’s own Confidential Information, and in no event less than reasonable care.

 

(c)            Nouvelle shall promptly report to Tefron any unauthorized disclosure, copying or use of any Confidential Information. Nouvelle shall immediately notify Tefron in writing of any breach or threatened breach of this Section of which it becomes aware, and shall provide all reasonable assistance and co-operation to Tefron as Tefron may request in its efforts to regain possession and control of the Confidential Information and to prevent further unauthorized use of same.  Upon request of Tefron, Nouvelle shall promptly return all Confidential Information which may then be in its possession or control.

 

(d)            For purposes of this Agreement, Confidential Information shall not include information that: (i) is in or subsequently becomes part of the public domain through no fault of the recipient; (ii) is lawfully received from a third party having the right to disclose such information; (iii) is independently developed by Nouvelle without breach of this Agreement; (iv) is publicly disclosed by Nouvelle with the written approval of Tefron; or (v) is obligated to be produced under order of a court of competent jurisdiction or other legal requirement.

 

(e)            The parties acknowledge that any remedy at law for any breach of this Section may be inadequate and that the other party shall be entitled to seek specific performance or any other mode of injunctive or other equitable relief to which it may be entitled in order to enforce its rights hereunder.

 

(f)             For the purpose of this Section any reference to Tefron shall also include an Affiliate thereof.

 

10.           Intellectual Property Rights & Inside Information.

 

(a)            Intellectual Property Rights. All right, title, and interest in and to all works and other deliverables to be provided by or on behalf of Nouvelle hereunder (“Deliverables”), including, without limitation, all copyrights, trademarks, trade secrets, patent rights and all other intellectual property rights therein, (“IP Rights”) shall exclusively vest in and be held by Tefron.  To the extent that any of the IP Rights in or to any of the Deliverables may not, by operation of law, vest in Tefron, Nouvelle agrees to, and hereby does, irrevocably transfer, assign and convey all such right, title and interest therein to Tefron. Nouvelle and its agents shall, at Tefron’s request and expense, promptly take all such action and execute such further documents and instruments as are necessary to record or perfect such IP Rights or vest full title in the Deliverables in Tefron.

 

(b)            Inside Information.  In the course of performing the Services hereunder, Nouvelle may receive information or data which is considered material “Inside Information” within the meaning and intent of the state and federal securities laws, rules, and regulations.  Nouvelle will not disclose any such Inside Information directly or indirectly to any third party, nor shall Nouvelle use such Inside Information as a basis for advice to itself, its personnel, or any other party concerning any recommendation or decision to buy, sell, or otherwise deal in securities of Tefron's parent company, Tefron Ltd.

 

  

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(c)            Originality of Services.  Nouvelle certifies to the originality of the Services to be performed and the deliverables prepared for or submitted to Tefron hereunder.  Nouvelle warrants that the rights it has granted to Tefron hereunder do not violate any intellectual property right(s) of any third party.

 

11.           Network Access.

 

(a)            In the event Nouvelle is permitted access to Tefron’s computer/data processing and transmission network (the “Network”) such access shall be granted solely for the benefit of Tefron and exclusively for the purpose of enabling Nouvelle to fulfill its obligations to Tefron hereunder. Nouvelle warrants and represents to Tefron that it shall access only those areas of the Network which Tefron specifically directs or authorizes it to access and only for the limited purpose of fulfilling its obligations hereunder.

 

(b)            Nouvelle warrants and represents that its personnel shall not (nor shall it nor its personnel directly or indirectly assist any other person in any manner to) directly or indirectly insert or attach into or on, or otherwise take, create, do, or cause to be done, in relation to the Network, any business application, personal computer or workstation, or any equipment, software, or other technology to which Nouvelle may have access, any bug, virus, encryption, time bomb, or other such item, device, or activity which would impede, interrupt, delay, destroy, or otherwise impair Tefron’s, its employees’, customers’, subcontractors’, advisors’ or others’ use of such Network, equipment, software, or other technology, or the data thereon.

 

(c)            Nouvelle agrees to indemnify, defend and hold Tefron harmless, without limitation of any kind, from and against any claim, loss, damage, cost, or other expense which Tefron may incur as a result of any breach of this Section.

