Document:

Form of Smile.Communications Series A Debenture Certificate

 Exhibit 10.2 
 Translated to English 
 Smile.Communications Ltd. 
 Registered Debentures (Series A) 
 Number ______ par value ______ of a series of NIS __________ 
  

	 1.
	 This certificate testifies that Smile.Communuications Ltd. (the “Company”) will pay the bearer,
__________________________ (“Holder”) or any person that is at that time the registered Holder of this Debenture, on the 15th day of March
of each of the years 2009 through 2016 (inclusive), 12.5% of the par value of this Debenture. The principal of the Debenture will be indexed to the Consumer Price Index published in February 2007 in respect of January 2007.

  

	2.	The unpaid balance of the principal of the Debenture (as in effect be from time to time) after indexation to the Index as stated above, shall bear 5.85% interest per annum. The
principal shall be indexed to the Consumer Price Index published in February 2007 in respect of January 2007, on the terms set forth below. 

  

	3.	In the event that the Debentures are registered on the TASE, in accordance with a resolution of the Company as provided in the Overleaf Terms, the Interest rate fixed in
Section 2 above will be adjusted, and commencing on the date of such registration, the unpaid balance of the principal of the Debentures (as in effect from time to time) after indexation to the Index in accordance with the Overleaf Terms, shall
bear annual interest at a rate to be determined by tender, which shall not exceed 4.75% and shall not be less than 4.25%. The principal shall be indexed to the Consumer Price Index published in February 2007 in respect of January 2007, on the terms
set forth below. 

  

	 4.
	 The Interest in respect of the unpaid balance of the principal of the Debentures (after indexation to the Index) shall
be paid once every 12 months, on the 15th day of March of each of the years 2009 – 2016, for the 12-month period ended on the last day prior to such
payment (the “Interest Period”). Notwithstanding the foregoing, the first interest payment will be made on March 15, 2009 for the period as of the first payment for the Debentures through March 14, 2009, on a 365-day
basis, and the last interest payment will be made on March 15, 2016, together with the last payment of the principal of the Debenture. 

  

	5.	Income tax shall be withheld as necessary from any payment of Interest and/or indexation, but the Company shall not withhold if prior to making the payment, the Debenture-Holder
presents to the Company certification from the tax authorities that such Holder has full or partial exemption. 

  

	6.	Any amount, principal or Interest, which is not paid as scheduled, shall bear late interest at the compulsory interest rate on unauthorized overdraws at Israel Discount Bank Ltd. at
that time, accruing from the date scheduled for payment through the date of actual payment. 

	7.	The Debentures from this Series are issued in accordance with the Trust Deed dated March 8, 2007, by and between the Company, of the first part, and Schiff Hasenperetz Trustees
(2004) Ltd. as Trustee, of the second part (“Trust Deed”), and the exhibits thereto. The provisions of the Trust Deed constitute an integral part of Debentures. 

  

	8.	All the Debentures from this Series shall rank pari passu with one another. 

  

	9.	This Debenture is issued pursuant and subject to the Overleaf Terms and the Trust Deed. 

 Sealed by the Company stamp this ___ day of _____________, 2007 
 Witness: _________________________________

  

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 OVERLEAF TERMS 
  

	1.	Interpretation and terms of the Debentures 

  

	 	1.1	In these Debentures, the following terms shall have the meanings ascribed to them below, unless another meaning is implied from the context: 

  

			
	“Debentures” or
“Debentures Series” or
“Debentures Series A”	  	The Debentures (Series A) that will be issued by the Company pursuant to a resolution of the Board of Directors of the Company, and additional Debentures that will be issued as part of this
series, if issued;
		
	“Register”	  	The Register in which the Holders will be listed as holding this Debenture, and which will document all the other details noted in Section 9 below;
		
	“Debenture-Holder” or
“Holder” or “Eligible
Person”	  	A Debenture-Holder and/or any person to whom his interest will inure and/or any transferee of the Debenture-Holder, subject to the terms set out below;
		
	“Debenture-Holders”	  	The persons whose names are listed at the relevant time in the Register , and in case of a co- Holders, the co-Holder who is named first in the Register;
		
	“Principal”	  	The amount of the principal stated on this Debenture (Series A);
		
	“Interest”	  	As defined in Section 2 below;
		
	“Series of Debentures” or “Series”	  	Debentures issued by the Company together with this Debenture (Series A), as well as debentures that will be issued by the Company on later dates, whose terms are identical to those of this
Debenture and the issuance of which shall be subject to the provisions of this Debenture with regard to issuance of additional debentures of this Series;

  

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	“Business Day” or “Bank Business Day”	  	Any day on which the banks or most of the banks in Israel are open for business;
		
	“Rating Company”	  	Midroog Ltd. or any other rating company as defined in the Second Addendum to the Securities Regulations (Details, structure and form of the prospectus), 5729-1969, with which the Company has
engaged for the purpose of rating the Debentures (Series A);
		
	“Shareholder Loan”	  	The NIS 157,000,000 balance of the debt at the date of execution of the Trust Deed in respect of the Debentures (Series A), which the Company owes the parent company, including interest, if any,
on such amount;
		
	“TASE”	  	The Tel Aviv Stock Exchange Ltd.

