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 July 2005
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 August 22, 2005.
2. Internet Gold-Golden Lines Ltd. Proxy Card.
3. Letter to Shareholders.
Item 1
INTERNET GOLD - GOLDEN LINES LTD.
July 21, 2005
NOTICE OF 2005 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 4:30 p.m. on Monday, August 22, 2005 at the offices of
Eurocom Communications Ltd. at 2 Dov Friedman Street, Ramat Gan 52141, Israel,
for the following purposes:
(1) The election of two Class C directors for terms expiring in 2008;
(2) The election of two outside directors for terms expiring in 2008;
(3) Approval of our 2005 Israeli Share Option Plan;
(4) Approval of the inclusion of our chief executive officer, who is
also a member of our Board of Directors, as a participant in the
incentive plan of our company;
(5) Approval of the grant of stock options to our chief executive
officer, who is also a member of our Board of Directors;
(6) Approval of the grant of a special bonus to our chief executive
officer, who is also a member of our Board of Directors;
(7) 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, 2005 and to authorize our Board of Directors to
delegate to our Audit Committee the authority to fix such
independent auditors' compensation in accordance with the volume
and nature of their services; and
(8) Review and discussion of our auditors' report and consolidated
financial statements for the year ended December 31, 2004.
The Board of Directors recommends that you vote in favor of all of the
proposals, which are described in the attached Proxy Statement.
Shareholders of record at the close of business on July 14, 2005 are
entitled to notice of and to vote at the Meeting. 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
INTERNET GOLD - GOLDEN LINES LTD.
1 Alexander Yanai Street
Petach-Tikva, Israel
--------------------------
PROXY STATEMENT
--------------------------
2005 ANNUAL GENERAL MEETING OF SHAREHOLDERS
This proxy statement is being furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of Internet
Gold-Golden Lines Ltd., or the Company, to be voted at the 2005 Annual General
Meeting of Shareholders, or the Meeting, to be held on Monday August 22, 2005 at
4:30 p.m. and any adjournment thereof. This Proxy Statement and the enclosed
proxy card are being mailed to shareholders on or about July 22, 2005.
Purpose of the Annual General Meeting
Shareholders will be asked to vote upon: (i) the election of two Class
C directors; (ii) the election of two outside directors; (iii) the approval of
our 2005 Israeli Share Option Plan; (iv) the approval of the inclusion of our
chief executive officer, who is also a member of our Board of Directors, as a
participant in the incentive plan of our Company; (v) the approval of the grant
of stock options to our chief executive officer, who is also a member of our
Board of Directors; (vi) the approval of the grant of a special bonus to our
chief executive officer, who is also a member of our Board of Directors; and
(vii) 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, 2005 and to authorize our Board of
Directors to delegate to our Audit Committee the authority to fix such
independent auditors' compensation in accordance with the volume and nature of
their services.
In addition, our consolidated auditors' report and our financial
statements for the year ended December 31, 2005 will be reviewed and considered
at the Meeting
Record Date; Outstanding Securities; Quorum
Only holders of record of our ordinary shares, par value (nominal
value) NIS 0.01 per share, as of the close of business on July 14, 2005, or the
record date, are entitled to notice of, and to vote at, the Meeting. As of July
14, 2005, there were outstanding 18,431,500 ordinary shares. Each ordinary share
entitles the holder to one vote.
According to our Articles of Association, the quorum at the Meeting
shall be two shareholders present in person or by proxy, holding or representing
more than one third of the total voting rights in the Company. If within half an
hour from the time appointed for the holding of the 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 or any time and hour as the directors shall designate
and state in a notice to the shareholders entitled to vote at the original
meeting. This notice shall serve as notice of such adjourned meeting if no
quorum is present at the original date and time and no further notice of the
adjourned meeting will be given to shareholders.
Voting and Proxies
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 nominees 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.
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 C director and to approve
each of the other proposals, except for the election of outside directors. The
election of outside directors will require the affirmative vote of a majority of
ordinary shares present at the Meeting, in person or by proxy, and voting on the
nominees, provided that either (i) the shares voting in favor of such nominees
include at least one-third of the shares voted by shareholders who are not
"controlling shareholders" (as such term is defined in the Companies Law), or
(ii) the total number of shares voted against the nominees by shareholders who
are not controlling shareholders does not exceed one percent of our company's
outstanding shares.
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. 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 or to our
Chairman of the Board of Directors, by submitting a subsequently dated, validly
executed proxy, or by voting in person.
