Bezeq Israel Telecommunication : Notice convening an extraordinary General Meeting of Company shareholders - Sept 14 2022

Bezeq The Israel Telecommunication Corp. Ltd.

(the "Company" or "Bezeq")

August 10, 2022

To:

Israel Securities Authority

Tel Aviv Stock Exchange Ltd.

Re: Notice convening an extraordinary General Meeting of Company shareholders

Pursuant to provisions of the Corporate Act, 1999 ("the Corporate Act"), Securities Regulations (Periodic and Immediate Reports), 1970 ("Reporting Regulations "), Corporate Regulations (Notice and Advertising of General Meeting and Class General Meeting of Public Company and Addition of Matters to the Agenda), 2000 and Corporate Regulations (Proxy vote and position statements), 2005 ("Proxy Vote Regulations "), the Company hereby announces the convening of an extraordinary General Meeting of Company shareholders ("the General Meeting"), to be held on Wednesday, September 14, 2022 at 11:00am at Company offices at 7 HaManor Street, Holon, 5th floor ("Company Offices ")

1. Summary of matters and proposed resolutions on the agenda of the General Meeting:
2. 1. Approval of dividend distribution.
   2. Approval of contracting by the Company of employment contract with Mr. Ran Guron, Company CEO, as from his start date in office on June 19, 2022 (hereinafter: "Mr. Guron", "Employment Contract", "Contracting", respectively).
3. Description of highlights of contract terms and conditions:
4. 1. Approval of dividend distribution (resolution proposed in section 1.1 on the agenda)
      2.1.1. The Company Board of Directors recommends approval of a cash dividend distribution to Company shareholders, amounting in total to NIS 294 million or, as of the date of this report, NIS 0.1063081 per Company ordinary share of NIS 1 par value ("Share ") and 10.63081% of the company's issued and paid-in share capital ("Dividend"). The dividend per share actually payable shall be determined based on the number of shares in the Company's issued and paid-in share capital at close of trading on

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September 20, 2022. The effective date and the ex-dividend date shall be September 21, 2022, and the payment date shall be October 3, 2022.

2.1.2. The Company Board of Directors has reviewed Company compliance with tests set forth in Section 302 of the Corporate Act, 1999: The earnings test and the solvency test, and has determined that the Company passed these tests, as set forth below.

1. As for the earnings test - based on the Company's financial statements as of June 30, 2022, the dividend distribution passed the earnings test. The Board of Directors was presented with the distributable retained earnings accumulated over the past two years (after deduction of distribution made in May 2022), amounting in total to NIS 1,731 million, and found that the proposed dividend passed the earnings test (i.e. the dividend distribution is made out distributable earnings).
2. As for the solvency test, the Board of Directors reviewed, inter alia, the Company's expected cash flows and financing sources available to the Company for repayment of its current and anticipated obligations and for payment of the dividend. The Board of Directors also reviewed, in this regard, the balance of cash and cash equivalents and the borrowing available to the Company, to the best of the Company's judgment.
   The Board of Directors further reviewed, as part of the solvency review, the implications of the dividend payment on the Company's financial position and liquidity, on Company operations as they currently stand, including impact on the Company's investment plan and on its capital structure and leverage (including its credit rating).
   In these regards, the Board of Directors was presented with the position of Company management, whereby payment of the aforementioned dividend should not impact Company operations and investments, as required to maintain its business and competitive position, or to comply with the solvency test. The Board of Directors also reviewed the Company's cash flow forecasts (and sensitivity analysis of such forecasts to cases of significant unexpected deterioration in Company business), and also reviewed the Company's financial resilience and its debt service capacity through analysis of anticipated debt coverage ratios. Moreover, the Board of Directors reviewed the net

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liquidity sources from the Company's wholly-owned subsidiaries. Furthermore, in this regard the Board of Directors took into account the fact that the Company has no financial covenants which may impact the scope or cost of such debt.

After review of its findings, the Board of Directors concluded, after being presented with the aforementioned data and forecasts by management, that the Company is significantly capable of meeting its current and anticipated cash needs for the foreseeable future (even under scenarios of unexpected deterioration in Company business), both by generating cash from operations, by net cash flow sources from investees and by borrowing, in as much as needed. Therefore, there is no reasonable concern that the dividend distribution may prevent the Company from meeting its current and anticipated obligations when due, and this payment is not expected to have materially adverse effect on the Company's financial position, including on its capital structure, liquidity and capacity to further operate as it currently does.

For more information about the dividend distribution, see immediate report by the Company dated August 10, 2022 regarding the Company Board of Directors' recommendation on the aforementioned dividend distribution.

2.1.3. Proposed resolution:"Approve cash dividend distribution to Company shareholders as set forth in section 2.1.1 of the report convening the General Meeting."

