tefron ltd (the “company”)...litef shall invest a total of us 5 million dollars in the company...

TEFRON LTD (The “Company”)

An Amended Immediate Report in accordance with the Securities Regulations (a

Transaction between a Company and a Controlling Shareholder Therein), 2001, and in

accordance with the Securities Regulations (Private Offering of Securities in a Listed

Company), 2000, concerning the convening of an Extraordinary General Meeting of the

shareholders of the Company

Name of the offerees and a concise description of the transaction and its principal terms:

On February 17, 2015, the Company signed an agreement with Litef Holdings Inc., a private

company incorporated in Canada, who is among the controlling shareholders of the Company

(hereinafter: "Litef" "the Offeree"), according to which, Litef will invest a total of US 5 million

dollars in the Company against an extraordinary private allocation of 4,672,897 ordinary shares

of the Company of NIS 10 par value each (hereinafter: "Ordinary Shares") (hereinafter: the

"Agreement"). The Company reported on the signing of the Agreement in an immediate report,

on February 18, 2015, Reference No.: 2015-01-033661.

On February 18, 2015, the Company's Board decided, pursuant to the approval of the Company's

Audit Committee as at that day, to approve the engagement of the Company in the Agreement,

which includes a transaction between the Company and Litef, as well as an allocation of shares

to Litef, and all as detailed as follows.

On April 2, 2015, and pursuant to receiving the approval of the Company's Audit Committee and

Board of Directors following their meetings dated April 1, 2015, the Company signed an

agreement with Mazouz and Weisselberger Genesis Investment, Limited Partnership, Mr. Erez

Rozenbuch and Mr. Tomer Hefetz (hereinafter: the "Additional Investors"), according to which

at the closing date, each of the Additional Investors shall invest in the Company a sum of US

175,000 dollars, and in total a sum of US 525,000 dollars, against a private offering of 163,551

ordinary shares of the Company to each of the Additional Investors, and in total 490,653

ordinary shares (hereinafter: the "Additional Investment Agreement"), furthermore the

Company signed on an amendment to the Agreement resulting from the Additional Investment

Agreement (hereinafter: the Agreement and the Additional Investment Agreement shall be called

together" the "Private Offering").

The transaction Private Offering is brought to the approval of General Meeting of the

shareholders of the Company, for the following reasons:

a. The transaction Private Offering is a transaction concerning which includes an

extraordinary private offering, between the Company and to Litef, who is among the

controlling shareholders of the Company, and therefore it is brought for approval as an

extraordinary transaction with a controlling shareholder in accordance with Section 270(4)

and 275 of the Companies Law, 1999 (hereinafter: the "Companies Law ")1.

b. As at the date of the report, Litef and Nouvelle Intimes Seamless Inc., a private company

incorporated in Canada (hereinafter: "Nouvelle") (Litef and Nouvelle shall be called

hereinafter: "Nouvelle Group") jointly hold approximately 32.47% of the issued and paid

up share capital of the Company and the voting rights therein and approximately

28.1628.53% of the issued and paid up share capital of the Company and the voting rights

therein on a fully diluted basis2. In the framework of the transaction, 4,672,897 Ordinary

Shares of the Company shall be allocated to Litef, so that upon the closing of the

transaction, the Nouvelle Group shall jointly hold approximately 60.257.71% of the issued

and paid up share capital of the Company and the voting rights therein and approximately


therein on a fully diluted basis. Since as at the date of this report, there is no other person

who holds more than 45% of the issued and paid up share capital of the Company

(regarding this matter, see the following paragraph entitled "Name of the controlling

shareholder who has a personal interest and the nature of this matter"), the transaction is

brought to the approval of the shareholders’ meeting of the Company also in accordance

with Section 328(b)(1) of the Companies Law, as a private offering whose aim is to grant

the shareholders of the Nouvelle Group more than 45% of the voting rights in the

Company.

The principals of the Agreement and the Additional Investment Agreement:

The principals of the Agreement

As noted above, on February 17, 2015, the Company signed the Agreement. The principals of

the Agreement are detailed as follows:

1. Litef shall invest a total of US 5 million dollars in the Company (hereinafter: the

"Investment Amount") on the closing date (as this term is defined s follows), against the

allocation of 4,672,897 Ordinary Shares of the Company, at a price of US 1.07 dollars per

share. It is noted that the payment for each share is lower than its nominal value (NIS 10).

Therefore, in accordance with Section 304(a) of the Companies Law, the Company shall

convert part of its profits from premium on shares included in its equity as presented in the

recent financial statements of the Company, into share capital, in an amount equal to the

1 For details regarding the controlling shareholders of the Company, as at this date, see below.

2 Calculation of the rate of holdings on a fully diluted basis was made as at March April 2, 2015, excluding 99,740

ordinary shares of the Company held by a subsidiary of the Company and assuming the full exercise of the warrants

(non-negotiable) to employees, consultants and officers of the Company as well as rights to shares, exercisable for

235135,000 ordinary shares of the Company (after taking into account adjusting the amount to holders of option

warrants due to the rights issue carried out by the Company in March 2010).

difference between the par value of each share issued (NIS 10), and the amount to be paid

for it (US 1.07 dollars). The calculation of the conversion of 10 NIS into US dollar will be

carried out in accordance to the exchange rate of the US dollar, as listed at the time of the

payment of the consideration.

2. Nouvelle and Messrs. Ben and Martin Lieberman, who are amongst the controlling

shareholders of the Company, signed on 30 December 2010, a commitment not to compete

with the Company in the field of seamless products for a limited period of 5 years as of the

date of signing such non-competition letter of commitment, and all as detailed in the letter

of commitment (hereinafter: the “Letter of Commitment”). In the framework of the

Agreement it was agreed upon that Litef would join as a party to the Letter of Commitment

and it will remain in force as long as Nouvelle, Messrs. Ben and Martin Lieberman, and

Litef, each on its own, will be amongst the controlling shareholders of the Company.

The closing of the transaction has been set to a date no later than five business days after

the fulfillment of all the conditions precedent as specified in the Agreement, including:

a. An approval, in accordance with the provisions of the law, of the Company’s engaging

in the Agreement including an approval to allocate the shares in accordance to the

Agreement by the Company’s Audit Committee and Board of Directors (who have

granted their approval during their meeting on February 18, 2015), as well as by the

meeting of the Company’s shareholders, that is convened according to this report, by a

special majority pursuant to Section 275 of the Companies Law. It shall be noted that

for the purpose of accompanying the negotiations with the controlling shareholder, the

Company's Board has established a special and independent committee whose

members are the members of the Audit Committee of the Company, and it has

accompanied the negotiations with the controlling shareholder and approved the terms

of the Agreement on February 12, 2015.

b. The approval of the Stock Exchange regarding the registration for trading of the shares

to be allocated under the Agreement.

c. The Company's engagement with its financing banks, Bank Leumi Le-Israel Ltd.,

Bank Hapoalim Ltd. and Israel Discount Bank Ltd. (hereinafter: the "Banks") in an

agreement to amend the existing financing agreement of the Company (hereinafter: the

"Financing Agreement") regarding the following topics:

(1) Refinancing of the Company's long-term loans in the amount of sixteen million US

dollars into long term loans with a repayment term of 10 years, which will be repaid

in equal annual principal repayments.

(2) Increasing the Banks' short-term credit lines (a credit line of 9.75 million US

dollars) and increasing the agreed-upon amount of the factoring limits (a factoring

limit of 2.5 million US dollars), in an amount equal to 150% of the Investment

Amount (i.e. US 7.5 million dollars), when the ratio between the amount of the

increase of the credit line and the amount of increase in the factoring limits, and out

of the amount stated above, the amount of the immediate increase in the

aforementioned limits and the increase that will depend on the Company's sales

growth, will be subject to an agreement between the Company and Litef.

(3) Cancellation of the mechanisms for the early repayment of the long-term loans set

out in the Financing Agreement.