BENEFICIAL OWNERSHIP OF SECURITIES
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of July 14, 2005
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 0.93%
Shaul Elovitch (3)................................... 12,683,135 68.8%
Yossef Elovitch (4) ................................. -- --
Itzhack Ish-Hurvitz................................. -- --
Moddi Keret........................................ -- --
Tommy Stramer.................................... -- --
Anat Winner........................................ -- --
All directors and executive officers as a group (12
persons) ...................................... 172,118 0.93%
(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 July 14, 2005
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 July 14, 2005.
2
(3) Such ordinary shares are held directly by Euronet Communications Ltd., an
Israeli company that is 100% owned by Eurocom Communications Ltd. Eurocom
Communications Ltd. is a 50.33% owned Israeli subsidiary of Eurocom Holdings
Ltd., an Israeli holding company. Mr. Shaul Elovitch holds an additional
0.67% interest in Eurocom Communications Ltd. Mr. Shaul Elovitch, chairman
of our Board of Directors, owns 80% of Eurocom Holdings Ltd.'s ordinary
shares and 75% of Eurocom Holdings Ltd.'s management shares. On July 14,
2005, Eurocom Communication Holdings 2005 Ltd., Eurocom Technologies
Management 2005 Ltd. and Eurocom Assets Ltd., all of which are Israeli
holding companies, 80% owned by Mr. Shaul Elovitch, and Eurocom Assets
Holdings Ltd., an Israeli holding company 80% held in trust for the benefit
of Mr. Shaul Elovitch, purchased a 49% interest in Eurocom Communications
Ltd. from Arison Investments Ltd. Due to Mr. Shaul Elovitch's ownership of
Eurocom Holdings Ltd., Eurocom Communication Holdings 2005 Ltd., Eurocom
Technologies Management 2005 Ltd., Eurocom Assets Ltd. and Eurocom Assets
Holdings Ltd. (held in trust as stated above), and his positions as director
of Eurocom Holdings Ltd., Eurocom Communication Holdings 2005 Ltd., Eurocom
Technologies Management 2005 Ltd., Eurocom Assets Ltd. and Eurocom
Communications Ltd., Mr. Shaul Elovitch is deemed to beneficially own the
ordinary shares directly held by Euronet Communications Ltd.
(4) Mr. Yossef Elovitch is the brother of Mr. Shaul Elovitch. Mr. Yossef
Elovitch owns 20% of Eurocom Holdings Ltd.'s ordinary shares and 25% of
Eurocom Holdings Ltd.'s management shares, as well as 20% of the following
Israeli holding companies: Eurocom Communication Holdings 2005 Ltd., Eurocom
Technologies Management 2005 Ltd. and Eurocom Assets Ltd. In addition, 20%
of Eurocom Assets Holdings Ltd., an Israeli holding company, is held in
trust for the benefit of Mr. Yossef Elovitch.
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.
PROPOSALS FOR THE 2005 ANNUAL GENERAL MEETING
---------------------------------------------
ELECTION OF CLASS C DIRECTORS
(Item 1 on the Proxy Card)
Pursuant to our articles of association, our Board of Directors may
consist 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. At
present we have one Class A director, two Class B directors, one Class C
director and 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 Ms. Anat Winner and
Ms. Aliza Schloss to serve as Class C directors to hold office for three years
until the Annual General Meeting of Shareholders to be held in 2008, and until
their successors are elected and qualified. Ms. Winner currently serves as a
member 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 Ms. Winner and Ms. Schloss.
Set forth below is information about Ms. Winner and Ms. Schloss,
including their age, position held with our company, principal occupation,
business history and other directorships held.
Nominees for Election as Class C Directors for Terms Expiring in 2008
Anat Winner, 46, has served as a director since August 2001. Since
July 2003, Ms. Winner has served as an independent business advisor. From
October 2001 to July 2003, Ms. Winner has served as chief
3
executive officer and chief financial officer of Israel News Ltd. From 1999 to
October 2001, Ms. 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, Ms. Winner has also served as
corporate secretary of Eurocom Cellular Communications Ltd. Ms. 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.
Aliza Schloss, 52, has served as an independent director and chairman
of the audit committee of the Israel Electric Company Ltd. since 2002.
