

<PAGE>
                           Offer to Purchase for Cash
                     All Outstanding Shares of Common Stock
                                       of


                             ALBA-WALDENSIAN, INC.
                                       at
                              $18.50 NET PER SHARE
                                       by


                             AWS ACQUISITION CORP.
                           a wholly-owned subsidiary
                                       of


                           TEFRON U.S. HOLDINGS CORP.
                            A WHOLLY-OWNED SUBSIDIARY
                                       OF
                                  TEFRON LTD.


    THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
     CITY TIME, ON MONDAY, DECEMBER 13, 1999, UNLESS THE OFFER IS EXTENDED.

                            ------------------------

THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER
AND THE MERGER (AS SUCH TERMS ARE DEFINED HEREIN), ARE FAIR TO, AND IN THE
  BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE
    OFFER, THE MERGER AND THE MERGER AGREEMENT AND RECOMMENDS THAT THE
              COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER
                      THEIR SHARES PURSUANT TO THE OFFER.


THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR WAIVER OF
CERTAIN CONDITIONS, INCLUDING (1) THERE BEING VALIDLY TENDERED AND NOT
  PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT
    NUMBER OF SHARES WHICH CONSTITUTE A MAJORITY OF THE SHARES OUTSTANDING
     ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE AND (2) THE
       EXPIRATION OR TERMINATION OF ALL WAITING PERIODS UNDER THE
       HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED.
        THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS SET
                  FORTH HEREIN. SEE INTRODUCTION AND SECTIONS 1, 11
                                    AND 14.


                                   IMPORTANT

     Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) either should (i) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, and mail or deliver it together with the
certificate(s) representing tendered Shares and any other required documents to
the Depositary (as defined herein) or tender such Shares pursuant to the
procedures for book-entry transfer set forth in Section 3 or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee to
effect such transaction. A stockholder whose Shares are registered in the name
of a broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other nominee if
such stockholder desires to tender such Shares.

     A stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis, may tender such Shares
by following the procedures for guaranteed delivery set forth in Section 3.

     Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Information Agent, the
Dealer Manager or from brokers, dealers, commercial banks, trust companies and
other nominees.

                      The Dealer Manager for the Offer is:

                             CREDIT    FIRST
                             SUISSE    BOSTON

November 12, 1999

<PAGE>
                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                             PAGE
                                                                                                             ----
<C>   <S>                                                                                                    <C>
INTRODUCTION..............................................................................................      1
  1.  Terms of the Offer..................................................................................      2
  2.  Acceptance for Payment and Payment..................................................................      4
  3.  Procedures for Tendering Shares.....................................................................      5
  4.  Withdrawal Rights...................................................................................      7
  5.  Certain Tax Consequences............................................................................      8
  6.  Price Range of the Shares; Dividends................................................................      8
  7.  Possible Effects of the Offer on the Market for the Shares; AMEX Listing; Exchange Act Registration;
      Margin Regulations..................................................................................      9
  8.  Certain Information Concerning the Company..........................................................     10
  9.  Certain Information Concerning Tefron, Parent and the Purchaser.....................................     13
 10.  Background of the Offer; Contacts with the Company..................................................     14
 11.  Purpose of the Offer; the Merger Agreement; the Support Agreement; the Consulting Agreements;
      Appraisal Rights; Plans for the Company.............................................................     15
 12.  Source and Amount of Funds..........................................................................     29
 13.  Dividends and Distributions.........................................................................     29
 14.  Certain Conditions of the Offer.....................................................................     30
 15.  Certain Legal Matters; Required Regulatory Approvals................................................     31
 16.  Certain Fees and Expenses...........................................................................     33
 17.  Miscellaneous.......................................................................................     34

SCHEDULE I--Directors and Executive Officers of Tefron, Parent and the Purchaser..........................    I-1
</TABLE>


                                       i

<PAGE>
To: All Holders of Shares of Common Stock of
Alba-Waldensian, Inc.:

                                  INTRODUCTION


     AWS Acquisition Corp. (the "Purchaser"), a Delaware corporation and a
wholly-owned subsidiary of Tefron U.S. Holdings Corp., a Delaware corporation
("Parent") which is a wholly-owned subsidiary of Tefron Ltd. ("Tefron"), a
company organized under the laws of the State of Israel, hereby offers to
purchase all outstanding shares of common stock, par value $2.50 per share (the
"Shares"), of Alba-Waldensian, Inc., a Delaware corporation (the "Company") at a
purchase price of $18.50 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer").



     Tendering stockholders who have shares registered in their name and who
Tender directly to the Depositary will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. Stockholders who hold their shares through a broker or
bank are urged to consult with them as to whether they charge service fees. The
Purchaser will pay all charges and expenses of First Union National Bank, as
Depositary (the "Depositary"), and D.F. King & Co., Inc., as Information Agent
(the "Information Agent"), incurred in connection with the Offer. See
Section 16.


     THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER (AS SUCH TERMS ARE DEFINED HEREIN) ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE OFFER, THE
MERGER AND THE MERGER AGREEMENT AND RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.


     William Blair & Company, L.L.C. ("William Blair"), financial advisor to the
Company, has delivered to the Board of Directors of the Company (the "Board of
Directors") a written opinion dated November 8, 1999 to the effect that, as of
such date and based upon and subject to certain matters stated in such opinion,
the $18.50 per Share cash consideration to be received by the holders of Shares
(other than the Company or any subsidiary of the Company and Parent or the
Purchaser), pursuant to the Offer and the Merger is fair, from a financial point
of view, to such holders. A copy of the written opinion from William Blair is
included with the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9"), that is being mailed to stockholders concurrently
herewith, and stockholders are urged to read such opinion carefully and in its
entirety for a description of the assumptions made, matters considered and
limitations of the review undertaken by William Blair.


     THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR
WAIVER OF CERTAIN CONDITIONS, INCLUDING (1) THERE BEING VALIDLY TENDERED AND NOT
PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT NUMBER
OF SHARES WHICH CONSTITUTE A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY
DILUTED BASIS ON THE DATE OF PURCHASE (THE "MINIMUM CONDITION") AND (2) THE
EXPIRATION OR TERMINATION OF ALL WAITING PERIODS UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"). THE OFFER IS
ALSO SUBJECT TO CERTAIN OTHER CONDITIONS SET FORTH HEREIN AND WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, DECEMBER 13, 1999, UNLESS
EXTENDED. SEE SECTIONS 1, 11 AND 14.


     The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of November 8, 1999 (the "Merger Agreement"), by and among the Company, the
Purchaser and Parent pursuant to which, following the consummation of the Offer
and the satisfaction or waiver of certain conditions, the Purchaser will be
merged with and into the Company (the "Merger"), with the Company continuing as
the surviving corporation (the "Surviving Corporation"). At the effective time
of the Merger (the "Effective Time"), each Share outstanding immediately prior
to the Effective Time (other than Shares held by the Company or by any
subsidiary of the Company, Parent or the Purchaser, which Shares will be
canceled with no payment being made with respect thereto, and other than Shares,
if any, held by stockholders who have properly perfected their appraisal rights
under the Delaware General

<PAGE>

Corporation Law (the "DGCL"), if available ("Dissenting Shares")), will, by
virtue of the Merger and without any action by the holder thereof, be converted
into the right to receive $18.50 in cash (the "Merger Consideration"), payable
to the holder thereof, without interest thereon, upon the surrender of the
certificate formerly representing such Share. The Merger Agreement is more fully
described in Section 11 below. Certain U.S. federal income tax consequences of
the sale of Shares pursuant to the Offer or the Merger are described in
Section 5 below.


     If the Minimum Condition and the other conditions of the Offer, as set
forth in Section 14 (the "Offer Conditions") are satisfied and the Offer is
consummated, the Purchaser will own a sufficient number of Shares to ensure that
the Merger will be approved. Under the DGCL, if, after consummation of the
Offer, the Purchaser owns at least 90% of the Shares then outstanding, the
Purchaser will be able to cause the Merger to occur without a vote of the
Company's stockholders. If, however, after consummation of the Offer, the
Purchaser owns less than 90% of the then outstanding Shares, a vote of the
Company's stockholders will be required under the DGCL to approve the Merger,
and a significantly longer period of time will be required to effect the Merger.
See Section 11.


     Concurrently with the execution of the Merger Agreement, Parent also
entered into a support agreement with two directors of the Company and an
affiliate of one of the directors (the "Support Agreement"). Pursuant to the
Support Agreement, such persons have agreed, among other things, to tender, in
accordance with the terms of the Offer, all of the Shares owned (beneficially or
of record) by them and to vote all of the Shares owned by them in favor of the
Merger and against certain other extraordinary transactions. According to
information provided by such persons, in the aggregate, approximately 1,801,766
Shares are subject to the Support Agreement, representing approximately 54% of
the outstanding Shares on a fully diluted basis. See Section 11.



     The Company has informed the Purchaser that, as of November 5, 1999, there
were 3,246,045 Shares issued and outstanding and 187,753 Shares issuable upon
the exercise of outstanding stock options ("Options") (of which 87,753 Options
are currently vested) granted under the Company's stock option or other equity
based plans (the "Company Option Plans"). Based on the foregoing, and assuming
no additional Shares (or warrants, options or rights exercisable for, or
securities convertible into, Shares) have been issued (other than Shares issued
pursuant to such options and rights referred to above), if the Purchaser were to
acquire the Shares required to be tendered pursuant to the Support Agreement,
the Minimum Condition would be satisfied.


     THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.

1. TERMS OF THE OFFER.


     Upon the terms and subject to the Offer Conditions (including, if the Offer
is extended or amended, the terms and conditions of any such extension or
amendment) and the Merger Agreement, the Purchaser will accept for payment and
pay for all Shares validly tendered and not properly withdrawn on or prior to
the Expiration Date in accordance with the procedures set forth in Section 4, as
soon as practicable after such Expiration Date. The Offer will remain open until
12:00 midnight, New York City time, on Monday, December 13, 1999 (the
"Expiration Date"), unless and until the Purchaser extends the period of time
for which the Offer is open, in which event the term "Expiration Date" will mean
the time and date at which the Offer, as so extended by the Purchaser, will
expire.



     The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition and the expiration or termination of all waiting periods
imposed by the HSR Act. See Section 14. Purchaser may, without the consent of
the Company, (i) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "Commission") or the staff thereof applicable to the Offer as a result of
an increase in the Offer Price (as defined herein) by the Purchaser in light of
a bona fide competing offer from a third party for some or all of the Shares and
(ii) extend the Offer, if at the Expiration Date, any of the Offer Conditions
shall not have been satisfied or waived. See Section 11. During any extension,
all Shares previously tendered and not properly withdrawn will remain subject to
the Offer and subject to the right of a tendering stockholder to


                                       2
<PAGE>

withdraw such stockholder's Shares. Under no circumstances will interest be paid
on the purchase price for tendered Shares, whether or not the Offer is extended.



     Subject to the applicable regulations of the Commission, the Purchaser
expressly reserves the right, in its sole discretion, at any time or from time
to time, to (i) in addition to its termination rights relating to fulfillment of
the Minimum Condition and expiration or termination of HSR Act, terminate the
Offer if at any time prior to the time of payment for Shares pursuant to the
Offer any of the other conditions referred to in Section 14 have not been
satisfied; (ii) waive any condition (except that Purchaser shall not waive the
Minimum Condition); or (iii) except as set forth in the Merger Agreement and
discussed below, otherwise amend the Offer in any respect, in each case, by
giving oral or written notice of such termination, waiver or amendment to the
Depositary. In the Merger Agreement, the Purchaser has agreed that without the
prior written consent of the Company it will not, (i) reduce the number of
Shares subject to the Offer, (ii) reduce the Offer Price, (iii) amend or add to
the Offer Conditions, (iv) except as referred to in the preceding paragraph,
extend the Offer, (v) change the form of consideration payable in the Offer or
(vi) amend any other term of the Offer in any manner adverse to the holders of
the Shares. See Section 11.


     Any such extension, termination or amendment will be followed as promptly
as practicable by public announcement thereof. In the case of an extension,
Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the announcement be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14e-1 under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service. The rights reserved by
the Purchaser in the preceding paragraph are in addition to the Purchaser's
rights pursuant to Section 14.


     If the Purchaser makes a material change in the terms of the Offer, or if
it waives a material condition to the Offer, the Purchaser will extend the Offer
and disseminate additional tender offer materials to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during which the Offer must remain open following material changes in the terms
of the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
materiality of the changes. In the Commission's view, an offer should remain
open for a minimum of five business days from the date the material change is
first published, sent or given to stockholders, and, if material changes are
made with respect to information that approaches the significance of price and
the percentage of securities sought, a minimum of ten business days may be
required to allow for adequate dissemination and investor response. With respect
to a change in price, a minimum ten business day period from the date of such
change is generally required under applicable Commission rules and regulations
to allow for adequate dissemination to stockholders. THE PURCHASER HAS AGREED
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE MERGER AGREEMENT IT SHALL BE DEEMED
TO HAVE WAIVED SATISFACTION OF THE CONDITIONS TO THE OFFER SET FORTH IN
PARAGRAPHS (B), (E), (F), AND (H) OF SECTION 14 FOLLOWING THE INITIAL EXTENSION
PERIOD (AS DEFINED HEREIN). SEE SECTION 11.


     For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or a Federal holiday and consists of the time period from
12:01 a.m. through 12:00 midnight, New York City time.

     The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other related materials will be mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
stockholder lists or, if

                                       3
<PAGE>
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.

2. ACCEPTANCE FOR PAYMENT AND PAYMENT.

     Upon the terms and subject to the Offer Conditions (including, if the Offer
is extended or amended, the terms and conditions of the Offer as so extended or
amended), promptly after the Expiration Date the Purchaser will purchase, by
accepting for payment, and will pay for, all Shares validly tendered and not
properly withdrawn (in accordance with Section 4) prior to the Expiration Date.
In addition, subject to applicable rules of the Commission, the Purchaser
expressly reserves the right, in its sole discretion, to delay acceptance for
payment of, or payment for, Shares in order to comply with applicable law,
including the HSR Act. See Sections 1 and 15.

     In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates
representing such Shares ("Share Certificates") or timely confirmation (a
"Book-Entry Confirmation") of the book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company ("DTC") pursuant to the
procedures set forth in Section 3; (ii) the appropriate Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with any
required signature guarantees or an Agent's Message (as defined below) in
connection with a book-entry transfer; and (iii) any other documents required by
the Letter of Transmittal.

     The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Depositary and forming a part of a Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the Shares which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against such participant.


     For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not properly
withdrawn if, as and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance of such Shares for payment pursuant to
the Offer. In all cases, upon the terms and subject to the Offer Conditions,
payment for Shares purchased pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to validly tendering stockholders.


     UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE
PAID BY THE PURCHASER.

     The reservation by Purchaser of the right to delay the acceptance or
purchase of or payment for Shares is subject to the provisions of
Rule 14e-1(c) under the Exchange Act, which requires Purchaser to pay the
consideration offered or to return Shares deposited by, or on behalf of
stockholders, promptly after the termination or withdrawal of the Offer.


     If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if Share Certificates are submitted representing more Shares than are
tendered, Share Certificates representing unpurchased or untendered Shares will
be returned, without expense to the tendering stockholder subject to Instruction
6 of the Letter of Transmittal (or, in the case of Shares delivered by book-
entry transfer into the Depositary's account at DTC pursuant to the procedures
set forth in Section 3, such Shares will be credited to an account maintained
within DTC), as promptly as practicable following the expiration, termination or
withdrawal of the Offer.


     IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER SHALL INCREASE THE
CONSIDERATION OFFERED TO HOLDERS OF SHARES PURSUANT TO THE OFFER, SUCH INCREASED
CONSIDERATION SHALL BE PAID TO ALL HOLDERS OF SHARES THAT ARE PURCHASED PURSUANT
TO THE OFFER, WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR TO SUCH INCREASE IN
CONSIDERATION.

                                       4
<PAGE>
3. PROCEDURES FOR TENDERING SHARES.

