EXHIBIT 1.2

                             ARTICLES OF ASSOCIATION

                                       OF

                                   TEFRON LTD.

                           A COMPANY LIMITED BY SHARES

                                   PRELIMINARY

1.   CANCELLED

2.   INTERPRETATION

     In these Articles, the following words shall have the meanings, if not
     inconsistent with the subject or context;

     "The Company" - TEFRON LTD.

     "The Companies Law" or "The Statutes" - The Companies Law, and every other
     Israeli Law or statute in force concerning companies limited by shares and
     affecting the Company.

     "These Articles" - These Articles of Association as originally adopted or
     as amended from time to time by Special Resolution.

     "The Office" - The current registered office from time to time of the
     Company.

     "Year" and "Month" - a Gregorian month or year.

     "Office Holder" - a director, general manager, chief business manager,
     president, executive vice president, vice president, other manager directly
     subordinate to the general manager or any other person assuming the
     responsibilities of any of the foregoing positions without regard to such
     person's title.

     "The Companies Law" - The Companies Law, 5759 - 1999, as will be in force
     from time to time, and any regulations enacted thereof.

     "In Writing" - in hand writing, print, typewriter, photocopy, telex,
     facsimile or any other readable form.

     "Person", "Man" or `Human Being" - including corporation.

     "Corporation" - company, partnership, cooperative, ottoman association
     amuta, and any body of persons, whether incorporated or not.


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     "Ordinary Majority' - a majority of the total voting power represented at
     the meeting in person or by proxy or by voting instrument, entitled to vote
     thereon and that voted thereon, without taking into account the votes that
     abstained.

     "Special Majority" - a majority of 75% (seventy five percent) of the total
     voting power represented at the meeting in person or by proxy or by voting
     instrument, entitled to vote thereon and that voted thereon, without taking
     into account the votes that abstained.

     "Special Resolution" - a resolution adopted by a Special Majority.

     "Shareholder" or "Member" - the holder of shares on the record date
     determined according to section 182 of the Companies Law, if a record date
     exists for that matter.

     "Registered Shareholder" - a Shareholder registered in the Company's
     register of shareholders.

     "Unregistered Shareholder" - a Shareholder according to section 177(1) of
     the Companies Law.

     "Register" or "Register of Members" or "Shareholder's Register" - the
     register of Shareholders that must be kept by the Company according to the
     Companies Law.

     Any term in these Articles of Association that was not defined in this
     article 2, shall have the meaning known to that term according to the
     Companies Law, unless inconsistent with the subject or context. The name of
     the Company, its goals and objects and the liability if its shareholders
     are as determined in the Company's Memorandum of Association.

2A.  BUSINESS

     The Company may, at any time, carry on business in any field or type of
     business permitted to the Company, whether explicit or implied, according
     to its Memorandum of Association. The Company may cease to be engaged in
     any such business, whether it began to be engaged in that business field or
     type of business, and whether not.

2B   CONTRIBUTIONS

     The Company may contribute reasonable sums for worthy causes, even if the
     contribution is not in the frame of the Company's business considerations.
     The Board of Directors or whoever the Board of Directors delegated its
     powers to for this purpose, will be authorized to determine, according to
     its discretion, the amounts of the contributions, their purposes, the
     entity receiving the contribution and any other condition connected
     thereof.


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3.   PUBLIC COMPANY

     This Company is a Public Company, as such a term is defined in the
     Companies Law, and accordingly:

     a)   fully paid-up shares may be transferred freely and such transfers do
          not require the approval of the board of directors, however the board
          of directors may refuse, without giving any reasons therefor, to
          register any transfer of shares which have not been fully paid-up or
          where the Company has a lien on the share, constituting the subject
          matter of the transfer;

     b)   the number of members of the Company for the time being shall not be
          limited.

     c)   the Company may issue shares, debentures or any other security to the
          public;

                                  SHARE CAPITAL

4.   SHARE CAPITAL

     a)   The authorized share capital of the Company is NIS 50,000,000 (fifty
          million) divided into 49,995,500 (forty nine million nine hundred
          ninety five thousand five hundred) Ordinary Shares, NIS 1.00 (one) par
          value per share, and 4,500 (four thousand five hundred) Ordinary B
          Shares, which are described in subparagraph 4(d) below.

     b)   The Ordinary Shares all rank pari passu in all respects.

     c)   The Deferred Shares entitle their holders, upon the liquidation of the
          Company, the par value of these shares but no other rights. The
          Deferred Shares are non-transferable.

     d)   Ordinary B Shares

          (1)  The holders of each Ordinary B Share shall only have the right to
               dividends calculated on the basis of one one-thousandth (1/1000%)
               percent of the Company's Annual "B" Shares Profit, as defined
               below. For purpose of this section and the Ordinary B Shares, the
               Company's Annual "B" Shares Profit shall be the profits from the
               Company's ordinary business operations, thus excluding capital
               gains and profits from nonrecurring activities in accordance with
               the Company's consolidated Statement of Income, which ordinary
               business profits shall be net of financing and taxes, but prior
               to setoffs for prior year loss carry forwards commencing in 1995.

          (2)  Calculation of the Company's Annual "B" Shares Profit shall be
               based on the Company's annual audited statements, approved by the
               Company's Board of Directors, for the relevant year, which shall
               be presented in US Dollars.


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          (3)  The Company's Ordinary B Shares may not be transferred, including
               either by operation of law or by testamtary or intestated
               descent, assigned, hypothecated, pledged, mortgaged, or otherwise
               encumbered, and shall not be subject to a power of attorney or a
               deed of transfer, whether immediate or in future, except that the
               Ordinary B Shares may be transferred pursuant to an agreement
               between the Company, the Trustee, and the holder of the Ordinary
               B Shares seeking to make the transfer, which agreement was
               entered into in connection with the issuance of the Ordinary B
               Shares (the "Ordinary "B" Shares Agreement").

          (4)  In the event that a holder, or a person entitled to be a holder,
               of Ordinary B Shares (hereafter the "Holder") is an employee of
               the Company or is part of the Company's management, and such
               employee's employment or management position with the Company
               ceases, for any reason, including termination, the Holder's
               Ordinary B Shares, whether held or to which the Holder is
               entitled, shall be converted to Deferred Shares.

          (5)  Upon the consummation of the initial public offering of the
               Company's Shares or in the event that the Company sells,
               transfers, or issues its Ordinary Shares to anyone that is not a
               holder of the Ordinary Shares of the Company as of November 24,
               1996, the Ordinary B Shares shall automatically convert to
               Deferred Shares.

          (6)  Notwithstanding the foregoing, the Ordinary B Shares shall bear
               the right to their relative share of the profits of the Company
               that are reflected in the Company's Statement of Income
               immediately prior to the occurrence of either of the events
               described in sub-paragraphs (4) and (5) above.

          (7)  Payment of dividends under this section shall only be made upon
               the resolution of the Company's Board of Directors.

5.   INCREASE OF AUTHORIZED SHARE CAPITAL

     a)   The Company may, from time to time, by Special Resolution (as defined
          in Article 28(a) below), whether or not all the shares then authorized
          have been issued and whether or not all the shares theretofore issued
          have been called up for payment, increase its authorized share
          capital. Any such increase shall be in such amount and shall be
          divided into shares of such nominal amounts, and such shares shall
          confer such rights and preferences, and shall be subject to such
          restrictions, as the Special Resolution shall provide.


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     b)   Except to the extent otherwise provided in the Special Resolution, any
          new shares included in the authorized share capital increased as
          aforesaid shall be subject to all the provisions of these Articles
          which are applicable to shares of the same class included in the
          existing share capital (and, if such new shares are of the same class
          as a class of shares included in the existing share capital, to all of
          the provisions which are applicable to shares of such class included
          in the existing share capital).

6.   SPECIAL RIGHTS; MODIFICATION OF RIGHTS

     a)   Subject to the provisions of the Memorandum of Association of the
          Company, and without prejudice to any special rights previously
          conferred upon the holders of existing shares in the Company, the
          Company may, from time to time, by Special Resolution, provide for
          shares with such preferred or deferred rights or rights of redemption
          or other special rights and/or restrictions, whether in regard to
          dividends, voting, repayment of share capital or otherwise, as may be
          stipulated in such Special Resolution.

     b)   (i)  If at any time the share capital is divided into different
               classes of shares, the rights attached to any class, unless
               otherwise provided by these Articles, may be modified or
               abrogated by the Company, by Special Resolution, subject to the
               consent in writing of the holders of seventy-five percent (75%)
               of the issued shares of such class or the adoption of a Special
               Resolution passed at a separate General Meeting of the holders of
               the shares of such class.

     c)   (ii) The provisions of these Articles relating to General Meetings
               shall, mutatis mutandis, apply to any separate General Meeting of
               the holders of the shares of a particular class, provided
               however, that the requisite quorum at any such separate General
               Meeting shall be two or more members present in person or by
               proxy or by voting instrument and holding not less than twenty
               five (25%) percent of the issued shares of such class.

     d)   (iii) Unless otherwise provided by these Articles, the enlargement of
               an authorized class of shares, or the issuance of additional
               shares thereof out of the authorized and unissued share capital,
               shall not be deemed, for purposes of this Article 6(b), to modify
               or abrogate the rights attached to previously issued shares of
               such class or of any other class.