From October 2000 to October 2003, Ms. Schloss served as a director and
chairmen of the audit committee of Bezeq The Israel Telecommunication Corp.,
Ltd. From 2000 to 2003, Ms. Schloss served as an independent director of
several companies, including Hiram Gat Engineering & Construction Co., Ltd.
and F.I.B.I Lamelcha - The First International Bank Ltd. From 1997 to 1999,
Ms. Schloss served as the general manager of Hevrat - Ha'ovdim General
Cooperative Israel Ltd. and as an office holder in several subsidiaries of that
corporation. Ms. Schloss holds a Ph.D. degree in Political Science and Public
Administration from the Hebrew University in Jerusalem. Ms. Schloss also holds
a B.Sc. degree in Biology from the Ben - Gurion University of the Negev.
Shareholders may vote in favor of the election of both of the nominees
named above, or may withhold their vote in respect of both or one of such
nominees. The affirmative vote of a majority of the ordinary shares represented
at the Meeting in person or by proxy, and voting thereon, is required to elect
each of the nominees named above as a director.
The Board of Directors recommends a vote FOR the election of Ms. Winner and Ms.
Schloss.
Directors Continuing in Office
Shaul Elovitch, 57, has served as chairman of our Board of Directors
since our inception in 1992. Mr. Elovitch is the founder of 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.
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 chairman of the board of directors of MSN Israel and Start Net and as a
director in Gold Trade. From November 2002 to January 2004, Mr. Holtzman served
as chief executive officer of Gold Trade and has served in that role again since
January 2005. Mr. Holtzman holds a B.Sc. degree in Chemistry and Pharmaceutical
from Illinois University.
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, 2004:
Salaries, fees, commissions and bonuses(1)
------------------------------------------
All directors and executive officers as a
group (12 persons)...................... $ 1.2 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.
4
ELECTION OF OUTSIDE DIRECTORS
(Item 2 on the Proxy Card)
Companies incorporated under the laws of Israel whose shares have been
offered to the public inside or outside of Israel are required by the Israeli
Companies Law, 5759-1999 (the "Companies Law") to appoint at least two outside
directors. To qualify as an outside director, an individual may not have, and
may not have had at any time during the previous two years, any affiliations
with the company or the company's affiliates, as such terms are defined in the
Companies Law. The term "affiliation" includes: an employment relationship; a
business or professional relationship maintained on a regular basis; control;
and service as an office holder. In addition, no individual may serve as an
outside director if the individual's position or other activities create or may
create a conflict of interest with his or her role as an outside director.
The outside directors generally must be elected by the shareholders.
The term of an outside director is three years and may be extended for an
additional three years. Under the Companies Law, each committee of a company's
board of directors empowered with powers of the board of directors is required
to include at least one outside director, except that the audit committee must
be comprised of at least three directors, including all of the outside
directors.
The Board of Directors proposes the election of Ms. Orly Guy and Ms.
Ronit Gotliv as outside directors of the Company for terms of three years. The
Company has received a declaration from such nominees, confirming their
qualifications under the Companies Law to be elected as an outside director of
the Company.
Under the Companies Law, in the event that Ms. Guy and Ms. Gotliv
should be unable to serve, the proxies will be voted for the election of such
other person or persons as shall be determined by the persons named in the proxy
in accordance with their best judgment to be suitable to serve as an outside
director.
Approval of the above nominees will require the affirmative vote of a
majority of ordinary shares present at the Meeting, in person or by proxy, and
voting on the nominees, provided that (i) the shares voting in favor of such
nominees include at least one-third of the shares voted by shareholders who are
not "controlling shareholders" (as such term is defined in the Companies Law),
or (ii) the total number of shares voted against the nominees by shareholders
who are not controlling shareholders does not exceed one percent of our
company's outstanding shares.
Set forth below is information about Ms. Guy and Ms. Gotliv, including
their age, principal occupation, business history and other directorships held.
Orly Guy, 45, has served as a managing partner of Guy and Co., a Tel
Aviv law firm specializing in civil-commercial law including litigation,
capital market law and real estate law since 1994. Since 2000 Ms. Guy has
served as a director of a pharmaceutics company, Intec Pharma Ltd. Ms. Guy
holds an LL.B degree from Tel Aviv University.
Ronit Gotliv, 52, has served as a managing partner of R.
Gotliv and Co., a Tel Aviv law firm specializing in civil-commercial
law, corporate laws and real estate law since 1999. From 1984 to 1999 Ms. Gotliv
was employed as an attorney at B.A. Gotliv Ltd - Law Offices. Ms. Gotliv holds
an LL.B degree from Tel Aviv University.
The Board of Directors recommends a vote FOR the election of the nominees named
above as outside directors.