     Valid Tender. Except as set forth below, in order for Shares to be validly
tendered pursuant to the Offer, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), together with any required signature
guarantees or an Agent's Message in connection with a book-entry delivery of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase on or prior to the Expiration Date and either
(i) Share Certificates representing tendered Shares must be received by the
Depositary or tendered pursuant to the procedure for book-entry transfer set
forth below, and Book-Entry Confirmation must be received by the Depositary, in
each case on or prior to the Expiration Date or (ii) the guaranteed delivery
procedures set forth below must be complied with. No alternate, conditional or
contingent tenders will be accepted.

     THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.

     Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at DTC for purposes of the Offer. Any financial institution that is a
participant in DTC's systems may make book-entry delivery of Shares by causing
DTC to transfer such Shares into the Depositary's account at DTC in accordance
with its procedures for such transfer. However, although delivery of Shares may
be effected through book-entry transfer into the Depositary's account at DTC,
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message in
connection with a book-entry transfer, and any other required documents must, in
any case, be transmitted to and received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase on or prior to
the Expiration Date, or the guaranteed delivery procedure set forth below must
be complied with.

     DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.

     Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm that is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program (an "Eligible Institution"), unless the Shares
tendered thereby are tendered (i) by a registered holder of Shares who has not
completed either the box labeled "Special Payment Instructions" or the box
labeled "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. See Instruction 1 of the Letter
of Transmittal.

     If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made to, or
Share Certificates for unpurchased Shares are to be issued or returned to, a
person other than the registered holder, then the tendered certificates must be
endorsed or accompanied by appropriate stock powers, signed exactly as the name
or names of the registered holder or holders appear on the certificates, with
the signatures on the certificates or stock powers guaranteed by an Eligible
Institution as provided in the Letter of Transmittal. See Instructions 1 and 5
of the Letter of Transmittal.

     If the Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) must accompany each such delivery.

     Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date or the procedures for book-entry transfer
cannot be completed on a timely basis, such Shares or Rights may nevertheless be
tendered if all of the following guaranteed delivery procedures are duly
complied with:

                                       5
<PAGE>
          (i) such tender is made by or through an Eligible Institution;

          (ii) a properly completed and duly executed Notice of Guaranteed
     Delivery, substantially in the form made available by the Purchaser, is
     received by the Depositary, as provided below, on or prior to the
     Expiration Date; and


          (iii) the Share Certificates (or a Book-Entry Confirmation)
     representing all tendered Shares, in proper form for transfer together with
     a properly completed and duly executed Letter of Transmittal (or facsimile
     thereof), with any required signature guarantees (or, in the case of a
     book-entry transfer, an Agent's Message) and any other documents required
     by the Letter of Transmittal are received by the Depositary within three
     American Stock Exchange, Inc. ("AMEX") trading days on which banks and DTC
     are open for business, after the date of execution of such Notice of
     Guaranteed Delivery. An AMEX "trading day" is any day on which the AMEX is
     open for business.


     The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by facsimile transmission to the Depositary, and must include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery and a representation that the stockholder on whose behalf
the tender is being made is deemed to own the Shares being tendered within the
meaning of Rule 14e-4 under the Exchange Act.

     Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or, of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message) and any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering stockholders at the same
time, and will depend upon when Share Certificates are received by the
Depositary or Book-Entry Confirmations of such Shares are received into the
Depositary's account at DTC.

     Appointment as Proxy. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of the Purchaser as such
stockholder's agents, attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares and other securities or rights issued or issuable in
respect of such Shares on or after the date of this Offer to Purchase. All such
powers of attorney and proxies shall be considered irrevocable and coupled with
an interest in the tendered Shares. Such appointment will be effective upon the
acceptance for payment of such Shares by the Purchaser in accordance with the
terms of the Offer. Upon such acceptance for payment, all other powers of
attorney and proxies given by such stockholder with respect to such Shares and
such other securities or rights prior to such payment will be revoked, without
further action, and no subsequent powers of attorney and proxies may be given by
such stockholder (and, if given, will not be deemed effective). The designees of
the Purchaser will, with respect to the Shares and such other securities and
rights for which such appointment is effective, be empowered to exercise all
voting and other rights of such stockholder as they in their sole discretion may
deem proper at any annual or special meeting of the Company's stockholders, or
any adjournment or postponement thereof, or by consent in lieu of any such
meeting or otherwise. In order for Shares to be deemed validly tendered,
immediately upon the acceptance for payment of such Shares, the Purchaser or its
designee must be able to exercise full voting rights with respect to such Shares
and other securities, including voting at any meeting of stockholders.

     Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding on all parties. The
Purchaser reserves the absolute right to reject any or all tenders determined by
it to be not in proper form or for which the acceptance of or payment may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right to waive any of the conditions of the Offer and the Merger
Agreement to the extent permitted by applicable law and the Merger Agreement or
any

                                       6
<PAGE>
defect or irregularity in any tender of Shares of any particular stockholder,
whether or not similar defects or irregularities are waived in the case of other
stockholders.

     A tender of Shares pursuant to any of the procedures described above will
constitute the tendering stockholder's acceptance of the terms and conditions of
the Offer, as well as the tendering stockholder's representation and warranty to
Purchaser that (i) such stockholder has a net long position in the Shares being
tendered within the meaning of Rule 14e-4 under the Exchange Act and (ii) the
tender of such Shares complies with Rule 14e-4. It is a violation of Rule 14e-4
for a person, directly or indirectly, to tender Shares for such person's own
account unless, at the time of tender, the person so tendering (a) has a net
long position equal to or greater than the amount of (A) Shares tendered or
(B) other securities immediately convertible into or exchangeable or exercisable
for the Shares tendered, and such person will acquire such Shares for tender by
conversion, exchange or exercise and (b) will cause such Shares to be delivered
in accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person.

     The Purchaser's interpretation of the terms and conditions of the Offer
will be final and binding. No tender of Shares will be deemed to have been
validly made until all defects and irregularities with respect to such tender
have been cured or waived by the Purchaser. None of Parent, the Purchaser or any
of their respective affiliates or assigns, the Depositary, the Information Agent
or any other person or entity, will be under any duty to give any notification
of any defects or irregularities in tenders or incur any liability for failure
to give any such notification.

     The Purchaser's acceptance for payment of Shares tendered pursuant to any
of the procedures described above will constitute a binding agreement between
the tendering stockholder and the Purchaser upon the terms and subject to the
conditions of the Offer.

4. WITHDRAWAL RIGHTS.

     Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time, on or prior to the Expiration Date.

     If, for any reason whatsoever, acceptance for payment of any Shares
tendered pursuant to the Offer is delayed, or the Purchaser is unable to accept
for payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to the Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares and such Shares
may not be withdrawn except to the extent that the tendering stockholder is
entitled to and duly exercises withdrawal rights as described in this
Section 4.

     In order for a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn, and (if Share
Certificates have been tendered) the name of the registered holder of the Shares
as set forth in the Share Certificate, if different from that of the person who
tendered such Shares. If Share Certificates have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, the tendering stockholder must submit the serial numbers shown on
the particular certificates evidencing the Shares to be withdrawn, and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Shares tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer set forth in Section 3, the notice of withdrawal must
specify the name and number of the account at DTC to be credited with the
withdrawn Shares, in that case a notice of withdrawal will be effective if
delivered to the Depositary by any method of delivery described in the first
sentence of this paragraph. Withdrawals of Shares may not be rescinded. Any
Shares properly withdrawn will be deemed not validly tendered for purposes of
the Offer, but may be tendered at any subsequent time prior to the Expiration
Date by following any of the procedures described in Section 3.

     All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding.

                                       7
<PAGE>
None of Parent, the Purchaser or any of their respective affiliates or assigns,
the Depositary, the Information Agent or any other person or entity will be
under any duty to give any notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.

5. CERTAIN TAX CONSEQUENCES.

     The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for U.S. federal income tax purposes and may also be a
taxable transaction under applicable state, local, foreign and other tax laws.
For U.S. federal income tax purposes, each selling stockholder generally will
recognize gain or loss equal to the difference between the amount of cash
received and such stockholder's tax basis for the sold Shares. Such gain or loss
will be capital gain or loss (assuming the Shares are held as a capital asset)
and any such capital gain or loss will be long-term capital gain or loss if the
stockholder held the Shares for more than one year.

     The foregoing discussion may not be applicable to certain types of
stockholders, including stockholders who acquired Shares pursuant to the
exercise of employee stock options or otherwise as compensation, individuals who
are not citizens or residents of the United States and foreign corporations, and
entities that are otherwise subject to special tax treatment under the Internal
Revenue Code of 1986, as amended (the "Code") (such as dealers in securities,
traders in securities who elect to apply a mark-to-market method of accounting,
financial institutions, persons who hold Shares as part of a hedge, straddle or
conversion transaction, insurance companies, tax-exempt entities and regulated
investment companies). This discussion does not address all aspects of U.S.
federal income taxation that may be relevant to a particular stockholder in
light of such stockholder's personal investment circumstances nor does it
address any aspect of foreign, state, local or estate and gift taxation that may
be applicable to a stockholder.

     In addition, under the backup federal income tax withholding laws
applicable to certain stockholders (other than certain exempt stockholders,
including, among others, all corporations and certain foreign individuals), the
Depositary may be required to withhold 31% of the amount of any payments made to
such stockholders pursuant to the Offer or the Merger. To prevent backup federal
income tax withholding, each such stockholder must provide the Depositary with
such stockholder's correct taxpayer identification number and certify that such
stockholder is not subject to backup federal income tax withholding by
completing the Substitute Form W-9 included in the Letter of Transmittal. See
Instruction 9 of the Letter of Transmittal.

     THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY. STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND
MERGER, INCLUDING UNITED STATES FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES.

6. PRICE RANGE OF THE SHARES; DIVIDENDS.

     The Shares are traded on the AMEX under the symbol "AWS." The following
table sets forth, for the periods indicated, the reported closing high and low
sale prices for the Shares on the AMEX since the first quarter of 1997 and the
cash dividends declared on the Company's common stock during each quarter
presented.

                                       8
<PAGE>
                             ALBA-WALDENSIAN, INC.

<TABLE>
<CAPTION>
                                                                                 HIGH       LOW       DIVIDENDS
                                                                                 ----       ---       ---------
<S>                                                                              <C>        <C>       <C>
CALENDAR YEAR 1997
First Quarter.................................................................   $ 3 1/8    $ 2 1/2      --
Second Quarter................................................................   $ 2 5/8    $ 2 7/16     --
Third Quarter.................................................................   $ 2 5/8    $ 2 7/16     --
Fourth Quarter................................................................   $ 2 7/8    $ 2 5/16     --

<CAPTION>

                                                                                 HIGH       LOW       DIVIDENDS
                                                                                 ----       ---        -------
<S>                                                                              <C>        <C>       <C>
CALENDAR YEAR 1998
First Quarter.................................................................   $ 2 9/16   $ 2 1/4      --
Second Quarter................................................................   $ 5 5/16   $ 2 9/16     --
Third Quarter.................................................................   $ 6 7/8    $ 4 5/8    $0.0375
Fourth Quarter................................................................   $21 11/16  $ 5 1/2      --
<CAPTION>

                                                                                 HIGH       LOW       DIVIDENDS
                                                                                 ----       ---        -------
<S>                                                                              <C>        <C>       <C>
CALENDAR YEAR 1999
First Quarter.................................................................   $19 1/2    $11 7/16   $0.056
Second Quarter................................................................   $20 5/8    $11 5/8      --
Third Quarter.................................................................   $20        $ 8 1/2    $0.075
Fourth Quarter (through November 10, 1999)....................................   $18 1/4    $ 8 5/8      --
</TABLE>


------------------


Prices and dividends are adjusted to reflect a three-for-two stock split
effected on November 16, 1998 and a four-for-three stock split effected on
June 4, 1999.



     On November 1, 1999, the last full day of trading prior to the Company's
public announcement that the Company was in discussions with a third party
concerning the possible sale of the Company, the reported closing price per
Share on the AMEX was $11 1/4, and on November 5, 1999, the last full day of
trading prior to the Company's public announcement of the Offer and the Merger,
the reported closing price per Share on the AMEX was $16 1/8.


     STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.

7. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES; AMEX LISTING;
   EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.

     Possible Effects of the Offer on the Market for the Shares. The purchase of
Shares pursuant to the Offer will reduce the number of Shares that might
otherwise be traded publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public. The purchase of Shares
pursuant to the Offer can also be expected to reduce the number of holders of
Shares. The Purchaser cannot predict whether the reduction in the number of
Shares that might otherwise be traded publicly will have an adverse or
beneficial effect on the market price for or marketability of the Shares or
whether it would cause future market prices to be greater or less than the Offer
price therefor.

     AMEX Listing. The purchase of Shares pursuant to the Offer will reduce the
number of holders of Shares and the number of Shares that might otherwise be
traded publicly and could adversely affect the liquidity and market value of the
remaining Shares held by the public.

     Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the standards for continued listing on the AMEX.
According to published guidelines, the AMEX will give consideration to delisting
the Shares if, among other things (i) the number of publicly-held Shares falls
below 200,000 shares; or (ii) the market value of the number of publicly-held
Shares falls below $1,000,000; or (iii) the number of stockholders is less than
300; or (iv) stockholders' equity falls below $2,000,000 if the Company has had
losses in 2 of the then most recent 3 years or below $4,000,000 if the Company
has had losses in 3 of the then most recent 4 years.

     In the event the Shares are no longer eligible for listing on the AMEX,
quotations might still be available from other sources. The extent of the public
market for the Shares and the availability of such

                                       9
<PAGE>
quotations would, however, depend upon the number of holders of such shares
remaining at such time, the interest in maintaining a market in such Shares on
the part of securities firms, the possible termination of registration of such
Shares under the Exchange Act as described below and other factors.

     Exchange Act Registration. The Shares are currently registered under the
Exchange Act. The purchase of the Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act. Registration
of the Shares may be terminated upon application by the Company to the
Commission if the Shares are not listed on a "national securities exchange" and
there are fewer than 300 record holders of Shares. Termination of registration
of the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to its stockholders and the Commission
and would make certain provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b) and the requirements of furnishing a
proxy statement in connection with stockholders' meetings pursuant to
Section 14(a) or 14(c) and the related requirement of an annual report, no
longer applicable to the Company. If the Shares are no longer registered under
the Exchange Act, the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions would no longer be applicable to the
Company. Furthermore, the ability of "affiliates" of the Company and persons
holding "restricted securities" of the Company to dispose of such securities
pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended,
may be impaired or, with respect to certain persons, eliminated. If registration
of the Shares under the Exchange Act were terminated, the Shares would no longer
be eligible for stock exchange listing or Nasdaq reporting. The Purchaser
believes that the purchase of the Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act, and it would
be the intention of the Purchaser to cause the Company to make an application
for termination of registration of the Shares as soon as possible after
successful completion of the Offer if the Shares are then eligible for such
termination.

     Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which have the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares for the purpose of
buying, carrying or trading in securities ("Purpose Loans"). Depending upon
factors such as the number of record holders of the Shares and the number and
market value of publicly held Shares, following the purchase of Shares pursuant
to the Offer, the Shares might no longer constitute "margin securities" for
purposes of the Federal Reserve Board's margin regulations and, therefore, could
no longer be used as collateral for Purpose Loans made by brokers. In addition,
if registration of the Shares under the Exchange Act were terminated, the Shares
would no longer constitute "margin securities."

8. CERTAIN INFORMATION CONCERNING THE COMPANY.

     The Company is a Delaware corporation with its principal executive offices
located at 201 St. Germain Avenue, S.W., P.O. Box 100, Valdese, North Carolina
28690, and its telephone number is (828) 879-6500. The following description of
the Company's business has been taken from, and is qualified in its entirety by
reference to, the Form 10-K filed by the Company for the year ended
December 31, 1998 (the "Form 10-K").

     The Company manufactures a variety of knitted apparel and health care
products at two plants in Valdese, North Carolina and one plant in Rockwood,
Tennessee and markets the products through two divisions, the Consumer Products
Division and the Health Products Division.

