20-F













	
 

	
 


	
 

	
Exhibit 4.3


	
 

	
 


	
 

	
Agreement


	
 

	
Written and Signed this 25th day of July, 2006


	
 

	
 


	
 

	
 


	
 

	
By and Among


	
 

	
 


	
 

	
Internet Gold – Golden Lines Ltd.


	
 

	
Private
  Company No. 520044264


	
 

	
Of 2 Dov
  Friedman St., Ramat Gan 52503


	
 

	
(the “Purchaser”)


	
 

	
 


	
 

	
Of the First Part


	
 

	
 


	
 

	
And


	
 

	
 


	
 

	
1. Fishman Family Properties Management (1988) Ltd


	
 

	
Private
  Company No. 511325870


	
 

	
Of 20
  Lincoln St., Tel Aviv 67134


	
 

	
(“Fishman”)


	
 

	
 


	
 

	
2. Monitin Media Ltd.


	
 

	
Private
  Company No. 510783186


	
 

	
Of 127 Yigal
  Alon St., Tel Aviv 67443


	
 

	
(“Monitin”)


	
 

	
Fishman and
  Monitin together shall herein be referred to as the “Sellers”


	
 

	
 


	
 

	
Of the second part


	
 

	
 


	
 

	
And


	
 

	
 


	
 

	
012 Golden Lines Ltd.


	
 

	
Private
  Company No. 512140799


	
 

	
Of 25
  Hasivim St., Petah Tikva 49170


	
 

	
(the “Company”)


	
 

	
 


	
 

	
Of the third part








	
 

	
 


	
Whereas

	
The Company
  is a private company limited by shares, duly organized under the laws of the
  State of Israel, and which engages, among other things, in the provision of
  international and domestic telecommunication services to private and business
  customers;


	
 

	
 


	
And whereas

	
Fishman
  holds 15,238,480 ordinary shares of the Company, par value NIS 0.1 each,
  which constitute approximately 50.79% of the Company’s issued and paid up
  share capital, Monitin holds 7,452,740 shares, constituting approximately
  24.84% of the Company’s issued and paid up share capital, and Globescom
  Communication (1997) Ltd. (“Globescom”)
  holds 6,624,000 shares, constituting approximately 22.08% of the Company’s
  issued and paid up share capital;













	
 

	
 


	
And whereas

	
The
  Purchaser is desirous to purchase from the Sellers 60% of the Company’s
  issued and paid up share capital on a fully-diluted basis (as of the date
  hereof – 18,000,000 shares out of 30,000,000 issued and paid up shares), and
  the Sellers are desirous to sell the Purchaser such shares in the Company,
  such that the Purchaser shall become a shareholder of the Company; 


	
 

	
 


	
And whereas

	
The parties
  wish to define and set forth the terms for the sale of the shares and for the
  Purchaser’s acquisition of an equity interest in the Company and to
  consolidate the operations of the Company with the telecommunication
  operations of the Purchaser (as a provider of internet services,
  international calls, information system integration services and the services
  of a “domestic operator”, as relevant), all in accordance with the provisions
  of this Agreement and in the method and for the consideration set forth
  herein;


	
 

	
 


	
And whereas

	
The Sellers
  have described the outline and terms of the transaction to the banks that
  have a security interest in the share capital of the Company (Israel Discount
  Bank Ltd. with respect to Fishman’s shares in the Company and Bank Leumi Ltd.
  with respect to Monitin’s shares in the Company) and have obtained their
  general consent for the transaction;





          The Parties Have Therefore Declared, Stipulated and
Agreed As Follows:


	
 

	
 

	
 

	
 

	
 


	
1.

	
Preamble

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
1.1.

	
The preamble
  to this agreement and the exhibits and schedules hereto constitute an
  integral part hereof and have the same binding effect as all the other terms
  hereof.


	
 

	
 

	
 


	
 

	
1.2.

	
Headings are
  for convenience only and shall not be used for interpretation.


	
 

	
 

	
 


	
 

	
1.3.

	
Unless the
  context otherwise requires, the terms below shall, for the purposes of this
  Agreement and the exhibits and schedules hereto, have the meanings ascribed
  to them as follows:


	
 

	
 

	
 


	
 

	
 

	
Conditions 

  Precedent

	
-

	
As defined
  in Section 5 herein.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Business Day

	
-

	
A day on
  which the public can perform transactions in the banks in Israel.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Closing Date

	
-

	
A date that
  will be designated by consensus among the parties for the sale of the
  Purchased Shares (as defined in Section 4.1 herein) by the Sellers to the
  Purchaser, provided, however, that such date is within 5 Business Days from
  the date when all Conditions Precedent have satisfied.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Meyrablin

	
-

	
MEYRABLIN
  INVESTMENTS LTD, which holds 684,780 shares of the Company, constituting
  approximately 2.28% of the Company’s issued and paid up share capital.





-2-









	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Shares

	
-

	
Ordinary
  shares of the Company, NIS 0.1 par value each.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Interim Period

	
-

	
The period
  between the execution of this Agreement and Closing.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Draft 

  Prospectus

	
-

	
The draft
  prospectus that the Company prepared ahead of an issuance of securities to
  institutional investors, which was to take place on the AIM but was not
  implemented.








	
 

	
 

	
 


	
2.

	
Representations and Warranties of the Company and Sellers


	
 

	
 


	
 

	
The Company
  and the Sellers hereby represent and/or warrant (as relevant), jointly and
  severally (unless otherwise expressly stated) as follows:


	
 

	
 


	
 

	
2.1.

	
The Company is
  a private company limited by shares, organized and duly registered in Israel
  on April 25, 1995, and which transacts its business in accordance with the
  Companies Law 1999. Copies of the Company’s certificate of incorporation and
  of its Memorandum of Association and Articles of Association, in their
  current form, are attached hereto as Disclosure
  Schedule 2.1.


	
 

	
 

	
 


	
 

	
2.2.

	
The
  Company’s registered share capital is NIS 8,000,000 divided into 80,000,000
  shares; the Company’s issued share capital is NIS 3,000,000, divided into
  30,000,000 shares, owned and held by the shareholders as detailed in Disclosure Schedule 2.2.


	
 

	
 

	
 


	
 

	
2.3.

	
The
  Company’s wholly-owned subsidiaries are: (a) Golden
  Lines 012 Communications Services 2001 Ltd., duly organized and registered in
  Israel on January 1, 2001; and (b) 012 Telecom Ltd., duly organized and
  registered in Israel on June 21, 2005 (the “Subsidiaries”). The Company together with the
  Subsidiaries shall herein be referred to as the “Group”). Copies of the certificates of
incorporation and the articles of
  association of the Subsidiaries, in their current form, are attached hereto
  as Disclosure Schedule 2.3.


	
 

	
 

	
 


	
 

	
2.4.

	
The names of
  the members of the boards of directors of each of the Group companies are
  listed in Disclosure Schedule 2.4.


	
 

	
 

	
 


	
 

	
2.5.

	
The minute
  books of the boards and shareholders meetings of the Group companies are
  regularly maintained and adequately and accurately reflect the resolutions
  adopted therein.


	
 

	
 

	
 


	
 

	
2.6.

