SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
F O R M 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of December 2004
INTERNET GOLD-GOLDEN LINES LTD.
(Name of Registrant)
1 Alexander Yanai Street Petach-Tikva, Israel
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F __
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):__
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): __
Indicate by check mark whether by furnishing the information
contained in this Form, the registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes__ No X
If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): 82-________
Internet Gold-Golden Lines Ltd.
6-K Items
1. Notice of and Proxy Statement for Internet Gold-Golden Lines Ltd. Annual
General Meeting to be held December 23, 2004.
2. Internet Gold-Golden Lines Ltd. Proxy Card.
Item 1
INTERNET GOLD - GOLDEN LINES LTD.
November 23, 2004
NOTICE OF 2004 ANNUAL MEETING OF SHAREHOLDERS
Internet Gold-Golden Lines Ltd. Shareholders:
We cordially invite you to the Annual General Meeting of Shareholders. It
will be held at 4:00 p.m. on Tuesday, December 23, 2004 at the offices of
Eurocom Communications Ltd. at 2 Dov Friedman Street, Ramat Gan 52141, Israel.
The purpose of the meeting is to consider and vote upon the following
matters:
(1) The election of two Class B directors for terms expiring in 2007;
(2) Authorization of our Board of Directors to acquire a 48.36% equity
interest in Gold-Trade (Electronic Commerce) Ltd., or Gold Trade, from
Eurocom Marketing (1986) Ltd., or Eurocom Marketing, for $241,818 or
for shares of Internet Gold having a market value of $241,818 at the
date of acquisition, as the Board of Directors will determine;
(3) Approval of the inclusion of our chief executive officer, who is also
a director, as a participant in the incentive plan of our company;
(4) Approval of the amendment of Article 41 of our Articles of
Association;
(5) Ratification of the appointment of Somekh Chaikin, independent
certified public accountants in Israel, a member firm of KPMG
International, as our independent auditors for the year ending
December 31, 2004 and authorization for the Board of Directors to
determine the remuneration of the auditors; and
(6) Review and discussion of our consolidated financial statements for the
year ended December 31, 2003.
The Board of Directors recommends that you vote in favor of all of the
proposals, which are described in the attached Proxy Statement.
You can vote by proxy either by mail or in person. If voting by mail, the
proxy must be received by our transfer agent or at our registered office in
Israel at least 24 hours prior to the meeting to be validly included in the
tally of ordinary shares voted at the meeting. Detailed proxy voting
instructions are provided both in the Proxy Statement and on the enclosed proxy
card.
By Order of the Board of Directors,
Shaul Elovitch,
Chairman of the Board of Directors
Petach-Tikva, Israel
PROXY STATEMENT
This statement is being furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Internet Gold-Golden Lines Ltd.
to be voted at the Annual General Meeting of Shareholders, or the Meeting, to be
held on Thursday, December 23, 2004 at 4:00 p.m. and any adjournment thereof.
Shareholders will be asked to vote upon: (i) the election of two Class B
directors; (ii) the authorization of our Board of Directors to acquire a 48.36%
equity interest in Gold-Trade from Eurocom Marketing, for $241,818 or for shares
of Internet Gold having a market value of $241,818 at the date of acquisition,
as the Board of Directors will determine; (iii) the approval of the inclusion of
our chief executive officer, who is also a director, as a participant in the
incentive plan of our company; (iv) the approval of the amendment of Article 41
of our Articles of Association; (v) the appointment of Somekh Chaikin,
independent certified public accountants in Israel, a member firm of KPMG
International, as our independent auditors for the year ending December 31, 2004
and authorization for the Board of Directors to fix their remuneration; and (vi)
the review and discussion of our consolidated financial statements for the year
ended December 31, 2003.
Shares eligible to be voted and for which a proxy card is properly signed
and returned at least 24 hours prior to the beginning of the Meeting will be
voted as directed. If directions are not given or directions are not in
accordance with the options listed on a signed and returned proxy card, such
shares will be voted FOR the nominee for director and each proposition for which
the Board of Directors recommends a vote FOR. Unsigned or unreturned proxies,
including those not returned by banks, brokers, or other record holders, will
not be counted for quorum or voting purposes. You may revoke your proxy at any
time prior to the exercise of authority granted in the proxy by giving a written
notice of revocation to our Corporate Secretary, by submitting a subsequently
dated, validly executed proxy, or by voting in person at the Meeting.
