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| (1) | AP.SB.AR Holdings Ltd., a company duly organised under the laws of Israel, having its registered office at Lincoln 20, Tel Aviv (the “Seller”); and |
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| (2) | 012 Smile.Communications Ltd., a company duly organised under the laws of Israel, having its registered office at 25 HaSivim Street, Petach Tikva (the “Purchaser”). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (A) | On the date hereof, the Seller is the sole legal and beneficial owner of 814,211,545 ordinary shares, par value NIS 1.00 each in Bezeq - The Israeli Telecommunication Corporation Ltd., a public company organised and existing under the laws of the State of Israel (the “Company”), whose securities are listed on the Tel Aviv Stock Exchange, and such shares representing, on the date hereof, approximately 30.6% of the issued and outstanding share capital of the Company, and approximately 29.6% on a fully diluted basis (the “Purchase Shares”). |
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| (B) | Upon the terms and subject to the conditions set forth herein, the Seller wishes to sell the Purchase Shares to the Purchaser and the Purchaser wishes to purchase the Purchase Shares from the Seller, all in accordance and subject to the terms herein. |
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| (C) | The Parties wish to set forth herein all of the terms and conditions that shall govern the sale and purchase of the Purchase Shares hereunder. |
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| 1. | DEFINITIONS |
|----|-------------|

|   | 1.1 | Definitions. In addition to the terms defined in the preamble and the recitals above, the following terms shall have the following meanings: |
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|       Affiliate  | A person Controlling, Controlled by or under common Control with a person, and if such person first stated above is a natural person, a relative of such person; provided, however, that in the case of the Seller, each shareholder of the Seller (and any Affiliate thereof) shall be deemed an Affiliate of the Seller.  |
|-----------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       Antitrust Approval   | As defined in Section 2.4(a)(ii).                                                                                                                                                                                                                                                                                           |
|       Agreement            | This Share Purchase Agreement, as may be amended and/or restated from time to time, including all schedules, exhibits and annexes attached hereto or referenced hereby.                                                                                                                                                     |

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|       Board                                           | The Board of Directors of the Company.                                                                                                                                                                                                                                                                                                                                                                        |
|-------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       Business Days                                   | Any day on which banks are open for business in the State of Israel.                                                                                                                                                                                                                                                                                                                                          |
|       Cash                                            | Cash, cash equivalents and marketable bonds.                                                                                                                                                                                                                                                                                                                                                                  |
|       Closing                                         | As defined in Section 2.4.                                                                                                                                                                                                                                                                                                                                                                                    |
|       Closing Date                                    | As defined in Section 2.4.                                                                                                                                                                                                                                                                                                                                                                                    |
|       Company                                         | As defined in Recital (A).                                                                                                                                                                                                                                                                                                                                                                                    |
|       Control or Controlled or Controlling  | The ability, directly or indirectly, to direct the activities of the relevant entity, including, without limitation, the holding of (i) more than 50% of the issued share capital, or (ii) such share capital as carries directly or indirectly, more than 50% of the shareholder votes in a general meeting or the ability to appoint or elect more than 50% of the directors or equivalent of such entity.  |
|       Distributions                                   | The payment, directly or indirectly, of any dividend or the transfer of any asset given by the Company to a shareholder of the Company by virtue of his or her right as a shareholder, whether in cash, shares or other securities of the Company, or in any other manner, or the cancellation of indebtedness of a shareholder of the Company owed to the Company.                                                |
|                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                               |
|       End Date                                        | As defined in Section 6.1(b).                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                               |
|       Interim Period                                  | As defined in Section 5.1(a).                                                                                                                                                                                                                                                                                                                                                                                 |
|       ISA                                             | The Israel Securities Authority.                                                                                                                                                                                                                                                                                                                                                                              |
|       MoC                                             | The Israeli Ministry of Communications.                                                                                                                                                                                                                                                                                                                                                                       |
|       MoC Approval                                    | As defined in Section 2.4(a)(i).                                                                                                                                                                                                                                                                                                                                                                              |
|       NIS                                             | New Israeli Shekels, the lawful currency of the State of Israel                                                                                                                                                                                                                                                                                                                                               |
|       Purchaser                                       | As defined in the Preamble.                                                                                                                                                                                                                                                                                                                                                                                   |