	
The
  registration of the Group companies is effective, and since registration they
  have filed all the reports and notices to the Companies Registrar, Registrar
  of Liens, Ministry of Communication and any other government agency as
  required by law and shall continue to do so; the Group companies have paid
  all of their franchise fees to the Companies Registrar (let it be noted that
  the Subsidiaries have not yet paid their franchise fees for 2006, which are
  due by December 31, 2006).


	
 

	
 

	
 


	
 

	
2.7.

	
Since their
  incorporation, no receivership or liquidation proceedings have been
  instigated against the Group companies, and none of the Group companies has
  received any notice or warning of any intention to instigate such
  proceedings. The Company and Sellers are not aware of any intention or basis for
  instigation of such proceedings. The Group companies have not adopted any resolution regarding
  voluntary liquidation, nor shall they adopt such a resolution before the
  Closing Date.





-3-









	
 

	
 

	
 


	
 

	
2.8.

	
Neither the
  Company nor the shareholders have made any obligation to issue shares,
  options for the purchase of shares or debentures convertible into shares, of
  any of the Group companies. Neither the Company nor the Sellers shall assume
  any such obligation until after the Closing Date. Disclosure Schedule 2.8 hereto lists obligations of this
  kind previously made.


	
 

	
 

	
 


	
 

	
2.9.

	
Each of the
  Sellers hereby confirms that there is no agreement among the Company’s
  shareholders regarding a right of first refusal with respect to the purchase
  of securities or options to purchase securities, except: (a)
  a right of first refusal as set forth in the Company’s current Articles of
  Association; and (b) a put option that Meyrablin has to sell its shares to
  Monitin, which in any event shall not be binding upon the Purchaser. Should Meyrablin seek to exercise its
  right of first refusal as described above, in a manner that shall prohibit
  the Purchaser from purchasing and receiving the Shares, this Agreement shall
  be null and void.


	
 

	
 

	
 


	
 

	
2.10.

	
Each of the
  Sellers covenants severally with respect to the Shares that it is selling,
  that at the Closing Date, the Purchased Shares shall be free and clear of any
  charge, lien, mortgage, debt, attachment or any other third party right.


	
 

	
 

	
 


	
 

	
2.11.

	
The Group
  companies have all of the licenses and permits required in order to transact
  their business, as detailed in Disclosure
  Schedule 2.11. The Group companies conduct their activities in
  accordance with the terms of such licenses and permits, and neither the
  Company nor the Sellers are aware of any violation of such licenses or
  permits by any of the Group companies, which might: (a) cause
  the Group companies to pay penalties of NIS 100,000 or more in the aggregate;
  or (b) cause any of these licenses or permits to be revoked or materially
  amended. The Company and the Sellers are also not aware of any intention to
  revoke or amend any of these licenses and permits.


	
 

	
 

	
 


	
 

	
2.12.

	
A complete
  and accurate copy of the Group’s audited financial statements as of December
  31, 2005 (the “Financial Statements”),
  internal reports (profit and loss) of the Group as of March 31, 2006 and
  estimated revenues, EBITDA and EBIT for the quarter ended June 30, 2006, are
  attached hereto as Disclosure Schedule 2.12. The Financial Statements were prepared
  in accordance with IFRS (International Reporting Financial Standards) and
  fairly present, as required, the financial position, assets, rights,
  liabilities, equity and results of the Group as of such dates and for such
  periods, in accordance with IFRS.


	
 

	
 

	
 


	
 

	
2.13.

	
Since the
  date of the Financial Statements, there has been no material change in the
  business, financial and economic position of the Group, and no actions in the
  Company except in the ordinary course of business, and no such actions have
  been taken that might have a material effect on the Company’s business, nor
  has there been any material change in the scope of the Company’s business,
  assets or liabilities (except expenses of approximately NIS 3.5 million in
  connection with the AIM issuance). In particular, in the ordinary course of business
  during this period, no single liability of more than $1 million has been
  assumed, and in the aggregate no liabilities have been assumed in excess of
  the cap set forth in the budget for such period, attached hereto as Disclosure Schedule 2.13. Neither the
Company nor the Sellers are
  aware of any event that might cause such material change.





-4-









	
 

	
 

	
 


	
 

	
2.14.

	
The
Company’s bank credit lines as of the date hereof are approximately NIS 324
million, of which the Company has, as of the end of June 2006, withdrawn
approximately NIS 290 million, all as detailed in Disclosure Schedule 2.14
(not including guarantees). 


	
 

	
 

	
 


	
 

	
2.15.

	
There are no
  security interests imposed on the assets of the Group. The Company works with all of its banks
  under the “negative charge” system (i.e., the consent of the bank is required
  for any transaction). The
  assets and property of the Group are free and clear of any charge, lien,
  mortgage, debt, attachment or any other third-party right, and the Group does
  not have any obligation to create such charge or grant any such right.


	
 

	
 

	
 


	
 

	
2.16.

	
Except as
  detailed in Disclosure Schedule 2.16,
  the Group has not given or promised to give any guarantees to any bank or any
  other third party.


	
 

	
 

	
 


	
 

	
2.17.

	
All of the
  claims or other legal proceedings, including attachments, orders and
  arbitrations, pending against Group companies (except for claims or
  proceedings for less than NIS 50,000 and provided that their aggregate value
  does not exceed NIS 150,000, and except for orders in which Group companies
  are only a nominal party (“Non-Material
  Litigation”) are detailed in Disclosure
  Schedule 2.17 (and letters from the Group’s legal counsel
  describing these litigations and proceedings have been provided to the
  Purchaser). Except as set forth above and for Non-Material Litigation, there
  is no litigation pending against Group companies and the Group companies are
  not party to any legal proceeding. Except as detailed in Disclosure Schedule 2.23(B), the Group companies have
not
  received any warning of an intention to file or institute litigation or other
  legal proceedings against them, nor are they aware of any such intention or
  of any event that to the best knowledge of the Company and the Sellers might
  serve as a basis for legal action (except Non-Material Litigation).


	
 

	
 

	
 


	
 

	
2.18.

	
Except as
  detailed in Disclosure Schedule 2.18(A),
  no engagements, agreements or arrangements, including shareholder loans,
  exist between the Group companies and any of the Group (direct or indirect)
  shareholders, other interested parties, officers or any company controlled by
  any of the above; the Group companies do not owe any of these entities any
  money or balances, nor have they given them guarantees or sureties of any
  kind.Except
  as set forth in Disclosure Schedule 2.18(B), there are no engagements,
  agreements or arrangements among the shareholders of the Company in
  connection with the Company.


	
 

	
 

	
 


	
 

	
2.19.

	
All of the
  lease agreements concerning real property leased by Group companies are
  detailed in Disclosure Schedule 2.19. The Company does not own or have a
  leasehold for more than five years or any real property.


	
 

	
 

	
 


	
 

	
2.20.

	
All of the
  material agreements to which the Group companies are party are detailed in Disclosure Schedule 2.20 and copies of
  such agreements have been delivered to the Purchaser. These agreements are in full force and
  effect and have not been violated by the Group companies (except for
  non-material violations that cannot cause the termination or amendment of any
  of the material agreements). The Group companies have and will continue to
  comply with their obligations under these material agreements. Neither the
  Company nor the Sellers is aware of an intention to terminate any of these
  material agreements (with the exception that the Company has informally
  learned that Hot Telecom LP intends to terminate the agreement for
  outsourcing services with which the Company provides HOT prior to the
  designated date of expiration of the agreement).