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7.   CONSOLIDATION, SUBDIVISION, CANCELLATION AND REDUCTION OF SHARE CAPITAL

     a)   The Company may, from time to time, by Special Resolution (subject,
          however, to the provisions of Article 6(b) hereof and to applicable
          law):

          (i)  consolidate and divide all or part of its issued or unissued
               authorized share capital into shares of a per share nominal value
               which is larger than the per share nominal value of its existing
               shares;

          (ii) subdivide its shares (issued or unissued) or any of them, into
               shares of smaller nominal value than is fixed by the Memorandum
               of Association (subject, however, to the provisions of Section
               144(4) of the Companies Law);

          (iii) cancel any shares which, at the date of the adoption of such
               Special Resolution, have not been taken or agreed to be taken by
               any person, and diminish the amount of its share capital by the
               amount of the shares so canceled; or

          (iv) reduce its share capital in any manner, and with and subject to
               any incident authorized, and consent required, by law;

     b)   With respect to any consolidation of issued shares into shares of a
          larger nominal value per share, and with respect to any other action
          which may result in fractional shares, the Board of Directors may
          settle any difficulty which may arise with regard thereto, as it deems
          fit, and, in connection with any such consolidation or other action
          which could result in fractional shares, may, without limiting its
          aforesaid power:

          (i)  determine, as to the holder of shares so consolidated, which
               issued shares shall be consolidated into a share of a larger
               nominal value per share.

          (ii) allot, in contemplation of or subsequent to such consolidation or
               other action, shares or fractional shares sufficient to preclude
               or remove fractional share holdings;

          (iii) redeem, in the case of redeemable preference shares, and subject
               to applicable law, such shares or fractional shares sufficient to
               preclude or remove fractional share holdings;

          (iv) cause the transfer of fractional shares by certain shareholders
               of the Company to other shareholders thereof so as to most
               expediently preclude or remove any fractional shareholdings, and
               cause the transferees of such fractional shares to pay the
               transferors thereof the fair value thereof, and the Board of
               Directors is hereby authorized to act in connection with such
               fractional shares, with full power of substitution, for the
               purposes of implementing the provisions of this sub-Article
               7(b)(iv).


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8.   ISSUANCE OF SHARE CERTIFICATES; REPLACEMENT OF LOST CERTIFICATES

     a)   Share Certificates shall be issued under the corporate seal of the
          Company and shall bear the signature of one Director, or of any other
          person or persons authorized therefor by the Board of Directors.

     b)   Each member shall be entitled to one or several numbered
          certificate(s) for all the shares of any class registered in his name,
          each for one or more of such shares. Each certificate shall specify
          the serial numbers of the shares represented thereby and may also
          specify the amount paid up thereon.

     c)   A share certificate registered in the names of two or more persons
          shall be delivered to the person first named in the Register of
          Members in respect of such co-ownership.

     d)   A share certificate which has been defaced, lost or destroyed, may be
          replaced, and the Company shall issue a new certificate to replace
          such defaced, lost or destroyed certificate upon payment of such fee,
          and upon the furnishing of such evidence of ownership and such
          indemnity, as the Board of Directors in its discretion deems fit.

9.   REGISTERED HOLDER

     9.1. Except as otherwise provided in these Articles, a Shareholder is the
          registered holder of each share in the Company's Register, and whoever
          is registered with a Stock Exchange member as entitled to shares of
          the Company, and such shares are included amongst the shares
          registered in the Company's Register in the name of a registration
          company.

     9.2. A Shareholder who is a trustee will be registered in the Register,
          together with a reference to his trust, and will be deemed for any
          matter connected with the Companies Law, as a shareholder. Without
          derogating from the above, the Company will recognize the trustee, as
          above, as a Shareholder, for all intents and purposes, and shall not
          recognize any other person, including the beneficiary, as the owner of
          any right in the share.

     9.3. Without derogating from the above, and subject to these Articles of
          Association, except for Shareholders according to articles 9.1 and 9.2
          above, the Company shall not, except as ordered by a court of
          competent jurisdiction, or as required by statute, recognize any other
          Person as the owner of any right in a share or any part of a share and
          the Company shall not be bound by and shall not recognize any
          equitable or other claim to, or interest in, future or partial, in any
          such share or any part thereof, on the part of any other person.


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10.  ALLOTMENT OF SHARES

     10.1. The unissued shares from time to time shall be under the control of
          the Board of Directors, who shall have the power to allot, issue or
          otherwise dispose of shares to such persons, on such terms and
          conditions (including inter alia terms relating to calls as set forth
          in Article 12(f) hereof), and either at par or at a premium, or,
          subject to the provisions of the Companies Law, at a discount and/or
          with payment of commission, and at such times, as the Board of
          Directors deems fit, and the power to give to any person the option to
          acquire from the Company any shares, either at par or at a premium,
          or, subject as aforesaid, at a discount and/or with payment of
          commission, during such time and for such consideration as the Board
          of Directors deems fit.

     10.2. The Board of Directors may issue shares and other securities,
          convertible or exercisable to shares, in an amount up to the Company's
          registered share capital. For this matter, convertible securities that
          could be converted or exercised into shares will be deemed converted
          or exercised at the time of their issuance. Without derogating from
          the above, the Board of Directors is entitled to issue the shares and
          the other securities, as above, to grant alternative rights for their
          purchase, including options or the purchase thereof in other ways, all
          to whoever will be determined by the Board of Directors and at times,
          prices and terms as determined by the Board of Directors, and to
          determine any other instruction connected thereto, including
          instructions concerning the ways to distribute the shares and the
          securities issued by the Company between their purchasers, including,
          in the event of excess subscription, and all, according to the
          discretion of the Board of Directors.

     10.3. Without derogating from the above, and subject to the Companies Law
          and to these Articles of Association, the Board of Directors is
          entitled to determine that the consideration for the shares shall be
          paid in cash or in assets, including securities or any other way,
          according to it's consideration, or that the shares shall be issued as
          bonus shares or that the shares shall be issued in consideration equal
          to or higher than their nominal value, whether in units or as stock,
          all according to the terms and the time as determined by the Board of
          Directors, according to it's consideration.

     10.4. In the resolution to increase the registered share capital of the
          Company, the general meeting may determine that, the new shares
          included in the amount which increase the registered share capital
          (the "New Shares") or any part thereof, shall be offered first, in
          their nominal value or at a premium, to all the shareholders holding
          shares at that time, at a rate proportional to the nominal value of
          their shares in the Company or to determine other instructions
          concerning the issuance and the allotment of the New Shares. But, if
          the General Meeting has not so determined in its resolution to
          increase the registered share capital of the Company, the Board of
          Directors may offer the shares according to Article 10.2 above.


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     10.5. The Board of Directors is entitles to decide to pay underwriting
          commissions or broker fees to any person, at the time of underwriting
          or agreement to underwrite or achievement of underwriting or ensurence
          of underwriting on shares, or debentures or other securities of the
          Company. In any event of issuance of securities of the Company, the
          Board of Directors is also entitled to determine the payment of
          commissions, by means of cash, or shares of the Company, or other
          securities issued by the Company, or any other way, or part of the
          payment in one way and part in another, and all subject to any
          applicable law.

11.  PAYMENT IN INSTALLMENTS

     If, pursuant to the terms of allotment or issue of any share, all or any
     portion of the price thereof shall be payable in installments, every such
     installment shall be paid to the Company on the due date thereof by the
     then registered holder(s) of the share or the person(s) then entitled
     thereto.

12.  CALLS ON SHARES

     a)   The Board of Directors may, from time to time, as it, in its
          discretion, deems fit, make calls for payment upon members in respect
          of any sum which has not been paid up in respect of shares held by
          such members and which is not pursuant to the terms of allotment or
          issue of such shares or otherwise, payable at a fixed time. Each
          member shall pay the amount of every call so made upon him (and of
          each installment thereof if the same is payable in installments), to
          the Company at the time(s) and place(s) designated by the Board of
          Directors, as any such time(s) may be thereafter extended or place(s)
          changed. Unless otherwise stipulated in a resolution of the Board of
          Directors (and in the notice hereafter referred to), each payment in
          response to a call shall be deemed to constitute a pro rata payment on
          account of all the shares in respect of which such call was made.

     b)   Notice of any call for payment by a member shall be given in writing
          to such member not less than fourteen (14) days prior to the time of
          payment fixed in such notice, and shall specify the time and place of
          payment. Prior to the time for any such payment fixed in a notice of a
          call given to a member, the Board of Directors may in its absolute
          discretion, by notice in writing to such member, revoke such call in
          whole or in part, extend the time fixed for payment thereof, or
          designate a different place of payment. In the event of a call payable
          in installments, only one notice thereof need be given.


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     c)   If pursuant to the terms of allotment or issue of a share or
          otherwise, an amount is made payable at a fixed time (whether on
          account of such share or by way of premium), such amount shall be
          payable at such time as if it were payable by virtue of a call made by
          the Board of Directors and for which notice was given in accordance
          with paragraphs (a) and (b) of this Article 12, and the provisions of
          these Articles with regard to calls (and the non-payment thereof)
          shall be applicable to such amount (and the non-payment thereof).

     d)   Joint holders of a share shall be jointly and severally liable to pay
          all calls for payment in respect of such share and all interest
          payable thereon.

     e)   Any amount called for payment which is not paid when due shall bear
          interest from the date fixed for payment until actual payment thereof,
          at such rate (not exceeding the then prevailing interest rate charged
          by leading commercial banks in Israel), and payable at such time(s) as
          the Board of Directors may prescribe.

     f)   Upon the allotment of shares, the Board of Directors may provide for
          differences among the allottees of such shares as to the amounts and
          times for payment of calls in respect of such shares.