As of November 17, 2004, the record date for the determination of
shareholders entitled to vote at the Meeting, there were outstanding 18,431,500
ordinary shares. Each ordinary share entitles the holder to one vote. The
ordinary shares have a par value of NIS 0.01 per share. The presence of two
shareholders, holding at least one third of our voting rights, represented in
person or by proxy at the Meeting, will constitute a quorum. If, within half an
hour from the starting time of the general meeting a quorum is not present, the
meeting shall stand adjourned to the same day in the next week at the same time
and place, and if, at such adjourned meeting, a quorum is not present within
half an hour from the time appointed for holding the meeting, any two
shareholders present in person or by proxy shall constitute a quorum. This proxy
shall constitute notice of such adjourned meeting and no additional notice shall
be provided by us to the shareholders.
An affirmative vote of the holders of a majority of the ordinary shares
represented at the Annual General Meeting, in person or by proxy and voting
thereon is required to elect the nominees for Class B director and to approve
each of the other proposals, except for Proposal 2, to be presented at the
Meeting. The approval of Proposal 2 requires the affirmative vote of the holders
of a majority of the ordinary shares represented at the Annual General Meeting
in person or by proxy and voting thereon, provided that either (i) at least one
third of the non-interested shareholders with respect to such proposal
represented and voting at the Annual General Meeting are included in the
majority (excluding the vote of abstaining shareholders); or (ii) that the total
shareholdings of the non-interested shareholders who vote against the proposal
do not represent more than 1% of the voting rights in our company. Under the
Israeli Companies Law, Proposal 2 requires that our shareholders notify us prior
to the vote at the Meeting, or if such vote is made by proxy on the proxy card,
whether or not they have a personal interest with respect to the subject matter
of this proposal. The term "personal interest" is defined as "a person's
personal interest in an act or transaction of the company, including the
personal interest of his relatives and of any other corporation in which he or
his relatives is an interested party, and exclusive of personal interest that
stems from the fact of holding shares in the company." There will be a specific
place on the proxy card to indicate if you have a personal interest in Proposal
2. Shareholders are asked to indicate "yes" or "no."
We will bear the cost of soliciting proxies from our shareholders. Proxies
will be solicited by mail and may also be solicited personally or by telephone
by our directors, officers and employees. We will reimburse brokerage houses and
other custodians, nominees and fiduciaries for their expenses in
accordance with the regulations of the Securities and Exchange Commission
concerning the sending of proxies and proxy material to the beneficial owners of
stock.
You may vote by submitting your proxy with voting instructions by mail if
you promptly complete, sign, date and return the accompanying proxy card in
enclosed self-addressed envelope to our transfer agent or to our registered
office in Israel at least 24 hours prior to the Meeting.
BENEFICIAL OWNERSHIP OF SECURITIES
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of November 17, 2004
regarding the beneficial ownership by (i) all shareholders known to us to own
beneficially more than 5% of our outstanding ordinary shares, (ii) each director
and (iii) all directors and executive officers as a group:
Number of Ordinary Percentage of
Shares Outstanding
Beneficially Owned (1) Ordinary Shares (2)
---------------------- -------------------
Eurocom Holdings Ltd. (3)....................... 12,683,135 68.8%
Eli Holtzman ................................... 172,118 0.9%
Shaul Elovitch (4).............................. -- --
Yossef Elovitch (4) ............................ -- --
Itzhack Ish-Hurvitz............................. -- --
Moddi Keret..................................... -- --
Tommy Stramer................................... -- --
Anat Winner..................................... -- --
All directors and executive officers as a group 172,118 0.9%
(13 persons) ...................................
____________
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Ordinary shares relating to
options currently exercisable or exercisable within 60 days of November 17,
2004 are deemed outstanding for computing the percentage of the person
holding such securities but are not deemed outstanding for computing the
percentage of any other person. Except as indicated by footnote, and
subject to community property laws where applicable, the persons named in
the table above have sole voting and investment power with respect to all
shares shown as beneficially owned by them.
(2) The percentages shown are based on 18,431,500 ordinary shares issued and
outstanding as of November 17, 2004.
