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                                                                     EXHIBIT 4.3
                                                                     -----------

                                   TEFRON LTD.
                             1997 SHARE OPTION PLAN
                             ----------------------

1.   NAME
     ----

     Tefron Ltd. (the "Company") hereby makes this share option plan, which
     shall be known as the Tefron Ltd. 1997 Share Option Plan (this "Plan"). The
     Company may amend this Plan from time to time.

2.   PURPOSE OF THE PLAN
     -------------------

     2.1. This Plan is intended as an incentive to retain on the Company's Board
          of Directors (the "Board"), and in the Company's and its subsidiaries'
          employ, persons of training, experience, and ability, to attract new
          directors, employees, consultants and contractors whose services are
          considered unusually valuable, to encourage the sense of
          proprietorship of such persons, and to stimulate the active interest
          of such persons in the development and financial success of the
          Company.

     2.2. The Plan is intended to provide such individuals with opportunities to
          purchase ordinary shares in the Company, pursuant to the Plan as
          approved by the Board, and is designed to benefit from, and may be
          made pursuant to, the provisions of Section 102 of the Israeli Income
          Tax Ordinance [New Version] 1961 ("Section 102") and any regulations,
          rules, orders or procedures promulgated thereunder with respect to
          options granted to employees of the Company, as defined below, if so
          determined by the Board or by the Committee.

     2.3. Share options ("Options") granted under the Plan may or may not
          contain such terms as will qualify the Options as Incentive Share
          Options ("ISOs") within the meaning of Section 422(b) of the United
          States Internal Revenue Code of 1986, as amended (the "Code").

3.   ADMINISTRATION OF THE PLAN
     --------------------------

     3.1. The Board, or in its discretion a Share Option Committee (the
          "Committee") appointed and maintained by the Board, shall have the
          power to administer the Plan. The Committee shall consist of such
          members of the Board (not less than two (2) in number) as may be
          determined by the Board, and any member of such Committee shall be
          eligible to receive Options under the Plan while serving on the
          Committee, unless otherwise specified in this Plan.

     3.2. The Board or the Committee shall have full power and authority to (i)
          designate participants; (ii) designate Options or any portion of the
          Options as ISOs; (iii) determine the terms and provisions (which need
          not be identical) of Option Agreements, which shall be in the form
          annexed to this Plan, including but not limited to the number of
          shares in the Company to be covered by each Option, provisions
          concerning the time or times when and the extent to which

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          the Options may be exercised, and the nature and duration of
          restrictions on transfer or restrictions constituting substantial risk
          of forfeiture; (iv) accelerate the right of an optionee to exercise,
          in whole or in part, any previously granted Option or ISO; (v)
          interpret the provisions and supervise the administration of the Plan;
          and (vi) determine any other matter which is necessary or desirable
          for, or incidental to, administration of the Plan.

     3.3. The Board or the Committee shall have the authority to grant in its
          discretion to the holder of an outstanding Option, in exchange for the
          surrender and cancellation of such Option, a new Option having a
          purchase price lower than provided in the Option so surrendered and
          canceled, and containing such other terms and conditions as the Board
          or the Committee may prescribe in accordance with the provisions of
          the Plan.

     3.4. All decisions and selections made by the Board or the Committee
          pursuant to the provisions of the Plan shall be made by a majority of
          its members except that no member of the Board or Committee shall vote
          on, or be counted for quorum purposes, with respect to any proposed
          action of the Board or Committee relating to any Options to be granted
          to that member. Any decision reduced to writing and signed by all the
          members who are authorized to make such decision shall be fully
          effective as if it had been made by a majority at a meeting duly held.