13.  PREPAYMENT

     With the approval of the Board of Directors, any member may pay to the
     Company any amount not yet payable in respect of his shares, and the Board
     of Directors may approve the payment by the Company of interest on any such
     amount until the same would be payable if it had not been paid in advance,
     at such rate and time(s) as may be approved by the Board of Directors. The
     Board of Directors may at any time cause the Company to repay all or any
     part of the money so advanced, without premium or penalty. Nothing in this
     Article 13 shall derogate from the right of the Board of Directors to make
     any call for payment before or after receipt by the Company of any such
     advance.

14.  FORFEITURE AND SURRENDER

     a)   If any member fails to pay an amount payable by virtue of a call, or
          interest thereon as provided for in accordance herewith, on or before
          the day fixed for payment of the same, the Board of Directors may at
          any time after the day fixed for such payment, so long as such amount
          (or any portion thereof) or interest thereon (or any portion thereof)
          remains unpaid, resolve to forfeit all or any of the shares in respect
          of which such payment was called for. All expenses incurred by the
          Company in attempting to collect any such amount or interest thereon,
          including, without limitation, attorney's fees and costs of legal
          proceedings, shall be added to, and shall, for all purposes (including
          the accrual of interest thereon), constitute a part of, the amount
          payable to the Company in respect of such call.


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     b)   Upon the adoption of a resolution as to the forfeiture of a member's
          share, the Board of Directors shall cause notice thereof to be given
          to such member, which notice shall state that, in the event of the
          failure to pay the entire amount so payable by a date specified in the
          notice (which date shall be not less than fourteen (14) days after the
          date such notice is given and which may be extended by the Board of
          Directors), such shares shall be ipso facto forfeited, provided,
          however, that, prior to such date, the Board of Directors may nullify
          such resolution of forfeiture, but such nullification shall not stop
          the Board of Directors from adopting a further resolution of
          forfeiture in respect of the non-payment of the same amount.

     c)   Without derogating from Articles 54 and 59 hereof, whenever shares are
          forfeited as herein provided, all dividends, if any, theretofore
          declared in respect thereof and not actually paid shall be deemed to
          have been forfeited at the same time.

     d)   The Company, by resolution of the Board of Directors, may accept the
          voluntary surrender of any share not fully paid for.

     e)   Any share forfeited or surrendered as provided herein, shall become
          the property of the Company, and the same, subject to the provisions
          of these Articles, may be sold, re-allotted or otherwise disposed of
          as the Board of Directors deems fit.

     f)   Any member whose shares have been forfeited or surrendered shall cease
          to be a member in respect of the forfeited or surrendered shares, but
          shall, notwithstanding, be liable to pay, and shall forthwith pay, to
          the Company, all calls, interest and expenses owing upon or in respect
          of such shares at the time of forfeiture or surrender together with
          interest thereon from the time of forfeiture or surrender until actual
          payment, at the rate prescribed in Article 12(e) above, and the Board
          of Directors, in its discretion, may, but shall not be obligated to,
          enforce the payment of such moneys, or any part thereof. In the event
          of such forfeiture or surrender, the Company, by resolution of the
          Board of Directors, may accelerate the date(s) of payment of any or
          all amounts then owing to the Company by the member in question (but
          not yet due) in respect of all shares owned by such member, solely or
          jointly with another.

     g)   The Board of Directors may at any time, before any share so forfeited
          or surrendered shall have been sold, re-allotted or otherwise disposed
          of, nullify the forfeiture or surrender on such conditions as it deems
          fit, but such nullification shall not stop the Board of Directors from
          re-exercising its powers of forfeiture pursuant to this Article 14.


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15.  LIEN

     a)   Except to the extent the same may be waived or subordinated in
          writing, the Company shall have a first and paramount lien upon all
          the shares registered in the name of each member (without regard to
          any equitable or other claim or interest in such shares on the part of
          any other person), and upon the proceeds of the sale thereof, for his
          debts, liabilities and engagements to the Company arising from any
          amount payable by such member in respect of any unpaid or partly paid
          share, whether or not such debt, liability or engagement has matured.
          Such lien shall extend to all dividends from time to time declared or
          paid in respect of such share. Unless otherwise provided, the
          registration by the Company of a transfer of shares shall be deemed to
          be a waiver on the part of the Company of the lien (if any) existing
          on such shares immediately prior to such transfer.

     b)   The Board of Directors may cause the Company to sell a share subject
          to such a lien when the debt, liability or engagement giving rise to
          such lien has matured, in such manner as the Board of Directors deems
          fit, but no such sale shall be made unless such debt, liability or
          engagement has not been satisfied within fourteen (14) days after
          written notice of the intention to sell shall have been served on such
          member, his executors or administrators.

     c)   The net proceeds of any such sale, after payment of the costs thereof,
          shall be applied in or toward satisfaction of the debts, liabilities
          or engagements of such member in respect of such share (whether or not
          the same have matured), and the remaining balance (if any) shall be
          paid to the member, his executors, administrators or assigns.

16.  SALE AFTER FORFEITURE OR SURRENDER OR IN ENFORCEMENT OF LIEN

     Upon any sale of a share after forfeiture or surrender of for enforcing a
     lien, the Board of Directors may appoint any person to execute an
     instrument of transfer of the share so sold and cause the purchaser's name
     to be entered in the Register of Members in respect of such share. The
     purchaser shall be registered as the shareholder and shall not be bound to
     see to the regularity of the sale proceedings, or to the application of the
     proceeds of such sale, and after his name has been entered in the Register
     of Members in respect of such share, the validity of the sale shall not be
     impeached by any person, and the remedy of any person aggrieved by the sale
     shall be in damages only and against the Company exclusively.

17.  REDEEMABLE SHARES

     The Company may, subject to applicable law, issue redeemable shares and
     redeem the same, according to the terms and the fashion determined by the
     Board of Directors, at it's discretion.


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18.  CONVERSION OF SHARES INTO STOCK

     a)   The Board of Directors may, with the approval of the members
          previously given by Special Resolution, convert any paid-up shares
          into stock, and may, with like sanction, reconvert any stock into
          paid-up shares of any denomination.

     b)   The holders of stock may transfer the same, or any part thereof, in
          the same manner and subject to the same regulations, as the shares
          from which the stock arose might have been transferred prior to
          conversion, or as near thereto as circumstances admit, provided,
          however, that the Board of Directors may from time to time fix the
          minimum amount of stock so transferable, and restrict or forbid the
          transfer of fractions of such minimum, but the minimum shall not
          exceed the nominal value of each of the shares from which such stock
          arose.

     c)   The holders of stock shall, in accordance with the amount of stock
          held by them, have the same rights and privileges as regards
          dividends, voting at meetings of the Company and other matters as if
          they held the shares from which such stock arose, but no such right or
          privilege, except participation in the dividends and profits of the
          Company, shall be conferred by any such aliquot part of such stock as
          would not, if existing in shares, have conferred that right or
          privilege.

     d)   Such of the Articles of the Company as are applicable to paid-up
          shares shall apply to stock, and the words "share" and "shareholder"
          (or "member") therein shall include "stock" and "stockholder".

                               TRANSFER OF SHARES

19.  REGISTRATION OF TRANSFER

     a)   No transfer of shares shall be registered unless a proper writing or
          instrument of transfer (in any customary form or any other form
          satisfactory to the Board of Directors) has been submitted to the
          Company (or its transfer agent), together with the share
          certificate(s) and such other evidence of title as the Board of
          Directors may reasonably require. Until the transferee has been
          registered in the Register of Members in respect of the shares so
          transferred, the Company may continue to regard the transferor as the
          owner thereof.

     b)   The Board of Directors may, in its discretion to the extent it deems
          necessary, close the Register of Members for registrations of
          transfers of shares during any year for a period determined by the
          Board of Directors, and no registrations of transfers of shares shall
          be made by the Company during any such period during which the
          Register of Members is so closed.


                                       13
<PAGE>


20.  RECORD DATE FOR NOTICES OF GENERAL MEETINGS AND OTHER ACTION

     Subject to the Companies Law and any other applicable law, and
     notwithstanding any provision of these Articles to the contrary, and to
     allow the Company to determine the members entitled to notice of, or to
     vote at, any Annual or Extraordinary General Meeting or any adjournment
     thereof, or to express consent to or dissent from any corporate action in
     writing without a meeting, or entitled to receive payment of any dividend
     or other distribution or allotment of any rights, or entitled to exercise
     any rights in respect of, or to take or be subject to, any other action,
     the Board of Directors may fix in advance, a record date (the "Record
     Date"). A determination of members of record entitled to notice of or to
     vote at a meeting shall apply to any adjournment or the meeting: provided,
     however, that the Board of Directors may fix a new record date for the
     adjourned meeting.

21.  DECEDENTS' SHARES

     a)   In case of the death of a registered holder of a share registered in
          the names of two or more holders, the Company may recognize the
          survivor(s) as the sole owner(s) thereof unless and until the
          provisions of Article 21(b) have been effectively invoked.

     b)   Any person becoming entitled to a share in consequence of the death of
          any shareholder, upon producing evidence of the grant of probate or
          letters of administration or declaration of succession (or such other
          evidence as the Board of Directors may reasonably deem sufficient),
          shall be registered as a member in respect of such share, or may,
          subject to the regulations as to transfer herein contained, transfer
          such share.