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|       Purchase Price      | As defined in Section 2.2.                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|---------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       Purchase Shares     | As defined in paragraph (A) of the Recitals, and any further shares or other equity securities issued in respect of the Purchase Shares in the framework of, or in connection with, a share combination or subdivision, share split, reverse share split, share dividend, distribution of bonus shares or any other reclassification, reorganisation or recapitalisation of the Company’s share capital on or after the date of this Agreement and prior to the Closing Date.  |
|       Purchaser Directors | As defined in Section 2.3(c).                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|        SEC           | The United States Securities and Exchange Commission.                                                                                                                                                                                                                                                                                                                                                                                                                                |
|       Security Interests  | All trusts, liens, mortgages, charges, attachments, judgments, conditional sale agreements, pledges, rights of usufruct, options, rights of first refusal, rights of possession, restrictions on transfer, voting agreements, sale/leasebacks or similar arrangements, security interests or other rights or claims of others or restrictions or encumbrances of any character whatsoever.                                                                                           |
|       Seller              | As defined in the Preamble.                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|       Seller Directors    | As defined in Section 2.3(a)(ii).                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|       Share Transfer Deed | As defined in Section 2.4(a)(i).                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|       Subsidiaries        | Any entity in which the Company holds: (i) more than 50% of the issued share capital or participation interests, or (ii) such share capital as carries directly or indirectly, more than 50% of the shareholder votes in a general meeting; or (iii) the ability to appoint or elect more than 50% of the directors or equivalent of such entity.                                                                                                                                    |

|   | 1.2 | Construction. |
|--------|-----|---------------|

|   | 1.3 | Headings. |
|--------|-----|-----------|

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|   | 1.4 | Exhibits |
|--------|-----|----------|

| 2. | PURCHASE AND SALE OF THE PURCHASE SHARES |
|----|------------------------------------------|

|   | 2.1 | Agreement to Purchase and Sell. |
|--------|-----|---------------------------------|

|   | 2.2 | Purchase Price. |
|--------|-----|-----------------|

|   | (a) | In full consideration for the purchase by the Purchaser of the Purchase Shares, the Purchaser shall pay to the Seller and the Seller shall receive an aggregate amount equal to six billion five hundred thirteen million six hundred ninety two thousand three hundred and sixty New Israeli Shekels (NIS 6,513,692,360) (the “Purchase Price”), reflecting a price per share of Eight New Israeli Shekels (NIS 8.00). |
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|   | (b) | If  the Seller receives Distributions of the Company with respect to the Purchase Shares beginning on the date hereof and ending on the date immediately preceding or on the Closing Date, then the Purchase Price will be reduced by the amount of such Distributions. In the event that any Distributions are declared, but not yet paid, relating to the Purchase Shares, the record date for which Distributions occurs during the period commencing on the date hereof and ending on the  Closing Date, the Seller shall assign its right to receive such Distributions or otherwise instruct the relevant member of the Tel Aviv Stock Exchange to cause the Company to pay such Distributions directly to Purchaser; provided, however, that if such actions are not feasible then the Purchase Price will be reduced by the amount of such Distributions. At Closing, the Purchaser shall pay to the Seller the Purchase Price in cash by wire transfer of immediately available funds to the account(s) the details of which shall be designated in writing by the Seller to the Purchaser no later than five (5) Business Days prior to the Closing Date. |
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|   | 2.3 | Closing. |
|--------|-----|----------|

|   | (a) | The Seller will deliver, or cause to be delivered, to the Purchaser the following: |
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|   | (i) | A share transfer deed in respect of the Purchase Shares, validly executed by the Seller as transferor of the Purchase Shares, in accordance with the Company's organisational documents (the "Share Transfer Deed"); |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | Written letters of resignation executed by all existing directors of the Company (other than the Company's "outside directors," as defined in Part 6, Chapter 1, section 5 of the Israeli Companies Law – 1999 (the "Companies Law") and other than directors representing employees and the incumbent chairman) in respect of their position as directors of the Company and of their position as directors of any of the Company's Subsidiaries (such resigning directors, the "Seller Directors"), effective as of the Closing Date, in the form attached hereto as Exhibit A; |
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|   | (iii) | A certificate signed on behalf of the Seller by a duly authorised officer of the Seller, dated as of the Closing Date, certifying as to the satisfaction of the conditions set forth in Section 2.4(b); |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | Written confirmation from the financing institutions that hold Security Interests with respect to the Purchase Shares that such Security Interests will be released upon payment of the Purchase Price in accordance with the provisions of Section 2.3(b)(ii) of this Agreement. |
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|   | (v) | If applicable, instructions of assignment of rights to Distributions that have been declared but not yet paid, as further set forth in the second sentence of Section 2.2(b). |
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|   |  (b) | The Purchaser shall deliver, or cause to be delivered, to the Seller the following: |
|--------|-----------|-------------------------------------------------------------------------------------|

|   | (i) | The Share Transfer Deed validly executed by the Purchaser as transferee of the Purchase Shares; |
|--------|-----|-------------------------------------------------------------------------------------------------|