(3) Such ordinary shares are held directly by Euronet Communications Ltd., an
Israeli company that is 100% owned by Eurocom Communications Ltd. Eurocom
Communications is a 50.3% owned Israeli subsidiary of Eurocom Holdings Ltd.
and Mr. Shaul Elovitch holds an additional 0.7% interest in Eurocom
Communications. Messrs. Shaul Elovitch, chairman of our board of directors,
and his brother, Yossef Elovitch, a director of our company, own 100% of
Eurocom Holdings. Due to their ownership of Eurocom Holdings and their
positions as directors of Eurocom Holdings and Eurocom Communications, they
may be deemed to beneficially own the ordinary shares directly held by
Euronet Communications. Messrs. Shaul Elovitch and Yossef Elovitch disclaim
beneficial ownership of such ordinary shares. Accordingly, Eurocom Holdings
may be deemed to be the beneficial owner of the 12,721,180 ordinary shares
held directly by Euronet Communications. The address of Eurocom Holdings is
2 Dov Friedman Street, Ramat Gan, Israel.
(4) Messrs. Shaul Elovitch, chairman of our board of directors, and his
brother, Yossef Elovitch, a director of our company, own 100% of Eurocom
Holdings Ltd., an Israeli holding company that holds a 50.3% interest in
Eurocom Communications Ltd. and Mr. Shaul Elovitch holds an additional 0.7%
interest in Eurocom Communications. Eurocom Communications, an Israeli
company, owns a 100%
2
interest in Euronet Communication Ltd., an Israeli company that directly
owns 12,683,135 of our ordinary shares. Due to their ownership of Eurocom
Holdings and their positions as directors of Eurocom Holdings and Eurocom
Communications, they may be deemed to beneficially own the ordinary shares
directly held by Euronet Communications. Messrs. Shaul Elovitch and Yossef
Elovitch disclaim beneficial ownership of such ordinary shares.
We are a controlled company within the meaning of Nasdaq Market Rules, Rule
4350(c)(5), based on the fact Eurocom Holdings Ltd. holds, indirectly, more than
50% of our voting power.
ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
Pursuant to our articles of association, our board of directors consists of
no less than six and no more than nine members, and is divided into three
classes, Class A, Class B and Class C. Generally, at each annual meeting of
shareholders one class of directors is elected for a term of three years. In
addition to these three classes of directors, we have two "outside directors,"
as defined under the Israeli Companies Law, who hold office for a term of three
years. All the members of our board of directors (except the outside directors
as detailed below) may be reelected upon completion of their term of office.
The Board of Directors proposes the election of Mr. Yossef Elovitch and Mr.
Eli Holtzman to serve as a Class B directors to hold office for three years
until the Annual General Meeting of Shareholders to be held in 2007, and until
their successors are elected and qualified. Messrs. Elovitch and Holtzman are
currently serving as members of our Board of Directors.
Should either of the nominees be unavailable for election, the proxies will
be voted for a substitute nominee designated by the Board of Directors. The
nominees are expected to be available.
Under the Companies Law, the affirmative vote of the holders of a majority
of the ordinary shares represented at the Annual General Meeting in person or by
proxy and entitled to vote and voting thereon will be necessary for shareholder
approval of the election as directors of Messrs. Elovitch and Holtzman.
Set forth below is information about Messrs. Elovitch and Holtzman,
including their age, position held with our company, principal occupation,
business history and other directorships held.
Nominees for Election as Class B Director for Term Expiring in 2007
Yossef Elovitch, 53, has served as a director since 1993. Mr. Elovitch has
been an officer and director of Eurocom Communications since 1985. He serves as
an officer and/or director of various other companies in the Eurocom group. Mr.
Elovitch is the brother of Mr. Shaul Elovitch.
Eli Holtzman, 56, co-founded our company and has been our chief executive
officer since 1992 and director since July 1999. Mr. Holtzman serves as director
and chairman of MSN Israel and as a director of Gold Trade. From January 2003 to
December 2003, Mr. Holtzman served as chief executive officer of Gold Trade.
From 1988 to 1992, Mr. Holtzman provided independent marketing consulting
services to numerous enterprises. From 1986 to 1988, Mr. Holtzman served as
chief executive officer of the Israeli franchisee of the American fast food
chain, Wendy's. From 1984 to 1986, Mr. Holtzman was the general manager of
Arieli Advertising Ltd., a leading Israeli advertising company. From 1977 to
1984, Mr. Holtzman was the general manager of SuperPharm, Israel's largest
pharmacy chain. Mr. Holtzman holds a B.Sc. degree in Chemistry and
Pharmaceutical from Illinois University.
The Board of Directors recommends a vote FOR the election of Messrs. Elovitch
and Holtzman.