(4) The investments that will be carried out by the Company as of January 1, 2015,

shall not exceed, each year during the period of long-term loans, an amount equal to

the Investment Amount plus the free EBITDA (the annual EBITDA less payments

of principal and interest and financing costs for the Banks and tax payments) on an

accumulated basis, less the investments carried out by the Company since the

beginning of 2015 on an accumulated basis.

(5) No change in the financial covenants currently existing in the Financing Agreement

despite the increase in the equity resulting from the investment, except, as the

change may be required in the framework of increasing the credit lines limits as

specified in clause (2) above. Regarding the financial covenants currently existing

in the Financing Agreement with the Banks, see the Company's immediate report

dated March 27, 2014 (Reference No.: 2014-01-027357).

The Company is in discussions with the Banks in order to reach an agreement with

them which will allow the existence of all the conditions precedent described in the

previous clauses (1) - (5) however at this stage it has not yet been completed. If the

Company reaches an agreement with the Banks, it shall return and report on such

matter.

d. In the event that, for whatever reason, all of the aforementioned conditions precedent

will not be completed until April May 21, 2015, then the Agreement will be cancelled,

and neither of the parties to the Agreement shall have any complaint and/or claim of

any kind whatsoever, against the other.

The principals of the Additional Investment Agreement

As noted above, on April 2, 2015, the Company signed the Additional Investment

Agreement, the principals of which are detailed as follows:

1. At the closing date, the Additional Investors shall invest each a sum of US 175,000 dollars,

and in total a sum of US 525,000 dollars, against an allocation of 490,653 of the

Company's ordinary shares (163,551 ordinary shares to each of the Additional Investors),

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so that for each share the Additional Investors shall pay a sum of US 1.07 dollars. It shall

be noted that the price per each share is lower than its nominal value (NIS 10). Therefore,

in accordance with Section 304(a) of the Companies Law, the Company shall convert part

of its profits from premium on shares included in its equity as presented in the recent

financial statements of the Company, into share capital, in an amount equal to the


for it (US 1.07 dollars). The calculation of the conversion of 10 NIS into US dollar will be

carried out in accordance to the exchange rate of the US dollar, as listed at the time of the

payment of the consideration.

2. The date for closing the Additional Investment Agreement has been set to the date of

closing the transaction with Litef, and in any event no later than May 21, 2015 or to a

deferred date as it shall be agreed upon between the Company and Litef (subject to the fact

that the closing date shall be postponed to a date after August 31, 2015, then the Additional

Investors shall hold the right to terminate the Agreement), and all after the fulfillment of all

the conditions precedent, as detailed in the Agreement, amongst which are the following:

a. The Approval, in accordance to the provisions of any law, of the Private Offering,

including the approval of the allocation of the shares according to the Agreement and

the Additional Investment Agreement, of the Company's Audit Committee and Board

(that granted their approval on February 18, 2015 and April 1, 2015), as well as by the


special majority pursuant to Section 275 of the Companies Law.



b. The closing of the transaction according to the Agreement.

Name of the controlling shareholder who has a personal interest and the nature of

that interest

To the best knowledge of the Company, as at the date of this report, Nouvelle Group and

Mivtach Shamir Holdings Ltd. (hereinafter: "Mivtach Shamir"), are a party to a shareholders'

agreement under which the parties will use their power as shareholders in certain matters,

including the appointment of directors of the Company, in a manner according to which each

party obligates to support a specified number of candidates proposed by the other party to fill the

position of director of the Company (hereinafter: the "Shareholders Agreement").

As at March 2April 12, 2015, Mivtach Shamir and Nouvelle Group , jointly hold approximately

43.92% of the issued and paid up share capital of the Company and voting rights therein and

approximately 38.0938.59% of the issued and paid up share capital of the Company and the

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voting rights therein on a fully diluted basis3. For more details, see Clause 3 of Part A of this

immediate report.

Litef has a personal interest in the said engagement since it is a party to the Agreement.

Nouvelle has a personal interest in the said engagement since Litef and Nouvelle jointly hold

shares of the Company.

Mivtach Shamir has a personal interest in the aforementioned engagement since it is a party to

the shareholders agreement.Upon the execution of the allocation to the Nouvelle Group, in

accordance with the Agreement, Mivtach Shamir's holdings in the Company will be diluted and

it shall hold approximately 6.75% and the Shareholders Agreement described above, according

to its terms will be terminated and Mivtach Shamir will cease to be a controlling shareholder of

the Company. Currently, the Company views Mivtach Shamir as having a personal interest in

engaging in the Agreement. Nevertheless, due to the fact that, following the allocation according

to the private offering, Mivtach Shamir shall no longer be a controlling shareholder of the

Company as aforementioned, the Company examines the question of whether Mivtach Shamir

has a personal interest in engaging in the Agreement and the Company will formulate its position

regarding this matter until the date of the General Meeting whose convening is carried out

through in this report.

Name of the directors who may be considered as having a personal interest and the nature

of that interest

Director Barham Gelfand may have a personal interest due to his business connections with the

Nouvelle Group.

Director Guy Shamir, the son of Meir Shamir who is the controlling shareholder of Mivtach

Shamir, may have a personal interest due to the personal interest Mivtach Shamir might have

(regarding this matter see the aforementioned paragraph entitled “name of the controlling

shareholder who has a personal interest and the nature of that interest”).

Director Avi Ziegelman has asked to handle the approval of the matter of engaging in the

Agreement, as if he has a personal interest in the engagement.

Conditions of the securities offered, their quantity and the percentage they constitute of the

issued and paid up share capital of the Company

As part of the private offering Litef the Offerees is are offered, 4,672,8975,163,550 Ordinary

Shares of the Company that will be allocated on the closing date (hereinafter: the "Allocated

Shares"). The Allocated Shares will be equal in their rights to the existing ordinary shares in the

issued and paid up capital of the Company. The Allocated Shares shall constitute, immediately

after the allocation, approximately 41.0643.5% of the issued and paid up share capital of the

Company and voting rights therein.

The consideration for the offered securities

3 See Footnote 2.

The consideration for the Allocated Shares allocated to Litef the Offerees amounts to US 5 5,525

million thousand dollars (US 1.07 dollars per share), and it will be paid in cash against an

allocation of 4,672,8975,163,550 Ordinary Shares of the Company on the closing date.

The closing price of one share in dollars on the Stock Exchange as at March 2, 2015, was US

1.14 dollars compared to the price per share in the private offering which is US 1.07 dollars, a

price lower by approximately 6.1% compared to the price on the Stock Exchange as

aforementioned.

Convening of an Extraordinary General Meeting of the shareholders of the Company

A notice is hereby given concerning the convening of an Extraordinary General Meeting of the

shareholders of the Company, which will be held on ThursdayMonday, April 16May 18, 2015, at

1109:00 a.m. Israel time) at the offices of Zahavi, Blau & Co., Law Offices & Notary, located at

96 Yigal Alon St., Tel Aviv. For inquiries call: 04-9900881.

The topic on the General Meeting’s agenda:

Approval of engaging in the Agreement.

The required majority

The required majority at the General Meeting for the purpose of approving the resolution on the

agenda, is an ordinary majority which is greater than half of the shareholders’ votes attending the

vote, except for abstaining votes, and as long as one of the following is fulfilled: (a) counting the

votes of the majority at the General Meeting shall include at least a majority of all the votes of

the shareholders who do not have a personal interest in the approval of the transaction, who are

participating in the vote; in counting all of the votes of the aforesaid shareholders, abstaining

votes would not be taken into consideration; (b) The total opposing votes from among the

shareholders referred to in sub-clause (a) above, shall not be greater than two percent of the total

voting rights in the Company.

Prior to the vote regarding the resolutions on the agenda, every shareholder who wishes to

participate in the vote shall be required to give notice to the Company whether or not he has a

personal interest in the resolution as aforesaid, or if not. If the shareholder did not give notice as

aforesaid, he shall not vote in regards with the aforesaid resolution and his vote shall not be

counted.