|   | (ii) | Payment of the Purchase Price by wire transfer of immediately available funds to one or more bank account(s) designated by the Seller in accordance with Section 2.2; |
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|   | (iii) | A certificate signed on behalf of the Purchaser by a duly authorised officer of the Purchaser, dated as of the Closing Date, certifying the satisfaction of the conditions set forth in Section 2.4(c). |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  (c) | No later than ninety (90) days after the date hereof, the Purchaser shall provide the Seller with the names of all persons recommended by the Purchaser to serve as the directors of the Company immediately following the Closing (the "Purchaser Directors"); provided, that: (i) in any case the number of the appointed Purchaser Directors shall not exceed the number of directors permitted to serve on the Company's Board under applicable law; and (ii) the persons recommended by the Purchaser to serve as the Purchaser Directors comply in all respects with the requirements and qualifications provided for in the Company's organisational documents and under any applicable law, including any MoC regulations and internal resolutions of the MoC; and (iii) Purchaser shall have the right to change the list of Purchaser Directors from time to time until seven (7) days prior to the last date for the issuance of the notice convening the shareholders meeting described in the following sentence. Subject to the Purchaser providing the Seller with the details of the Purchaser Directors as set forth above, the Seller shall convene a meeting of the Company's shareholders, to occur on the date of the Closing, whose agenda shall include the resignation of the Seller Directors and the election of the Purchaser Directors.  The Seller shall either vote the Purchase Shares in favor of the Purchaser Directors or provide the Purchaser an irrevocable proxy to vote the Purchase Shares at such meeting. |
|--------|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | At the Closing, (i) the Seller and the Purchaser shall provide the Company with the fully executed Share Transfer Deed, accompanied by the share certificates representing the Purchase Shares issued by the Company on the name of the Seller, and (ii) the Parties shall procure that the Company will perform the following actions:  (x) record the transfer of the Purchase Shares to the Purchaser in the shareholders' register of the Company; and (y) deliver to the Purchaser a new share certificate in respect of the Purchase Shares under the name of the Purchaser in lieu of the share certificates described in sub-section 2.3(d)(i) above. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | It is acknowledged by the Seller, that performances by the Company of the actions specified under sub-sections 2.3(c), 2.3(d)(i) and 2.3(d)(ii) above, shall be made concurrently with the payment of the Purchase Price by the Purchaser to the Seller and as an integral part of the Closing. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.4 | Conditions to Closing. |
|--------|-----|------------------------|

|   | (a) | Joint Conditions to Closing.  Each Party’s obligation to consummate the purchase and sale of the Purchase Shares hereunder is subject to the fulfilment, prior to or at the Closing, of each of the following conditions: |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i) | Approval of the MoC of the sale and purchase of the Purchase Shares pursuant to this Agreement, including the issuance of control permits to Purchaser and its Affiliates (the "MoC Approval"). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | (ii) | Approval of the Israeli Antitrust Commissioner of the purchase of the Purchase Shares pursuant to this Agreement (to the extent such approval is required) (the "Antitrust Approval"). |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | Approval of the Prime Minister and the Minister of Communications of the State of Israel (collectively, the "Prime Minister") of the purchase of the Purchase Shares pursuant to this Agreement under the Communications Law (Bezeq and Transmissions) – 1982 and the Communications Order (Bezeq and Transmissions) (Determination of Vital Services Provided by Bezeq - The Israeli Communications Company Ltd.) – 1997 (the "Communications Order") promulgated thereunder (the "Prime Minister Approval"). |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | Any other approval or consent required by law to effect the transaction contemplated by this Agreement. |
|--------|------|---------------------------------------------------------------------------------------------------------|

|   | (a1) | For the avoidance of doubt, and in accordance with the provisions of section 5(a) of the Communications Order, the Parties agree that the portions of this Agreement relating to the granting of control in the Company to the Purchaser, if any, shall not be considered as granting "control" or "means of control" or "material influence" in the Company (as such terms are defined in the Communications Order) until subsequent to the submission of the application to receive the MoC Approval under such section 5(a), without derogating from the effectiveness of any other provisions of this Agreement. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Conditions to the Purchaser’s Obligation to Close.  The Purchaser’s obligation to consummate the purchase of the Purchase Shares hereunder is subject to the fulfilment, prior to or at the Closing, of each of the following conditions: |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i) | The representations and warranties of the Seller were true and correct when made and shall be true and correct in all material respects at the Closing as though made again at the Closing Date. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | The Seller shall have performed and complied with all obligations and covenants required by this Agreement to be performed or complied with by it prior to or at the Closing in all material respects. |
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|   | (iii) | An unconditional release of any charge or pledge over the Purchase Shares shall have been obtained at Closing simultaneously with payment of the Purchase Price. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | The Company shall not have taken any of the actions set forth in Section 5.1 without the Purchaser's prior consent (which may be granted or withheld in Purchaser's reasonable discretion). |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (v) | During the Interim Period, there shall not have occurred (i) any action by the Company by which it exits from, in whole or in substantial part, any one or more of its four principal business sectors (i.e., fixed telephone communications; cellular; international long distance and internet services; and multichannel television) (the "Business Sectors"), in any such case in which the Purchaser did not provide its prior written consent, not to be unreasonably withheld or delayed, (ii) any event that would result, at the Closing, in Purchaser acquiring less than 30% of the Company's issued and outstanding share capital and less than 26% of the Company's share capital on a fully diluted basis. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | (c) | Conditions to the Seller’s Obligation to Close.  The Seller’s obligation to consummate the sale of the Purchase Shares hereunder is subject to the fulfilment, prior to or at the Closing, of each of the following conditions: |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i) | The representations and warranties of the Purchaser were true and correct when made and shall be true and correct at the Closing in all material respects as though made again at the Closing Date. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | The Purchaser shall have performed and complied with all obligations and covenants required by this Agreement to be performed or complied with by it prior to or at the Closing in all material respects. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | The Purchaser shall deduct and withhold taxes from the Purchase Price as required by law, unless and to the extent the Seller provides the Purchaser with an approrpiate certificate of tax exemption or reduced rate of withholding (in which case the Purchaser shall deduct and withhold an amount in accordance therewith). All amounts so deducted and withheld by the Purchaser shall be treated for all purposes of this Agreement as having been paid to the Seller. Purchaser shall reasonably assist and cooperate with Seller in Seller’s attempts to procure certificates of exemption or reduced withholding. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Purchaser shall reasonably cooperate with Seller to procure information regarding this Agreement and the transactions contemplated therein as may be required or necessary for the Seller or its shareholders to timely file any tax return or report the transaction. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | REPRESENTATIONS AND WARRANTIES OF THE SELLER |
|----|----------------------------------------------|