-5-









	
 

	
 

	
 

	
 


	
 

	
 

	
For the
  purposes of this sub-section, any of the following shall be deemed a “material
  agreement”:


	
 

	
 

	
 

	
 


	
 

	
 

	
2.20.1

	
An agreement
  whose termination or breach might cause a material adverse effect to the
  ordinary course of business of the Company or it financial results.


	
 

	
 

	
 

	
 


	
 

	
 

	
2.20.2

	
An agreement
  whose value exceeds NIS 2 million, whether because the cost of operations
  reflected in the agreement exceeds this amount (as a one-time expense or an
  annual basis) or because the annual revenues arising for the Company from the
  agreement and/or the services/products provided thereunder exceeds this
  amount.


	
 

	
 

	
 

	
 


	
 

	
 

	
Notwithstanding
  the above, marketing agreements, capacity agreements, bilateral agreements
  with international operators and customer agreements, including those that
  meet any one or more of the above criteria, have not been delivered to the
  Purchaser, but will, for all intents and purposes, be deemed material
  agreements.The material agreements that have not been delivered to the Purchaser
  do not contain any information and/or terms that would cause a reasonable
  purchaser engaged in the telecommunication sector who would be prepared to
  engage in this Agreement, to refrain from entering into this Agreement, or
  change the consideration by $200,000 or more in the aggregate, or cause such
  purchaser to demand any further terms to be added to this agreement in order
  to protect its rights.


	
 

	
 

	
 

	
 


	
 

	
2.21.

	
All of the
  insurance polices to which the Group companies are party or under which they
  are insured, are in full force and effect and binding in accordance with
  their terms, and have been issued by reputable insurers in the industry.


	
 

	
 

	
 


	
 

	
2.22.

	
The Company
  confirms that it has paid all of its liabilities and contributions with
  respect to social benefits for all of its employees, including provisions for
  vacation days, recreation allowance (dmei havraa), severance pay, pension
  savings etc., as required by law, custom or practice, and deposited all such
  contributions in full in the reserves and/or with the provident funds and/or
  managers insurance policies and/or made provisions for such liabilities in
  its Financial Statements. Without prejudice to the above, the Purchaser has
  received from the Company a list of all of the senior employees in the Group
  (approximately 33 executives), specifying their wages, other terms of
  employment and payments owing to them by law, custom or practice, the start
  date of their employment, the funds with which they are insured and the
  balances in such funds.


	
 

	
 

	
 


	
 

	
2.23.

	
The patents,
  trademarks and other intellectual property rights owned by Group companies,
  to the extent such rights exist (and except for use rights), and applications
  or objections to the registration of such intellectual property rights are
  detailed in Disclosure Schedule 2.23(A). Except as stated in Disclosure Schedule
  2.23(B) and in Disclosure Schedule 2.17 with respect to the Zvi Kimmel claim,
  the Group has no knowledge of any breach of its intellectual property rights
  or of any breach of third party intellectual property by the Group (this
  representations does not constitute admission by the Company of any of the
  plaintiffs’ allegations, all of which are denied).





-6-









	
 

	
 

	
 


	
 

	
2.24.

	
The group
  conducts and transacts its business in accordance with the law and/or the
  instructions of the competent authorities, and shall continue to do so.


	
 

	
 

	
 


	
 

	
2.25.

	
Each of the
  Group companies has duly and timely filed its reports with the tax
  authorities and other government agencies, including income tax, VAT,
  national insurance, tax withholding etc., and has fully and timely (and in
  accordance with any extension granted to any Group member for any filing or
  any report and/or any payment in accordance therewith) paid its taxes,
  including penalties for late payment, if any such penalties have applied
  and/or were required, and there no tax debt as described above that has not
  been included and reflected in the Financial Statements. The Financial Statement include, for the
  periods covered by them, all of the provisioning for taxes as described
  above, that were required or paid as of the date of the Financial Statements. The Group companies have received
final
  tax assessments through the tax year of 2006, inclusive. 


	
 

	
 

	
 


	
 

	
2.26.

	
The Company
  has all requisite power and authority to enter into this Agreement and
  perform its obligations hereunder, and there is nothing in law, any contract
  or its documents of association, barring it from entering into this Agreement
  and performing its obligations hereunder, subject to the Conditions
  Precedent, as stated in Section 5 herein.


	
 

	
 

	
 


	
 

	
2.27.

	
The Company
  confirms that all of the representations and warranties it has made are true,
  accurate and complete and contain all the relevant information that in the
  Company’s opinion a reasonable investor who would be prepared to engage in
  this agreement and which is involved in the telecommunication industry would
  need in order to purchase the Purchased Shares (as defined in Section 4.1
  herein). If
  any information has not been disclosed to the Purchaser, such in formation
  alone is not of the kind that would cause a reasonable purchaser as described
  above to refrain from entering into this Agreement or cause the consideration
  under the Agreement to change by $200,000 or more or cause such purchaser to
  demand any term to be added to this Agreement in order to protect its rights.


	
 

	
 

	
 


	
 

	
2.28.

	
The Draft
  Prospectus (as defined in Section 1.3 above) is attached hereto as Disclosure Schedule 2.28. This shall not
  limit or reduce the scope of any of the representations and warranties
  provided above or release the Sellers and the Company from any liability in
  connection therewith. All of the details of the Draft Prospectus regarding the Company’s
  commercial operations are true as of March 28, 2006, in accordance with the
  AIM requirements as of that date. Any facts (excluding risk factors) that are relevant to any of the
Company’s
  and Purchasers’ representations herein but are not contained therein and
  which are contained in the Draft Prospectus, shall be deemed to have been
  included in the relevant representations by reference.


	
 

	
 

	
 


	
 

	
2.29.

	
Each of the
  Sellers, severally, has all requisite power and authority to enter into this
  Agreement and perform its obligations hereunder, and there is nothing in law,
  any contract or its documents of association, barring it from entering into
  this Agreement and performing its obligations hereunder, subject to the
  Conditions Precedent, as stated in Section 5 herein.





-7-









	
 

	
 

	
 


	
 

	
2.30.

	
Without
  prejudice to the above, each of the Sellers confirms (with respect to itself
  and with respect to the Company) that all of the representations and warranties
  it has made above are true, accurate and complete and contain all the
  relevant information that in the Sellers’ opinion a reasonable investor who
  would be prepared to engage in this agreement and which is involved in the
  telecommunication industry would need in order to purchase the Purchased
  Shares (as defined in Section 4.1 herein). Any information that may not have been disclosed to
  the Purchaser is not material and would not have caused a reasonable
  purchaser as described above not to enter into this Agreement nor would it
  have caused a change of $200,000 or more in the consideration under this
  Agreement.


	
 

	
 

	
 


	
 

	
2.31.

	
Each of the
  Sellers (severally) acknowledges and agrees that, without prejudice to any
  other right or remedy available to the Purchaser, the Purchaser may terminate
  this Agreement with all of the parties hereto, even if any of the
  representations or warranties expressly made severally by the Sellers is not
  true or is violated such that the violation entitles the Purchaser to terminate
  the Agreement as against the violating party.