Directors Continuing in Office
Shaul Elovitch, 57, has served as chairman of our board of directors since
our inception in 1992. Mr. Elovitch founded Eurocom Communications and its
affiliated companies, one of Israel's largest private communications groups. Mr.
Elovitch has served as chairman of the board of directors and chief executive
officer of Eurocom Holdings and Eurocom Communications, our parent company,
since 1985. Mr. Elovitch serves as an officer and/or director of various other
companies in the Eurocom group. Mr. Elovitch is the brother of Mr. Yossef
Elovitch.
3
Anat Winner, 46, has served as a director since August 2001. Since July
2003 Mrs. Winner has served as an independent business advisor. From October
2001 to July 2003 Mrs. Winner has served as chief executive officer and chief
financial officer of Israel News Ltd. From 1999 to October 2001, Mrs. Winner
served as chief financial officer of DBS Satellite Services (1998) Ltd. (YES),
an Israeli company that is engaged in setting up and operating DBS television
systems. Previously, and since 1995, Ms. Winner served as chief financial
officer of Eurocom Cellular Communications Ltd., an Israeli company that is
engaged in the importing and marketing of cellular phones as well as supplying
cellular service. Since 1996, Mrs. Winner has also served as corporate secretary
of Eurocom Cellular Communications Ltd. Mrs. Winner holds a B.A. degree in
Accounting and Economics from Haifa University and has been a certified public
accountant for more than 15 years.
Moddi Keret, 47, was appointed to serve as a director in February 2003. Mr.
Keret has been an executive vice president of Arison Holdings (1998) Ltd., an
Israeli investment company, since 1993. Mr. Keret currently serves as a director
at a number of companies in which Arison Holdings or one of its affiliates is a
shareholder, including Partner Communications Ltd., Housing and Construction
Holdings Ltd., Eurocom Communications, Eurocom Cellular Communications Ltd.,
Gaon Holdings Ltd., Hamlet Ltd., Priortech Ltd., DBS Satellite Services (1998)
Ltd., Keret Holdings and Management Ltd., MSN Israel, Gold Trade and other
companies in the Arison Group. Mr. Keret is an Israeli CPA and holds a B.A.
degree in accounting and economics from Tel-Aviv University.
Itzhack Ish-Hurvitz, 73, has served as a director since July 1999. Mr.
Ish-Hurvitz has been a senior research fellow at I.C.T.A.F. - Interdisciplinary
Center for Technological Analysis and Forecasting at Tel Aviv University since
1990. Mr. Ish-Hurvitz was a member of the advisory board of W&S - Transition and
Interim Management of the Netherlands and its branch in Israel from May 2000
until September 2002. Mr. Ish-Hurvitz was the executive director of the Israel
Consortium for Research and Development of Generic Technology of Satellite
Communications from 1992 to 1998. From 1991 to 1992, Mr. Ish-Hurvitz was a
special adviser to the Israeli Minister of Telecommunications for
telecommunications policy. From 1988 to 1990, Mr. Ish-Hurvitz was the director
general of the Israeli Ministry of Telecommunications.
Tommy Stramer, 57, has served as a director since January 2000. Mr. Stramer
currently serves as president of Zim American Integrated Shipping Services
Company, Inc. Mr. Stramer has served as vice president shipping of Zim - The
Israeli Navigation Company since May 1997 and is in charge of all the shipping
activity of Zim. From January 1996 until May 1997, he served as president of
Astral Maritime. From 1988 until January 1996, Mr. Stramer served as general
manager of the European and Mediterranean lines of Zim.
BOARD OF DIRECTORS AND COMMITTEES
Independent and Outside Directors
The Israeli Companies Law requires Israeli companies with shares that have
been offered to the public in or outside of Israel to appoint at least two
outside directors. Our outside directors are Mr. Ish-Hurvitz and Mr. Stramer. No
person may serve as an outside director if the person's position or other
activities create, or may create, a conflict of interest with the person's
responsibilities as an outside director or may otherwise interfere with the
person's ability to serve as an outside director. If, at the time outside
directors are to be appointed, all current members of the board of directors are
of the same gender, then at least one outside director must be of the other
gender.
Outside directors are elected by shareholders. The shareholders voting in
favor of their election must include at least one-third of the shares of the
non-controlling shareholders of the company who are present at the meeting. This
minority approval requirement need not be met if the total shareholdings of
those non-controlling shareholders who vote against their election represent 1%
or less of all of the voting rights in the company. Outside directors serve for
a three-year term, which may be renewed for only one additional three-year term.