     Consumer Products Division

     Products manufactured and sold by this Division include women's apparel and
women's hosiery products. Women's apparel includes both intimate apparel
(brassieres, briefs and bodywear, as well as specially designed briefs for
maternity wear) and combination internally/externally worn products (bodysuits,
bandeaus, tube tops, and dresses). Women's hosiery products include sheer
stockings, pantyhose, tights and trouser socks, primarily for large-size women
and the maternity market.

                                       10
<PAGE>
     The Company has developed a process that makes it possible to knit bras,
briefs, tank tops, bodysuits and many other products on seamless knitting
equipment. This design technology, which is patented for the knit bra and
various knit-in features for all seamless products, has allowed the Company to
significantly broaden its product offerings. The seamless knit bra was
introduced in 1994 and the tank tops and bodysuits were introduced in 1995.
During 1988, the Company introduced several new products utilizing the seamless
technology, including bandeaus, tube tops, dresses and activewear.

     The Company uses state of the art computer-controlled circular-knitting
technology. Such equipment produces apparel that management believes is better
fitting and therefore more comfortable than traditional cut and sew products.

     Health Products Division

     Products manufactured and sold by this Division are designed to assist in
healthcare. They include anti-embolism stockings and compression therapy
systems, an intermittent pneumatic compression device, both of which are
designed to improve circulation and reduce the incidence of deep vein
thrombosis; sterile wound dressings such as pre-saturated gauze, petrolatum and
xeroform gauze, non-adhering dressings and gauze strips and
XX-Span(Registered) dressing retainers, an extensible net tubing designed to
hold dressings in place without the use of adhesive tape. All dressing products
are used in wound care therapy.

     In addition, this Division manufactures a knitted stockinette in a variety
of sizes, which is used under fracture casts or is sterile packaged for use as a
supplemental drape in surgical procedures, as well as heel and elbow pads which
are XX-Span(Registered) sleeves with an inner soft foam pad used to reduce
pressure and the incidence of decubitus ulcers.

     Other products include slip-resistant patient treads, which are knitted
soft patient footwear with slip resistant soles to help prevent patient falls
while keeping feet warm even while in bed; knitted arm sleeves, which provide
protection to the skin of patients with poor circulation; oversize socks for
diabetic patients; baby caps to retain body temperature; and knitted cuffs for
use on surgical gowns.


     The selected financial information of the Company and its consolidated
subsidiaries set forth below has been excerpted and derived from the Form 10-K
and from the Form 10-Q filed by the Company for the six months ended July 4,
1999. More comprehensive financial and other information is included in such
report (including management's discussion and analysis of financial condition
and results of operations) and in other reports and documents filed by the
Company with the Commission. The financial information set forth below is
qualified in its entirety by reference to such reports and documents filed with
the Commission and the financial statements and related notes contained therein.
These reports and other documents may be examined and copies thereof may be
obtained in the manner set forth below.


                                       11
<PAGE>
                             ALBA-WALDENSIAN, INC.
                         SELECTED FINANCIAL INFORMATION
                      (IN THOUSANDS EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>

                                                                   IX MONTHS
                                                   THREE MONTHS      ENDED            YEARS ENDED DECEMBER,
                                                   ENDED JULY 4,     JULY 4,      -----------------------------
                                                      1999            1999         1998       1997       1996
                                                   ------------    -----------    -------    -------    -------
                                                   (UNAUDITED)     (UNAUDITED)
                                                   ------------    -----------
<S>                                                <C>             <C>            <C>        <C>        <C>
Net Sales.......................................     $ 19,321        $40,446      $75,242    $59,912    $65,815
Cost of sales...................................       13,996         29,013       53,087     47,690     50,624
                                                     --------        -------      -------    -------    -------
Gross margin....................................        5,325         11,433       22,155     12,222     15,191
Selling, general and administrative expenses....        3,548          6,853       12,966     11,809     13,392
Operating income................................        1,777          4,580        9,189        413      1,799
Interest Expense................................         (343)          (631)        (865)    (1,020)    (1,286)
Interest Income.................................                                       56         79         21
Other expenses..................................          (23)           (46)        (115)       (63)       (30)
Total Other Expenses............................         (366)          (677)        (924)    (1,004)    (1,295)

Income before Income Taxes......................        1,411          3,903        8,265       (591)       504
Provision for Income Taxes......................          422          1,369        3,282       (214)       184
                                                     --------        -------      -------    -------    -------

Net income per common share                          $    989        $ 2,534        4,983       (377)       320
                                                     --------        -------      -------    -------    -------
  --Basic(1)....................................     $    .32        $   .81      $  1.49    $ (0.10)   $  0.08
  --Diluted(1)..................................     $    .30        $   .76      $  1.43    $ (0.10)   $  0.08

Weighted average number of shares of common
  stock outstanding
  --Basic.......................................        3,138          3,139
  --Diluted.....................................        3,334          3,343
</TABLE>

------------------
(1) Adjusted to reflect the effect of the 3 for 2 stock split effected
November 16, 1998 and 4 for 3 Stock Split effected June 4, 1999.



<TABLE>
<CAPTION>
                                                                                         JULY 4,    DECEMBER 31,
                                                                                          1999         1998
                                                                                         -------    ------------
<S>                                                                                      <C>        <C>
BALANCE SHEET DATA:
Current assets........................................................................   $28,291      $ 21,571
Net property and equipment............................................................    21,409        17,882
Other assets..........................................................................     6,999         7,326
Total assets..........................................................................    56,699        46,779
Current liabilities...................................................................     7,598         6,683
Long-term debt........................................................................    15,507         8,383
Deferred compensation.................................................................       210           200
Deferred income tax liability.........................................................     1,864         1,864
Total liabilities.....................................................................    25,179        17,130
Stockholders' equity..................................................................    31,520        29,649
</TABLE>


     The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Certain information, as of
particular dates, concerning the Company's business, principal physical
properties, capital structure, material pending legal proceedings, operating
results, financial condition, directors and officers (including their
remuneration and the stock options granted to them), the principal holders of
the Company's securities, any material interests of such persons in transactions
with the Company and certain other matters is required to be disclosed in proxy
statements and annual reports distributed to

                                       12
<PAGE>
the Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at 500 West Madison Street, Chicago, Illinois 60606, and 7 World Trade Center,
New York, New York 10048. Copies of such material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. Such material may be obtained electronically by visiting the Commission's
website on the Internet, at http://www.sec.gov. The Shares are traded on the
AMEX, and reports, proxy statements and other information concerning the Company
should also be available for inspection at The American Stock Exchange, 86
Trinity Place, New York, New York 10006.

     Although none of Parent, the Purchaser or Tefron has any knowledge that any
such information is untrue, none of Parent, the Purchaser or Tefron takes any
responsibility for the accuracy or completeness of information contained in this
Offer to Purchase with respect to the Company or any of its subsidiaries or
affiliates or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information.

9. CERTAIN INFORMATION CONCERNING TEFRON, PARENT AND THE PURCHASER.

     Tefron is a corporation organized under the laws of the State of Israel
whose principal executive offices are located at 28 Chida Street, Bnei-Brak,
51371 Israel.


     The Parent's principal executive offices are located c/o Tefron at 28 Chida
Street, Bnei-Brak, 51371 Israel. The Parent is a newly formed Delaware
corporation and a wholly owned subsidiary of Tefron. The Parent has not
conducted any business other than in connection with the Offer and the Merger.



     The Purchaser's principal executive offices are located c/o Tefron at 28
Chida Street, Bnei-Brak, 51371 Israel. The Purchaser is a newly formed Delaware
corporation and a wholly-owned subsidiary of Parent. The Purchaser has not
conducted any business other than in connection with the Offer and the Merger.



     Tefron is a foreign issuer subject to certain information and reporting
requirements of the Exchange Act and in accordance therewith is required to file
periodic reports and other information with the Commission relating to its
business, financial condition and other matters. Such reports and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at 500 West
Madison Street, Chicago, Illinois 60606, and 7 World Trade Center, New York, New
York 10048. Copies of such material can also be obtained at prescribed rates
from the Public Reference Section of the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Tefron's
ordinary shares are traded on the New York Stock Exchange (the "NYSE"), and
reports and other information concerning the Company should also be available
for inspection at The New York Stock Exchange, 20 Broad Street, New York, New
York 10005.


     The name, business address, citizenship, present principal occupation and
employment history for the past five years of each of the directors and
executive officers of Tefron, Parent and the Purchaser are set forth in Schedule
I.

     Except as set forth elsewhere in this Offer to Purchase or Schedule I
hereto: (i) none of Parent, the Purchaser or Tefron or, to the knowledge of
Parent, the Purchaser or Tefron, any of the persons listed in Schedule I hereto
or any associate or majority-owned subsidiary of Parent, the Purchaser or Tefron
or any of the persons so listed, beneficially owns or has a right to acquire any
Shares or any other equity securities of the Company; (ii) none of Parent, the
Purchaser or Tefron or, to the knowledge of Parent, the Purchaser or Tefron, any
of the persons or entities referred to in clause (i) above or any of their
executive officers, directors or subsidiaries has effected any transaction in
the Shares or any other equity securities of the Company during the past
60 days; (iii) none of Parent, the Purchaser or Tefron or, to the knowledge of
Parent, the Purchaser or Tefron, any of the persons listed in Schedule I hereto,
has any contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company (including, but not limited
to, any contract, arrangement, understanding or

                                       13
<PAGE>
relationship concerning the transfer or the voting of any such securities, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies, consents or
authorizations); (iv) in the past five years, there have been no transactions
which would require reporting under the rules and regulations of the Commission
between Tefron, Parent or the Purchaser or any of their respective subsidiaries
or, to the knowledge of Tefron, Parent or the Purchaser, any of the persons
listed in Schedule I hereto, on the one hand, and the Company or any of its
executive officers, directors or affiliates, on the other hand; and (v) in the
past five years, there have been no contacts, negotiations or transactions
between Parent or the Purchaser or any of their respective subsidiaries or, to
the knowledge of Parent or the Purchaser, any of the persons listed in Schedule
I hereto, on the one hand, and the Company or any of its subsidiaries or
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.

10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.


     Certain of Tefron's strategic objectives have included increasing its
production capacity to meet demand and establishing a U.S. design and
manufacturing presence.



     In August 1999, in furtherence of these objectives, Tefron contacted the
Company concerning pursuit of a possible business combination with or
acquisition of the Company. After further discussions, on August 25, 1999,
representatives of the Company and Tefron met in Chicago at which time Tefron
and the Company entered into a confidentiality agreement regarding a potential
business combination with or acquisition of the Company. At such meeting, the
Company also provided information regarding the Company to Tefron for purposes
of Tefron's consideration of such business transaction.



     Representatives of Tefron met with representatives of the Company in New
York on August 30, 1999 and discussed a possible acquisition transaction.
Thereafter, Tefron indicated that it was considering making an offer to acquire
the Company for $16 per Share in some combination of cash and shares of Tefron
stock for all of the outstanding Shares of the Company. Tefron indicated that
the offer would not be subject to a financing condition and would be made on a
friendly basis only. The management of the Company subsequently responded to
Tefron that the Company would not be interested in pursuing discussions unless
Tefron was prepared to pay a price which was higher than its current proposal.
Such exploratory discussions did not advance beyond this phase.



     On October 24, 1999, after the expiration of the Company's exclusivity
period with another potential acquiror, Arie Wolfson, the Chairman and President
of Tefron, contacted Nathan H Dardick, the chairman of the special committee of
the Company's Board of Directors (the "Special Committee"), and expressed
continuing interest in pursuing a transaction with the Company. Tefron's
financial advisor, Credit Suisse First Boston Corporation ("CSFB"), also
contacted the Company on October 25 and the Company sent to CSFB documents to
permit Tefron to commence its due diligence investigation of the Company.



     On October 27, 1999, representatives of Tefron visited the Company's
headquarters and plant in Valdese, North Carolina. Following a meeting of the
Board of Directors of the Company, certain members of the Board of Directors of
the Company later met with representatives of Tefron and continued discussion of
a possible acquisition transaction.



     Discussions between Mr. Dardick, on behalf of the Special Committee, and
representatives of Tefron continued through the remainder of the week. Tefron
indicated that it would be willing to offer $18.50 per Share in cash in a
two-step tender offer and merger transaction, subject to satisfactory completion
of its due diligence review of the Company and satisfactory resolution of
certain outstanding business issues. Mr. Wolfson also informed the Company that
Tefron and its representatives were prepared to commence confidential,
confirmatory financial, legal and accounting due diligence of the Company.



     Following October 27, 1999 through November 7, 1999, the Purchaser, Parent
and Tefron and their financial and legal advisors and accountants conducted a
financial, legal and accounting due diligence review of the Company. Discussions
continued during the week of November 1, 1999, during which


                                       14
<PAGE>

Tefron's accountants and consultants visited the Company's facilities. On
November 1, Tefron's legal advisors delivered drafts of the Merger Agreement,
Support Agreement and Integration Consulting/Noncompetition Agreements to the
Company, its counsel and counsel to the Special Committee. Negotiations
concerning those documents continued through the week.



     On November 2, 1999, in response to an unusually high volume of trading in
the Common Stock, the Company issued a press release announcing that it is
currently engaged in discussions with an interested party concerning the
possible sale transaction.



     Tefron and its advisors substantially completed their due diligence of the
Company by the weekend of November 7, 1999. Negotiations continued on Saturday,
November 6, and Sunday, November 7, 1999, by which time the parties had reached
substantial agreement on the documents and the terms of the Offer and the Merger
and related matters. Substantially final drafts of the Merger Agreement, the
Support Agreement and the Integration Consulting/Noncompetition Agreements were
delivered to the members of the Company's Board of Directors on Saturday,
November 6, and Tefron's Board of Directors on Sunday, November 7, in Israel.



     On Sunday evening, November 7, the Board of Directors of the Company
unanimously approved the Offer, the Merger, the Merger Agreement and the
transaction contemplated thereby and resolved to recommend that the Company's
Stockholders accept the Offer and tender their Shares pursuant to the Offer.



     On Monday morning, November 8, after discussion with their financial
advisors, accountants and legal counsel the Board of Directors of Tetron
unanimously approved the Offer, the Merger, the Merger Agreement and the
transaction contemplated thereby.



     The Merger Agreement, the Support Agreement and the Integration
Consulting/Noncompetition Agreements were executed and delivered after the close
of the NYSE on Monday, November 8, 1999, and Tefron and the Company issued a
joint press release announcing the Merger and the Offer.



11. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE SUPPORT AGREEMENT; THE
CONSULTING AGREEMENTS; APPRAISAL RIGHTS; PLANS FOR THE COMPANY.


  Purpose

     The purpose of the Offer and the Merger is to acquire control of, and the
entire equity interest in, the Company. The Offer, as the first step in the
acquisition of the Company, is intended to facilitate the acquisition of all the
Shares. The purpose of the Merger is to acquire all of the capital stock of the
Company not purchased pursuant to the Offer or otherwise.


     The following is a summary of certain provisions of the Merger Agreement,
the Support Agreement and the Consulting Agreements (as such terms are defined
below). This summary is qualified in its entirety by reference to the Merger
Agreement, the Support Agreement and the Consulting Agreements which are
incorporated by reference and copies or forms of which have been filed with the
Commission as exhibits to the Schedule 14D-1 to which this Offer to Purchase is
an exhibit (the "Schedule 14D-1"). The Merger Agreement and the Support
Agreement may be examined and copies may be obtained at the places set forth in
Section 8. Defined terms used herein and not defined herein shall have the
respective meanings assigned to those terms in the Merger Agreement.