	
 

	
 

	
 


	
 

	
2.32.

	
A
  description of the covenants defined with the banks is attached hereto as Disclosure Schedule 2.32.


	
 

	
 

	
 


	
3.

	
Representations and Warranties of the Purchaser


	
 

	
 


	
 

	
The
  Purchaser represents, confirms and warrants, as relevant, as follows:


	
 

	
 


	
 

	
3.1.

	
The
  Purchaser has the ability and financial means to perform its obligations
  hereunder in full.


	
 

	
 

	
 


	
 

	
3.2.

	
The
  Purchaser has all requisite power and authority to enter into this Agreement
  and perform its obligations hereunder, and there is nothing in law, any
  contract or its documents of association, barring it from entering into this
  Agreement and performing its obligations hereunder, subject to the Conditions
  Precedent, as stated in Section 5 herein.


	
 

	
 

	
 


	
 

	
3.3.

	
The
  Purchaser confirms that all of the representations and warranties provided
  above are true, accurate and complete.


	
 

	
 

	
 


	
4.

	
The Transaction 


	
 

	
 

	
 


	
 

	
4.1.

	
At the
  Closing Date, and against payment of the consideration as described herein,
  the Sellers shall sell and transfer to the Purchaser’s ownership, and the
  Purchaser shall purchase and receive ownership, of 60% of the Company’s
  issued and paid up share capital on a fully-diluted basis (as of the date
  hereof – 18,000,000 shares out of 30,000,000) – 15,238,480 shares from
  Fishman and 2,761,520 from Monitin (the “Purchased Shares”).
  The Purchased Shares shall be free and clear of any debt, obligation, charge,
  lien, attachment, right of first refusal, preemptive right or any other
  third-party right (except for any charge, lien or any other third-party right
  created by and/or to the benefit of the Purchaser or on its behalf).





-8-









	
 

	
 

	
 


	
 

	
 

	
For the
  avoidance of any doubt, it is hereby expressly stated that the Purchaser
  stipulates as a condition for the transaction contemplated herein, that the
  Sellers must sell it all of the Purchase Shares. Without prejudice to any
  other right it may have, the Purchaser shall be entitled to terminate this
  Agreement in case not all of the Purchased Shares are transferred to it as
  set forth herein. Notwithstanding the above, (a) the breakdown of the Purchased Shares
  between Fishman and Monitin may be different than stated above; and (b) some
  of the Purchased Shares may be sold to the Purchaser by any of the other
  current shareholders of the Company, provided that such additional seller
  executes this Agreement and shall be considered a Seller, as defined herein,
  for all intents and purposes.


	
 

	
 

	
 


	
 

	
4.2.

	
In
  consideration of the Purchased Shares, the Purchaser shall, at the Closing
  Date and against the Seller’s compliance with all of their obligations
  hereunder and against the transfer of the Purchased Shares to the Purchaser,
  pay the Sellers (or other shareholders that may sell part of the Purchased
  Shares, as the case may be) the shekel equivalent (as of the Closing Date) of
  $84,000,000 (eighty four million USD) (the “Consideration”).
  The Consideration shall be paid to the Sellers (and any other selling
  shareholder, as relevant) on a prorated basis, and subject to adjustment as
  stated in Section 6.2 herein.


	
 

	
 

	
 


	
 

	
 

	
As an
  integral part of the transaction contemplated herein, and although this shall
  take place after the Closing Date, the parties and Globescom shall endeavor
  to merge the telecommunication activities of the Purchaser and the Company,
  whether by effecting a share swap, by a statutory merger between the Company
  and a corporation controlled by the Purchaser which shall include all of the
  Purchaser’s telecommunication business as stated in Section 4.4 herein, or by
  the transfer of all of the Purchaser’s said telecommunication business to a
  corporation that will be the purchaser in the case of a share swap
  transaction or to a corporation that will be the surviving entity in a
  merger, as relevant, and all at the discretion of the Purchaser (the “Merger” and the “Merged
Company”), provided, however,
  that consummation of such Merger shall not create a tax liability for any of
  the Company’s shareholders at the time.The articles of association of the Merged Company and
  the rights to appoint directors shall be as set forth in the articles
  attached hereto as Exhibit 7.5.
  The ratio between the shareholders of each of the merging companies or the
  parties to the share swap transaction, as the case may be, in the Merged
  Company (the “Merger Ratio”)
  shall be agreed upon by the Purchaser and Monitin, and if they fail to reach
  such an agreement within 30 days of the Closing Date, they shall, within 10
  days after the end of the said 30-day period, submit the matter to an
  impartial assessor (the “Assessor”).


	
 

	
 

	
 


	
 

	
 

	
The parties
  shall instruct the Assessor to deliver his assessment of the Merger Ratio to
  the Purchaser and Monitin within 30 days of his appointment. The Purchaser
  and Monitin shall have 15 days from receipt of the preliminary Merger Ratio assessment
  to post their objections. A party that has not submitted an objection within
  this timeframe shall be deemed to have agreed to the preliminary Merger Ratio
  assessment. If
  objections are submitted to the Assessor regarding the preliminary Merger Ratio,
  the parties shall instruct the Assessor to submit his final assessment to the
  parties within 15 days of receipt of the parties’ objections. The final Merger Ratio assessment shall
  be binding upon the parties for all intents and purposes. The parties shall
  act in accordance with such assessment and shall not initiate any proceeding
  to cause the revocation or alteration of the final Merger Ratio assessment.





-9-










	
 

	
 

	
 


	
 

	
4.3.

	
The
  Purchaser covenants that all of the telecommunication business of the
  Purchaser and its subsidiaries as a provider of internet services,
  international calls, information system integration services and the services
  of a “domestic operator”, as relevant, and excluding its media and website
  business, shall be organized under the Merged Company.


	
 

	
 

	
 


	
 

	
4.4.

	
Without
  prejudice to any other obligation hereunder, each of the parties and
  Globescom (the latter only with respect to the consummation of the Merger)
  shall exercise its best efforts to cause the transaction to be completed in
  accordance with the provisions of this Agreement, including the consummation
  of the Merger, which is a material term hereof, and for this purpose shall
  cooperate with the other parties hereto, including for the purpose of
  obtaining the approval of the Antitrust Commissioner for the sale of the
  Purchase Shares and for the Merger.


	
 

	
 

	
 


	
 

	
4.5.

	
If an
  Assessor is appointed in order to determine the Merger Ratio, as detailed in
  Section 4.3, then each of the Purchaser, Globescom, and any of the Sellers
  that are still shareholders of the Company during the relevant period, shall
  provide the Assessor with any representation reasonably required of them in
  order to determine the ratio, and shall be liable for the accuracy of such
  representation. Representations that the Company shall make shall be deemed to have
  been made by the Company’s shareholders at the time, exclusive of the
  Purchaser.








	
 

	
 

	
 


	
5.

	
Conditions Precedent


	
 

	
 

	
 


	
 

	
The force
  and effect of this Agreement is conditioned upon all of the following
  conditions in the aggregate:


	
 

	
 

	
 


	
 

	
5.1.

	
Receipt of
  all the relevant approvals required from the Ministry of Communication for
  the transaction contemplated herein, including the Merger.


