RECORD DATE; SOLICITATION OF PROXIES
Only shareholders of record at the close of business on June 23, 2008 will
be entitled to vote at the Meeting and any adjournment thereof. Proxies will be
solicited chiefly by mail; however, certain officers, directors, employees and
agents of the Company, none of whom will receive additional compensation
therefor, may solicit proxies by telephone, fax or other personal contact.
Copies of solicitation materials will be furnished to banks, brokerage firms,
nominees, fiduciaries and other custodians holding Ordinary Shares in their
names for others to send proxy materials to and obtain proxies from the
beneficial owners of such Ordinary Shares. The Company will bear the cost of
soliciting proxies, including postage, printing and handling, and will reimburse
the reasonable expenses of brokerage firms and others for forwarding material to
beneficial owners of Ordinary Shares.
To the extent you would like to state your position with respect to any of
the proposals described in this proxy statement, in addition to any right you
may have under applicable law, pursuant to regulations under the Israeli
Companies Law, 1999 (the "COMPANIES LAW"), you may do so by delivery of a notice
to the Company's offices located at Park Azorim, 94 Derech Em Hamoshavot, Petach
Tikva 49527, Israel, not later than July 3, 2008.
Following the Meeting, one or more shareholders holding, at the Record
Date, at least 1,060,149 Ordinary Shares, which represent approximately five
percent (5%) of the total voting rights of the Company, which are not held by
controlling shareholders of the Company, may review the Proxy Cards submitted to
the Company at Company's offices during business hours.
QUORUM AND VOTING REQUIREMENTS
On June 20, 2008, the Company had 21,202,986 Ordinary Shares outstanding,
each of which is entitled to one vote upon each of the matters to be presented
at the Meeting. This number does not include 997,400 Ordinary Shares held by a
wholly-owned subsidiary of the Company.
At the Meeting, each shareholder of record will be entitled to one vote for
each Ordinary Share held by him in respect of each matter to be voted upon.
Two or more shareholders, present in person or by proxy and holding or
representing shares conferring in the aggregate at least twenty five percent
(25%) of the voting power of the Company, will constitute a quorum at the
Meeting. Shares that are voted in person or by proxy "FOR" or "AGAINST" are
treated as being present at the Meeting for purposes of establishing a quorum
and are also treated as voted at the Meeting with respect to such matters.
Abstentions and broker non-votes will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business, but such
abstentions and broker non-votes will not be counted for purposes of determining
the number of votes cast with respect to the particular proposal. If a quorum is
not present within thirty minutes from the time appointed for the Meeting, the
Meeting will be adjourned to the same day on the following week, at the same
time and place, or to such day and at such time and place as the Chairman of the
Meeting may determine. At such adjourned Meeting, any two shareholders, present
in person or by proxy, will constitute a quorum.
The affirmative vote of the holders of a majority of the voting power
represented at the Meeting in person or by proxy is necessary to approve the
terms of office for Mr. Gelbard.
This Proxy Statement and the Proxy Cards attached hereto shall be deemed to
constitute voting deeds (Ktavei Hatzba'a) for the purpose of regulation 3(c) of
the Israel Companies Regulations (Alleviation for Public Companies whose shares
are listed on a Stock Exchange Outside of Israel), 2000.
6
BENEFICIAL OWNERSHIP OF SECURITIES
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of June 20, 2008
concerning the only persons or entities known to the Company to own beneficially
more than five percent (5%) of the Company's outstanding Ordinary Shares. The
information presented in this table is based on 21,202,986 Ordinary Shares
outstanding as of June 20, 2008, but does not take into account 997,400 Ordinary
Shares held by a wholly owned subsidiary of the Company. The number of Ordinary
Shares beneficially owned by a person includes Ordinary Shares subject to
options held by that person that were exercisable at June 20, 2008, or
exercisable within 60 days of June 20, 2008. The Ordinary Shares issuable under
these options are treated as if they were outstanding for purposes of computing
the percentage ownership of the person holding these options, but are not
treated as if they were outstanding for the purposes of computing the percentage
ownership outstanding for any other person. None of the holders of the Ordinary
Shares listed in this table have voting rights different from other holders of
the Ordinary Shares.