|   | The Seller hereby represents and warrants to the Purchaser: |
|--------|-------------------------------------------------------------|

|   | 3.1 | Organisation and Authority. |
|--------|-----|-----------------------------|

|   | (a) | The Seller duly and validly exists under the laws of Israel and, subject to the conditions specified under Sections 2.4(a) and 2.4(b)(iii),  has all necessary company power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Subject to the conditions specified under Sections 2.4(a) and 2.4(b)(iii), the execution and delivery of this Agreement by the Seller, the performance by the Seller of its obligations hereunder and the consummation by the Seller of the transactions contemplated hereby have been duly authorised by all requisite corporate action on the part of the Seller. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | (c) | This Agreement has been duly executed and delivered by the Seller, and (assuming due authorisation, execution and delivery by the Purchaser and subject to the conditions set under Sections 2.4(a) and 2.4(b)(iii)) this Agreement constitutes a legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | 3.2 | Free and Clear. |
|--------|-----|-----------------|

|   |   |
|--------|--------|

|   | 3.3 | Consents and Approvals; No Conflict. |
|--------|-----|--------------------------------------|

|   | 3.4 | Litigation. |
|--------|-----|-------------|

|   | 3.5 | Related Party and Certain Other Transactions. |
|--------|-----|-----------------------------------------------|

|   | 3.6 | [Reserved] |
|--------|-----|------------|

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|   | 3.7 | Capitalisation; Charter Documents. |
|--------|-----|------------------------------------|

|   | (a) | Schedule 3.7(a) hereof accurately describes (i) as of immediately after the Closing, the number of issued and outstanding ordinary shares of the Company held by the Seller and (ii) as of the date hereof, the percentage of the Company's issued and outstanding share capital that the Purchase Shares constitute on both a fully diluted and non-fully diluted basis. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Schedule 3.7(b) hereof accurately describes the shareholdings in the Seller. |
|--------|-----|------------------------------------------------------------------------------|

|   | (c) | Schedule 3.7(c) contains accurate and complete copies of the Memorandum of Association, Articles of Association and Certificate of Incorporation of the Company. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.8 | No Additional Representations |
|--------|-----|-------------------------------|

|   | Without derogating from any right or remedy available to it under law, the Seller acknowledges that the Purchaser has made no representations other than the representations set forth in Section 4 hereof and that in deciding to enter into this Agreement the Seller is not relying on any other information that may have been provided by the Purchaser or its representatives. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | REPRESENTATIONS AND WARRANTIES OF THE PURCHASER |
|----|-------------------------------------------------|

|   | 4.1 | Organisation and Authority. |
|--------|-----|-----------------------------|

|   | (a) | The Purchaser duly and validly exists under the laws of Israel and subject to the conditions specified under Section 2.4(a), has all necessary company power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Subject to the conditions specified under Section 2.4(a), the execution and delivery of this Agreement by the Purchaser, the performance by the Purchaser of its obligations hereunder and the consummation by the Purchaser of the transactions contemplated hereby have been duly authorised by all requisite corporate action on the part of the Purchaser. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | This Agreement has been duly executed and delivered by the Purchaser, and (assuming due authorisation, execution and delivery by the Seller and subject to the conditions specified under Sections 2.4(a) and 2.4(b)) this Agreement constitutes a legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.2 | Consent and Approvals; No Conflict. |
|--------|-----|-------------------------------------|

