<PAGE>

                                                                     EXHIBIT 1.1

                             ARTICLES OF ASSOCIATION
                                       OF
                       PARTNER COMMUNICATIONS COMPANY LTD.

                                TABLE OF CONTENTS

<Table>

<S>                                                                                              <C>
Chapter One - General.............................................................................3
   1.      Definitions and Interpretation.........................................................3
   2.      Public Company.........................................................................4
   3.      The Purpose of the Company.............................................................4
   4.      The Objectives of the Company..........................................................5
   5.      Limited Liability......................................................................5
Chapter Two - The Share Capital of the Company....................................................5
   6.      Share Capital..........................................................................5
   7.      The Issuance of Shares and Other Equity Securities.....................................5
   8.      Calls of Payment.......................................................................6
   9.      The Shareholder Registers of the Company and the Issuance of Share Certificates........8
   10.     Transfer of Shares of the Company......................................................8
   10A.    Limitations on Transfer of Shares.....................................................11
   11.     Bearer Share Certificate..............................................................12
   12.     Pledge of Shares......................................................................12
   13.     Changes in the Share Capital..........................................................13
Chapter Three - General Meetings.................................................................15
   14.     The Authority of the General Meeting..................................................15
   15.     Kinds of General Meetings.............................................................16
   16.     The Holding of General Meetings.......................................................17
   17.     The Agenda of General Meetings........................................................18
   18.     Discussions in General Meetings.......................................................18
   19.     Voting of the Shareholders............................................................20
   20.     The Appointment of a Proxy............................................................22
   21.     Deed of Vote..........................................................................24
Chapter Four - The Board of Directors............................................................27
   22.     The Authority of the Board of Directors...............................................27
   23.     The Appointment of Directors and the Termination of Their Office......................27
   24.     Actions of Directors..................................................................31
   25.     Committees of the Board of Directors..................................................34
   26.     Chairman of the Board of Directors....................................................35
</Table>


<PAGE>
<Table>

<S>                                                                                             <C>
Chapter Five - Officers who are not Directors and the Auditor....................................36
   27.     The General Manager...................................................................36
   28.     The Corporate Secretary, Internal Controller and Other Officers of the Company........38
   29.     The Auditor...........................................................................38
Chapter Six - The Share Capital of the Company and its Distribution..............................40
   30.     Permitted Distributions...............................................................40
   31.     Dividends and Bonus Shares............................................................40
   32.     The Acquisition of Shares.............................................................44
Chapter Seven - Insurance, Indemnification and Release of Officers...............................44
   33.     Insurance of Officers.................................................................44
   34.     Indemnification of Officers...........................................................45
   35.     Release of Officers...................................................................46
Chapter Eight - Liquidation and Reorganization of the Company....................................46
   36.     Liquidation...........................................................................46
   37.     Reorganization........................................................................47
Chapter Nine - Miscellaneous.....................................................................47
   38.     Notices...............................................................................47
Chapter 10 - Transitional Rules until the Companies Law shall be Effective.......................48
   39.     Applicability.........................................................................48
   40.     Indemnification of Officers...........................................................49
   41.     Exemption for Officers................................................................49
   42.     Interpretation........................................................................50
Chapter 11 - Compliance with the License/Limitations on Ownership and Control....................50
   43.     Compliance............................................................................50
   44.     Limitations on Ownership and Control..................................................50
</Table>


                                       2
<PAGE>
                             CHAPTER ONE - GENERAL

1.       DEFINITIONS AND INTERPRETATION

         1.1.     The following terms in these Articles of Association bear the
                  meaning appearing alongside them below:

         Articles of Association The      Articles of Association of the
                                          Company, as set forth herein or as
                                          amended, whether explicitly or
                                          pursuant to any Law.

         Business Day                     Sunday to Thursday, inclusive, with
                                          the exception of holidays and official
                                          days of rest in the State of Israel.

         Companies Law                    The Companies Law, 1999.

         Companies Ordinance              The Companies Ordinance [New Version],
                                          1983.

         Companies Regulations            Regulations issued pursuant to the
                                          Companies Ordinance or Companies Law.

         Director                         A Director of the Company in
                                          accordance with the definition in
                                          Section 1 of the Companies Law,
                                          including an Alternate Director or an
                                          empowered representative.

         Document                         A printout and any other form of
                                          written or printed words, including
                                          documents transmitted in writing, via
                                          facsimile, telegram, telex, e-mail, on
                                          a computer or through any other
                                          electronic instrumentation, producing
                                          or allowing the production of a copy
                                          and/or an output of a document.

         Financial                        Statements The balance sheet, profit
                                          and loss statement, statement of
                                          changes in the share capital and cash
                                          flow statements, including the notes
                                          attached to them.

         Law                              The provisions of any law ("din") as
                                          defined in the Interpretation Law,
                                          1981.

         License                          The Company's General License for the
                                          Provision of Mobile Radio Telephone
                                          Services using the Cellular Method in
                                          Israel dated April 7, 1998, and the
                                          permit issued by the Ministry of
                                          Communications dated April 7, 1998.

         Linkage                          Payments with respect to changes in
                                          the Israeli consumer price index or
                                          the representative exchange rate of
                                          NIS vis-a-vis the U.S. dollar, as
                                          published by the Bank of Israel, or
                                          any other rate which replaces such
                                          rate.

         NIS                              New Israeli Shekel



                                       3

<PAGE>



         Office                           The registered office of the Company.

         Ordinary Majority                A simple majority of the shareholders
                                          who are entitled to vote and who voted
                                          in a General Meeting in person, by
                                          means of a proxy or by means of a deed
                                          of voting.

         Periodic Statement               According to its definition in Chapter
                                          B of the Securities Regulations
                                          (Periodic and Immediate Reports),
                                          1970, or such Securities Regulations
                                          replacing them.

         Securities                       Shares, bonds, capital notes or
                                          securities negotiable into shares and
                                          certificates, conferring a right in
                                          such securities, or other securities
                                          issued by the Company.

         Securities Law                   The Securities Law, 1968.

         Securities Regulations           Regulations issued pursuant to the
                                          Securities Law.

         Shares                           shares in the share capital of the
                                          Company.

         Shareholder                      Anyone registered as a shareholder in
                                          the Shareholder Register of the
                                          Company.

         Special Majority                 A majority of at least three quarters
                                          of the votes of shareholders who are
                                          entitled to vote and who voted in a
                                          general meeting, in person, by means
                                          of a proxy or by means of a deed of
                                          voting.

         1.2.     The provisions of Sections 3 through 10 of the Interpretation
                  Law, 1981, shall also apply to the interpretation of these
                  Articles of Association, mutatis mutandis, unless the context
                  otherwise requires.

         1.3.     Except as otherwise provided in this Article, each word and
                  expression in these Articles of Association shall have the
                  meaning given to it in accordance with the Companies Law, and
                  to the extent that no meaning is attached to it in the
                  Companies Law, the meaning given to it in the Companies
                  Regulations, and if they lack reference thereto, as stated,
                  the meaning given to it in the Securities Law or Securities
                  Regulations, and in the absence of any meaning, as stated, the
                  meaning given to it in another Law, unless it contradicts the
                  relevant provision or its contents.

2.       PUBLIC COMPANY

         The Company is a public company.

3.       THE PURPOSE OF THE COMPANY

         The purpose of the Company is to operate in accordance with business
         considerations to generate profits; provided, however, the Board of
         Directors is entitled to donate

                                       4

<PAGE>

         reasonable amounts to worthy causes, even if such a donation is not
         within the framework of business considerations, as stated.

4.       THE OBJECTIVES OF THE COMPANY

         The Company shall engage in any legal business.

5.       LIMITED LIABILITY

         The liability of the Shareholders of the Company is limited, each one
         up to the full amount he undertook to pay for the Shares allotted to
         him, at the time of the allotment.

                 CHAPTER TWO - THE SHARE CAPITAL OF THE COMPANY

6.       SHARE CAPITAL

         6.1.     The authorized share capital of the Company is NIS 2,350,000,
                  divided into 235,000,000 ordinary shares at a par value of NIS
                  0.01 each (hereinafter: the "Ordinary Shares").

         6.2.     Each Ordinary Share shall confer upon its holder the right to
                  receive notices of, and to attend and vote in, general
                  meetings, and to one vote for each Ordinary Share held by him.

         6.3.     Each class of Shares shall also confer equal rights to each
                  holder in the class with respect to the amounts of equity
                  which were paid or credited as paid with respect to their par
                  value, in all matters pertaining to dividends, the
                  distribution of bonus shares and any other distribution,
                  return of capital and participation in the distribution of the
                  balance of the assets of the Company upon liquidation.

         6.4.     The provisions of these Articles of Association with respect
                  to Shares, shall also apply to other Securities issued by the
                  Company, mutatis mutandis.

7.       THE ISSUANCE OF SHARES AND OTHER SECURITIES

         7.1.     The Board of Directors of the Company may issue Shares and
                  other equity Securities of the Company, up to the limit of the
                  registered share capital of the Company. In the event that the
                  share capital of the Company includes several classes of
                  Shares and other equity Securities, no shares and other equity
                  Securities shall be issued above the limit of the registered
                  share capital for its class.

         7.2.     The Board of Directors of the Company may issue redeemable
                  Securities, having such rights and subject to such conditions
                  as will be determined by the Board of Directors.

         7.3.     Subject to the provisions of these Articles of Association,
                  the Board of Directors may allot Shares and other Securities
                  according to such stipulations and conditions, at par value or
                  by way of a premium, as it deems fit.



                                       5
<PAGE>

         7.4.     The Board of Directors may decide on the issuance of a series
                  of bonds or other debt securities within the framework of its
                  authority or to take a loan on behalf of the Company and
                  within the limits of the same authority.

         7.5.     The Shareholders of the Company at any given time shall not
                  have any preemption right or priority or any other right
                  whatsoever with respect to the acquisition of Securities of
                  the Company. The Board of Directors, in its sole discretion,
                  may decide to offer Securities of the Company first to
                  existing Shareholders or to any one or more of them.

         7.6.     The Company is entitled to pay a commission (including
                  underwriting fees) to any person, in consideration for
                  underwriting services, or the marketing or distribution of
                  Securities of the Company, whether reserved or unreserved, as
                  determined by the Board of Directors. Payments, as stated in
                  this Article, may be paid in cash or in Securities of the
                  Company, or partly in one manner and partly in another manner.

8.       CALLS OF PAYMENT

         8.1.     In the event that according to the terms of a Share allotment,
                  there is no fixed date for the payment of any part of the
                  price that is to be paid for the Shares, the Board of
                  Directors may issue from time to time calls of payment to the
                  Shareholders with respect to the moneys which were not yet
                  paid by them in relation to the Shares (hereinafter: "Calls of
                  Payment" or "a Call of Payment", as the case may be).

         8.2.     A Call of Payment shall set a date, which will not be earlier
                  than thirty days from the date of the notice, by which the
                  amount indicated in the Call of Payment must be paid, together
                  with interest, Linkage and expenses incurred in consequence of
                  the non-payment, according to the rates and amounts set by the
                  Board of Directors. The notice shall further specify that in
                  the event of a failure to pay within the date fixed, the
                  Shares in respect of which payment or the rate is required may
                  be forfeited. In the event that a Shareholder fails to meet
                  any of its obligations, under a Call of Payment, the Share in
                  respect of which said notice was issued pursuant to the
                  resolution of the Board of Directors may be forfeited at any
                  time thereafter. The forfeiture of Shares shall include the
                  forfeiture of all the dividends on same Shares which were not
                  paid prior to the forfeiture, even if such dividends were
                  declared.

         8.3.     Any amount, which according to the terms of a Share allotment,
                  must be paid at the time of issuance or at a fixed date,
                  whether at the par value of the Share or at a premium, shall
                  be deemed for the purposes of these Articles of Association to
                  be combined in a duly issued Call of Payment. In the event of
                  non-payment of any such amount, all the provisions of these
                  Articles of Association shall apply with respect to such an
                  amount, as if a proper Call of Payment has been made and an
                  appropriate notice thereof was given.



                                       6
<PAGE>

         8.4.     The Board of Directors, acting reasonably and in good faith,
                  may differentiate among Shareholders with respect to amounts
                  of Calls of Payment and/or their payment time.

         8.5.     The joint holders of Shares shall be liable, jointly and
                  severally, for the payment of Calls of Payment in respect of
                  such Shares.

         8.6.     Any payment for Shares shall be credited, pro rata, according
                  to the par value of and according to the premium on such
                  Shares.

         8.7.     A Call of Payment may be cancelled or deferred to another
                  date, as may be decided by the Board of Directors. The Board
                  of Directors may waive any interest, Linkage and expenses or
                  any part of them.

         8.8.     The Board of Directors may receive from a Shareholder any
                  payments for his Shares, in addition to the amount of any Call
                  of Payment, and the Board of Directors may pay to the same
                  Shareholder interest on amounts which were paid in advance, as
                  stated above, or on same part of them, in excess of the amount
                  of the Call of Payment, or to make any other arrangement with
                  him which may compensate him for the advancement of the
                  payment.

         8.9.     A Shareholder shall not be entitled to a dividend or to his
                  other rights as a Shareholder, unless he has fully paid the
                  amounts specified in the Calls of Payment issued to him,
                  together with interest, Linkage and expenses, if any, unless
                  otherwise determined by the Board of Directors.

         8.10.    The Board of Directors is entitled to sell, re-allot or
                  transfer in any other manner any Share which was forfeited, in
                  the manner it decides, with or without any amount paid on the
                  Share or deemed as paid on it.

         8.11.    The Board of Directors is entitled at all times prior to the
                  sale, reallotment or transfer of the forfeited Share to cancel
                  the forfeiture on the conditions it may decide.

         8.12.    A person whose Shares have been forfeited shall,
                  notwithstanding the forfeiture, remain liable to pay to the
                  Company all moneys which, up until the date of forfeiture,
                  were due and payable by him to the Company in respect of the
                  Shares, including interest, Linkage and expenses up until the
                  actual payment date in the same manner as if the Shares were
                  not forfeited, and shall be compelled to fulfill all the
                  requirements and claims which the Company was entitled to
                  enforce with respect to the Shares up until the forfeiture
                  date, without any decrease or discount for the value of the
                  Shares at the time of forfeiture. His liability shall cease
                  only if and when the Company receives the full payment set at
                  the time of allotment of the Shares.