NUMBER OF PERCENT OF
NAME SHARES OWNED ORDINARY SHARES*
----------------------------------- -------------- -------------------------
Norfet, Limited Partnership
c/o Fimi 2001 Ltd.
Rubinstein House
37 Begin Rd.
Tel Aviv, Israel 4,613,085 (1) 21.76%
Wellington Management Company, LLP
75 State Street,
Boston, MA 2,985,900 (2) 14.08%
* Does not take into account 997,400 Ordinary Shares held by a wholly owned
subsidiary of the Company.
(1) Norfet L.P is an Israeli partnership. As of June 20, 2008, 8.82% of Norfet
was held by FIMI Opportunity Fund, LP, approximately 45.61% of Norfet was
held by FIMI Israel Opportunity Fund, Limited Partnership, approximately
34.45% was held by Mivtach Shamir Holdings Ltd., approximately 3.45% was
held by Migdal Insurance Company, approximately 6.89% was held by First
International Bank of Israel and approximately 0.786% was held by Zaleznick
and Butler. In addition, pursuant to Rule 13d-5, (i) Mr. Ishay Davidi, a
director of the Company, may be deemed to beneficially own the shares held
by Norfet due to his position as CEO of FIMI 2001 Ltd. and senior partner
of FIMI Israel, Opportunity Fund, Limited Partnership and FIMI Opportunity
Fund, L.P. and (ii) Mr. Meir Shamir, a director in the Company, may be
deemed to beneficially own the shares held by Norfet due to his 40.02%
interest in Mivtah Shamir.
(2) Wellington Management Company, LLP has voting power over 2,063,400 of these
shares.
7
DIRECTORS AND SENIOR MANAGERS
As of June 20, 2008, the following directors and senior managers
beneficially held the number of Ordinary Shares set forth in the table below.
The information in this table is based on 21,202,986 Ordinary Shares (excluding
997,400 shares owned by a wholly owned subsidiary) outstanding as of June 20,
2008. The number of Ordinary Shares beneficially owned by a person includes
Ordinary Shares subject to options held by that person that were exercisable at
June 20, 2008 or exercisable within 60 days of June 20, 2008. The Ordinary
Shares issuable under these options are treated as if they were outstanding for
purposes of computing the percentage ownership of the person holding these
options but are not treated as if they were outstanding for the purposes of
computing the percentage ownership outstanding for any other person. Except as
disclosed below, to the Company's knowledge, none of the directors or senior
managers beneficially owns any Ordinary Shares.
NUMBER OF % OF ORDINARY SHARES
NAME ORDINARY SHARES OUTSTANDING**
----------------------------------------------------- ----------------- --------------------
Yacov Gelbard --- ---
Ishay Davidi 4,632,767 (1) 21.84%
Meir Shamir 4,613,085 (2) 21.76%
Yosef Shiran 815,000 (3) 3.70%
Micha Korman * *
Avi Zigelman --- ---
Shirit Kasher --- ---
Yacov Elinav --- ---
Eli Admoni --- ---
Yarom Oren --- ---
Zvi Limon 692,270 (4) 3.26%
Asaf Alperovitz * *
Itamar Harchol * *
Anat Barkan --- ---
David Gerbi * *
Ronny Grundland --- ---
Ilan Gilboa * *
Michal Baumwald Oron * *
Alon Shadmi * *
Amit Eshet * *
Directors and senior managers as a group (12 persons) 6,381,919 (5) 28.67%
------------------
* Less than one percent (1%) of the outstanding Ordinary Shares.
** Does not take into account 997,400 Ordinary Shares held by a wholly owned
subsidiary of the Company.
(1) Consists of (i) 4,613,085 Ordinary Shares held by Norfet, which Mr.
Ishay Davidi may be deemed to beneficially own under U.S. securities
laws since he serves as CEO of FIMI 2001 Ltd., which controls the
general partner of Norfet, one of the Norfet limited partners (which
is managed by FIMI 2001 Ltd.) as well as the other Norfet limited
partners by virtue of an irrevocable power of attorney; and (ii)
19,682 Ordinary Shares held by FIMI, which Mr. Ishay Davidi may be
deemed to beneficially own in accordance with the above mentioned.