     3.5. Each member of the Board or the Committee shall be indemnified and
          held harmless by the Company against any cost or expense (including
          counsel fees) reasonably incurred by him, or any liability (including
          any sum paid in settlement of a claim with the approval of the
          Company) arising out of any act or omission to act in connection with
          the Plan unless arising out of such member's own fraud or bad faith,
          to the extent permitted by applicable law. Such indemnification shall
          be in addition to any rights of indemnification that the member may
          have as a Director or otherwise under the Company's Articles of
          Association, any agreement, any vote of shareholders or disinterested
          directors, or otherwise.

4.   DESIGNATION OF PARTICIPANTS
     ---------------------------

     4.1. The persons eligible for participation in the Plan as recipients of
          Options shall include any employees of the Company or of any
          subsidiary of the Company. Directors of the Company or of any
          subsidiary of the Company who are not employees of the Company or its
          subsidiaries, and consultants or contractors of the Company or its
          subsidiaries, shall also be eligible for participation in the Plan as
          recipients of Options.

     4.2. The grant of an Option under this Plan shall neither entitle the
          recipient to participate, nor disqualify him from participating in,
          any other grant of Options pursuant to this Plan, or any other option
          or stock plan of the Company or any of its affiliates.

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5.   TRUSTEE
     -------

          In the event that the Options shall be granted to employees of the
          Company pursuant to the provisions of Section 102, they shall be
          issued to a trustee (the "Trustee") nominated by the Board or the
          Committee (in accordance with the provisions of Section 102) and held
          for the benefit of the Option recipients for a period of not less than
          two (2) years (24 months) from the date of the grant of the Option.
          The Trustee may also hold in trust any shares issued upon exercise of
          such Options.

6.   SHARES RESERVED FOR THE PLAN, AND RESTRICTIONS
     ----------------------------------------------

     6.1. Subject to adjustment as provided in Paragraph 8 below, a total of
          1,166,049 (One Million One Hundred Sixty Six Thousand Forty Nine)
          Ordinary Shares, NIS 1.00 par value per share of the Company, (the
          "Shares") shall be subject to this Plan. The Shares subject to the
          Plan are hereby reserved for sale for such purpose.

     6.2. Any of such Shares which may remain unsold and which are not subject
          to outstanding Options at the termination of the Plan shall cease to
          be reserved for the purpose of the Plan, but until termination of the
          Plan the Company shall at all times reserve a sufficient number of
          Shares to meet the requirements of the Plan. If any Option for any
          reason expires or is canceled prior to its exercise or relinquishment
          in full, the Shares that are the subject of such Option may again be
          subjected to an Option under the Plan.

     6.3. Anyone who purchased Shares under this Plan upon the exercise of
          Options shall have no voting rights as a shareholder (in any and all
          matters whatsoever) until the consummation of a public offering of the
          Company's Shares (the "IPO"). Until an IPO, such Shares shall be voted
          by a proxy pursuant to the directions of the Board, such proxy to be
          to the person or persons designated by the Board. All Shares issued
          upon exercise of the Options shall entitle the holder thereof to
          receive dividends and other distributions thereon.

7.   OPTION PRICE
     ------------

     7.1. The purchase price of each Share subject to an Option or any portion
          of it (which is not designated as an ISO) shall be determined by the
          Board or the Committee in its sole and absolute discretion in
          accordance with applicable law, subject to guidelines as shall be
          determined by the Board from time to time and this Section 7.

     7.2. The purchase price of each Share subject to an Option shall not be
          less than 85% of the fair market value (or, if the Company's Shares
          shall be traded, the market price per share known at the time the
          option is granted). The purchase price of each Share subject to an ISO
          shall not be less than 100% (or 110% if at the time of grant the
          optionee owns more than 10% of the voting stock of the Company) of the
          fair market value of such Share on the date the ISO is granted.

     7.3. The option price shall be payable upon the exercise of the Option in
          cash, by check, or other form satisfactory to the Board or the
          Committee.

                                      -3-

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     7.4. The proceeds received by the Company from the sale of Shares subject
          to an Option granted under the Plan will be added to the general funds
          of the Company and used for its corporate purposes.