  The Merger Agreement


     The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to prior satisfaction or waiver
of the Offer Conditions, the Purchaser will purchase all Shares validly tendered
pursuant to the Offer. The Merger Agreement provides that Purchaser may modify
the terms of the Offer, except that without the consent of the Company Purchaser
shall not (i) reduce the number of Shares subject to the Offer, (ii) reduce the
Offer Price, (iii) amend or add to the Offer Conditions, (iv) except as provided
below, extend the Offer, (v) change the form of consideration payable in the
Offer or (vi) amend any other term of the Offer in any manner adverse to the
holders of the Shares. In addition, the Merger Agreement also provides the
Purchaser


                                       15
<PAGE>

shall not increase or decrease a dealer's soliciting fee, of which there is
none. Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (i) extend the Offer for any period required by any rule, regulation,
interpretation or position of Commission applicable to the Offer as a result of
an increase in the Offer Price by Purchaser in light of a bona fide competing
offer from a third party for some or all of the Shares and (ii) (A) extend the
Offer for a period, in the aggregate, of not more than five business days if, at
the initial scheduled expiration date of the Offer, the Shares validly tendered
and not withdrawn pursuant to the Offer are less, than 90% of the outstanding
Shares and (B) following the period contemplated by clause (ii) (A) (the
"Initial Extension Period"), if any of the Offer Conditions have not been waived
or satisfied, extend the Offer on one or more occasions for periods not to
exceed five business days until January 31, 2000; provided, that, (x) if at the
expiration date of the Offer, as so extended, the Offer Conditions have been
satisfied or waived (including the deemed waivers described in clauses (y) and
(z) below), Purchaser shall not continue to extend the Offer (unless required by
clause (i), above), (y) following the Initial Extension Period, Purchaser shall
be deemed to have waived satisfaction of the Offer Conditions set forth in
paragraphs (b), (e), (f) and (h) set forth in Section 14 hereof with respect to
matters existing on or before the last day of the Initial Extension Period and
(z) in the event Purchaser extends the Offer after the Initial Extension Period
following written notice from the Company of an event which has had, or is
reasonably likely to have a material adverse effect on the financial condition,
business, assets or results of operations of the Company taken as a whole or on
the Company's ability to perform its obligations under the Merger Agreement or
which would prevent or delay the consummation of the transactions contemplated
by the Merger Agreement, Purchaser shall be deemed to have waived satisfaction
of the condition set forth in paragraph (c) set forth in Section 14 with
respect, and only with respect, to the event for which it has received such
written notice; provided further, that all time periods set forth above in this
sentence shall be tolled, at the election of Purchaser, during the pendency of
the No Takedown Period (as defined under the heading "No Solicitation" below).


     Directors. The Merger Agreement provides that, promptly upon the acceptance
of payment of Shares by Purchaser pursuant to the Offer, Purchaser shall be
entitled to designate such number of directors on the Board of Directors of
(i) the Company as will give Purchaser, subject to compliance with
Section 14(f) of the Exchange Act, a majority of such directors and the Company
shall, at such time, cause Purchasers designees to be so elected by its existing
Board of Directors and (ii) each subsidiary of the Company and each committee of
the Board of Directors and each such subsidiary as will give Purchaser a
majority of such directors or committee, and the Company shall, at such time,
cause Purchaser's designees to be so elected. In the event that Purchasers
designees are elected to the Board of Directors, until the Effective Time such
Board of Directors shall have at least two directors who are directors on the
date of the Merger Agreement and who are not officers of the Company (the
Independent Directors); and provided that, in such event, if the number of
Independent Directors shall be reduced below two for any reason whatsoever, the
remaining Independent Director shall designate a person to fill such vacancy who
shall be deemed to be an Independent Director for purposes of this Agreement or,
if no Independent Directors then remain, the other directors shall designate two
persons to fill such vacancies who shall not be officers or affiliates of the
Company, or officers or affiliates of Parent or any of its subsidiaries, and
such persons shall be deemed to be Independent Directors for purposes of the
Merger Agreement. Subject to applicable law, the Company shall take all action
requested by Parent necessary to effect any such election, including mailing to
its stockholders an information statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder (the
"Information Statement"), and the Company agrees to make such mailing with the
mailing of the Schedule 14D-9 (provided that Purchaser shall have provided to
the Company on a timely basis all information required to be included in the
Information Statement with respect to Purchasers designees). In connection with
the foregoing, the Company will promptly, at the option of Parent, either
increase the size of the Board of Directors and each subsidiarys board of
directors (and each committee thereof) and/or obtain the resignation of such
number of its current directors as is necessary to enable Purchasers designees
to be elected or appointed to, and to constitute a majority of the Companys and
each subsidiarys board of directors (and each committee thereof) as provided
above. Following the election or appointment of Purchaser's designees and prior
to

                                       16
<PAGE>
the Effective Time, the affirmative vote of a majority of the Independent
Directors then in office shall be required by the Company to (i) amend or
terminate the Merger Agreement by the Company, (ii) exercise or waive any of the
Company's rights or remedies under the Merger Agreement or (iii) extend the time
for performance of Parent's and Purchaser's respective obligations under the
Merger Agreement.

     The Merger. The Merger Agreement provides that, at the Effective Time, the
Purchaser will be merged with and into the Company. Following the Merger, the
separate corporate existence of the Purchaser will cease and the Company will
continue as the Surviving Corporation.

     The Merger Agreement provides that as promptly as practicable (but in no
event more than two business days) after the satisfaction or waiver of the
conditions to the Merger (other than conditions which by their nature are to be
satisfied at the closing, but subject to such conditions) the parties to the
Merger Agreement shall (a) file a certificate of merger or, if applicable, a
certificate of ownership and merger (the Certificate of Merger) in such form as
is required by and executed in accordance with the relevant provisions of the
DGCL and (b) make all other filings or recordings required under the DGCL. The
Merger shall become effective at such time as the Certificate of Merger is duly
filed with the Delaware Secretary of State or at such subsequent time as Parent
and the Company shall agree and as shall be specified in the Certificate of
Merger the Effective Time.


     Charter, Bylaws, Directors and Officers. The Merger Agreement provides
that, the Certificate of Incorporation of the Purchaser, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and applicable law. The by-laws of the
Purchaser in effect at the time of the Effective Time shall be the by-laws of
the Surviving Corporation until amended, subject to the provisions of the Merger
Agreement which provide that all rights to indemnification now existing in favor
of directors and officers of the Company and its subsidiaries as provided in
their respective articles of incorporation or by-laws shall survive the Merger
and continue in full force and effect in accordance with their terms. Subject to
applicable law, the directors of the Purchaser immediately prior to the
Effective Time, will be the initial directors of the Surviving Corporation, and
the officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation. Such officers and directors will
hold office until their respective successors are duly elected and qualified, or
their earlier death, resignation or removal.



     Conversion of Securities. The Merger Agreement provides that, by virtue of
the Merger and without any action on the part of the holders thereof, as of the
Effective Time, each issued and outstanding Share (other than (i) any Shares
owned by the Company or any subsidiary of the Company and each Share that is
owned by Parent or Purchaser, which Shares, by virtue of the Merger and without
any action on the part of the holder thereof, will be canceled and retired and
will cease to exist with no payment being made in exchange therefor and
(ii) Dissenting Shares (as defined below)) will be canceled and retired and will
be converted into the right to receive in cash, without interest, the Merger
Consideration. As of the Effective Time, all such Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such Shares shall cease
to have any rights with respect thereto, except the right to receive the Merger
Consideration.



     Company Stock Options. The Merger Agreement provides that, prior to the
date that Purchaser shall accept for payment, and pay for, all Shares validly
tendered pursuant to the Offer (such date, the "Takedown Date"), the Company
shall use commercially reasonable efforts to cause as of (i) the Effective Time
or, (ii) if the Purchaser and Parent so elect, as of the Take-down Date
provided, that in the case of clause (ii) Purchaser will take such actions as
may be reasonably necessary to allow the Company to cause the following actions,
(i) each Option for which the exercise price is less than the Offer Price,
whether or not then vested or exercisable, to be canceled in consideration for a
payment by the Company to each holder thereof of an amount equal to the product
of (A) the excess of the Offer Price over the exercise price of each such Option
and (B) the number of Shares subject to the Option immediately prior to its
cancellation and (ii) each Option for which the exercise price is equal to or
greater than the Offer Price, whether or not then vested or exercisable, to be
cancelled in consideration


                                       17
<PAGE>

for a payment by the Company to each holder thereof in an amount equal to the
product of (A) $0.50 and (B) the number of Shares subject to the Option. All
such payments to be made shall be net of required withholding taxes. The Merger
Agreement obligates the Company to use commercially reasonable efforts to cause
or, if Purchaser and Parent so elect, Purchaser will take such actions as may be
reasonably necessary to allow the Company to cause, as of the Takedown Date,
(i) all Company Option Plans to terminate as of the Effective Time, (ii) no
holder of an Option to have any rights thereunder other than to receive the cash
payment contemplated above and (iii) no person to have any right to acquire any
security of the Company, the Surviving Corporation (or any parent subsidiary
thereof) as a result of any agreement or obligation of the Company or any
subsidiary. Prior to the Takedown Date, the Company shall use commercially
reasonable efforts to obtain all necessary consents (in a form acceptable to
Parent) from holders of Options and take all other lawful action as is necessary
to give effect to the requirements set forth under this heading "Company Stock
Options". Pursuant to the Merger Agreement, the Company has further agreed to
cause the Board of Directors to adopt any resolutions necessary to effectuate
the foregoing.


     Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Parent and the
Purchaser with respect to, among other matters, its organization and
qualification, capitalization, subsidiaries, authority, consents and approvals,
no violations, financial statements, public filings, absence of certain changes
or events, undisclosed liabilities, information to be included in the 14D-1 and
the documents included therein, together with any supplements or amendments
thereto, the Schedule 14D-9, the Information Statement or the Proxy Statement,
employee benefit plans, employment practices, labor matters, material contracts,
litigation, insurance, compliance with laws, product warranties and liabilities,
relationships, tax matters, environmental matters, title to and condition of
properties, intellectual property, opinion of financial advisor, brokers and
finders, year 2000 compliance, related party transactions, state takeover
statutes, charter provisions, accuracy of information supplied and copies of
documents. Pursuant to the Merger Agreement, Parent and the Purchaser have made
customary representations and warranties to the Company with respect to, among
other matters, their organization, qualifications, authority, consents and
approvals, no violations, information to be included in the 14-D-1, Schedule
14D-9, Information Statement or Proxy Statement, interim operations of
Purchaser, brokers and finders and no knowledge of certain matters.


     Covenants. The Merger Agreement obligates the Company and its subsidiaries,
from the date of the Merger Agreement until such time as Parent's designees
constitute a majority of the members of the Board of Directors, to conduct their
business only in the ordinary course and use all reasonable efforts to preserve
intact their business organizations and relationships with third parties and to
keep available the services of their present officers and employees and preserve
their relationships with customers, suppliers and others having business
dealings with the Company and its subsidiaries. The Merger Agreement also
contains specific restrictive covenants as to certain activities of the Company
prior to the time as Parent's designees constitute a majority of the members of
the Board of Directors, which provide that the Company, without the written
consent of Purchaser, will not, and will cause its subsidiaries not to, take
certain actions including, among other things and subject to certain exceptions,
make dividends, make changes in capital stock, issue securities, make amendments
to its certificate of incorporation or by-laws, make material acquisitions,
effect consolidations or dispositions, incur indebtedness, change tax
accounting, make capital expenditures, discharge liabilities, change material
contracts, change benefits plans, change Company Option Plans (other than their
termination as discussed above under the heading "Company Stock Options"),
change insurance, change accounting methods or take certain other actions.



     No Solicitation. The Merger Agreement requires the Company to, and to cause
its officers, directors, employees, representatives and agents to, immediately
cease any discussions or negotiations with any parties that may be ongoing with
respect to any inquiry, proposal, offer or expression of interest by any third
party relating a merger, consolidation or other business combination involving
all or substantially all of the Company's consolidated assets or 100% of the
outstanding voting power of the Company's securities that is not subject to any
financing condition (the foregoing, a


                                       18
<PAGE>

"Takeover Proposal"). The Merger Agreement further provides that the Company
will not, and will cause its officers, directors, employees, representatives and
agents not to, directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action designed
or reasonably likely to facilitate or encourage, any inquiries or the making of
any proposal which constitutes, or may reasonably be expected to lead to, any
Takeover Proposal or (ii) participate in any discussions or negotiations
regarding any Takeover Proposal, provided, however, that if, at any time prior
to the acceptance for payment of Shares pursuant to the Offer, the Board of
Directors determines in good faith, after consultation with outside counsel and
William Blair, that it is necessary to do so in order to comply with its
fiduciary duties to the Companys stockholders under applicable law, the Company
may, in response to a Takeover Proposal that was not solicited subsequent to the
date hereof, and subject to compliance with the requirements set forth under
this heading "No Solicitation," furnish information with respect to the Company
to any person pursuant to a confidentiality agreement in a form approved by
Parent (such approval not to be unreasonably withheld) and (y) participate in
discussions or negotiations regarding such Takeover Proposal. The Merger
Agreement provides that any material modification of a Takeover Proposal shall
constitute a new Takeover Proposal. The Merger Agreement requires the Company to
immediately advise Parent orally and in writing of any request for information
or of any Takeover Proposal, the material terms and conditions of such request
or Takeover Proposal and the identity of the person making such request or
Takeover Proposal. Pursuant to the Merger Agreement, the Company is obligated to
immediately inform Parent of any material change in the details (including
amendments or proposed amendments) of any such request or Takeover Proposal.



     The Merger Agreement provides that, unless it has complied with the
procedures set forth under this heading "No Solicitation," neither the Board of
Directors nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, the approval or recommendation by such Board of Directors or
such committee of the Offer, the Merger or this Agreement, (ii) approve or
recommend or take no position with respect to, or propose to approve or
recommend or take no position with respect to, any Takeover Proposal or
(iii) cause the Company to enter into any agreement related to any Takeover
Proposal (other than a confidentiality agreement in compliance with the
procedures set forth in the preceding paragraph). Notwithstanding the foregoing,
in the event that prior to the acceptance for payment of Shares pursuant to the
Offer the Board of Directors determines in good faith, after consultation with
outside counsel and the William Blair, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's stockholders under applicable
law, the Board of Directors may, in response to a Superior Proposal (as defined
below) that was not solicited subsequent to the date hereof, (x) withdraw or
modify its approval or recommendation of the Offer, the Merger or this Agreement
or (y) subject to the requirement that it pay Parent the amounts due Parent, as
described under the heading "Expenses" below, in accordance with the terms of
the Merger Agreement, terminate the Merger Agreement, but in each such case,
only at a time that is after the fifth business day following Parent's receipt
of written notice (such five-day period, the "Notice Period") advising Parent
that the Board of Directors has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal and only if the Company is in compliance
with the requirements set forth under this heading "No Solicitation." Parent and
Purchaser agree that Purchaser shall not accept for payment, or pay for any
Shares tendered pursuant to the Offer until 5 p.m. (New York City time) on the
business day immediately following the end of the Notice Period (the "No
Takedown Period"); provided, that either of Parent or Purchaser, in its sole
discretion, may elect to shorten or waive the Notice Period and immediately
terminate this Agreement at any time after commencement of the Notice Period in
which case the amounts due Parent, as described under the heading "Expenses"
below, shall be immediately due and payable. For purposes of this Agreement, a
Superior Proposal means any bona fide Takeover Proposal made by a third party on
terms which the Board of Directors determines in its good faith judgment (based
on the advice of the William Blair or other financial advisor of nationally
recognized reputation) to be more favorable to the Company's stockholders than
the Offer and the Merger and which is reasonably capable of being consummated in
a timely fashion. Nothing contained in the Merger Agreement will prohibit the
Company from taking and disclosing to its stockholders a position


                                       19
<PAGE>

contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Companys stockholders if, in the good faith judgment of
the Board of Directors, after consultation with outside counsel, failure so to
disclose would be inconsistent with applicable law, provided, however, none of
the Company, the Board of Directors or any committee thereof shall, except as
specifically permitted as set forth under this "No Solicitation" heading,
withdraw or modify, or propose to withdraw or modify, its position with respect
to the Offer, the Merger or this Agreement or approve or recommend, or propose
to approve or recommend, a Takeover Proposal.