Outside directors can be removed from office only by the same special percentage
of shareholders as can elect them, or by a court, and then only if the outside
directors cease to meet the statutory qualifications with respect to their
appointment or if they violate their duty of loyalty to the company.
Any committee of the board of directors must include at least one
outside director and the audit committee must include all of the outside
directors. An outside director is entitled to compensation as
4
provided in regulations adopted under the Companies Law and is otherwise
prohibited from receiving any other compensation, directly or indirectly, in
connection with such service.
Audit Committee
Our audit committee, which was established in accordance with Section 114
of the Israeli Companies Law and Section 3(a)(58)(A) of the Securities Exchange
Act of 1934, assists our board of directors in overseeing the accounting and
financial reporting processes of our company and audits of our financial
statements, including the integrity of our financial statements, compliance with
legal and regulatory requirements, our independent public accountants'
qualifications and independence, the performance of our internal audit function
and independent public accountants, finding any defects in the business
management of our company for which purpose the audit committee may consult with
our independent auditors and internal auditor, proposing to the board of
directors ways to correct such defects, approving related-party transactions as
required by Israeli law, and such other duties as may be directed by our board
of directors.
Our audit committee consists of three board members who satisfy the
"independence" requirements of the Securities Exchange Commission, NASDAQ and
Israeli Law for audit committee members. Our audit committee is currently
composed of Ms. Winner and Messrs. Ish-Hurvitz and Stramer each of whom
satisfies these requirements. The audit committee meets at least once each
quarter.
Under Israeli law, an audit committee may not approve an action or a
transaction with a controlling shareholder, or with an office holder, unless at
the time of approval two outside directors are serving as members of the audit
committee and at least one of the outside directors was present at the meeting
in which an approval was granted.
Approval of Related Party Transactions Under Israeli Law
The Companies Law codifies the fiduciary duties that "office holders,"
including directors and executive officers, owe to a company. An office holder's
fiduciary duties consist of a duty of care and a duty of loyalty. Generally,
duty of care requires an office holder to act at a level of care that a
reasonable office holder in the same position would employ under the same
circumstances. Under the Companies Law, all arrangements as to compensation of
office holders who are not directors require approval of our board of directors,
and the compensation of office holders who are directors must be approved by our
audit committee, board of directors and shareholders. If the director or the
office holder is a controlling shareholder of the company, then the employment
and compensation arrangements of such director or office holder requires the
approval of the audit committee, the Board of Directors and the shareholders (by
either (i) the affirmative vote of the holders of a majority of the ordinary
shares represented at the Annual General Meeting in person or by proxy and
voting thereon, provided that at least one third of the non-controlling
shareholders represented and voting at the Annual General Meeting are included
in the majority; or (ii) that the total shareholdings of the non-controlling
shareholders who vote against their election do not represent more than 1% of
the voting rights in our company), except in certain events where shareholders
approval is not required.
Indemnification of Directors and Officers
The Companies Law provides that an Israeli company cannot exculpate an
office holder from liability with respect to a breach of his duty of loyalty,
but may exculpate in advance an office holder from his liability to the company,
in whole or in part, with respect to a breach of his duty of care.
Pursuant to the Companies Law, indemnification of, and procurement of
insurance coverage for, our office holders must be approved by our audit
committee and our board of directors and, in specified circumstances, by our
shareholders. We currently maintain a directors and officers liability insurance
policy with a per claim and aggregate coverage limit of $5.0 million including
legal costs incurred in Israel. In addition, we undertook to indemnify our
directors and officers to the extent permitted by law, in an aggregate amount
not to exceed $5,000,000, to the extent that their liability is not covered
under our directors and officers liability insurance policy.
5
Our articles of association provide that subject to any restrictions
imposed by the Companies Law, we may procure insurance for, or indemnify any
officer holder, to the fullest extent permitted, provided that the procurement
of any such insurance or provision of any such indemnification, as the case may
be, is approved by the audit committee and otherwise as required by law.
Compensation
The following table sets forth all compensation we paid with respect to all
of our directors and executive officers as a group for the year ended December
31, 2003:
Salaries, fees,
commissions and bonuses(1)
--------------------------
All directors and executive officers as a
group (13 persons)...................... $ 1.1 million
______________
(1) Includes expenses incurred for cars made available to officers and expenses
related to salaries, but does not include expenses such as business travel,
professional and business association dues and expenses reimbursed to
officers and other fringe benefits commonly reimbursed or paid by companies
in Israel.