 

12.           Warranty; Indemnity.

 

(a)            Nouvelle represents and warrants to Tefron that:

 

i)            Nouvelle has all rights, privileges and other authority necessary or required to enter into this Agreement, to make and accept the representations made herein, and to perform the Services contemplated hereunder without conflict to or with Tefron or any third party; and

 

ii)           Nouvelle and its personnel will perform its obligations hereunder in a good and workmanlike manner within the specified time schedule and in accordance with (a) the highest applicable industry standards; and (b) any and all applicable statutes, laws, ordinances, and regulations of any governmental authority having jurisdiction over such matters.

 

(b)            Nouvelle shall indemnify, defend, and hold Tefron harmless from and against any liabilities, claims or demands (including the costs, expenses, and attorneys’ fees on account thereof) that may result from any (i) breach by Nouvelle or persons furnished by Nouvelle, of Nouvelle’s obligations specified in Sections 9, 10 or 11; or (ii) any injuries or damages claimed under workers’ compensation or similar acts by persons furnished by Nouvelle.

 

  

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13.           No Waiver.  The failure of either party hereto to enforce any right under this Agreement shall not constitute a waiver of that right, of the damages caused thereby, or of any other current or future rights under this Agreement.

 

14.           Assignment and Subcontracting.   This Agreement and Nouvelle’s rights and obligations hereunder may not be assigned, subcontracted, or otherwise transferred, in whole or in part, without Tefron’s specific written authorization to do so.

 

15.           Governing Law.  This Agreement is subject to and shall be governed by and interpreted in accordance with the laws of the State of North Carolina, excluding its conflict of laws principles, and Nouvelle hereby consents to exclusive jurisdiction therein.

 

TEFRON USA, INC.

 

Name: Eran Rotem__________________

Title:    Chief Financial Officer & Director_

Date:   ___________________________

 

ACCEPTED AND AGREED TO this 30th day of December, 2010.

NOUVELLE SEAMLESS INTIMATES INC.

 

Name: Martin Lieberman___________

Title:   _________________________

Date:  December 29, 2010_________

- 6 -exhibit_4-18.htm

EXHIBIT 4.18

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, IN EACH CASE PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT IS DELIVERED TO THE COMPANY.  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

WARRANT TO PURCHASE SHARES

 

	
Company:

	
TEFRON LIMITED

	
Number of Shares:

	
Up to 225,000

	
Class of Shares:

	
Ordinary Shares, NIS10.00 nominal value per share

	
Exercise Price Per Share:

	
US$3.00

	
Issue Date:

	
December 30, 2010

	
Expiration Date:

	
17:00 Israel time on the third anniversary of the publication by the Company of its financial statements for the period ending December 31, 2013

	
Warrant No.:

	
BL-1

 

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, the receipt of which is hereby acknowledged, Benny Lieberman (the “Holder”) is entitled to purchase the number of fully paid and non-assessable Ordinary Shares, NIS10.00 nominal value per share (the “Ordinary Shares”) of Tefron Limited (the “Company”) at the Exercise Price Per Share set forth above and as adjusted pursuant to Article 2 of this Warrant (the “Warrant Shares”), subject to the provisions and upon the terms and conditions set forth in this warrant.

 

	
1.

	
EXERCISE.

 

	
1.1.

	
Vesting; Expiration This Warrant shall vest and expire on the following terms:

 

1.1.1.             The Holder shall be entitled to exercise warrants to purchase up to 75,000 of the Warrant Shares if the revenues of the Company from January 1, 2011 through December 31, 2011 (the “2011 Revenues”) equal or exceed US$130 million (“2011 Target Revenues”), with earnings before interest, taxes, depreciation and amortization (“EBITDA”) for such year (the “2011 EBITDA”) of at least 8%, such entitlement to expire on the third anniversary of the publication of the Company’s financial statements for the period ending December 31, 2011.  Notwithstanding the foregoing, and provided that the 2011 Revenues are equal to or greater than $115 million with 2011 EBITDA equal to or greater than 5%, the Holder shall be entitled to exercise a portion of the 2011 Shares equal to the result of the following equation:

 