     Stockholder Approval; Preparation of Proxy Statement. The Company has
agreed pursuant to the Merger Agreement that, if the adoption of the Merger
Agreement by holders of a majority of the outstanding Shares (the "Company
Stockholder Approval") is required by law, the Company shall, as promptly as
practicable following the expiration of the Offer, duly call, give notice of,
convene and hold a meeting of its stockholders (the Stockholders Meeting) for
the purpose of obtaining the Company Stockholder Approval. Pursuant to the
Merger Agreement, the Company shall, through the Board of Directors, recommend
to its stockholders that the Company Stockholder Approval be given.
Notwithstanding the foregoing, if Purchaser or any other subsidiary of Parent
shall acquire at least 90% of the outstanding Shares, the parties shall, at the
option and request of Parent, take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after the expiration of
the Offer without a Stockholders Meeting in accordance with the short form
merger provisions of the DGCL. If the Company Stockholder Approval is required
by law, the Company shall, as soon as practicable following the expiration of
the Offer, prepare and file a preliminary proxy statement ("Proxy Statement")
with the Commission and shall use all reasonable efforts to respond to any
comments of the Commission or its staff and to cause the Proxy Statement to be
mailed to the Company's stockholders as promptly as practicable.



     Access to Information. The Merger Agreement provides that the Company will,
and will cause each of its subsidiaries to, give Parent and its officers,
employees, accountants, counsel, agents and other representatives reasonable
access to all of the properties, personnel, books and records of the Company and
its subsidiaries, and will furnish promptly all information concerning the
business, properties and personnel of the Company and its subsidiaries
(including environmental review and testing) as Parent may reasonably request,
subject to applicable confidentiality requirements. Pursuant to the Merger
Agreement, the Company may withhold information that would be unlawful to
disclose to a competitor, or the disclosure of which the Company reasonably
believes may result in a competitive disadvantage to the Company, if it provides
Parent in writing with a description in reasonable detail of the nature of the
information withheld and the reason for withholding it.


     Disclosure Supplements. The Merger Agreement requires that, from time to
time prior to the Effective Time, the Company shall supplement or amend the
disclosure schedule delivered by the Company to Parent prior to the execution of
the Merger Agreement (the "Company Disclosure Schedule") with respect to any
matter arising after or any information obtained after the execution of the
Merger Agreement which, if existing, occurring or known at or prior to the date
of the Merger Agreement, would have been required to be set forth or described
in the Company Disclosure Schedule or which is necessary to complete or correct
any information in such schedule or in any representation and warranty of the
Company in the Merger Agreement which has been rendered inaccurate thereby. The
Merger Agreement also requires the Company to promptly inform Parent of any
claim by a third party that a contract has been breached, is in default, may not
be renewed or that a consent would be required as a result of the transactions
contemplated by the Merger Agreement. No such supplement, amendment or
information will be considered for purposes of determining the satisfaction of
the conditions to the consummation of the transactions contemplated by the
Merger Agreement.

     Reasonable Efforts. Pursuant to the Merger Agreement, each of the Company,
Parent and Purchaser has agreed to use all reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by the Merger Agreement as promptly as
practicable including, but not limited to, (i) the preparation and filing of all
forms, registrations and notices required to be filed to consummate the
transactions contemplated by the Merger Agreement

                                       20
<PAGE>
and the taking of such commercially reasonable actions as are necessary to
obtain any requisite approvals, consents, orders, exemptions or waivers by any
third party or any governmental body, court, agency, official or regulatory or
other authority (collectively, "Governmental Entity"), including filings
pursuant to the HSR Act and (ii) using all reasonable efforts to cause the
satisfaction of all conditions to effect the Merger. Each party to the Merger
Agreement has agreed to promptly consult with the others with respect to,
provide any necessary information with respect to and provide the others (or
their respective counsel) copies of, all filings made by such party with any
Governmental Entity or any other information supplied by such party to a
Governmental Entity in connection with the Merger Agreement and the transactions
contemplated by the Merger Agreement.


     Pursuant to the Merger Agreement, each party thereto has agreed to promptly
inform the others of any communication from any Governmental Entity regarding
any of the transactions contemplated by the Merger Agreement. If any of the
Company, Parent or Purchaser or an affiliate thereof receives a request for
additional information or documentary material from any such Governmental Entity
with respect to the transactions contemplated by the Merger Agreement, then such
party will endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other party, an
appropriate response in compliance with such request. Nothing in the Merger
Agreement requires any of the Company, Parent or Purchaser, to waive any
substantial rights or agree to any substantial limitation on its (or the
Surviving Corporation's) operations or to dispose of any assets.


     Pursuant to the Merger Agreement, Parent has covenanted that it will cause
Purchaser to comply with its obligations under the Merger Agreement.


     Indemnification; Insurance. Pursuant to the Merger Agreement, Parent and
Purchaser have agreed that all rights to indemnification for acts or omissions
occurring prior to the Effective Time now existing in favor of the current or
former directors or officers of the Company and its subsidiaries as provided in
their respective articles of incorporation or by-laws (or similar organizational
documents), shall survive the Merger and shall continue in full force and effect
in accordance with their terms. The Merger Agreement provides that, for five
years from the Effective Time, Parent will maintain in effect the Companys
current directors and officers liability insurance and fiduciary liability
insurance covering those persons who are currently covered by the Companys
directors and officers liability insurance policy and fiduciary liability
insurance (or, in lieu of maintaining such insurance, cause coverage to be
provided under any policy maintained for the benefit of Parent or any of its
subsidiaries or otherwise obtained by Parent, so long as the terms thereof are
no less advantageous to the intended beneficiaries thereof than those of the
Companys policy), provided, however, that in no event shall Parent be required
to expend in excess of 150% of the annual premiums currently paid by the Company
for such insurance, and, provided further, that if the annual premiums of such
insurance coverage exceed such amount, Parent shall be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount.


     Certain Litigation. Pursuant to the Merger Agreement the Company has agreed
that it will not settle any litigation commenced after the date of the Merger
Agreement against the Company or any of its directors by any stockholder of the
Company relating to the Offer, the Merger, the Merger Agreement or the Support
Agreement, without the prior written consent of Parent, with such consent not to
be unreasonably withheld. In addition, subject to its obligations described
under the heading "No Solicitation" above, the Company will not voluntarily
cooperate with any third party that may hereafter seek to restrain or prohibit
or otherwise oppose the Offer or the Merger and will cooperate with Parent and
Purchaser to resist any such effort to restrain or prohibit or otherwise oppose
the Offer or the Merger

     State Takeover Laws. The Merger Agreement provides that, if any state
anti-takeover law or state law that purports to limit or restrict business
combination or the ability to acquire voting shares become applicable to the
transactions contemplated by the Offer or the Merger Agreement, the Company and
Parent and their respective boards of directors shall grant such approvals and
take such actions as are necessary so that the transactions contemplated by the
Merger Agreement may be consummated as

                                       21
<PAGE>
promptly as practicable on the terms contemplated by the Merger Agreement and
otherwise act to eliminate or minimize the effect of such law on the
transactions contemplated by the Merger Agreement


     Tefron Undertaking. Pursuant to the Merger Agreement, Tefron undertakes and
agrees to (i) provide or cause to be provided sufficient funds to Parent and
Purchaser so that Parent and Purchaser can meet their payment obligations with
respect to the Offer and the Merger and (ii) otherwise take such action as may
be required to cause Parent and Purchaser to meet their other obligations with
respect to (A) the Offer and the Merger, (B) taking reasonable efforts to
consummate and make effective the transactions contemplated by the Merger
Agreement as promptly as practicable, and (C) paying their own expenses with
respect to the transactions contemplated by the Merger Agreement. Tefron agrees
that the Company may seek remedies directly from Tefron with respect to this
undertaking without first exhausting its remedies against Purchaser or Parent.


     HSR Filing. Pursuant to the Merger Agreement, each of the Company and the
Parent has undertaken to promptly file, and to cause its direct and indirect
shareholders (to the extent required by the HSR Act) to file, with the Federal
Trade Commission ("FTC") and the Antitrust Division of the United States
Department of Justice (the "Antitrust Division") a notification and report form
and related material required to be filed under the HSR Act, which will, at the
time of filing, comply in all material respects with the requirements of the HSR
Act. Additionally, pursuant to the Merger Agreement, each of the Company and the
Parent has undertaken to make all reasonable effort to ensure that, at the time
of such filing, all information relating to the Company, or the Parent, as
applicable, and its respective subsidiaries as set forth in the notification and
report form filed by it will be true and correct in all material respects.


     Conditions to Consummation of the Merger. Pursuant to the Merger Agreement,
the respective obligations of each party to the Merger Agreement to consummate
the Merger are subject to the satisfaction of each of the following conditions:
(i) if required by applicable law, the Company Stockholder Approval shall have
been obtained; (ii) no statute, law, ordinance, rule or regulation of any
Governmental Entity (a "Law") or any judgment, order, writ, preliminary or
permanent injunction or decree issued by any court of competent jurisdiction (an
"Order") or other Governmental Entity or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, provided, however,
that each party to the Merger Agreement shall have used reasonable efforts to
prevent the entry of any such Order and to appeal as promptly as possible any
Order that may have been entered and (iii) Purchaser shall have previously
accepted for payment and paid for Shares pursuant to the Offer. Additionally,
the obligations of Parent and Purchaser to consummate the Merger are subject to
the satisfaction of the condition that Parent and Purchaser shall have been
provided with a certified statement of the Company, pursuant to
Section 1.1445-2(c)(3) of the treasury regulations, that the Company is not, and
has not been within the last five years, a "United States real property holding
corporation" as defined in Section 897(c)(2) of the Internal Revenue Code of
1986 (the "Code").


     Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the terms of this
Agreement by the stockholders of the Company:

          (a) by mutual written consent of the Parent and the Company;


          (b) by either the Parent or the Company if (i) (x) the Offer shall
     have expired without the acceptance for payment of Shares thereunder or
     (y) Purchaser shall not have accepted for payment any Shares pursuant to
     the Offer prior to January 31, 2000; provided, however, that such right to
     terminate the Merger Agreement pursuant to this clause (b)(i) is not
     available to any party whose failure to perform any of its obligations
     under the Merger Agreement resulted in the failure of any such condition or
     if the failure of such condition results from facts or circumstances that
     constitute a breach of representation or warranty under the Merger
     Agreement by such party; or (ii) if any Governmental Entity shall have
     issued an Order or taken any other action permanently enjoining,
     restraining or otherwise prohibiting the acceptance for payment of, or
     payment for, Shares pursuant to the Offer or the Merger and such Order or
     other action shall have become final and nonappealable;


                                       22
<PAGE>
          (c) by Parent prior to the purchase of Shares pursuant to the Offer if
     the Company shall have breached or failed to perform in any material
     respect any representation, warranty, covenant or other agreement contained
     in the Merger Agreement that (i) would give rise to the failure of a
     condition to the Offer set forth in paragraphs (e) or (f) of Section 14,
     and (ii) cannot be or has not been cured within five business days after
     the giving of written notice to the Company;

          (d) by Parent or Purchaser if either Parent or Purchaser is entitled
     to terminate the Offer as a result of the occurrence of any event set forth
     in paragraph (d) of Section 14;


          (e) by the Company; provided, that it has complied with the provisions
     set forth under the heading "No Solicitation" above, including the notice
     provisions therein contained, and that it has paid Parent the amounts due
     Parent as described under the heading "Expenses" below, in accordance with
     the terms of the Merger Agreement;



          (f) by the Company prior to the purchase of Shares pursuant to the
     Offer if Parent or Purchaser shall have breached or failed to perform in
     any material respect any of their respective representations, warranties,
     covenants or other agreements contained in the Merger Agreement, which
     breach or failure to perform is incapable of being cured or has not been
     cured within five business days after the giving of written notice to
     Parent or Purchaser, as applicable, except, in any case, such breaches and
     failures which are not reasonably likely to materially and adversely affect
     Parent's or Purchaser's ability to consummate the Offer or the Merger; or


          (g) by the Parent or Purchaser if either Parent or Purchaser is
     entitled to terminate the Offer as a result of the occurrence of any event
     set forth in paragraph (h) of Section 14.


     Effect of Termination. In the event of the termination of the Merger
Agreement, subject to the provisions relating to the payment of certain fees and
expenses described under the heading "Expenses" below, the Merger Agreement will
become void and there shall be no liability or obligation on the part of Parent,
Purchaser or the Company or their respective officers or directors; provided,
that no party would be relieved from liability for any willful breach of the
Merger Agreement.


     Amendment. The Merger Agreement may be amended by the parties thereto, by
duly authorized action taken, at any time before or after obtaining the Company
Stockholder Approval, but, after the purchase of Shares pursuant to the Offer,
no amendment shall be made which decreases the Merger Consideration and, after
the Company Stockholder Approval, no amendment shall be made which by law
requires further approval by such stockholders without obtaining such further
approval. The Merger Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties thereto.


     Extension; Waiver. At any time prior to the Effective Time, the parties to
the Merger Agreement may, to the extent legally allowed and subject to the
provisions set forth under the heading "Amendment" above, (i) extend the time
for the performance of any of the obligations or other acts of any other party
thereto, (ii) waive any inaccuracies in the representations and warranties
contained therein of any other party thereto or in any document delivered
pursuant to the Merger Agreement or (iii) waive compliance with any of the
agreements contained in the Merger Agreement.



     Expenses. Except as provided below, each party to the Merger Agreement will
bear its own expenses in connection with the transactions contemplated by the
Merger Agreement. If the Merger Agreement is terminated pursuant to
(i) paragraph (c) under the heading "Termination" above and either (x) such
termination is the result of an intentional breach or failure to perform by the
Company or (y) the Company enters into a definitive agreement with respect to a
Superior Transaction within 12 months of the date of such termination,
(ii) paragraph (d) or (e) under the heading "Termination" above or (iii) if the
Company has knowledge of any liability, loss, damage, penalty, fine, obligation,
lien, cost or expense of any nature whatsoever to the Company with respect to
any environmental matter or violation of Environmental Law or any litigation or
litigations relating thereto (which are not otherwise disclosed in relevant
section of the Company Disclosure Schedule), which individually or in the
aggregate exceed $500,000 (an "Environmental Violation"), paragraph (g) under
the heading "Termination" above, then the Company shall pay to Parent, as
liquidated damages, (A) a fee of


                                       23
<PAGE>

$3,000,000 plus (B) an amount equal to Parent's Costs (as defined below) by wire
transfer of immediately available funds. If this Agreement is terminated
pursuant to paragraph (c) under the heading "Termination" above and such
termination did not result from an intentional breach or failure to perform by
the Company, the Company shall pay to Parent, as liquidated damages (in the
manner set forth in this paragraph), an amount equal to Parent's Costs. If this
Agreement is terminated pursuant to paragraph (g) under the heading
"Termination" above and the Company does not have knowledge of an Environmental
Violation, the Company shall pay to Parent, as liquidated damages (in the manner
set forth in this paragraph), an amount equal to Parent's Costs incurred from
and after the date of the Merger Agreement. Such fee and /or costs shall be paid
prior to termination in the case of paragraph (e) under the heading
"Termination" above and within one business day of termination otherwise;
provided, that, in the case of a Superior Transaction contemplated by clause
(i)(y) above, the fee shall be paid at the time of the execution of the
definitive agreement contemplated thereby. For purposes hereof, a "Superior
Transaction" shall mean a merger, consolidation, reorganization,
recapitalization, asset or share purchase or other acquisition or sale
transaction made at any time (i) involving a per Share purchase price or
consideration in excess of $18.50 per Share and (ii) involving (A) 50% or more
of the assets of the Company or the outstanding Shares or (B) a change of
control of the Company. If the Company fails to pay the amount due as described
under this heading "Expenses" when it is required to be paid, and, in order to
obtain such payment, Parent commences a suit which results in a judgment against
the Company for the fee set forth under this heading "Expenses," the Company
shall pay to Parent its costs and expenses (including attorneys' fees) in
connection with such suit, including any costs of collection, together with
interest on the amount of the fee at the rate of 12% per annum from the date
such fee was required to be paid. "Parent's Costs" is defined as Parent's and
Purchaser's reasonable and documented out-of-pocket costs, fees and expenses of
their counsel, accountants, financial advisors and other experts and advisors as
well as fees and expenses incident to negotiation, preparation and execution of
this Agreement and related documentation and shareholders' meetings and consents
up to an aggregate amount of $1,800,000.