As of December 31, 2003 we accrued $350,000 for retirement, recreation
payments and vacation for our directors and executive officers.
During the year ended December 31, 2003 we paid to each of our outside
directors as well as to Mrs. Winner, who was paid as an outside director since
she was considered to be an independent director under U.S. law, an annual fee
of NIS 31,000 ($ 7,080), and a per meeting attendance fee of NIS 1,631 ($372).
Those fees are paid based on the fees detailed in regulations promulgated under
the Israeli Companies Law. Our other non-employee directors do not receive
compensation for their services on the board of directors or any committee
thereof. All of our non-employee directors are reimbursed for their expenses for
each board of directors meeting attended.
AUTHORIZATION OF THE BOARD OF DIRECTORS TO ACQUIRE A 48.36% EQUITY
INTEREST IN GOLD-TRADE FROM EUROCOM MARKETING
(Item 2 on the Proxy Card)
Our Board of Directors and Audit Committee have recommended that we acquire
a 48.36% equity interest in Gold-Trade from Eurocom Marketing, for $241,818 or
for Internet Gold shares having a market value of $241,818 at the acquisition
date, as our Board of Directors will determine. Currently we own a 48.27% equity
interest in Gold Trade, after this acquisition, and following the acquisition of
additional shares from three minority shareholders of Gold Trade, which is not
subject to shareholder approval, we will own all the shares of Gold Trade.
Gold Trade is involved in e-commerce activity. According to an independent
survey conducted this year by a third party, Gold Trade's website, P1000.CO.IL,
is one of the four most popular e-commerce websites in Israel. Gold Trade is
involved in the sale, by means of electronic tenders, of products and services
by third parties. Gold Trade's revenues result from commissions paid for any
transaction executed through its website by any of the 90 different suppliers
who sell their products through the website. In the past Gold Trade was involved
in telemarketing activity. During the last quarter of 2004 Gold Trade ceased its
telemarketing activity, which was one of the reasons it had incurred losses over
the last few years.
As of October 30, 2004, Gold Trade had an excess of liabilities over assets
of NIS 22 million (approximately $5 million). As of October 30, 2004, Gold Trade
had approximately 60 employees, however, according to a re-organization plan
authorized by its Board of Directors, the number of employees will decrease to
about 30 by the end of 2004. In the third quarter of 2004, Gold Trade reached a
positive EBITDA (earnings before interest, taxes, depreciation and amortization)
and a positive cash flow from operations of NIS 0.3 million (approximately $0.07
million).
In the last two years the scope of electronic commerce in Israel has
significantly increased. Nevertheless, the percentage of electronic transactions
is still a small part of total commercial transactions
6
in Israel. We believe that the acquisition of Gold Trade will afford us a secure
e-commerce base from which to provide our customers a broader range of services
and may increase synergies in our company, especially in the areas of ISP
connectivity and e-advertising. We believe that the increase of collaboration
between P1000.CO.IL, the MSN portal and our large customer base may increase our
sales in all of our activity fields.
Our Board of Directors will chose from two alternative methods to acquire
Gold Trade. The first alternative is the acquisition of a 48.36% equity interest
in Gold-Trade for $241,818. The other alternative is the acquisition of Gold
Trade shares for shares of Internet Gold having a market value of $241,818 at
the date of acquisition.
Under the Israeli Companies Law, because Eurocom Marketing is an affiliate
of Eurocom Holdings Ltd., our principal shareholder, Eurocom Marketing is deemed
to be an interested party to the transaction and, therefore, shareholder
approval of the acquisition is required. Our Board of Directors believes that
the terms of the acquisition are fair and no less favorable to us than the terms
that might be available to us from unaffiliated third parties. Our Board has
received an appraisal confirming that the terms of the acquisition are fair.
It is proposed that at the Meeting the shareholders adopt the following
resolution:
"RESOLVED, to authorize the Board of Directors to acquire a 48.36%
equity interest in Gold-Trade from Eurocom Marketing, for $241,818 or for
shares of Internet Gold having a market value of $241,818 at the date of
acquisition, as the Board of Directors will determine."