22.  RECEIVERS AND LIQUIDATORS

     a)   The Company may recognize any receiver, liquidator or similar official
          appointed to wind-up, dissolve or otherwise liquidate a corporate
          member, and a trustee, manager, receiver, liquidator or similar
          official appointed in bankruptcy or in connection with the
          reorganization of, or similar proceeding with respect to a member or
          its properties, as being entitled to the shares registered in the name
          of such member.

     b)   Such receiver, liquidator or similar official appointed to wind-up,
          dissolve or otherwise liquidate a corporate member and such trustee,
          manager, receiver, liquidator, or similar official appointed in
          bankruptcy or in connection with the reorganization of, or similar
          proceedings with respect to a member or its properties, upon producing
          such evidence as the Board of Directors may deem sufficient as to his
          authority to act in such capacity or under this Article, shall with
          the consent of the Board of Directors (which the Board of Directors
          may grant or refuse in its absolute discretion), be registered as a
          member in respect of such shares, or may, subject to the regulations
          as to transfer herein contained, transfer such shares.


                                       14
<PAGE>


23.  GENERAL MEETING

     Resolutions of the Company in the following matters shall be adopted by the
     General Meeting:

     23.1. Changes in the Company's Articles of Association or Memorandum of
          Association.

     23.2. Execution of the authorities of the Board of Directors by the General
          Meeting. if the Board of Directors is incapable of executing it's
          authorities and the execution of such authority is essential for the
          proper administration of the Company, according to section 52(a) of
          the Companies Law.

     23.3. Appointment of the Company's auditors and their dismissal.

     23.4. Election of the directors of the Company and their dismissal.

     23.5. Confirmation of actions and transactions that require the approval of
          the General Meeting according to sections 255 and 268 up to 275 of the
          Companies Law.

     23.6. The increase of the registered share capital and its decrease
          according to sections 286 and 297 of the Companies Law and, changes in
          the share capital according to article 7 hereof.

     23.7. Merger according to section 320(a) of the Companies Law.

     23.8. Any resolution that according to these Articles of Association, is
          required to be adopted by the General Meeting

                                GENERAL MEETINGS

23A. ANNUAL GENERAL MEETING

     a)   An Annual General Meeting shall be held once in every calendar year at
          such time (within a period of not more than fifteen (15) months after
          the last preceding Annual General Meeting) and at such place, either
          within or outside the State of Israel, as may be determined by the
          Board of Directors.

     b)   Subject to the provisions of these Articles, the function of the
          Annual General Meeting shall be to elect the members of the Board of
          Directors; to receive the Financial Statements, the ordinary reports
          and accounts of the Company's directors and auditors; to approve final
          annual (pursuant and subject to Articles 52, 53, 54 and 57) dividends;
          to appoint the Company's auditors and to fix their remuneration; and
          to transact any other business which under these Articles or the
          Statutes are to be transacted at a General Meeting.


                                       15
<PAGE>


     c)   Subject to any applicable law, all resolutions concerning all the
          business that may come before the Annual General Meetings,
          Extraordinary Meetings or any adjournments thereof, shall be adopted
          by Members who either chose to attend and vote their shares in person
          at such meetings or to vote thereon by means of a proxy.

24.  EXTRAORDINARY GENERAL MEETINGS

     All General Meetings other than Annual General Meetings shall be called
     "Extraordinary General Meeting". The Board of Directors may, whenever it
     thinks fit, convene an Extraordinary General Meeting, at such time and
     place, within or out-side the State of Israel, as may be determined by the
     Board of Directors, and shall be obliged to do so upon a request in writing
     in accordance with Section 63(b) of the Companies Law.

25.  NOTICE OF GENERAL MEETINGS; OMISSION TO GIVE NOTICE

     a)   Not less than seven (7) days' prior notice shall be given of every
          General Meeting, provided, however, that a Special Resolution shall
          not be passed unless at least twenty one (21) days' prior notice shall
          have been given of the meeting at which it is proposed to pass the
          same unless all shareholders entitled to vote agree on a shorter
          period. Each such notice shall specify the place and the day and hour
          of the meeting, and the general nature of each item to be acted upon
          thereat, said notice to be given to all members who would be entitled
          to attend and vote at such meeting. No separate notice shall be given
          to Registered Shareholders. Anything therein to the contrary
          notwithstanding, with the consent of all members entitled to vote
          thereon, a resolution may be proposed and passed at such meeting
          although a lesser notice than hereinabove prescribed has been given.

     b)   The accidental omission to give notice of a meeting to any member, or
          the non-receipt of notice sent to such member, shall not invalidate
          the proceedings at such meeting.

                         PROCEEDINGS AT GENERAL MEETINGS

26.  QUORUM

     a)   No business shall be transacted at a General Meeting, or at any
          adjournment thereof, unless the quorum required under these Articles
          for such General Meeting or such adjourned meeting, as the case may
          be, is present when the meeting proceeds to business.


                                       16
<PAGE>


     b)   In the absence of contrary provisions in these Articles, two or more
          members (not in default in payment of any sum referred to in Article
          32(a) hereof), present in person or by proxy or by voting instrument
          and holding shares conferring in the aggregate not less than twenty
          five (25%) percent of the voting power of the Company, shall
          constitute a quorum of General Meeting.

     c)   If within half an hour from the time appointed for the meeting a
          quorum is not present, the meeting, if convened upon requisition under
          Section 63(b)(2) of the Companies Law, shall be dissolved, but in any
          other case it shall be adjourned to the same day in the next week, at
          the same time and place, or to such day and at such time and place as
          the Chairman may determine with the consent of the holders of a
          majority of the voting power present at the meeting in person or by
          proxy or by voting instrument and voting on the question of
          adjournment. No business shall be transacted at any adjourned meeting
          except business which might lawfully have been transacted at the
          meeting as originally called. At such adjourned meeting (other than an
          adjourned separate meeting of a particular class of shares as referred
          to in Article 6 of these Articles), any two (2) members (not in
          default as aforesaid) present in person or by proxy or by voting
          instrument, and holding shares conferring in the aggregate not less
          than twenty five (25%) percent of the voting power of the Company,
          shall constitute a quorum.

27.  CHAIRMAN

     The Chairman, if any, of the Board of Directors, shall preside as Chairman
     at every General Meeting of the Company. If, at any meeting, the Chairman
     is not present within fifteen (15) minutes after the time fixed for holding
     the meeting or is unwilling to act as Chairman, the Co-Chairman shall
     preside at the meeting. If at any such meeting both the Chairman and the
     Co-Chairman are not present or are unwilling to act as Chairman, the
     members present shall choose someone of their number to be Chairman. The
     office of Chairman shall not, by itself, entitle the holder thereof to vote
     at any General Meeting nor shall it entitle such holder to a second or
     casting vote (without derogating, however, from the rights of such Chairman
     to vote as a shareholder or proxy of a shareholder if, in fact, he is also
     a shareholder or such proxy).

28.  ADOPTION OF RESOLUTIONS AT GENERAL MEETINGS

     a)   (i)  An Ordinary Resolution shall be deemed adopted if approved by an
               Ordinary Majority.

          (ii) A Special or Extraordinary Resolution shall be deemed adopted if
               approved by a Special Majority.


                                       17
<PAGE>


     b)   Every question submitted to a General Meeting shall be decided by a
          show of hands, but if a written ballot is demanded by any member
          present in person or by proxy or by voting instrument and entitled to
          vote at the meeting, the same shall be decided by such ballot. A
          written ballot may be demanded before the proposed resolution is voted
          upon or immediately after the declaration by the Chairman of the
          results of the vote by a show of hands. If a vote by written ballot is
          taken after such declaration, the results of the vote by a show of
          hands shall be of no effect, and the proposed resolution shall be
          decided by such written ballot. The demand for a written ballot may be
          withdrawn at any time before the same is conducted, in which event
          another member may then demand such written ballot. The demand for a
          written ballot shall not prevent the continuance of the meeting for
          the transaction of business other than the question on which the
          written ballot has been demanded.

     c)   A declaration by the Chairman of the meeting that a resolution has
          been carried unanimously, or carried by a particular majority, or
          lost, and an entry to that effect in the minute book of the Company,
          shall be conclusive evidence of the fact without proof of the number
          or proportion of the votes recorded in favor of or against such
          resolution.

29.  RESOLUTIONS IN WRITING

     A resolution in writing signed by all members of the Company then entitled
     to attend and vote at General Meetings or to which all such members have
     given their written consent (by letter, telegram, telex, facsimile or
     otherwise) shall be deemed to have been unanimously adopted by a General
     Meeting duly convened and held.

30.  POWER TO ADJOURN

     The Chairman of a General Meeting at which a quorum is present may, with
     the consent of the holders of a majority of the voting power represented in
     person or by proxy or by voting instrument and voting on the question of
     adjournment (and shall if so directed by the meeting), adjourn the meeting
     from time to time and from place to place, but no business shall be
     transacted at any adjourned meeting except business which might lawfully
     have been transacted at the meeting as originally called.

31.  VOTING POWER

     Subject to provisions of Article 32(a) and subject to any provision hereof
     conferring special rights as to voting, or restricting the right to vote,
     every member shall have one vote for each share held by him of record, on
     every resolution, without regard to whether the vote thereon is conducted
     by a show of hands, by written ballot or by any other means.