     Publicity. The Merger Agreement provides that except as otherwise required
by law, court process or the rules of any applicable securities exchange or as
contemplated or provided elsewhere therein, no party to the Merger Agreement
will issue any press release or otherwise make any public statement with respect
to the transactions contemplated by the Merger Agreement without prior
consultation with the other parties to the Merger Agreement.

  (a) The Support Agreement


     Concurrently with the execution of the Merger Agreement, Parent and
Purchaser entered into a Support Agreement with two directors of the Company,
Engle and Dardick (the "Director Stockholders") and GSC Enterprises, Inc., an
affiliate of Engle (GSC and, together with the Director Stockholders, the
"Support Stockholders"). According to the information provided by them, as of
November 8, 1999, Engle, Dardick and GSC beneficially owned directly or
indirectly 977,000, 687,066 and 127,700 Shares, respectively. 18,000 of the
Shares owned by Dardick (the "Dardick Owned Shares") will be donated to charity
and, upon such donation will not be subject to the Support Agreement. In
addition, each of the Director Stockholders have an option to acquire an
additional 5,000 Shares (the Director Options), representing in the aggregate
approximately 54% of the Shares outstanding on a fully- diluted basis as of such
date. The Shares owned by Engle (the "Engle Owned Shares") and the Shares owned
by GSC (the "GSC Owned Shares") were subject to one or more stock pledge or
similar agreements (the "Pledge Agreements"), between Engle and LaSalle National
Bank (the "Bank") and GSC and the Bank, as applicable, pursuant to which some or
all of the Engle Owned Shares and the GSC Owned Shares were held in the name of
a nominee for the Bank. On the date the Support Agreement was entered into the
Bank delivered to Parent and Purchaser letter agreements (the "Bank Letters")
pursuant to which the Bank agreed to cause the Engle Owned Shares and the GSC
Owned Shares to be tendered in the Offer pursuant to Section 1.1 of the Support
Agreement.



     Pursuant to the Support Agreement each of the Support Stockholders agreed
to validly tender (or cause the record owner of such Shares to validly tender)
and not withdraw, pursuant to the Offer (i) all of


                                       24
<PAGE>

their Shares owned on the date of the Support Agreement, as soon as practicable
after commencement of the Offer but in no event later than ten business days
after the date of commencement of the Offer, and (ii) all Shares acquired prior
to termination of the Tender Offer, upon the date of acquisition thereof by such
stockholder, or promptly thereafter, but, in any event prior to the expiration
date of the Offer, (the "Tender Shares") and not withdraw their Tender Shares,
except following termination of the Offer pursuant to its terms, or the
termination of this Agreement. Engle and GSC agreed to instruct the Bank in a
timely manner to tender all Shares held in nominee's name by the Bank, or
otherwise pursuant to the Pledge Agreements, in accordance with the Support
Agreement so that each of Engle and GSC will meet such obligation under the
Support Agreement. Each Support Stockholder also agreed that, for so long as the
Support Agreement is in effect, at any meeting of the stockholders of the
Company, however called, such stockholder would vote his or its Tender Shares in
favor of the Merger, vote his or its Tender Shares against any action or
agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement, and vote his or its Tender Shares against any action or agreement
that would impede, interfere with, delay, postpone or attempt to discourage the
Merger or the Offer including (i) any extraordinary transaction involving the
Company or any of its subsidiaries, (ii) a sale or transfer of a material amount
of assets of the Company or any of its subsidiaries or a reorganization,
recapitalization or liquidation of the Company or any of its subsidiaries,
(iii) any change in the management or Board of Directors, except as otherwise
agreed to in writing by Purchaser, (iv) any material change in the present
capitalization or dividend policy of the Company, or (v) any other material
change in the Company's corporate structure or business. Pursuant to the Support
Agreement, each stockholder revoked any proxy previously granted by him or it
with respect to the Tender Shares; provided, that, if such meeting of the
stockholders is held prior to the expiration or waiver of all waiting periods
under the HSR Act (such expiration or waiver, the "HSR Termination") such
Support Stockholder shall vote only that pro rata portion of his or its Tender
Shares such that the total number of Tender Shares voted pursuant to the Support
Agreement in favor of the Merger, combined with the total number of Shares held
by Parent and Purchaser at the time of such meeting, equals 49.9% (forty-nine
and nine-tenths percent) of the total Shares. The pro rata portion of Tender
Shares to be voted shall be calculated such that each Support Stockholder votes
an equal percentage of his or its Tender Shares. Notwithstanding the foregoing,
it is understood that the Engle Owned Shares and the GSC Owned Shares and
Engle's and the GSC's obligations under Section 1.2 of the Support Agreement are
subject to the Pledge Agreements. Pursuant to the Support Agreement, each of
Engle and GSC have agreed to instruct the Bank and to use all reasonable efforts
to cause the Bank to vote the Engle Owned Shares and the GSC Owned Shares as
described above.


     Each of the Support Stockholders also granted representatives of Parent
and/or Purchaser an irrevocable proxy and attorney-in-fact to vote his or its
Tender Shares in favor of the Merger and other transactions contemplated by the
Merger Agreement, against any Takeover Proposal and otherwise as contemplated by
the preceding paragraph; provided, that, if such proxy is exercised prior to HSR
Termination, such proxy will be exercisable only with respect to that pro rata
portion of each Support Stockholders Tender Shares such that the total number of
Tender Shares subject to proxy, combined with the total number of Shares held by
Parent and Purchaser at the time of such exercise, equals 49.9% (forty-nine and
nine-tenths percent) of the total Shares. The pro rata portion of Tender Shares
subject to proxy will be calculated so that each Support Stockholder granted a
proxy with respect to an equal percentage of his or its Tender Shares. The
foregoing proxy terminates upon the termination of the Support Agreement. The
grant of irrevocable proxy described above applies to the Engle Owned Shares and
the GSC Owned Shares only to the extent permitted (or not permitted and
acceptable to the Bank) by the Pledge Agreements.


     In addition each of the Support Stockholders who is a party to the Support
Agreement has agreed not to (i) except to the Purchaser, transfer (which term
includes, without limitation, any sale, gift, pledge or other disposition) or
consent to any transfer of, any or all of his Director Options or his or its
Tender Shares, or any interest therein (ii) except with Parent, enter into any
contract, option or other agreement or understanding with respect to any
transfer of any or all of his Director Options or his or its Tender Shares, or
any interest therein, (iii) grant any proxy, power-of-attorney or other
authorization in or with


                                       25
<PAGE>

respect to his Director Options or his or its Tender Shares, (iv) deposit any
Director Options or Tender Shares into a voting trust or enter into a voting
agreement or arrangement with respect to his or its Tender Shares or (v) take
any other action that would in any way restrict, limit or interfere with the
performance of his or its obligations under the Support Agreement, or the
transactions contemplated by the Support Agreement or by the Merger Agreement or
which would make any representation or warranty of such stockholder under the
Support Agreement untrue or incorrect.


     Each Support Stockholder further agrees that he or it will not, and will
not permit or authorize any of his or its affiliates, representatives or agents
to, directly or indirectly, encourage, solicit, explore, participate in or
initiate discussions or negotiations with, or provide or disclose any
information to, any corporation, partnership, person or other entity or group
(other than Parent, the Purchaser, any of their affiliates or representatives)
concerning any Takeover Proposal or enter into any agreement, arrangement or
understanding requiring the Company to abandon, terminate or fail to consummate
the Merger or any other transactions contemplated by the Merger Agreement. Each
Support Stockholder has also agreed to immediately cease any existing
activities, discussions or negotiations with any parties with respect to any
Takeover Proposal and to immediately advise Parent in writing of the receipt,
directly or indirectly, of any inquiries, discussions, negotiations or proposals
relating to a Takeover Proposal, identify the offeror and furnish to Parent a
copy of any such proposal or inquiry, if it is in writing, or a written summary
of any oral proposal or inquiry relating to a Takeover Proposal and to promptly
advise Parent in writing of any development relating to such proposal, including
the results of any discussions or negotiations with respect thereto. Where
applicable, the Support Agreement provides, however, that any action taken by
any stockholder in his capacity as an officer or director of the Company, as
applicable, or the Company or any member of the Board of Directors (including,
if applicable, any representative of such stockholder acting in such capacity)
in accordance with the proviso set forth in the second sentence of
Section 6.2(a) of the Merger Agreement will be deemed not to violate the
provisions described in this paragraph.

     Pursuant to the Support Agreement, each Support Stockholder has also agreed
to waive any appraisal rights or rights to dissent from, the Merger that it may
have.

     The Support Agreement also provided that any incremental value each Support
Stockholder has in the equity of the Company (including any Shares and Director
Options beneficially owned by such stockholder) resulting from or attributable
to a Superior Transaction (other than with Parent or the Purchaser) that is
entered into or consummated prior to or within one month of the termination of
the Merger Agreement in accordance with its terms that exceeds $18.50 per Share
(or the equivalent spread value of any Option) (an "Excess Amount") shall belong
to Parent who is entitled to receive such amount within two business days of
receipt by such Support Stockholder.

     The agreements and proxy contained in the Support Agreement will terminate
on the earlier of the payment for the Shares pursuant to the Offer and date of
termination of the Merger Agreement in accordance with its terms.

     The foregoing is a summary of the material provisions of the Support
Agreement, a copy of which is included as an exhibit to the Schedule 14D-1 of
which this Offer to Purchase forms a part. This summary is qualified in its
entirety by reference to the Support Agreement which is incorporated herein by
reference.

  (b) Integration Consulting/Non-competition Agreements


     Concurrently with the execution of the Merger Agreement, the Parent entered
into an integration consulting/noncompetition agreement (each, a "Consulting
Agreement" and collectively, the "Consulting Agreements") with each of Engle and
Dardick (each, a "Consultant") which are substantially similar in their terms.
Each Consulting Agreement has a period commencing from the Takedown Date to the
Effective Time (the "Consulting Period"). Each Consultant is a principal
stockholder and director of the Company and acknowledged and agreed that, from
and after the Takedown Date, his status at all times shall be that of an
independent contractor, and that he may not, at any time, act as a
representative for or on behalf of the Parent or the Company for any purpose or


                                       26
<PAGE>

transaction, and may not bind or otherwise obligate the Parent or the Company in
any manner whatsoever without obtaining the prior written approval of the Parent
therefor. Each Consultant has agreed to render such advisory and consulting
services during the Consulting Period with respect to the integration of the
business of the Company with the business of Parent and its affiliates (such
businesses, collectively, the "Businesses") as Parent may reasonably request
from time to time (including, but not limited to, consulting with and advising
the officers of Parent and the Company with respect to the integration of the
Businesses) and at a mutually agreed upon time and place.



     The Consulting Agreements provide that each Consultant may engage for
compensation in any business, employment, occupation or other activity (either
as an employee or on his own behalf); provided, that, in consideration of the
Offer, the transactions contemplated by the Merger Agreement, the Noncompetition
Payment (as defined herein) and the provisions of the Consulting Agreement, each
Consultant has agreed that, for a minimum of thirty months from the Takedown
Date (the "Noncompetition Period") such Consultant will not (i) in any
geographic area where the Parent or its controlling shareholder or the Company
conducts business during the Noncompetition Period, engage in or participate in,
directly or indirectly (whether as an officer, director, employee, partner,
consultant, holder of an equity or debt investment, lender or in any other
manner or capacity), or lend his name (or any part or variant thereof) to, any
business which is, or as a result of such Consultant's engagement or
participation would be involved in the industry in which the Parent or the
Company operates, (ii) deal, directly or indirectly, in a competitive manner
with any customers doing business with the Parent or the Company during the
Noncompetition Period (except in connection with the performance of his services
hereunder), or (iii) solicit or employ any officer or employee of the Parent or
its controlling shareholder or the Company to become an officer, director,
employee or agent of the Consultant, his affiliates or anyone else; provided,
that, for the Consulting Agreement with Engle only, Consultant may continue to
employ an officer of the Company in the same capacity on the same part-time
basis as he is currently employed and may employ him on a full-time or other
basis if his employment is terminated by or with the consent of the Company.
Each Consultant has agreed that, at no time shall such Consultant engage in or
participate in, directly or indirectly, any business conducted under any name
that shall be the same as or similar to the name of the Parent or the Company or
any trade name used by them. Notwithstanding the foregoing, the Consulting
Agreements provide that ownership by each Consultant, in the aggregate, of less
than 5% of the outstanding shares of capital stock of any corporation with one
or more classes of its capital stock listed on a national securities exchange or
actively traded in the over-the-counter market that would otherwise be
prohibited by clause (i) above is not deemed to constitute a violation of such
provision.


     Pursuant to the Consulting Agreements, during the Consulting Period, each
Consultant is obligated to disclose to the Parent all ideas, inventions and
business plans developed by such Consultant during such period which relate
directly or indirectly to the Businesses, including, without limitation, any
process, operation, product or improvement which may be patentable or
copyrightable. Each Consultant agreed that such is the property of the Parent
and that such Consultant will at the Parent's request and cost do whatever is
necessary to secure the rights thereto by patent, copyright or otherwise to the
Parent. Each Consultant will be prohibited from making use of or implementing
any such ideas, inventions or business plans in connection with his employment
with a business that is considered a competitor under the Consulting Agreements.

     Pursuant to the Consulting Agreements, during the Consulting Period and at
all times thereafter, each Consultant agreed that he will not divulge to anyone
(other than the Parent or the Company or any persons employed or designated by
the Parent or the Company) any knowledge or information of any type whatsoever
whether of a confidential nature or otherwise relating to the business of the
Parent or the Company or any of their respective subsidiaries or affiliates,
including, without limitation, all types of trade secrets (unless readily
ascertainable from public or published information or trade sources) and
customer and supplier information (the foregoing, collectively, the
"Confidential Information"). Each Consultant further agreed not to disclose,
publish or make use of any Confidential Information without the prior written
consent of the Parent. If the Consulting Agreements are terminated, all books,
memoranda, plans, records and written data of every kind relating to the
business and affairs of the

                                       27
<PAGE>
Company or the Confidential Information which are then in either Consultant's
possession shall be promptly delivered to the Company by such Consultant or his
personal representative.


     The Consulting Agreements provide a fee of $200,000 and $100,000 for Engle
and Dardick, respectively, (the "Consulting Fee") for services requested by the
Parent as described above, to be paid by the Parent to the Consultant in two
equal installments of $100,000 and $50,000 respectively. The first installment
is to be paid on the Takedown Date and the second installment to be paid upon
the Effective Time. Each Consultant will be reimbursed by the Parent for all
reasonable travel, food, lodging or similar expenses incurred in connection with
such Consultant's duties under the Consulting Agreements which are pre-approved
by Parent. In consideration of each Consultant's agreement to enter into the
covenant not-to-compete as described above, Engle and Dardick, respectively,
shall be paid $100,000 and $50,000 (the "Noncompetition Payment"), which
payments shall be made to each Consultant on March 31, 2001.


     The foregoing is a summary of the material provisions of the Consulting
Agreements, a copy of which is included as an exhibit to the Schedule 14D-1 of
which this Offer to Purchase forms a part. This summary is qualified in its
entirety by reference to the Consulting Agreements which is incorporated herein
by reference.