Under the Israeli Companies Law, since this acquisition is deemed to be an
extraordinary transaction with a controlling shareholder, the approval of the
forgoing resolution will require the affirmative vote of the holders of a
majority of the ordinary shares represented at the Meeting in person or by proxy
and voting thereon, provided (i) that at least one-third of the non-interested
shareholders represented and voting at the meeting are included in the majority;
or (ii) that the total shareholdings of those who have no personal interest in
the transaction who vote against the proposal do not represent more than 1% of
the voting rights in our company.
The Board of Directors recommends a vote FOR the foregoing resolution.
APPROVAL OF THE INCLUSION OF OUR CHIEF EXECUTIVE OFFICER
AS A PARTICIPANT IN THE INCENTIVE PLAN OF OUR COMPANY
(Item 3 on the Proxy Card)
Under applicable Israeli law, shareholders must approve the payment of
compensation and fees to our directors. Our Board of Directors and Audit
Committee have decided to include Mr. Eli Holtzman, our chief executive officer
and a member of our Board of Directors, as a participant in the company
incentive plan. Accordingly shareholders will be asked to approve at the Annual
General Meeting the inclusion of Mr. Eli Holtzman as a participant in our
company's incentive plan. According to the terms of the incentive plan, our
management projects that no more than 10% of our annual operational profit
(excluding certain items, as determined by the Board of Directors) will be
allocated in the aggregate to all of the participants in the plan. Our Board of
Directors will determine the actual annual allocation.
It is therefore proposed that at the Meeting the shareholders adopt the
following resolution:
"RESOLVED, that the Company is authorized to include its chief
executive officer, who is also a Director, as a participant in its
incentive plan."
The affirmative vote of the holders of a majority of the ordinary shares
represented at the Meeting in person or by proxy and entitled to vote and voting
thereon will be necessary for shareholder approval of the foregoing resolution.
The Board of Directors recommends a vote FOR the foregoing resolution.
7
APPROVAL OF AN AMENDMENT TO ARTICLE 41 OF OUR
ARTICLES OF ASSOCIATION
(Item 4 on the Proxy Card)
The amendment to Article 41 will allow our Board of Directors to fill
vacancies and to appoint new directors to serve until our next Annual General
Meeting. At present, the Board of Directors' ability to fill vacancies and
appoint new directors is limited.
It is therefore proposed that at the Meeting the shareholders adopt the
following resolution:
"RESOLVED, that Article 41 of our Articles of Association is hereby
amended to read as follows: "The Board of Directors may, from time to time,
appoint additional director/s to the Company's Board of Directors, whether
to fill a vacancy of a director whose appointment was terminated for any
reason or as additional director/s, provided, however, that the total
number of directors will not exceed that set forth in Article 38 hereof and
further provided, that if the total number of directors decreases below
that set forth in Article 38 hereof, the Board may only act in emergency
situations, or to fill the office of the director(s) which has or have
become vacant up to the minimum number, or to call a General Meeting. Any
director so appointed shall hold office until the end of first General
Meeting convened after such appointment and may be re-elected at such
General Meeting."
The affirmative vote of the holders of the majority of the ordinary shares
present at the Meeting in person or represented by proxy entitled to vote and
voting thereon will be necessary for shareholder approval of the foregoing
resolution.
The Board of Directors recommends a vote FOR the foregoing resolution.
APPOINTMENT OF AUDITORS
(Item 5 on the Proxy Card)
Our Board of Directors first appointed Somekh Chaikin as our auditors in
1999 and has reappointed the firm as our auditors since such time. Somekh
Chaikin has no relationship with us or any of our affiliates except as auditors.
As a result of Somekh Chaikin's knowledge of our operations and reputation in
the auditing field, the Board of Directors is convinced that this firm has the
necessary personnel, professional qualifications and independence to act as our
auditors and has again recommended, pursuant to the recommendation of our Audit
Committee, that Somekh Chaikin be selected as our auditors for the fiscal year
ending December 31, 2004 and recommends that the shareholders ratify and approve
the selection. The remuneration of Somekh Chaikin will be fixed by the Board of
Directors pursuant to the recommendation of our Audit Committee.
The following resolution will be offered by the Board of Directors at the
Meeting:
"RESOLVED, that the appointment of Somekh Chaikin, independent
certified public accountants in Israel, a member firm of KPMG
International, to conduct the annual audit of our financial statements for
the year ending December 31, 2004, and to authorize the Board of Directors
to determine their remuneration pursuant to the recommendation of our Audit
Committee is ratified, confirmed and approved".
