Koor Industries Ltd. ("Koor" or "the Company") hereby gives notice that Discount Investments Ltd. ("DIL"), the parent of the Company, has notified it as follows:

On 12 March, 2009, a claim and an application for its certification as a class action ("together: "the Claim") was served on DIL, against DIL and against the directors and CEO of Koor, which was filed in the Jerusalem District Court by a plaintiff who alleges that he is a shareholder of Koor.

The principal allegation of the Claim is that the rights issue by Koor in November 2008 ("the Rights Issue") deprived the pubic shareholders of Koor and was made for the benefit of the controlling shareholders of Koor, including DIL, and that in adopting the resolution to issue the rights, the directors of Koor acted in conflict of interests. It is further alleged in the Claim that the number of shares offered in the shelf offering report for the Rights Issue exceeded the number of shares defined in Koor's shelf prospectus of May 2008 on which it was based.

The Claim alleges that in implementing the Rights Issue, the defendants violated their duty under the Companies Law, 5759-1999, the Securities Law, 5728-1968 and its regulations, and the Unjust Enrichment Law, 5739-1979, and that they acted in bad faith and with negligence.

The group which the plaintiff seeks to represent ("the Class") is all those who were shareholders of Koor prior to the Rights Issue who are not among the controlling shareholder group at Koor (DIL, its parent, and any interested party in them who personally holds Koor shares), who did not exercise their right to purchase shares in the Rights Issue, as well as the American shareholders who were not permitted to exercise rights to purchase Koor shares in the Rights Issue.

If the Claim is allowed as a class action, the reliefs sought by the plaintiff are that DIL should make available to the Class 3,988,377 shares of Koor that DIL purchased in the Rights Issue beyond its proportionate part in the Rights Issue, so that each of the members of the Class is able to purchase a proportionate part of those shares in exchange for NIS 37.29 per share, and if this is not possible – the compel the defendants to compensate the members of the Class in the amount of NIS 68.24 for every such share; alternatively, the compel the defendants to compensate the members of the Class in a total amount estimated by the plaintiff (according to an economic opinion which was attached to the Claim) at approximately NIS 73 million, or in another amount to be determined by the court. The court is also requested to give instructions for preventing future deprivation of the public shareholders of Koor.

DIL also stated that it believes the Claim to be unfounded and that it intends to defend itself rigorously against it.

To the best of Koor's knowledge, the Claim has not yet been served on any of the other defendants