     Appraisal Rights. No appraisal rights are available in connection with the
Offer. If the Merger is consummated, however, stockholders of the Company who
have not tendered their Shares will have certain rights under the DGCL to
dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. Stockholders who perfect such rights by complying with
the procedures set forth in Section 262 of the DGCL ("Section 262") will have
the fair value of their Shares (exclusive of any element of value arising from
the accomplishment or expectation of the Merger) determined by the Delaware
Court of Chancery and will be entitled to receive a cash payment equal to such
fair value from the Surviving Corporation. In addition, such dissenting
stockholders would be entitled to receive payment of a fair rate of interest
from the date of consummation of the Merger on the amount determined to be the
fair value of their Shares. In determining the fair value of the Shares, the
court is required to take into account all relevant factors. Accordingly, such
determination could be based upon considerations other than, or in addition to,
the market value of the Shares, including, among other things, asset values and
earning capacity. In Weinberger v. UOP, Inc., the Delaware Supreme court stated
that "proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in an appraisal proceeding. The Weinberger court also noted that
under Section 262, fair value is to be determined "exclusive of any element of
value arising from the accomplishment of exception of the merger." In Cede & Co.
v. Technicolor, Inc., however, the Delaware Supreme Court stated that, in the
context of a two-step cash merger, "to the extent that value has been added
following a change in majority control before cash-out, it is still value
attributable to the going concern," to be included in the appraisal process. As
a consequence, the fair value determined in any appraisal proceeding could be
more or less than the consideration to be paid in the Offer and the Merger.

     Parent does not intend to object, assuming the proper procedures are
followed, to the exercise of appraisal rights by any stockholder and the demand
for appraisal of, and payment in cash for the fair value of, the Shares. Parent
intends, however, to cause the Surviving Corporation to argue in an appraisal
proceeding that, for purposes of such proceeding, the fair value of each Share
is less than the price paid in the Merger. In this regard, stockholders should
be aware that opinions of investment banking firms as to the fairness from a
financial point of view (including the opinion of William Blair described
herein) are not necessarily opinions as to "fair value" under Section 262.

     THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.

     Plans for the Company. In connection with the Offer, Parent and the
Purchaser have reviewed, and will continue to review various possible business
strategies that they might consider in the event that the Purchaser acquires
control of the Company, whether pursuant to this Offer, the Merger or otherwise.

                                       28
<PAGE>
Such strategies could include, among other things, changes in the Company's
business, corporate structure, capitalization or management.


     "Going Private" Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions.
The Company does not believe Rule 13e-3 is applicable to the Offer, but the rule
may, under certain circumstances, be applicable to the Merger. However,
Rule 13e-3 would be inapplicable to the Merger if (i) the Shares are
deregistered under the Exchange Act prior to the Merger or other business
combination or (ii) the Merger or other business combination is consummated
within one year after the purchase of the Shares pursuant to the Offer and the
amount paid per Share in the Merger or other business combination is at least
equal to the amount paid per Share in the Offer. If applicable, Rule 13e-3
requires, among other things, that certain financial information concerning the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction be filed with the Commission and disclosed to
stockholders prior to the consummation of the transaction.


12. SOURCE AND AMOUNT OF FUNDS.

     The Offer is not conditioned upon any financing arrangements. The total
amount of funds required to consummate the Offer and the Merger (including fees
and expenses related thereto) and to refinance certain indebtedness of the
Company is estimated to be approximately $85 million.


     Tefron, Parent and the Purchaser plan to obtain sufficient funds from loans
to be provided by a new senior credit facility to be provided by Bank Hapoalim
B.M. (the "Bank") pursuant to a commitment letter between Tefron and the Bank,
dated November 1, 1999, which commitment letter will be appropriately modified
to reflect the definitive structure of the financing. It is expected that such
facility will provide Tefron, Parent and the Purchaser with seven year term
loans in the aggregate amount of $85 million. Such borrowings will bear interest
at rates to be agreed to between Tefron and the Bank, currently anticipated to
be approximately 150 basis points above the London Interbank Offered Rate. It is
expected that funds from the facility will be loaned in part to Purchaser and in
part to Tefron and will be sufficient to consummate the Offer and the proposed
Merger (including fees and expenses related thereto).


     The funds necessary to purchase the Shares pursuant to the Offer and upon
conversion of the Shares in the proposed Merger (and to pay fees and expenses
related thereto) not borrowed directly from the Bank by Purchaser, will be
furnished to Purchaser, directly or indirectly, by Tefron and/or Parent as
capital contributions and/or loans.

13. DIVIDENDS AND DISTRIBUTIONS.


     According to the Company's Form 10-K for the period ended December 31,
1998, the Company paid a dividend of $0.05 per Share on August 24, 1998 and
according to the Company's Form 10-Q for the period ending July 4, 1999, the
Company paid a dividend of $0.075 per Share on February 22, 1999 and a dividend
of $0.075 per Share on August 24, 1999. (The foregoing dividend amounts do not
reflect subsequent stock splits.)



     The Merger Agreement provides that until Parent's designees constitute a
majority of the members of the Board of Directors, the Company will not, and
will not permit any of its subsidiaries to declare or pay any dividends on or
make other distributions in respect of any of its capital stock (except for
dividends by a wholly owned subsidiary of the Company to its parent),
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (iii) repurchase, redeem or
otherwise acquire, or modify or amend, any shares of capital stock of the
Company or any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities,
except as otherwise described in Section 11.


                                       29
<PAGE>
14. CERTAIN CONDITIONS OF THE OFFER.

     Notwithstanding any other term of the Offer, the Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchasers obligation to pay for or return tendered Shares after
the termination or withdrawal of the Offer), to pay for any Shares tendered
pursuant to the Offer unless prior to the Expiration Date (i) the Minimum
Condition shall have been met and (ii) any waiting period under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall have expired or
been terminated. The Purchaser is not required to accept for payment or to pay
for any Shares not theretofore accepted for payment or paid for, and may
terminate the Offer if, at any time on or after the date of this Agreement and
prior to the Expiration Date, any of the following conditions exists (other than
as a result of any action or inaction of Parent or any of its subsidiaries that
constitutes a breach of the Merger Agreement):

          (a) there shall be threatened, instituted or pending by any
     Governmental Entity any suit, action or proceeding (i) challenging the
     acquisition by Parent or Purchaser of any Shares under the Offer, seeking
     to restrain or prohibit the making or consummation of the Offer or the
     Merger or seeking to obtain from the Company, Parent or Purchaser any
     damages that are material in relation to the Company and its subsidiaries
     taken as a whole, (ii) seeking to prohibit or materially limit the
     ownership or operation by the Company, Parent or any of their respective
     subsidiaries of a material portion of the business or assets of the Company
     and its subsidiaries, taken as a whole, or Parent and its subsidiaries,
     taken as a whole, or to compel the Company and its subsidiaries, taken as a
     whole or Parent to dispose of or hold separate any material portion of the
     business or assets of the Company or Parent and its subsidiaries, taken as
     a whole, in each case as a result of the Offer or any of the other
     transactions contemplated by this Agreement, (iii) seeking to impose
     material limitations on the ability of Parent or Purchaser to acquire or
     hold, or exercise full rights of ownership of, any Shares to be accepted
     for payment pursuant to the Offer including, without limitation, the right
     to vote such Shares on all matters properly presented to the stockholders
     of the Company, (iv) seeking to prohibit Parent or any of its subsidiaries
     from effectively controlling in any material respect any material portion
     of the business or operations of the Company or its subsidiaries or (v)
     which otherwise is reasonably likely to have a Material Adverse Effect on
     the Company;

          (b) there shall be any Law or Order enacted, entered, first enforced,
     promulgated or first deemed applicable to the Offer or the Merger, by any
     Governmental Entity, other than the routine application to the Offer or the
     Merger of applicable waiting periods under the HSR Act, that is reasonably
     likely to result, directly or indirectly, in any of the consequences
     referred to in clauses (i) through (v) of paragraph (a) above;

          (c) there shall exist any Material Adverse Effect with respect to the
     Company other than as disclosed in the Merger Agreement or the Company
     Disclosure Schedule;


          (d) (i) the Board of Directors or any committee thereof shall have
     (x) withdrawn or modified in a manner adverse to Parent or Purchaser its
     approval or recommendation of the Offer or the Merger or its adoption of
     the Merger Agreement, (y) approved or recommended or taken a neutral
     position with respect to any Takeover Proposal, or (z) failed to reaffirm
     its recommendation of the Offer or the Merger or its adoption of the Merger
     Agreement within five business days of being requested by Parent to do so
     or (ii) the Board of Directors or any committee thereof shall have resolved
     to take any of the foregoing actions;


          (e) any of the representations and warranties of the Company set forth
     in the Merger Agreement shall not be true and correct in any material
     respect in each case at the date of the Merger Agreement and at the
     scheduled or extended expiration of the Offer;

          (f) the Company shall have failed to perform or comply, in all
     material respects, with any agreement, obligation or covenant to be
     performed or complied with by it under the Merger

                                       30
<PAGE>
     Agreement, which failure to perform or comply has not been cured within
     five business days after the giving of written notice to the Company;

          (g) the Merger Agreement shall have been terminated in accordance with
     its terms;

          (h) the Purchaser and Parent shall have reasonably determined that
     there is any Environmental Violation; or

          (i) Parent or Purchaser shall not have been provided with a certified
     statement of the Company, pursuant to Section 1.1445-2(c)(3) of the
     treasury regulations, that the Company is not, and has not been within the
     last five years, a United States real property holding corporation as
     defined in Section 897(c)(2) of the Code.


     The foregoing conditions are for the sole benefit of Parent and Purchaser
and may, subject to the terms of the Merger Agreement, be waived by Parent and
Purchaser in whole or in part at any time and from time to time in their
reasonable discretion. The failure by Parent or Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time. THE PURCHASER HAS AGREED THAT UNDER
CERTAIN CIRCUMSTANCES SET FORTH IN THE MERGER AGREEMENT IT SHALL BE DEEMED TO
HAVE WAIVED SATISFACTION OF THE CONDITIONS SET FORTH IN PARAGRAPHS (B), (E),
(F), AND (H) ABOVE FOLLOWING THE INITIAL EXTENSION PERIOD. SEE SECTION 11.


15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS.

     General. Except as set forth in this Offer to Purchase, based on its review
of publicly available filings by the Company with the Commission, neither Parent
nor the Purchaser is aware of any licenses or regulatory permits that appear to
be material to the business of the Company and its subsidiaries, taken as a
whole, and that might be adversely affected by the Purchaser's acquisition of
Shares (and the indirect acquisition of the stock of the Company's subsidiaries)
as contemplated herein, or any filings, approvals or other actions by or with
any domestic, foreign or supranational governmental authority or administrative
or regulatory agency that would be required for the acquisition or ownership of
the Shares by the Purchaser pursuant to the Offer as contemplated herein. Should
any such approval or other action be required, it is presently contemplated that
such approval or action would be sought except as described below under "State
Takeover Laws." Should any such approval or other action be required, there can
be no assurance that any such approval or action would be obtained without
substantial conditions or that adverse consequences might not result to the
Company's or its subsidiaries' businesses, or that certain parts of the
Company's, Parent's, the Purchaser's or any of their respective subsidiaries'
businesses might not have to be disposed of or held separate or other
substantial conditions complied with in order to obtain such approval or action
or in the event that such approvals were not obtained or such actions were not
taken. The Purchaser's obligation to purchase and pay for Shares is subject to
certain conditions, including conditions with respect to litigation and
governmental actions. See Introduction and Section 14.


     State Takeover Laws. A number of states (including Delaware where the
Company is incorporated) have adopted takeover laws and regulations which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, stockholders, principal executive offices or principal places of
business therein. To the extent that certain provisions of certain of these
state takeover statutes purport to apply to the Offer or the Merger, the
Purchaser believes that such laws conflict with federal law and constitute an
unconstitutional burden on interstate commerce. In 1982, the Supreme Court of
the United States, in Edgar v. Mite Corp., invalidated on constitutional grounds
the Illinois Business Takeovers Statute, which as a matter of state securities
law made takeovers of corporations meeting certain requirements more difficult.
The reasoning in such decision is likely to apply to certain other state
takeover statutes. In 1987, however, in CTS Corp. v. Dynamics Corp. of America,
the Supreme Court of the United States held that the State of Indiana could as a
matter of corporate law and, in particular, those aspects of


                                       31
<PAGE>

corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders, provided that such laws were
applicable only under certain conditions. Subsequently, in TLX Acquisition Corp.
v. Telex Corp., a Federal district court in Oklahoma ruled that the Oklahoma
statutes were unconstitutional insofar as they apply to corporations
incorporated outside Oklahoma in that they would subject such corporations to
inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a
Federal district court in Tennessee ruled that four Tennessee takeover statutes
were unconstitutional as applied to corporations incorporated outside Tennessee.
This decision was affirmed by the United States Court of Appeals for the Sixth
Circuit.



     Section 203 of the DGCL prevents certain "business combinations" with an
"interested stockholder" (generally, any person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock) for a period of
three years following the time such person became an interested stockholder,
unless, among other things, prior to the time the interested stockholder became
such, the board of directors of the corporation approved either the business
combination (and ratified by 66 2/3% of the voting stock not owned by the
interested party) or the transaction in which the interested stockholder became
such. The Board of Directors of the Company has unanimously approved the Offer,
the Merger and the Merger Agreement and the transactions contemplated thereby
for the purposes of Section 203 of DGCL.



     The North Carolina Tender Offer Disclosure Act (the "TODA") purports to
apply to tender offers for equity securities of a company that has its principal
place of business and substantial assets in North Carolina. The TODA requires
Purchaser to file a statement with the North Carolina Secretary of State
relating to the Offer and contains prohibitions against deceptive practices in
connection with making a tender offer. In Eure v. Grand Metropolitan Limited,
the North Carolina Superior Court held that the TODA's 30-day waiting period
prior to the commencement of a tender offer is unenforceable and preempted by
the Exchange Act. Consequently, Purchaser has filed concurrently with the
Commission and the North Carolina Secretary of State a Tender Offer Statement on
Schedule 14D-1, together with all exhibits thereto, pursuant to Rule 14d-3 of
the General Rules and Regulations under the Exchange Act, and Section 78B-4 of
the TODA.



     Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer or the Merger although,
pursuant to the Merger Agreement, the Company has represented that the Board of
Directors has taken appropriate action to render Section 203 of the DGCL
inapplicable to the Offer, the Merger and the transactions contemplated by the
Merger Agreement. The Purchaser reserves the right to challenge the validity or
applicability of any state law allegedly applicable to the Offer or the Merger,
and nothing in this Offer to Purchase nor any action taken in connection
herewith is intended as a waiver of that right. In the event that it is asserted
that one or more takeover statutes apply to the Offer or the Merger, and it is
not determined by an appropriate court that such statute or statutes do not
apply or are invalid as applied to the Offer or the Merger, as applicable, the
Purchaser may be required to file certain documents with, or receive approvals
from, the relevant state authorities, and the Purchaser might be unable to
accept for payment or purchase Shares tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Purchaser may
not be obligated to accept for purchase, or pay for, any Shares tendered. See
Section 14.



     Article 13 of the Company's Charter. Article 13 of the certificate of
incorporation of the Company (the "Company's Charter") provides that the
affirmative vote of at least 80% of the issued and outstanding voting stock of
the Company shall be required to authorize, adopt or approve: (i) any plan of
merger or consolidation with or into any entity, or affiliate thereof, which
owns of record, beneficially, directly or indirectly, or which has the right to
acquire more than 5% of the issued and outstanding stock of the Company having
the right to vote (a "Substantial Stockholder"); (ii) any sale, lease, exchange,
transfer or other disposition of all or substantially all of the assets or
business of the Company to a Substantial Stockholder; (iii) any issuance or
delivery of stock or other securities of the Company in exchange for any
properties or assets or other consideration of a Substantial Stockholder; and
(iv) the dissolution of the Company (unless the Board of Directors unanimously
approves such transaction).


                                       32
<PAGE>

However, the foregoing provisions shall not apply to any transaction if either
(i) a majority of the entire board of directors has approved, by resolution, a
memorandum with respect to such transaction prior to the time such Substantial
Stockholder became a holder of more than 5% of the issued and outstanding voting
stock of the Company or (ii) the entire board of directors of the Company has
approved the transaction. The foregoing provisions may not be amended, repealed
or annulled without the affirmative vote of at least 80% of the issued and
outstanding voting stock of the Company. The Board of Directors of the Company
has unanimously approved the Offer, the Merger and the Merger Agreement and the
transactions contemplated thereby for the purposes of Article 13 of the
Company's Charter.