APPROVAL OF OUR NEW 2005 ISRAELI SHARE OPTION PLAN
(Item 3 on the Proxy Card)
Our Audit Committee and Board of Directors have adopted, subject to
shareholder approval, an option plan, the 2005 Israeli Share Option Plan, or the
ISOP, which complies with the amended Section 102 of the Israeli Income Tax
Ordinance [New Version] 1961, and authorizes the grant of options to purchase up
to 540,000 of our ordinary shares with an exercise price of $4.50 per share.
Employees, officers directors and consultants of our company and its
subsidiaries are eligible to participate in the ISOP. The ISOP has a term of
seven years and will terminate in July 2012.
5
The provisions of our ISOP are designated to allow for the tax benefits
promulgated under the Israeli Income Tax Ordinance [New Version]. Our Board of
Directors has resolved that all options that will be granted to Israeli
residents under the ISOP will be taxable under the "capital gains path."
Pursuant to this path, the profit realized by an employee is taxed as a capital
gain (25%) if the options or shares are held by a trustee for at least 24 months
from the end of the tax year in which such options were granted. If the shares
are sold before the lapse of such period, the profit is re-characterized as
ordinary income. Our company will not be allowed a corresponding salary expense,
even in the event the profit is taxed as ordinary income.
The Board of Directors or a committee of the Board of Directors, or the
Committee, if appointed, will administer the ISOP. The Board of Directors or the
Committee will have the full power and authority to, subject to limitation under
the terms and provisions of any applicable law and subject to changes according
to the Board's decisions:
o designate participants;
o determine the terms and provisions of the respective option
agreements (which need not be identical), including, but not
limited to, provisions concerning the time and the extent to
which the options may be exercised and the nature and duration of
restrictions as to the transferability or restrictions
constituting substantial risk of forfeiture and to cancel or
suspend awards, as necessary;
o make an election as to the type of Approved 102 option;
o alter any restrictions and conditions of any options or shares
subject to any options;
o interpret the provisions and supervise the administration of the
ISOP;
o accelerate the right of an optionee to exercise in whole or in
part, any previously granted option;
o prescribe, amend and rescind rules and regulations relating to
the ISOP; and
o make all other determinations deemed necessary or advisable for
the administration of the ISOP.
The Board of Directors or the Committee may not, without the consent of
the optionee, alter or in any way impair the rights of such optionee under any
award previously granted.
Options are not assignable or transferable by the optionee. No option
or any right with respect thereto, purchasable hereunder, whether fully paid or
not, may be assignable, transferable or given as collateral or any right with
respect to it given to any third party whatsoever, except as specifically
allowed under the ISOP, and during the lifetime of the optionee each optionee's
rights to purchase shares may only be exercised by the optionee. Generally, an
option may be exercised as long as the optionee is employed by, or providing
services to, the company or any of its affiliates, to the extent the options
have vested.
The Board of Directors believes that the approval of the ISOP at this
Meeting will (i) provide us with the means to retain talented personnel; (ii)
result in our saving cash, which would otherwise be required to maintain our
current employees, officers and directors; and (iii) enable us to remain
competitive in our industry.
It is therefore proposed that at the Meeting our shareholders adopt the
following resolution:
"RESOLVED, the 2005 Israeli Share Option Plan authorizing the
grant of options to purchase up to 540,000 ordinary shares, with an
exercise price of $4.50, par value NIS 0.01 per share, be and is
hereby adopted and approved."
Under the Companies Law 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.
6
APPROVAL OF THE INCLUSION OF OUR CHIEF EXECUTIVE OFFICER AS A PARTICIPANT
IN THE INCENTIVE PLAN OF OUR COMPANY
(Item 4 on the Proxy Card)
Under the Israeli Companies law, the terms of compensation of our
directors must be approved by the audit committee, the board of directors, and
thereafter, the general meeting of shareholders. Our Audit Committee and Board
of Directors 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's 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 Mr. Eli
Holtzman, its chief executive officer and a member of its Board of
Directors, 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.
APPROVAL OF THE GRANT OF STOCK OPTIONS TO OUR CHIEF EXECUTIVE OFFICER
(Item 5 on the Proxy Card)
Under the Israeli Companies law, the terms of compensation of our
directors, including grants of options, must be approved by the audit committee,
the board of directors, and thereafter, the general meeting of shareholders.