         8.13.    The Board of Directors may collect any Calls of Payment which
                  were not paid on the forfeited Shares or any part of them, as
                  it deems fit, but it is not obligated to do so.



                                       7
<PAGE>

         8.14.    The forfeiture of a Share shall cause, as of the time of
                  forfeiture, the cancellation of all rights in the Company and
                  of any claim or demand against the Company with respect to
                  that Share, and of other rights and obligations of the
                  Shareholder in respect of the Company, save as otherwise
                  provided by Law.

9.       THE SHAREHOLDER REGISTERS OF THE COMPANY AND THE ISSUANCE OF SHARE
         CERTIFICATES

         9.1.     The Company shall maintain a Shareholder Register and a
                  Register of Significant Shareholders, together with a notation
                  of any Exceptional Holdings in accordance with the provisions
                  set forth in Article 10A below, to be administered by the
                  corporate secretary of the Company, subject to the oversight
                  of the Board of Directors.

         9.2.     A Shareholder is entitled to receive from the Company, free of
                  charge, within two months after an allotment or the
                  registration of a transfer (unless the conditions of the
                  allotment fix a different period) one or several certificates
                  with respect to all the Shares of a certain class registered
                  in his favor, which certificate must specify the number of the
                  Shares, the class of the Shares and the amount paid for them
                  and also any other detail deemed important by the Board of
                  Directors. In the event a Share is held jointly, the Company
                  shall not be obligated to issue more than one certificate for
                  all the joint holders, and the delivery of such a certificate
                  to any of the joint holders shall be viewed as if it was
                  delivered to all of them.

         9.3.     Each and every Share certificate shall be stamped with the
                  seal or the stamp of the Company or bear the Company's printed
                  name, and shall also bear the signature of one Director and of
                  the corporate secretary of the Company, or of two Directors or
                  of any other person appointed by the Board of Directors for
                  this purpose.

         9.4.     The Company is entitled to issue a new Share certificate in
                  place of an issued Share certificate which was lost or spoiled
                  or corrupted, following evidence thereto and guarantees and
                  indemnities, as may be required by the Company and the payment
                  of an amount determined by the Board of Directors.

         9.5.     Where two people or more are registered as joint holders of
                  Shares, each of them is entitled to acknowledge the receipt of
                  a dividend or other payments in connection with such jointly
                  held Shares, and such acknowledgement of any one of them shall
                  be good discharge of the Company's obligation to pay such
                  dividend or other payments.

10.      TRANSFER OF SHARES

         10.1.    The Shares are transferable. The transfer of Shares shall not
                  be registered unless the Company receives a deed of transfer
                  (hereinafter: "Deed of Transfer") or other proper Document or
                  instrument of transfer. A Deed of Transfer shall be drawn up
                  in the following manner or in any substantially similar manner
                  or in any other manner approved by the Board of Directors.




                                       8
<PAGE>



                                DEED OF TRANSFER

 I, _________________, (hereinafter: "The Transferor") of ____________, do
 hereby transfer to ___________ (hereinafter: "The Transferee") of __________,
 for valuable consideration paid to me, _________ Share(s) having a par value of
 NIS 0.01 each, numbered ________ to ________ (inclusive), of Partner
 Communications Company Ltd. (hereinafter: the "Company") to hold unto the
 Transferee, his executors, administrators and assigns, subject to the same
 terms and conditions on which I held the same at the time of the execution
 hereof; and I, the said Transferee, do hereby agree to take the said Share(s)
 subject to the aforesaid terms and conditions.

                In witness whereof we have hereunto set our hands this _____ day
                of _________, _____.

                The Transferor                      The Transferee
                Name: _______________               Name: _______________
                Signature: ____________             Signature: ____________

                Witness to the Signature of:
                The Transferor                      The Transferee
                Name: _____________                 Name: _____________
                Signature: ____________             Signature: ____________

10.2.    The transfer of Shares which are not fully paid, or Shares on which the
         Company has a lien or pledge, shall have no validity unless approved by
         the Board of Directors, which may, in its absolute discretion and
         without giving any reasoning thereto, decline the registration of such
         a transfer. The Board of Directors may deny a transfer of Shares as
         aforesaid and may also impose a condition of the transfer of Shares as
         aforesaid an undertaking by the transferee to meet the obligations of
         the transferor with respect to the Shares or the obligations for which
         the Company has a lien or pledge on the Shares, signed by the
         transferee together with the signature of a witness, authenticating the
         signature of the transferee.

10.3.    The transfer of a fraction of a Share shall lack validity.

10.4.    A transferor of Shares shall continue to be regarded as the holder of
         the transferred Shares, until the name of the transferee of the Shares
         is registered in the Shareholder Register of the Company.

10.5.    A Deed of Transfer shall be filed with the Company's office for
         registration, together with the Share Certificates for the Shares which
         are to be transferred (if such are issued) and also any other evidence
         which the Company may require with respect to the proprietary right of
         the transferor or with respect to his right to transfer the Shares.
         Deeds of Transfer which are registered shall remain with the Company.
         The Company is not obligated to retain the Deeds of Transfer and the



                                       9
<PAGE>

         Share Certificates, which may be cancelled, after the completion of a
         seven-year period from the registration of the transfer.

10.6.    A joint Shareholder may transfer his right in a Share. In the event the
         transferring Shareholder does not hold the relevant Share Certificate,
         the transferor shall not be obligated to attach the Share Certificate
         to the Deed of Transfer, so long as the Deed of Transfer shall indicate
         that the transferor does not hold the Share Certificate, that the right
         he has in the Shares therein is being transferred, and that the
         transferred Share is held jointly with others, together with their
         details.

10.7.    The Company may require payment of a fee for the registration of the
         transfer, at an amount or a rate determined by the Board of Directors
         from time to time.

10.8.    The Board of Directors may close the Shareholder Register for a period
         of up to thirty days in each year.

10.9.    Subject to Article 10.10, upon the death of a Shareholder, the Company
         shall recognize the custodians or administrators of the estate or
         executors of the will, and in the absence of such, the lawful heirs of
         the Shareholder, as the only holders of the right for the Shares of the
         deceased Shareholder, after receipt of evidence to the entitlement
         thereto, as determined by the Board of Directors.

10.10.   In the event that a deceased Shareholder held Shares jointly with
         others, the Company shall acknowledge each survivor as a joint
         Shareholder with respect to said Shares, unless all the joint holders
         in the Share notify the Company in writing, prior to the death of any
         of them, of their will that the provisions of this Article shall not
         apply to them. The foregoing shall not release the estate of a joint
         Shareholder of any obligation in relation to a Share which is held
         jointly.

10.11.   A person acquiring a right in Shares in consequence of being a
         custodian, administrator of the estate, the heir of a Shareholder, a
         receiver, liquidator or a trustee in a bankruptcy of a Shareholder or
         according to another provision of the Law, is entitled, after providing
         evidence to his right, to the satisfaction of the Board of Directors,
         to be registered as the Shareholder or to transfer such Shares to
         another person, subject to the provisions of these Articles of
         Association with respect to transfers.

10.12.   A person becoming entitled to a Share because of the death of a
         Shareholder shall be entitled to receive, and to give receipts for,
         dividends or other payments paid or distributions made, with respect to
         the Share, but shall not be entitled to receive notices with respect to
         General Meetings of the Company or to participate or vote therein with
         respect to that Share, or to exercise any other right of a Shareholder,
         until he has been registered in the Shareholder Register as the holder
         of that Share.

10.13.   Notwithstanding anything to the contrary in Articles 10.5 and 10.7, the
         transfer of Shares as a result of a realization of a share pledge
         entered into by a Shareholder of the Company in connection with the
         Company's $650 million credit facility dated August 13, 1998, as
         amended from time to time, will not require additional evidence with
         respect to the proprietary right of the transferor or with respect to



                                       10
<PAGE>

         his right to transfer the shares other than a properly completed deed
         of transfer and valid Share Certificate (if issued), nor will the
         Company require a fee for the registration of said transfer.

10A.     LIMITATIONS ON TRANSFER OF SHARES

                  10A.1.   Exceptional Holdings shall be registered in the
                           Register of Members (Shareholder Register) together
                           with a notation that such holdings have been
                           classified as "Exceptional Holdings", immediately
                           upon the Company's learning of such matter. Notice of
                           such registration shall be sent by the Company to the
                           registered holder of the Exceptional Holding and to
                           the Minister of Communications.

                  10A.2.   Exceptional Holdings, registered in the manner set
                           forth in Article 10A.1, shall not entitle the holder
                           to any rights in respect to his holdings, and such
                           holdings shall be considered "Dormant Shares" within
                           the meaning of Section 308 of the Companies Law,
                           except, however, that the holder of such shares shall
                           be entitled to receive dividends and other
                           distributions to shareholders (including the right to
                           participate in a rights offering calculated on the
                           basis of Means of Control of the Company (as defined
                           in the License), provided, however, that such
                           additional holdings shall be considered Exceptional
                           Holdings). Therefore, any action taken or claim made
                           on the basis of a right deriving from an Exceptional
                           Holdings shall have no effect, except for the receipt
                           of dividends or other distribution as stated above.

                           Without derogating from the above:

                  10A2.1   A Shareholder participating in a vote of the General
                           Meeting will certify to the Company prior to the vote
                           or, if the vote is by Deed of Vote, on the Deed of
                           Vote, as to whether or not his holdings in the
                           Company or his vote require consent pursuant to
                           Sections 21 and 23 to the License; in the event the
                           shareholder does not provide notification as
                           aforesaid, he shall not vote and his vote shall not
                           be counted.

                  10A.2.2  No Director shall be appointed, elected or removed on
                           the basis of Exceptional Holdings. In the event a
                           Director is appointed, elected or removed from his
                           position as a Director as set forth above, such
                           appointment, election or removal shall have no
                           effect.

                  10A.2.3  Exceptional Holdings shall have no voting rights at a
                           General Meeting of the Company.

For the purposes of this Article 10A, "EXCEPTIONAL HOLDINGS" means the holdings
of Traded Means of Control held without the consent of the Minister of
Communications pursuant to Section 21 to the License or as a result of a breach
of the provisions of Section 23 to the License, and all holdings of a holder of
Traded Means of Control who acted contrary to the provisions of Section 24 to
the



                                       11
<PAGE>
License; and as long as the consent of the Minister of Communications is
required but has not been obtained pursuant to Section 21 to the License, or the
circumstances exist which constitute a violation of the provisions of Sections
23 or 24 to the License.

For the purposes of this Article 10A, "TRADED MEANS OF CONTROL" means Means of
Control (as defined in the License) including Global or American Depositary
Shares (GDRs or ADRs) or similar certificates, registered for trade on a
securities exchange in Israel or abroad or which have been offered to the public
in connection with a prospectus, and are held by the public in Israel or abroad.

                  10A.3.   The provisions of Article 10A shall not apply to
                           those who were Shareholders of the Company on the eve
                           of the first registration of the Company's Shares for
                           trade.

11.      BEARER SHARE CERTIFICATE

         The Company shall not issue bearer Share Certificates which grant the
         bearer rights in the Shares specified therein.

12.      PLEDGE OF SHARES

         12.1.    The Company shall have a first degree pledge on, and a right
                  to create a lien on, all Shares which are not fully paid and
                  registered in the name of any Shareholder, and the proceeds of
                  their sale, with respect to moneys (which payment time is due
                  or not) whose payment was already called or are to be paid up
                  within a fixed time. Furthermore, the Company shall have a
                  first degree pledge right on all the Shares (other than Shares
                  which were fully paid) registered in the name of any
                  Shareholder to secure the payment of moneys which are due from
                  him or from his property, whether with respect to his own
                  debts or debts jointly with others. The said pledge shall also
                  apply to dividends, declared from time to time, with respect
                  to these Shares.

         12.2.    For purposes of the realization of any such pledge and or
                  lien, the Board of Directors is entitled to sell the Shares
                  which are the subject of the pledge or lien, or any part of
                  them, as it deems fit. No sale, as aforesaid, shall be carried
                  out, until the date fixed for the payment has passed and a
                  notice in writing was transferred to same Shareholder with
                  respect to the intention of the Company to sell them, on
                  condition that the amounts were not paid within fourteen days
                  after the notice.

         12.3.    The proceeds of any such sale, after deduction for the payment
                  of the sale expenses, shall serve for the covering of the
                  debts or obligations of said Shareholder, and the balance (if
                  any) shall be paid to him.

         12.4.    In the event that a sale of Shares was carried out pursuant to
                  the realization of a pledge or a lien, pursuant to the
                  presumptive authority conferred above, the Board of Directors
                  is entitled to register such Shares in the Shareholder
                  Register in favor of the buyer, and the buyer shall not be
                  under the obligation to examine the fitness


                                       12
<PAGE>


                  of such actions or the manner in which the purchase price paid
                  for such Shares was used. After the said Shares are registered
                  in the Shareholder Register in favor of the buyer, no person
                  shall have the right to object to the validity of the sale.

13.      CHANGES IN THE SHARE CAPITAL

         The General Meeting is entitled to take any of the following actions at
         all times, so long as the resolution of the General Meeting is adopted
         by a Special Majority.

         13.1.    Increasing the Share Capital

To increase the share capital of the Company, regardless of whether all the
Shares registered at such a time were issued or not. The increased share capital
shall be divided into Shares having ordinary rights or preference rights or
deferred rights or other special rights (subject to the special rights of an
existing class of Shares) or subject to conditions and restrictions with respect
to entitlement to dividend, return of capital, voting or other conditions, as
may be instructed by the General Meeting in a resolution with respect to the
increase of the share capital, and in the absence of a special provision,
according to the terms determined by the Board of Directors.

         13.2.    Classes of Shares

To divide the share capital of the Company into various classes of Shares, and
to set and change the rights attaching to each class of Shares, according to the
conditions specified below:

                  13.2.1.  So long as it was not otherwise set in the Share
                           allotment conditions, the rights of any class may be
                           changed pursuant to a resolution of the General
                           Meeting of the Shareholders of each class of Shares,
                           separately, or upon the written consent of all the
                           Shareholders of all classes.

                  13.2.2.  The rights conferred on the holders of Shares of a
                           certain class shall not be deemed to have been
                           changed as a result of the creation or allotment of
                           other Shares having identical rights, unless it was
                           otherwise stipulated in the allotment conditions of
                           said Shares.

