Bezeq Israel Telecommunication : Amended notice of special general meeting, January 18, 2021

Bezeq - The Israel Telecommunication Corp. Ltd.

("the Company" or "Bezeq")

January 14, 2021

The Israeli Securities Authority

The Tel Aviv Stock Exchange

Re - Amended Report- Notice of Extraordinary General Meeting of the Company's Shareholders

In accordance with the Companies Law, 5759-1999 ("the Companies Law"); the Securities Regulations (Periodic and Immediate Reports) 5730-1970 ( "the Reports Regulations"); the Companies Regulations (Notice and Announcement of General Meeting and Class Meeting in Public Companies and Addition of an Issue to the Agenda) 5760-2000, the Companies Regulations (Written Votes and Position Papers) 5766-2005 ("Written Vote Regulations"), and further to the resolutions of the compensation committee dated December 9, 2020, and the resolutions of the Company's board of directors dated December 10, 2020 and January 14, 2021, the Company hereby announces the convening of an extraordinary general meeting of the Company's shareholders ("the General Meeting") on Monday, January 18, 2021, at 11:00, at the Company's offices, 7 Hamanor Street, Holon, 5th floor ("the Company's Offices").

This amended report includes several amendments in relation to the Convening Notice for General Meeting that was published on December 12, 2020, further to discussions with consulting firms and representatives of Company investors.

1. Summary of the issues and proposed regulations on the agenda of the General Meeting:

1. Approval of the increase of the Company's registered share capital by 24,485,753 ordinary shares of NIS 1 par value each of the Company ("the Ordinary Shares"), and amendment of the wording of Article 8 of the Company's Articles of Association and Section 2B of the Company's Memorandum of Association.
2. Approval of the terms of tenure and employment of Mr. Gil Sharon as chairman of the board of directors of the Company, which will apply retroactively as of August 27, 2020, the date of commencement of his term of office. The approval of this resolution is subject to the General
   Meeting's approval of the amendments and revisions to the Company's compensation policy as set forth in sections 1.4 and 2.4 below.
3. Approval of allotment to Mr. Dudu Mizrahi, CEO of the Company, of 9,000,000 registered options, which are not listed on the Tel Aviv Stock Exchange Ltd. ("the Options" and "the TASE", as the case may be), exercisable into up to 9,000,000 ordinary shares, in accordance with the equity-based compensation plan (2020) that was approved by the Company's

compensation committee and board of directors on December 9 and 10, 2020, respectively ("the equity-basedCompensation Plan"). The approval of this resolution is subject to the General Meeting's approval of the amendments and revisions to the Company's equity-based compensation plan as set forth in sections 1.4 and 2.4 below.

1. Approval of amendments and revisions to the Company's compensation policy within its meaning in Section 267(A)A of the Companies Law, as approved by the General Meeting on May 23, 2019 for a three (3) year period, and amended on February 6, 2020 and February 14, 2020.

2. A summary of the proposed resolutions and the terms thereof :

1. Approval of the increase of the Company's registered capital (the proposed resolution in section 1.1 of the agenda)
2. 1. On December 10, 2020, after adopting the compensation committee's recommendation dated December 9, 2020, the Company's board of directors approved the equity-based compensation plan by virtue thereof for allotment of options exercisable into up to 84,000,000 ordinary shares, representing 2.94% of the Company's fully diluted issued and paid up share capital following the said exercise of options.
      The aforesaid approval includes an allotment of up to 58,735,000 options to up to 117 officers, executives and senior employees of the Company and its subsidiaries, including the chairman of the Company's board of directors and the CEO of the Company, for which an outline and a material private offering report will be published close to the date of this report in accordance with the Securities Regulations (Details of an Outline of an Offer of Securities to Employees), 2000 and Securities Regulations (Private Offering of Securities by a Listed Company), 2000 ("the Outline").
   2. Following the approval of the equity-based compensation plan, and in order to enable the future allotment of capital compensation up to the maximum permitted for allotment by virtue of the plan as stated in section 2.1.1 above1, it is proposed to approve an increase in the Company's registered share capital by 24,485,753 additional ordinary shares, so that it will amount to NIS 2,849,485,753 divided into 2,849,485,753 ordinary shares, and the amendment of the wording of Article 8 of the Company's Articles of Association and section 2B of the Company's Memorandum of Association, respectively.
   3. The Proposed Resolution: "To approve the increase of the Company's registered share capital by 24,485,753 additional ordinary shares, so that it will amount to NIS 2,849,485,753 divided into 2,849,485,753 ordinary shares, and the amendment of the wording of Article 8 of the Company's Articles of Association and section 2B of the Company's Memorandum of Association, respectively."