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|   | 4.3 | Litigation. |
|--------|-----|-------------|

|   | 4.4 | Eurocom Undertakings. |
|--------|-----|-----------------------|

|   | 4.5 | Financial Capability |
|--------|-----|----------------------|

|   | (a) | At the Closing, the Purchaser will have sufficient funds to effect the purchase of the Purchase Shares, and the Purchaser acknowledges that any failure to obtain the financing necessary to consummate the transaction contemplated hereby shall not constitute a defence or condition precedent to its obligations hereunder. The Purchaser will provide the Seller with copies of all credit agreements, financing commitments and other arrangements with banks and other entities providing financing to the Purchaser for purposes of funding its obligations hereunder (collectively "Credit Agreements") shortly after such documents are made available to the Purchaser and such copies shall be complete and accurate; provided, however, that the Purchaser may redact trade secrets and other confidential commercial information. The Purchaser undertakes to take all actions necessary to fulfil all of its obligations set forth in such Credit Agreements in a prompt and timely manner. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | As of the date hereof, the Purchaser itself has in its bank accounts an aggregate available Cash amount of not less than NIS300 million (the "Signing Date Available Cash Amount"). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Exhibit 4.5(c) contains a "highly confident" letter from a bank with respect to the transaction contemplated hereby (the "Bank Financing").  There are no written side agreements of any sort which are not disclosed in such letter. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 4.6 | Acting for Own Account |
|--------|-----|------------------------|

|   | Purchaser is entering into this Agreement to purchase the Purchase Shares on its own account and not with a view to resale or redistribution of the Purchase Shares.  Notwithstanding the foregoing, Purchaser shall have the right to bring other investors into the transactions contemplated hereby; provided, however, that at the Closing control of the Company (as defined in the Telecommunications Law) shall remain with the Purchaser and that doing so would not be expected to have an adverse impact on the consummation of the transactions in a timely manner and would not cause any transfer tax, stamp duty or VAT to be imposed on Seller. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.7 | No Additional Representations |
|--------|-----|-------------------------------|

|   | Without derogating from any right or remedy available to it under law, the Purchaser acknowledges that the Seller has made no representations other than the representations set forth in Section 3 hereof and in particular has not made any representations regarding the business, assets, liabilities or prospects of the Company or its subsidiaries and that in deciding to enter into this Agreement the Purchaser is not relying on any forecasts or other information that may have been provided by the Seller or its representatives. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5. | COVENANTS |
|----|-----------|

|   | 5.1 | Interim Covenants. |
|--------|-----|--------------------|

|   | (a) | From the date of this Agreement until the Closing Date (the “Interim Period”), subject to applicable antitrust law, the Seller undertakes in its capacity as a shareholder of the Company to exercise its voting rights as a shareholder of the Company, to object to the passing of any shareholders’ resolution of the Company with respect to the following matters: (i) other than as required by applicable law, any amendment and/or change and/or alteration of the Company's organisational documents; (ii) voluntary liquidation of the Company or any of the Company's Subsidiaries, and/or the engagement in any arrangement with all, or a class of, the creditors of the Company and/or of the Company's Subsidiaries; (iii) other than the existing management agreement between the AP.SB.AR Cayman L.P. and the Company described in the Company's public filings, and except for existing indemnification letters as described in the Company's public filings, any related party transaction by and between the Company or any of its Subsidiaries, on the one hand, and the Seller or any of its Affiliates or the Seller Directors or any of their Affiliates (other than the Company or any of its Subsidiaries), on the other hand; (iv) other than the purchase by a Subsidiary of the Company of MIRS Communications Ltd. and Walla Communications Ltd. any merger and/or any other change in the corporate structure of the Company and/or any of the Company's Subsidiaries; and (v) any issuance of shares or other equity interests of the Company (including options, rights offerings, or convertible securities), other than resulting from (A) the exercise of options or (B) the issuance of options or shares pursuant to existing employee benefit plans consistent with past practice. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | (b) | The Seller shall not dispose of any interest in the Purchase Shares or any of them or grant any option over or create after the date hereof any Security Interest over the Purchase Shares or any of them. At the Closing, upon payment of the Purchase Price, the Seller shall release or cause to be released any Security Interest over the Purchase Shares. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | During the Interim Period, contacts between the Purchaser or its Affiliates and Company management (or the management of its Affiliates) (other than ordinary course of commercial business) shall be done in coordination with the Seller. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.2 | Announcements. |
|--------|-----|----------------|

|   | (a) | Neither Party nor any of its Subsidiaries shall (and each Party shall use all reasonable efforts to procure that none of its Affiliates (and with respect to the Seller, including the Company and its subsidiaries) issue any press release or public announcement concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of the other Party, which approval will not be unreasonably withheld or delayed, unless disclosure is otherwise required by applicable law or by the applicable rules of or listing agreement with any stock exchange on which the securities of a Party or its Affiliates are traded securities.  The Purchaser shall not, and shall cause its Affiliates not to, make public announcements concerning concrete business plans with respect to the Company's assets and business operations without Seller's prior written approval, which shall not be unreasonably withheld. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Nothing in Section 5.2(a) shall: (i) prevent the Parties from providing any of their Affiliates (and with respect to the Seller, including the Company and any of its Subsidiaries) or their shareholders, attorneys, accountants or advisors any details or information regarding this Agreement, the transaction contemplated hereby, the identity of the other Party and its direct and indirect shareholders to the extent that such details or information are required for the approval of this Agreement and the transaction contemplated herein; and (ii) prevent the Purchaser from providing any lenders, institutions and other entities which will provide loans/credit to the Purchaser for the purpose of the consummation of the transactions provided in this Agreement (including by means of issuance of bonds and/or prospectus), any details or information regarding this Agreement and the transaction contemplated herein to the extent that such details or information are required for the purpose of financing the purchase of the Purchase Shares by the Purchaser. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.3 | Further Assurance. |
|--------|-----|--------------------|