The record date for the purpose of determining the eligibility of the shareholders to participate

and vote at the General Meeting

The record date for determining the eligibility of a shareholder of the Company to participate and

vote at the General Meeting, is the end of trade day on MondayThursday, March April 16, 2015

(hereinafter: the “Record Date”).

In accordance with the Companies Regulations (Proof of Ownership of a Share for the purpose

of Voting at a General Meeting) 2000, (hereinafter: “Proof of Ownership Regulations”), a

shareholder in whose favor a share is registered with a member of the Tel Aviv Stock Exchange

Ltd., and that share is included amongst the shares of the Company registered in the Register of

Shareholders in the name of a nominee company and he wishes to vote at the General Meeting,

shall submit to the Company a confirmation from the said member of the Stock Exchange with

whom his title to the share is registered, with respect to his ownership of the share, on the Record

Date, in accordance with Form 1 in the Addendum to the Proof of Ownership Regulations.

If you are an owner of an “American Share”, meaning: a Company’s share that is not an “Israeli

Share”, as defined as follows, in order to vote at the Meeting, please see the voting instructions

detailed on the voting card which can be found on the Company’s internet site whose address is:

www.tefron.com.

“An Israeli Share”- A Company’s share that fulfills one of the following: (a) The share is

registered in the Company’s Israeli shareholder register (for the purpose of clarity, a Company’s

share which is registered in the Company’s American shareholder register, that is managed by

the American Stock Transfer & Trust Company, is not “an Israeli Share”); or (b) the share is

registered with a member of the Stock Exchange ( of Tel Aviv Stock Exchange Ltd.) in the

shareholder’s favor, and the aforesaid share is included in the shares registered on the

Company’s Israeli shareholder register in the name of the Registration Company of Bank

Hapoalim Ltd.

The quorum for opening the deliberation at the General Meeting is two (2) shareholders or more

(whose shares have been fully paid) attending the Meeting in person or via a proxy or via a

voting card, per item, and holding at least twenty five (25%) of the voting rights in the Company.

If half an hour has passed from the time that was scheduled for the meeting and a quorum hasn’t

been established, the meeting shall be deferred for the exact same day of the week and hour in

the forthcoming week, or to a different day, hour and place as determined by the chairman of the

meeting, with the agreement of the majority of the shareholders with voting rights attending

themselves or via a proxy or via a voting card, and voting in the matter of the date of the

postponed meeting. The quorum in the postponed meeting shall be two (2) shareholders

attending the meeting in person or via a proxy or via a voting card, per item, and holding at least

twenty five (25%) of the voting rights in the Company.

The shareholders may vote regarding the resolution on the meeting’s agenda, in person or via a

proxy. The proxy appointment statement form must be carried out according to the Company’s

regulations.

The appointment statement must be delivered to the chairman of the meeting or to the

Company’s offices (to the CFO of the Company, Mr. Eliezer Parnafes), so that it would arrive to

the Company’s offices at least two hours prior to the convening of the meeting. Thec of the

meeting shall have the authority to receive appointment statements which were delivered even

after the aforementioned appointed time and till the beginning of the meeting.

http://www.tefron.com/

A shareholder is entitled to vote regarding the resolution on the meeting’s agenda, through a

voting card. For this purpose, the vote of a shareholder who voted via a voting card shall be

considered as if the shareholder was present and participated in the meeting. Voting via a voting

card, in regards to a shareholder seeking to vote via a voting card in lieu of participating in the

meeting in person or by a proxy, shall be carried out using the second part of the voting card

attached to this report. The voting card and the documents required to be attached to it as detailed

in the voting card, shall be delivered to the Company’s offices no later than 72 hours prior to the

time appointed for the convening of the meeting. For this purpose, the date of submittal is the

date on which the voting card and the documents required to be attached to it, reached the

Company’s offices.

A shareholder participating in the vote in regards with the resolution on the meeting’s agenda,

shall notify the Company prior to his voting – and if the voting is via a voting card – he shall

make his markings on the second part of the voting card, on the designated section, whether he is

considered as a controlling shareholder of the Company and/or having personal interest in

approving the resolution, as detailed above, or if not. If the aforementioned shareholder failed to

notify as aforesaid, his vote shall not be counted.

The addresses of the websites of the Securities Authority and the Tel Aviv Stock Exchange Ltd.

where one can find the voting card and the position statements, as their meaning in Section 88 of

the Companies Law, are: the ISA distribution site http://www.magna.isa.gov.il (hereinafter the

“Distribution Site”); and the website of the Tel Aviv Stock Exchange Ltd. http://maya.tase.il.

The shareholders are entitled to approach the Company directly and receive from it the voting

card and the position statements.

A Stock Exchange member shall sent via email, at no cost, a link to the voting card and position

statements on the Distribution Site, to every shareholder who is an unlisted shareholder and

whose shares are listed with the aforesaid Stock Exchange member, unless the shareholder has

notified the Stock Exchange member that he is not interested in receiving such a link, as long as

the notification was given in regards of a specific securities account and on a date prior to the

Record Date or that he is interested in receiving voting cards in the mail, for a certain cost.

A shareholder whose shares are listed with a Stock Exchange member is entitled to receive the

proof of ownership from the Stock Exchange member, with whom his stocks are listed, at the

Stock Exchange member’s branch or by mail to his mailing address, paying only the postage

fees, if he has asked for it. A request in this matter would be given in advance for a specific

securities account.

The last date for delivering the position statements is no later than 10 days after the Record Date,

meaning until ThursdaySunday, March 26April 26, 2015.

The Company does not permit voting via the internet.

Reviewing the documents

http://www.magna.isa.gov.il/

http://maya.tase.il/

A copy of this immediate report together with the addendums thereto shall be made available for

review at the Company's offices Sunday to Thursday during normal working hours, after prior

arrangement by telephone: 04-9900818, and this until the date of convening the meeting to

approve the resolution on the agenda as well as on the Securities Authority website at the

address: www.magna.isa.gov.il

Date: March 4April 2, 2015


TEFRON LTD

(The “Company”)

March 4April 2, 2015

To: To:

Securities Authority Tel-Aviv Stock Exchange Ltd.

www.isa.gov.il www.tase.co.il

Dear Sirs,

Re: An Amended Immediate Report in accordance with the Securities Regulations (a

Transaction between a Company and a Controlling Shareholder Therein), 2001, and in

accordance with the Securities Regulations (Private Offering of Securities in a Listed

Company), 2000, concerning the convening of an Extraordinary General Meeting of the

shareholders of the Company

The Company hereby submits an immediate report in accordance with Regulation 4 of the

Securities Law (Private Offering of Securities in a Listed Company), 2000, (hereinafter:

“Private Offering Regulations”) and in accordance with Regulation 3 of the Securities Law

(Transaction between a Company and a Controlling Shareholder Therein), 2001 (hereinafter:

“Transaction with a Controlling Shareholder Regulations”), regarding a transaction of the

Company with a controlling shareholder thereof, Litef Holdings Inc., a private company

incorporated in Canada (hereinafter: “Litef"), and regarding an extraordinary private offering of

4,672,897 ordinary shares of the Company of NIS 10 par value each (hereinafter: "Ordinary

Shares") to Litef and regarding a private offering of 490,653 ordinary shares to additional

investors as detailed as follows.

According to the aforesaid, the Company announces the convening of an Extraordinary General

Meeting of the Company, which will be held on ThursdayMonday, April 16May 18, 2015, at

1109:00 am at the offices of Zahavi, Blau & Co., Advocates, 96 Yigal Alon St., Tel Aviv

1. Preface

On February 17, 2015, the Company signed an agreement with Litef, according to which

Litef will invest a total of US 5 million dollars in the Company against an extraordinary

private offering of 4,672,897 Ordinary Shares (hereinafter: the "Agreement" or the

“Transaction” or the “Private Offering”). The Company reported on the signing of the

Agreement in an immediate report, on February 18, 2015, Reference No.: 2015-01-033661.