8.   ADJUSTMENTS
     -----------

     Upon the occurrence of any of the following described events, an optionee's
     rights to purchase Shares under the Plan shall be adjusted as hereinafter
     provided:

     8.1. If the Company is separated, reorganized, merged, consolidated, or
          amalgamated with or into another corporation while unexercised Options
          remain outstanding under the Plan, there shall be substituted for the
          Shares subject to the unexercised portions of such outstanding Options
          an appropriate number of shares of each class of shares or other
          securities of the separated, reorganized, merged, consolidated or
          amalgamated corporation which were distributed to the shareholders of
          the Company in respect of their Shares, and appropriate adjustments
          shall be made in the purchase price per share or other security to
          reflect such action.

     8.2. If the Company is liquidated or dissolved while unexercised Options
          remain outstanding under the Plan, then all such outstanding Options
          may be exercised in full by the Optionee as of the effective date of
          any such liquidation or dissolution of the Company without regard to
          the installment exercise provisions of Section 9 below.

     8.3. If the outstanding shares of the Company shall at any time be changed
          or exchanged by declaration of a stock dividend, stock split,
          combination or exchange of shares, recapitalization, or any other like
          event by or of the Company, and as often as the same shall occur, then
          the number, class, and kind of Shares subject to the Option
          theretofore granted shall be appropriately and equitably adjusted so
          that upon exercise of the option the Optionee will receive whatever
          securities such Optionee would have received had the option been
          exercised immediately prior to the above mentioned events, without
          changing the aggregate Option price. Upon the happening of any of the
          foregoing, the class and aggregate number of Shares issuable pursuant
          to the Plan (as set forth in paragraph 6 above), in respect of which
          options have not yet been exercised, shall be appropriately adjusted.

     8.4. In the event of a rights issuance to shareholders of the Company to
          purchase any securities issued by the Company, no adjustment shall be
          made with respect to such option theretofore granted, but such rights
          will be issued also to the Optionee inasmuch as the Optionee would
          have been entitled thereto had such option been exercised immediately
          prior to th record date for such rights issuance; provided however
          that such rights issued to the Optionee may be exercised only if and
          when the option is exercised and only to the extent that such rights
          have been issued in respect of the Shares purchased upon the exercise
          of such option. The exercise price of any rights issued in respect of
          outstanding options shall be subject to such adjustments as may be
          determined by the Board when the rights issuance is made to account
          for any postponement of the exercise of such rights pursuant to the
          foregoing.

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     8.5. Anything herein to the contrary notwithstanding, if prior to the
          completion of the IPO, all or substantially all of the Shares of the
          Company are to be sold, or upon a merger or reorganization or the
          like, the Shares of the Company, or any class thereof, are to be
          exchanged for securities of another company, then in such event, each
          optionee shall be obliged to sell or exchange, as the case may be, the
          Shares such optionee purchased under the Plan, in accordance with the
          instructions then issued by the Board.

9.   TERM AND EXERCISE OF OPTIONS
     ----------------------------

     9.1. Options shall be exercised by the Optionee by giving written notice to
          the Company, which exercise shall be effective upon receipt of such
          notice together with check or cash payment of the purchase price of
          the Shares for which the option is exercised by the Company at its
          principal office. The notice shall specify the number of Shares with
          respect to which the Option is being exercised. The written notice, if
          delivered prior to completion of the Company's Initial Public
          Offering, shall be accompanied by a proxy for voting in the Company's
          general meeting duly executed by the Optionee, in a form authorized by
          the Company.

     9.2. Each Option granted under this Plan shall vest and be exercisable on
          the date and for the number of Shares as shall be provided in the
          Option Agreement evidencing the Option and setting forth the terms
          thereof. However, (i) no Option shall be exercisable after the
          expiration of ten years from the date of grant, and (ii) no ISO
          granted to a person, who, at the time of grant owns more than 10% of
          the voting shares of the Company, may be exercisable after the
          expiration of five years from the date of grant.

