Document:

20-F

                                                                     EXHIBIT 4.6

                         TEFRON SUBORDINATION AGREEMENT

     This Subordination Agreement (this "AGREEMENT"), dated as of December 31,
2008, is entered into by TEFRON USA, INC., a Delaware corporation ("SUBORDINATED
CREDITOR") in favor of BRANCH BANKING AND TRUST COMPANY ("SENIOR LENDER"), to
determine the parties' respective rights, remedies and interests with respect to
certain debts, liabilities or obligations owing to each by ALBAHEALTH, LLC, a
Delaware limited liability company ("BORROWER"). This Agreement is made with
respect to the following facts:

     A.   Subordinated Creditor is a current (or former) shareholder, partner or
          member of, or an investor in, Borrower, or is otherwise affiliated
          with Borrower; and has obtained, or hereafter may obtain, certain
          claims against Borrower in the nature of money owed.

     B.   Senior Lender is proposing to extend a term and revolving credit
          facility to Borrower for the purposes of, among others, refinancing
          existing indebtedness and funding transaction costs and working
          capital needs; however, Senior Lender is unwilling to provide or
          continue such credit facility to Borrower unless Subordinated Creditor
          subordinates its claims against Borrower in the manner set forth
          below. Subordinated Creditor hereby acknowledges and affirms that
          Senior Lender's financial accommodations to Borrower constitute
          valuable consideration to Subordinated Creditor.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, and to
induce Senior Lender to extend such financial accommodations to Borrower as they
may determine, and to better secure Senior Lender with respect to the foregoing,
the parties hereby agree as follows:

     1.   SUBORDINATION AND STANDBY.

          a. INDEBTEDNESS. Except as otherwise expressly set forth in Section 4,
     unless and until all "SENIOR INDEBTEDNESS" (as hereinafter defined) has
     been fully paid and satisfied in cash, and this Agreement has ceased to be
     effective, Subordinated Creditor shall not accept or receive, by setoff or
     in any other manner, from Borrower or any Subsidiary of the Borrower (an
     "AFFILIATE GUARANTOR") the whole or any part of any sums which may now or
     hereafter be owing to Subordinated Creditor by Borrower, or any of its
     predecessors, successors or assigns, including, without limitation, a
     receiver, trustee or debtor in possession (the term "BORROWER," as used
     hereinafter, shall include any such predecessors, successors or assigns)
     under or in connection with the "SUBORDINATED INDEBTEDNESS" (as hereinafter
     defined).

          b. LIENS AND SECURITY INTERESTS. As of the date of this Agreement,
     Subordinated Creditor has no security interests or liens over any property
     of Borrower or any subsidiary of Borrower, and Subordinated Creditor hereby
     agrees that, until the termination of this Agreement, it shall not create
     any security interests or liens over any property of Borrower or any
     subsidiary of Borrower. Without limitation of the foregoing, but in
     furtherance thereof, so long as this Agreement shall remain in effect:

               (1) Subordinated Creditor shall not commence, prosecute or
          participate in any other action, whether private, judicial, equitable,
          administrative or otherwise, including, without limitation, any
          bankruptcy case against Borrower or any of the Affiliate Guarantors or
          any of its (or their) assets, PROVIDED THAT, (i) as more fully set
          forth in Section 5 hereof, Subordinated Creditor may file a proof of
          claim in a bankruptcy or insolvency proceeding involving Borrower or
          any of the Affiliate Guarantors, which proof of claim shall indicate
          Subordinated Creditor's subordination hereunder and (ii) should any
          default occur in the payment of any amounts of principal and/or
          accrued interest which, pursuant to Section 4 below, Borrower is
          permitted to pay to Subordinated Creditor, and Subordinated Creditor
          is permitted to receive from Borrower, Subordinated Creditor may sue
          on the Subordinated Note in respect of such default and obtain
          judgment thereon, but Subordinated Creditor shall not execute upon or
          otherwise enforce such judgment except with the prior written consent
          of the Senior Lender or unless this Agreement has been terminated;

               (2) Subordinated Creditor shall have no right either to possess
          any such assets, enforce any security interests in, foreclose, levy or
          execute upon, or collect or attach any such assets, whether by private
          or judicial action or otherwise; and

               (3) Subordinated Creditor shall neither take, nor consent to or
          acquiesce in the taking of, any action hereafter to set aside,
          challenge or otherwise dispute the existence or priority of any Senior
          Indebtedness or the creation, attachment, perfection or continuation
          of any lien or security interest of the Senior Lender in any assets of
          Borrower or any Affiliate Guarantor.

          c. DEFINITIONS.

               (1) "SENIOR INDEBTEDNESS". The term "SENIOR INDEBTEDNESS" shall
          mean and include all loans, advances, debts, liabilities, and
          obligations, arising pursuant to or in connection with the Senior Loan
          Documents, owed by Borrower to Senior Lender of every kind and
          description (whether or not evidenced by any note or instrument),
          direct or indirect, absolute or contingent, due or to become due, now
          existing or hereafter arising pursuant to the terms of the Senior Loan
          Documents, including, without limitation, all interest, prepayment
          amounts, fees, charges, expenses, attorneys' fees and accountants'
          fees chargeable to Borrower or payable by Borrower hereunder or
          thereunder, and including all interest that accrues during the
          pendency of any Proceeding, whether or not a claim for such interest
          is allowed in such Proceeding, all liabilities of the Borrower to
          Senior Lender pursuant to any interest rate protection or hedge
          agreement, and all other indebtedness of Borrower now or at any time
          hereafter evidencing any replacement, substitution, refunding, renewal
          or refinancing of or for all or any part of the Senior Indebtedness;
          PROVIDED, HOWEVER, that for purposes of this Agreement, the maximum
          aggregate principal amount of Senior Indebtedness shall not exceed
          $6,500,000.