	
 

	
 

	
 


	
 

	
 

	
The parties
  shall, within 7 days of the execution of this Agreement, submit the
  applications for the authorizations required under the relevant
  telecommunication laws and under the Company’s licenses.


	
 

	
 

	
 


	
 

	
5.2.

	
Approval by
  the Antitrust Commissioner (the “Commissioner”)
  of the sale of the Purchased Shares to the Purchaser and for the Merger.


	
 

	
 

	
 


	
 

	
 

	
The
  companies shall, within 7 days of the execution of this Agreement, issue a
  merger notice in accordance with the Antitrust Law 1988 and the regulations
  promulgated thereunder.


	
 

	
 

	
 


	
 

	
5.3.

	
Consent by
  the banks named in Exhibit 2.14 to the amendment of the
  covenants set forth in Exhibit 2.32, to the Purchaser’s satisfaction. The Purchaser may waive this
condition.


	
 

	
 

	
 


	
 

	
5.4.

	
Authorization
  by the Purchaser’s board of directors for the Purchaser’s engagement in this
  Agreement, to be granted at a meeting duly convened and held in accordance
  with the Company’s documents of incorporation and no later than August 20,
  2006.


	
 

	
 

	
 


	
 

	
5.5.

	
Authorization
  by the board of directors and shareholders’ meetings of the Company, the
  Sellers and Globescom for their engagement under this Agreement, to be
  granted at meetings duly convened and held in accordance with the documents
  of incorporation of these companies and no later than August 20, 2006.





-10-









	
 

	
 

	
 


	
 

	
If the
  Conditions Precedent set forth above are not satisfied within 90 days or,
  with respect to Sections 5.4 and 5.5., by August 20, 2006, this Agreement
  shall be null and void and the parties shall have no claim or grievance
  toward one another and shall be released of all of their obligations
  hereunder.


	
 

	
 

	
 


	
 

	
Notwithstanding
  the above, if the approval of the Ministry of Communication or the
  Commissioner contains certain conditions or restrictions with regard to the
  activity of the Company or the Purchaser, the Purchaser shall be entitled to
  decide whether to perform the transaction in accordance with such conditions
  or to cancel it, and in such case the Sellers shall have not claim or
  grievance against it. In case the approval of the Ministry of Communication or the
  Commissioner includes conditions or restrictions with regard to the activity
  of the Sellers, the Sellers shall be entitled to decide whether to perform
  the transaction in accordance with such conditions or to cancel it, and in
  such case the Purchaser shall have not claim or grievance against them. Notice of cancellation under such
  circumstances shall be delivered by the party entitled to cancel to the other
  party or parties to this Agreement within 5 business days of the day on which
  written notice of the restrictions was delivered to the restricted party. If
  no such notice of cancellation is delivered, the party entitled to cancel
  shall be deemed to have waived this right.


	
 

	
 

	
 


	
 

	
Each of the
  parties and Globescom shall act in good faith and cooperate with the others
  in order to cause the Conditions Precedent to be satisfied, i.e., to obtain
  the authorizations and consents constituting these Conditions.


	
 

	
 

	
 


	
6.

	
Covenants of the Company and the Sellers


	
 

	
 

	
 


	
 

	
The Company
  and the Sellers covenant, jointly and severally, as follows:


	
 

	
 

	
 


	
 

	
6.1.

	
The terms of
  the agreements currently in existence among the Company and its controlling
  shareholders and/or interested parties and/or companies in their control, as
  detailed in Section 2.18(a) and in Disclosure Schedule 2.18(a) shall not be
  amended to the detriment of the Company, for 5 years as of the Closing Date,
  provided, however, that this provision shall not apply to agreements between
  the Company and the HOT cable companies group.


	
 

	
 

	
 


	
 

	
6.2.

	
By the
  Closing Date, the lease agreement for the Rishon Letzion property where the
  Company’s headquarters was supposed to move, shall be terminated, and the
  relocation to this property shall be canceled. If any penalty is imposed on
  the Company due to such termination, including by payment of future rent (for
  the purposes of this Section, the “Penalty”), the Sellers shall cover the
  Penalty by a deduction from the Consideration paid to the Sellers with
  respect to the Purchased Shares of 60% of the Penalty. Should the Company be required to pay
  the Penalty after the Closing Date and payment of the Consideration to the
  Sellers, the Sellers shall repay the Purchaser 60% of the Penalty within 7
  days of its payment. This
  sum shall not be taken in to account for the purpose of the minimum amounts
  or restrictions set forth in Section 10 herein.


	
 

	
 

	
 


	
 

	
6.3.

	
By the
  Closing Date, the Company’s financial statements for the years 2004 and 2005
  shall be adjusted to US GAAP.





-11-









	
 

	
 

	
 

	
 


	
 

	
6.4.

	
By and no later
  than August 20, 2006, the Company shall deliver to the Purchaser reviewed
  financial statements of the Group for the six months ended June 30, 2006 (the
  “Reviewed
  Statements”), which will fairly present the representations
  contained in Section 2.12 and which will demonstrate that the Group has
  accomplished its estimated revenues, EBITDA and EBIT as provided in Disclosure
  Schedule 2.12 hereto. If the Group fails to comply with the
  representation or estimates as stated above, the Purchaser shall have the right
  to terminate this Agreement, and none of the parties shall have any grievance
  toward the other. If the Purchaser does not exercise its right to terminate as set forth
  above, the revenues, EBITDA and EBIT in the Reviewed Statements shall be
  deemed to replace those disclosed in Section 2.12. Should it transpire that the Company’s actual results
  are lower than the figures contained in the Reviewed Statements with regard
  to revenues and/or EBITDA and/or EBIT for the relevant period and are lower
  than the estimates provided in Disclosure Schedule 2.12, then the
  Sellers and the Company shall indemnify the Purchaser for any damage it may
  incur in connection with such differences, including any damage with respect
  to a devaluation of the Company.

	
 


	
 

	
 

	
 

	
 


	
 

	
6.5.

	
The Company
  and the Sellers shall, to the extent that this is required, obtain the
  unconditional consent of the banks named in Disclosure Schedule 2.14
  for the sale of the Shares to the Purchaser in accordance with the provisions
  of this Agreement. 

	
 


	
 

	
 

	
 

	
 


	
 

	
6.6.

	
The Company
  and the Sellers shall, to the extent that this is required under the
  agreements with the banks, obtain the unconditional consent of the banks that
  have a charge over Company shares to the amendment of the Articles of
  Association as set forth in Section 7.5 and in Exhibit 7.5.

	
 


	
 

	
 

	
 

	
 


	
7.

	
Board of Directors; Amendment of Documents
  of Incorporation; Registration Rights

	
 


	
 

	
 

	
 

	
 


	
 

	
7.1.

	
Immediately
  before the Closing Date and thereafter, the Company’s board of directors
  shall consist of six directors, four of which shall be appointed by the
  Purchaser, including one who will serve as chairman of the board, and two of
  which shall be appointed by Monitin and Globescom (together). Monitin and Globescom (and/or any
  affiliate, as defined in the draft Articles of Association attached hereto as
  Exhibit
  7.5 (“Affiliate”)) shall be entitled to appoint
  directors as long as together they hold at least 15% of the issued and paid
  up share capital of the Company.