         13.3.    Amalgamation and Redivision of the Share Capital

To amalgamate and redivide the share capital of the Company, entirely or
partially, into Shares having a higher or lesser par value than that stated in
these Articles of Association. In the event that in consequence of such
amalgamation, there are Shareholders left with fractions of Shares, the Board of
Directors if approved by the Shareholders at a General Meeting in adopting the
resolution for amalgamation of the capital, may agree as follows:


                                       13
<PAGE>


                  13.3.1.  To sell the total of all the fractional shares and to
                           appoint a trustee for this purpose, in whose name
                           Share Certificates representing the fractions shall
                           be issued, who will sell them, with the proceeds
                           received after the deduction of commissions and
                           expenses to be distributed to those entitled. The
                           Board of Directors shall be entitled to decide that
                           Shareholders who are entitled to proceeds which are
                           below an amount determined by it, shall not receive
                           the proceeds of the sale of the fractional shares,
                           and their share in the proceeds shall be distributed
                           among the Shareholders who are entitled to proceeds,
                           in an amount greater than the amount that was
                           determined, relative to the proceeds to which they
                           are entitled;

                  13.3.2.  To allot to any Shareholder, who is left with a
                           fractional Share following the amalgamation, Shares
                           of the class of Shares prior to the amalgamation,
                           which are fully paid, in such a number, the
                           amalgamation of which together with the fractional
                           Share shall complete a whole Share, and an allotment
                           as stated shall be viewed as valid shortly before the
                           amalgamation;

                  13.3.3.  To determine that Shareholders shall not be entitled
                           to receive a Share in exchange for a fractional Share
                           resulting from the amalgamation of a half or smaller
                           fraction of the number of Shares, whose amalgamation
                           creates a single Share, and they shall be entitled to
                           receive a whole Share in exchange for a fractional
                           Share, resulting from the amalgamation of more than a
                           half of the number of Shares, whose amalgamation
                           creates a whole Share.

                  In the event that an action pursuant to Articles 13.3.2 or
                  13.3.3 above requires the allotment of additional Shares,
                  their payment shall be effected in a manner similar to that
                  applicable the payment of Bonus Shares. An amalgamation and
                  redivision, as aforesaid, shall not be regarded as a change in
                  the rights attaching to the Shares which are the subject of
                  the amalgamation and redivision.

         13.4.    Cancellation of Unissued Share Capital

To cancel registered share capital which has not yet been allotted, so long as
the Company is not under an obligation to allot these Shares.

         13.5.    The Division of the Share Capital

To divide the share capital of the Company, entirely or partially, into Shares
having a lower par value than those stated in these Articles of Association, by
way of dividing the Shares of the Company at such a time, entirely or partially.

         13.6.    The provisions specified in this Article 13 shall also apply
                  to other equity Securities of the Company, mutatis mutandis.


                                       14
<PAGE>


                        CHAPTER THREE - GENERAL MEETINGS

14.      THE AUTHORITY OF THE GENERAL MEETING

         14.1.    Subjects within the authority of the General Meeting

                  The following matters shall require the approval of the
                  General Meeting:

                  14.1.1.  Changes in the Articles of Association, if adopted by
                           a Special Majority.

                  14.1.2.  The exercise of the authority of the Board of
                           Directors, if resolved by a Special Majority that the
                           Board of Directors is incapable of exercising its
                           authority, and that the exercise of any of its
                           authority is essential to the orderly management of
                           the Company.

                  14.1.3.  The appointment or reappointment of the Company's
                           auditor, the termination or non-renewal of his
                           service, and to the extent required by Law and not
                           delegated to the Board of Directors, the
                           determination of his fee.

                  14.1.4.  The appointment of Directors, including external
                           Directors.

                  14.1.5.  To the extent required by the provisions of Section
                           255 of the Companies Law, the approval of actions and
                           transactions with interested parties and also the
                           approval of an action or a transaction of an officer
                           which might constitute a breach of the duty of
                           loyalty.

                  14.1.6.  Changes in the share capital of the Company, if
                           adopted by a Special Majority as set forth in Article
                           13 above.

                  14.1.7.  A merger of the Company, as defined in the Companies
                           Law.

                  14.1.8.  Changes in the objectives of the Company as set forth
                           in Article 4 above, if adopted by a Special Majority.

                  14.1.9.  Changes in the name of the Company, if adopted by a
                           Special Majority.

                  14.1.10. Liquidation, if adopted by a Special Majority.

                  14.1.11. Settlements or Arrangements pursuant to Section 233
                           of the Companies Ordinance.

                  14.1.12. Any other matters which applicable Law requires to be
                           dealt with at General Meetings of the Company.

         14.2.    The authority of the General Meeting to transfer authorities
                  between corporate organs.


                                       15
<PAGE>


The General Meeting, by a Special Majority, may assume the authority which is
given to another corporate organ, and may transfer the authority which is given
to the General Manager to the Board of Directors.

The taking or transferring of authorities, as aforesaid, shall be with regard to
a specific issue or for a specific period of time, all as stated in the
resolution of the General Meeting.

15.      KINDS OF GENERAL MEETINGS

         15.1.    Annual Meetings

A General Meeting shall be convened at least once a year, within fifteen months
of the last general meeting. The meeting shall be held at the registered offices
of the Company, unless otherwise determined by the Board of Directors. These
General Meetings shall be referred to as "Annual Meetings".

                  15.1.1.  An Annual Meeting shall be convened to approve the
                           following:

                           (One) The Financial Statements and the Report of the
                           Board of Directors, as of December 31st of the
                           calendar year preceding the year of the annual
                           meeting.

                           (Two) The Report of the Board of Directors with
                           respect to the fee paid to the Company's auditor.

                  15.1.2.  The Annual Meeting shall be convened to adopt
                           resolutions on the following matters:

                           (One) The appointment of Directors and the
                           termination of their office in accordance with
                           Article 23 below.

                           (Two) The appointment of an auditor or the renewal of
                           his office, and authorization of the Board of
                           Directors to determine his fee, subject to the
                           provisions of Article 29 below.

         15.2.    Extraordinary Meetings

General Meetings of the Shareholders of the Company which are not convened in
accordance with the provisions of Article 15.1 above, shall be referred to as
"Extraordinary Meetings". An Extraordinary Meeting shall discuss and decide in
all matters which are not discussed and decided in the Annual Meeting, and for
which the Extraordinary Meeting was convened.


                                       16
<PAGE>


         15.3.    Class Meetings

The provisions of these Articles of Association with respect to General Meetings
shall apply, mutatis mutandis, to meetings of a class of Shareholders of the
Company.

16.      THE HOLDING OF GENERAL MEETINGS

         16.1.    The Convening of the Annual Meeting

The Board of Directors shall convene Annual Meetings in accordance with the
provisions of Article 15.1 above.

         16.2.    The Convening of an Extraordinary Meeting

The Board of Directors may convene an Extraordinary Meeting, as it decides,
provided, however, that it shall be obligated to convene an Extraordinary
Meeting upon the demand of one of the following:

                  16.2.1.  Any two Directors or a quarter of the Directors,
                           whichever is lower; or

                  16.2.2.  any one or more Shareholders, holding alone or
                           together at least 4.99% of the issued share capital
                           of the Company.

         16.3.    Date of Convening an Extraordinary Meeting Upon Demand

The Board of Directors, which is required to convene a general meeting in
accordance with Article 16.2 above shall announce the convening of the General
Meeting within twenty-one (21) days from the receipt of a demand in that
respect, and the date fixed for the meeting shall not be more than thirty-five
(35) days from the publication date of the announcement of the General Meeting.

In the event that the Board of Directors shall not have convened an
Extraordinary Meeting, as required in this Article, those demanding its
convening or half of the Shareholders which demand it subject to Article 16.2.2,
are entitled to convene the meeting themselves, so long as it is convened within
three months from the date on which the demand was filed, and it shall be
convened, inasmuch as possible, in the same manner by which meetings are
convened by the Board of Directors. In the event that a General Meeting is
convened as aforesaid, the Company shall bear the reasonable costs and expenses
incurred by those demanding it.

         16.4.    Notice of Convening a General Meeting

Unless otherwise prescribed by Law, a notice of a general meeting shall be sent
to each registered Shareholder of the Company at least twenty-one (21) days
prior to the date fixed for the meeting.


                                       17
<PAGE>


A General Meeting may be convened following a shorter notice period, if the
written consent of all the Shareholders who are entitled at such time to receive
notices has been obtained. A waiver by a Shareholder can also be made in writing
after the fact and even after the convening of the General Meeting.

16.5.    Contents of the Notice

Subject to the provisions of any Law, a notice with respect to a general meeting
shall specify the agenda of the meeting, the location, the proposed resolutions
and also the arrangements for voting by means of a deed of voting or a deed of
authorization, and the requirements of Article 10A.2.1.

Any notice to be sent to the Shareholders shall also include a draft of the
proposed resolutions or a concise description of their particulars.

17.      THE AGENDA OF GENERAL MEETINGS

         17.1.    The agenda of the General Meeting shall be determined by the
                  Board of Directors and shall also include issues for which an
                  Extraordinary Meeting is being convened in accordance with
                  Article 15.2 above, or demanded in accordance with Article
                  17.2 below.

         17.2.    One or more Shareholders holding alone or in the aggregate,
                  4.99% or more of the share capital of the Company may request
                  that the Board of Directors include an issue on the agenda of
                  a general meeting to be convened in the future. The Board of
                  Directors shall incorporate such issue on the agenda of such a
                  future general meeting, provided that the Board of Directors
                  determines, in its discretion, such issue is suitable to be
                  discussed in the General Meeting of the Company.

         17.3.    The General Meeting shall only adopt resolutions on issues
                  which are on its agenda.

         17.4.    So long as it is not otherwise prescribed by Law, the General
                  Meeting is entitled to accept or reject a proposed resolution
                  which is on the agenda of the General Meeting, the draft or
                  concise description of the particulars of which were published
                  by the Company, including slight alterations, however, it is
                  not entitled to take a resolution, which is materially
                  different than the proposed resolution.

18.      DISCUSSIONS IN GENERAL MEETINGS

         18.1.    Quorum

No discussion shall be held in the General Meeting unless a lawful quorum is
present. Subject to the requirements of the applicable Law in force at the time
these Articles of Association come into force, the rules of the Nasdaq National
Market, the London Stock Exchange and any other exchange on which the Company's
securities are or may become quoted or listed, and the provisions of these
Articles, any two Shareholders, present by themselves or by means of a


                                       18
<PAGE>


proxy, or who have delivered to the Company a Deed of Voting indicating their
manner of voting, and who hold or represent at least one-third of the voting
rights in the Company shall constitute a lawful quorum. A Shareholder or his
proxy, who may also serve as a proxy for other Shareholders, shall be regarded
as two Shareholders or more, in accordance with the number of Shareholders he is
representing.

         18.2.    Deferral of the General Meeting in the Absence of Lawful
                  Quorum

In the event that a legal quorum is not present after the lapsing of 30 minutes
from the time specified in the convening notice for the commencement of the
meeting, the meeting may be adjourned to the same day of the following week (or
the first business day thereafter) at the same time and venue, or to another
time and venue, as determined by the Board of Directors in a notice to the
Shareholders, and the adjourned meeting shall discuss the same issues for which
the original meeting was convened. If at the adjourned meeting, a legal quorum
is not present at the time specified for the commencement of the meeting, then
and in such event one or more Shareholders holding or representing in the
aggregate at least 10% of the voting rights in the Company shall be deemed to
form a proper quorum, subject to the provisions of Section 79 of the Companies
Law.

         18.3.    The Chairman of the General Meeting

The chairman of the Board of Directors (if appointed) shall preside at each
General Meeting. In the absence of the chairman, or if he fails to appear at the
meeting within 15 minutes after the time fixed for the meeting, the Shareholders
present at the meeting shall choose any one of the Directors of the Company as
the chairman, and if there is no Director present at the meeting, one of the
Shareholders shall be chosen to preside over the meeting. The chairman shall not
have an additional vote or casting vote.

         18.4.    Adjourned Meeting

Upon adoption of a resolution at a General Meeting at which a lawful quorum is
present, the chairman may and upon demand of the General Meeting shall adjourn
the General Meeting from time to time and from venue to venue, as the meeting
may decide (for the purpose of this Article: an "Adjourned Meeting"). In the
event that a meeting is adjourned for fourteen days or more, a notice of the
Adjourned Meeting shall be given in the same manner as the notice of the
original meeting. With the exception of the aforesaid, a Shareholder shall not
be entitled to receive notice of an Adjourned Meeting or of the issues which are
to be discussed in the Adjourned Meeting. The Adjourned Meeting shall only
discuss issues that could have been discussed at the General Meeting which was
adjourned. The provisions of Articles 17.1, 17.2 and 17.3 of the Articles of
Association shall apply to an Adjourned Meeting.


                                       19
<PAGE>


19.      VOTING OF THE SHAREHOLDERS

         19.1.    Resolutions

In any General Meeting, a proposed resolution shall be adopted if it receives an
Ordinary Majority, or any other majority of votes set by Law or in accordance
with these Articles of Association. For the avoidance of doubt, any proposed
resolution requiring a Special Majority under the Companies Ordinance shall
continue to require the same Special Majority even after the effective date of
the Companies Law.

In the event of a tie vote, the resolution shall be deemed rejected.

         19.2.    Checking Majority

                  19.2.1.  The checking of the majority shall be carried out by
                           means of a count of votes, at which each Shareholder
                           shall be entitled to vote in each case in accordance
                           with rights fixed for such Shares, subject to
                           Articles 10A above and Article 44 below. A
                           Shareholder shall be entitled to a single vote for
                           each share he holds which is fully paid or that Calls
                           of Payment in respect of which was fully paid.

                  19.2.2.  The announcement of the chairman that a resolution in
                           the General Meeting was adopted or rejected, whether
                           unanimously or with a specific majority, shall be
                           regarded as prima facie evidence thereof.