               (2) "SENIOR LOAN DOCUMENTS". The term "SENIOR LOAN DOCUMENTS"
          shall mean, collectively, (i) the Loan Agreement, dated as of the date
          hereof, between the Borrower and the Senior Lender, and (ii) each
          promissory note, security agreement, deed of trust, mortgage, pledge
          agreement and other agreement, document and instrument executed and
          delivered from time to time in connection with the Loan Agreement,
          each as amended, restated, supplemented or otherwise modified from
          time to time, so long as any such amendment, restatement,
          supplementation or modification does not expressly prohibit or
          otherwise prevent payment of the Subordinated Indebtedness as and when
          permitted hereunder.

                                       2

               (3) "SUBORDINATED INDEBTEDNESS". The term "SUBORDINATED
          INDEBTEDNESS" shall mean all indebtedness of Borrower to Subordinated
          Creditor, whether consisting of principal, interest or otherwise,
          evidenced by and arising under that certain Amended and Restated
          Unsecured Subordinated Promissory Note, dated December 31, 2008, in
          the original principal amount of $3,000,000, issued by Borrower to the
          order of Subordinated Creditor (together with any extensions or
          renewals thereof, or amendments thereto, called herein the
          "SUBORDINATED NOTE").

     2. MODIFICATIONS OF INDEBTEDNESS.

          a. SENIOR INDEBTEDNESS. Subject to the right of the Subordinated
     Creditor to receive the payments permitted under clause (ii) of Section 4,
     Senior Lender shall have the right, without notice to Subordinated
     Creditor, to amend, restate, supplement or otherwise modify the Senior
     Indebtedness, in accordance with the terms of the Senior Loan Documents,
     including, without limitation, any extensions or shortening of time of
     payments (even if such shortening causes any Senior Indebtedness to be due
     on demand or otherwise), any revision of any amortization schedule with
     respect thereto, and any increase in the amount of the Senior Indebtedness
     (provided that no more than $6,500,000 outstanding principal amount of
     indebtedness incurred under the Senior Loan Documents will be deemed to be
     Senior Indebtedness for purposes of this Agreement), and Subordinated
     Creditor consents and agrees to any such amendment, restatement, supplement
     or other modification.

          b. SUBORDINATED INDEBTEDNESS. Subordinated Creditor understands and
     agrees that, other than the Subordinated Indebtedness referred to in clause
     (2) of Section 1(c) above, no Subordinated Indebtedness may be created
     hereafter except as may be permitted under the Senior Loan Documents, and
     no document, instrument or agreement evidencing all or any part of any
     Subordinated Indebtedness so created may be modified or amended except as
     permitted under the Senior Loan Documents.

     3. SUBORDINATED INDEBTEDNESS OWED ONLY TO SUBORDINATED CREDITOR.

          a. Subordinated Creditor warrants and represents that it has not
     previously assigned any interest in the Subordinated Indebtedness, that no
     other party owns an interest in any of the Subordinated Indebtedness
     (whether as joint holders, participants or otherwise), and that the entire
     Subordinated Indebtedness is owing only to Subordinated Creditor.

          b. Subordinated Creditor covenants and agrees that the entire
     Subordinated Indebtedness shall continue to be owing only to it; provided
     that Subordinated Creditor may assign some or all of its interest in the
     Subordinated Indebtedness after the assignee has executed and delivered to
     Senior Lender an agreement subordinating, in the manner set forth herein,
     all rights, remedies and interests with respect to the assigned
     Subordinated Indebtedness.

                                       3

     4. PAYMENTS RECEIVED BY SUBORDINATED. Creditor Notwithstanding the terms of
Section l.a. and 2.a. Borrower may pay, and Subordinated Creditor may receive if
and so long as no Event of Default (as that term is defined in the Senior Loan
Documents) has occurred and is continuing or would result after giving effect to
such payment, (i) regularly scheduled payments of interest on the Subordinated
Note at the rate and the times set forth in the Subordinated Note as in effect
on the date hereof and (ii) at any time after August 31, 2009, regularly
scheduled payments of principal and interest, as and to the extent provided
under the terms of the Subordinated Note as in effect on the date hereof. If any
other payment, distribution or any collateral proceeds thereof are received by
Subordinated Creditor from Borrower or any Affiliate Guarantor with respect to
the Subordinated Indebtedness prior to the full payment and satisfaction of all
the Senior Indebtedness and termination of this Agreement, Subordinated Creditor
shall receive and hold the same in trust as trustee for the benefit of Senior
Lender and shall forthwith deliver such assets to the Senior Lender, in
precisely the form received (except for the endorsement or assignment by
Subordinated Creditor where necessary), for application on any of the Senior
Indebtedness, due or not due. In the event of the failure of Subordinated
Creditor to make any such endorsement or assignment to Senior Lender, Senior
Lender and its officers or agents are hereby irrevocably authorized to make such
endorsement or assignment.

Subject to the prior payment in full in cash of the Senior Indebtedness, the
Subordinated Creditor shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
Subordinated Indebtedness shall be paid in full; and, for the purposes of such
subrogation, no such payments or distributions to the holders of the Senior
Indebtedness by or on behalf of the Company or by or on behalf of the
Subordinated Creditor by virtue of this Section 4 or Section 5 which otherwise
would have been made to the Subordinated Creditor shall, as between the Company
and the Subordinated Creditor, be deemed to be a payment by the Company to or on
account of the Senior Indebtedness, it being understood that the provisions of
this Agreement are and are intended solely for the purpose of defining the
relative rights of the Subordinated Creditor, on the one hand, and the holders
of the Senior Indebtedness, on the other hand.