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
The voting
  power of the directors appointed by a party shall be prorated to the holding
  of such party in the issued share capital of the Company.

	
 


	
 

	
 

	
 

	
 


	
 

	
 

	
The Sellers
  shall, by the Closing Date, cause all of the current directors, except two as
  stated above, to submit letters of resignation which will become effective at
  the Closing Date.

	
 


	
 

	
 

	
 

	
 


	
 

	
7.2.

	
As of the
  Closing Date, should the Purchaser or Monitin/Globescom seek to transfer any
  or all of their shares in the Company, they shall first be required to offer
  them to Monitin and Globescom or the Purchaser (as relevant), under a right
  of first refusal and in accordance with the mechanism set forth in the
  Company’s amended Articles of Association as stated in Section 7.5 herein.

	
 





-12-









	
 

	
 

	
 

	
 


	
 

	
7.3.

	
As of the
  Closing Date, should a third party ask the Purchaser to sell it all of the
  Company’s share capital (except for Meyrablin’s holdings, if it is not one of
  the Sellers as stated in the end of Section 4.1) and should the Purchaser
  accordingly seek to sell of its holdings in the share capital of the Company
  to such third party, the Purchaser shall be entitled to compel Monitin and
  Globescom to also sell all of their holdings in the Company’s share capital,
  as part of a drag along obligation and in accordance with the mechanism set
  forth in the Company’s amended Articles of Association as stated in Section
  7.5 herein.


	
 

	
 

	
 

	
 


	
 

	
7.4.

	
As of the
  Closing Date and as long as Monitin and Globescom and/or Affiliates hold in
  the aggregate at least 18% of the Company’s share capital, the Company shall
  not perform the actions listed below without the approval of representatives
  of Monitin and Globescom (and/or the Affiliates) on the Board of Directors or
  in the shareholders’ meeting (as relevant and as required by law):


	
 

	
 

	
 

	
 


	
 

	
 

	
7.4.1.

	
Amend the
  Company’s Articles of Association, except for amendments required in order to
  go public.


	
 

	
 

	
 

	
 


	
 

	
 

	
7.4.2.

	
Change the
  Company’s field of business; for the purposes of this sub-section, any change
  within the field of telecommunications shall not be deemed a material change
  in the Company’s business.


	
 

	
 

	
 

	
 


	
 

	
 

	
7.4.3.

	
Perform
  extraordinary transactions with controlling shareholders other than in the
  Company’s ordinary course of business.


	
 

	
 

	
 

	
 


	
 

	
 

	
It is hereby
  expressly stated that if any right granted hereunder to any of the Sellers,
  Globescom or the Affiliates shall cause any of the parties hereto to be
  subject, under the rules of the Bank of Israel, to restrictions imposed on
  single borrowers or groups of borrowers, then such right shall be cancelled
  to the extent required in order to release such party from such restrictions.


	
 

	
 

	
 

	
 


	
 

	
7.5.

	
The Sellers
  shall, by the Closing Date, cause the Company’s Articles of Association to be
  amended, as required by law, in accordance with the form attached hereto as Exhibit
  7.5., and shall immediately thereafter report the amendment to the
  Companies Registrar, and shall also cause all of the shareholders’ agreements
  currently or that will then be in effect to be terminated.


	
 

	
 

	
 

	
 


	
 

	
7.6

	
Whenever the
  Merged Company lists for trading any of the shares of the Merged Company held
  by the Purchaser and/or any affiliate (in case not all of the registered
  share capital of the Merged Company is listed for trading at such time), the
  Purchaser shall cause the Merged Company to list on the same stock exchange,
  simultaneously with and under the same terms as the shares being listed,
  shares of the Merged Company held at such time by Monitin, Fishman (if it is
  a shareholder of the Company at such time), Globescom and/or any of their
  affiliates, the number of which shall be equal to the product of (i) the
  number of shares of the Merged Company held by such entities; and (ii) the
  division of (x) the number of shares being listed at such time by (y) the
  overall number of shares of the Merged Company held at such time by the
  Purchaser. The Purchaser shall cause the Merged Company to cover all the
  costs and expenses of such listing of shares held by Monitin, Fishman (if it
  is a shareholder of the Company at such time), Globescom and/or any of their
  affiliates, pro rata to the costs and expenses that it incurs with respect to
  the listing of shares for other shareholders. 





-13-









	
 

	
 

	
 


	
8.

	
Confidentiality


	
 

	
 

	
 


	
 

	
In addition
  and without prejudice to the provisions of the non-disclosure agreements
  executed by the parties in the negotiations leading up to the execution of
  this Agreement:


	
 

	
 

	
 


	
 

	
8.1.

	
The parties
  shall maintain the existence and contents of this Agreement in absolute
  confidence, except for disclosure of information for the purpose of
  effectuating and performing this Agreement or in accordance with the
  instruction of any competent authority, and including reporting by the
  Purchaser, which is a public company, regarding the execution and contents of
  this Agreement to the extent that this is required by law.


	
 

	
 

	
 


	
 

	
8.2.

	
Copies of
  this Agreement and information thereunder shall only be provided to entities
  entitled to receive them and subject to execution of a
  confidentiality/non-disclosure agreement.


	
 

	
 

	
 


	
 

	
8.3.

	
Subject to
  the provisions hereof, the parties agree not to disclose, make use of or
  transfer in any way to any third party, any information that they may have
  regarding or in connection with the Company’s business.


	
 

	
 

	
 


	
 

	
8.4.

	
The above
  shall not apply to knowledge, information or secrets that are in the public
  domain or that have entered the public domain through not action or omission
  of the disclosing party or whose disclosure is required by law or in
  accordance with an order by a competent court of law.


	
 

	
 

	
 


	
9.

	
The Interim Period


	
 

	
 

	
 


	
 

	
The Company
  and the Sellers and the Company warrant that during the Interim Period:


	
 

	
 

	
 


	
 

	
9.1.

	
The Company
  shall continue to transact its business in the ordinary course of business
  and as practiced before; no action other than in the ordinary course of
  business shall be taken, and no material change shall be effected in the
  Company’s operations and course of business, including (and without
  derogating from the generality of the above) in the Company’s assets,
  obligations, rights, turnover, employment terms, etc.


	
 

	
 

	
 


	
 

	
9.2.

	
The Company
  shall not execute or engage in material agreements nor will it amend its
  existing material agreements (as detailed in Section 2.20 above), unless this
  is required in the ordinary course of business.


	
 

	
 

	
 


	
 

	
9.3.

	
No
  transaction shall be made with respect to the Company’s registered or issued
  share capital, including any issuance, grant of options, convertible security
  or any other obligation in connection with the Company’s share capital or
  rights in the Company.


	
 

	
 

	
 


	
 

	
9.4.

	
No material
  legal transaction shall be made in the assets of the Company, and the Company
  shall not crate any charges or grant any other rights in its assets to any
  third party.


	
 

	
 

	
 


	
 

	
9.5.

	
No dividend
  shall be distributed and no amount shall be paid to the Company’s
  shareholders; no obligations, guarantees or sureties shall be given and no
  engagements of any kind shall be entered with the Company’s shareholders; no
  transactions shall be entered with the Company’s shareholders, including (and
  without prejudice to the generality of the above) transactions with interested
  parties, and except for agreements with HOT in the ordinary course of
  business.