         19.3.    Written Resolutions

Subject to the provisions of applicable Law, a written resolution signed by all
of the Shareholders of the Company holding Shares which entitle their holders to
participate in General Meetings of the Company and vote therein, or of the same
class of Shares to which the resolution refers, as the case may be, shall be
regarded as a valid resolution for all purposes, and as a resolution adopted at
a General Meeting of the Company or at a class meeting of the relevant class of
Shares, as the case may be, which was properly summoned and convened, for the
purpose of adopting such a resolution.

Such a resolution could be stated in several copies of the same document, each
of them signed by one Shareholder or by several Shareholders.

         19.4.    The Determining Date with Respect to Participation and Voting

In the event that a General Meeting was summoned more than twenty-one (21) days
prior to the date fixed for its convening, the Shareholders who are entitled to
participate and vote in same General Meeting shall be those Shareholders who are
registered in the Shareholder Register of the Company on the date twenty-one
(21)


                                       20
<PAGE>


days prior to the date of the meeting. In the event that a General Meeting was
summoned 21 days or less prior to the date fixed for its convening, the
Shareholders who are entitled to participate and vote in the same General
Meeting shall be those shareholders who are registered in the Shareholder
Register of the Company on the date determined by the Board of Directors but in
no event shall the date be less than four days prior to the date of the meeting.

         19.5.    A Right to Participate and Vote

A Shareholder shall not be entitled to participate and vote in any General
Meeting or to be counted among those present, so long as (i) he owes the Company
a payment which was called for the Shares held by him, unless the allotment
conditions of the Shares provide otherwise, and/or (ii) his holdings are
registered in the Shareholder Register together with a notation that such
holdings have been classified as Exceptional Holdings, as defined in Article 10A
or Affected Shares, as defined in Article 44.

         19.6.    Personal Interest in Resolutions

A Shareholder seeking to vote with respect to a resolution which requires that
the majority for its adoption include at least a third of the votes of all those
not having a personal interest (as defined in the Companies Law) in the
resolution shall notify the registered office of the Company at least two
business days prior to the date of the General Meeting, whether he has a
personal interest in the resolution or not, as a condition for his right to vote
and be counted with respect to such resolution.

A Shareholder voting on a resolution, as aforesaid, by means of a Deed of Vote,
may include his notice with regard to his personal interest on the Deed of Vote.

         19.7.    The Disqualification of Deeds of Vote

Subject to the provisions of applicable Law, the corporate secretary of the
Company may, in his discretion, disqualify Deeds of Vote and Deeds of
Authorization and so notify the Shareholder who submitted a Deed of Vote or
Deeds of Authorization in the following cases:

                  19.7.1.  If there is a reasonable suspicion that they are
                           forged;

                  19.7.2.  If there is a reasonable suspicion that they are
                           falsified, or given with respect to Shares for which
                           one or more Deeds of Vote or deeds of authorization
                           have been given and not withdrawn; or

                  19.7.3.  If there is no note on the Deed of Vote or Deed of
                           Authorization as to whether or not his holding in the
                           Company or his vote require the consent of the
                           Minister of Communications pursuant to Sections 21
                           and 23 to the License.


                                       21
<PAGE>


                  19.7.4.  With respect to Deeds of Vote:

                           (One) If more than one choice is marked for the same
                           resolution; or

                           (Two) With respect to resolutions which require that
                           the majority for their adoption includes a third of
                           the votes of those not having a personal interest in
                           the approval of the resolution, where it was not
                           marked whether the relevant Shareholder has a
                           personal interest or not, as aforesaid.

                  Any Shareholder shall be entitled to appeal on any such
                  disqualification to the Board of Directors at least one
                  business day prior to the relevant General Meeting.

         19.8.    The Voting of a Person without Legal Capacity

A person without legal capacity is entitled to vote only by means of a trustee
or a legal custodian. Such trustee or legal custodian may vote in person, by
Deed of Vote or by means of a proxy.

         19.9.    The Voting of Joint Holders of a Share

Where two or more Shareholders are registered joint holders of a Share, only the
first named joint holder shall vote, either in person or by means of a proxy or
by means of a Deed of Vote, without taking into account the other registered
joint holders of the Share. For this purpose, the first named joint holder shall
be the person whose name is registered first in the Shareholder Register.

         19.10.   Minutes of the General Meeting

The chairman of the General Meeting shall cause that the minutes of each General
Meeting shall be properly maintained and shall include the following:

                  19.10.1. The name of each Shareholder present in person, by
                           Deed of Vote or by proxy and the number of Shares
                           held or represented by him;

                  19.10.2. The principal issues of the discussion, all the
                           resolutions which were adopted or rejected at the
                           General Meeting, and if adopted - according to what
                           majority.

20.      THE APPOINTMENT OF A PROXY

         20.1.    Voting by Means of a Proxy

A Shareholder registered in the Shareholder Register is entitled to appoint by
deed of authorization a proxy to participate and vote in his stead, whether at a
certain General Meeting or generally at General Meetings of the Company, whether
personally or by means of a Deed of Vote, so long as the deed of authorization


                                       22
<PAGE>


with respect to the appointment of the proxy was delivered to the Company at
least two Business Days prior to the date of the General Meeting.

In the event that the deed of authorization is not limited to a certain General
Meeting, then the deed of authorization, which was deposited prior to a certain
General Meeting, shall also be good for other General Meetings thereafter. This
Article 20 shall also apply to a Shareholder which is a corporation, appointing
a person to participate and vote in a General Meeting in its stead. A proxy is
not required to be a Shareholder of the Company.

         20.2.    The Draft of the Deed of Authorization

The deed of authorization shall be signed by the Shareholder and shall be in or
substantially in the form specified below or any such other form acceptable to
the Board of Directors of the Company. The corporate secretary, in his
discretion, may accept a deed of authorization differing from that set forth
below provided the changes are immaterial.

The corporate secretary shall only accept either an original deed of
authorization, or a copy of the deed of authorization which is certified by a
lawyer having an Israeli license or a notary.

                              DEED OF AUTHORIZATION
                                                                   Date:
                                                                        --------

To:      Partner Communications Company Ltd.
Attn.:   Corporate Secretary

            Re: [Annual/Extraordinary] General Meeting of the Company
                        to be Held On __________________

         I, the undersigned _________________, Identification No. / Registration
No. _____________, of ________________, being the registered holder of ________
(*) Shares [Ordinary Shares having a par value of NIS 0.01, each], hereby
authorize ___________, Identification No. ___________ (**) and/or ___________,
Identification No. ___________ and/or ___________, Identification No.
___________ to participate and vote in my stead and on my behalf at the
referenced meeting and in any adjournment of the referenced meeting of the
Company / at any General Meeting of the Company, until I shall otherwise notify
you .

                                         -----------------------
                                         Signature

--------------------------------------------------------------------------------
(*)      A Shareholder is entitled to give several deeds of authorization, each
         of which refers to a different quantity of Shares of the Company held
         by him, so long as he shall not give deeds of authorization with
         respect to an aggregate number of Shares exceeding the total number he
         holds.

(**)     In the event that the proxy does not hold an Israeli Identification
         number, indicate a passport number, if any, and the name of the country
         which issued the passport.


                                       23
<PAGE>


         20.3.    A vote in accordance with a deed of authorization shall be
                  lawful even if prior to it, the appointer died or became
                  incapacitated or bankrupt, or if it is a corporation - was
                  liquidated, or if he cancelled the deed of authorization or
                  transferred the Share in respect of which it was given, unless
                  a notice in writing was received at the Office of the Company
                  prior to the meeting with respect to the occurrence of such an
                  event.

21.      DEED OF VOTE

         21.1.    A Shareholder may vote in a General Meeting by means of a Deed
                  of Vote on the issues specified below, unless the Company is
                  entitled by Law to a partial or full exemption from the
                  requirement for the delivery of Deeds of Vote, either
                  generally or specifically:

                  21.1.1.  The appointment and dismissal of Directors.

                  21.1.2.  The approval of actions with interested parties,
                           subject to sections 268-275 of the Companies Law.

                  21.1.3.  The approval of an action by an officer which
                           conflicts with his duty of loyalty toward the
                           Company, subject to Section 255 of the Companies Law.

                  21.1.4.  A merger subject to Section 320 of the Companies Law.

                  21.1.5.  Any issue which the Articles of Association provide
                           can be voted thereon by means of a Deed of Vote.

                  21.1.6.  Other issues prescribed by Law.

         21.2.    The Draft of the Deed of Vote

The Deed of Vote shall be signed by the Shareholder and shall be in or
substantially in the form specified below, or any such other form acceptable to
the Board of Directors of the Company. The corporate secretary or any one
authorized by the Board of Directors to convene the meeting, shall be entitled
to amend the form of the Deed of Vote in accordance with the resolutions on the
agenda.


                                       24
<PAGE>


                                  DEED OF VOTE
                                                                  Date:
                                                                        --------
Partner Communications Company Ltd.
[Address of the Company]

         Re: [Annual/Extraordinary] General Meeting of the Shareholders
                          to be on ___________________

         I, the undersigned _________________, Identification No. / Registration
No. _____________, of ________________, being the registered holder / the holder
an appropriate Deed of Authorization, attached hereto (*) of ________ (**)
Ordinary Shares having a par value of NIS 0.01 each, hereby notify you that my
vote in the General Meeting and in any adjourned meeting of the Company is as
specified below.

<Table>
<Caption>
   Item No. of the                                                                            Personal Interest of the
    Resolution on           Subject of the                                                        Shareholder in the
      the Agenda              Resolution                      Vote (***)                           Resolution (****)
------------------------ --------------------- ------------------------------------------- ---------------------------------
                                                 In Favor      Abstain         Against            Yes               No
------------------------ --------------------- ------------ -------------- --------------- ------------------ --------------
<S>                      <C>                   <C>          <C>            <C>             <C>                <C>
------------------------ --------------------- ------------ -------------- --------------- ------------------ --------------

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

------------------------ --------------------- ------------ -------------- --------------- ------------------ --------------
</Table>


[ ] I, the undersigned, hereby declare that either my holdings or my vote
    require the consent of the Minister of Communications pursuant to Sections
    21 or 23 to the License. (*****)

[ ] I, the undersigned, hereby declare that neither my holdings nor my vote,
    require the consent of the Minister of Communications pursuant to Sections
    21 or 23 to the License. (*****)


------------------------
       Signature

--------------------------------------------------------------------------------
(*)      In the event that the Shares are held by means of a Registration
         Company, a power of attorney on behalf of the Registration Company
         should be enclosed and the Deed of Vote should be signed.

(**)     In the event that a Shareholder wishes to vote in a different manner
         with respect to each part of his Shares, a separate Deed of Vote should
         be filed for each quantity of Shares in respect of which he intends to
         vote differently.


                                       25
<PAGE>


(***)    An "X" should be marked in the appropriate column and with respect to
         each resolution. In the event that more than one choice are marked for
         a certain resolution, the vote in respect of that resolution shall be
         disqualified.

(****)   In resolutions for which a majority which includes a third of the votes
         of those not having a personal interest in the transaction is required
         for adoption, an X should be marked in the appropriate column. If an X
         is not marked in either column, the vote in respect of the same
         resolution shall be disqualified.

(*****)  An"X" should be marked in the appropriate column. If an X is not marked
         in either column, or if an X is marked in both column, the vote shall
         be disqualified.

         21.3.    The Sending of a Deed of Vote

The Deed of Vote shall be sent by the Company to the Shareholders who are
registered in the Shareholder Register of the Company and who are entitled to
vote in the General Meeting, together with the notice with respect to General
Meetings.

The Deed of Vote shall be sent by the Company and at its expense.

         21.4.    Manner of Use of the Deed of Vote

A duly executed Deed of Vote which was received at the Office of the Company at
least two Business Days prior to the date of the General Meeting shall
constitute the participation and voting of the Shareholder who has delivered it,
for each and every purpose, including for the purpose of determining the lawful
quorum at a meeting. A Deed of Vote received by the Company, in accordance with
this Article, with respect to a certain issue, at which voting in the General
Meeting did not take place, shall be viewed as an "abstain" with respect to the
resolution to adjourn the meeting and, at the adjourned meeting, shall be voted
in accordance with the manner set forth therein.

         21.5.    Board Recommendation

The Board of Directors and any other person lawfully demanding the holding of an
extraordinary General Meeting may send to the Shareholders a recommendation in
order to persuade the Shareholders with respect to the items which are on the
agenda of said meeting. The recommendation shall be delivered at the expense of
the Company together with the Deed of Vote. In the event that a General Meeting
is convened with respect to any of the issues specified in Article 21.1 above, a
Shareholder may submit to the Company a request that a recommendation be
delivered on his behalf to the other Shareholders. Unless it is otherwise
prescribed by Law, the said recommendation shall be delivered at the expense of
the Shareholder, and only if it was received at the registered office of the
Company at least 10 days prior to the General Meeting.

The Board of Directors of the Company may send to the Shareholders a
recommendation in response to a recommendation delivered in accordance with the
provisions of this Article, or in response to any other submission to the


                                       26
<PAGE>


Shareholders. Such recommendation shall be delivered at the expense of the
Company.

                      CHAPTER FOUR - THE BOARD OF DIRECTORS

22.      THE AUTHORITY OF THE BOARD OF DIRECTORS

         22.1.    The authority of the Board of Directors is as specified both
                  in the Law and in the provisions of these Articles of
                  Association.

         22.2.    Signature Authority and Powers of Attorney

                  22.2.1.  The Board of Directors shall determine the person(s)
                           with authority to sign for and on behalf of the
                           Company with respect to various issues. The signature
                           of such person(s), appointed from time to time by the
                           Board of Directors, whether generally or for a
                           specific issue, whether alone or together with
                           others, or together with the seal or the stamp of the
                           Company or its printed name, shall bind the Company,
                           subject to the terms and conditions set by the Board
                           of Directors.

                  22.2.2.  The Board of Directors may set separate signature
                           authorities with respect to different issues and
                           different amounts.

                  22.2.3.  The Board of Directors may, from time to time,
                           authorize any person to be the representative of the
                           Company with respect to those objectives and subject
                           to those conditions and for that time period, as the
                           Board of Directors deems fit. The Board of Directors
                           may also grant any representative the authority to
                           delegate any or all of the authorities, powers and
                           discretion given to the Board of Directors.

         22.3.    The Registered Office of the Company

The Board of Directors shall fix the location of the Office of the Company.

23.      THE APPOINTMENT OF DIRECTORS AND THE TERMINATION OF THEIR OFFICE

         23.1.    The Number of Directors

The number of Directors in the Company shall not be less than seven (7) or more
than seventeen (17).