     9.3. Options granted under the Plan shall not be transferable by optionees
          other than by will or laws of descent and distribution, and during an
          optionee's lifetime shall be exercisable only by that optionee.

     9.4. Options granted to employees or directors may not be exercised after
          the termination of employment and/or service as a director unless

          9.4.1. prior to the date of such termination, the Board or the
                 Committee shall authorize, in the relevant Option Agreement or
                 otherwise, an extension of the term of all or part of the
                 Option beyond the date of such termination for a period not to
                 exceed the period during which the Option by its terms would
                 otherwise have been exerciseable;

          9.4.2. termination is without cause (as determined by an applicable
                 court), in which event any Options still in force and unexpired
                 may be exercised within a period of the lesser of (i) ninety
                 (90) days from the date of such termination, or (ii) the
                 remainder of the period during which the Option by its terms
                 would otherwise have been exerciseable, but only with respect
                 to the number of Shares purchasable at the time of such
                 termination;

          9.4.3. termination is the result of death or disability, in which
                 event any Options still in force and unexpired may be exercised
                 within a period of the lesser of (i) six (6) months from the
                 date of termination, or (ii)

                                      -5-

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                 the remainder of the period during which the Option by its
                 terms would otherwise have been exerciseable, but only with
                 respect to the number of Shares purchasable at the time of such
                 termination; or

          9.4.4. termination of employment is the result of retirement under any
                 deferred compensation agreement or retirement plan of the
                 Company or of any subsidiary of the Company or after the age of
                 60, while Options granted under this Plan are still in force
                 and unexpired, in which case the Board or Committee shall have
                 the discretion to permit any unmatured installments of the
                 Options to be accelerated for exercise as of the later of the
                 date of retirement or a date one year following the date of
                 grant, but in any event no later than the date on which the
                 Option by its terms would have otherwise expired, and the
                 Options shall thereupon be exercisable in full without regard
                 to the installment exercise provisions of this Section.

     9.5. The holders of Options shall not be, or have any of the rights or
          privileges of, shareholders of the Company in respect of any Shares
          purchasable upon the exercise of any part of an Option unless and
          until, following exercise of any part of an Option, but subject always
          to the provisions of Section 5 above, certificates representing such
          Shares shall have been issued by the Company and delivered to such
          holders.

     9.6. Any form of Option Agreement authorized by the Plan may contain such
          other provisions as the Board or the Committee may, from time to time,
          deem advisable. Without limiting the foregoing, the Board or the
          Committee may, with the consent of the optionee, from time to time
          cancel all or any portion of any option then subject to exercise, and
          may approve in such case that the Company's obligation in respect of
          such Option may be discharged by

          9.6.1. payment to the optionee of an amount in cash equal to the
                 excess, if any, of the fair market value of the Shares at the
                 date of such cancellation subject to the portion of the Option
                 so canceled over the aggregate purchase price of such Shares;

          9.6.2. the issuance or transfer to the optionee of Shares of the
                 Company with a Fair Market Value at the date of such transfer
                 equal to any such excess; or

          9.6.3. a combination of cash and Shares with a combined value equal to
                 any such excess, all as determined by the Board or the
                 Committee in its sole discretion.

10.  ASSIGNMENT AND SALE
     -------------------

          Any Options shall not be assigned, transferred, pledged, or otherwise
          given as collateral to any third party whatsoever, and during the
          lifetime of the optionee each and all of such optionee's rights to
          purchase Shares under this Plan shall be exercisable only by such
          optionee.

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11.  MAXIMUM ISO AWARD
     -----------------

          In case of ISO granted to non-Israeli employees or directors, the
          aggregate Fair Market Value of Shares (determined as of the date of
          the grant of the ISOs) with respect to which ISOs are exercisable for
          the first time by any optionee during any calendar year shall not
          exceed the limitation provided under Section 422(d) of the Code.