                                       18
<PAGE>


32.  VOTING RIGHTS

     a)   No member shall be entitled to vote at any General Meeting (or be
          counted as a part of the quorum thereat), unless all calls then
          payable by him in respect of his shares in the Company have been paid,
          but this Article 32(a) shall not apply to separate General Meetings of
          the holders of a particular class of shares pursuant to Article 6(b).

     b)   A company or other corporate body being a member of the Company may
          duly authorize any person to be its representative at any meeting of
          the Company or to execute or deliver a proxy on its behalf. Any person
          so authorized shall be entitled to exercise on behalf of such member
          all the power which the latter could have exercised if it were an
          individual shareholder. Upon the request of the Chairman of the
          meeting, written evidence of such authorization (in form acceptable to
          the Chairman) shall be delivered to him.

     c)   Any member entitled to vote may vote either in person or by proxy (who
          need not be a member of the Company) or by voting instrument, or, if
          the member is a company or other corporate body, by a representative
          authorized pursuant to Article 32(b) or by voting instrument. Votes
          may be given by a voting instrument on any issue for which voting by
          voting instrument is required to be offered under the Companies Law
          and on any other issue for which the Board of Directors has approved
          voting by voting instrument, either generally or specifically. The
          form of the voting instrument shall be set by the corporate secretary
          or anyone so authorized by the Board of Directors.

     d)   If two or more persons are registered as joint holders of any share,
          the vote of the senior who tenders a vote, in person or by proxy or by
          voting instrument, shall be accepted to the exclusion of the vote(s)
          of the other joint holder(s). For the purpose of this Article 32(d),
          seniority shall be determined by the order of registration of the
          joint holders in the Register of Members.

                                     PROXIES

33.  INSTRUMENT OF APPOINTMENTS

     a)   An instrument appointing a proxy shall be in writing and shall be
          substantially in the following form:

          "I _____________________ of ________________________
             (Name of Shareholder)    (Address of Shareholder)

          being a member of TEFRON LTD. hereby appoint
          _____________________ of ______________________
             (Name of Proxy)         (Address of Proxy)

     as my proxy to vote for me and on my behalf at the General Meeting of the
     Company to be held on the ____ day of _______, 200_ and at any
     adjournment(s) thereof.

     Signed this ____ day of ______, 200_.

     or in any usual or common form or in such other form as may be approved by
     the Board of Directors. Such proxy shall be duly signed by the appointor or
     such person's duly authorized attorney or, if such appointor is a company
     or other corporate body, under its corporate seal or stamp or the hand of
     its duly authorized agent(s) or attorney(s).


                                       19
<PAGE>


     b)   The instrument appointing a proxy (and the power of attorney or other
          authority, if any, under which such instrument has been signed) shall
          either be presented to the Chairman at the meeting at which the person
          named in the instrument proposes to vote or be delivered to the
          Company (at its Registered Office, at its principal place of business,
          or at the offices of its registrar or transfer agent, or at such place
          as the Board of Directors may specify) not less than two (2) hours
          before the time fixed for such meeting, except that the instrument
          shall be delivered forty-eight (48) hours before the time fixed for
          the meeting where the meeting is to be held outside of Israel and the
          instrument is delivered to the Company's registrar or transfer agent.
          Notwithstanding the above, the Chairman shall have the right to waive
          the time requirement provided above with respect to all instruments of
          proxies and to accept any and all instruments of proxy until the
          beginning of a General Meeting.

34.  EFFECT OF DEATH OF APPOINTOR OR TRANSFER OF SHARE OR REVOCATION OF
     APPOINTMENT

     a)   A vote cast in accordance with an instrument appointing a proxy shall
          be valid notwithstanding the prior death or bankruptcy of the
          appointing member (or of his attorney-in-fact, if any, who signed such
          instrument), or the transfer of the share in respect of which the vote
          is cast, unless written notice of such matters shall have been
          received by the Company or by the Chairman of such meeting prior to
          such vote being cast.

     b)   An instrument appointing a proxy shall be deemed revoked (i) upon
          receipt by the Company or the Chairman, subsequent to receipt by the
          Company of such instrument, of written notice signed by the person
          signing such instrument or by the member appointing such proxy
          canceling the appointment thereunder (or the authority pursuant to
          which such instrument was signed) or of an instrument appointing a
          different proxy (and such other documents, if any, required under
          Article 33(b) for such new appointment), PROVIDED such notice of
          cancellation or instrument appointing a different proxy were so
          received at the place and within the time for delivery of the
          instrument revoked thereby as referred to in Article 33(b) hereof, or
          (ii) if the appointing member is present in person at the meeting for
          which such instrument of proxy was delivered, upon receipt by the
          Chairman of such meeting of written notice from such member of the
          revocation of such appointment, or if and when such member votes at
          such meeting. A vote cast in accordance with an instrument appointing
          a proxy shall be valid notwithstanding the revocation or purported
          cancellation of the appointment, or the presence in person or vote of
          the appointing member at a meeting for which it was rendered, unless
          such instrument of appointment was deemed revoked in accordance with
          the foregoing provisions of this Article 34(b) at or prior to the time
          such vote was cast.


                                       20
<PAGE>


                               BOARD OF DIRECTORS

35.  POWERS OF BOARD OF DIRECTORS

     (a)  GENERAL

     The management of the business of the Company shall be vested in the Board
     of Directors, which may exercise all such powers and do all such acts and
     things as the Company is authorized to exercise and do, and are not hereby
     or by law required to be exercised or done by the Company by action of its
     members at a General Meeting. The authority conferred on the Board of
     Directors by this Article 35 shall be subject to the provisions of the
     Companies Law, these Articles, and any regulation or resolution consistent
     with these Articles adopted from time to time by the Company by action of
     its members at a General Meeting, PROVIDED, however, that no such
     regulation or resolution shall invalidate any prior act done by or pursuant
     to a decision of the Board of Directors which would have been valid if such
     regulation or resolution had not been adopted.

     (b)  BORROWING POWER

     The Board of Directors may from time to time, at its discretion, cause the
     Company to borrow or secure the payment of any sum or sums of money for the
     purposes of the Company, and may secure or provide for the repayment of
     such sum or sums in such manner, at such times and upon such terms and
     conditions as it deems fit, and, in particular, by the issuance of bonds,
     perpetual or redeemable debentures, debenture stock, or any mortgages,
     charges, or other securities on the undertaking or the whole or any part of
     the property of the Company, both present and future, including its
     uncalled or called but unpaid capital for the time being.

     (c)  RESERVES

     The Board of Directors may, from time to time, set aside any amount(s) out
     of the profits of the Company as a reserve or reserves for any purpose(s)
     which the Board of Directors, in its absolute discretion, shall deem fit,
     including without limitation, capitalization and distribution of bonus
     shares, and may invest any sum so set aside in any manner and from time to
     time deal with and vary such investments and dispose of all or any part
     thereof, and employ any such reserve or any part thereof in the business of
     the Company without being bound to keep the same separate from other assets
     of the Company, and may subdivide or redesignate any reserve or cancel the
     same or apply the funds therein for another purpose, all as the Board of
     Directors may from time to time think fit.


                                       21
<PAGE>


36.  EXERCISE OF POWERS OF BOARD OF DIRECTORS

     a)   A meeting of the Board of Directors duly convened and at which a
          quorum is present shall be competent to exercise all the authorities,
          powers and discretion vested in or exercisable by the Board of
          Directors.

     b)   A resolution proposed at any meeting of the Board of Directors shall
          be deemed adopted if approved by a majority of the Directors present
          when such resolution is put to a vote and voting thereon.

     c)   The board of directors may adopt resolutions without actually
          convening, provided that all the directors then in office entitled to
          participate in a discussion and vote on a matter brought for
          resolution have agreed to a resolution in writing (by letter,
          facsimile, electronic mail or otherwise). A resolution adopted by the
          board of directors without actually convening shall require the
          approval of at least 75% of the members of the board of directors
          entitled to vote thereon and thus approved, shall be deemed to have
          been adopted by a meeting of the Board of Directors duly convened and
          held.

37.  DELEGATION OF POWERS

     a)   The Board of Directors may, subject to the provisions of the Companies
          Law, delegate any or all of its powers to committees, each consisting
          of one or more persons, and it may from time to time revoke such
          delegation or alter the composition of any such committee. Any
          Committee so formed (in these Articles referred to as a "Committee of
          the Board of Directors"), shall, in the exercise of the powers so
          delegated, conform to any regulations imposed on it by the Board of
          Directors. The meetings and proceedings of any such Committee of the
          Board of Directors shall, mutatis mutandis, be governed by the
          provisions herein contained for regulating the meetings of the Board
          of Directors, so far as not superseded by any regulations adopted by
          the Board of Directors under this Article. Unless otherwise expressly
          provided by the Board of Directors in delegating powers to a Committee
          of the Board of Directors, such Committee shall not be empowered to
          further delegate such powers.

     b)   Without derogating from the provisions of Article 50, the Board of
          Directors may from time to time appoint a Secretary to the Company, as
          well as officers, agents, employees and independent contractors, as
          the Board of Directors deems fit, and may terminate the service of any
          such person. The Board of Directors may, subject to the provisions of
          the Companies Law, determine the powers and duties, as well as the
          salaries and emoluments, of all such persons, and may require security
          in such cases and in such amounts as it deems fit.