This section 4 shall not restrict the ability of the Subordinated Creditor to
convert the Subordinated Indebtedness to Common Units in accordance with section
11 of the Subordinated Note, and the holders of the Senior Indebtedness shall
not have any rights in or to such Common Units by virtue of this section 4.

     5. CLAIMS IN BANKRUPTCY. In the event of any bankruptcy, assignment for the
benefit of creditors or similar proceedings against Borrower or any Affiliate
Guarantor, Subordinated Creditor shall file all claims it may have against
Borrower, and shall direct the debtor in possession or trustee in bankruptcy, as
appropriate, to pay over to the Senior Lender, all amounts due to Subordinated
Creditor on account of the Subordinated Indebtedness until the Senior
Indebtedness has been paid in full in cash. If Subordinated Creditor fails to
file such claims as requested by Senior Lender, Senior Lender may file such
claims on Subordinated Creditor's own behalf.

     6. POSTPETITION FINANCING; LIENS. In the event of an bankruptcy case
against Borrower or any Affiliate Guarantor or any of the assets of Borrower or
any Affiliate Guarantor, Subordinated Creditor hereby expressly consents to the
granting by Borrower or any Affiliate Guarantor to Senior Lender of senior liens
and priorities in connection with any post- petition financing of Borrower or
any Affiliate Guarantor by Senior Lender.

                                       4

     7. SALE OF ASSETS. In the event of a sale of some or all of the assets of
Borrower or any Affiliate Guarantor, whether initiated by Senior Lender; i.e.,
as part of a liquidation of its liens and security interests, or initiated by
Borrower with Senior Lender's consent, Subordinated Creditor agrees to release
any security interest, lien or claim in such assets, or any of them, upon the
request of Senior Lender, whether or not Subordinated Creditor will receive any
proceeds from such sale. Should Subordinated Creditor fail to do so within five
(5) business days after its receipt of Senior Lender's request, Senior Lender
may, acting as Subordinated. Creditor's attorney-in-fact, do so itself in
Subordinated Creditor's name.

     8. LEGEND. Any instrument at any time evidencing any Subordinated
Indebtedness, including the Subordinated Note (herein, a "SUBORDINATED
INSTRUMENT") will be forthwith inscribed with a provision conspicuously
indicating that payment thereon is subordinated to the claims of Senior Lender
under the Senior Loan Documents, and copies thereof will forthwith be delivered
to Senior Lender. Any instrument evidencing any of the Subordinated Indebtedness
or any portion thereof which is hereafter executed will, on the date thereof, be
inscribed with the aforesaid legend, and copies thereof will be delivered to
Senior Lender on the date of its execution or within five (5) business days
thereafter.

     9. ADDITIONAL REMEDIES. If Subordinated Creditor violates any of the terms
of this Agreement, in addition to any remedies in law, equity or otherwise,
Senior Lender may restrain such violation in any court of law and may interpose
this Agreement as a defense in any action by Subordinated Creditor.

     10. SUBORDINATED CREDITOR'S WAIVERS.

          a. All of the Senior Indebtedness shall be deemed to have been made or
     incurred in reliance upon this Agreement. Subordinated Creditor expressly
     waives all notice of the acceptance by Senior Lender of the subordination
     and other provisions of this Agreement and agrees that Senior Lender has
     not made any warranties or representations with respect to the legality,
     validity, enforceability, collectibility or perfection of the Senior
     Indebtedness or any liens or security interests held in connection
     therewith.

          b. Subordinated Creditor agrees that Senior Lender shall be entitled
     to manage and supervise its loans in accordance with applicable law and its
     usual practices, modified from time to time as it deems appropriate under
     the circumstances, without regard to the existence of any rights that
     Subordinated Creditor may now or hereafter have in or to any assets. Senior
     Lender shall not have any liability to Subordinated Creditor as a result of
     any and all lawful actions which Senior Lender takes or omits to take
     (including, without limitation, actions with respect to the creation,
     perfection or continuation of its liens or security interest, actions with
     respect to the occurrence of any default or event of default, actions with
     respect to the foreclosure upon, sale, release or failure to realize upon,
     any o its collateral, and actions with respect to the collection of any
     claim for all or any part of the Senior Indebtedness from any account
     debtor or any other party), regardless of whether any such .actions or
     omissions may affect Senior Lender's rights to deficiency or Subordinated
     Creditor's rights of subrogation or reimbursement.

                                       5

          c. Senior Lender may, from time to time, enter into agreements and
     settlements with Borrower as it. may determine, including, without
     limitation, any substitution of collateral, any release of any lien or
     security interest and any release of Borrower. Subordinated Creditor waives
     any and all rights it may have to require Senior Lender to marshall assets.

     11. WAIVERS. No waiver of any provision hereof shall be deemed to be made
by Senior Lender or Subordinated Creditor hereunder unless it is in writing
signed by the waiving party. Each such waiver shall be a waiver only with
respect to the specific instance involved and shall in no way impair the rights
of the waiving party or the obligations of the other party to the waiving party
In any other respect at any other time.