|   | (a) | The Purchaser shall, and to the extent possible subject to applicable law shall cause its Affiliates to, and the Seller shall use its commercially reasonable efforts to cause the Company to, (i) file all legally required applications with (w) the Israeli Antitrust Commissioner in connection with obtaining the Antitrust Approval, and (x) the MoC in connection with obtaining the MoC Approval, and (y) the Prime Minister in connection with obtaining the Prime Minister Approval, and (z) any other person or governmental authority whose approval is required by law to effect the transaction contemplated hereby ((w) through (z) collectively, the "Regulatory Approvals"), as soon as possible, and Purchaser will use its best efforts to file the request for the MoC Approval within 14 business days of the date hereof, and (ii) provide all information required by the Israeli Antitrust Commissioner, the Prime Minister and the MoC in connection with such filings in a timely manner. |
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|   | (b) | Upon the terms and subject to the conditions set forth in this Agreement, and to applicable laws, each Party (with respect to its own obligations) agrees to use, and to the extent possible subject to applicable law to cause its Affiliates to use, best efforts to obtain the Regulatory Approvals as soon as possible, to make such filings and notifications and respond to any requests for additional information made by an authority in a timely, complete and correct manner, and to comply with all applicable law and all requirements applicable to it of the MoC or the Israeli Antitrust Commissioner or the Prime Minister or other applicable agencies or regulatory authorities, as the case may be, to effect the transactions contemplated by this Agreement. Each party undertakes not to, and shall exercise best efforts to cause any of its controlling shareholders and its Affiliates (and, in the case of the Seller, the Company, the Seller Directors and each of its and their respective Affiliates) not to, take any action that would reasonably be expected to materially delay, impede or prevent receipt of any necessary Regulatory Approvals.  Insofar as this Section 5.3(b) applies to undertakings of the Seller to cause the Company to take certain actions, it is understood that such obligations shall be limited only to the provision of information and submission of applications and reports (to the extent required), and specifically excludes any action that materially adversely affect the Company's interests or any such actions that require the Company to take any action with respect to the business or operations of the Company. |
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|   | (c) | Without limiting the generality of the foregoing, in order to facilitate the issuance of any Regulatory Approval: |
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|   | (i) | in order to facilitate receipt of the MoC Approval, the Purchaser shall consent to and comply with all requirements applicable to it that are specified in the Communications Order, and all requirements of general application substantially similar to those contained in the existing control permits with respect to the Seller or the Company in effect on the date hereof, attached hereto as Schedule 5.3(c). |
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|   | (ii) | In order to facilitate receipt of the Antitrust Approval or the MoC Approval or any other Regulatory Approval, the Purchaser shall take such actions with respect to its assets, including without limitation the sale or other disposition of such assets, as and to the extent required to obtain such Approval, and shall use such proceeds and other assets not needed to support its course of business and obligations in order to finance the transaction contemplated hereby and not for purpose of a Distribution; provided, however, that if such sale is not required in order to receive such Regulatory Approval but cannot be effected as a source of financing for the transaction, the Purchaser shall provide an alternative source of financing in an amount necessary for the Purchaser to effect the Closing. |
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|   | (iii) | use its best efforts to take any other actions required to facilitate the issuance of any Regulatory Approval. |
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|   |  (d) | The Seller shall use its best efforts to assist and to cooperate with the Purchaser and the Company in obtaining the approvals required under Sections5.3(a) above and shall use its best efforts to cause the conditions to Closing set forth in Sections 2.4(a) (to the extent that the approvals provided for in that Section 2.4(a) are required by law to be obtained by the Seller) and 2.4(b) to be satisfied as promptly as practicable. Subject to the requirements of applicable law and regulations, the Seller shall cause the Company to provide such information as the Purchaser requires for filings or offering documents in connection with the transactions contemplated hereby, including without limitation any financial or other information required to effect capital raising transactions; provided that (i) such information is required to be included in the relevant filings under applicable securities law and there is no restriction under applicable law to provide such information; (ii) the Purchaser bears all costs incurred by the Seller or the Company in providing such information; and (iii) the Purchaser provides customary indemnification to the Seller and the Company in connection with the provision of such information. Insofar as this clause (d) applies to undertakings of the Seller to take action or to cause the Company or any of its Subsidiaries to take certain actions, it is understood that such obligations shall be limited only to the provision of information and submission of applications and reports (to the extent required), and specifically excludes any action that materially adversely affect the Company's interests or any such actions that require the Company to take any action with respect to the business or operations of the Company. The Purchaser shall provide such information as the Seller reasonably requests in connection with its tax filings; provided that (i) such information is required to be included in the relevant filings under applicable tax law and there is no restriction under applicable law to provide such information; (ii) the Seller bears all costs incurred by the Purchaser in providing such information; and (iii) the Seller provides customary indemnification to the Purchaser in connection with the provision of such information. |
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|   | (e) | Each Party, upon request by the other Party, shall provide the other Party with correspondence and material relevant information with respect to Regulatory Approvals; provided that any trade secrets or other confidential information shall be redacted from such updates. The Purchaser shall promptly inform the Seller and provide detailed information with respect thereto in the event of a final decision refusing to provide an Approval contemplated by this Agreement or the determination by any relevant governmental authority of conditions for an Approval to which the Purchaser objects. |
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|   | 5.4 | Financing. |
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|   | (a) | Attached hereto as Exhibit 5.4 is an agreement between Purchaser and Eurocom pursuant to which Eurocom irrevocably grants Purchaser an irrevocable call option to require Eurocom to provide Purchaser a loan of up to the lesser of (i) NIS1.2B, or (ii) the difference between (x) the Purchase Price and (y) the sum of the Cash holdings of the Purchaser and any committed financing available to the Purchaser for the transaction contemplated hereby (the "Eurocom Option").  Such option may be exercised by Purchaser, at no cost, at any time after 120 days from the date hereof (the "120th Day"), upon submission of a written notice to Eurocom.  The underlying loan shall bear interest at a risk-free or lower rate, and shall be subordinated in all respects to committed financing referenced above. The Eurocom Option includes a representation in which Eurocom shall represent and warrant therein that it has, as of the date hereof, the financial ability to provide the required funds under the Eurocom Option and further covenants and undertakes to maintain such level of financial ability. |
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|   | (b) | Purchaser shall take all means required in order to comply in all respects on a timely basis with all of the undertakings of the Purchaser and the terms and conditions set forth in sub-Sections 6.1(c)(i) through 6.1(c)(v) below.  No later than on the date of each of the Milestones, Purchaser shall submit to the Seller a certificate issued by the Purchaser confirming that the respective conditions which are required to be fulfilled at the respective Milestones are timely fulfilled in their entirety. |
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|   | (c) | In the event that Purchaser is, for any reason whatsoever, unable, at any time after the 120th Day, to timely comply with any of the terms and conditions set forth in sub-Sections 6.1(c)(i) through 6.1(c)(v) below, it hereby undertakes to immediately exercise the Eurocom Option in such manner which shall allow it to fully comply with said provisions and achieve the pertinent Milestone. |
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|   |   |
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| 6. | TERMINATION |
|----|-------------|