         23.2.    The Identity of a Director

                  23.2.1.  A member of the Board of Directors may hold another
                           position with the Company.


                                       27
<PAGE>


                  23.2.2.  A corporation may serve as a Director in the Company,
                           subject to the provisions of Article 23.6 below.

                  23.2.3.  For as long as any individual or an entity which is
                           an Interested Party in the Company is also an
                           Interested Party in Cellcom (Israel) Ltd.
                           (hereinafter "Cellcom"), such Interested Party or an
                           Office Holder of an Interested Party in Cellcom or an
                           Office Holder of any entity controlled by an
                           Interested Party in Cellcom (other than Elron
                           Electronic Industries Ltd ("Elron") or an entity
                           controlled by Elron) will not serve as an Office
                           Holder of the Company, and no Interested Party in
                           Cellcom or any entity controlled by such Interested
                           Party, may appoint more than two Directors to the
                           Board of Directors of the Company. For the purposes
                           of this Article, the terms "control", "Interested
                           Party" and "Office Holder" shall bear the same
                           meaning as in, and shall be interpreted in accordance
                           with, the License.

                  23.2.4.  The Board of Directors shall include independent
                           and/or external Directors required to comply with the
                           applicable requirements of any Law, the Nasdaq Stock
                           Market, the London Stock Exchange and any other
                           investment exchange on which the securities of the
                           Company are or may become quoted or listed. The
                           requirements of the Companies Law applicable to an
                           external Director (Dahatz) shall prevail over the
                           provisions of these Articles of Association to the
                           extent these Articles of Associations are
                           inconsistent with the Companies Law, and shall apply
                           to the extent these Articles of Associations are
                           silent.

         23.3.    The Election of Directors and their Terms of Office


                  23.3.1.  The Directors shall be elected at each Annual Meeting
                           and shall serve in office until the close of the next
                           Annual Meeting, unless their office becomes vacant
                           earlier in accordance with the provisions of these
                           Articles of Association. Each Director of the Company
                           shall be elected by an Ordinary Majority at the
                           Annual Meeting; provided, however, that external
                           Directors shall be elected in accordance with
                           applicable law and/or any relevant stock exchange
                           rule applicable to the Company. The elected Directors
                           shall commence their terms from the close of the
                           Annual Meeting at which they are elected, unless a
                           later date is stated in the resolution with respect
                           to their appointment.

                  23.3.2.  In each Annual Meeting, the Directors that were
                           elected in the previous Annual Meeting, and
                           thereafter, in any Extraordinary Meeting shall be
                           deemed to have resigned from their office. A
                           resigning Director may be reelected.

                  23.3.3.  Notwithstanding the other provisions of these
                           Articles of Association and without derogating from
                           Article 23.4, an


                                       28
<PAGE>


                           Extraordinary Meeting of the Company may elect any
                           person as a Director, to fill an office which became
                           vacant or to serve as an external Director (Dahatz)
                           or an independent Director and also in any event in
                           which the number of the members of the Board of
                           Directors is less than the minimum set in the
                           Articles of Association. Any Director elected in such
                           manner (excluding an external Director (Dahatz) shall
                           serve in office until the coming Annual Meeting,
                           unless his office becomes vacant earlier in
                           accordance with the provisions of these Articles of
                           Association and may be reelected.

                  23.3.4.  An elected external Director (Dahatz) shall commence
                           his term from the date of, and shall serve for the
                           period stated in, the resolution of the General
                           Meeting at which he was elected, notwithstanding
                           Article 23.3 above, unless his office becomes vacant
                           earlier in accordance with the provisions of the
                           Companies Law. A General Meeting may reelect an
                           external Director (Dahatz) for additional term(s) as
                           permitted by the Companies Law.

         23.4.    The election of Directors by the Board of Directors

                  The Board of Directors shall have the right, at all times,
                  upon approval of at least 75% of the Directors of the Company,
                  to elect any person as a Director, to fill an office which
                  became vacant, and also in any event in which the number of
                  the members of the Board of Directors is less than the minimum
                  set in the Articles of Association. Any Director elected in
                  such manner shall serve in office until the coming Annual
                  Meeting and may be reelected.

         23.5.    Alternate Director

Any Director may, from time to time, appoint for himself an alternate Director
(hereinafter: the "Alternate Director"), dismiss such Alternate Director and
also appoint another Alternate Director instead of any Alternate Director, whose
office becomes vacant, due to whatever cause, whether for a certain meeting or
generally. Anyone who is not qualified to be appointed as a Director and also
anyone serving as a Director or as an existing Alternate Director shall not
serve as an Alternate Director.

         23.6.    Representatives of a Director that is a Corporation

A Director that is a corporation shall appoint an individual, qualified to be
appointed as a Director in the Company, in order to serve on its behalf, either
generally or for a certain meeting, or for a certain period of time and the said
corporation may also dismiss that individual and appoint another in his stead
(hereinafter: "Representatives of a Director").

         23.7.    Manner of Appointment or Dismissal of an Alternate Director or
                  a Representative of a Director that is a Corporation


                                       29
<PAGE>


                  Any appointment or dismissal of Representatives of Directors,
                  when such Directors are corporations, or of Alternate
                  Directors, shall be made by means of a notice in writing to
                  the corporate secretary, signed by the appointing or
                  dismissing body and shall become valid upon the date indicated
                  in the appointment or dismissal notice or upon the date of its
                  delivery to the corporate secretary, whichever is the later.

         23.8.    Miscellaneous Provisions with Respect to Alternate Directors
                  and Representatives of Directors that are Corporations.

                  23.8.1.  Any person, whether he is a Director or not, may
                           serve as the representative of a Director, and any
                           one person may serve as the representative of several
                           Directors.

                  23.8.2.  The Representative of a Director - in addition to his
                           own vote, if he is serving as a Director - shall have
                           a number of votes corresponding to the number of
                           Directors represented by him.

                  23.8.3.  An Alternate Director and the Representative of a
                           Director shall have all the authority of the Director
                           for whom he is serving as an Alternate Director or as
                           a representative, with the exception of the authority
                           to vote in meetings at which the Director is present
                           in person.

                  23.8.4.  The office of an Alternate Director or a
                           representative of a Director shall automatically
                           become vacant, if the office of the Director for whom
                           he is serving as an Alternate Director or as a
                           representative becomes vacant.

         23.9.    Termination of the Term of a Director

         The term of a Director shall be terminated in any of the following
         cases:

                  23.9.1.  If he resigns from his office by way of a signed
                           letter, filed with the corporate secretary at the
                           Company's Office;

                  23.9.2.  If he is declared bankrupt or if he reaches a
                           settlement with his creditors within the framework of
                           bankruptcy procedures;

                  23.9.3.  If he is declared by an appropriate court to be
                           incapacitated;

                  23.9.4.  Upon his death and, in the event of a corporation, if
                           a resolution has been adopted for its voluntary
                           liquidation or a liquidation order has been issued to
                           it;

                  23.9.5.  If he is removed from his office by way of a
                           resolution, adopted by the General Meeting of the
                           Company, even prior to the completion of his term of
                           office;


                                       30
<PAGE>


                  23.9.6.  If he is convicted of a crime, as stated in Section
                           232 of the Companies Law; or

                  23.9.7.  If his term is terminated by the Board of Directors
                           in accordance with the provisions of Section 231 of
                           the Companies Law.

         23.10.   The Implications on the Board of Directors of the Termination
                  of the Term of a Director.

In the event that an office of a Director becomes vacant, the remaining
Directors are entitled to continue operating, so long as their number has not
decreased below the minimum number of Directors set forth in Article 23.1.

In the event that the number of Directors decreased below that minimum number,
the remaining Directors shall be entitled to act solely for the convening of a
General Meeting of the Company for the purpose of electing additional Directors
to the Board of Directors.

         23.11.   Compensation of Members of the Board of Directors

Members of the Board of Directors who do not hold other positions in the Company
and who are not external Directors shall not receive any compensation from the
Company, unless such compensation is approved by the General Meeting and
according to the amount determined by the General Meeting, subject to the
provisions of the Law.

                 The compensation of the Directors may be fixed, as an
                 all-inclusive payment or as payment for participation in
                 meetings or in any combination thereof.

The Company may reimburse expenses incurred by a Director in connection with the
performance of his office, to the extent provided in a resolution of the Board
of Directors.

24.      ACTIONS OF DIRECTORS

         24.1.    Convening Meetings of the Board of Directors

                  24.1.1.  The chairman of the Board of Directors may convene a
                           meeting of the Board of Directors at any time.

                  24.1.2.  The chairman of the Board of Directors shall convene
                           a meeting of the Board of Directors at least four
                           times a year, in a manner allowing the Company to
                           fulfil the provisions of the Law with respect to the
                           publication of Financial Statements and reporting to
                           the public.

                  24.1.3.  The chairman of the Board of Directors shall convene
                           a meeting of the Board of Directors on a specific
                           issue if requested by at least two


                                       31
<PAGE>


                           Directors or one Director, if he is an external
                           Director, within no more than 14 days from the date
                           of the request.

                  24.1.4.  The chairman of the Board of Directors shall act
                           forthwith for the convening of a meeting of the Board
                           of Directors, within 14 days from the time that a
                           Director in the Company has informed him of a matter
                           related to the Company in which there is an apparent
                           violation of the Law or a breach of proper management
                           of the business, or from the time that the auditor of
                           the Company has reported to him that he had become
                           aware of material flaws in the accounting oversight
                           of the Company.

                  24.1.5.  In the event that a notice or a report of the General
                           Manager requires an action of the Board of Directors,
                           the chairman of the Board of Directors shall
                           forthwith convene a meeting of the Board of
                           Directors, which should be held within 14 days from
                           the date of the notice or the report.

         24.2.    Convening of a Meeting of the Board of Directors

                  24.2.1.  Any notice with respect to a meeting of the Board of
                           Directors may be given in writing, so long as the
                           notice is given at least 14 days prior to the date
                           fixed for the meeting, unless all the members of the
                           Board of Directors or their Alternate Directors or
                           their representatives agree on a shorter time period.
                           A notice, as stated, shall be delivered in writing or
                           transmitted via facsimile or E-mail or through
                           another means of communication, to the address or
                           facsimile number or to the E-mail address or to an
                           address where messages can be delivered through other
                           means of communication, as the case may be, as the
                           Director informed the corporate secretary, upon his
                           appointment, or by means of a written notice to the
                           corporate secretary thereafter.

                           A notice, which was delivered or transmitted, as
                           provided in this Article, shall be deemed to be
                           personally delivered to the Director on its delivery
                           date.

                  24.2.2.  In the event that a Director appointed an Alternate
                           Director or a representative, the notice shall be
                           delivered to the Alternate Director or the
                           representative, unless the Director instructed that
                           the notice should be delivered to him as well.

                  24.2.3.  The notice shall include the venue, date and time of
                           the meeting of the Board of Directors, arrangements
                           with respect to the manner of management of the
                           meeting (in cases where telecommunications are used),
                           the details of the issues on its agenda and any other
                           material that the chairman of the Board of Directors
                           requests be attached to the summoning notice with
                           respect to the meeting.


                                       32
<PAGE>


         24.3.    The Agenda of Meetings of Board of Directors

                  The agenda of meetings of the Board of Directors shall be
                  determined by the chairman of the Board of Directors and shall
                  include the following issues:

                  24.3.1.  Issues determined by the chairman of the Board of
                           Directors.

                  24.3.2.  Issues for which the meeting is convened in
                           accordance with Article 24.1 above.

                  24.3.3.  Any issue requested by a Director or by the General
                           Manager within a reasonable time prior to the date of
                           the meeting of the Board of Directors (taking into
                           account the nature of the issue).

         24.4.    Quorum

The quorum for meetings of the Board of Directors shall be a majority of the
Directors, which must include one external Director.

         24.5.    Conducting a Meeting Through Means of Communication

                  The Board of Directors may conduct a meeting of the Board of
                  Directors through the use of any means of communications,
                  provided all of the participating Directors can hear each
                  other simultaneously.

         24.6.    Voting in the Board of Directors

Subject to Article 23.4 and Article 44, Issues presented at meetings of the
Board of Directors shall be decided upon by a majority of the votes of the
Directors present (or participating, in the case of a vote through a permitted
means of communications) and voting, subject to the provisions of Article 23.8
above, with respect to Alternate Directors and representatives of Directors that
are corporations.

Each Director shall have a single vote.

         24.7.    Written Resolutions

A written resolution signed by all the Directors shall be deemed as a resolution
lawfully adopted at a meeting of the Board of Directors. Such a resolution may
be made in several copies of the same Document, each of them signed by one
Director or by several Directors. Such a resolution may be adopted by signature
of only a portion of the Directors, if all of the Directors who have not signed
the resolution were not entitled to participate in the discussion and to vote on
such resolution in accordance with any Law whatsoever, so long as they confirm
in writing that they are aware of the intention to adopt such a resolution.

         24.8.    Resolutions Approved by Means of Communications


                                       33
<PAGE>


A resolution approved by use of a means of communications by the Directors shall
be deemed to be a resolution lawfully adopted at a meeting of the Board of
Directors, and the provisions of Article 24.6 above shall apply to the said
resolution.

         24.9.    The Validity of Actions of the Directors

All actions taken in good faith in a meeting of the Board of Directors or by a
committee of the Board of Directors or by any person acting as a Director shall
be valid, even if it subsequently transpires that there was a flaw in the
appointment of such a Director or person acting as such, or if any of them were
disqualified, as if any such person was lawfully appointed and was qualified to
serve as a Director.

         24.10.   Minutes of Meetings of the Board of Directors

The chairman of the Board of Directors shall cause that the minutes of meetings
of the Board of Directors shall be properly maintained and shall include the
following:

                  24.10.1. Names of those present and participating at each
                           meeting.

                  24.10.2. All the resolutions and particulars of the discussion
                           of said meetings.

Any such minutes signed by the chairman of the Board of Directors presiding over
that meeting or by the chairman of the Board of Directors at the following
meeting, shall be viewed as prima facie evidence of the issues recorded in the
minutes.