     12. INFORMATION CONCERNING FINANCIAL CONDITION. Subordinated Creditor
hereby assumes responsibility for keeping itself informed of the financial
condition of Borrower and each Affiliate Guarantor and of all other
circumstances bearing upon the risk of nonpayment of the Senior Indebtedness,
and agrees that Senior Lender shall not have any duty to advise it of
information known to Senior Lender regarding such condition or any such
circumstances. In the event Senior Lender, in its sole discretion, undertakes,
at any time or from time to time, to provide any such information to
Subordinated Creditor, Senior Lender shall be under no obligation (i) to provide
any such information to Subordinated Creditor on any subsequent occasion, (ii)
to undertake any investigation not a part of its regular business routine, or
(iii) to disclose any information which, pursuant to its commercial finance
practices, Senior Lender wishes to maintain confidential.

     13. THIRD PARTY BENEFICIARIES.

          a. This Agreement is solely for the benefit of Senior Lender,
     Subordinated Creditor and their respective successors and assigns, and
     neither Borrower nor any Affiliate Guarantor or any other persons or
     entities are intended to be third party beneficiaries hereunder or to have
     any right, benefit, priority or interest under, or because of the existence
     of, or to have any right to enforce, this Agreement. Senior Lender and
     Subordinated Creditor shall have the right to modify or terminate this
     Agreement at any time without notice to or approval of Borrower or any
     Affiliate Guarantor or any other person or persons.

          b. Nothing in this Agreement is intended to or shall impair, as
     between Borrower, its creditors other than Senior Lender, and Subordinated
     Creditor, the obligation of Borrower, which is absolute and unconditional,
     to pay to Subordinated Creditor the principal of and interest on any
     Subordinated Instrument and all of the Subordinated Indebtedness as and
     when the same shall become due and payable in accordance with their terms,
     or affect the relative rights of Subordinated Creditor and creditors of
     Borrower other than Senior Lender.

          c. Notwithstanding any of the foregoing, if any third party satisfies
     the Senior Indebtedness owing to Senior Lender, Senior Lender may assign
     its rights and remedies hereunder to such third party, and such third party
     shall be deemed to be a Senior Lender for all purposes of this Agreement.
     If a determination is made in favor of any third party, including, without
     limitation, a trustee in bankruptcy, that Senior Lender's liens or security
     interests are invalid, avoidable or unperfected, the subordination set
     forth in Section 1 hereinabove shall be deemed null and void, but only to
     the extent of such invalidity, avoidability and imperfection.

                                       6

     14. NOTICES. For the purposes of this Agreement, written notices shall be
sent by U.S. first class mail, postage prepaid; or by U.S. certified mail,
return receipt requested, postage prepaid; or by personal delivery; or
by-facsimile confirmed by the recipient; and addressed to the notified party at
its address set forth below its signature line, or such other address specified
by the party with like notice. Notices shall be deemed received on the earlier
of (i) the day of actual receipt or (ii) ten (10) business days after deposit in
the U.S. mail, if sent by first class mail; upon the date set forth in the
return receipt, if by certified mail; on the day of confirmation of delivery by
the recipient, if by facsimile; or on the day of transmittal by personal
delivery.

     15. EFFECTIVENESS. This Agreement shall continue in effect until all Senior
Indebtedness has been fully paid and satisfied and all commitments of Senior
Lender in regard thereto have been terminated.

     16. CONSENT TO JURISDICTION ADDITIONAL WAIVERS SUBORDINATED CREDITOR AND
SENIOR LENDER EACH CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN ATLANTA, GEORGIA. SUBORDINATED CREDITOR WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SERVICE OF PROCESS BE MADE
IN THE MANNER SET FORTH IN SECTION 14 OF THIS AGREEMENT. SUBORDINATED CREDITOR
AND SENIOR LENDER EACH WAIVES, TO THE FULLEST EXTENT EACH MAY EFFECTIVELY DO SO,
ANY DEFENSE OR OBJECTION BASED UPON FORUM NON CONVENIENS AND ANY DEFENSE OR
OBJECTION TO VENUE OF ANY ACTION INSTITUTED WITHIN ATLANTA, GEORGIA. EACH OF THE
PARTIES HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE OR
DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT.

     17. GOVERNING LAW THIS AGREEMENT HAS BEEN DELIVERED AND ACCEPTED AT AND
SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF GEORGIA, AND SHALL BE
INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS PROVISIONS)
OF THE STATE OF GEORGIA.

     18. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties' respective successors and assigns, subject
to the provisions hereof.

     19. INTEGRATED AGREEMENT. This Agreement sets forth the entire
understanding of the parties with respect to the within matters and may not be
modified or amended except upon a writing signed by all parties.

     20. AUTHORITY. Each of the signatories hereto certifies that such party has
all necessary authority to execute this Agreement.

     21. HEADINGS. The paragraph headings used in this Agreement are for
convenience only and shall not affect the interpretation of any of the
provisions hereof.

                                       7

     22. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each one of which where so executed shall be deemed to be an
original, and all of which taken together shall constitute one and the same
agreement. Any signatures delivered by a party by facsimile transmission or by
e-mail transmission of an adobe file format document (also known as a PDF file)
shall be deemed an original signature hereto.

                                        "Subordinated Creditor"

                                        TEFRON USA, INC.

                                        By: /s/ Adi Livneh , /s/ Jacob Gelbard
                                        --------------------------------------
                                        Name: Adi Livneh / Jacob Gelbard
                                        Title:  CEO/  Chairman  of the  Board of
                                        Directors

                                        Address for Notices:

                                        Tefron USA, Inc.
                                        Attention: Adi Livneh
                                        Industrial Center
                                        Teradyon, P.O. Box 1365,
                                        Misgav 20179, Israel
                                        Telecopier: (972) 4-990-0054

                                       8

All of the foregoing is consented
and agreed to as of the date first
set forth above:

"Borrower"                                     "Senior Lender"

ALBAHEALTH, LLC                                BRANCH BANKING AND TRUST COMPANY

By: /s/ Bill Ott                               By: /s/ PAUL E. MCLAUGHLIN
------------------                             -----------------------------
Name: BILL OTT                                 Name: Paul E. McLaughlin
Title: PRESIDENT                               Title: Sen. V.P.