12.  PURCHASE OF INVESTMENT
     ----------------------

          Unless Shares covered by the Plan have been listed for trade on any
          stock exchange (of any jurisdiction), or the Company has determined
          that such registrations are unnecessary, each person exercising an
          Option under the Plan shall if so required by the Company give a
          representation in writing that he is acquiring such shares for his own
          account, for investment, and not with a view to, or for sale in
          connection with, the distribution of any part thereof.

13.  TERM OF THE PLAN
     ----------------

          The plan shall be effective as of September __, 1997, and shall
          continue, unless otherwise determined by the Company, for ten (10)
          years.

14.  AMENDMENTS OR TERMINATION
     -------------------------

          The Board may, at any time and from time to time, amend, alter, or
          discontinue the Plan, except that no amendment or alteration shall be
          made which would impair the rights of the holder of any Option
          theretofore granted without his consent, and except that no amendment
          or alteration shall be made which, without the approval of the
          shareholders, would:

          14.1. Increase the total number of Shares reserved for the purposes of
                the Plan, except as is provided in Section 6, or decrease the
                option price provided in Section 7, or change the class of
                persons eligible to participate in the Plan as provided in
                Section 4, or

          14.2. Extend the option period provided for in Section 9.

15.  GOVERNMENT REGULATIONS
     ----------------------

          The Plan, and the granting and exercise of Options under this Plan,
          and the obligation of the Company to sell and deliver Shares under
          such Options, shall be subject to all applicable laws, rules, and
          regulations, whether of the State of Israel or of the United States or
          any other State having jurisdiction over the Company and the optionee
          including the registration of the Shares under the U.S. Securities Act
          of 1933, as amended, and to such approvals by any governmental
          agencies or national securities exchanges as may by required.

16.  CONTINUANCE OF EMPLOYMENT
     -------------------------

          Neither the Plan nor the Option Agreement with the optionees shall
          impose any obligation on the Company or a subsidiary thereof, to
          continue any

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          optionee in its employ, and nothing in the Plan or in any Option
          granted pursuant to this Plan shall confer upon any optionee any right
          to continue in the employ of the Company or a subsidiary thereof, or
          restrict the right of the Company or a subsidiary thereof, to
          terminate such employment at any time.

17.  GOVERNING LAW
     -------------

          This Plan shall be governed by and construed and enforced in
          accordance with the laws of the State of Israel applicable to
          contracts made and to be performed therein, without giving effect to
          the principles of conflict of laws.

18.  TAX CONSEQUENCES
     ----------------

          Any tax consequences arising from the grant or exercise of any Option,
          from the payment for Shares covered thereby. or from any other event
          or act (of the Company or the optionee) under this Plan, shall be
          borne solely by the optionee. Furthermore, the optionee shall agree to
          indemnify the Company and the Trustee, and hold them harmless against
          and from any and all liability for any such tax or interest or penalty
          thereon, including without limitation, liabilities relating to the
          necessity to withhold, or to have withheld, any such tax from any
          payment made to the optionee.

19.  NON-EXCLUSIVITY OF THE PLAN
     ---------------------------

          The adoption of the Plan by the Board shall not be construed as
          amending, modifying, or rescinding any previously approved incentive
          arrangements or as creating any limitations on the power of the Board
          to adopt such other incentive arrangements as it may deem desirable,
          including without limitation, the granting of stock options otherwise
          than under the Plan, and such arrangements may be either applicable
          generally or only in specific cases.

20.  MULTIPLE AGREEMENTS
     -------------------

          The terms of each Option may differ from other Options granted under
          the Plan at the same time, or at any other time. The Committee may
          also grant more than one Option to a given optionee during the term of
          the Plan, either in addition to, or in substitution for, one or more
          Options previously granted to that optionee.

                                      -8-