On February 18, 2015, the Company's Board of Directors decided, after obtaining the

approval of the Audit Committee of the Company on the same day, to approve the

engagement of the Company in an agreement, which includes a transaction between the

Company and Litef as well as the allocation of shares to Litef, all as set forth in Clause 2 as

follows. On April 2, 2015, and pursuant to receiving the approval of the Company's Audit

Committee and Board of Directors following their meetings dated April 1, 2015, the

Company signed an agreement with Mazouz and Weisselberger Genesis Investment, Limited

Partnership (hereinafter: "Genesis"), Mr. Erez Rozenbuch and Mr. Tomer Hefetz (hereinafter:

the "Additional Investors"), according to which they shall invest in the Company a sum of

US 525,000 dollars (in equal parts), against a private offering of 490,653 ordinary shares

(hereinafter: the "Additional Investment Agreement"), furthermore the Company signed on

an amendment to the Agreement resulting from the Additional Investment Agreement

(hereinafter: the Agreement and the Additional Investment Agreement shall be called

together" the "Private Offering")

The Transaction Private Offering is brought for the approval of the General Meeting of the

shareholders of the Company, for the reasons set forth below:

a. The Transaction Private Offering is a transaction concerning which includes an

extraordinary private offering between the Company andto Litef, who is among the

controlling shareholders of the Company, and therefore it is presented for approval as an

extraordinary transaction with a controlling shareholder in accordance with Section 270(4)

and 275 of the Companies Law 1999 (hereinafter: the "Companies Law ")4.

b. As at the date of this report, Litef and Nouvelle Intimes Seamless Inc., a rivate company

incorporated in Canada (hereinafter: "Nouvelle") (Litef and Nouvelle shall be called

hereinafter: "Nouvelle Group") jointly hold approximately 32.47% of the issued and paid

up share capital of the Company and the voting rights therein and approximately


therein on a fully diluted basis5. In the framework of the Transaction, 4,672,897 Ordinary

Shares of the Company shall be allocated to Litef, so that upon the closing of the

Transaction, the Nouvelle Group shall jointly hold approximately 60.257.71% of the issued

and paid up share capital of the Company and the voting rights therein and approximately


4 For details regarding the controlling shareholders of the Company, as at this date, see Clause 3 as follows.

5 Calculation of the rate of holdings on a fully diluted basis was made as at March April 2, 2015, excluding 99,740

ordinary shares of the Company held by a subsidiary of the Company and assuming the full exercise of the

warrants (non-negotiable) to employees, consultants and officers of the Company as well as rights to shares,

exercisable for 235135,000 ordinary shares of the Company (after taking into account adjusting the amount to

holders of option warrants due to the rights issue carried out by the Company in March 2010).


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therein on a fully diluted basis. Since as at the date of this report, there is no other person

who holds more than 45% of the issued and paid up share capital of the Company

(regarding this matter, see also Clause 3 as follows), the Transaction is brought to the

approval of the meeting of the shareholders of the Company also in accordance with

Section 328(b)(1) of the Companies Law, as a private offering whose aim is to grant the

shareholders of the Nouvelle Group more than 45% of the voting rights in the Company.

2. The principals of the Agreement and the Additional Investment Agreement:

The principals of the Agreement:

As aforementioned, on February 17, 2015, the Company signed the Agreement. The

principles of the Agreement are detailed as follows:

2.1 On the closing date (as this term is defined as follows) Litef will invest in the Company a

total of US 5 million dollars (hereinafter: the "Investment Amount"), against an

allocation of 4,672,897 Ordinary Shares of the Company, so Litef shall pay for each share

a price of US 1.07 dollars. It is noted that the payment for each share is lower than its

nominal value (NIS 10). Therefore, in accordance with Section 304(a) of the Companies

Law, the Company shall convert part of its profits from premium on shares included in its

equity as presented in the recent financial statements of the Company, into share capital,

in an amount equal to the difference between the par value of each share issued (NIS 10),

and the amount to be paid for it (US 1.07 dollars). The calculation of the conversion of 10

NIS into US dollar will be carried out in accordance to the exchange rate of the US dollar,

as listed at the time of the payment of the consideration.

2.2 Nouvelle and Messrs. Ben and Martin Lieberman, who are amongst the controlling

shareholders of the Company, signed on 30 December 2010, a commitment not to

compete with the Company in the field of seamless products for a limited period of 5

years as of the date of signing such non-competition letter of commitment, and all as

detailed in the letter of commitment (hereinafter: the “Letter of Commitment). In the

framework of the Agreement it was agreed upon that Litef would join as a party to the

Letter of Commitment and it will remain in force as long as Nouvelle, Messrs. Ben and

Martin Lieberman, and Litef, each on its own, will be amongst the controlling

shareholders of the Company.

2.3 The closing of the Transaction has been set to a date no later than five business days after

the fulfillment of all the conditions precedent (hereinafter: the “Closing Date”) as

specified in the Agreement, including:

a. An approval, in accordance with the provisions of the law, of the Company’s

engagement in the Agreement including an approval to allocate the shares in

accordance to the Agreement by the Company’s Audit Committee and Board of

Directors (who have granted their approval during their meeting on February 18,

2015), as well as by the meeting of the Company’s shareholders, that is convened

according to this report, by a special majority pursuant to Section 275 of the

Companies Law. It shall be noted that for the purpose of accompanying the

negotiations with the controlling shareholder, the Company's Board has established a

special and independent committee whose members are the members of the Audit

Committee of the Company, and it has accompanied the negotiations with the

controlling shareholder and approved the conditions of the Agreement on February

12, 2015.

b. The approval of the Stock Exchange regarding the registration for trading of the

shares to be allocated under the Agreement.

c. The Company's engagement with its financing banks, Bank Leumi Le-Israel Ltd.,

Bank Hapoalim Ltd. and Israel Discount Bank Ltd. (hereinafter: the "Banks") in an

agreement to amend the existing financing agreement of the Company (hereinafter:

the "Financing Agreement") regarding the following topics:

(1) Refinancing of the Company's long-term loans in the amount of sixteen million US

dollars into long term loans with a repayment term of 10 years, which will be repaid

in equal annual principal repayments.

(2) Increasing the Banks' short-term credit lines (a credit line of 9.75 million US dollars)

and increasing the agreed-upon amount of the factoring limits (a factoring limit of

2.5 million US dollars), in an amount equal to 150% of the Investment Amount (i.e.

US 7.5 million dollars), when the ratio between the amount of the increase of the

credit line and the amount of increase in the factoring limits, and out of the amount

stated above, the amount of the immediate increase in the aforementioned limits and

the increase that will depend on the Company's sales growth, will be subject to an

agreement between the Company and Litef.

(3) Cancellation of the mechanisms for the early repayment of the long-term loans set

out in the Financing Agreement.

(4) The investments that will be carried out by the Company as of January 1, 2015, shall

not exceed, each year during the period of long-term loans, an amount equal to the

Investment Amount plus the free EBITDA (the annual EBITDA less payments of

principal and interest and financing costs for the Banks and tax payments) on an

accumulated basis, less the investments carried out by the Company since the

beginning of 2015 on an accumulated basis.

(5) No change in the financial covenants currently existing in the Financing Agreement

despite the increase in the equity resulting from the investment, except, as the change

may be required in the framework of increasing the credit lines’ limits as specified in

clause (2) above. Regarding the financial covenants currently existing in the

Financing Agreement with the Banks, see the Company's immediate report dated

March 27, 2014 (Reference No. 2014-01-027357).

The Company is in discussions with the Banks in order to reach an agreement with them

which will allow the existence of all the conditions precedent described in the previous

clauses (1) - (5) however at this stage it has not yet been completed. If the Company

reaches an agreement with the Banks, it shall return and report on such matter.