                                       22
<PAGE>


     c)   The Board of Directors may from time to time, by power of attorney or
          otherwise, appoint any person, company, firm or body of persons to be
          the attorney or attorneys of the Company at law or in fact for such
          purpose(s) and with such powers, authorities and discretions, and for
          such period and subject to such conditions, as it deems fit, and any
          such power of attorney or other appointment may contain such
          provisions for the protection and convenience of persons dealing with
          any such attorney as the Board of Directors deems fit, and may also
          authorize any such attorney to delegate all or any of the powers,
          authorities and discretions vested in him.

38.  ELECTION OF DIRECTORS

     a)   The Board of Directors of the Company shall consist of such number of
          Directors (not less than two (2) nor more than fifteen (15) as may be
          fixed, from time to time, by ordinary Resolution of the Company.

     b)   The Board of Directors may, from time to time, elect an additional
          director or directors to the Company, whether to fill a vacancy,
          however created, or as an additional director or directors, only that
          the total number of directors may not be higher than the maximum
          number determined in Article 38(a) hereof. A director thus elected,
          would terminate his service at the first Annual General Meeting that
          shall be held after his appointment, and could be re-elected as a
          director.

     c)   The General Meeting or the Board of Directors may determine that the
          service term of a director elected by them, accordingly, may begin at
          a date later than the date of such director's election as a director.

     d)   The Company shall appoint at least two External Directors, and the
          provisions of the Companies Law in this matter shall apply.

39.  ELECTION AND REMOVAL OF DIRECTORS

     Directors shall be elected at the Annual General Meeting, Extraordinary
     Meeting or General Meeting of the Company by the vote of the holders of a
     majority of the voting power represented at such meeting in person or by
     proxy or by voting instrument and voting on the election of directors, and
     each Director shall serve, subject to Article 42 hereof, and, with respect
     to a Director appointed pursuant to Article 41 hereof, subject to such
     Article, until the Annual General Meeting next following the Annual General
     Meeting or General Meeting at which such Director was elected pursuant to
     this Article or Article 41 hereof, or his earlier removal pursuant to this
     Article 39. The holders of a majority of the voting power represented at a
     General Meeting in person or by proxy or by voting instrument and voting
     thereon at such Meeting shall be entitled to remove any Director(s) from
     office, to elect Directors instead of Directors so removed, or to fill any
     vacancy, however created, in the Board of Directors.


                                       23
<PAGE>


40.  QUALIFICATION OF DIRECTORS

     No person shall be disqualified to serve as a Director by reason of his not
     holding shares in the Company or by reason of his having served as a
     Director in the past.

41.  CONTINUING DIRECTORS IN THE EVENT OF VACANCIES

     In the event of one or more vacancies in the Board of Directors, the
     continuing Directors may continue to act in every matter, and, pending the
     filling of any vacancy pursuant to the provisions of Article 39, may
     appoint Directors to temporarily fill any such vacancy, provided, however,
     that if they number less than a majority of the number provided for
     pursuant to Article 38 hereof, they may only act in an emergency or to fill
     the office of director which has become vacant up to the minimum number or
     in order to call a General Meeting of the Company for the purpose of
     electing Directors to fill any or all vacancies, so that at least a
     majority of the number of Directors provided for pursuant to Article 38
     hereof are in office as a result of said meeting.

42.  VACATION OF OFFICE

     a)   The office of a Director shall be vacated, ipso facto, upon his or her
          death, or if he or she be found lunatic or become of unsound mind, or
          if he or she becomes bankrupt, or if the Director is a company, upon
          its winding-up.

     b)   The office of a Director shall be vacated by his, her or its written
          resignation. Such resignation shall become effective on the date fixed
          therein, or upon the delivery thereof to the Company, whichever is
          later.

43.  REMUNERATION OF DIRECTORS

     A Director shall be paid remuneration by the Company for his services as
     Director to the extent such remuneration shall have been approved by a
     General Meeting of the Company.


                                       24
<PAGE>


44.  CONFLICT OF INTEREST

     a)   Subject to the provisions of the Companies Law, no Director shall be
          disqualified by virtue of his office from holding any office or place
          of profit in the Company or in any company in which the Company shall
          be a shareholder or otherwise interested, or from contracting with the
          Company as vendor, purchaser or otherwise, nor shall any such
          contract, or any contract or arrangement entered into by or on behalf
          of the Company in which any Director shall be in any way interested,
          be avoided, nor, other than as required under the Companies Law, shall
          any Director be liable to account to the Company for any profit
          arising from any such office or place of profit or realized by any
          such contract or arrangement by reason only of such Director's holding
          that office or of the fiduciary relations thereby established, but the
          nature of his interest as well as any material fact of document, must
          be disclosed by him at the meeting of the Board of Directors at which
          the contract or arrangement is first considered, if his interest then
          exists, or, in any other case, at no later than the first meeting of
          the Board of Directors after the acquisition of his interest.

     b)   Subject to the Companies law, all actions executed by the Board of
          Directors or by a committee of the Board of Directors or by any person
          acting as a director or a member of a Committee of the Board or by the
          General Manager, accordingly - shall be valid even if after their
          execution it will be discovered that there was a certain flaw in the
          appointment of the Board of Directors, the Committee, the Director,
          the Committee's member or the General Manager, accordingly, or that
          any one of the above officers was disqualified from serving at his
          office.

     c)   Subject to the Companies law, an officer holding shares of the Company
          and having an interest or holding another office in any other
          corporation, including a corporation in which the Company has an
          interest or that holds shares of the Company, shall not disqualify the
          officer from being an officer in the Company. Nor shall an officer of
          the Company be disqualified from being an officer of the Company as a
          result of the execution of an agreement between such an officer or any
          such corporation and the Company in any matter and in any fashion.

     d)   Subject to the Companies law, an officer shall be entitled to
          participate and to vote in meetings concerning the approval of actions
          or transactions in which he has personal interest.

     e)   Subject to the Companies law, a transaction between the Company and an
          officer of the Company or an entity controlling the Company or a
          transaction between the Company and another person that an officer of
          the Company or that an entity controlling the Company have personal
          interest thereof, and which are not irregular transactions, shall be
          approved in the following manner:

          (i)  Such a transaction, which is not irregular, shall be approved by
               the Board of Directors or by the Audit Committee or by any other
               entity authorized by the Board of Directors, whether according to
               a specific resolution or to a general authorization, an
               authorization to a certain category of transactions or an
               authorization to a certain transaction.


                                       25
<PAGE>


          (ii) The approval of transactions which are not irregular, as
               aforesaid, may be made by granting a general approval to a
               certain category of transactions or by approving one specific
               transaction.

     f)   Subject to the Companies law, a general notice given to the Board of
          Directors by an officer or an entity controlling the Company,
          concerning their personal interest in a certain entity, specifying
          such personal interest, shall be deemed as the revelation by such
          officer or controlling entity to the Company of such personal
          interest, in connection with the entrance into a transaction which is
          not irregular with any such entity

45.  ALTERNATE DIRECTORS

     a)   A Director may, by written notice to the Company given in the manner
          set forth in Article 45(b) below, appoint any individual (whether or
          not such person is then a member of the Board of directors) as an
          alternate for himself (in these Articles referred to as "Alternate
          Director"), remove such Alternate Director and appoint another
          Alternate Director in place of any Alternate Director appointed by him
          whose office has been vacated for any reason whatsoever. The
          appointment of an Alternate Director shall be subject to the consent
          of the Board of Directors if the appointee is not then a member of the
          Board of Directors. Unless the appointing Director, by the instrument
          appointing an Alternate Director or by written notice to the Company,
          limits such appointment to a specified period of time or restricts it
          to a specified meeting or action of the Board of Directors, or
          otherwise restricts its scope, the appointment shall be for all
          purposes, and for a period of time concurrent with the term of the
          appointing Director.

     b)   Any notice to the Company pursuant to Article 45(a) shall be given in
          person to, or by sending the same by mail to the attention of the
          General Manager of the Company at the principal office of the Company
          or to such other person or place as the Board of Directors shall have
          determined for such purpose, and shall become effective on the date
          fixed therein, or upon the receipt thereof by the Company (at the
          place as aforesaid), whichever is later, subject to the consent of the
          Board of Directors if the appointee is not then a member of the Board
          of Directors, in which case the notice will be effective as of the
          date of such consent.

     c)   An Alternate Director shall have all the rights and obligations of the
          Director who appointed him, provided however, that (i) he may not in
          turn appoint an alternate for himself (unless the instrument
          appointing him otherwise expressly provides), and (ii) that an
          Alternate Director shall have no standing at any meeting of the Board
          of Directors or any committee thereof while the Director who appointed
          him is present, and (iii) hat the Alternate Director is not entitled
          to remuneration.

     d)   Any natural person, whether or not he or she be a member of the Board
          of Directors, may act as an Alternate Director. One person may act as
          Alternate Director for several Directors, and in such event he or she
          shall have a number of votes (and shall be treated as the number of
          persons for purposes of establishing a quorum) equal to the number of
          Directors for whom he acts as Alternate Director. If an Alternate
          Director is also a Director in his own right, his rights as an
          Alternate Director shall be in addition to his rights as a Director.


                                       26
<PAGE>


     e)   An Alternate Director shall alone be responsible for his or her own
          acts and defaults, and he or she shall not be deemed the agent of the
          Director(s) who appointed him.

     f)   The office of an Alternate Director shall be vacated under the
          circumstances, mutatis mutandis, set forth in Article 42, and such
          office shall ipso facto be vacated if the Director who appointed such
          Alternate Director ceased to be a Director.