2.2. Approval of contracting by the Company of employment contract with Mr. Ran Guron, Company CEO, as from his start date in office on June 19, 2022 (the resolution proposed in section 1.2 of the agenda)

Further to approval by the Company Board of Directors of appointment of Mr. Guron as Company CEO as from June 19, 2022 (see immediate report dated May 12, 20221 ), the agenda of the General Meeting includes approval of terms of office and employment of Mr. Guron as Company CEO, effective as from his aforementioned employment start date with the Company.

Note that on May 23, 2022, the Company Board of Directors approved, after approval by the Remuneration Committee, the terms of office and employment of

1 This information is included herein by way of reference. Bezeq The Israel Telecommunication Corp. Ltd.

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Mr. Guron as from their employment start date, unchanged from his previous terms of employment as CEO of three material subsidiaries of the Company (DBS Satellite Services (1998) Ltd.; Pelephone Communications Ltd.; and Bezeq International Ltd., hereinafter "the Subsidiarie s "), and unchanged from the terms of employment of the Company's previous CEO, and in conformity with Regulation 1B4 of the Corporate Regulations (Relief for interested party transactions), 2000 ("the Relief Regulations ") and with the Company's officer remuneration policy, pending approval by the next General Meeting (for more information see immediate report dated May 24, 2022.

Below are highlights of Mr. Guron's terms of employment and other information:

1. Term of employment, advance notice and retirement bonus
   The employment contract shall be effective as from June 19, 2022 for an undetermined term. However, either party may terminate the contract by giving six months' advance written notice2 , during which the employer-employee relations would continue.
2. Payroll
   Mr. Guron shall be entitled to a gross monthly salary of NIS 150 thousand (hereinafter: "Base Salary"), linked to the increase in the Consumer Price Index (hereinafter: "CPI"), and shall be revised every January by the rate of change in the CPI, based on the most recent known CPI reading (published in December of the preceding year), relative to the previous CPI reading used for such linkage.
   Note, in this regard, that indeed the revision of the Company's remuneration policy dated May 23, 2019 (immediate report by the Company dated May 15, 20193 ) eliminates the option of linking the base salary to the CPI, but because Mr. Guron's terms of employment as CEO of the Subsidiaries (the office he held prior to being appointed Company CEO) included linkage to the CPI, and given that the revision of the remuneration policy was made after approval of their terms of employment as CEO of the Subsidiaries, the Company chose not to detract from the CEO's currentemployment terms (compared to his employment terms as CEO of the Subsidiaries) and to keep in place the linkage of his salary to the CPI.

1. Notwithstanding the foregoing, note that pursuant to the employment contract, the Company may immediately terminate its contract with Mr. without giving any advance notice, in any case of circumstances which allow for denial of an employee's severance pay and/or advance notice, in whole or in part.
2. This information is included herein by way of reference.

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Note that linkage to the CPI is compared to the known CPI as of Mr. Guron's employment start date at his former position with the Group, as CEO of the Subsidiaries - i.e. as from January 1, 2019.

Note that should the CPI reading be negative, Mr. Guron's salary would not be reduced accordingly, but the negative CPI reading would be offset against the next positive CPI reading (or the next positive CPI readings, until the negative CPI reading will have been fully offset).

1. Other benefits
   Mr. Guron would be entitled to common social benefits, including contribution to an educational provident fund. The Company would also provide Mr. Guron with a company car, as is customary at the Company, in conformity with Company procedures as they may be from time to time, and would cover all expenses with respect to use and maintenance of such company car.
   Mr. Guron would also be entitled to expense reimbursement for his phone bill, including ISP charges, and to expense reimbursement for use of a cell phone, all subject to Company procedures as they may be from time to time.
2. Options
   Mr. Guron was awarded 9,000,000 options in conjunction with the position of CEO of the Subsidiaries, which would remain un-changed4 .
3. Bonus
4. 1. Once per year, as close as practicable before the start of each calendar year, the Company's competent organs shall specify the bonus target plan for the subsequent calendar year, based on the following principles: The CEO shall be paid an annual bonus not to exceed 100% of his annual pay (calculated based on his basic salary, excluding benefits), assuming full achievement of the targets set for that year. Furthermore, a formula shall be specified for remuneration of over-achievement (of the specified targets), up to 125% of the annual pay, as well as a formula for a partial bonus in case of under- achievement and the threshold for non-payment of any bonus relative to the specified targets.
   2. For rules applied by these organs to set the targets and to review achievement of the targets, and for a list of targets to be used each year to specify the targets for the Company CEO, see sections 7.2.1.6.3 and

7.2.1.6.4 of the Company's current officer remuneration policy, respectively. Moreover, for weighting of the target-based component and

4 For more information about terms and conditions of these options, see revised report about employee option award outline and material private offering report dated May 9, 2022 (reference no. 2022-01-045402) and immediate report about changes to holdings of interested parties. and senior officers dated February 14, 2021 (reference no. 2021-01-017847), included herein by way of reference.

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