2.4 In the event that, for whatever reason, all of the aforementioned conditions precedent will

not be completed until April May 21, 2015, then the Agreement will be cancelled, and

neither of the parties to the Agreement shall have any complaint and/or claim of any kind

whatsoever, against the other.

The principals of the Additional Investment Agreement

2.5 As noted above, on April 2, 2015, the Company signed the Additional Investment

Agreement, the principals of which are detailed as follows:

2.6 At the closing date, the Additional Investors shall invest each a sum of US 175,000

dollars, and in total a sum of US 525,000 dollars, against an allocation of 490,653 of the

Company's ordinary shares (163,551 ordinary shares to each of the Additional Investors),

so that for each share the Additional Investors shall pay a sum of US 1.07 dollars. It shall

be noted that the price per each share is lower than its nominal value (NIS 10). Therefore,

in accordance with Section 304(a) of the Companies Law, the Company shall convert part

of its profits from premium on shares included in its equity as presented in the recent

financial statements of the Company, into share capital, in an amount equal to the


for it (US 1.07 dollars). The calculation of the conversion of 10 NIS into US dollar will

be carried out in accordance to the exchange rate of the US dollar, as listed at the time of

the payment of the consideration.

2.7 The date for closing the Additional Investment Agreement has been set to the date of

closing the transaction with Litef, and in any event no later than May 21, 2015 or to a

deferred date as it shall be agreed upon between the Company and Litef (subject to the

fact that the closing date shall be postponed to a date after August 31 2015, then the

Additional Investors shall hold the right to terminate the Agreement), and all after the

fulfillment of all the conditions precedent, as detailed in the Agreement, amongst which

are:

a. The Approval, in accordance to the provisions of any law, of the Private Offering,

including the approval of the allocation of the shares according to the Agreement and


Formatted: Indent: Before: 0.2"

the Additional Investment Agreement, of the Company's Audit Committee and Board

(that granted their approval on February 18, 2015 and April 1, 2015), as well as by the


special majority pursuant to Section 275 of the Companies Law.



b. The closing of the transaction according to the Agreement.

3. The Company’s controlling shareholders and the nature of their personal interest

To the best knowledge of the Company Nouvelle Group and Mivtach Shamir Holdings Ltd.

(hereinafter: "Mivtach Shamir"), are a party to a shareholders' agreement under which the

parties will use their power as shareholders in certain matters, including the appointment of

directors of the Company, in a manner according to which each party obligates to support a

specified number of candidates proposed by the other party to fill the position of director of

the Company (hereinafter: the "Shareholders Agreement"). Therefore, Mivtach Shamir and

Nouvelle Group are considered as jointly holding approximately 43.92% of the issued and

paid up share capital of the Company and voting rights therein and approximately 38.09% of

the issued and paid up share capital of the Company and the voting rights therein on a fully

diluted basis. As detailed as follows:

Name of Shareholder Quantity of

Shares

Percentage the

Shares Constitute

of the Capital and

Voting Rights of the

Company6

Percentage the Shares

Constitute of the

Capital and Voting

Rights of the Company

on a Fully Diluted

Basis7

Litef Holdings Inc.8 1,577,619 23.52 20.4020.67

Intimes Nouvelle Seamless

Inc.9

600,000 8.95 7.767.86

6 Calculated excluding 99,740 ordinary shares of the Company which are held by a subsidiary of the Company, and

which were acquired by the subsidiary prior to the entering into effect of the Israeli Companies Law. In practice,

the Company’s subsidiary has undertaken not to exercise the voting rights and its rights of the share capital with

respect to such Company’s shares, as aforementioned. Accordingly, the above calculation was carried out while

excluding the holdings of the subsidiary of both the Company’s share capital and the voting rights. 7 See Footnote 5.

8 To the best knowledge of the Company, Litef Holdings Inc. is a private company incorporated in Canada and

controlled by Messrs. Martin Lieberman and Ben Lieberman (amongst the shareholders of Nouvelle, see Footnote

9, as follows), in equal parts.


Name of Shareholder Quantity of

Shares

Percentage the

Shares Constitute

of the Capital and

Voting Rights of the

Company

Percentage the Shares

Constitute of the

Capital and Voting

Rights of the Company

on a Fully Diluted

Basis

Mivtach Shamir Holdings

Ltd.10

768,171 11.45 9.9310.06

Total: 2,945,790 43.92 38.0938.59

Litef has a personal interest in the said engagement since it is a party to the Agreement.

Nouvelle has a personal interest in the said engagement since Litef and Nouvelle jointly hold

shares of the Company.

Mivtach Shamir has a personal interest in the aforementioned engagement since it a party to

the shareholders agreement.

The Additional Investors are not a party to the controlling shareholders agreement and they do

not hold and/or shall hold shares jointly and/or jointly with any of the controlling

shareholders. Their personal interest in the engagement of each of the Additional Investors is

solely due to the fact they are offerees in a private offering.

9 To the best knowledge of the Company, Nouvelle is a private company incorporated in Canada and controlled by

Lamour Hosiery Manufacturing Inc. (hereinafter: “Lamour). Lamour’s shares are held as follows: 75% held by

Canada Inc. 153367 which is held through the family trust of the late Mr. Aharon Lieberman. The beneficiaries of

the trust fund are the late Mr. Aharon Lieberman’s children, Messrs. Ben, Martin, Helen and Lauren Lieberman;

25% held by Samlieb Holdings Inc. which is held through the late Sam Lieberman trust fund (the late Aharon

Lieberman’s brother). The beneficiaries of the trust fund are the late Sam Lieberman’s children, Messrs. Michael,

Larry, David and Paul Lieberman.

10

According to the report of the holdings of interested parties in Mivtach Shamir, dated February 5, 2015 (Reference

No. 2015-01-025495): Mr. Meir Shamir holds approximately 35.8% of the voting rights and the rights in the share

capital of Mivtach Shamir Holdings Ltd. (approximately 35.8% on a fully diluted basis), Leon Recanati holds

approximately 8.37% of the voting rights and the rights in the company's share capital (approximately 8.37% on a

fully diluted basis), Yecheskel Dovrat holds approximately 0.02% of the voting rights and the share capital rights

(approximately 0.02% on a fully diluted basis), the Clal Group holds approximately 8.63% of the voting rights and

the share capital rights (approximately 8.63% on a fully diluted basis), Ashtrom Properties Ltd. holds

approximately 8.77% of the voting rights and the share capital rights (approximately 8.77% on a fully diluted

basis), the Menorah Group holds approximately 7.26% of the voting rights and the share capital rights

(approximately 7.26% on a fully diluted basis), the Excellence Group holds approximately 2.86% of the voting

rights and the share capital rights (approximately 2.86% on a fully diluted basis), the Phoenix Group holds

approximately 2.68% of the voting rights and the share capital rights (approximately 2.68% on a fully diluted

basis), and Epsilon holds approximately 0.04% of the voting rights and the share capital rights (approximately

0.04% on a fully diluted basis). According to the Mivtach Shamir’s report of the holdings of interested parties

therein, Mivtach Shamir is controlled by Mr. Meir Shamir (35.8%).

Formatted: Space After: 6 pt

Formatted: Space Before: 6 pt

Upon the execution of the allocation to the Nouvelle Group, in accordance with the

Agreement, Mivtach Shamir's holdings in the Company will be diluted and it shall hold

approximately 6.75% of the Company and the Shareholders Agreement described above,

according to its conditions will be terminated and Mivtach Shamir will cease to be a

controlling shareholder of the Company. Currently, the Company views Mivtach Shamir as

having a personal interest in engaging in the Agreement. Nevertheless, due to the fact that,

following the allocation according to the Private Offering Mivtach Shamir shall no longer be

a controlling shareholder of the Company as aforementioned, the Company examines the

question of whether Mivtach Shamir has a personal interest in engaging in the Agreement and

the Company will formulate its position regarding this matter until the date of the General

Meeting whose convening is carried out through in this report.