Address for Notices                            Address for Notices

AlbaHealth, LLC                                Branch Banking and Trust Company
425 North Gateway Avenue                       Mailcode:  800-92-01-00
Rockwood, TN  37854                            3500 Lenox Road, Suite 1450
Attention:  Chief Financial Officer            Atlanta, Georgia  30326
Telecopier: 865-354-1541                       Attention:  Paul McLaughlin
                                               Facsimile:  (404) 846-0163

                                       920-F

                                                                     EXHIBIT 4.7

THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY ARE SUBORDINATE TO THE SENIOR
INDEBTEDNESS (AS DEFINED BELOW) AND THE SUBORDINATED INDEBTEDNESS (AS DEFINED
BELOW) IN THE MANNER AND TO THE EXTENT SET FORTH IN (A) THAT CERTAIN
SUBORDINATION AGREEMENT DATED AS OF DECEMBER 31, 2008 AMONG ALBAHEALTH, LLC,
TEFRON USA, INC. AND BRANCH BANKING AND TRUST COMPANY, AND (B) THAT CERTAIN
SUBORDINATION AGREEMENT DATED AS OF APRIL 26, 2006 AMONG ALBAHEALTH, LLC, TEFRON
USA, INC. AND SUNTRUST BANK, AS ADMINISTRATIVE AGENT; AND THE HOLDER OF THIS
UNSECURED SUBORDINATED PROMISSORY NOTE, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND
BY THE SUBORDINATION PROVISIONS OF THE SUBORDINATION AGREEMENTS.

                              AMENDED AND RESTATED
                     UNSECURED SUBORDINATED PROMISSORY NOTE

U.S. $3,000,000.00                                             DECEMBER 31, 2008
(Principal Amount)                                               (Date of Issue)

     FOR VALUABLE CONSIDERATION RECEIVED, AlbaHealth, LLC, a Delaware limited
liability company (the "Company"), hereby promises to pay to Tefron USA, Inc., a
Delaware corporation ("Seller"), the principal amount of Three Million and
00/100 Dollars ($3,000,000.00), together with interest (calculated on the basis
of actual days elapsed and a 360 calendar day year) on the unpaid principal
balance hereof, from the Date of Issue and until this Amended and Restated
Unsecured Subordinated Promissory Note ("Note") is paid in full, at a rate equal
to the rate determined in accordance with paragraph 2 (the "Interest Rate").

1.   MATURITY DATE. The principal balance represented by this Note, together
     with all accrued and unpaid interest due hereunder, shall be due and
     payable, in full, to Seller on or before January 1, 2012 (the "Maturity
     Date").

2.   INTEREST RATE. Prior to July 1, 2009, interest will accrue on the
     outstanding principal balance at an interest rate per annum equal to the
     LIBOR in effect on the first day of the FIXED RATE TERM plus a margin of
     5.00% (the "Default Margin"). On and after July 1, 2009, interest will
     accrue on the outstanding principal balance at an interest rate per annum
     equal to the LIBOR in effect on the first day of the FIXED RATE TERM plus a
     margin of 3.00% (the "Standard Margin"). Such rate is set on the first day
     of each Fixed Rate Term based upon the then applicable LIBOR, plus the
     Standard Margin or the Default Margin, as applicable, and is fixed for the
     duration of each Fixed Rate Term. "LIBOR" means, for each Fixed Rate Term,
     an annual rate equal to the rate for the applicable Fixed Rate Term
     appearing on the display designated as Reuters Screen LIBOR01 Page (or such
     other page on that service or such other service designated by the British
     Banker's Association for the display of such Association's Interest
     Settlement Rates for Dollar deposits) as of 11:00 a.m. (London, England
     time) on the day that is two business days prior to the first day of the
     relevant Fixed Rate Term or if such page is unavailable for any reason at
     such time, the rate which appears on the Reuters Screen ISDA Page as of
     such date and such time; provided, however, that if the relevant foregoing
     sources are unavailable for the relevant Fixed Rate Term, the LIBOR shall
     be determined from such financial reporting service or other information as
     shall be mutually acceptable to the Company and the Seller. "Fixed Rate
     Term" means a period commencing on a Business Day and continuing for three
     (3) months, during which the outstanding principal balance of this Note
     bears interest determined in relation to LIBOR. The first Fixed Rate Term
     shall commence on the Date of Issue.

     At the end of the first Fixed Rate Term, and at the end of each subsequent
     Fixed Rate Term until final maturity of this Note, another Fixed Rate Term
     of the same length shall commence, and the interest rate shall be adjusted
     to reflect the LIBOR in effect on the first day of the new Fixed Rate Term
     plus the Standard Margin or the Default Margin, as applicable. If any Fixed
     Rate Term would end on a day which is not followed by a Business Day, then
     such Fixed Rate Term shall be extended to the next day which is followed by
     a Business Day. "Business Day" means any day except a Saturday, Sunday or
     any other day on which commercial banks in Georgia are authorized or
     required by law to close.

     If the Company shall default in the payment of principal of or interest,
     then the outstanding principal amount and, to the extent permitted by
     applicable law, any interest payments thereon not paid when due, shall
     thereafter bear interest at the Default Rate. Interest at the Default Rate
     shall be payable upon demand and shall accrue from the initial date of such
     default until it is cured or waived. The "Default Rate" shall mean the
     interest calculated in accordance with the Default Margin.

