SHAREHOLDERS AGREEMENT Entered into and executed on July 5, 2007 by and between

WHEREAS

the Parties are shareholders in Delta Galil Industries Limited (hereinafter referred to as "the Company" or "Delta Galil"); and

WHEREAS

the issued share capital of the Company is NIS 20,113,711 divided into 20,113,711 Ordinary Shares of a nominal value of NIS 1 each (hereinafter "Shares") of which 1,206,802 are held by Delta Galil as treasury stock; and

WHEREAS

On the date hereof, the ▇▇▇▇▇▇▇ Group holds beneficially and of record (in the aggregate) 2,144,993 Shares; and

WHEREAS

the Parties, with the agreement of ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ have agreed to replace and restate the Shareholders' Agreement amongst them dated August 30, 2005 in accordance with the terms and provisions contained herein (as so restated, this "Agreement");

1.

Right of First Refusal; Requirements Concerning the Disposal of Shares

(a)

Except with respect to a transfer to a Permitted Transferee as specified below, any member of the ▇▇▇▇▇▇▇ Group proposing to transfer all or any of the Shares held by it (the "Offeror") shall notify GMM in writing offering to sell such Shares to GMM (the "Offer"), which notice shall state (i) the number of such Shares proposed to be transferred (the "Offered Shares"), (ii) the name of the proposed purchaser thereof (except with respect to sales of shares on the TASE or NASDAQ) and (iii) the terms of the proposed transfer and the transferring Party's bona fide intention to transfer the Shares on such terms. If the Offeror submits an Offer to sell the Offered Shares on the TASE (or NASDAQ), then the price of the Offer will be the weighted average of the closing market price of the Shares on the TASE (or NASDAQ, as the case may be) during the three (3) trading days immediately preceding the date of the Offer (the "Average Price").

(b)

GMM may accept such Offer in respect of all but not less than all of the Offered Shares, by giving a written notice to that effect to the Offeror (hereinafter the "Purchase Notice") within five (5) business days after being served with the Offer with respect to an Offer that is not by way of a sale on the TASE or NASDAQ, and within one (1) business day, with respect to a proposed sale on the TASE or NASDAQ (the "Offer Notice Period"). Notwithstanding the aforesaid, with respect to the sale of Shares on the TASE or NASDAQ; or in the event that the Offeror advises GMM, in the Offer Notice, that the Offer is made, based upon an agreement of the Offeror with a person that is willing to purchase less than the full number of Shares being offered, GMM may accept the Offer within the Offer Notice Period, with respect to part of the Offered Shares.

(c)

The delivery to the Offeror of the Purchase Notice as aforesaid will constitute a binding agreement between the Offeror and GMM as to the purchase and sale of the Offered Shares to GMM, free and clear of any liens or other encumbrances, at the price and on the terms set forth in the Offer.

(d)

With respect to any Offer accepted by GMM, GMM shall pay the relevant price of the Offered Shares within fourteen (14) days from the receipt of the Purchase Notice (or on a later date, if such date is specified in the Offer), or if the Offeror submits an Offer to sell the Offered Shares on the TASE (or NASDAQ), then the price of the Offer shall be paid within five (5) business days of the Purchase Notice, in each case against receipt of a duly executed Share Transfer Deed (or Deeds) and Share certificates (as appropriate) for the Offered Shares.

(e)

If GMM fails to notify the Offeror in writing of the acceptance of the Offer within the Offer Notice Period, GMM will be deemed to have rejected the Offer and the Offeror may sell to the person named as the purchaser in the Offer, the Offered Shares at a price and on terms which are not less favorable to the Offeror than

(f)

Notwithstanding anything to the contrary contained herein, the ▇▇▇▇▇▇▇ Group may transfer, sell or otherwise assign any of its Shares to: (i) ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, their's spouse, siblings, ancestors, and descendents (whether natural or adopted), any spouses of such siblings, ancestors or descendants ("Relatives"), or any trust (including "Hekdesh") for the benefit or under the control of such Shareholder or Relatives or any of the foregoing; (ii) a person or entity that Controls or is Controlled by such shareholder or any of their Relatives; (iii) in the case of a body corporate, to its shareholders on the date of execution of this Agreement and their Relatives in the same proportion as their ownership interest on the date of execution of this Agreement in the body corporate; (iv) to any member of the ▇▇▇▇▇▇▇ Group; (v) a transfer by any Party of any shares to a recognized charitable organization, or (vi) one (or more) transfer(s) of up to 200,000 Shares in any twelve (12) month period commencing the date hereof. (each, a "Permitted Transferee").

2.

No sale or transfer under Section 1 (e)(i-iv), to any Permitted Transferee shall be permitted or of any effect unless and until the proposed purchaser or transferee referred to therein undertakes in writing towards GMM, to be bound by all the provisions of this Section 1 as if it were a party hereto in place of the Offeror.

3.

Any transfer of the Control in any entity which holds, directly or indirectly, Shares in Delta Galil to any party which is not a Permitted Transferee shall be deemed to be a transfer of the Shares of Delta Galil held by such entity, and will be subject to the Right of First Refusal specified in section 1 of this Agreement. In such event, the said Party shall be obligated to send to GMM, prior to the transfer of Control, an Offer with respect to the Shares held by such Party which will be subject to all the terms applied with respect to an Offer that is not by way of a sale on the TASE or NASDAQ, provided that the price in respect of such Shares shall be deemed to be the weighted average of the Closing Price (as defined in the Agreement between the Parties dated July 1, 2007) of the Shares on the TASE during the three (3) trading days immediately preceding the date of

4.

Duration

(i)

The date on which GMM ceases to hold at least twenty percent (20%) of the Shares of the Company; or

(ii)

the date on which the ▇▇▇▇▇▇▇ Group (together with its Permitted Transferees of the type referred to in clauses (i)-(iv) of Section 1(f) holds less than 500,000 Shares of the Company

5.

Governing Law and Competent Court

6.

Conflict of Terms

7.

Miscellaneous

(a)

Entire Agreement. This Agreement constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they have related in any way to the subject matter hereof. This Agreement shall replace the Shareholders Agreement – dated August 30, 2005.

(b)

Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.

(c)

Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

(d)

Amendments. No modification or amendment of this Agreement may be made except by an instrument in writing, signed by all the parties hereto.

8.

Notices

_______________________________

N.D.R.L INVESTMENTS (1998) LTD

___________________________________
GMM CAPITAL LLC

________________________________
NICHSEI ADINOAM LTD.

_______________________________

▇▇▇ ▇▇▇▇▇▇▇

___________________________________
▇▇▇▇▇ ▇▇▇▇▇

________________________________
▇▇▇▇ ▇▇▇▇▇▇▇