  

	 	1.2	The terms used in this document are written in the masculine for reasons of convenience, and shall include the feminine gender. 

  

	 	1.3	The Company will issue Debentures, NIS 1.00 par value each, up to an aggregate par value of NIS 425,000,000, at a price of 100% of their par value, on the terms set out below, in
425,000,000 units, by way of a tender for the interest rate on the Debentures (Series A). Each unit will consist of NIS 1 par value of Debentures (Series A) at a price of 100% of their par value. 

  

	 	1.4	In the event that the immediate proceeds of the issuance under the tender shall be less than NIS 200,000,000, the Company shall be entitled to cancel the issuance, and in such case
the Debentures (Series A) shall not be issued, money shall not be collected from subscribers and the Company shall have no obligations under this Deed or the documents ancillary thereto, including toward the Trustee or toward the Holders, nor will
the Company have any obligation to make any payment and/or commission with respect to such private issuance. 

  

	 	1.5	As of the date of the issuance, Midroog Co. has given the Debentures an A1 rating. 

  

	 	 1.6
	 On 15th of March of each
of the years 2009 through 2016, inclusive, the Company will redeem 12.5% of the par value of the original principal of the Debentures plus indexation as provided in Section 4 below. The Debentures shall bear annual Interest at the rate stated
in Section 2 below, which is indexed to the Consumer Price Index commencing from the Index known on the date of this Debenture, which is the Index published in February 2007 in respect of January 2007. Interest will be paid on the indexed
Principal as stated above. 

  

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	 	1.7	Registration of the Debentures (Series A) 

  

	 	1.7.1	The Company intends, subject to approval by the Israel Securities Authority and the TASE, to take steps to cause the registration of the Debentures (Series A) on the TASE, and
subject to a prospectus (“Registration” and “Prospectus”). 

  

	 	1.7.2	In the event that the Debentures (Series A) are not registered for by December 5, 2007, any or all of the Holders may, after such date and through December 31, 2007
(“Early Repayment Period”), demand early repayment of the Debentures (Series A) by the Company (“Early Repayment Demand” and “Redeemed Debentures”, respectively). 

  

	 	1.7.3	The amount to be paid to the Debenture-Holders in case of such early repayment (“Early Repayment Amount”) shall be the higher of (a) the obligation under the
Debentures (i.e. Principal plus Interest and indexation accrued through the date of the Company’s notice of early repayment); (b) the cash flow balance expected from the Debentures (Principal plus Interest and indexation) up to the
original date of payment of the Debentures, capitalized at the Interest stated in the Interest Rates table, in accordance with the average life expectancy and the latest rating, as effective on the Early Repayment Date. 

  

	 	1.7.4	Such early repayment of the Debentures (Series A) shall not entitle the person that held such Redeemed Debentures to payment of Interest and/or any other payment in respect of the
period after the Early Repayment Date. 

  

	 	1.7.5	Such Early Repayment Demand by any or all of the Holders shall be submitted in writing to the Company at its address as it appears in the Trust Deed, and shall include any
information as the Company may request, at its absolute discretion. An Early Repayment Demand can be submitted to the Company on any trading day during the Early Repayment Period. Early repayment shall be effected no later than forty-five
(45) days from the actual date of submission of the Early Repayment Demand to the Company. 

  

	 	1.7.6	Non-publication of the Prospectus and/or non-completion of the Registration shall not constitute violation of the provisions of this Deed and shall not entitle Holders to any right
other than their right to early repayment as provided above and/or any other right noted expressly in the Trust Deed in connection with non-publication of the Prospectus and/or non-completion of the Registration. 

  

	 	1.7.7	All the expenses in connection with effectuating the Registration and publication of the Prospectus shall be borne by the Company. 

	 	

  

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	 	1.8	Until Registration for Trading is effected, if effected, and after the private placement, subject to the TASE Regulations and/or the regulations of the TASE clearing house,
including any directive or instruction given thereunder, the Company shall, within a reasonable time after the private placement, take steps to cause the Debentures to be registered on the TASE clearing house, which will grant clearing services with
respect to the Debentures. In addition, the Company shall take steps to cause registration of the Debentures on Nashir (a clearing and depositary system for securities issued to institutional investors under a prospectus), and shall file an
application for such registration no later than 60 days after the date of the private placement. All the registration expenses referred to in this Section shall be borne by the Company. 

  

	 	1.9	The Company may, from time to time, issue additional debentures in this series, on the same terms as those of the Debentures, at any price and in any manner as the Company may deem
fit, at any discount rate, whether the same as or different from (higher or lower) that of the Debentures (Series A), provided that as a result of such issuance the rating of the Debentures shall not fall below the rating of the Debentures (Series
A) immediately prior to the date of the issuance of such additional debentures. The Company shall notify the Trustee of any such issuance. The Trust Deed shall govern any such additional Debentures (Series A) issued by the Company. The additional
Debentures (Series A) shall not entitle their Holders to Interest in respect of the Interest periods that ended prior to issuance of such additional Debentures. The Company shall apply to the TASE for Registration of any additional Debentures
(Series A) issued as stipulated above. 