37,500 + 37,500*((2011 Revenues minus $114,999,999)/$15,000,000) * ((2011 EBITDA minus 4.99%)/3%)

  

  

  

 

1.1.2              The Holder shall be entitled to exercise warrants to purchase up to an additional 75,000 of the Warrant Shares (in addition to any to which the Holder may be entitled under Section 1.1.1 or 1.1.3 if the revenues of the Company from January 1, 2012 through December 31, 2012 (“2012 Revenues”) equal or exceed US $150 million (the “2012 Revenue Target”) with EBITDA for such year (the “2012 EBITDA”) of at least 8%, such entitlement to expire on the third anniversary of the publication of the Company’s financial statements for the period ending December 31, 2012.  Notwithstanding the foregoing, and provided that the 2012 Revenues are equal to or greater than $135 million with 2012 EBITDA equal to or greater than 5%, the Holder shall be entitled to exercise a portion of the 2012 Shares equal to the result of the following equation:

37,500 + 37,500*((2012 Revenues minus $134,999,999)/$15,000,000) * ((2012 EBITDA minus 4.99%)/3%); and

1.1.3              The Holder shall be entitled to exercise warrants to purchase up to an additional 75,000 of the Warrant Shares (in addition to any to which the Holder may be entitled under Section 1.1.1, 1.1.2 if the revenues of the Company from January 1, 2013 through December 31, 2013, (the “2013 Revenues”) equal or exceed US $180 million, with EBITDA for such year (the “2013 EBITDA”) of at least 8% such entitlement to expire on the third anniversary of the publication of the Company’s financial statements for the period ending December 31, 2013.  Notwithstanding the foregoing, and provided that the 2013 Revenues are equal to or greater than $165 million, with 2013 EBITDA equal to or greater than 5%, the Holder shall be entitled to exercise a portion of the 2013 Shares equal to the result of the following equation:

37,500 + 37,500*((2013 Revenues minus $164,999,999)/$15,000,000) * ((2013 EBITDA minus 4.99%)/3%).

1.1.4              This Warrant shall expire on the third anniversary of the publication of the Company’s financial statements for the period ending December 31, 2013.

 

1.1.5              In no event shall any of Sections 1.1.1, 1.1.2 or 1.1.3 individually allow more than 75,000 Warrant Shares become newly exercisable with respect to the revenues and EBITDA for the applicable year.

 

	
1.2.

	
Expiration. This Warrant may be exercised at any time and from time to time, in whole or in part, at any time prior to the Expiration Date, subject to the terms of Section 1.1 above.

 

  

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1.3.

	
Methods of Exercise. Subject to Section 1.1, the Holder may exercise this Warrant by delivering this Warrant and a duly executed Notice of Exercise (substantially in the form attached hereto on Appendix 1) to the principal office of the Company, along with a wire transfer in immediately available funds of the aggregate Exercise Price for the Warrant Shares being purchased.

 

	
1.4.

	
Delivery of Certificate and New Warrant.  Promptly after the Holder exercises this Warrant by delivery of the Warrant or an affidavit of loss warrant, the Company shall deliver to the Holder a copy of a share certificate evidencing the issuance of the Warrant Shares acquired (or exercised pursuant to Section 1.4(b), as the case may be)) in the name of the Nominee Company and an issuance letter from Company to the Nominee Company. The Warrant Shares acquired (or exercised pursuant to Section 1.4(b), as the case may be)) shall be credited to the securities accounts opened by the Holder with members of the TASE. If the Holder exercises this Warrant in part, the Company shall also deliver to the Holder a new Warrant evidencing the outstanding Warrant Shares.

 

For purposes of this Agreement, “Nominee Company” shall mean; the nominee of company of Bank Hapoalim B.M.; and “TASE” shall mean; the Tel-Aviv Stock Exchange Ltd.

 

	
1.5.

	
Replacement of Warrants.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor.

 

	
2.

	
ADJUSTMENTS TO THE SHARES EXERCISE PRICE.

 

	
2.1.