     Notwithstanding any other provision of this Note, interest under this Note
     shall not exceed the maximum amount permitted by law. If any amount is paid
     under this note as interest in excess of such maximum rate, then the amount
     so paid will not constitute interest but will constitute a prepayment on
     account of the principal amount of this Note.

3.   PAYMENT. Accrued but unpaid interest on this Note shall be paid as follows:

     (a)  Interest which has accrued but remains unpaid for the period April 1,
          2008 through March 31, 2009 shall be paid in four (4) equal sequential
          monthly installments commencing on July 1, 2009, and continuing on the
          first day of each month thereafter;

     (b)  Interest accruing for the period April 1, 2009 through June 30, 2009
          shall be paid on July 1, 2009;

     (c)  Interest accruing for the period July 1, 2009 through September 30,
          2009 shall be paid on October 1, 2009; and

     (d)  Thereafter, accrued interest shall be paid together with payments of
          principal, as described below.

                                     - 2 -

     Notwithstanding the foregoing, the Company shall not commence to make any
     payments of accrued interest on this Note until such time as all amounts
     due and owing to SunTrust under that certain Amended and Restated Declining
     Revolving Credit Agreement dated as of December 31, 2008, among the Company
     and SunTrust (as amended, the "Credit Agreement") have been paid in full.

     Commencing on October 1, 2009 accrued interest shall be due and payable in
     consecutive quarterly installments, with the first such payment on October
     1, 2009, and continuing on the first (1st) day of each January, April, July
     and October thereafter until this Note is paid in full, by deposit to such
     account as Seller may have last designated by written notice to the
     Company. All payments made after 1:00 p.m., Georgia time, shall be deemed
     to have been received on the next Business Day. The principal balance under
     this Note shall due and payable in ten (10) consecutive quarterly
     installments of $300,000 commencing on October 1, 2009 and continuing on
     the first (1st) day of each January, April, July and October thereafter
     until this Note is paid in full, with the final principal payment being due
     and payable on the Maturity Date.

4.   TERMINATION. On or prior to the Maturity Date, upon final, irrevocable and
     indefeasible payment, in whole or in aggregate installments, of the full
     amount due and owing under this Note, this Note will terminate and be of no
     further force and effect.

5.   UNSECURED NOTE. Seller acknowledges and agrees that the indebtedness
     represented by this Note is unsecured.

6.   MEMBERSHIP INTEREST REDEMPTION AGREEMENT. This Note is issued pursuant to
     the terms of that certain Membership Interest Redemption Agreement dated
     April 26, 2006, by and between the Company and Seller and is subject to the
     terms thereof.

7.   SUBORDINATED NOTE. ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED
     TO CERTAIN OTHER INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED IN,
     AND IS OTHERWISE SUBJECT TO THE TERMS OF, (i) THAT CERTAIN SUBORDINATION
     AGREEMENT AMONG THE COMPANY, SELLER AND THE LENDER DATED AS OF DECEMBER 31,
     2008 (THE "BB&T SUBORDINATION AGREEMENT"), AND (ii) THAT CERTAIN
     SUBORDINATION AGREEMENT AMONG THE COMPANY, SELLER AND SUNTRUST DATED AS OF
     APRIL 26, 2006 (THE "SUNTRUST SUBORDINATION AGREEMENT"). THE INDEBTEDNESS
     EVIDENCED BY THIS NOTE SHALL NOT BE SUBORDINATED TO ANY INDEBTEDNESS OTHER
     THAN THE SENIOR INDEBTEDNESS AS DEFINED IN THE BB&T SUBORDINATION AGREEMENT
     AND THE SUBORDINATED INDEBTEDNESS AS DEFINED IN THE BB&T SUBORDINATION
     AGREEMENT.

8.   RIGHT TO PREPAY BY COMPANY. At any time prior to the Maturity Date, the
     Company may, in its sole discretion, prepay this Note, in whole or in part
     without premium or penalty, at a price equal to one hundred percent (100%)
     of the principal amount of the Note, plus accrued interest on a daily basis
     to the date of prepayment.

                                     - 3 -

9.   COMPANY COVENANTS.

     (a)  The Company agrees that until payment of this Note in full, it shall
          at all time maintain the Financial Covenants described in Section 5 of
          the Loan Agreement dated December 31, 2008 between the Company and the
          Lender (the "Loan Agreement") and the Negative Covenants described in
          Section 6 of the Loan Agreement.

     (b)  The Company agrees that until payment of this Note in full, it shall
          deliver to Seller financial statements and other information in the
          form and at the times that is provided by the Company to either the
          Lender or to any other holder of common units of the Company.

     (c)  Until final, irrevocable and indefeasible payment of this Note in
          full, the Company will not (and will cause its subsidiaries not to)
          make any "Restricted Payments". "Restricted Payment" means (i) the
          declaration or payment, or agreement to declare to pay, directly or
          indirectly, of any dividend or other distribution, including any
          return of capital or distribution of cash or other assets to the
          Company's equity holders on account of their holding of Company
          securities, and (ii) any payment on account of, or setting apart
          assets for a sinking or other analogous fund for, the purchase,
          redemption, retirement, defeasance or other acquisition of, any shares
          of Company securities (including any options, warrants, or other
          rights to purchase such securities, whether now or hereafter
          outstanding). Notwithstanding the foregoing, "Restricted Payments"
          shall not include (x) distributions to the holders of Company
          securities on a quarterly basis to enable them to pay income taxes
          payable in cash in such fiscal year, which are payable on account of
          their holdings of Company securities, provided that such payments in
          the aggregate for any fiscal year shall not exceed 42.5% of the
          Company's taxable income for the relevant tax year; (y) Restricted
          Payments made by any Company subsidiary to the Company; and (z)
          payments described in this Note.