  

	 	1.10	The Company reserves the absolute right to issue securities and/or to additional series of debentures at any time, whether or not convertible into shares of the Company, and on
terms of redemption, interest, indexation, priority in the event of liquidation, and other terms, all as the Company may deem fit, and regardless of whether they rank pari passu with, behind or before the Debentures. 

 

	 	1.11	 Should the discount rate fixed for the Debentures following issuance of additional Debentures from the same series differ from the discount rate of the Debentures
of the same series at such time (the debentures issued as described below shall be issued without a discount), the Company shall apply to the tax authority before issuing the additional Debentures, for confirmation that for the purposes of the tax
withholding from the discounted amounts in respect of the Debentures of the same series, a uniform discount rate will be fixed for all Debentures of the same series, according to a formula that weights the various discount rates (if any) in the same
series. In the event of receipt of such confirmation, the Company shall compute the weighted discount rate in respect of all the Debentures (Series A) and shall deduct tax on the date of payment of the Debentures (Series A) at such weighted rate and
in accordance with the provisions of the law. If such confirmation is not obtained, the Company shall notify the Trustee, immediately prior to issuance of the additional Debentures, of the highest discount rate generated in respect of the Debentures
(Series A). 

  

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The Company shall withhold tax at the time of payment of the Debentures (Series A), at such discount rate. Consequently, there may be cases in which the
Company will withhold tax in respect of discount amounts at a rate that exceeds those originally fixed, from any person that held the Debentures prior to issuance of the additional Debentures (Series A). In such case, a taxpayer who held Debentures
(Series A) prior to issuuance of the additional Debentures (Series A) and through repayment of the Debentures (Series A), shall be entitled to file a tax return and to receive a rebate of the tax withheld from the discount amount, to the extent that
such taxpayer is entitled to such rebate by law. 

  

	 	1.12	The Company undertakes not to create any security interest (fixed or floating charge) on the any or all of the assets of the Company, until repayment of the Debentures (Series A) in
full – except with the consent of the Debenture-Holders (Series A) by a simple majority (50%) at a general meeting of the Debenture-Holders (Series A). At the date of execution of the Trust Deed, no charges are registered on the
Company’s assets. 

  

	 	1.13	At the request of the Trustee, the Company shall deliver to the Trustee confirmation of its legal counsel that the Company has not created any security interest on its assets,
together with an up-to-date printout of the Registrar of Companies. 

  

	 	1.14	The Company covenants not to repay the Shareholder Loan in full or in part as long as the ratio of the net financial debt (as defined (net): the aggregate bank debt, the debt to the
Debenture-Holders, the debt to the infrastructure capacity vendors, a dividend announced less cash, cash equivalent, and any negotiable securities portfolio) after full repayment of the Shareholder Loan or part of it, to the EBITDA of the last four
quarters, is higher than 2 at the end of each quarter according to the reviewed or audited financial statements, as the case may be. If this ratio falls below 2, the Company may repay the Shareholder Loan, provided that after full or partial
repayment of the Shareholder Loan, the aforementioned ratio shall not exceed 2. 

 21 days prior to any repayment of the
Shareholder Loan, the Company shall deliver to the Trustee a Company report, approved by its auditor, regarding the Company’s compliance with the terms of this Section immediately after repayment of the Loan. 
  

	 	1.15	The Company covenants that if it is determined that the Shareholder Loan bears interest, such interest shall accrue and be paid only at the time of repayment of any part of the
principal of the Shareholder Loan and on such part. 

  

	 	1.16	 For the avoidance of doubt, it is hereby stated that the Trustee has no duty to examine, and has not examined, the need to provide collateral in order to secure the
payments to Debenture-Holders. By engaging in the Trust Deed and consenting to serve as trustee for the Debenture-Holders, the Trustee is not 

  

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giving his opinion, express or implied, as to the ability of the Company to meet its obligations towards the Debenture-Holders. The foregoing shall not
derogate from the obligations of the Trustee under the law and/or the Trust Deed, nor shall it derogate from the duty of the Trustee (insofar as it applies to the Trustee by law) to examine the influence of changes in the Company from the date of
issuance onwards, to the extent that such changes could have an adverse effect on the ability of the Company to meet its obligations to the Debenture-Holders. 

  

	2.	Interest 

  

	 	2.1	The unpaid balance of the Principal (as will be from time to time) and after indexation to the Index as aforesaid, shall bear 5.85% Interest per annum. The Principal shall be
indexed to the Consumer Price Index published in February 2007 in respect of January 2007, on the terms described below. 

  

	 	2.2	If the Debentures are registered on the TASE, in accordance with the decision of the Company as provided in Section 2.7 below, the Interest rate noted in Section 2.1 above
shall vary, and commencing from the date of Registration of the Debentures, the unpaid balance of the Principal (as will be from time to time) and after indexation to the Index as described below, shall bear annual Interest at the rate that will be
determined by tender, which shall not exceed 4.75% and shall not be less than 4.25%. The Principal shall be indexed to the Consumer Price Index published in February 2007 in respect of January 2007, on the terms described below. The Company shall
notify the TASE, at least four trading days in advance, of any change in the Interest rate. 