-14-









	
 

	
 

	
 


	
 

	
9.6.

	
The Sellers
  shall not effect any legal transaction in their shares in the Company, nor
  shall they create any charge or grant any other right in their shares to any
  third party.








	
 

	
 

	
 


	
10.

	
Indemnification 


	
 

	
 


	
 

	
10.1.

	
The Sellers
  and the Company shall indemnify and/or compensate the Purchaser for any
  inaccuracies, inconsistencies or differences that may be discovered in any of
  representations and warranties they have provided herein and which cause the
  value of the Company to diminish, or for any claims or demands made against
  the Group after the date of the Financial Statements (as defined in Section
  2.10 above) relating to the period up to the Closing Date and which are not
  reflected in the Sellers’ representations and warranties above. Notwithstanding the minimum amounts set
  forth in each of the representations herein, in case of a misrepresentation
  or breach of warranty as stated above, then, for the purpose of
  indemnification, the full extent of the damage shall be taken into account,
  regardless of the minimum amounts, and subject however to the minimum
  indemnification amount set forth in Section 10.2 herein.


	
 

	
 

	
 


	
 

	
 

	
In addition,
  the Sellers and the Company shall indemnify and/or compensate the Purchaser
  in connection with any claim, penalty or payment that the Company shall incur
  with respect to events or facts predating the Closing Date and with respect
  to which no provisions have been made in the Financial Statements attached
  hereto or with respect to which the provisions that have been made were less
  than the actual payment/claim/penalty. The indemnification obligation under this Section
  shall only be triggered if the aggregate amount of claims, penalties and
  payments with respect to which no provisions have been made in the Financial
  Statements attached hereto reaches NIS 20 million. Indemnification under this
  Section shall only be paid for any amount in excess of NIS 20 million, with
  the exception of the Zvi Camille claim as disclosed in Disclosure Schedule
  2.17, with respect to which the Purchaser shall be indemnified in accordance
  with Section 10.2.


	
 

	
 

	
 


	
 

	
 

	
In case of
  indemnification by the Company to the Purchaser, the indemnification amount
  will be adjusted by the prorated loss incurred by the Purchaser due to the
  fact that it is a shareholder of the Company. In case the Company indemnifies
  the Purchaser, the Purchaser shall transfer some of the indemnification
  amount to Meyrablin and Globescom (unless they constitute Sellers under the
  end of Section 4.1 hereto), pro rata to their holdings in the Company.


	
 

	
 

	
 


	
 

	
10.2.

	
Indemnification
  and/or compensation payable by the Sellers and/or the Company to the
  Purchaser shall, in the aggregate, not exceed $42 million (i.e., after
  adjustment for the prorated share of the Purchaser in the indemnification
  received from the Company according the Purchaser’s holdings in the Company).
  In any event, the Purchaser shall not file action against the Sellers and/or
  the Company for indemnification and/or compensation (for one cause of action
  or more) whose amount, combined with amounts of previous indemnification
  and/or compensation, is less than $500,000. Amounts paid by the Company with
  respect to the Zvi Camille claim shall be taken into account for the purposes
  of the figures set forth in this Section. The Purchaser shall not file an
  indemnification claim against the Sellers or the Company under this Agreement
  at any time after the 4th anniversary of the Closing Date.





-15-









	
 

	
 

	
 


	
 

	
 

	
The
  indemnification amount shall not be capped and the ceiling and aggregate
  amount set forth in this sub-section shall not apply in case the
  inaccuracies, inconsistencies, differences, demands or claims as mentioned in
  Section 10.1 above are the result of or are associated with fraud by the
  Sellers and/or the Company.


	
 

	
 

	
 


	
 

	
 

	
Also, and
  for the For the avoidance of any doubt, it is hereby expressly stated that of
  any doubt, the cap and aggregate amount set forth in this sub-section and any
  other limitation under this Section 10, shall not apply to the provisions
  regarding adjustment of the Consideration as designated in Section 6.2 above.


	
 

	
 

	
 


	
 

	
10.3.

	
The Purchase
  shall have no grievance, demand or claim against the Sellers and/or the
  Company arising from Section 10.1 above and based on a grievance, demand,
  proceeding or claim by any third party (including local or central government
  agencies) against the Purchaser and/or the Company (“Third Party Action”),
  unless: (a) the Purchaser has given the Sellers
  written notice of such Third Party Action shortly after gaining knowledge of
  such Action; (b) the Purchaser has agreed to allow the Sellers to participate
  in the defense, or, if they so ask, to assume the defense against such Third
  Party Action, through attorneys that they shall retain, all including (at the
  Sellers’ request and if possible, in accordance with the rules of civil
  procedure) by way of adding them as a party to any such litigation; (c) the
  Purchaser shall not allow any settlement agreement to be entered in
  connection with such Third Party Action except subject to the Sellers’ prior
  written consent, which shall not be unreasonably withheld, and if withheld,
  the reasons shall be specified (and in their decision whether to grant their
  consent, the Sellers shall also take into account the likelihood of
  non-monetary damages that the Company and/or the Purchaser might incur if it
  withholds its consent). The above requirements to provide reasonable and detailed explanations
  and to take into account the likelihood of non-monetary damages shall not be
  construed as permitting the Purchaser to enter a settlement agreement without
  the Sellers’ consent; and (d) a judgment is delivered against the Purchaser
  and/or the Company whose execution is not stayed, or, if stayed, such stay of
  execution has been revoked or a settlement agreement has been entered between
  the Purchaser or the Company and the third party, with the Sellers’ consent
  as mentioned. Provided, however, that in case payment is made under a judgment
  that is not final, which has been set aside or amended by a subsequent
  judgment (“Subsequent Judgment”), the Sellers shall be repaid, or the
  Purchaser paid, as relevant, the difference, according to the Subsequent
  Judgment. The Sellers’ participation in the litigation and their right to make decisions in
  such litigation shall be contingent upon submission to the Purchaser of
  reasonable sureties, as practiced, to the Purchaser’s satisfaction, in order
  to guarantee that such participation and decision-making shall not cause the
  Purchaser to incur any damage.





-16-










	
 

	
 

	
 


	
 

	
10.4.

	
The
  Purchaser shall not sue officers of the Company (in their capacity as such)
  with respect to inaccuracies, inconsistencies or discrepancies found in any
  of the
  representations and warranties of the Company herein, or with respect to claims
  or demands made against the Group, as stated in Section 10.1 above, except in
  the case that such claims or demands are in connection with fraud by such
  officers. It is hereby expressly stated that the officers shall not be liable
  in any way for any damage and/or loss and/or consequential loss that the
  Purchaser and/or its shareholders may incur prior to the Closing Date,
  including during the Interim Period, due to the actions of the officers of
  the Company in connection with the representations provided herein. By the
  Closing Date, the Company’s Board of Directors shall adopt a resolution
  whereby the CEO of the Company and the Company’s officers (in their capacity
  as such) shall be entitled to indemnification by the Company with respect to
  representations made to the Purchaser herein. The Company shall indemnify an
  officer with respect to any damage and/or claim and/or obligation and/or
  amount relating directly and/or indirectly to mattes with respect to which
  the officer is entitled to an exemption as stated above, in the event that he
  is ordered to pay such amount by a court of law or an arbitrator, including
  legal fees and guarantees of any kind that the officer is made to pay in
  connection with any damage and/or tort for which any or all of the officers
  are liable and/or for which they are allegedly liable, all in accordance with
  the terms stipulated in Section 10.3 above, mutatis mutandis.