Subject to the approval of our 2005 Israeli Stock Option Plan at this meeting,
our Audit Committee and Board of Directors have decided to grant Mr. Eli
Holtzman, our chief executive officer and a member of our Board of Directors, in
consideration for his valuable contribution to our company, options to purchase
a total of 100,000 ordinary shares under our 2005 Israeli Stock Option Plan. The
exercise price of the options is $4.50 per share. The options will vest ratably
over a five year period from the date of grant, will be exercisable beginning
January 1, 2006 and will terminate 10 years from the date of grant of such
options. Accordingly, shareholders will be asked to approve at the Annual
General Meeting the grant of options to Mr. Eli Holtzman.
It is therefore proposed that at the Meeting the shareholders adopt the
following resolution:
"RESOLVED, that the Company is authorized to grant options to
purchase 100,000 ordinary shares to Mr. Eli Holtzman, its chief
executive officer and a member of its Board of Directors, at an
exercise price of $4.50 per share."
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 THE GRANT OF A SPECIAL BONUS TO OUR CHIEF EXECUTIVE OFFICER
(Item 6 on the Proxy Card)
Under the Israeli Companies law, the terms of compensation of our
directors, must be approved by the audit committee, the board of directors, and
thereafter, the general meeting of shareholders. In consideration for his
contribution to the success of our company's offering of convertible debentures
and options through the Tel Aviv Stock Exchange in April 2005, our Audit
Committee and Board of Directors have decided to grant Mr. Eli Holtzman a
special bonus in the amount of NIS 100,000 (approximately $21,940). Accordingly,
shareholders will be asked to approve at the Annual General Meeting the grant of
the special bonus to Mr. Eli Holtzman.
"RESOLVED, that the Company is authorized to grant a special
bonus in the amount of NIS 100,000 (approximately $21,940) to Mr. Eli
Holtzman, its chief executive officer and a member of its Board of
Directors."
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.
APPOINTMENT OF AUDITORS
(Item 7 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.
At the Meeting, shareholders will be asked to approve the
re-appointment of Somekh Chaikin as our independent auditors, pursuant to the
recommendation of our Audit Committee and Board of Directors. As a result of
Somekh Chaikin's familiarity with our operations and reputation in the auditing
field, our Audit Committee and Board of Directors believe that Somekh Chaikin
has the necessary personnel, professional qualifications and independence to act
as our auditors.
At the Meeting, shareholders will also be asked to authorize our Board
of Directors to delegate to our Audit Committee the authority to fix the
compensation of our independent auditors according to the volume and nature of
their services.
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, as recommended by our company's Audit Committee and the
Board of Directors, as the independent auditors of the Company to
conduct the annual audit of our financial statements for the year
ending December 31, 2005, be and hereby is approved, and it is further
resolved, that the Board of Directors be, and it hereby is, authorized
to delegate to the Audit Committee of the Board the authority to fix
the remuneration of said independent auditors in accordance with the
volume and nature of their services."
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.
CONSIDER AND RECEIVE THE CONSOLIDATED FINANCIAL STATEMENTS
At the Meeting, Auditors' Report and our Consolidated Financial
Statements for the year ended December 31, 2004 will be presented. We will hold
a discussion with respect to the financial statements
8
at the Meeting as required by the Companies Law. This item will not involve a
vote of the shareholders. The foregoing Auditors' Report and Consolidated
Financial Statements, as well as our annual report on Form 20-F for the year
ended December 31, 2004 (filed with the SEC on June 28, 2005), may be viewed on
our website - www.igld.com or through the EDGAR website of the SEC at
www.sec.gov.
None of the Auditors' Report, the Consolidated Financial Statements,
the Form 20-F or the contents of our website form part of the proxy solicitation
material.
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: July 21, 2005
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 August 22, 2005 at
4:30 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 C DIRECTOR IN ITEM 1, FOR THE NOMINEES FOR
OUTSIDE DIRECTOR IN ITEMS 2A AND 2B AND FOR ITEMS 3 THROUGH 7. 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.
August 22, 2005
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.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE CLASS C
DIRECTORS AND "FOR" PROPOSALS 2 THROUGH 7.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
--------------------------------------------------------------------------------
1. The election of two Class C Directors for terms expiring in 2008.
[ ] FOR ALL NOMINEES NOMINEES:
( )ANAT WINNER
[ ] WITHHOLD AUTHORITY FOR ALL NOMINEES ( )ALIZA SCHLOSS
[ ] FOR ALL EXCEPT
(See instructions below)
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)
2a. To elect Orly Guy as an outside director.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2b. To elect Ronit Gotliv as an outside director.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the Company's 2005 Israeli Share Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Approval of the inclusion of the Company's chief executive officer, who is
also a member of the Board of Directors, as a participant in the incentive
plan of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Approval of the grant of stock options to the Company's chief executive
officer, who is also a member of the Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. Approval of the grant of a special bonus to the Company's chief executive
officer, who is also a member of the Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. 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, 2005 and
authorization for the Board of Directors to delegate to the Audit Committee
the authority to fix such independent auditors' compensation in accordance
with the volume and nature of their services.