  

	 	 2.3
	 The Interest in respect of the unpaid balance of the Principal (after indexation of the Principal to the Index), shall
be paid once every 12 months, on the 15th day of March of each of the years 2009 – 2016, each time with respect to the 12-month period ended on the
last day prior to such date (“Interest Period”). 

  

	 	2.4	Notwithstanding the provisions of Section 2.3 above, the first Interest payment shall be made on March 15, 2009 for the period from March 8, 2007 through
March 14, 2009, on a 365-day basis. The first Interest rate shall be 11.83%. The Company shall notify the TASE at least four trading days in advance of any change in this Interest rate. The last payment of the Interest shall be made on
March 15, 2016, together with payment of the last installment of the Principal. 

  

	 	2.5	Income tax shall be withheld as necessary from any payment of Interest and/or indexation, but the Company shall not withhold if prior to making the payment, the Debenture-Holder
presents to the Company certification from the tax authorities that such Holder has full or partial exemption. 

  

	 	2.6	Any amount, principal or Interest, which is not paid as scheduled, shall bear late interest at the compulsory interest rate on unauthorized overdraws at Israel Discount Bank Ltd. at
that time, accruing from the date scheduled for payment through the date of actual payment. 

  

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	3.	Repayment of the principal 

 On the 15th day of March of each of the years 2009 – 2016 (inclusive), the Company shall redeem 12.5% of the original amount of the Principal after indexation to the Index, all in accordance with the indexation terms set forth in Section 4
below. 
 Such repayment shall be made in accordance with the provisions of Section 5 below, and upon such payment, the par value
of the Debentures shall automatically be reduced according to the balance of the par value as in effect after each payment. 
  

	4.	Payment of and Interest on the Principal 

 In
this Section, the following terms shall have the meaning ascribed to them below: 
  

			
	“Consumer Price
Index” or “ Index”	  	The price index know as the Consumer Price Index, including fruits and vegetables, which is published by the Central Bureau of Statistics and Economic Research, and including such Index even if
published by another official body or institution, and including any official index that may replace it, whether or not it is based on the same data as those on which the Index is currently based. In the event that the Index is replaced by another
index published by such body or institution, and such body or institution did not determine the ratio between the new Index and the replaced Index, the ratio shall be fixed by the Central Bureau of Statistics, and if it is not, then it shall be
fixed by an entity on which the Company and the Trustee shall agree, and if they fail to reach such agreement, by an entity that shall be named by the President of the Institute of Certified Accountants in Israel.
		
	“ Payment Index”	  	The last Consumer Price Index known on the date of any payment of the Principal or the Interest.
		
	“ Base Index”	  	The Index published on February 2007 in respect of January 2007.

  

	 	4.1	The Principal shall be linked to the Consumer Price Index at the Base Index rate. 

  

	 	4.2	Each payment of the Principal shall be effected together with indexation, such that each payment shall be increased prorated to the increase of the Payment Index over the Base
Index. 

  

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	 	4.3	Should it transpire on the date of any payment of the Principal that the Payment Index is the same as or lower than the Base Index, the Base Index shall serve as Payment Index.

  

	 	4.4	Interest shall be paid on the balance of the amount of the Principal, as increased prorate to the increase of the Payment Index over the Base Index. Should it transpire on the date
of any Interest payment that the Payment Index is the same as or lower than the Base Index, the Base Index shall serve as Payment Index. 

  

	5.	Principal and Interest payments 

  

	 	5.1	All payments of the Principal and/or Interest shall be made on the dates stated in Section 2 and Section 3 above, and in accordance with the terms set forth therein, to
persons named in the Register of Debenture-Holders at the end of the third Business Day of the month in which such payment is made(“Date of Record”). The last payment of the Debentures (Principal and Interest) shall be made against
delivery of the Debenture certificates to the Company at its registered office, and at any other location of which it gives notice. 

  

	 	5.2	The payment to Eligible Persons shall be made by check or by bank transfer to such bank account of the persons named in the Register of Debenture-Holders, as each Debenture-Holder
shall provide to the Company ahead of time, in accordance with the provisions of Section 5.3 below. Payments shall be made in accordance with the indexation terms as provided in Section 4 above. If the Company is unable, for any reason, to
pay any such amount to the Eligible Persons, it shall deposit the relevant amount with the Trustee as provided in Section 6.2 below. 

  

	 	5.3	A Debenture-Holder who wishes to notify the Company of the details of the bank account to be credited with the payment under the Debenture as provided in Section 5.2 above, or
of a change in such account details or his address, can do so by written notice delivered by registered mail to the Company, but the Company shall comply with such instruction only if it is received at its registered office at least 30 days prior to
the date fixed for making any payment in respect of the Debentures. In the event that the notice is received by the Company less than 30 days before such date, the Company shall effect payment to such new account or address only in relation to
payments whose date is subsequent to the first date of payment close after receipt of such notice. 

  

	 	5.4	In the event that a person entitled to payment fails to deliver written details of his bank account to the Company, payment shall be made by check sent by registered mail to the
last address written in the Register of Debenture-Holders. Delivery of a check to an Eligible Person by registered mail as aforesaid shall, for all intents and purposes, be deemed payment of the amount of the check, on the date of its dispatch by
mail as aforesaid, provided that it is honored upon its proper presentation for collection. 