(2) Consists of 4,613,085 Ordinary Shares held by Norfet, which Mr. Shamir
may be deemed to beneficially own due to his 40% interest in
Mivtah-Shamir, which held an approximately 34.45% interest in Norfet
as of June 20, 2008.
(3) Consists of 815,000 Ordinary Shares subject to options exercisable at
prices that are between $3.388 and $3.59 per share (which expire
between 2011 and 2012).
8
(4) Consists of (i) 689,670 Ordinary Shares held by Rimon Investment
Master Fund, LP ("Rimon"), which Mr. Zvi Limon may be deemed to
beneficially own under U.S. securities laws since he serves as a
partner in the management company of Rimon; and (ii) 2,600 Ordinary
Shares held by Mr. Zvi Limon directly.
(5) Consists of (i) 4,613,085 Ordinary Shares held by Norfet, which Mr.
Ishay Davidi may be deemed to beneficially own under U.S. securities
laws since he serves as CEO of FIMI 2001 Ltd., which controls the
general partner and one of the limited partners of Norfet and which
Meir Shamir may be deemed to beneficially own under U.S. securities
laws due to his 40% interest in Mivtah-Shamir, which held an
approximately 34.45% interest in Norfet as of June 20, 2008; (ii)
19,682 Ordinary Shares held by FIMI which Mr. Ishay Davidi may be
deemed to beneficially own under U.S. securities laws since he serves
as CEO of FIMI 2001 Ltd., which controls the general partner and one
of the limited partners of Norfet; (iii) 689,670 Ordinary Shares held
by Rimon, which Mr. Zvi Limon may be deemed to beneficially own under
U.S. securities laws since he serves as a partner in the management
company of Rimon; (iv) 2,600 Ordinary Shares held by Mr. Zvi Limon
directly; and (v) 1,056,882 options (exercisable within 60 days) to
purchase 1,056,882 Ordinary Shares. The exercise prices of these
options range from 3.388 to 11.275 per share. These options will
expire between 2009 and 2016.
EXECUTIVE COMPENSATION
The aggregate direct remuneration paid to all Directors and senior
management as a group for services in all capacities for the year ended December
31, 2007 was approximately $2.2 million, of which $90,500 was paid to Directors
in their capacities as Directors. Approximately NIS 280,000 was set aside or
accrued for vacation and recuperation pay. Negligible amounts were set aside or
accrued to provide pension, retirement or similar benefits. The amount does not
include any amounts expended by the Company for automobiles made available to
its officers, expenses (including business travel and professional and business
association dues and expenses) reimbursed to officers and other fringe benefits
commonly reimbursed or paid by companies in Israel and $120,000 in management
fees paid to Norfet and $80,000 in management fees paid to New York Delights, a
company wholly owned by Arie Wolfson, a former director and former chairman of
the Company's Board of Directors.
In 2007, the Company did not grant options under the Share Option Plan.
PROPOSAL FOR APPROVING THE TERMS OF OFFICE OF OUR ACTIVE CHAIRMAN OF THE BOARD
OF DIRECTORS
Under the Companies Law, a director's terms of office (including
compensation) requires the approval of the Audit Committee, the Board of
Directors and the shareholders of the Company. The Audit Committee and the Board
of Directors have approved the terms of office of the active Chairman of the
Board of Directors, Mr. Yacov Gelbard ("MR. GELBARD"). It is now proposed that
the shareholders do the same.
Mr. Gelbard began rendering his services to the Company on January 1, 2008
as Active Chairman of the Company's Board of Directors. Mr. Gelbard is to
provide management services to the Company as an independent contractor pursuant
to a proposed Services Agreement between the Company and Mr. Gelbard (the
"AGREEMENT"), the material terms of which are described below.
9
THE SERVICES. Mr. Gelbard will be an active partner and will assist in the
formulation and execution of the long term and short term policies of the
Company, including the advancement of the business of the Company. Mr. Gelbard
will contribute of his experience and capabilities, as much as will be required,
for the providence of the Services to the Company and its subsidiaries.