1 It is noted that as of the report date, the balance of unissued registered capital of the Company is 59,514,247 ordinary shares. Consequently, the allotment of 58,735,000 options that was approved on December 10, 2020 is not subject to the General Meeting's approval for capital increase, however, future allotments by virtue of the equity- based compensation plan may be subject to the capital increase approval in accordance with this resolution.

2.2 Approval of the terms of tenure and employment of Mr. Gil, Sharon as chairman of the board of directors of the Company (the proposed resolution in section 1.2 on the agenda)

1. On August 2, 2020, the Company's board of directors approved the appointment of Mr. Sharon as ordinary director and as chairman of the board of directors of the Company, as well as his appointment as stated in each of the following: Pelephone Communications Ltd. Bezeq International Ltd., D.B.S. Satellite Services (1998) Ltd., Walla!
   Communications Ltd. and Bezeq Online Ltd. ("the Subsidiaries" and "Chairman of the Board of Directors of the Company", as the case may be) with effect as of the date he assumes office.
2. On August 27, 2020, Mr. Sharon commenced his tenure as chairman of the board of directors of the Company. On September 6, 2020 an extraordinary general meeting of the
   Company's shareholders approved Mr. Sharon's appointment as ordinary director on the Company's board of directors2.
3. On December 9 and December 10, 2020, the compensation committee and board of directors of the Company, respectively, approved the terms of tenure and employment of Mr. Sharon as chairman of the board of directors of the Company, subject to the approval of the general meeting, in accordance with the provisions of Section 273 of the Companies Law.
4. Accordingly, and subject to the General Meeting's approval of the amendments and revisions to the Company's compensation policy as specified in sections 1.4 above and
   2.4 below, the terms of tenure and employment of Mr. Sharon as Chairman of the Board of Directors of the Company are submitted to the approval of the General Meeting, with effect as of August 27, 2020, the date of commencement of his tenure, pursuant to the employment agreement that was signed between Mr. Sharon and the Company on December 10, 2020, which is subject to the approval of the General Meeting ("the Employment Agreement"), the highlights of which are set forth below:

2.2.4.1 Roles and responsibilities of the chairman

Mr. Sharon shall serve as director and as chairman of the board of directors of the Company and in this capacity, subject to and in accordance with the board of directors' resolutions as shall be in effect from time to time, shall also serve as Chairman of the Board of Directors of the Company's subsidiaries, on a full time basis, and shall provide the following services: (1) lead the Company and outline its strategy, while implementing the strategy adopted by the Company's board of directors; (2) promote and develop the Company's business; and (3) carry out, among other things, the powers and duties assigned to him as Chairman of the Board of Directors, pursuant to the provisions of any applicable law, including the Articles of Association and procedures of the Company as shall be revised from time to time.

2 For additional details on the appointment of Mr. Sharon as director on the Company's board of directors, see report on the convening of a general meeting which the Company published on August 2, 2020 (reference no. 2020-01- 075247), which is included herein by way of reference.

1. The period of employment; early notice
   The employment agreement shall enter into force on August 27, 2020, the date of his entry into office, for an unlimited period. However, each of the parties may terminate this agreement, at any time and for any reason whatsoever, with a three (3) months prior notice, provided the chairman has been in office less than one year, in which case the early notice period shall be two (2) months.
2. Salary
   The total monthly salary of the Chairman of the Board of Directors shall amount to NIS 170,150 in gross terms ("the Salary"). The Salary will not be linked to any index. It is clarified that as long as the employment agreement is in effect, the Chairman of the Board of Directors of the Company will not receive a directors' fee from the Company and/or the subsidiaries/second-tier companies, in addition to his Salary.
3. Social and other benefits
   The Chairman of the Board of Directors of the Company will be entitled to customary social benefits, including contributions to a savings fund. In addition, he will be entitled to monthly reimbursement of car maintenance expenses in the amount of NIS 11,000, the installment of a refueling device "("Dalkan") and reimbursement of fuel charges.
   In addition, the Chairman of the Board of Directors of the Company will be entitled to reimbursement of home telephone and Internet and mobile phone expenses, in accordance with Company procedures, as shall be in effect from time to time, as well as reimbursement of expenses incurred in the discharge of official duty in accordance with Company procedures as shall be in effect from time to time, the scope of which shall be reviewed once annually by the
   Company's compensation committee.
4. Confidentiality and non-compete
   The Chairman of the Board of Directors will be subject to a confidentiality or
   "non-disclosure" obligation as customary as well as a two-month"cooling-off period" following the end of his term in office, during which the chairman will be paid a salary and all social benefits. During this period he will not compete with the Company's business at that time (including the business of the Company's subsidiaries or affiliated companies) and will refrain from establishing, managing, operating or being the controlling shareholder of any entity whose main business activity is similar to competes with the Company's business activity on the date of termination of the agreement. The Company may waive or shorten the non-compete period.