  

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	 	5.5	If the date fixed for any payment of Principal or Interest falls on a day that is not a Business Day, actual payment shall be postponed to the first Business Day thereafter.

  

	 	5.6	At the time of any payment of Interest or any installment of the Principal, Interest and indexation as set forth herein, the Holder shall present to the Company the Debenture in
respect of which such payments are made, and the Company shall create a notice on the face of the Debenture stating the amounts paid and the date of their payment. The Company may, in special cases, at its discretion, waive presentation of the
Debenture subject to receipt of a letter of indemnity or other satisfactory guarantee in respect of losses that it might incur due to failure to create such notice on the Debenture, all at the discretion of the Company. Notwithstanding the
foregoing, the Company may, at its discretion, keep any other records of such partial payments. 

  

	 	5.7	The Company may make the aforementioned payments through the TASE clearing house. 

  

	6.	Default for a reason beyond the Company’s control 

  

	 	6.1	Any amount payable to a Debenture-Holder and which was not actually paid for a reason dependent on the Debenture-Holder although the Company was ready to pay it, shall cease to bear
Interest and indexation from the date fixed for its payment, and the Debenture-Holder shall be entitled only to such amounts of the Principal, indexation or Interest, to which he was entitled on the date fixed for that payment.

  

	 	6.2	In the event that such amount was not paid within 14 days of the date fixed for payment, the Company shall transfer it to the Trustee, who shall hold it in trust for the
Debenture-Holder, and such holding shall be deemed payment of that amount to the Debenture-Holder. The Company shall notify the Debenture-Holder, at the address in its records, of such deposit. If that amount was the last payment – the holding
in trust shall be deemed redemption of the Debenture. 

  

	 	6.3	All the amounts held by the Trustee shall be deposited in a bank, in trust for Debenture-Holders, and shall be invested in securities of the State of Israel or in shekel deposits,
all at the Trustee’s discretion and subject to the provisions of any law. The Trustee shall transfer to the Debenture-Holders the monies accrued on the deposit and deriving from liquidation of their investment, net of expenses and trust account
management fees and net of any statutory tax. Payment shall be made against presentation of such evidence acceptable to the Trustee concerning the entitlement of the Holder to receive it. 

  

	 	6.4	At the end of a year from the final date for repayment of the Debentures, the Trustee shall return the amounts accumulated in its possession to the Company, net of hitsis expenses,
and the Company shall hold them in trust and invest them as described above, for the Debenture-Holders. The Company shall give the Trustee confirmation of the return of the foregong amounts and of their receipt in trust for the Debenture-Holders.

  

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	7.	Splits 

 One certificate shall be issued to
each Holder, representing all of the Debentures held by such Holder. Each certificate may be split into several certificates such that the aggregate par value of the resulting Debentures represented thereby, equals the par value of the original
Debenture, provided that the par value of the new certificates are denominated in multiples of NIS 1.00, and in the event of any remainder, another certificate shall be created for same. The split certificates shall be delivered to the Holder
against the delivery of the original Debenture certificate to the Company at its registered address. 
  

	8.	Transfer of a Debenture 

 This Debenture and
the rights attaching to it can be transferred, provided that the transferee is an investor, as defined in the First Addendum to the Law. The transfer shall be go subject to the following terms: 
  

	 	8.1	Debentures may be transferred by a deed of transfer in an accepted form, properly executed by the registered owner or his legal representatives, and delivered to the Company at its
registered office together with the Debenture certificate to which the transfer relates and any other evidence required by the Company as evidence of the transferor’s right to transfer it. If any compulsory payment is applicable by law to such
deed of transfer, proof of payment to the Company’s satisfaction shall be delivered to the Company. 

  

	 	8.2	In the event of transfer of only part of the stated Principal amount of the Debenture, subject to the provisions of Section 7 above, the certificate must first be split into
the applicable number of Debenture certificates, such that the total of all the Principal amounts designated on the post-split certificates shall be equal to the Principal designated on the original Debenture certificate. 

 

	 	8.3	Subject to satisfaction of the foregoing conditions, the transfer shall be recorded in the Register and on the Debenture certificates being transferred, which shall be delivered to
the transferee, and all the terms set forth in this Debenture shall apply to the transferee, such that wherever it says the words “the Debenture-Holder”, it shall be deemed to say “the transferee”. 

 The foregoing provisions shall not apply if the Debentures are traded on the TASE’s Nesher system and/or institutional investors as provided in
Section 1.7.1 above, or are registered on the TASE. 
 After registration of the Debentures on the TASE or institutional investors, the
following terms shall apply: 
  

	 	8.4	Any amount of the Debentures can be transferred, provided that it is in whole shekels and effected by a deed of transfer in the form practiced by the Company for transfer of shares,
properly executed by the registered owners or their legal representatives. 

  

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	 	8.5	The deed of transfer shall be delivered to the registered office of the Company, together with the Debenture and any suitable proof of the identity and entitlement as the Company
may request, and together with proof to the Company’s satisfaction of any compulsory government payments. The Company may retain the deed of transfer. 

  

	 	8.6	The Company’s Articles of Association relating to share transfers shall apply, mutatis mutandis, to any transfer or conversin of Debentures. 