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
This
  exemption and indemnification obligation is irrevocable, has no limitation
  with respect to the amount and no expiration date, provided however, that the
  officer gives the Company immediate written notice of any demand and/or claim
  and/or grievance by any third party.


	
 

	
 

	
 


	
 

	
 

	
For the
  purposes of this Section, the term “officer” shall include: Any person who on
  and/or prior to the date hereof has served as a director, general manager,
  deputy general manager, vice-general manager, any person filling any of these
  positions in the Company even if he holds a different title, and any other
  manager directly subordinate to the general manager, chief financial officer,
  in-house legal counsel and internal auditor.


	
 

	
 

	
 


	
11.

	
Closing  


	
 

	
 


	
 

	
The sale of
  the Purchased Shares by the Sellers to the Purchaser (the “Closing”) and all actions required in
  order to effectuate such sale, shall take place at the offices of Eurocom
  Communications Ltd., 2 Dov Friedman St., Ramat Gan. At the Closing, the
  following actions will take place (among other things):


	
 

	
 


	
 

	
11.1.

	
The Sellers
  and the Company on the one hand and the Company on the other shall provide
  written confirmation that their representations and warranties under this
  Agreement are true, accurate, complete and comprehensive as of the Closing
  Date.


	
 

	
 

	
 


	
 

	
11.2.

	
Banks that
  have any charges over the Company’s share capital shall provide all the
  necessary documents, duly signed by these banks, in order to release the
  Purchased Shares from such charges. The Sellers and the Company shall provide
  all the necessary authorizations in order to perform their obligations toward
  the banks as set forth in Sections 5.3, 6.5 and 6.6 above.


	
 

	
 

	
 


	
 

	
11.3.

	
The Sellers shall transfer the Purchased Shares to the Purchaser,
  free and clear of any debt, obligation, charge, lien, attachment, right of
  first refusal, preemptive right or any other third-party right, and shall
  adopt all the corporate resolutions as required for this purpose.






-17-









	
 

	
 

	
 


	
 

	
11.4.

	
The Sellers
  shall deliver to the Purchaser a share certificate for the Purchased Shares. 


	
 

	
 

	
 


	
 

	
11.5.

	
The Company
  shall register the Purchaser in its shareholders register as the owner of the
  Purchased Shares. 


	
 

	
 

	
 


	
 

	
11.6.

	
The Company
  shall notify the Companies Registrar of the transfer of the Purchased Shares
  from the Sellers to the Purchaser. 


	
 

	
 

	
 


	
 

	
11.7.

	
The
  Purchaser shall pay the Sellers the Consideration, as set forth in Section
  4.2 above. 


	
 

	
 

	
 


	
 

	
11.8.

	
The Sellers
  shall provide: (a) letters of resignation of the current directors (except
  two directors representing the Sellers); (b) minutes of the general
  shareholders meeting of the Company in which a resolution is duly adopted,
  appointing the four directors representing the Purchaser, all in accordance
  with Section 7.1 above; the Company shall notify the Companies Registrar of
  the termination of the appointment of the old directors and of the appointment
  of the new ones; (c) the Company’s Amended Articles of Association, in
  accordance with the form attached hereto as Exhibit 7.5, and notice of such
  amendment to the Companies Registrar; (d) termination of all of the
  agreements among shareholders of the Company, whether currently or then in
  existence. 


	
 

	
 

	
 


	
12.

	
General  


	
 

	
 


	
 

	
12.1.

	
In the
  relationship among them and between them and the Company, the parties shall
  exercise diligence, loyalty, fairness and good faith and refrain from any
  action that might give rise to a conflict of interests. 


	
 

	
 

	
 


	
 

	
12.2.

	
Immediately
  upon the execution of this Agreement, each of the parties shall exercise its
  best efforts to cause the sale of the Purchased Shares by the Sellers to the
  Purchaser and the Merger to be effectuated, prepare and deliver all of the
  documents and information as such party may be requested, execute all the
  applications, notices and other documents and perform any action that may be
  required in order to effectuate and complete the sale of the Purchased Shares
  by the Sellers to the Purchaser and effectuate and complete the Merger. 


	
 

	
 

	
 


	
 

	
12.3.

	
Neither
  party may assign or transfer any of its rights and/or obligations hereunder
  without the prior written consent of the other. Notwithstanding the above,
  the Purchaser may assign this Agreement to Smile.Communication Ltd. or any
  other company in its control, provided that the Purchaser guarantees the
  obligations under this Agreement. 


	
 

	
 

	
 


	
 

	
12.4.

	
This
  Agreement represents the entire agreement between the parties in relation to
  the all of the matters contemplated herein. No documents, negotiations,
  representations, warranties, undertakings or agreements that may have been
  made between the parties, whether orally or in writing, expressly or by
  implication and/or in any other way, before the date hereof, shall be relied
  on in any way. 


	
 

	
 

	
 


	
 

	
12.5.

	
No amendment
  to the provisions of this Agreement shall be effective unless entered in
  writing and executed by the parties. 





-18-









	
 

	
 

	
 


	
 

	
12.6.

	
Consent by
  one of the parties hereto in a specific instance to deviate from the
  provisions of this Agreement shall not serve as precedent or be construed as
  consent for such deviation in other instances. Should any of the parties
  waive or not exercise, in a specific instance, any right granted to it under
  this Agreement and/or by law, this shall not be construed as waiver of such
  right. 


	
 

	
 

	
 


	
 

	
12.7.

	
Notices
  delivered to the parties addresses first stated above by registered mail
  shall be deemed to have been received and read by the addressee within 3
  Business Days from posting at a post office in Israel, and if delivered
  personally – upon actual delivery, and if delivered by fax – on the first
  consecutive Business Day after dispatch. The parties may change their
  designated address by written notice between them.





-19-









	
 


	
In witness whereof, the parties have
  hereunto set their hand in writing at the place and on the date first written
  above:








	
 

	
 

	
 

	
 


	
 

	


	
 

	



	
 

	
Internet Gold – Golden Lines Ltd.

	
 

	
Fishman Family Properties


	
 

	
 

	
 

	
Management (1988) Ltd.




	
 

	


	
 

	



	
 

	
Monitin Media Ltd.

	
 

	
012 Golden Lines Ltd.





Globescom
Communication (1997) Ltd., which holds 6,624,000 shares, constituting
approximately 22.08% of the Company’s issued and paid up share capital, hereby
agrees to all of the obligations in this Agreement relating directly to
Globescom, waives the right to first refusal granted to it as stated in Section
2.9 above, and consents to the Merger planned in accordance with the guidelines
set forth in Section 4 above, the amendment of the Articles of Association and
all of the obligations expressly assumed by the Company and the Sellers in
connection with these matters under this Agreement, including with regard to
the determination of the Merger Ratio. 


	
 


	



	
Globescom Communication (1997) Ltd.





-20-