25.      COMMITTEES OF THE BOARD OF DIRECTORS

         25.1.    Subject to the provisions of the Companies Law, the Board of
                  Directors may delegate its authorities or any part of them to
                  committees, as they deem fit, and they may from time to time
                  cancel the delegation of such an authority. Any such
                  committee, while utilizing an authority as stated, is
                  obligated to fulfil all of the instructions given to it from
                  time to time by the Board of Directors.

         25.2.    Subject to the provisions of the Companies Law, each committee
                  of the Board of Directors shall consist of at least two
                  Directors, and it may include members who are not Directors,
                  with the exception of the audit committee which shall consist
                  of at least three (3) Directors, and all of the external
                  Directors of the Company shall be members of it.

         25.3.    The provisions with respect to meetings of the Board of
                  Directors shall apply to the meetings and discussions of each
                  committee of the Board of Directors, with the appropriate
                  changes, provided that no other terms are set by the Board of
                  Directors in this matter, and provided that the lawful quorum
                  for the meetings of the committee, as stated, shall be at
                  least a majority of the members of the committee, unless
                  otherwise required by Law.


                                       34
<PAGE>


26.      CHAIRMAN OF THE BOARD OF DIRECTORS

         26.1.    Appointment

                  26.1.1.  The Board of Directors shall choose one of its
                           members to serve as the chairman of the Board of
                           Directors, and shall set in the appointing resolution
                           the term for his service.

                  26.1.2.  Unless otherwise provided in the appointing
                           resolution, the chairman of the Board of Directors
                           shall be chosen each and every calendar year at the
                           first meeting of the Board of Directors held after
                           the General Meeting in which Directors were appointed
                           to the Company.

                  26.1.3.  In the event that the chairman of the Board of
                           Directors ceases to serve as a Director in the
                           Company, the Board of Directors in its first meeting
                           held thereafter shall choose one of its members to
                           serve as a new chairman who will serve in his
                           position for the term set in the appointing
                           resolution, and if no period is set, until the
                           appointment of a chairman, as provided in this
                           Article.

                  26.1.4.  In the event that the chairman of the Board of
                           Directors is absent from a meeting, the Board of
                           Directors shall choose one of the Directors present
                           to preside at the meeting.

         26.2.    Authority

                  26.2.1.  The chairman of the Board of Directors shall preside
                           over meetings of the Board of Directors.

                  26.2.2.  In the event of a deadlock vote, the chairman of the
                           Board of Directors shall not have an additional or
                           casting vote.

                  26.2.3.  The chairman of the Board of Directors is entitled,
                           at all times, at his initiative or pursuant to a
                           resolution of the Board of Directors, to require
                           reports from the General Manager in matters
                           pertaining to the business affairs of the Company.

         26.3.    Reservations with Regard to Actions of the Chairman of the
                  Board of Directors

                  26.3.1.  The chairman of the Board of Directors shall not
                           serve as the General Manager of the Company, unless
                           he is appointed in accordance with the provisions of
                           Article 27.2 below.

                  26.3.2.  The chairman of the Board of Directors shall not
                           serve as a member of the Audit Committee.


                                       35
<PAGE>


         CHAPTER FIVE - OFFICERS WHO ARE NOT DIRECTORS, AND THE AUDITOR

27.      THE GENERAL MANAGER

         27.1.    The Appointment and Dismissal of the General Manager

                  27.1.1.  The Board of Directors shall appoint a General
                           Manager for a fixed period of time or for an
                           indefinite period of time. The Board of Directors may
                           appoint more than one General Manager.

                  27.1.2.  The compensation and employment conditions of the
                           General Manager shall be determined by the Board of
                           Directors in any manner it deems fit. Where the
                           compensation of the General Manager is regarded by
                           the Board of Directors in accordance with the Company
                           Law as an "exceptional transaction" and also in cases
                           of the granting of a release, insurance, liability
                           for indemnification or indemnification given by a
                           permit, said compensation requires the prior approval
                           of the audit committee.

                  27.1.3.  The Board of Directors may from time to time remove
                           the General Manager from his office or dismiss the
                           General Manager and appoint another or others in his
                           stead.

         27.2.    The Chairman of the Board of Directors as the General Manager

                  27.2.1.  The General Meeting of the Company is entitled to
                           authorize the chairman of the Board of Directors to
                           fulfil the position of the General Manager and to
                           exercise his authority, so long as the majority of
                           the votes in the General Meeting adopting such a
                           resolution include at least two thirds of the votes
                           of Shareholders present and entitled to vote at the
                           meeting who are not controlling Shareholders of the
                           Company as defined in the Companies Law or
                           representatives of any of them. "Abstain" votes shall
                           not be taken into account in the counting of the
                           votes of the Shareholders.

                  27.2.2.  The validity of a resolution provided in Article
                           27.2.1 above is restricted to a maximum period of
                           three years from the date of the adoption of the
                           resolution by the General Meeting. In the event that
                           no period was set in the resolution, the period shall
                           be deemed to be for three years. Prior to the
                           completion of the three year period, as aforesaid,
                           and even after the end of this period, the General
                           Meeting is entitled to extend the validity of such
                           resolution.

                  27.2.3.  A resolution, as stated, may relate to the authority
                           of the chairman of the Board of Directors, generally,
                           or to a specific person who is serving as the
                           chairman of the Board of Directors.

         27.3.    The Authority of the General Manager and Subordination to the
                  Board of Directors


                                       36
<PAGE>


                  27.3.1.  The General Manager is responsible for the day-to-day
                           management of the affairs of the Company within the
                           framework of the policy set by the Board of Directors
                           and subject to its instructions.

The General Manager shall have all administrative and operational authority
which were not conferred by Law or pursuant to these Articles of Association to
any other corporate organ of the Company, and he shall be under the supervision
of the Board of Directors and subject to its instructions.

The General Manager shall appoint and dismiss officers of the Company, with the
exception of Directors, and he shall also determine the terms of their
employment, unless otherwise resolved by the Board of Directors and provided,
however, that the appointment and dismissal of senior managers of the Company
shall require consultation with and approval by the Board of Directors.

                  27.3.2.  The Board of Directors may instruct the General
                           Manager on how to act with respect to a certain
                           issue. If the General Manager fails to fulfil the
                           instruction, the Board of Directors may exercise the
                           required authority in order to act in the place of
                           the General Manager.

The Board of Directors may assume the authority granted to the General Manager,
either with respect to a certain issue or for a certain period of time.

                  27.3.3.  In the event that the General Manager is unable to
                           exercise his authority, the Board of Directors may
                           exercise such authority in his stead, or authorize
                           another to exercise such authority.

         27.4.    Reporting Duties of the General Manager

The General Manager is obligated to notify the chairman of the Board of
Directors of any exceptional matter which is material to the Company, or of any
material deviation by the Company from the policy set by the Board of Directors.
In the event that the Company shall be without a chairman of the Board of
Directors for whatever reason the General Manager shall notify all the members
of the Board of Directors, as aforesaid. The General Manager shall deliver to
the Board of Directors reports on issues, at such time and in such scope, as is
determined by the Board of Directors.

         27.5.    Delegating Authority of the General Manager

The General Manager, upon approval of the Board of Directors, may delegate to
his subordinates any of his authority. However, such delegation of authority
shall not release the General Manager from his liability.


                                       37
<PAGE>


28.      THE CORPORATE SECRETARY, INTERNAL CONTROLLER AND OTHER OFFICERS OF THE
         COMPANY

         28.1.    The corporate secretary

                  28.1.1.  The Board of Directors is entitled to appoint a
                           corporate secretary on terms it deems fit, joint
                           secretaries, sub-secretaries and to determine the
                           areas of their functions and authorities.

                  28.1.2.  In the event that no corporate secretary has been
                           appointed, the General Manager or anyone authorized
                           by him shall fulfil the functions assigned to the
                           corporate secretary, in accordance with any Law, to
                           these Articles of Association and the resolutions of
                           the Board of Directors.

                  28.1.3.  The corporate secretary shall be responsible for all
                           documents which are kept at the Office, as stated in
                           Section 124 of the Companies Law, and he shall manage
                           all the registries maintained by the Company in
                           accordance with the Law or Companies Law.

         28.2.    Internal Controller

                  28.2.1.  The internal controller of the Company shall report
                           to the chairman of the Board of Directors.

                  28.2.2.  The internal controller shall file with the Board of
                           Directors a proposal for an annual or other periodic
                           work plan, which shall be approved by the Board of
                           Directors, subject to any changes it deems fit.

         28.3.    Other Officers of the Company

The Board of Directors may decide that in addition to the General Manager and
the corporate secretary, other officers may be appointed, whether generally or
for a specific issue. In such event, the Board of Directors shall appoint the
officer, define his position and authority, and set his compensation and terms
of employment.

The Board of Directors is entitled to authorize the General Manager to fulfil
any or all of its authorities, as stated.

29.      THE AUDITOR

         29.1.    The Shareholders at the Annual Meeting shall appoint an
                  auditor for a period until the close of the following Annual
                  Meeting. The Annual Meeting may appoint an auditor for a
                  period not to extend beyond the close of the third Annual
                  Meeting following the Annual Meeting in which he was
                  appointed. In the event that the auditor was appointed for
                  said period, the Annual Meeting shall not address the


                                       38
<PAGE>


                  appointment of the auditor during said period, unless a
                  resolution is adopted with respect to the termination of his
                  service.

         29.2.    The General Meeting is entitled at all times to terminate the
                  service of the auditor or to decide not to renew it.

         29.3.    The Board of Directors shall determine the compensation of the
                  auditor of the Company and it shall report in that respect to
                  the Annual Meeting of the Company.

         29.4.    The Board of Directors shall set the compensation of the
                  auditor for additional services which are not regarded as
                  oversight activities, and it shall report in this respect at
                  the Annual Meeting of the Company.


                                       39
<PAGE>


       CHAPTER SIX - THE SHARE CAPITAL OF THE COMPANY AND ITS DISTRIBUTION

30.      PERMITTED DISTRIBUTIONS

         30.1.    Definitions

In this Chapter, the following terms shall be construed, in accordance with
their definition in Sections 301 and 302 of the Companies Law: "distribution",
"acquisition", "profits", "profit test", "adjusted financial statements" and
"balances".

         30.2.    Distribution of Profits

The Company shall not make any distribution except from its profits, provided
that the Company shall not make any distribution if there is a reasonable fear
that such distribution shall preclude the Company from having the ability to
meet its present and anticipated liabilities, as they become due.
Notwithstanding the aforesaid, the Company, with the approval of the Court, is
entitled to make a distribution which fails to meet the profit test.

         30.3.    Allotment for a Consideration Below the Par Value

In the event the Board of Directors decides to allot Shares having a par value,
for consideration which is less than their par value, including Bonus Shares,
the Company shall convert into share capital from its profits, premium on its
Shares, or any other source, included in its shareholders equity, as stated in
its most recent Financial Statements, an amount equal to the difference between
the par value and the consideration.

Even if the aforesaid is not done, with the approval of the Court, the Company
shall be entitled to make an allotment of Shares, for consideration which is
less than their par value.

31.      DIVIDENDS AND BONUS SHARES

         31.1.    Right to Dividends or Bonus Shares

                  31.1.1.  A Shareholder of the Company shall have the right to
                           receive dividends or Bonus Shares, if the Company so
                           decides in accordance with Article 31.2 below,
                           consistent with the rights attaching to such Shares.

                  31.1.2.  Dividends or Bonus Shares shall be distributed or
                           allotted to those who are registered in the
                           Shareholder Register on the date of the resolution
                           approving the distribution or allotment or upon a
                           latter date, if another date is determined for this
                           purpose in same resolution (hereinafter: the
                           "Determining Date").


                                       40
<PAGE>


                  31.1.3.  In the event that the share capital of the Company
                           consists of Shares having various par values,
                           dividends or Bonus Shares shall be distributed in
                           proportion to the par value of each Share.

                  31.1.4.  Subject to special rights conferred upon Shares in
                           accordance with the conditions of their allotment,
                           profits of the Company which the Company decides to
                           distribute as a dividend or as Bonus Shares shall be
                           paid in proportion to the amount which was paid or
                           credited on the account of the par value of the
                           Shares, held by the Shareholder.

                  31.1.5.  In the event that it was not otherwise determined in
                           the conditions applicable to the allotment of the
                           Shares or in a resolution of the General Meeting, all
                           the dividends or Bonus Shares with respect to Shares,
                           which were not fully paid within the period in which
                           the dividends or Bonus Shares are paid, shall be paid
                           in proportion to the amounts which were actually paid
                           or credited as paid on the par value of the Shares
                           during any part of said period (pro rata temporis).

         31.2.    Resolution of the Company with Respect to a Dividend or Bonus
                  Shares

                  31.2.1.  The Authority to Distribute Dividends or Bonus Shares

The resolution of the Company on the distribution of a dividend or Bonus Shares
to be distributed to the Shareholders according to their respective rights and
benefits, and on their time of payment, shall be made by the General Meeting,
after the recommendation of the Board of Directors is presented. The General
Meeting may accept the recommendation or diminish the amount, but it is not
entitled to increase it, provided in each case the distribution is a permitted
distribution, as specified in Article 30.

                  31.2.2.  Funds

The Board of Directors may, in its discretion, allocate to special funds any
amount whatsoever from the profits of the Company or from the revaluation of its
assets or its relative share in the revaluation of assets of "branch companies,"
and also to determine the designation of these funds.

         31.3.    The Payment of Dividends

                  31.3.1.  Manner of Payment

Unless otherwise provided in the resolution with respect to the distribution of
the dividend, the Company may pay any dividend with the withholding of any tax
required by Law, by way of a


                                       41
<PAGE>


cheque to the order of the beneficiary alone, which should be sent by means of
registered mail to the registered address of the Shareholder entitled thereto,
or by way of a bank transfer. Any cheque, as stated, shall be drawn up to the
order of the person to whom it is intended.

In the event of registered joint holders, the cheque shall be passed to the same
Shareholder whose name is registered first in the Shareholder Register with
respect to the joint holding.

The sending of a cheque to a person whose name is registered in the Shareholder
Register as the holder of the Share upon the Determining Date or, in the case of
joint holders, to any of the joint holders, shall serve as evidence with respect
to all the payments made in connection with same Shares.

                           The Company may decide that a cheque under a certain
                           amount shall not be sent and the amount of the
                           dividend which was supposed to be paid shall be
                           deemed to be an unclaimed dividend.