 All the expenses involved in any split ad/or transfer of Debentures, including a handling commission in the case of a split and including any other
levies, as applicable, shall be paid by the party applying for the split and/or the transfer, as the case may be. The provisions of this section shall also apply to waiver of a Debenture, mutatis mutandis. 
  

	9.	Register of Debenture-Holders 

  

	 	9.1	The Company shall maintain at its registered office, or cause others to maintain in its name, a Register in which the Debenture-Holders are listed, with the addresses of Holders,
the bank account to which payments of Principal and Interest will be transferred, and the par value of the Debentures listed in their name as in effect from time to time. Any transfers of ownership of the Debentures made in accordance with
Section 8 above, shall also be recorded in the Register. 

  

	 	9.2	As long as they remain Holders, Debenture-Holders may inspect the Register at any reasonable time during the Company’s normal working hours, by appointment with the Company.

  

	 	9.3	The Company is not required to record in the Register of Debenture-Holders any notice regarding any express, implied or presumed trust, or regarding pledges or charges of any kind,
or regarding any equitable right, claim or setoff or any other right in connection with the Debentures. The Company shall recognize only the ownership of the person in whose name the Debentures were registered, provided however that his legal heirs,
the administrators of his estate or the executors of his will and any person who is entitled to the Debenture due to the bankruptcy (or liquidation in case of a corporation) of any registered owner, may be registered as owners of such Debentures
after furnishing evidence of such claimed rights to the satisfaction of Company management. 

  

	 	9.4	The Company may close the Register from time to time, for a period or periods not to exceed 30 days per year in the aggregate. 

  

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	10.	Early redemption initiated by the Company 

 The Company is entitled (but not obliged), at its exclusive discretion, to effect full or partial early redemption of the Debentures during the last two weeks of any calendar quarter, commencing from the day of the private placement and at
any time thereafter, including after the Debentures (Series A) have been registered for trading. In the event of early redemption, the Company shall transfer payment of the Proceeds of such Early Redemption (as defined below), subject to and in
accordance with the following terms: 
  

	 	 10.1
	 The Company shall deliver written notice to the Debenture-Holders, with a copy to the Trustee, of early redemption of
all or part of the outstanding balance of the Debentures, in a single payment that will be paid to the Holders at least 17 days before (inclusive of the 17th day) and not later than 45 days after the date of delivery of such notice (“Early Redemption Date”). The Early Redemption Date shall not fall in the period between the date of record for payment of the Interest and the
date of actual payment thereof. 

  

	 	10.2	The amount to be paid to the Debenture-Holders in case of such early redemption (“Early Redemption Amount”) shall be the higher of (a) the obligation under the
Debentures (i.e. Principal plus Interest and indexation accrued through the date of the Company’s notice of early redemption); (b) the cash flow balance expected from the Debentures (Principal plus Interest and indexation) up to the
original date of payment of the Debentures, capitalized at the yield of government bonds + 0.3%. Such capitalization will be computed as of the Early Redemption Date to the last date fixed for payment of the Debentures. 

  

	 	10.3	“The yield of the government bond” means – the yield in the 21 Business Days ending two Business Days before the date of the notice of early redemption
(“Controlling Date of the Notice”) of two series of Galil 5427 and Galil 5481 government bonds. 

  

	 	10.4	On the Early Redemption Date, future payments will be reduced proportionately, and in the event of their full repayment, the Debentures shall expire and shall have no further force
or effect. In other words, on partial redemption, the unpaid balance will be redeemed in equal installments according to the number of payments of the Principal still outstanding. In the event of partial redemption, the record date for entitlement
to early redemption of the Principal will be 12 days prior to the Early Redemption Date. 

  

	 	10.5	Partial early redemption will be effected pari passu for all Debenture-Holders. 

  

	 	10.6	Payments made as part of such partial redemption will be deemed to have been made first against the indexation and Interest payments (that accrued up to the date of the
Company’s notice of the early redemption), and thereafter against the Principal. 

  

	11.	Terms of issuance 

  

	 	11.1	The Debentures shall not be secured by any collateral. 

  

 14 

	 	11.2	The Debentures shall rank pari passu among themselves, with no priority or preferred right among them. 

 The Company reserves the right to purchase Debentures at any time, at any price it deems appropriate, without prejudice to the duty to repay the
Debentures still held by Debenture-Holders. Debentures purchased by the Company as aforesaid shall be cancelled upon such purchase and shall be delisted (after and insofar as the Debentures have been registered on the TASE) from the TASE, and the
Company may not reissue them. A parent company and/or a subsidiary of the Company and/or a corporation in its control and/or the controlling shareholder and/or corporation controlled by a controlling shareholder (directly and/or indirectly) of the
Company, may purchase and/or sell Debentures from time to time at their discretion and in accordance with the law. As long as the Debentures are owned by a parent company and/or a subsidiary of the Company and/or a corporation in its control and/or
a controlling shareholder and/or a corporation controlled by a controlling shareholder (directly and/or indirectly) of the Company, they shall not grant such entity voting rights at meetings of the Debenture-Holders and shall not be taken into
account for the purpose of determining the presence of a quorum or for exercising any other right granted to Debenture-Holders of the Company. 
  