4. Names of the offerees and their being an interested party

The Offeree Litef is Litef, a private company incorporated in Canada who is controlled by

Messrs. Martin and Ben Lieberman. Litef is an interested party since it is a party to the

Agreement and since it continues to be a part of Nouvelle Group, the controlling shareholders

of the Company, who after the closing of the Transaction shall hold together approximately

60.257.71% of the issued and paid up share capital of the Company and voting rights therein

and approximately 55.2253.53% of the issued and paid up share capital of the Company and

voting rights on a fully diluted basis. For details regarding the holdings of Litef in particular,

and the Nouvelle Group in general, in the issued and paid up share capital of the Company, as

at this date, see Clause 3 above.

The Offeree Genesis is a limited partnership registered in Israel. The general partner therein is

Mazouz Weisselberger Investments Ltd. (hereinafter: the "General Partner"). The

shareholders in the General Partner are Messrs. Weisselberger Ofir and Mazouz Ariel. After

the allocation of the offered shares and on a fully diluted basis, Genesis shall not become an

interested party of the Company as defined in the regulations of a private offering, since as a

result of the execution of the allocation as aforementioned, Genesis shall not become a

substantial shareholder as this term is defined in Sections 1 and 270(5) of the Companies

Law.

The Offeree, Mr. Erez Rozenbuch is a private person, holding an Israeli citizenship. After the

allocation of the offered shares and on a fully diluted basis, Mr. Rozenbuch shall not become

an interested party of the Company as defined in the regulations of a private offering, since as

a result of the execution of the allocation as aforementioned, he shall not become a substantial

shareholder as this term is defined in Sections 1 and 270(5) of the Companies Law.

The Offeree, Mr. Tomer Hefetz is a private person, holding an Israeli citizenship. After the

allocation of the offered shares and on a fully diluted basis, Mr. Hefetz shall not become an

interested party of the Company as defined in the regulations of a private offering, since as a


result of the execution of the allocation as aforementioned, he shall not become a substantial

shareholder as this term is defined in Sections 1 and 270(5) of the Companies Law.

5. Terms of the securities offered, their quantity and the percentage they will constitute of

the voting rights and the issued and paid up share capital of the Company after the

allocation

As part of the Private Offering Litef and the Additional Investors is are offered jointly,

4,672,8975,163,550 Ordinary Shares of the Company that will be allocated on the Closing

Date (hereinafter: the "Allocated Shares"). The Allocated Shares will be equal in their rights,

in every respect, to the existing Ordinary Shares in the issued and paid up share capital of the

Company immediately upon their allocation (for details regarding the rights that accompany

the Company’s shares see Chapter 4 of the Company’s shelf prospectus dated May 28, 2012

(Reference No. 2012-01-137499)).

The Allocated Shares shall constitute, immediately after their allocation, approximately

41.0643.5% of the issued and paid up share capital of the Company and voting rights therein

and approximately 37.6740.35% of the issued and paid up share capital of the Company and

voting rights therein on a fully diluted basis11

.

The Allocated Shares shall be registered in the name of a nominee company.

6. The Company's issued share capital, the quantity and percentage of the holdings of the

Offerees, the interested parties in the Company and the total holdings of the other

shareholders before and after the Private Offering and on a fully diluted basis

6.1 As at March 2April 1, 2015, the Company's registered share capital includes 20,000,000

ordinary shares of NIS 10 par value each and the issued share capital of the Company

includes 6,806,47612

ordinary shares of NIS 10 par value each.

6.2 As follows is a detail account of the quantity and percentage of holdings of the Offerees,

the interested parties in the Company and the total holdings of the other shareholders in

the issued and paid up shared capital of the Company and voting rights therein, as at March

April 2, 2015, immediately following the Private Offering and immediately following the

Private Offering on a fully diluted basis, as detailed as follows:

11

See Footnote 5.

12 Out of the aforementioned shares, 99,740 shares are shares that are held by a subsidiary (indirectly), as detailed in

Footnote 6 above.

Name of the

shareholder

As at March April 2, 2015

(before the allocation) After the allocation

After the allocation on a fully

diluted basis**

Type of

securities and

quantity

% of share

capital

and voting

rights*

Type of

securities and

quantity

% of share

capital and

voting rights*

Number of

ordinary

shares

% of share

capital and

voting rights

Litef Holdings

Inc.13

1,577,619

ordinary shares 23.52%

6,250,516

ordinary shares 54.93%52.66% 6,250,516 50.38%48.85%

Mazouz and

Weisselberger

Genesis

Investment,

Limited

Partnership14

69,000


232,551


232,551

1.82%

Erez Rozenbuch15

113,000


276,551

ordinary shares 2.33% 276,551 2.16%

Tomer Hefetz 97,343


260,834


260,834

2.04%

Intimes Nouvelle

Seamless Inc.16

600,000


600,000

ordinary shares 5.27%5.05% 600,000 4.84%4.69%

Mivtach Shamir

Holdings Ltd.17

768,171


768,171

ordinary shares 6.75%5.47% 768,171 6.19%6.0%

Rimon Investment

Master Fund LP18

458,752


458,752

ordinary shares 4.03%3.86% 458,752 3.7%3.58%

Tefron Holdings

(98) Ltd.19

99,740

ordinary shares 0%

99,740

ordinary shares

0% 99,740 0%

Arnon Tieberg20

47,605

options 0%

47,605

options 0% 47,605 0.38%0.37%

13

See Footnote 8. 14

See Section 4.

15 113,000 ordinary shares of the Company are held through Erez Rozenbuch Advocates, a company wholly-owned

by the offeree, Mr. Erez Rozenbuch

16 See Footnote 9.

17 See Footnote 10.

18 To the best knowledge of the Company the interested parties in Rimon Investment Master Fund LP are as follows:

Zvi Limon, is the managing partner in the management company that manages this partnership, Rimon

Management Z.T. (2005) Ltd. (Company I.D. 513738831) and holds 33% of the voting rights; Dan Tocatly owns

33% of the voting rights, and Ziv Gil owns 33% of the voting rights in the company.

19A private company, wholly-owned (indirectly) by the Company, holds 99,740 ordinary shares of the Company,

which were purchased by the subsidiary (indirectly) prior to the entering into effect of the Israeli Companies Law

– 1999. In practice, the Company’s subsidiary (indirectly) has undertaken not to exercise the voting rights or its

rights in the share capital with respect to such shares, as aforementioned. Accordingly, the calculation of the rates

of the holdings in this report was carried out while excluding the holdings of the subsidiary (indirectly) both in

regards with the Company’s share capital and voting rights therein.

20 The chairman of the Company’s Board of Directors.

Formatted Table

Formatted: Font: Times New Roman

Formatted: Font: Times New Roman

Gil Shimon21

150,000

options 0%

150,000

options 0% 150,000

22 1.21%1.17%

* See Footnote 6 above.

** See Footnote 5 above.

7. The consideration for the offered securities

The consideration for the Allocated Shares allocated to Litef and the Additional Investors

amounts to US 5 5,525 million thousand dollars, and it will be paid in cash on the Closing

Date, against an allocation of 4,672,8975,163,550 Ordinary Shares of the Company (each

share shall be allocated for US 1.07 dollars per share).

8. The manner of determining the consideration

The consideration in the Agreement was determined in negotiations between the Company

and Litef, in the framework of the negotiations between the management of the Company

(accompanied by the special committee of the Board of Directors that was established for this

purpose) and Litef, it was agreed upon that the share price to be determined shall be the

higher of the following averages, as at the date of signing the Agreement: (1) the average

share price of the Company’s share in US dollar on the Stock Exchange (the share price in US

dollars is also listed on the Stock Exchange and is determined by translating the share price in

NIS into US dollar, in accordance with the exchange rate of the dollar) during the six months

preceding the date of the Agreement, (2) the average share price of the Company’s share in

US dollar on the Stock Exchange during the three months preceding the date of signing the

Agreement (3) the average share price of the Company’s share in US dollar on the Stock

Exchange during the 30 trading days preceding the date of signing the Agreement. The

reference to the share price in US dollars is determined due to the fact that the Company's

financial statements are presented in US dollars.