                  31.3.2.  An Unclaimed Dividend

The Board of Directors is entitled to invest the amount of any unclaimed
dividend for one year after it was declared or to utilize it in any other manner
to the benefit of the Company until it is claimed. The Company shall not be
obligated to pay interest or Linkage on an unclaimed dividend.

                  31.3.3.  Specific Dividend

In the event the Company declares a dividend, as provided in Article 31.2.1
above, it may decide that same dividend shall be paid, entirely or partially, by
way of the distribution of certain assets, including fully paid Shares or bonds
of any other company or in any combination of these assets.

         31.4.    Manner of Capitalization of Profits and the Distribution of
                  Bonus Shares

                  31.4.1.  Subject to the provisions of Article 30 above in the
                           event of a capitalization of profits and distribution
                           of Bonus Shares, the undistributed profits of the
                           Company, or premium on Shares, or funds derived from
                           the revaluation of the assets of the Company, or
                           funds derived on the basis of equity from the profits
                           of "branch companies," or from the revaluation of
                           assets of "branch companies" and capital redemption
                           funds shall be capitalized and distributed among the
                           Shareholders entitled thereto, as per the provisions
                           of Article 31.1 above, to be held by the shareholders
                           as capital, and that


                                       42
<PAGE>


                           this capital, entirely or partially, shall be used on
                           behalf of same Shareholders as full payment, whether
                           according to the par value of the Shares or together
                           with premium decided upon, for Shares to be
                           distributed accordingly, and that this distribution
                           or payment shall be received by same Shareholders as
                           full consideration for their portion of the benefit
                           in the capitalized amount, as determined by the Board
                           of Directors.

                           The provisions of this chapter six shall also apply
                           to the distribution of bonds.

                  31.4.2.  The Company, in the resolution with respect to the
                           distribution of Bonus Shares, is entitled in
                           accordance with the recommendation of the Board of
                           Directors, to decide that the Company shall transfer
                           to a special fund, designated for the future
                           distribution of Bonus Shares, an amount the
                           capitalization of which shall be sufficient in order
                           to allot to anyone having at such time a right to
                           acquire Shares of the Company (including a right
                           which can be exercised only upon a later date), Bonus
                           Shares at the par value which would have been due to
                           him had he exercised the right to acquire the Shares
                           shortly before the Determining Date, at the price of
                           the right in effect at such time. In the event that
                           after the Determining Date, the holder of said right
                           shall exercise his right to acquire the Shares or any
                           part of them, the Board of Directors shall allot to
                           him fully paid Bonus Shares at such par value and of
                           such class, which would have been due to him had he
                           exercised shortly before the Determining Date the
                           right to acquire those Shares he actually acquired,
                           by way of an appropriate capitalization made by the
                           Board of Directors out of the special fund, as
                           aforesaid. For the purpose of the determination of
                           the par value of the Bonus Shares which are to be
                           distributed, any amount transferred to the special
                           fund, with respect to a previous distribution of
                           previous Bonus Shares shall be viewed as if it had
                           already been capitalized and that Shares entitling
                           the holders to the right to acquire Shares of the
                           Company were already allotted as Bonus Shares.

                  31.4.3.  Upon the distribution of Bonus Shares, each
                           Shareholder of the Company shall receive Shares of a
                           uniform class or of the class which confers on its
                           holder the right to receive the Bonus Shares, as
                           determined by the Board of Directors.

                  31.4.4.  For purposes of carrying out any resolution pursuant
                           to the provisions of Article 30, the Board of
                           Directors may settle, as it deems fit, any difficulty
                           arising with regard to the distribution of Bonus
                           Shares, and, in particular, to issue certificates for
                           fractions of Shares and sell such fractions of
                           Shares, in order to pay their consideration to those
                           entitled thereto, and also to set the value for the
                           distribution of certain assets and to decide that
                           cash payments


                                       43
<PAGE>


                           shall be paid to the Shareholders on the basis of the
                           value determined in such a way, or that fractions
                           whose value is less than NIS 0.01 shall not be taken
                           into account, pursuant to the adjustment of the
                           rights of all parties. The Board of Directors may pay
                           cash or convey these certain assets to trustees in
                           trust in favor of those people who are entitled to a
                           dividend or to a capitalized fund, as the Board of
                           Directors shall deem beneficial.

32.      ACQUISITION OF SHARES

         32.1.    The Company is entitled to acquire or to finance an
                  acquisition, directly or indirectly, of Shares of the Company
                  or securities convertible into Shares of the Company or which
                  could be exercised into Shares of the Company, including
                  incurring an obligation to take any of these actions, subject
                  to the fulfillment of the conditions of a permissible
                  distribution, as stated in Article 30 above.

         32.2.    In the event that the Company acquired any of its Shares, such
                  a Share shall become a dormant Share, and shall not confer any
                  rights, so long as it is in the holding of the Company.

         32.3.    A subsidiary or another corporation in the control of the
                  Company is entitled to acquire Shares of the Company or
                  securities convertible into Shares of the Company or which can
                  be exercised into Shares of the Company, including an
                  obligation to take any of these actions, to the same extent
                  the Company may make a distribution, so long as the board of
                  directors of the subsidiary or the managers of the acquiring
                  corporation have determined that had the acquisition of the
                  Shares been carried out by the Company it would have been
                  regarded as a permissible distribution, as specified in
                  Article 30 above. Notwithstanding the foregoing, an
                  acquisition by a subsidiary or by another corporation in the
                  control of the Company, which is not fully-owned by the
                  Company, will be considered a distribution of an amount equal
                  to the product of the amount acquired multiplied by the
                  percentage of the rights in the capital of the subsidiary or
                  in the capital of said corporation which is held by the
                  Company.

         32.4.    In the event that a Share of the Company is acquired by a
                  subsidiary or by a corporation in the control of the Company,
                  the Share shall not confer any voting rights, for so long as
                  said Share is held by the subsidiary or by said controlled
                  corporation.

       CHAPTER SEVEN - INSURANCE, INDEMNIFICATION AND RELEASE OF OFFICERS

33.      INSURANCE OF OFFICERS

         33.1.    The Company shall not insure the liability of an officer in
                  the Company, other than pursuant to the provisions of this
                  Article.

         33.2.    The Company may enter into an insurance contract or arrange
                  and pay all premiums in respect of an insurance contract, for
                  the insurance of the liability of


                                       44
<PAGE>


                  an officer in the Company, resulting from the consequence of
                  an action by him in his capacity as an officer in the Company,
                  for any of the following:

                  33.2.1.  The breach of the duty of care toward the Company or
                           toward any other person;

                  33.2.2.  The breach of the duty of loyalty toward the Company
                           provided the officer has acted in good faith and had
                           reasonable grounds to assume that the action would
                           not harm the Company; and

                  33.2.3.  A financial liability imposed on him in favor of
                           another person.

         33.3.    The Company shall not enter into a contract for the insurance
                  of the liability of an officer in the Company for any of the
                  following:

                  33.3.1.  The breach of the duty of loyalty toward the Company,
                           unless the officer acted in good faith and had
                           reasonable grounds to assume that the action would
                           not harm the Company;

                  33.3.2.  The breach of the duty of care made intentionally or
                           recklessly ("pezizut"), unless otherwise permitted by
                           law;

                  33.3.3.  An intentional act intended to unlawfully yield a
                           personal profit;

                  33.3.4.  A criminal fine or a penalty imposed on him.

34.      INDEMNIFICATION OF OFFICERS

         34.1.    The Company shall not indemnify an officer in the Company,
                  other than pursuant to the provisions of this Article.

         34.2.    Indemnification in Advance

The Company may undertake in advance to indemnify an officer of the Company,
provided the undertaking is restricted to events of a kind which the Board of
Directors believes can be anticipated at the time of the making of the
indemnification undertaking, with the exception of the events stated in Article
33.3 above, and at an amount that the Board of Directors determines is
reasonable in the circumstances.

         34.3.    Indemnification after the Fact

The Company may indemnify an officer in the Company for all kinds of events,
retrospectively, with the exception of the events specified in Article 33.3
above.

         34.4.    The Company may indemnify an officer in the Company for
                  liability or expense he incurs in consequence of an action
                  made by him in the capacity of his position as an officer in
                  the Company, as follows:


                                       45
<PAGE>


                  34.4.1.  Any financial liability imposed on him in favor of
                           another person in accordance with a judgment,
                           including a judgment given in a settlement or a
                           judgment of an arbitrator, approved by the Court.

                  34.4.2.  Reasonable litigation expenses, including legal fees,
                           incurred by the officer or which he was ordered to
                           pay by the Court, within the framework of proceedings
                           filed against him by the Company or on its behalf or
                           by another person, or in a criminal proceeding in
                           which he was acquitted, or in a criminal proceeding
                           in which he was convicted of a felony which does not
                           require a finding of criminal intent.

35.      RELEASE OF OFFICERS

         35.1.    The Company shall not release an officer from his liability
                  for a breach of the duty of care toward the Company, other
                  than in accordance with the provisions of this Article.

         35.2.    The Company may release an officer in the Company, in advance,
                  from his liability, entirely or partially, for damage in
                  consequence of the breach of the duty of care toward the
                  Company.

         35.3.    Notwithstanding the foregoing, the Company may not release an
                  officer from his liability, resulting from any of the
                  following events:

                  35.3.1.  The breach of the duty of loyalty toward the Company.

                  35.3.2.  The breach of the duty of care made intentionally or
                           recklessly ("pezizut");

                  35.3.3.  An intentional act intended to unlawfully yield a
                           personal profit;

                  35.3.4.  A criminal fine or a penalty imposed on him.

          CHAPTER EIGHT - LIQUIDATION AND REORGANIZATION OF THE COMPANY

36.      LIQUIDATION

         36.1.    In the event that the Company is liquidated, whether
                  voluntarily or otherwise, the liquidator, upon the approval of
                  an Extraordinary Meeting, may make a distribution in kind to
                  the Shareholders of all or part of the property of the
                  Company, and he may with a similar approval of the General
                  Meeting, deposit any part of the property of the Company with
                  trustees in favor of the Shareholders, as the liquidator with
                  the aforementioned approval, deems fit.

         36.2.    The Shares of the Company shall confer equal rights among them
                  with respect to capital amounts which were paid or which were
                  credited as paid on the par value of the Shares, in all
                  matters pertaining to the refund of the capital and to the


                                       46
<PAGE>


                  participation in the distribution of the balance of the assets
                  of the Company in liquidation.

37.      REORGANIZATION

         37.1.    Upon the sale of the property of the Company, the Board of
                  Directors or the liquidators (in case of a liquidation), if
                  they are so authorized by a resolution of the General Meeting
                  of the Company adopted with a Special Majority, may receive
                  fully or partially paid up Shares, bonds or securities of
                  another company, either Israeli or foreign, whether
                  incorporated or which is about to incorporated for the purpose
                  of acquiring property of the Company, or any part thereof, and
                  the Directors (if the profits of the Company allow for it) or
                  the liquidators (in case of a liquidation) may distribute
                  among the Shareholders the Shares or the securities mentioned
                  above or any other property of the Company without selling
                  them or depositing them with trustees on behalf of the
                  Shareholders.

         37.2.    The General Meeting may, pursuant to a resolution adopted by a
                  Special Majority, decide on the valuation of the securities or
                  of the aforementioned property at a price and in the same
                  manner as it deems appropriate and all the Shareholders shall
                  be obligated to accept any valuation or distribution,
                  authorized in accordance with the foregoing and to waive their
                  rights in this matter, unless the Company is about to
                  liquidate or is in a liquidation process, of same lawful
                  rights (if any) which according to the provisions of the Law
                  should not be altered or denied.

                          CHAPTER NINE - MISCELLANEOUS

38.      NOTICES

         38.1.    A notice or other document may be sent by the Company to any
                  Shareholder appearing in the Shareholder Register of the
                  Company either personally or by way of sending by registered
                  mail, at the registered address of the Shareholder in the
                  Shareholder Register, or at such address as the Shareholder
                  shall have provided in writing to the Company as the address
                  for the delivery of notices.

         38.2.    All the notices to be given to Shareholders, shall, in respect
                  of Shares held jointly, be given to the person whose name is
                  mentioned first in the Shareholder Register, and any notice
                  given in such a manner shall be viewed as a sufficient notice
                  to all the joint Shareholders.

         38.3.    Any Shareholder registered in the Shareholder Register, with
                  an address, whether in Israel or overseas, is entitled to
                  receive, at such address, any notice he is entitled to receive
                  in accordance with the Articles of Association or according to
                  the provisions of the Law. Unless otherwise stated above, no
                  person who is not registered in the Shareholder Register shall
                  be entitled to receive any notices from the Company.

         38.4.    Any notice or other document which is sent to a Shareholder in
                  accordance with these Articles of Association shall be
                  considered lawfully sent with respect to all


                                       47
<PAGE>


                  the Shares held by him (whether with respect to Shares held by
                  him alone or held by him jointly with others) even if same
                  Shareholder had died by that time or had become bankrupt or
                  had received an order for its liquidation or if a trustee or a
                  liquidator or a receiver was appointed with respect to his
                  Shares (whether the Company was aware of it or not) until
                  another person is registered in the Shareholder Register in
                  his stead, as the holder thereof. The sending of a notice or
                  other document, as aforesaid, shall be viewed as a sufficient
                  sending to any person having a right in these Shares.

         38.5.    Any notice or other document which was sent by the Company via
                  registered mail, to an address in Israel, shall be considered
                  sent within 72 hours from its posting at the post office. In
                  order to prove sufficient sending, it is enough to show that
                  the letter containing the notice or the document was addressed
                  to the correct address and was posted at the post office.

         38.6.    Any accidental omission with respect to the giving of a notice
                  of a General Meeting to any Shareholder or the non-receipt of
                  a notice with respect to a meeting or any other notice on the
                  part of whatever Shareholder shall not cause the cancellation
                  of a resolution taken at that meeting, or the cancellation of
                  processes based on such notice.

         38.7.    Any Shareholder and any member of the Board of Directors may
                  waive his right to receive notices or waive his right to
                  receive notices during a specific time period and he may
                  consent that a General Meeting of the Company or a meeting of
                  the Board of Directors, as the case may be, shall be convened
                  and held notwithstanding the fact that he did not receive a
                  notice with respect to it, or notwithstanding the fact that
                  the notice was not received by him within the required time,
                  in each case subject to the provisions of any Law prohibiting
                  any such waiver or consent.