|   | 6.1 | Right of Parties to Terminate. |
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|   | (b) | by either the Seller or the Purchaser, by written notice to the other Party, if the Closing has not occurred on or prior to the close of business on April 25, 2010 (the “End Date") and in that case no Party may terminate this Agreement according to this Section 6.1(b) prior to such extended date; provided, further, however, that this Agreement may be terminated earlier pursuant to this Section 6.1(b) in the case of a final and unappealable determination by a relevant governmental authority not to issue an approval required for the consummation of the transactions contemplated hereby. |
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|   | (c) | by Seller in the event that any of the following conditions and/or events and/or actions have not occurred or maintained (as applicable) by the date designated therefor (subject to a cure period of three business days), provided that the timely occurrence of each of the following conditions and/or events and/or actions shall be deemed to constitute part of the Purchaser's obligations and covenants hereunder and Purchaser's failure to timely comply with any of such obligations shall be deemed to constitute a material breach of this Agreement which entitles the Seller to immediately terminate this agreement: |
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|   |   | (i)   Within no later than seven (7) days following the date hereof (the "First Milestone"), the Purchaser or its wholly-owned Subsidiaries shall have in its bank accounts an aggregate available Cash amount of not less than NIS600 million, including the Signing Date Available Cash Amount (such amount, the "7-day Available Cash Amount"). |
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|   |   | (ii)   Within no later than thirty (30) days following the date hereof (the "Second Milestone"), the Purchaser or its wholly-owned Subsidiaries shall have in its bank accounts an aggregate available Cash amount of not less than NIS1.00 billion, including the 7-day Available Cash Amount (such amount, the "Required Available Cash Amount"). |
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|   |   | (iii)    Within no later than the 120th Day, the Purchaser shall have secured sufficient committed financing of no less than NIS4.25 billion (the "Third Milestone").    |
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|   |   | (iv)    The Purchaser shall maintain in its bank accounts at all times following the 30-day period subsequent to the date hereof and until the 120th Day such level of available Cash amount of not less than the Required Available Cash Amount. |
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|   |   | (v)       No later than the 120th Day (the "Fourth Milestone", and collectively, with the First Milestone, the Second Milestone and the Third Milestone, the "Milestones"), the Purchaser itself shall have in its bank accounts an aggregate available Cash amount of the difference between (x) the Purchase Price and (y) the committed financing available to the Purchaser for the transaction contemplated hereby, and such amount shall be maintained at all times until the Closing Date. |
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|   | 6.2 | Procedure upon Termination. |
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|   | 6.3 | Effect of Termination. |
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|   | 6.4 | Undertaking to Consummate |
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|   | The Parties acknowledge and agree that, except as otherwise provided herein, their obligation to consummate the transactions contemplated hereby constitutes an unconditional obligation to procure performance and consummation of the transaction. |
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| 7. | MISCELLANEOUS |
|----|---------------|