	12.	Meetings of Debenture-Holders 

 Proceedings
at meetings of the Debenture-Holders shall as provided in the Second Addendum to the Debenture certificates. 
  

	13.	Early repayment demand 

  

	 	13.1	Subject to the provisions of Section 13.3 below and the provisions of the Trust Deed, the Trustee may demand early repayment of the entire outstanding balance of the
Debentures, and must do so if so demanded by an extraordinary resolution adopted at the general meeting of Holders of Debentures in circulation at such time, subject, however, to the occurrence of one or more of the following events of default:

  

	 	(1)	The Company fails to pay any amount, including Principal, Interest, late interest, if any, and indexation payable in connection with the Debentures, within 30 days after the time
fixed for such payment, except where the Company provides reasonable proof that such non-payment is due to reasons beyond the Company’s control. 

  

	 	(2)	A court of law gives a permanent order or a binding resolution is made to liquidate the Company or a temporary receiver is appointed for the Company and his appointment is not
canceled within 45 days. 

  

	 	(3)	An attachment is imposed on substantially all of the assets of the Company or action is taken to effectuate such attachment, and the attachment is not removed or the action is not
cancelled within 45 days, and the Trustee deems such attachment or action to jeopardize repayment of any amount payable by the Company in connection with the Debentures. 

  

 15 

	 	(4)	A receiver is appointed for the Company and/or substantially all of its assets, and such appointment is not canceled within 45 days. 

  

	 	(5)	The Company gives notice of its intention to cease payment of all its debts or actually ceases payment of all its debts. 

  

	 	(6)	The Company violates or defaults on any term or covenant included in the Debentures and/or in the Trust Deed, and the Trustee deems this a material violation of the rights of
Debenture-Holder, and the Company fails to satisfy such term within 14 Business Days after notice by the Trustee. 

  

	 	(7)	The Rating Company discontinues the rating of the Debentures for a period of more than 45 days, due to the Company’s breach of the agreement with the Rating Company.

  

	 	(8)	A petition is filed by a third party to provide the Company with protection against creditors under Section 150 of the Companies Law, 5759-1999, and such petition is not
withdrawn within 45 days of the court hearing. 

  

	 	(9)	As long as the Debentures have not been registered on the TASE – The Rating Company rates the Debentures lower than “Baa1” (or the corresponding rating on the
rating scale of the relevant rating company). For the removal of doubt, it is stated that if the Debentures are rated by a number of rating companies (at the Company’s request), then for the purposes of this sub-section, the lowest of the
ratings shall apply. 

  

	 	(10)	As long as the Debentures have not been registered on the TASE – Eurocom Communications Ltd. ceases to be the Controlling Shareholder, as defined in Section 268 of
the Companies Law, 5759-1999. 

  

	 	(11)	The Company is liquidated or delisted for any reason, and/or engages in a Merger Transaction as defined in the Companies Law, 5759-1999, and/or reorganizes, and all in such a way
that the Company ceases to exist, except in cases where such liquidation and/or delisting and/or merger and/or reorganization do not have an adverse effect on the Company’s obligations, and all subject to the provisions thereof

  

	 	13.2	As long as the Debentures have not been registered on the TASE – Early repayment of another series of debentures of the Company, in a material amount, is demanded. The
Trustee shall notify the Debenture-Holders of the occurrence of an event constituting cause for early repayment as soon as he learns of it. 

  

 16 

	 	13.3	Notwithstanding the provisions of Section 13.1 above, early repayment of the Debentures shall not be demanded except after the Trustee has given the Company prior written
notice of his intention to take such action and the Company does not respond to such notice within 60 days of its receipt. The notice will demand that the Company pay the amounts in arrears or satisfy the other provisions of the Trust Deed and the
Debentures whose violation constitutes cause for the foregoing actions of the Trustee, or that it restore the situation as was prior to the accrual of such cause. 

  

	 	13.4	Notwithstanding the foregoing, should the Trustee believe that a delay as provided in Section 13.2 above might materially jeopardize the rights of Debenture-Holders, he may
shorten the notice period or give no notice at all, as he deems necessary, provided that he gives the Company written notice of this to the Company simultaneously with the demand for early repayment of the debt in accordance with Section 13.1
above. 

  

	14.	Changes in the terms of the Debentures 

 No
change, waiver and/or settlement in any matter relating to the terms of this Debenture and the rights arising from it, shall be valid unless made in writing by the Company and the Trustee, in accordance with the provisions of Section 26 of the
Trust Deed. 
  

	15.	Receipts as evidence 

 Without derogating
from the provisions of Section 14 of the Trust Deed regarding “Receipt from Debenture-Holders”, a receipt from a Debenture-Holder for the Principal, Interest or indexation paid to him by the Trustee or by the Company in respect of his
Debentures, shall constitute full and final release of the Company or the Trustee, as the case may be, in connection with the amounts stated in such receipt. 
  