Accordingly, on the date of signing the Agreement the aforementioned averages were

examined (respectively: US 0.94 dollars, US 1.01 dollars and US 1.07 dollars) and it was

determined that the highest average of the three shall constitute the consideration to be paid

for each share allocated to Litef, i.e. 1.07 US dollars. The consideration in the Additional

Investment Agreement is identical to the consideration for Litef's shares.

9. Personal interest in the consideration

Regarding the personal interest of Litef, Nouvelle and Mivtach Shamir - see Clause 3 above.

21

The Company’s CEO.

22 Under the theoretical assumption of exercising each option into one ordinary share of the Company, while taking

into account that the shares to be issued in the exercise of the options will reflect only the value of the benefit

(CashLess).

Director Barham Gelfand may have a personal interest because of his business connections

with the Nouvelle Group.

Director Guy Shamir, son of Mr. Meir Shamir, the controlling shareholder of Mivtach Shamir,

may have a personal interest due to the personal interest Mivtach Shamir may have (see

Clause 3 above).

Director Avi Zigelman has asked to handle the approval of the matter of engaging in the

Agreement, as if he has a personal interest in the engagement.

10. Details regarding the average share price

The average share price of the Company’s share on the Tel Aviv Stock Exchange during the

six months preceding the date of the publication of the report is US 0.94 dollars. The closing

price of the Company’s share in US dollar on the Stock Exchange on February 17, 2015

(immediately before the date of signing the Agreement) was US 1.32 dollars. The closing

price of the Company’s share in US dollar on the Stock Exchange on February 18, 2015

(immediately before the Board’s decision regarding the approval of the Agreement) was US

1.31 dollars. The closing price of the Company’s share in US dollar on the Stock Exchange on

March 2, 2015 (immediately before the publication of this report) was US 1.14 dollars, in

comparison to the share price in the Private Offering which is US 1.07 dollars, which is lower

in 6.1% compared to the price on the Stock Exchange, as aforesaid.

11. The goals of the consideration

The Company will use the consideration it will receive against the allocation of shares, in

accordance with the decisions of the Company’s Board of directors, as they will be made

from time to time.

12. The approvals and meeting the conditions, required to execute the allocation pursuant

to the Private Offering

The approvals and meeting the conditions, required to execute the allocation of shares

pursuant to the Private Offering.

a. The approval of the Tel Aviv Stock Exchange regarding the registration for trading of the

shares allocated pursuant to the Private Offering.

b. The approval of the Company’s Audit Committee that was granted at its meeting dated

February 18, 2015 and April 1, 2015.

c. The approval of the Company’s Board of Directors that was granted at its meeting dated

February 18, 2015 and April 1, 2015.

d. The approval of the General Meeting of the shareholders of the Company which is

scheduled to convene for this purpose on April 16May 18, 2015, as detailed in this report.

e. Amending the Company's Financing Agreement, as detailed in Sub-clause 2.3(c) above.

The Company is in discussions with the Banks in order to reach an agreement with them

which will allow the fulfillment of all of the aforesaid in the previous Sub-clause 2.3(c)

above; however at this stage it has not yet been completed. If the Company reaches an

agreement with the Banks, it shall return and report on such matter.

Subject to receiving all the approvals and the fulfillment of all the aforementioned conditions

until April May 21, 2015, the shares will be allocated pursuant to the Private Offering, within

5 business days of the date of receiving all the approvals and the fulfillment of all of the

aforementioned conditions.

It is further noted that for the purpose of accompanying the negotiations with Litef, the

Company’s Board has established a special and independent committee whose members are

the members of the Audit Committee of the Company, and it has accompanied the

negotiations with Litef and approved the conditions of the Agreement on February 12, 2015

(hereinafter: the “Special Committee”).

13. Details of agreements between Litef and other shareholders of the Company

See Clause 3 above.

14. Details of similar transactions between the Company and the controlling shareholders

that have been signed during the past two years or that are still in effect

On December 29, 2010, the Company’s shareholders meeting approved the engagement of the

Company in a number of agreements with the Nouvelle Group and other shareholders of the

Company. As part of the agreements that were approved, as aforementioned, by the General

Meeting of the shareholders of the Company, the Company's engagement in a non-

competition agreement was approved in regards with Nouvelle and Messrs. Ben and Martin

Lieberman regarding the Company, whereby they have undertaken not to compete with the

Company in the field of seamless products for a period of 5 years as of the date of signing the

Letter of Commitment, i.e. by December 30, 2015. For further details, see the Company's

immediate report dated November 24, 2010 (Reference No.: 2010-01-6918151).

15. Exclusion or limitation applicable while carrying out transactions with the allocated

securities in the framework of the Transaction

A restriction of resale shall be applicable to the Offerees for a period of 6 months and for an

additional period of six quarters, all in accordance with the provisions of Section 15c of the

Securities Law, 1968, and with the provisions of Section 5 of the Securities Regulations

(details regarding Sections 15a to 15c of the Law), 2000.

16. Reasons of the Audit Committee and the Board of Directors for the approval of the

Private Offering

At the Company’s Audit Committee and Board’s decisions to approve the Agreement and the

Additional Investment Agreement, including the Private Offering, which were unanimously, it

was noted that:

a. The process of fundraising is essential including fundraising according to the Additional

Investment Agreement is essential for the Company in order to increase the Company's

flexibility in its ongoing business management and its financial strength especially in

light of its obligations to its financing Banks.

b. The sum of the additional investment shall help the Company to reach an agreement with

its financing banks; reaching such an agreement is a condition precedent in the

Agreement.

bc. The possibility of fundraising from the controlling shareholder in a Private Offering is

the quickest and most effective possibility for raising the capital, especially in light of

the Company’s circumstances since there is no shareholder holding more than forty-five

percent of the voting rights in the Company.

cd. The Company’s Audit Committee and Board of Directors believe that the mechanism to

determine the share price, according to which the price will be determined as the highest

of the three average price per share at the Stock Exchange listed on the date of signing

the Agreement: (1) the average share price of the Company’s share in US dollars during

the six months preceding the date of signing the Agreement , (2) the average share price

of the Company’s share in US dollars during the three months preceding the date of

signing the Agreement (3) the average share price of the Company’s share in US dollars

during the 30 trading days preceding the date of signing the Agreement - is a fair and

reasonable mechanism. As a result, the Company's share price (US 1.07 dollars) that has

been determined in the framework of the Agreement is fair and reasonable.

de. In light of the aforementioned reasons, the Company’s Audit Committee and Board

believe that the engagement in the Transaction is for the benefit of Company.

17. Names of the directors who have participated in the deliberations of the Audit

Committee and the Board

The directors who have participated in the deliberation of the Audit Committee regarding the

approval of the Agreement at its meeting on February 18, 2015, and regarding the approval of

the Additional Investment Agreement at its meeting dated April 1, 2015, are Messrs. Eli

Admoni (external director), Aviram Lahav (external director), Yossi Shachak and Eytan

Stiassnie, all of whom have no personal interest in approving the Agreement.

The directors have participated in the deliberation of the Board at its meeting on February 18,

2015, and at its meeting dated April 1, 2015, are Messrs. Arnon Tieberg (chairman of the

Board), Eli Admoni (external director), Aviram Lahav (external director), Yossi Shachak and

Eytan Stiassnie, all of whom have no personal interest in approving the Agreement.

Part B – Convening of a an Extraordinary General Meeting

18. Convening of an Extraordinary General Meeting and the date thereof

A notice is hereby given concerning the convening of an Extraordinary General Meeting of

the shareholders of the Company, which will be held on ThursdayMonday, April 16May 18,

2015 at 1109:00 a.m. (Israel time) at the offices of Zahavi, Blau & Co., Law Offices &

Notary, 96 Yigal Alon St., Tel Aviv. For inquiries call: 04-9900881.