	
Shares Dividends, Splits, Etc.  If, after the Issue Date, the Company declares or pays a dividend on its Ordinary Shares in kind, subdivides, splits or reverse splits the outstanding Ordinary Shares into a different number of Ordinary Shares, then upon exercise of this warrant, for each Warrant Share acquired, the Holder shall receive, without cost to the Holder, the total number of Ordinary Shares to which the Holder would have been entitled had the Holder owned the Ordinary Shares of record as of the date the dividend, subdivision, split or reverse split occurred.

 

	
2.2.

	
Reclassification, Exchange or Substitution.  Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant, the Holder shall be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of securities and property that the Holder would have received for the Warrant Shares if this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event.   The Company or its successor shall promptly issue to the Holder a new warrant for such new securities or other property.  The new warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 2 including, without limitation, adjustments to the Exercise Price Per Share and to the number of securities or property issuable upon exercise of the new warrant.  The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.

 

  

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2.3.

	
Adjustment for Certain Dividends and Distributions.  In the event the Company at any time or from time to time, during the term of this Warrant:

 

	 	
2.3.1.

	
distributes bonus shares, the effective date for the distribution of which takes place after the Issue Date, but before the Expiration Date, the number of Warrant Shares to which the Holder shall be entitled upon the exercise of this Warrant shall increase by the number of the Shares that the Holder would have been entitled to as bonus shares, had he exercised the Warrant prior to the effective date for the distribution of the bonus shares. The exercise price of each Warrant Share shall not vary as a result of the increase in the number of Warrant Shares to which the Holder is entitled in the wake of the distribution of bonus shares, provided, however that such adjustment will take place only if and when the Warrant is exercised and only in respect of the amount of Warrant Shares that will be exercised.

 

	 	
2.3.2 

	
grants rights to acquire any securities whatsoever offered to the Company’s shareholders by way of rights, the Company shall act with a view that the number of Warrant Shares that the Holder is entitled to upon the exercise of the Warrant will be increased by multiplying the number of Warrant Shares to which the Holder shall be entitled pursuant to this Warrant by the Benefit Ratio (as defined below),provided, however that (i) such adjustment will take place only if and when this Warrant is exercised, (ii) only in respect of the amount of Warrant Shares that will be exercised and (iii) in no event will the number of Warrant Shares be decreased. For the purposes of this Warrant, “Benefit Ratio” means the price of the Company's share in the TASE on the record date for the right to participate in the said issuance of rights divided by the base price of the Company's share in the TASE “ex-rights”.

 

	
  

	
2.3.3

	
Notwithstanding anything to the contrary herein, if a record date as mentioned in this Section 2.3 is fixed and bonus shares are not fully granted or if rights are not fully distributed on the date fixed thereof, the number of Warrant Shares issuable upon exercise of this Warrant shall be recomputed accordingly as of the close of business on such record date and thereafter the number of shares of Warrant Shares issuable upon exercise of this Warrant shall be adjusted pursuant to this Section 2.3 as of the time of actual issuance of bonus shares or distributions of rights..

 

	
2.4.

	
Anti-Dilution Adjustment. If, while this Warrant, or any portion hereof, remains outstanding and unexpired, the Company issues or sells any securities or any instrument convertible into securities of the Company for a price per share below $3.0 per share, as adjusted for dividends or bonus shares on its Ordinary Shares in kind, or subdivides, splits or reverse splits the outstanding Ordinary Shares into a different number of Ordinary Shares, then the number of Warrant Shares underlying this Warrant shall be adjusted on the basis of a standard anti-dilution formula, such that following such adjustment the number of Warrant Shares underlying this Warrant upon their exercise, shall confer the Holder with the same amount of voting power as the Warrant Shares underlying this Warrant have on the date immediately prior to such issuance, provided, however that such adjustment is subject to the following: (i) filing of an immediate report regarding such allocation of additional warrants; and (ii) receipt of all approvals required by law for such allocation of additional warrants, including the approval of the TASE. The Company shall use commercially reasonable efforts to take all actions, and to do all things necessary, proper or advisable (subject to any applicable laws) to obtain such approvals. In case that such approvals can not be obtained, the parties will negotiate alternative solutions to the anti dilution adjustment.

 

  

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2.5.