	16.	Replacement of Debenture certificates 

 In
the event that this Debenture certificate is defaced, lost or damaged, the Company may order its cancellation and issue a new certificate to replace it, provided that the Debenture certificate was submitted to the Company and destroyed by it, or
that it was proven to the Company’s satisfaction that the certificate was lost or destroyed and the Company received guarantees to its satisfaction for any possible damages. For every Debenture certificate issued under this Section, a sum shall
be paid as determined by the Company from time to time. Levies and expenses involved in the issue of any new certificate shall be borne by the person requesting such certificate. 
  

	17.	Jurisdiction 

 Any and all disputes in
connection with the terms of the Debentures and/or the Trust Deed and/or these Overleaf Terms shall be submitted to the courts in Tel Aviv-Yofo, which shall have exclusive jurisdiction. 
  

 17 

	18.	No representation 

 Holders are purchasing
the Debentures based on their own evaluation and at their own liability, and the Company or representatives (including its executives and/or consultants) have not provided any information or made any representations or warranties in connection with
the issuance of the Series of Debentures, including in connection with the condition of the Company, its assets or its obligations. 
  

	19.	Notices 

  

	 	19.1	Unless expressly determined otherwise in the terms of the Debentures and/or in the Trust Deed, any notice from the Company to the Debenture-Holders shall be given by registered mail
to the last address of the Debenture-Holder recorded in the Register, and any notice sent as aforesaid shall be deemed to have been delivered to the Debenture-Holder seven Business Days after dispatch at the post office, or by publication of notice
in two widely-circulated Hebrew daily newspapers in Israel. A notice published in the newspapers shall be deemed to have been delivered 72 hours from the date of its publication. 

  

	 	19.2	Any notice or demand from the Trustee to the Company can be given by registered mail to the Company’s registered office, or to any other address of which the Company notifies
the Trustee in writing, and any such notice or demand shall be deemed to have been received by the Company seven Business Days after dispatch at the post office. 

  

	 	19.3	A copy of any notice delivered by the Company to Debenture-Holders shall also be delivered to the Trustee. 

  

	20.	General 

  

	 	20.1	No rights claimed in equity, offset rights or counterclaims asserted or underway currently or in the future in connection with the relationship between Holders and the Company shall
be taken into account for the purpose of payments of the Principal or Interest to Debenture-Holders. 

  

	 	20.2	Any person that becomes entitled to a Debenture as a result of the bankruptcy or liquidation of a Holders, shall be entitled, upon producing such evidence as the executives of the
Company may require from time to time, to be registered as Holder of such Debenture or, subject to these Terms, to transfer the Debenture. 

  

	 	20.3	Notwithstanding the foregoing and subject to the provisions of the law, for the purpose of registering of the Debentures on the TASE, the Company may, at its absolute and exclusive
discretion, amend the Trust Deed and/or the Debentures, as and to the extent required by the Israel Securities Authority and/or the TASE and/or the TASE clearing house and/or any other authority, insofar as such amendments are required for
Registration on the TASE or for authorization to publish a prospectus, and the consent of the Trustee and/or Debenture-Holders shall not be required. 

  

 18 

	21.	Early redemption initiated by the TASE 

  

	 	21.1	Should the TASE decide to delist the Debentures (Series A) in circulation because the value of the Series of Debentures (Series A) has fallen below the amount fixed in the TASE
directives for delisting, the Company shall take the following action: 

  

	 	21.1.1 	Within 45 days of the date of the resolution of the Board of Directors of the TASE, the Company shall give notice of the date of early redemption on which Holders may redeem their
Debentures. Notice of such Early Redemption Date will be published in two widely-circulated Hebrew daily newspapers in Israel, and will be delivered in writing to all the registered Debenture-Holders. 

  

	 	21.1.2 	The Early Redemption Date will be at least 17 days and no later than 45 days from the date of publication of the notice as stipulated above, but will not be between the date fixed
for payment of the Interest and the date of actual payment thereof. 

  

	 	21.1.3 	On the Early Redemption Date, the Company shall redeem the Debentures whose Holders have requested such redemption, according to the balance of their par value plus indexation and
the Interest accrued on the Principal. 

  

	 	21.1.4 	Such early redemption of the Debentures shall not entitle the person that held such Debentures to payment of Interest in respect of the period after the redemption date.

  

	 	21.1.5 	In the event that an Early Redemption Date is fixed due to delisting as described above, this shall not prejudice the redemption rights stipulated in the Debentures (Series A) for
any of the Debenture-Holders (Series A) that do not redeem them on such Early Redemption Date, but the Debentures will be delisted from the TASE and they shall bear all tax implications arising from such delisting. 

  

 19Agreement dated July 25, 2006

 Exhibit 10.4 
 Translated to English 
 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.

					
			
	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. 

  

	 	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. 

  

	 	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). 

 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). 

  

	 	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. 

  

	 	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). 

 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. 

	 	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. 

 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. 

  

	 	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. 

	 	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. 

	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. 

	 	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. 

 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. 

	 	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. 

	 	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. 

	 	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.

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

					
	/s/ Illegible	 		 	/s/ Illegible
	Internet Gold – Golden Lines Ltd.	 		 	Fishman Family Properties Management (1988) Ltd.
			
	/s/ Illegible	 		 	/s/ Illegible
	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. 
  

	
	/s/ Illegible
	Globescom Communication (1997) Ltd.

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