19. The following resolution is on the agenda of the Company’s General Meeting:

The approval of the Company’s engagement in the Agreement.

20. The required majority

The required majority, at the General Meeting, for the purpose of approving the resolution on

the meeting’s agenda, is an ordinary majority which is greater than half of the shareholders’

votes attending the voting, except for abstaining votes, and as long as one of the following is

fulfilled: (a) counting the votes of the majority at the General Meeting shall include at least a

majority of all the votes of the shareholders who do not have a personal interest in the

approval of the transaction, who are participating in the vote; in counting all of the votes of

the aforesaid shareholders, abstaining votes would not be taken into consideration; (b) The

total opposing votes from among the shareholders referred to in sub-clause (a) above, shall

not be greater than two percent of the total voting rights in the Company.

Prior to the vote regarding the resolutions on the agenda, every shareholder who wishes to

participate in the vote shall be required to give notice to the Company whether he has a

personal interest in the resolution as aforesaid, or if not. If the shareholder did not give notice

as aforesaid, he shall not vote in regards with the aforesaid resolution and his vote shall not be

counted.

21. Quorum and postponed meeting

The quorum for opening the deliberation at the General Meeting is two (2) shareholders or

more (whose shares have been fully paid) attending the meeting in person or via a proxy or

via a voting card, per item, and holding at least twenty five (25%) of the voting rights in the

Company.

If half an hour has passed from the time that was scheduled for the meeting and a quorum

hasn’t been established, the meeting shall be deferred to the exact same day of the week and

hour in the forthcoming week, or to a different day, hour and place as determined by the

chairman of the meeting, with the agreement of the majority of the shareholders with voting

rights attending themselves or via a proxy or via a voting card, and voting in the matter of the

date of the postponed meeting. The Company shall announce the deferral of the meeting and

its date through an immediate report. The quorum in the postponed meeting shall be two (2)

shareholders attending the meeting in person or via a proxy or via a voting card, per item, and

holding at least twenty five (25%) of the voting rights in the Company.

22. The record date for the purpose of determining the eligibility of the shareholders to

participate and vote at the General Meeting

The record date for determining the eligibility of a shareholder of the Company to participate

and vote at the General Meeting, is the end of trade day on MondayThursday, March 16April

16, 2015 (hereinafter: the “Record Date”).

If you are an owner of an “American Share”, meaning: a Company’s share that is not an

“Israeli Share”, as defined as follows, in order to vote at the meeting, please see the voting

instructions detailed on the voting card which can be found on the Company’s internet site

whose address is: www.tefron.com.

“An Israeli Share”- A Company’s share that fulfills one of the following: (a) The share is

registered in the Company’s Israeli shareholder register (for the purpose of clarity, a

Company’s share which is registered in the Company’s American shareholder register, that is

managed by the American Stock Transfer & Trust Company, is not “an Israeli Share”); or (b)

the share is registered with a member of the Stock Exchange (of Tel Aviv Stock Exchange

Ltd.) in the shareholder’s favor, and the aforesaid share is included in the shares registered on

the Company’s Israeli shareholder register in the name of the Registration Company of Bank

Hapoalim Ltd.

23. Voting card and position statements

23.1 The Shareholders may vote regarding the resolution on the meeting’s agenda, in person

or via a proxy. The proxy appointment statement must be carried out according to the

Company’s Regulations.

23.2 The appointment statement must be delivered to the chairman of the meeting or to the

Company’s offices (to the CFO of the Company, Mr. Eliezer Parnafes), so that it

would arrive to the Company’s offices at least two hours prior to the convening of the

http://www.tefron.com/

meeting. The chairman of the meeting shall have the authority to receive appointment

statements which were delivered even after the aforementioned appointed time and

until the beginning of the meeting.

23.3 A shareholder is entitled to vote regarding the resolution on the meeting’s agenda, via a

voting card. For this purpose, the vote of a shareholder who voted via a voting card

shall be considered as if the shareholder was present and participated in the meeting.

Voting via a voting card, in regards to a shareholder seeking to vote via a voting card

in lieu of participating in the meeting in person or via a proxy, shall be carried out

while using the second part of the voting card attached to this report. The voting card

and the documents required to be attached to it as detailed in the voting card, shall be

delivered to the Company’s offices no later than 72 hours prior to the time appointed

for the convening of the meeting. For this purpose, the date of submittal is the date on

which the voting card and the documents required to be attached to it, reached the

Company’s offices.

23.4 A shareholder participating in the vote in regards with the resolution on the meeting’s

agenda, shall notify the Company prior to his voting – and if the voting is via a voting

card – he shall make his markings on the second part of the voting card, on the

designated section, whether he is considered a controlling shareholder of the Company

and/or having personal interest in approving the resolution, or if not. If the

aforementioned shareholder failed to notify as aforesaid, his vote shall not be counted.

23.5 The addresses of the websites of the Securities Authority and the Tel Aviv Stock

Exchange Ltd. where one can find the voting card and the position statements, as their

meaning in Section 88 of the Companies Law, are: the ISA distribution site

http://www.magna.isa.gov.il (hereinafter the “Distribution Site”); and the website of

the Tel Aviv Stock Exchange Ltd. http://maya.tase.il. The shareholders are entitled to

approach the Company directly and receive from it the voting card and the position

statements.

23.6 A Stock Exchange member shall sent via email, at no cost, a link to the voting card and

position statements on the Distribution Site, to every shareholder who is an unlisted

shareholder and whose shares are listed with the aforesaid Stock Exchange member,

unless the shareholder has notified the Stock Exchange member that he is not

interested in receiving such a link, as long as the notification was given in regards of a

specific securities account and on a date prior to the Record Date or that he is

interested in receiving voting cards in the mail, for a certain cost.

23.7 A shareholder whose shares are listed with a Stock Exchange member is entitled to

receive the proof of ownership from the Stock Exchange member, with whom his

stocks are listed, at the Stock Exchange member’s branch or by mail to his mailing

address, paying only the postage fees, if he has asked for it. A request in this matter

would be given in advance for a specific securities account.

23.8 The last date for delivering the position statements is no later than 10 days after the

Record Date, meaning until ThursdaySunday, March April 26, 2015.

23.9 The Company does not permit voting via the internet.

24. Jurisdiction of the Securities Authority

Pursuant to the provisions of Section 10 of the Transaction with a Controlling Shareholder

Regulations and Section 17 of the Private Offering Regulations, within 21 days of filing this

report, the Securities Authority may order the Company to provide, within a determined

period of time, an explanation, particulars of information and documents relating to the

Transaction which is the subject of this report, and instruct the Company to amend this report

in such manner and such date determined thereby.

If such an instruction to amend the report was given as aforesaid, the ISA may instruct to

postpone the date of the General Meeting to a date occurring no less than 3 business days and

no more than 21 days as of the date of publication of the amendment of this report. If such an

instruction regarding the postpone of the date of the General Meeting was given, the

Company shall publish an immediate report regarding such instruction.

25. Reviewing the documents

A copy of this immediate report together with the addendums thereto shall be made available

for review at the Company's offices Sunday to Thursday during normal working hours, after

prior arrangement by telephone: 04-9900818, and this until the date of convening the meeting

to approve the resolution on the agenda as well as on the Securities Authority website at the

address: www.magna.isa.gov.il

26. The Company’s representatives for handling the immediate report

The Company’s representatives for handling the immediate report are attorney Itzchak Blau

and Karin Appel of the attorney offices Zahavi, Blau & Co., Law Offices & Notary, 96 Yigal

Alon St., Tel Aviv, Tel: 03-6252000, Fax: 03-6252020.

Respectfully,

Gil Shimon, CEO

Eliezer Parnafes, CFO


Tefron Ltd.

tefron ltd (the “company”)...litef shall invest a total of us 5 million dollars in the company...

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