The affirmative vote of the holders of a majority of the ordinary shares
represented at the Meeting in person or by proxy and entitled to vote and voting
thereon will be necessary for shareholder approval of the foregoing resolution.
The Board of Directors recommends a vote FOR the foregoing resolution.
8
CONSIDER AND RECEIVE THE CONSOLIDATED FINANCIAL STATEMENTS
At the Meeting, our Consolidated Financial Statements for the year ended
December 31, 2003 will be presented. We will hold a discussion with respect to
the financial statements at the Meeting. This item will not involve a vote of
the shareholders.
By Order of the Board of Directors,
Shaul Elovitch,
Chairman of the Board of Directors
Dated: November 23, 2004
9
Item 2
INTERNET GOLD-GOLDEN LINES LTD.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Eli Holtzman and Shaul Elovitch, or
either of them, attorneys or attorney of the undersigned, for and in the name(s)
of the undersigned, with power of substitution and revocation in each to vote
any and all ordinary shares, par value NIS 0.01 per share, of Internet
Gold-Golden Lines Ltd. (the "Company"), which the undersigned would be entitled
to vote as fully as the undersigned could if personally present at the Annual
General Meeting of Shareholders of the Company to be held on December 23, 2004
at 4:00 p.m. at the offices of Eurocom Communications Ltd., 2 Dov Friedman
Street, Ramat Gan 52141 Israel and at any adjournment or adjournments thereof,
and hereby revoking any prior proxies to vote said shares, upon the following
items of business more fully described in the notice of and proxy statement for
such Annual General Meeting (receipt of which is hereby acknowledged):
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE. IN THE ABSENCE OF
SUCH SPECIFICATION, THE SHARES REPRESENTED BY THIS PROXY CARD WILL BE VOTED FOR
THE ELECTION OF THE NOMINEES FOR CLASS B DIRECTOR IN ITEM 1 AND FOR ITEMS 2
THROUGH 5. VOTES CANNOT BE CAST FOR PROPOSAL 2 UNLESS YES OR NO HAS BEEN
SPECIFIED WITH RESPECT TO WHETHER THE SHAREHOLDER HAS A PERSONAL INTEREST WITH
RESPECT TO THE SUBJECT MATTER OF THE PROPOSAL (SEE THE PROXY STATEMENT FOR
FURTHER CLARIFICATION). ON ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE
MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS
NAMED ABOVE AS PROXIES.
(Continued and to be signed on the reverse side)
ANNUAL GENERAL MEETING OF SHAREHOLDERS OF
INTERNET GOLD-GOLDEN LINES LTD.
December 23, 2004
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE CLASS B
DIRECTORS AND "FOR" PROPOSALS 2 THROUGH 5.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
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1. The election of two Class B Directors for terms expiring in 2007.
[ ] FOR ALL NOMINEES
[ ] WITHHOLD AUTHORITY FOR ALL NOMINEES
[ ] FOR ALL EXCEPT
(See instructions below)
NOMINEES:
Yossef Elovitch
Eli Holtzman
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
------------ mark "FOR ALL EXCEPT" and fill in the circle next to each
nominee you wish to withhold, as shown here: (X)
2. Authorization of the Board of Directors to acquire a 48.36% equity
interest in Gold-Trade (Electronic Commerce) Ltd. from Eurocom
Marketing (1986) Ltd., and three other minor shareholders, for
$241,818 or for shares of Internet Gold having a market value of
$241,818 at the date of acquisition, as the Board of Directors will
determine.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Pursuant to Israeli law, in order to ensure specific majority requirements
we are required to ask you if you have a personal interest (as described in
the proxy statement) with respect with respect to the subject matter of
Proposal 2 to be voted on at the Meeting.
Do you have a personal interest with respect to the subject matter of
Proposal 2? YES ___ NO ___
3. Approval of the inclusion of our chief executive officer, who is also
a director, as a participant in the incentive plan of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Approval of the amendment of Article 41 of the Company's Articles of
Association.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Ratification of the appointment of Somekh Chaikin, independent
certified public accountants in Israel, a member firm of KPMG
International, as the Company's independent auditors for the year
ending December 31, 2004 and authorization for the Board of Directors
to determine the remuneration of the auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method. [ ]
Signature of Shareholder__________ Date _____
Signature of Shareholder__________ Date _____
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERNET GOLD-GOLDEN LINES LTD.
(Registrant)
By /s/Eli Holtzman
---------------
Eli Holtzman
Chief Executive Officer
Date: December 1, 2004