                      PROCEEDINGS OF THE BOARD OF DIRECTORS

46.  MEETINGS

     a)   The Board of Directors may meet and adjourn its meetings and otherwise
          regulate such meetings and proceedings as the Directors think fit.

     b)   Any Director may at any time, and the Secretary, upon the request of
          such Director, shall, convene a meeting of the Board of Directors, but
          not less than two (2) days notice shall be given of any meetings so
          convened. Notice of any such meeting shall be given to all the
          Directors and may be given orally, by telephone, in writing or by
          mail, telex, cablegram or facsimile. Notwithstanding anything to the
          contrary herein, failure to deliver notice to a director of any such
          meeting in the manner required hereby may be waived by such Director,
          and a meeting shall be deemed to have been duly convened
          notwithstanding such defective notice if such failure of defect is
          waived prior to action being taken at such meeting, by all Directors
          entitled to participate at such meeting to whom notice was not duly
          given as aforesaid.

47.  QUORUM

     Until otherwise unanimously decided by the Board of Directors, a quorum at
     a meeting of the Board of Directors shall be constituted by the presence in
     person or by telephone conference of half (50%) of the Directors then in
     office who are lawfully entitled to participate in the meeting. No business
     shall be transacted at a meeting of the Board of Directors unless the
     requisite quorum is present (in person or by telephone conference) when the
     meeting proceeds to business.


                                       27
<PAGE>


48.  CHAIRMAN OF THE BOARD OF DIRECTORS

     The Board of Directors may from time to time, elect one of its members to
     be the Chairman of the Board of Directors, and another of its members as
     Co-Chairman, remove such Chairman and Co-Chairman from office and appoint
     others in their place. The Chairman of the Board of Directors shall preside
     at every meeting of the Board of Directors, but if there is no such
     Chairman, or if at any meeting he is not present within fifteen (15)
     minutes of the time fixed for the meeting or if he is unwilling to take the
     chair, the Co-Chairman shall preside. If both the Chairman and the
     Co-Chairman are not present within such fifteen (15) minutes or are
     unwilling to take the chair the Directors present shall choose one of their
     number to be the Chairman of such meeting.

49.  VALIDITY OF ACTS DESPITE DEFECTS

     All acts done bona fide at any meeting of the Board of Directors, or of a
     Committee of the Board of Directors, or by any person(s) acting as
     Director(s), shall, notwithstanding that it may afterwards be discovered
     that there was some defect in the appointment of the participants in such
     meetings or any of them or any person(s) acting as aforesaid, or that they
     or any of them were disqualified, be as valid as if there were no such
     defect or disqualification.

                      CHIEF EXECUTIVE OFFICER AND PRESIDENT

50.  CHIEF EXECUTIVE OFFICER AND PRESIDENT

     The Board of Directors may from time to time appoint one or more persons,
     whether or not Directors, as Chief Executive Officer or Officers, General
     Manager or Managers, or President of the Company and may confer upon such
     person(s), and from time to time modify or revoke, such title(s) and such
     duties and authorities of the Board of Directors as the Board of Directors
     may deem fit, subject to such limitations and restrictions as the Board of
     Directors may from time to time prescribe. Unless otherwise determined by
     the Board of Directors, the Chief Executive Officer(s) shall have authority
     with respect of the management of the Company in the ordinary course of
     business. Such appointment(s) may be either for a fixed term or without any
     limitation of time, and the Board of Directors may from time to time
     (subject to the provisions of the Companies Law and of any contract between
     any such person and the Company) fix his or their salaries and emoluments,
     remove or dismiss him or them from office and appoint another or others in
     his or their place or places.


                                       28
<PAGE>


MINUTES

51.    MINUTES

     a)   Minutes of each General Meeting and of each meeting of the Board of
          Directors shall be recorded and duly entered in books provided for
          that purpose, and shall be held by the Company at its principal place
          of office or its Registered Office or such other place as shall have
          been determined by the Board of Directors. Such minutes shall, in all
          events, set forth the names of the persons present at the meeting and
          all resolutions adopted thereat.

     b)   Any minutes as aforesaid, if purporting to be signed by the chairman
          of the meeting or by the chairman of the next succeeding meeting,
          shall constitute prima facie evidence of the matters recorded therein.

                                    DIVIDENDS

52.  DECLARATION OF DIVIDENDS

     The Board of Directors may from time to time declare, and cause the Company
     to pay, such interim dividend as may appear to the Board of Directors to be
     justified by the profits of the Company. The final dividend in respect of
     any fiscal year shall be proposed by the Board of Directors and shall be
     payable only after the same has been approved by Ordinary Resolution of the
     Company, but no such resolution shall provide for the payment of an amount
     exceeding that proposed by the Board of Directors for the payment of such
     final dividend, and no such resolution or any failure to approve a final
     dividend shall affect any interim dividend theretofore declared and paid.
     The Board of Directors shall determine the time for payment of such
     dividends, both interim and final, and the record date for determining the
     shareholders entitled thereto.

53.  FUNDS AVAILABLE FOR PAYMENT OF DIVIDEND

     The Company may pay dividends subject to and according to the provisions of
     the Companies Law.

54.  AMOUNT PAYABLE BY WAY OF DIVIDENDS

     Subject to the provisions of these Articles and subject to any rights or
     conditions attached at that time to any share in the capital of the Company
     granting preferential, special or deferred rights or not granting any
     rights with respect to dividends, the profits of the Company which shall be
     declared as dividends shall be distributed according to the proportion of
     the nominal value paid up on account of the shares held at the date so
     appointed by the Company, without regard to the premium paid in excess of
     the nominal value, if any. No amount paid or credited as paid on a share in
     advance of calls shall be treated for purposes of this Article as paid on a
     share.


                                       29
<PAGE>


55.  INTEREST

     No dividend shall carry interest as against the Company.

56.  PAYMENT IN SPECIE

     Upon the recommendation of the Board of Directors approved by Ordinary
     Resolution of the Company, the Company (i) may cause any monies,
     investments, or other assets forming part of the undivided profits of the
     Company, standing to the credit of a reserve fund, or to the credit of a
     reserve fund for the redemption of capital, or in the hands of the Company
     and available for dividends, or representing premiums received on the
     issuance of shares and standing to the credit of the share premium account,
     to be capitalized and distributed among such of the shareholders as would
     be entitled to receive the same if distributed by way of dividend and in
     the same proportion, on the basis that they become entitled thereto as
     capital, or may cause any part of such capitalized fund to be applied on
     behalf of such shareholders in paying up in full, either at par or at such
     premium as the resolution may provide, any unissued shares or debentures or
     debenture stock of the Company, which shall be distributed accordingly or
     in payment, in full or in part, of the uncalled liability on all issued
     shares or debentures or debenture stock if such liability exists, on a pro
     rata basis, and (ii) may cause such distribution or payment to be accepted
     by such shareholders in full satisfaction of their interest in the said
     capitalized sum. In case of a stock dividend, holders of each class of
     shares can receive shares of one class whether such class existed prior
     thereto or was created therefor or shares of the same class which conferred
     upon the holder the right to receive such dividend.

57.  IMPLEMENTATION OF POWERS UNDER ARTICLE 56

     For the purpose of giving full effect to any resolution under Article 56,
     and without derogating from the provisions of Article 7(b) hereof, the
     Board of Directors may settle any difficulty which may arise in regard to
     the distribution as it thinks expedient, and, in particular, may issue
     fractional certificates, and may fix the value for distribution of any
     specific assets, and may determine that cash payments shall be made to any
     members upon the basis of the value so fixed, or that fractions of less
     value than the nominal value of one share may be disregarded in order to
     adjust the rights of all parties, and may vest any such cash, shares,
     debentures, debenture stock or specific assets in trustees upon such trusts
     for the persons entitled to the dividend or capitalized fund as may seem
     expedient to the Board of Directors. Where requisite, a proper contract
     shall be filed in accordance with Section 291 of the Companies Law, and the
     Board of Directors may appoint any person to sign such contract on behalf
     of the persons entitled to the dividend or capitalized fund as may seem
     expedient to the Board of Directors. Where requisite, a proper contract
     shall be filed in accordance with Section 291 of the Companies Law, and the
     Board of Directors may appoint any person to sign such contract on behalf
     of the persons entitled to the dividend or capitalized fund.


                                       30
<PAGE>


58.  DIVIDEND ON UNPAID SHARES

     Without derogation from Article 54 hereof, the Board of Directors may give
     an instruction which shall prevent the distribution of a dividend to the
     registered holders of share the full nominal amount of which has not been
     paid up.

59.  RETENTION OF DIVIDENDS

     a)   The Board of Directors may retain any dividend or other monies payable
          or property distributable in respect of a share on which the Company
          has a lien, and may apply the same in or towards satisfaction of the
          debts, liabilities, or engagements in respect of which the lien
          exists.

     b)   The Board of Directors may retain any dividend or other monies payable
          or property distributable in respect of a share in respect of which
          any person is, under Article 21 or 22, entitled to become a member, or
          which any person, is, under said Articles, entitled to transfer, until
          such person shall become a member in respect of such share or shall
          transfer the same.

60.  UNCLAIMED DIVIDENDS

     All unclaimed dividends or other moneys payable in respect of a share may
     be invested or otherwise made use of by the Board of Directors for the
     benefit of the Company until claimed. The payment by the Directors of any
     unclaimed dividend or such other moneys into a separate account shall not
     constitute the Company a trustee in respect thereof. The principal (and
     only the principal) of an unclaimed dividend or such other moneys shall be,
     if claimed, paid to a person entitled thereto.