MONTHLY FEE. The Company will pay Mr. Gelbard a monthly fee of NIS 60,000
(the "MONTHLY FEE"), subject to increases at the end of each fiscal quarter in
accordance with increases in the Israeli consumer price index since December 15,
2007 (the "INCREASED MONTHLY FEE"), in each case plus VAT. This compensation is
to constitute the total compensation due to Mr. Gelbard under the Agreement and
includes the consideration for any social and fringe benefits to which Mr.
Gelbard is entitled to (whether for annual vacation, recuperation pay, bituach
leumi (social welfare payments), severance pay, education fund and other
benefits).
EXPENSES. Mr. Gelbard will be entitled to a reimbursement of all expenses
incurred in connection with his position, whether in Israel or abroad, including
but not limited to car expenses, board and lodging, hospitality and similar
items.
OPTIONS. Mr. Gelbard would be granted options to purchase 300,000 Ordinary
Shares (the: "Options"). The exercise price of the Options would be equal to the
closing price per share of Tefron's ordinary shares on the New York Stock
Exchange on the day on which the Company's shareholders' approve the grant of
the Options (the "relevant day"). The Options are to vest over a period of three
(3) years - one-third upon the completion of 12 months from the relevant day,
one-third upon completion of 24 months from the relevant day and one-third upon
completion of 36 months from the relevant day, assuming, in each case that the
Agreement is in full force and effect at the end of the prescribed vesting
periods. The Options would be subject to the terms of the Company's share option
plan.
Mr. Gelbard would be able to exercise any vested Options starting from the
elapse of the applicable holding period set in section 102 to the Israeli Tax
Ordinance and until five years from the relevant day, subject to the applicable
law. Should Mr. Gelbard terminate the Agreement, he would be entitled to
exercise the vested Options until the earlier of two years from termination of
the Agreement or five years from the relevant day, whether or not the Agreement
is in effect at the time of exercise. However, in the event of the distribution
of a dividend on the Company's ordinary shares, then an amount equal to the
dividend per share will be deducted from the exercise price of each Option that
Mr. Gelbard is not able to exercise as of the date of record date for such
dividend, whether because such options had not yet vested or because the
applicable holding period for such options under section 102 of the Israeli Tax
Ordinance had not yet elapsed. The Agreement also provides that the adjustment
described above shall apply MUTATIS MUTANDIS to distribution of bonus shares by
the Company.
The Audit Committee and Board of Directors of the Company have already
approved the grant of these options to Mr. Gelbard, shareholders will be asked
at the Meeting as part of this proposal to approve the grant of these options to
Mr. Gelbard.
INSURANCE AND INDEMNIFICATION. Mr. Gelbard will be included in the
Company's Directors' and Officers' liability insurance policy in connection with
the services rendered under the Agreement. The Company will also provide Mr.
Gelbard with an indemnification letter in the form approved by the Company's
shareholders on August 7, 2007.
CONFIDENTIALITY. Mr. Gelbard undertakes to hold in confidence and not to
disclose and use (except in the capacity of his position) any information
related to the Company obtained by Gelbard while providing his services. The
confidentiality provision will survive the termination of the Agreement.
10
OTHER SERVICES. Mr. Gelbard will be permitted to engage in other activities
as long as they will not interfere with his obligations to the Company or cause
a conflict of interest. In the event Mr. Gelbard is interested in serving as
chairman of the board of directors of a company other than Tefron (during the
period covered by his agreement with the Company), he is required to submit a
written notice to the Company within a reasonable period of time prior to his
appointment.
NON-COMPETE. During the period of the Agreement and for a period of six (6)
months following the termination thereof, Mr. Gelbard undertakes not to compete,
directly or indirectly, with the Company and with any of the Company's projects
and/or activities.