|   | 7.1 | Parties in Interest; Assignment. |
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|   | (a) | This Agreement is binding upon and is solely for the benefit of the Parties and their respective successors, legal representatives and permitted assigns. No Party may assign this Agreement or any portion thereof without the written consent of the other Party. Any attempted assignment not in compliance with the terms of this Agreement is null and void. |
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|   | (b) | Notwithstanding Section 7.1(a) above but without prejudice to the restrictions contained therein, subject to any necessary approvals of any governmental authority, the Purchaser may pledge all or any part of its rights under this Agreement to any bank and/or other financial institutions which shall provide full or partial funding for the Purchaser in respect of the purchase of the Purchase Shares under this Agreement. |
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|   | (c) | Notwithstanding Section 7.1(a) above, the Purchaser may assign its rights to receive the Purchase Shares to any Affiliate; provided, however, that Purchaser remains liable for all obligations of the Purchaser and of such Affiliate hereunder. |
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|   | 7.2 | Notices. |
|--------|-----|----------|

|            If to the Seller:                                   | AP.SB.AR Holdings Ltd.20 Lincoln StreetTel Aviv  67134Facsimile:  +972-3-625-5500Attn:  Michael Zellermayer, Adv.           |
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|            With a copy to (which shall notconstitute notice):  | Zellermayer, Pelossof & Co.20 Lincoln StreetTel Aviv  67134Facsimile:  +972-3-625-5500Attn:  Michael Zellermayer, Adv.  |
|            If to the Purchaser:                                     | 012 Smile.Communications Ltd.25 Hasivim StreetPetach TikvaFacsimile: +972-72-200-2090Attn.:  Stella Hendler                                     |

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|            With a copy to (which shall notconstitute notice): | Fischer Behar Chen Well Orion & Co.3 Daniel Frisch St.Tel Aviv  64731,  IsraelFacsimile:  +972-3-609-1116Attn:  Avraham Well, Adv.  |
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|   | 7.3 | Successors and Assigns. |
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|   | 7.4 | Delays or Omissions; Waiver. |
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|   | 7.5 | Amendment.  This Agreement may be amended or modified only by a written document signed by all the Parties. |
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|   | 7.6 | Entire Agreement. This Agreement (together with the recitals, schedules, appendices, annexes and exhibits hereto) contains the entire understanding of the Parties with respect to its subject matter and all prior negotiations, discussions, agreements, commitments and understandings between them with respect thereto not expressly contained herein shall be null and void in their entirety, effective immediately with no further action required. |
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|   | 7.7 | Severability. If a provision of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect the validity or enforceability in that jurisdiction of any other provision hereof or the validity or enforceability in other jurisdictions of that or any other provision hereof.  Where provisions of any applicable law resulting in such illegality, invalidity or unenforceability may be waived, they are hereby waived by each Party to the full extent permitted so that this Agreement shall be deemed valid and binding agreements, in each case enforceable in accordance with its terms. |
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|   | 7.8 | Counterparts; Facsimile Signatures. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. A signed Agreement received by a Party via facsimile will be deemed an original, and binding upon the party who signed it. |
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|   | 7.9 | Governing Law; Jurisdiction. The Agreement shall be governed by and construed in accordance with the laws of the State of Israel, without giving effect to the principles thereof relating to conflict of laws.  The Parties hereby consent and submit to the exclusive jurisdiction of the competent courts of Central District, Israel, which shall have jurisdiction to hear all disputes arising in connection with this Agreement and no other courts shall have any jurisdiction whatsoever in respect of such disputes. |
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|   | 7.10 | No Third-Party Beneficiaries. Nothing in this Agreement shall create or confer upon any Person, other than the Parties or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities. |
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|   | (i) | As of immediately after the Closing, the number of issued and outstanding ordinary shares of the Company held by the Seller shall be: 814,211,545 ordinary shares. |
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|   | (ii) | As of the date hereof, the percentage of the Company's issued and outstanding share capital that the Purchase Shares constitute on a fully diluted basis is approximately 29.6% and on a non-fully diluted basis approximately 30.6%. |
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