     (d)  The Company will not, and will not permit any of its subsidiaries to,
          sell, lease or otherwise transfer any property or assets to, or
          purchase, lease or otherwise acquire any property or assets from, or
          otherwise engage in any other transactions with, any of its affiliates
          (which includes any person or entity that directly, or indirectly
          through one or more intermediaries, controls, is controlled by, or is
          under common control with, the Company), except (i) in the ordinary
          course of business consistent with past practice at prices and on
          terms and conditions not less favorable to the Company or such
          subsidiary than could be obtained on an arm's-length basis from
          unrelated third parties, and (ii) any payment permitted by subsection
          (b) of this Section 9.

                                     - 4 -

10.  EVENTS OF DEFAULT. Each of the following events shall be an Event of
     Default ("Event of Default") for purposes of this Note:

     a.   PAYMENT OF INTEREST. The Company defaults in the due and punctual
          payment of any installment of interest under this Note;

     b.   PAYMENT OF PRINCIPAL. The Company defaults in the due and punctual
          payment of any installment of the principal amount of this Note under
          the terms of this Note;

     c.   NOTE TERMS. The Company defaults in the due and punctual performance
          or observance of any material terms contained in this Note, and such
          default continues for a period of ten (10) consecutive days after
          written notice thereof to the Company by Seller;

     d.   INSOLVENCY MATTERS. The Company makes an assignment for the benefit of
          creditors or admits in writing its inability to pay its debts as they
          become due, or files a voluntary petition in bankruptcy, or is
          adjudicated a "debtor" under the U.S. federal bankruptcy law or other
          similar federal or state law or insolvent, or files any petition or
          answer seeking for itself any reorganization, arrangement,
          composition, readjustment, liquidation, dissolution or similar relief
          under any present or future statute, law or regulation, or files any
          answer admitting the material allegations of a petition filed against
          the Company for any such relief, or a trustee, receiver or liquidator
          shall be appointed for the Company or all or any substantial part of
          the properties of the Company, or if any petition for bankruptcy,
          reorganization or arrangement under federal bankruptcy law, or any
          similar federal or state law, shall be filed by or against, consented
          to, or acquiesced in by the Company, or if any proceeding for the
          dissolution or liquidation of the Company shall be instituted;
          provided, that if such appointment, petition or proceeding was
          involuntary and not consented to by the Company, the same shall become
          an Event of Default upon the same not being discharged, stayed or
          dismissed within sixty (60) days; or

     e.   ASSIGNMENT. The Company's obligations under this Note shall be
          assigned to a third party. For purposes of this paragraph e., an
          "assignment" shall not be deemed to occur upon the sale or merger of
          the Company to or with any party, which does not result in a "Change
          in Control" of the Company. "Change in Control" shall mean (a) the
          failure of Encompass Group, L.L.C., a Delaware limited liability
          company ("Encompass") (i) at any time during which the president of
          the Company is not a member of the board of directors or other
          managing body of the Company, to have and exercise voting power for
          the election of at least a majority of the board of directors or other
          managing body of the Company or (ii) at any time during which the
          president of the Company is a member of the board of directors or
          other managing body of the Company, to have and exercise voting power
          for the election of at least two members of the board of directors or
          other managing body of the Company (provided that this clause (ii)
          shall only apply so long as the board of directors or other managing
          body of the Company consists of five or fewer members); or (b) the
          failure of Encompass at any time to directly own beneficially and of
          record on a fully diluted basis 51% of the outstanding equity
          interests (including limited liability company interests and warrants,
          rights or options to purchase any equity interests) (collectively,
          "Capital Stock") of the Company; or (c) the failure of the Company at
          any time to own beneficially and of record on a fully diluted basis
          100% of the outstanding Capital Stock of each of its subsidiaries,
          free and clear of all liens other than liens created under the
          security documents entered into by the Company and the Bank.
          Notwithstanding anything else in this Section, the pledge by Encompass
          of its membership interests, whether now owned or hereafter acquired,
          to Wachovia Bank, National Association, as agent, and its successors
          and assigns (hereinafter, "Wachovia Bank") shall not constitute a
          Change in Control.

                                     - 5 -

11.  REMEDIES ON DEFAULT; ACCELERATION. Upon the occurrence of an Event of
     Default as described under Sections 10.a., 10.c. and 10.e. hereof, Seller
     shall have the right to declare the principal amount hereof and all accrued
     but unpaid interest thereon to be immediately due and payable upon written
     notice from Seller to the Company.

     Upon the occurrence of an Event of Default as described under Sections
     10.b., Seller shall have the option to either (a) declare the principal
     amount hereof and all accrued but unpaid interest thereon to be immediately
     due and payable upon written notice from Seller to the Company, or (b)
     convert the principal balance of this Note into Common Units of the
     Company, which are free and clear of any restriction, lien or encumbrance
     of any kind, at a rate equal $274.20 per Common Unit, subject to adjustment
     for dividends, distributions, reclassifications, or similar events
     affecting the Company's Common Units (which adjustments are intended to put
     Seller in the same position with regard to its percentage ownership of the
     issued and outstanding equity of the Company as it would have been had the
     relevant event not occurred) (the "Conversion Price"). The number of Common
     Units to be issued upon such conversion shall be equal to the quotient
     obtained by dividing (i) the entire principal amount of this Note plus
     accrued interest by (ii) the Conversion Price.