[ ] 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.
Item 3
[LETTERHEAD OF INTERNET GOLD-GOLDEN LINES LTD.]
Dear Shareholder,
Our annual General Shareholder's Meeting is scheduled for August 22, 2005, and
we hope you can attend. In preparation for the meeting, allow me to take a
moment of your time to draw your attention to a number of accomplishments that
our Group has achieved during the last several quarters.
As I am sure you are aware, the Israeli communications market is currently
undergoing a consolidation process that is driving positive changes and creating
new investment possibilities. As such, our work during the past year has been
focused on positioning Internet Gold as a major player in Israel's
communications space and assuring that we have the resources to take advantage
of synergistic opportunities. We have been most active in five areas: 1)
solidifying our position as a provider of Internet access and related services;
2) launching IP-based telephony services; 3) establishing Internet Gold as
Israel's #1 Internet Media group; 4) building our e-Commerce activities; and 5)
expanding our cash reserves to support our growth strategy.
We are proud to report on-track progress in each of these areas, which has
enabled us to post nine consecutive quarters of revenue growth and 15
consecutive quarters of growth in net income.
Internet Access and Related Services: We continue to build our market share in
Israel's Internet access market, maintaining solid profitability despite strong
price pressure. Throughout 2004, we increased our marketing activities
significantly, driving a dramatic increase in the number of our broadband
users. We are proud to have maintained profitability and a steady market share
during this highly competitive period during which Israel's overall broadband
penetration rate rose to above 90% for all Internet subscribers, one of the
highest broadband penetration rates in the world.
International Telephony: We launched our 015 international telephony services
in the fall of 2004, and in just two quarters it has become a source of
significant revenues and profits for the Group. This is due both to our
cost-advantage in launching the service, and to the success of our innovative
marketing campaigns. In light of 015's success, we have launched commercial,
hubbing, and incoming call services ahead of schedule, and are moving steadily
toward the initiation of local telephony services which are expected to
commence at the end of the year. As such, we believe that our telephony
services will be an important engine for growth in the future.
Interactive Media: With a strong belief that interactive advertising will
become a major media focus in the years ahead, we have been working to solidify
Internet Gold's position as Israel's dominant interactive media group. The
platform for our efforts is the strong presence that we have built through MSN
Israel, a leading portal that we operate in partnership with Microsoft
Corporation (our ownership interest is 50.1%). Building on this solid base, we
completed a number of important acquisitions during the past year: 1) the
remaining shares of Start, one of the most important portals in Israel (ranked
#5 in TGI's most recent survey of homepage usage in Israel); 2) 50% of the
shares of the Nirshamim, Israel's leading academic portal; and 3) marketing
rights for "Goop," Israel's leading youth portal, for a three year period. As a
result, we now offer advertisers a broad range of "products" ranging from
search to targeted portals and more. We intend to continue moving forward
strongly in this area in the coming year.
e-Commerce: We also see indications that e-Commerce in Israel is emerging as a
major retail force, just as it is in other developed regions. Our main
e-Commerce vehicle is P-1000, Israel's #3 e-Commerce portal. During the past
year, we acquired the remaining minority equity, achieving 100% ownership.
P-1000's revenues are rising steadily and the entire operation is now
profitable. Besides contributing revenues, P-1000 gives us the opportunity to
mount cross-selling campaigns targeting the customers of other Internet Zahav
Group companies. As such, e-Commerce is already an important leg of our growth
strategy, and will become even more important as Israel's e-Commerce market
continues to grow.
Expansion of cash reserves and liquidity: In May 2005, we completed an extremely
successful oversubscribed $50 million offering of convertible debt and options,
giving us the capital we need to carry out our planned growth strategy.
Taken as a whole, these activities have established us as one of Israel's major
Internet players and its #1 Internet media goup with the right resources,
critical market mass, management experience and vision to take full advantage of
emerging opportunities in our markets. We thank you for your ongoing support,
and pledge to continue building Internet Gold's value for the benefit of all our
shareholders.
Faithfully yours,
Eli Holtzman, CEO
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: July 29, 2005