61.  MECHANICS OF PAYMENT

     The Board of Directors may fix the mechanics for payment of dividends as it
     deems fit. However, if nothing to the contrary in the resolution of the
     Board of Directors, then all dividends or other moneys payable in cash in
     respect of a share may be paid by check or warrant sent through the post
     to, or left at, the registered address of the person entitled thereto or by
     transfer to a bank account specified by such person (or, if two or more
     persons are registered as joint holders of such share or are entitled
     jointly thereto in consequence of the death or bankruptcy of the holder or
     otherwise, to the joint holder whose name is registered first in the
     Register of Members or his bank account or the person who the Company may
     then recognize as the owner thereof or entitled thereto under Article 21 or
     22 hereof, as applicable, or such person's bank account), or to such person
     and at such other address as the person entitled thereto may by writing
     direct. Every such check or warrant shall be made payable to the order of
     the person to whom it is sent, or to such person as the person entitled
     thereto as aforesaid may direct, and payment of the check or warrant by the
     banker upon whom it is drawn shall be a good discharge to the Company.


                                       31
<PAGE>


62.  RECEIPT FROM A JOINT HOLDER

     If two or more persons are registered as joint holders of any share, or are
     entitled jointly thereto in consequence of the death or bankruptcy of the
     holder or otherwise, any one of them may give effectual receipts for any
     dividend or other moneys payable or property distributable in respect of
     such share.

                                    ACCOUNTS

63.  BOOKS OF ACCOUNT

     The Board of Directors shall cause accurate books of account to be kept in
     accordance with the provisions of the Companies Law and of any other
     applicable law. Such books of account shall be kept at the Registered
     Office of the Company, or at such other place or places as the Board of
     Directors may think fit, and they shall always be open to inspection by all
     Directors. No member, not being a Director, shall have any right to inspect
     any account or book or other similar document of the Company, except as
     conferred by law or authorized by the Board of Directors or by Ordinary
     Resolution of the Company.

64.  AUDIT

     At least once in every fiscal year the accounts of the Company shall be
     audited and the correctness of the profit and loss account and balance
     sheet certified by one or more duly qualified auditors.

65.  AUDITORS

     The appointment, authorities, rights and duties of the auditor(s) of the
     Company, shall be regulated by applicable law, provided, however, that in
     exercising its authority to fix the remuneration of the auditor(s), the
     members in General Meeting may, by Ordinary Resolution, act (and in the
     absence of any action in connection therewith shall be deemed to have so
     acted) to authorize the Board of Directors to fix such remuneration subject
     to such criteria or standards, if any, as may be provided in such Ordinary
     Resolution, and if no such criteria or standards are so provided, such
     remuneration shall be fixed in an amount commensurate with the volume and
     nature of the services rendered by such auditor(s).


                                       32
<PAGE>


                                BRANCH REGISTERS

66.  BRANCH REGISTERS

     Subject to and in accordance with the provisions of Sections 138 to 139,
     inclusive, of the Companies Law and to all orders and regulation issued
     thereunder, the Company may cause branch registers to be kept in any place
     outside Israel as the Board of Directors may think fit, and, subject to all
     applicable requirements of law, the Board of Directors may from time to
     time adopt such rules and procedures as it may think fit in connection with
     the keeping of such branch registers.

                             INDEMNITY AND INSURANCE

67.  INDEMNITY AND INSURANCE

     a)   Subject to the provisions of the Companies Ordinance, the Company may
          enter into a contract for the insurance of the Liability, in whole or
          in part, of any of its Office Holders with respect to: (i) a breach of
          his duty of care to the Company or to another person; (ii) a breach of
          his fiduciary duty to the Company, provided that the Office Holder
          acted in good faith and had reasonable cause to assume that his act
          would not prejudice the interests of the Company; or (iii) a financial
          liability imposed upon him in favor of another person in respect of an
          act performed by him in his capacity as an Office Holder of the
          Company.

     b)   The Company may indemnify an Office Holder against: (i) a financial
          liability imposed on him in favor of another person by any judgment,
          including a settlement or an arbitrator's award approved by a court in
          respect of an act performed in his capacity as an Office Holder of the
          Company, and (ii) reasonable litigation expenses, including attorneys'
          fees, expended by such Office Holder or charged to him by a court, in
          proceedings instituted against him by the Company or on its behalf or
          by another person, or in a criminal charge, from which he was
          acquitted, all in respect of an act performed in his capacity as an
          Office Holder of the Company, and (iii) liabilities, obligations and
          expenses in respect of which in the future the Company may be legally
          permitted to indemnify under the Companies Ordinance.

     c)   The Company may indemnify an Office Holder in accordance with the
          provisions of article 67(b) for any liabilities and/or expenses
          incurred by such an Office Holder. Such indemnification shall include
          reasonable litigation expenses, as specified in Article 67(b) above,
          that were incurred by or charged to such an Office Holder if convicted
          in a criminal charge for an offense that does not require the proof of
          criminal thought. In addition to the above, the Company may also
          undertake to indemnify such an Office Holder in advance, for
          liabilities and/or expenses that were not yet incurred, provided that
          such a commitment shall be restricted to types of events that in the
          opinion of the Board of Directors can be foreseen at the time that the
          commitment is made and to an amount that the Board of Directors deems
          reasonable, in view of the circumstances. Such indemnification may
          include any other liability or event permitted by any applicable law.


                                       33
<PAGE>


     d)   The Company may release an Office Holder in advance from liability -
          whether totally or partially - for damages arising from the breach of
          the duty of such an Office Holder to act with due skill and care
          towards the Company.

     e)   Subject to the Companies law - the Company may indemnify any employee
          of the Company who is not an Office Holder of the Company, from any
          liability or expense imposed on such an employee in his capacity as an
          employee of the Company, while defending from any litigation, whether
          criminal or civil, that resulted, accordingly, by an acquittal or a
          judgment in the employee's favor.

     f)   The company may commit to indemnify such an employee, including in
          advance, for any financial liability imposed on such an employee in
          favor of another person in respect of an act performed bona fide in
          his capacity as an employee of the Company.

     g)   Subject to the Companies Law, these Articles of Association shall not
          limit the Company in any way from entering into a contract for the
          insurance, or the granting of exemptions or indemnification (i) in
          connection with an Office Holder in the Company or any person
          designated by the Company to serve as a director in another company in
          which the Company has any interest or holds shares, directly or
          indirectly ("a Director In Another Company"), to the extent that the
          insurance, exemption or indemnification are not forbidden by any
          applicable law, and (ii) in connection with whoever is not an Office
          Holder in the Company or a Director In Another Company, including but
          not limited to, employees, contractors and consultants.

                                   WINDING UP

68.  WINDING UP

     If the Company is wound up, then subject to applicable law and to the
     rights of the holders of shares with special rights upon winding up, the
     assets of the Company available for distribution among the members shall be
     distributed to them in proportion to the respective holdings of the shares
     in respect of which such distribution is being made.


                                       34
<PAGE>


                      RIGHTS OF SIGNATURE, STAMP, AND SEAL

69.  RIGHTS OF SIGNATURE, STAMP, AND SEAL

     a)   The Board of Directors shall be entitled to authorize any person or
          persons (who need not be Directors) to act and sign on behalf of the
          Company, and the acts and signature of such person(s) on behalf of the
          Company shall bind the Company insofar as such person(s) acted and
          signed within the scope of his or their authority.

     b)   The Board of Directors may provide for a seal. If the Board of
          Directors so provides, it shall also provide for the safe custody
          thereof. Such seal shall not be used except by the authority of the
          Board of Directors and in the presence of the person(s) authorized to
          sign on behalf of the Company, who shall sign every instrument to
          which such seal is affixed.

     c)   The Company may exercise the powers conferred by Section 102 of the
          Companies Law regarding a seal for use abroad, and such powers shall
          be vested in the Board of Directors.

                                     NOTICES

70.  NOTICES

     a)   Any written notice or other document may be served by the Company upon
          any member either personally or by sending it by prepaid mail (airmail
          if sent internationally) addressed to such member at his address as
          described in the Register of Members. Any written notice or other
          document may be served by any member upon the Company by tendering the
          same in person to the Secretary or the General Manager or Chief
          Executive Officer of the Company at the principal office of the
          Company or by sending it by prepaid registered mail (airmail if posted
          outside Israel) to the Company at it Registered Address. Any such
          notice or other document shall be deemed to have been served five (5)
          business days after it has been posted (7) business days if posted
          internationally), or when actually tendered in person, to such member
          (or to the Secretary or the General Manager). Notice sent by
          cablegram, telex, or facsimile shall be deemed to have been served two
          business days after the notice is sent to the addressee, or when in
          fact received, whichever is earlier, notwithstanding that it was
          defectively addressed or failed, in some other respect, to comply with
          the provisions of this Article 70(a).

     b)   All notices to be given to the members shall, with respect to any
          share to which persons are jointly entitled, be given to whichever of
          such persons is named first in the Register of Members, and any notice
          so given shall be sufficient notice to the holders of such share.

     c)   Any member whose address is not described in the Register of Members,
          and who shall not have designated in writing delivered to the Company
          an address for the receipt of notices, shall not be entitled to
          receive any notice from the Company.


                                       35