TERM/TERMINATION. The term of the agreement is to be initially for 12
months commencing January 1, 2008 (the "INITIAL PERIOD"). To the extent the
parties do not provide a termination notice, and to the extent the Agreement is
not terminated for cause, the Agreement will then be extended automatically for
an additional unlimited term (the "EXTENDED PERIOD"). During the Extended
Period, each party may terminate the Agreement upon ninety (90) days prior
written notice (such 90-day period, the "NOTICE PERIOD"). During the Notice
Period, Mr. Gelbard would continue to provide the services and be entitled to
the compensation pursuant to the Agreement, although the Company is entitled to
waive Mr. Gelbards' services with the Company during the Notice Period or any
part thereof so long as the Company pays Mr. Gelbard his compensation for the
remainder of the Notice Period. The Company will have a right to terminate the
Agreement immediately for cause, which includes among others, a material breach
by Mr. Gelbard of his confidentiality undertaking and/or duty of loyalty to the
Company and/or a breach by Mr. Gelbard of a fundamental term of the Agreement
that can be cured, but which is not cured within 14 days of demand to do so.
It is proposed that at the Meeting, the following Resolution be adopted:
"RESOLVED, TO APPROVE AND AUTHORIZE THE ENTRY INTO THE SERVICES AGREEMENT
BETWEEN THE COMPANY AND MR. YACOV GELBARD AND TO APPROVE THE RETENTION OF HIS
SERVICES AND HIS TERMS OF OFFICE, INCLUDING SUCH FEES AND OPTIONS GRANTED AND
COSTS AND EXPENSES INCURRED IN CONNECTION WITH SUCH SERVICES."
The affirmative vote of the holders of a majority of the Ordinary Shares
represented at the Meeting in person or by proxy and voting thereon is necessary
for approval of this resolution.
OTHER MATTERS
The Board of Directors knows of no matters that are to be brought before
the meeting other than as set forth in the Notice of Extraordinary General
Meeting. If any other matter requiring a vote of the shareholders properly comes
before the meeting, the persons named in the enclosed form of proxy are
authorized to vote on such matter using their discretion.
By Order of the Board of Directors
MICHAL BAUMWALD ORON
COMPANY SECRETARY
June 26, 2008
11
EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS OF
TEFRON LTD.
JULY 24, 2008
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
^ Please detach along perforated line and mail in the envelope provided. ^
-------------------------------------------------------------------------------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
-------------------------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. To approve the terms of office for our active chairman of
the board, MR. Yacov Gelbard, including among others,
compensation arrangements, payment of expenses, grant of [_] [_] [_]
options and insurance and indemnification arrangements, as
more fully described in the Proxy Statement accompanying
this Proxy Card.
Pursuant to the Articles of association of the Company, a proxy will be
effective only if received by the Company at least two hours prior to the time
of the Extraordinary General Meeting
----------------------------------------------------------------
To change the address on your account, please check the
box at right and indicate your new address in the address [_]
space above. Please note that changes to the registered
name(s) on the account may not be submitted via this method.
----------------------------------------------------------------
Signature of Shareholder________________________ Date:_____________ Signature of Shareholder________________________ Date:_____________
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such.
If signer is a partnership, please sign in partnership name by
authorized person.
12
PROXY
TEFRON LTD.
PARK AZORIM, 94 DERECH EM HAMOSHAVOT
PETACH TIKVA, 49527 ISRAEL
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 24, 2008
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Mr. Asaf Alperovitz and Ms. Michal Baumwald Oron, and each of them, as
agent and proxy for the undersigned, with full power of substitution, to vote
with respect to all of the Ordinary Shares of Tefron Ltd. (the "COMPANY"),
standing in the name of the undersigned at the close of business on June 23,
2008, at the Extraordinary General Meeting of Shareholders of the Company to be
held at the Company's offices, Park Azorim, 94 Derech Em Hamoshavot, Petach
Tikva, Israel, on July 24, 2008 at 11:00 a.m. (Israel time) and at any and all
adjournments thereof, with all power that the undersigned would possess if
personally present and especially (but without limiting the general
authorization and power hereby given) to vote as follows.
The proxies are authorized to vote in their discretion on such other matters as
may properly come before the meeting.
THE SHARES REPRESENTED BY THIS PROXY CARD WILL BE VOTED IN THE MANNER DIRECTED.
TO THE EXTENT PERMITTED BY LAW AND APPLICABLE STOCK EXCHANGE REQUIREMENTS, IF NO
INSTRUCTIONS TO THE CONTRARY ARE INDICATED, THE SHARES WILL BE VOTED "FOR" ALL
THE PROPOSALS, AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES ON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
13
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