     Upon the occurrence of an Event of Default as described under Section
     10.d., the principal amount and all accrued but unpaid interest thereon
     will automatically become and be immediately due and payable without any
     declaration or other act on behalf of Seller.

                                     - 6 -

12.  NOTICES. All notices required under the terms of this Note shall be in
     writing and either delivered personally or sent by United States first
     class mail. If sent by mail, notice shall be deemed given when deposited in
     the United States mail, properly addressed and with postage prepaid. Unless
     changed by subsequent written notice, the following address shall be used:

     If to the Company:                 AlbaHealth, LLC
                                        ATTN: Bill Ott
                                        425 North Gateway Avenue
                                        Rockwood, TN 37854
                                        Facsimile: 865-354-1541

     with a copy to:                    Timothy M. Barnett, Esq.
                                        Winthrop & Weinstine, P.A.
                                        225 South Sixth Street, Suite 3500
                                        Minneapolis, MN 55402
                                        Facsimile: (612) 604-6853

     If to Seller:                      Tefron USA, Inc.
                                        ATTN:  Eran Rotem
                                        Industrial Center
                                        Teradyon, P.O. Box 1365,
                                        Misgav 20179, Israel
                                        Facsimile: (972) 4-990-0054

     with a copy to:                    Gross, Kleinhendler, Hodak, Halevy,
                                        Greenberg & Co.
                                        ATTN:  Richard Mann, Adv.
                                        One Azrieli Center
                                        Tel Aviv 67021, Israel
                                        Facsimile:  (972) 3-607-4411

13.  MODIFICATION AND WAIVER. No purported amendment, modification or waiver of
     any provision hereof shall be binding unless set forth in a written
     document signed by the Company and Seller (in the case of amendments or
     modifications) or by the party to be charged thereby (in the case of
     waivers). No waiver shall be effective except in a written instrument
     signed by the party against whom enforcement of any such waiver is sought.
     Any waiver shall be limited to the provision hereof in the circumstances or
     events specifically made subject thereto, and shall not be deemed a waiver
     of any other term hereof or of the same circumstance or event upon any
     reoccurrence thereof.

14.  TIME IS OF THE ESSENCE WITH RESPECT TO THIS NOTE.

15.  ASSIGNMENT. Seller shall not have the right to assign, sell, transfer,
     delegate, or otherwise dispose of, whether voluntarily or involuntarily,
     any right or obligation under this Note without the prior written consent
     of the Company. Neither this Note nor any interest therein may be assigned
     by the Company without Seller's written consent; provided, however, that an
     assignment shall not be deemed to occur upon the sale or merger of the
     Company to or with any party, which does not result in a "Change in
     Control" (as defined above) of the Company. Any purported assignment,
     transfer, or delegation in violation of this Section 14 shall be null and
     void. Subject to the foregoing limits on assignment and delegation, and the
     limits set forth in Section 10.d., this Note shall be binding upon and
     shall inure to the benefit of the parties and their respective successors
     and assigns.

16.  WAIVER OF DEMAND, PRESENTMENT AND NOTICE OF DISHONOR. The undersigned and
     each endorser or guarantor, together with their respective successors and
     assigns, hereof hereby waives demand, notice of demand, presentment,
     protest, notice of protest and notice of dishonor.

                                     - 7 -

17.  GOVERNING LAW AND VENUE. This Note shall be construed and interpreted
     pursuant to and in accordance with the laws of the State of Georgia. Any
     dispute arising out of or relating to this Note or the alleged breach of
     it, or otherwise related to the transactions contemplated hereby, will be
     discussed between the disputing parties in a good faith effort to arrive at
     a mutual settlement of any such controversy. If, notwithstanding such
     discussions, such dispute cannot be resolved, any action at law, suit in
     equity or judicial proceeding arising directly, indirectly or otherwise in
     connection with, out of, related to or from this Note or any provision
     hereof shall be venued only in the courts of the State of Georgia. Seller
     and the Company hereby consent to the personal jurisdiction of these courts
     and waive any objection that such venue is inconvenient or improper. Seller
     and the Company hereby waive personal service of the summons, complaint and
     other process issued in any such action or suit and agrees that service of
     such summons, complaints and other process may be made by registered or
     certified mail addressed to such party at the address set forth in Section
     12 hereof and that service shall be deemed completed upon the earlier of
     such party's actual receipt thereof or 10 days after deposit in the United
     States or Israeli mail, as the case may be, proper postage prepaid.

18.  WAIVER OF JURY TRIAL. THE PARTIES, HAVING BEEN REPRESENTED BY COUNSEL EACH
     KNOWLINGLY AND VOLUNTARILY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
     OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE OR ANY
     RELATED AGREEMENT OR UNDER ANY AMENDMENT WHICH MAY IN THE FUTURE BE
     DELIVERED IN CONNECTION WITH THIS NOTE AND AGREES THAT ANY SUCH ACTION OR
     PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

     IN WITNESS WHEREOF, this Unsecured Subordinated Promissory Note has been
executed and delivered effective as of the date first set forth above.

                                                   ALBAHEALTH, LLC

                                                   By: /s/ Bill Ott
                                                   ----------------
                                                   Its: President

Agreed and accepted this 31st day of December, 2008.

TEFRON USA, INC.

By: /s/ Adi Livneh
------------------
Adi Livneh, CEO
Jacob Gelbard, Chairman of the Board of Directors, Tefron Ltd

                                     - 8 -

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