     Antitrust. The Offer and the acquisition of Shares pursuant to the Merger
Agreement are subject to the HSR Act, which provides that certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the Federal Trade Commission ("FTC") and certain waiting period
requirements have been satisfied.


     Under the provisions of the HSR Act applicable to the Offer, the purchase
of Shares pursuant to the Offer and the Merger may not be consummated until the
expiration of a 15-calendar day waiting period following the filing by Parent.
Accordingly, the waiting period with respect to the Offer will expire at
11:59 p.m., New York City time, on the 15th calendar day following the date of
filing, unless the Antitrust Division and the FTC terminate the waiting period
or Parent receives a request for additional information or documentary material
prior thereto. If, within such 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or material from Parent
concerning the Offer, the waiting period will be extended and would expire at
11:59 p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Parent with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized by
the HSR Act. Thereafter, such waiting period may be extended only by court order
or with the consent of Parent. The Purchaser will not accept for payment Shares
tendered pursuant to the Offer unless and until the waiting period requirements
imposed by the HSR Act with respect to the Offer have been satisfied. See
Section 14.

     No separate HSR Act waiting period requirements with respect to the Merger
Agreement will apply, so long as the 15-day waiting period expires or is
terminated. Thus, all Shares may be acquired pursuant to the Offer upon the
expiration or termination of the 15-day waiting period or the tenth calendar day
after the date of substantial compliance with a request for additional
information.


     The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer and the Merger Agreement. At any time before or after the
Purchaser's acquisition of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Shares pursuant
to the Offer or otherwise or seeking divestiture of Shares acquired by the
Purchaser or divestiture of substantial assets of Parent or its subsidiaries, or
the Company or its subsidiaries. Private parties and state attorneys general may
also bring legal action under the antitrust laws under certain circumstances.


     Based upon an examination of publicly available information relating to the
businesses in which the Company is engaged, the Purchaser believes that the
acquisition of Shares pursuant to the Offer and the Merger should not violate
the applicable antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer and the Merger on antitrust grounds will not be made, or,
if such challenge is made, what the result will be. See Section 14.

16. CERTAIN FEES AND EXPENSES.

     D.F. King & Co., Inc. has been retained by the Purchaser as Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee stockholders to forward material
relating to the Offer to beneficial owners of Shares. The Purchaser will pay the
Information

                                       33
<PAGE>
Agent reasonable and customary compensation for all such services in addition to
reimbursing the Information Agent for reasonable out-of-pocket expenses in
connection therewith.

     First Union National Bank has been retained as the Depositary. The
Purchaser will pay the Depositary reasonable and customary compensation for its
services in connection with the Offer, will reimburse the Depositary for its
reasonable out-of-pocket expenses in connection therewith and will indemnify the
Depositary against certain liabilities and expenses in connection therewith,
including certain liabilities under the federal securities laws.

     Except as set forth above, neither Parent nor the Purchaser will pay any
fees or commissions to any broker, dealer or other person for soliciting tenders
of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies and other nominees will, upon request, be reimbursed by Parent or the
Purchaser for customary clerical and mailing expenses incurred by them in
forwarding offering materials to their customers.

17. MISCELLANEOUS.

     The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the Purchaser
may, in its discretion, take such action as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.

     In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of the Purchaser by one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.

     Parent and the Purchaser have filed with the Commission a Schedule 14D-1,
together with exhibits, pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. Such Schedule 14D-1
and any amendments thereto, including exhibits, may be examined and copies may
be obtained from the office of the Commission in the same manner as described in
Section 8 with respect to information concerning the Company, except that copies
will not be available at the regional offices of the Commission.

     NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, ANY SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.

     Neither the delivery of the Offer to Purchase nor any purchase pursuant to
the Offer shall under any circumstances create any implication that there has
been no change in the affairs of Tefron, Parent, the Purchaser, the Company or
any of their respective subsidiaries since the date as of which information is
furnished or the date of this Offer to Purchase.

                                          AWS ACQUISITION CORP.
                                          November 12, 1999

                                       34
<PAGE>
                                   SCHEDULE-1
        DIRECTORS AND EXECUTIVE OFFICERS OF TEFRON, PARENT AND PURCHASER

A. DIRECTORS AND EXECUTIVE OFFICERS OF TEFRON


     The name, business address, present principal occupation or employment and
five-year history of each of the directors and executive officers of the Tefron
are set forth below. Unless otherwise indicated, the business address of each
such director and each such executive officer is care of Tefron Ltd. 28 Chida
Street, Bnei-Brak 51371. Unless otherwise indicated, all directors and executive
officers listed below are citizens of Israel.



<TABLE>
<CAPTION>
NAME AND ADDRESS                    AGE   PRINCIPAL OCCUPATION OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
---------------------------------   ---   ------------------------------------------------------------------------
<S>                                 <C>   <C>
Sigi Rabinowicz..................   50    CEO of Tefron. Mr. Rabinowicz joined Tefron in 1977 and has served as
                                            CEO since 1990. Mr. Rabinowicz has also served as a Director of
                                            Macpell Industries Ltd. ("Macpell") since April 21, 1998.
                                            Mr. Rabinowicz has over 25 years of experience in the textile industry
                                            in Israel and abroad. Prior to joining the Company, Mr. Rabinowicz was
                                            general manager of Kortes Hosiery Mills in Australia, which was
                                            subsequently acquired by Sara Lee Corporation.
Arie Wolfson.....................   37    Chairman and President of Tefron. Joined Tefron in 1987 and has served
                                            as Chairman of the Board of Directors since 1997 and President since
                                            1993, prior to which time Mr. Wolfson served as Chief Financial
                                            Officer from 1988 to 1990 and Assistant to the CEO from 1990 to 1993.
                                            Mr. Wolfson has also served as CEO of Macpell since May 17, 1998, as
                                            well as Chairman of the Board of Macpell since April 21, 1998.
Zvi Meiri........................   53    Mr. Meiri joined Tefron in 1998 as General Manager, and was appointed as
                                            a Director of Tefron on December 1, 1998. Prior to joining Tefron,
                                            Mr. Meiri served as the General Manager of the paper and board
                                            division of American Israeli Paper Mills, Ltd.
Yoseph Ron.......................   52    General Manager. Mr. Ron joined Tefron as General Manager in 1999, prior
                                            to which time Mr. Ron held the positions first as Managing Director of
                                            Operations of Delta, Inc. and then as Division Manager of Delta, Inc.
                                            from 1982 to 1999. Mr. Ron has also served as Managing Director of
                                            Begd'or.
Micha Korman.....................   44    Chief Financial Officer of Tefron. Mr. Korman joined Tefron in 1991 as
                                            Chief Financial Officer. Prior to joining Tefron, Mr. Korman held
                                            various financial and management positions with companies in the
                                            beverage, paper and electronics industries.
Tchiya R. Fortus.................   40    Company Secretary and Legal Counsel. Ms. Fortus joined Tefron as Company
                                            Secretary and Legal Counsel in 1998. Prior to joining Tefron, Ms.
                                            Fortus served as lawyer in DIC from 1989 to 1997, and earlier served
                                            as Legal Counsel and Company Secretary with companies in the
                                            construction and medical imaging industries.
Zvi Regev........................   52    Chief Operating Officer. Mr. Regev joined Tefron in 1997 as Chief
                                            Operating Officer. From 1989 to 1997, Mr. Regev served as General
                                            Manager-Underwear Division for Gibor Sabrina Ltd. Mr. Regev has over
                                            25 years of experience in the textile industry.
</TABLE>


                                      I-1
<PAGE>

<TABLE>
<CAPTION>
NAME AND ADDRESS                    AGE   PRINCIPAL OCCUPATION OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
---------------------------------   ---   ------------------------------------------------------------------------
<S>                                 <C>   <C>
Itzhak Gan.......................   52    General Manager of Operations. Mr. Gan joined Tefron in 1994 and has
                                            served as General Manager of Operations since 1996, prior to which
                                            time he served as Production Manager. Prior to joining Tefron,
                                            Mr. Gan served as a plant manager for Rabintex Ltd. (Rabintex) from
                                            1992 to 1993. Prior thereto, Mr. Gan held managerial positions with
                                            Gibor Sabrina Ltd., Rabintex and Macpell in Israel and with Rabintex
                                            in the United States. Mr. Gan has over 15 years of experience in the
                                            textile industry.
<S>                                 <C>   <C>
Zviki Gafni......................   49    General Manager New-Net. Mr. Gafni joined Tefron in 1993 and has served
                                            as General Manager of New-Net since 1996, prior to which time he
                                            served as Operations Manager. Mr. Gafni served as the Quality
                                            Assurance Manager for Macpell from 1991 to 1992 and as Quality
                                            Assurance Manager for Delta Galil Industries (Socks) from 1989 to
                                            1991. Mr. Gafni has over 1 years experience in the textile industry.
Talya Hanan......................   38    General Manager Hi-Tex. Ms. Hanan joined Tefron in 1989 and has served
                                            as the General Manager of Hi-Tex since 1997, prior to which time she
                                            served in various operational positions in Tefron including
                                            Manager-Quality Assurance, Manager-Research and Development,
                                            Manager-Pre-production and New York Sales Correspondent.
Hanoch Zlotnick..................   44    Controller. Mr. Zlotnick joined Tefron in 1985 and has served as
                                            Controller since 1992. Prior to joining Tefron, Mr. Zlotnick served
                                            as the Controller for the Rimini Restaurant chain from 1988 to 1992
                                            and as chief bookkeeper for Tefron from 1985 to 1988. Mr. Zlotnick is
                                            a Certified Public Accountant.
Meyer Azoulay....................   38    Manager-Research and Development. Mr. Azoulay joined Tefron in 1991.
                                            Prior to joining Tefron, Mr. Azoulay served as a Lieutenant Colonel in
                                            the Israeli Army responsible for technology and logistics.
Zvika Maoz.......................   41    Manager-Logistics. Mr. Maoz has served as the Manager-Logistics since
                                            1994. From 1992 to 1994, Mr. Maoz served as the Manager-Cutting
                                            operations. Prior to joining Tefron, Mr. Maoz served as Operations
                                            Manager for Macpell from 1989 to 1990.
Eliezer Peleg....................   61    Director. Mr. Peleg has been a Director of Tefron since 1993. Mr. Peleg
                                            served as the Chairman of the board of directors of Macpell from
                                            October 1993 to April 20, 1998, and has served as Director of Macpell
                                            since 1986. From November 1993 to July 1994, Mr. Peleg was the Chief
                                            Executive Officer of Macpell.
Nachum Peleg.....................   55    Director. Mr. Peleg has been a Director of Tefron since 1993. Mr. Peleg
                                            served as the CEO of Macpell from 1996 to May 16, 1998. Mr. Peleg
                                            served as the Chairman of the board of directors and Managing Director
                                            of Macpell from 1986 to 1993 and as Directors of Macpell from 1993 to
                                            1996.
Lenny Recanti....................   45    Director. Mr. Recanti has been a Director of Tefron since 1988.
                                            Mr. Recanti currently serves as a Senior Manger and a Director of DIC,
                                            the Chairman of the board of directors of Ilanot Discount Ltd., the
                                            Chairman of the board of directors of Delek- The Israel Fuel Company
                                            and a member of the board
</TABLE>


                                      I-2
<PAGE>

<TABLE>
<CAPTION>
<S>                                 <C>   <C>
NAME AND ADDRESS                    AGE   PRINCIPAL OCCUPATION OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
---------------------------------   ---   ------------------------------------------------------------------------
                                            of directors of IDB Holdings Ltd. and of other companies in the IDB
                                            Group.
Frank J. Klein...................   56    Director. Mr. Klein joined Tefron as a Director on June 21, 1998.
                                            Mr. Klein was appointed President of PEC on January 1, 1995. Prior to
                                            such appointment, he served as Executive Vice President of Israel
                                            Discount Bank of New York beginning in 1985. Mr. Klein served as
                                            Executive Vice President of PEC from November 1977 to November 1991
                                            and as Treasurer of PEC from May 1980 to November 1991. Mr. Klein is a
                                            Director of PEC, as well as of a number of companies associated with
                                            it, including Tambour Ltd. where he serves as Chairman of the Board,
                                            Scitex, Elron Electronics Industries Ltd., Level 8 Systems, Inc.
                                            Property and Building Corporation Ltd. and Super-Sol.
</TABLE>


B. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT

     The name, business address, present principal occupation or employment and
five-year history of each of the directors and executive officers of the
Purchaser are set forth below. Unless otherwise indicated, the business address
of each such director and each such executive officer is care of Tefron Ltd. 28
Chida Street, Bnei-Brak 51371. Unless otherwise indicated, all directors and
executive officers listed below are citizens of Israel.

                                    DIRECTOR

<TABLE>
<CAPTION>
                                                                POSITION WITH THE PURCHASER;
                                                             PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND ADDRESS                                                AND 5-YEAR EMPLOYMENT HISTORY
------------------------------------------  ---------------------------------------------------------------------
<S>                                         <C>
Arie Wolfson..............................  Director and President. See Part A.

                                               EXECUTIVE OFFICERS

Arie Wolfson..............................  Director and President. See Part A.
Micha Korman..............................  Vice President. See Part A.
Nachum Peleg..............................  Vice President. See Part A.
</TABLE>

C. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER.

     The name, business address, present principal occupation or employment and
five-year history of each of the directors and executive officers of the
Purchaser are set forth below. Unless otherwise indicated, the business address
of each such director and each such executive officer is care of Tefron Ltd. 28
Chida Street, Bnei-Brak 51371. Unless otherwise indicated, all directors and
executive officers listed below are citizens of Israel.

                                    DIRECTOR

<TABLE>
<CAPTION>
                                                                POSITION WITH THE PURCHASER;
                                                             PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND ADDRESS                                                AND 5-YEAR EMPLOYMENT HISTORY
------------------------------------------  ---------------------------------------------------------------------
<S>                                         <C>
Arie Wolfson..............................  Director and President. See Part A.

                                               EXECUTIVE OFFICERS
Arie Wolfson..............................  Director and President. See Part A.
Micha Korman..............................  Vice President. See Part A.
Nachum Peleg..............................  Vice President. See Part A.
</TABLE>

                                      I-3

<PAGE>
     Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below:

                        The Depositary For The Offer Is:
                           FIRST UNION NATIONAL BANK

<TABLE>
<S>                                   <C>                                   <C>
              By Mail:                              By Hand:                           By Overnight:
     First Union National Bank             First Union National Bank             First Union National Bank
     Corporate Trust Operations            Corporate Trust Operations            Corporate Trust Operations
1525 West W.T. Harris Boulevard, 3C3  1525 West W.T. Harris Boulevard, 3C3  1525 West W.T. Harris Boulevard, 3C3
Charlotte, North Carolina 28288-1153  Charlotte, North Carolina 28288-1105  Charlotte, North Carolina 28288-1105
</TABLE>

<TABLE>
<S>                                 <C>
   By Facsimile Transmission:            To Confirm Receipt of
(for eligible institutions only)    Notice of Guaranteed Delivery:
        (704) 590-7628                      (704) 590-7408

Confirm Facsimile Transmission:
       By Telephone Only
        (704) 590-7408
</TABLE>

     Questions and requests for assistance may be directed to the Information
Agent at the address and telephone number set forth below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and other tender offer
materials may be obtained from the Information Agent as set forth below and will
be furnished promptly at the Purchaser's expense. Stockholders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.


                    The Information Agent For The Offer Is:
                             D.F. KING & CO., INC.
                                77 Water Street
                            New York, New York 10005
                 Banks and Brokers Call Collect: (212) 269-5550
                   All Others Call Toll Free: (800) 659-6590


                      The Dealer Manager for the Offer is:




                     CREDIT SUISSE FIRST BOSTON CORPORATION


                             Eleven Madison Avenue
                            New York, New York 10010
                         Call Toll Free: (800) 881-8320