	
No Impairment.  The Company shall not, by amendment of its Articles of Association or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this warrant by the Company, but shall at all times in good faith assist in carrying out all the provisions of this Article 2 and in taking all such action as may be necessary or appropriate to protect the Holder’s rights under this Article against impairment.

 

	
2.6.

	
Certificate as to Adjustments.  Upon each adjustment of the Exercise Price Per Share, and/or the Number of Shares, the Company at its expense shall promptly compute such adjustment, and upon written request, furnish the Holder with a certificate setting forth such adjustment and the facts upon which such adjustment is based.  The Company shall, upon written request, furnish the Holder a certificate setting forth the Exercise Price Per Share in effect upon the date thereof and the series of adjustments leading to such Exercise Price Per Share.

 

	
3.

	
REPRESENTATIONS AND COVENANTS OF THE COMPANY.

 

	
3.1.

	
Representations and Warranties.  The Company hereby represents and warrants to the Holder that all the Warrant Shares that be issued upon the exercise of this warrant, and all securities, if any, issuable upon conversion of the Warrant Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein, under its Articles of Association, or under applicable federal and state securities laws.

 

	
4.

	
MISCELLANEOUS.

 

	
4.1.

	
Legend.  Share Certificates evidencing the Warrant Shares (and the securities issuable, directly or indirectly, upon conversion of the Warrant Shares, if any) shall be imprinted with a legend in substantially the following form:

 

THESE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, IN EACH CASE PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT IS DELIVERED TO THE COMPANY.  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

  

5

  

 

	
4.2.

	
Compliance with Securities Laws on Transfer.  This Warrant and the Warrant Shares issuable upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Warrant Shares, if any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company).

 

	
4.3.

	
Transfer Procedure.  Subject to applicable law, and to the restrictions contained in the legend above, the Holder may transfer or assign all or any part of this Warrant without the consent of the Company as soon as the Holder has a right to exercise. Notwithstanding, and subject to any applicable law, the Warrant Shares issuable upon exercise of this warrant (or the securities issuable, directly or indirectly, upon conversion of the Warrant Shares, if any), may be transferred or assigned, so long as the Holder shall execute and deliver any documents and agreements as the Company may reasonably request to give effect to the forgoing.

 

	
4.4.

	
Notices.  Any notice or other communication required or permitted to be delivered to any party under this Agreement shall be in writing and shall be deemed delivered, given and received when delivered (by hand, by registered mail, by courier or express delivery service or by facsimile) to the address or facsimile telephone number set forth beneath the name of such party below (or to such other address or facsimile telephone number as such party shall have specified in a written notice given to the other parties hereto):

 

If to the Company, at Misgav Industrial Park, P.O. Box 1365, Misgav 20179, Israel or at such other address or addresses as may have been furnished in writing by the Company to the other parties; or

 

If to the Holder, at the Holder’s address set forth on the signature page, or at such other address or addresses as may have been furnished to the other parties.

 

	
4.5.

	
Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Israel, excluding that body of law pertaining to conflict of law.

 

	
4.6.

	
Waiver.  No failure or delay on the part of any party to exercise any power, right, privilege or remedy under this Agreement shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy.

 

[SIGNATURE PAGE FOLLOWS]

 

  

6

  

 

IN WITNESS WHEREOF, the undersigned have caused this warrant to be executed as of the date first written above.

 

	TEFRON LIMITED	
BENNY LIEBERMAN     /s/ Benny Lieberman

	 	 	  
	By:      /s/ Eran Rotem	Address:	
55 Louvain St. West

	Name: Eran Rotem	 	
Suite 200

	Title:   Chief Financial Officer	 	Montreal Q.C.
	 	 	H2N IA4

 

  

7

 

APPENDIX 1

 

NOTICE OF EXERCISE

 

1.           The undersigned hereby elects to purchase ______________ Ordinary Shares of TEFRON LIMITED, pursuant to the terms of the attached Warrant, and tenders herewith US$, in payment of the Exercise Price Per Share of such Warrant Shares in full.

 

2.           Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

	Name:	 
	Attn:__________________	 
	 __________________	 
	 __________________	 
	 __________________	 

 

3.           The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws.

 

	
NAME:

	 
	  	 
	
(Signature)

	 
	  	 
	
(Date)

	 

8

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