    CHAPTER 10-TRANSITIONAL RULES UNTIL THE COMPANIES LAW SHALL BE EFFECTIVE.

39.      APPLICABILITY

         The provisions of this chapter shall apply solely during the period
         commencing on the day on which the Articles of Association shall be
         effective until the day on which the Companies Law shall be effective
         (hereinafter the "Transitional Period").

         The following provisions shall not apply during the Transitional
         Period:

         39.1.    Article 14.2-titled "The General Meeting's authority to
                  transfer authority between the organs"

         39.2.    Article 28.2-titled "Internal Controller"

         39.3.    Article 32-titled "Purchase of the Company's Shares"


                                       48
<PAGE>


40.      INDEMNIFICATION OF OFFICERS

                  Notwithstanding the provisions of Article 34 above, during the
                  Transitional Period Article 34 shall read as follows:

         "34      "INDEMNIFICATION OF OFFICERS"

         34.1     The Company is entitled to indemnify an Officer of the Company
                  and/or an employee of the Company for one of the following:

                  34.1.1   Financial liability imposed by judgment upon him for
                           the benefit of a third party, including a settlement
                           or arbitration decision certified by the Court, as a
                           result of an act or omission committed by him in his
                           capacity as an officer and/or employee of the
                           Company.

                  34.1.2   Reasonable litigation fees, including attorney's
                           fees, incurred by the officer and/or the employee of
                           the Company or imposed upon him by a court, in a
                           proceeding initiated against him by the Company or in
                           its name or by another person, or in a criminal
                           proceeding from which he is acquitted, provided that
                           any such proceeding related to an act or omission
                           committed by him in his capacity as an officer and/or
                           employee of the Company.

         34.2     These instructions are not intended nor will they be intended
                  to limit the Company in any way in respect of the Company
                  entering into an insurance contract and/or an indemnification
                  agreement:

                  34.2.1   In respect of anyone who is not an officer of the
                           Company, including employees, contractors or
                           consultants of the Company who are not officers of
                           the Company.

                  34.2.2   In respect of officers of the Company in the event
                           that the insurance and/or the indemnification are not
                           explicitly forbidden by any law."

41.      EXEMPTION FOR OFFICERS

         The words "made intentionally or recklessly ("pezizut")" in Article
         35.3.2 above shall not apply.

         The rules of the second schedule of the Companies Ordinance will not
         apply both during the Transitional Period and thereafter, including
         with respect to matters that have not been dealt with in the Articles
         of Association.


                                       49
<PAGE>


42.      INTERPRETATION

         During the Transitional Period, all of the provisions and/or
         definitions in the Articles of Association that are incompatible with
         cognitive rules of the Companies Ordinance will be cancelled and the
         rules of the Companies Ordinance shall apply.

                   CHAPTER 11 - COMPLIANCE WITH THE LICENSE /
                      LIMITATIONS ON OWNERSHIP AND CONTROL

43.      COMPLIANCE

         The Shareholders shall at all times comply with the terms of the
         License. Nothing herein shall be construed as requiring or permitting
         the performance of any acts which are inconsistent with the terms of
         the License. If any article of these Articles shall be found to be
         inconsistent with the terms of the License, the provisions of such
         article shall be null and void, but the validity, legality or
         enforceability of provisions of the other Articles shall not be
         affected thereby.

44.      LIMITATIONS ON OWNERSHIP AND CONTROL

         44.1.    This Article is to ensure that so long as and to the extent
                  that any Operating Right is conditional on or subject to any
                  conditions or restrictions relating to ownership or control
                  over the Company imposed by the Ministry, the Company is so
                  owned and controlled. This Article shall not affect or
                  influence in any way the interpretation or application of
                  Article 10A.

         44.2.    In this Article:

                  "AFFECTED SHARE" means any Share determined to be dealt with
                  as such pursuant to Article 44.4;

                  "AFFECTED SHARE NOTICE" means a notice in writing served in
                  accordance with Article 44.5;

                  "DEPOSITARY" means a custodian or other person appointed under
                  contractual arrangements with the Company (or a nominee for
                  such custodian or other person) whereby such custodian or
                  other person holds or is interested in Shares and which issues
                  securities evidencing the right to receive such Shares;

                  "DEPOSITARY RECEIPTS" means receipts or similar documents of
                  title issued by or on behalf of a Depositary;

                  "DEPOSITARY SHARES" means the Shares held by a Depositary or
                  in which a Depositary is interested in its capacity as a
                  Depositary;


                                       50
<PAGE>


                  "INTERVENING ACT" means the refusal, withholding, suspension
                  or revocation of any Operating Right applied for, granted to
                  or enjoyed by the Company, or the imposition of any conditions
                  or limitations upon any such Operating Right which materially
                  inhibit the exercise thereof, in either case by any state,
                  authority or person (including the Ministry) by reason of the
                  nationality and/or activities of persons holding Shares in
                  and/or controlling the Company;

                  "MINISTRY" means the Ministry of Communications and/or
                  Minister of Communications;

                  "OPERATING RIGHT" means all or any part of any authority,
                  permission, licence or privilege applied for, granted to or
                  enjoyed by the Company, including the Licence, for the
                  establishment, subsistence, maintenance and operation of a
                  mobile radio telephone system using the cellular method and
                  the provision of mobile radio telephone services to the public
                  in Israel;

                  "PERMITTED MAXIMUM" means the maximum aggregate permitted
                  number of Relevant Shares specified by the Board of Directors
                  in accordance with the terms of the Licence, any other
                  requirements of the Ministry and any relevant requirements of
                  Law;

                  "RELEVANT PERSON" means:

                  (a)      any individual who is not a Citizen of Israel or
                           Resident of Israel as defined in Section 14.1(G)(2)
                           of the License;

                  (b)      any body corporate or unincorporate not incorporated,
                           registered or otherwise established under the laws of
                           Israel, including a government, governmental
                           department or agency, statutory or other authority,
                           any undertaking or body formed or established in a
                           country or any part thereof other than Israel;

                  (c)      any person who, without the approval of the Ministry,
                           acquires, directly or indirectly, any Means of
                           Control (as defined in the Licence) in breach of
                           Section 21 of the Licence other than a person who
                           falls within Article 10A; or

                  (d)      any Interested Party (as defined in the Licence) who,
                           or who has an Officer Holder (as defined in the
                           Licence) who, is in breach of Sections 23 or 24 of
                           the Licence other than a person who falls within
                           Article 10A;

                  "RELEVANT SHARE" means any Share (other than a Share removed
                  from the Relevant Shares Register (defined in Article 44.3.2)
                  pursuant to Article 44.3.5), in which a Relevant Person has an
                  interest or which is declared to be a Relevant Share pursuant
                  to Article 44.3.4;

         44.3.

                  44.3.1.  The Board of Directors shall not register a person as
                           a holder of a Share unless the person has given to
                           the Board of Directors a declaration (in a form
                           prescribed by the Board of Directors) signed


                                       51
<PAGE>


                           by him or on his behalf, stating his name,
                           nationality, that he is not a Relevant Person falling
                           within paragraphs (c) or (d) of the definition of
                           that term and other information required by the Board
                           of Directors.

                  44.3.2.  The Board of Directors shall maintain a register (the
                           "Relevant Shares Register"), in which shall be
                           entered particulars of any Share which has been:

                           (a)      acknowledged by the holder (or by a joint
                                    holder) to be a Relevant Share;

                           (b)      declared to be a Relevant Share pursuant to
                                    Article 44.3.4; or

                           (c)      determined to be an Affected Share pursuant
                                    to Article 44.4.2.;

                                    and which has not ceased to be a Relevant
                                    Share. The particulars in the Relevant
                                    Shares Register in respect of any Share
                                    shall include the identity of the holder or
                                    joint holders and information requested by
                                    and supplied to the Board of Directors.

                  44.3.3.  Each registered holder of a Share which has not been
                           acknowledged to be a Relevant Share who becomes aware
                           that such Share is or has become a Relevant Share
                           shall forthwith notify the Company accordingly.

                  44.3.4.  The Board of Directors may notify in writing the
                           registered holder of a Share which is not in the
                           Relevant Shares Register and appears to be a Relevant
                           Share, requiring him to show that the Share is not a
                           Relevant Share. Any person to whom such notice has
                           been issued may within 21 clear days after the issue
                           of the notice (or such longer period as the Board of
                           Directors may decide) represent to the Board of
                           Directors why such Share should not be treated as a
                           Relevant Share but if, after considering such
                           representations and other relevant information, the
                           Board of Directors is not so satisfied, it shall
                           declare such Share to be a Relevant Share and treat
                           it as such.

                  44.3.5.  The Board of Directors shall remove a Relevant Share
                           from the Relevant Shares Register if the holder of
                           the Relevant Share gives to the Board of Directors a
                           declaration (in a form prescribed by the Board of
                           Directors), together with such other evidence as the
                           Board of Directors may require, which satisfies it
                           that such Share is no longer, or should not be
                           treated, as a Relevant Share.


                                       52
<PAGE>


         44.4.

                  44.4.1.  Article 44.4.2 shall apply for so long as the Company
                           holds or enjoys any Operating Right where the Board
                           of Directors determines that it is necessary to take
                           steps to protect any Operating Right because an
                           Intervening Act is contemplated, threatened or
                           intended, may take place or has taken place;

                  44.4.2.  Where a determination has been made under Article
                           44.4.1, the Board of Directors shall take such of the
                           following steps as they consider necessary or
                           desirable to overcome, prevent or avoid an
                           Intervening Act:

                           44.4.2.1. the Board of Directors may remove any
                                     Director from office, by a resolution
                                     passed by a majority of 75 per cent or more
                                     of the other Directors present and voting
                                     at the relevant meeting;

                           44.4.2.2. the Board of Directors may seek to identify
                                     those Relevant Shares which gave rise to
                                     the determination under Article 44.4.1 and
                                     by a resolution passed by a majority of 75
                                     per cent or more of the Directors present
                                     and voting at the relevant meeting deal
                                     with such Shares as Affected Shares; and

                           44.4.2.3. when the aggregate number of Relevant
                                     Shares in the Relevant Shares Register
                                     exceeds the Permitted Maximum, the Board of
                                     Directors may deal with the Relevant Shares
                                     which it decides, by a resolution passed by
                                     a majority of 75 per cent or more of the
                                     Directors present and voting at the
                                     relevant meeting, are in excess of the
                                     Permitted Maximum as Affected Shares.

         44.5.    The Board of Directors shall give an Affected Share Notice to
                  the registered holder of any Affected Share and state that
                  Article 44.6 is to be applied forthwith in respect of such
                  Affected Share. The registered holder of the Affected Share
                  may within 21 clear days after the issue of the notice (or
                  such longer period as the Board of Directors may decide)
                  represent to the Board of Directors why such Share should not
                  be treated as an Affected Share and if, after considering such
                  representations and other relevant information, the Board of
                  Directors considers that the Share should not be treated as an
                  Affected Share it shall forthwith withdraw the Affected Share
                  Notice and Article 44.6 shall no longer apply to the Share.

         44.6.    An Affected Share in respect of which an Affected Share Notice
                  has been served shall be treated as a dormant share (as
                  defined in section 308 of the Companies Law) except that the
                  registered holder of the Affected Share shall continue to have


                                       53
<PAGE>


                  the right to receive dividends and other distributions of the
                  Company and participate in bonus or rights issues of the
                  Company in respect of such Share.

         44.7.    In deciding which Shares are to be treated as Affected Shares,
                  the Board of Directors shall have regard to the Relevant
                  Shares which in its opinion have directly or indirectly caused
                  the determination under Article 44.4 and the chronological
                  order in which Relevant Shares have been entered in the
                  Relevant Shares Register (and accordingly treat as Affected
                  Shares those Relevant Shares entered in the Relevant Shares
                  Register most recently) except where such criterion would in
                  their opinion be inequitable, in which event the Board of
                  Directors shall apply such other criterion or criteria as they
                  may consider appropriate.

         44.8.    Subject to the other provisions of this Article 44, the Board
                  of Directors shall be entitled to assume without enquiry that:

                  44.8.1.  all Shares not in the Relevant Shares Register and
                           not falling within clause 44.8.2 are neither Relevant
                           Shares nor Shares which would be or be capable of
                           being treated as Affected Shares; and

                  44.8.2.  all or some specified number of the Shares are
                           Relevant Shares falling within paragraphs (a)-(b) in
                           the definition of that term if they (or interests in
                           them) are held by a Depositary unless and for so long
                           as, in respect of any such Shares, it is established
                           to their satisfaction that such Shares are not
                           Relevant Shares.

         44.9.    Any resolution or determination of, or any decision or the
                  exercise of any discretion or power by, the Board of Directors
                  or any one of the Directors under this Article 44 shall be
                  final and conclusive.

         44.10.

                  44.10.1. On withdrawal of the determination under Article
                           44.4.1, the Board of Directors shall cease to act
                           pursuant to such determination and inform every
                           person on whom an Affected Share Notice has been
                           served that Article 44.6 no longer applies in respect
                           of such Share. The withdrawal of such a determination
                           shall not affect the validity of any action taken by
                           the Board of Directors under this Article whilst that
                           determination remained in effect and such actions
                           shall not be open to challenge on any ground
                           whatsoever.

                  44.10.2. The Board of Directors shall, so long as it acts
                           reasonably and in good faith, be under no liability
                           to the Company or to any other person for failing to
                           treat any Share as an Affected Share or any person as
                           a Relevant Person in accordance with this Article and
                           it shall not be liable to the Company or any other
                           person if, having acted reasonably and in good faith
                           it determines erroneously that any Share is an
                           Affected Share, or any person is a Relevant Person or
                           on the basis of such determination or any other
                           determination or


                                       54
<PAGE>


                  resolution, they perform or exercise their duties,
                  powers, rights or discretions under this Article in
                  relation to such Share.

         44.11.   A person who has an interest in Shares by virtue of having an
                  interest in Depositary Receipts shall be deemed to have an
                  interest in the number of Shares represented by such
                  Depositary Receipts and not (in the absence of any other
                  reason why he should be so treated) in the remainder of the
                  Depositary Shares held by the relevant Depositary.



                                       55