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 2008
MER TELEMANAGEMENT SOLUTIONS LTD.
(Name of Registrant)
22 Zarhin Street, Ra'anana 43662, 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- ____________
THIS FORM 6-K IS BEING INCORPORATED BY REFERENCE INTO THE REGISTRANT'S FORM
F-3 REGISTRATION STATEMENT FILE NO. 333-128225 AND FORM S-8 REGISTRATION
STATEMENTS FILE NOS. 333-12014 AND 333-123321.
MER Telemanagement Solutions Ltd.
6-K Items
1. Notice of and Proxy Statement for MER Telemanagement Solutions Ltd. Annual
General Meeting to be held August 27, 2008 mailed July 23, 2008.
2. Form of MER Telemanagement Solutions Ltd. Proxy Card.
ITEM 1
MER TELEMANAGEMENT SOLUTIONS LTD.
22 Zarhin Street
Ra'anana 43662, Israel
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NOTICE OF 2008 ANNUAL GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders:
We are pleased to invite you to the 2008 Annual General Meeting of
Shareholders to be held on Wednesday, August 27, 2008 at 10:30 a.m. (Israel
time) at our offices at 22 Zarhin Street, Ra'anana, Israel, for the
following purposes:
1. To reelect five directors for terms expiring at our 2009 Annual
General Meeting of Shareholders;
2. To elect one outside director for an initial three-year term;
3. Subject to the approval of Proposal 2, to approve the compensation to
be paid to our new outside director;
4. To ratify and approve the employment agreement entered into with Mr.
Lior Salanksy in connection with his appointment as our President, and
to authorize the Chairman of our Board of Directors to amend the
employment agreement so that Mr. Salansky will serve as our President
in a full time role;
5. To ratify and approve the reappointment of Kost Forer Gabbay &
Kasierer, registered public accountants, a member of Ernst & Young
Global, as our independent registered public accountants for the year
ending December 31, 2008, and to authorize our Board of Directors to
delegate to the Audit Committee the authority to fix such independent
registered public accountants' compensation in accordance with the
volume and nature of their services;
6. To review and discuss our, auditor's report and consolidated financial
statements for the year ended December 31, 2007; and
7. To transact such other business that may properly come before the
annual general meeting or any adjournment thereof.
The Board of Directors recommends that you vote in favor of all of the
items, which are described in the attached Proxy Statement.
Shareholders of record at the close of business on July 18, 2008 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 forty-eight (48)
hours prior to the appointed time of the meeting to be validly included in the
tally of ordinary shares voted at the annual general meeting. Detailed proxy
voting instructions are provided both in the Proxy Statement and on the enclosed
proxy card.
Sincerely,
Chaim Mer
Chairman of the Board of Directors
July 18, 2008
MER TELEMANAGEMENT SOLUTIONS LTD.
22 Zarhin Street
Ra'anana 43662, Israel
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PROXY STATEMENT
2008 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 Mer Telemanagement Solutions
Ltd. to be voted at the 2008 Annual General Meeting of Shareholders, or the
Meeting, and at any adjournment thereof, pursuant to the accompanying Notice of
2008 Annual General Meeting of Shareholders. The Meeting will be held at 10:30
a.m. (Israel time) on Wednesday, August 27, 2008, at our offices at 22 Zarhin
Street, Ra'anana, Israel.
This Proxy Statement, the attached Notice of 2008 Annual General Meeting
and the enclosed proxy card, as well as our consolidated financial statements
for the year ended December 31, 2007, are being mailed to shareholders on or
before July 23, 2008.
PURPOSE OF THE ANNUAL GENERAL MEETING
At the Meeting, shareholders will be asked to consider and vote upon the
following matters: (i) reelection of five directors for terms expiring at our
2009 Annual General Meeting of Shareholders; (ii) election of one outside
director for an initial three-year term; (iii) subject to the approval of
Proposal 2, approval of the compensation to be paid to our new outside director;
(iv) ratification and approval of the employment agreement entered into with Mr.
Lior Salansky in connection with his appointment as our President, and
authorization of the Chairman of our Board of Directors to amend the employment
agreement so that Mr. Salansky will serve as our President in a full time role;
and (iv) ratification and approval of the reappointment of Kost Forer Gabbay &
Kasierer, registered public accountants, a member of Ernst & Young Global, as
our independent registered public accountants for the year ending December 31,
2008, and to authorize our Board of Directors to delegate to the Audit Committee
the authority to fix such independent registered public accountants'
compensation in accordance with the volume and nature of their services. In
addition, our auditor's report and consolidated financial statements for the
year ended December 31, 2007 will be reviewed and discussed at the Meeting.
We are not aware of any other matters that will come before the Meeting. If
any other matters properly come before the Meeting, the persons designated as
proxies intend to vote on such matters in accordance with the judgment of the
Board of Directors.
PROXY PROCEDURE
Only holders of record of our ordinary shares, par value of NIS 0.01 per
share, as of the close of business on July 18, 2008, are entitled to notice of,
and to vote in person or by proxy at, the Meeting.
Shares eligible to be voted and for which a proxy card is properly signed
and returned and actually received by our transfer agent or at our registered
office in Israel at least forty-eight (48) 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 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.
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 U.S. 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 the
enclosed self-addressed envelope to our transfer agent or to our registered
office in Israel at least forty-eight (48) hours prior to the appointed time of
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, by submitting a subsequently dated, validly executed proxy,
or by voting in person.
QUORUM AND VOTING
As of July 18, 2008, the record date for determination of shareholders
entitled to vote at the Meeting, there were outstanding 6,523,845 ordinary
shares. Each ordinary share entitles the holder to one vote.
The presence of two shareholders, holding at least one third (1/3) of our
issued share capital voting rights, represented in person or by proxy at the
Meeting, will constitute a quorum. A meeting adjourned for lack of a quorum
generally is adjourned to the same day in the following week at the same time
and place or any time and place as the directors designate in a notice to the
shareholders. At the reconvened meeting, the required quorum consists of any two
members present in person or by proxy. An affirmative vote of the holders of a
majority of the ordinary shares represented at the Meeting, in person or by
proxy, entitled to vote and voting thereon, is required to approve each of the
proposals, except as otherwise stated in the proposal.
We have received indications from four of our principal shareholders, Mr.
Chaim Mer, Mrs. Dora Mer, Mr. Isaac Ben-Bassat and Mr. Lior Salansky, who
together hold approximately 57.6% of our issued and outstanding ordinary shares,
that they presently intend to vote for all of the nominees for director and
outside director and in favor of all of the Items to be acted upon at the
Meeting.
I. ELECTION OF DIRECTORS
(OTHER THAN OUTSIDE DIRECTORS)
(Item 1 on the Proxy Card)
Our Articles of Association provide for a board of directors consisting of
up to ten members or such other number as may be determined from time to time at
a general meeting of shareholders. Our Board of Directors currently consists of
seven directors, including two outside directors appointed in accordance with
the Israeli Companies Law (see Item II below regarding outside directors). Our
directors, other than our outside directors, are elected at each annual meeting
of shareholders. All the members of our Board of Directors (except the outside
directors) may be reelected upon completion of their term of office.
At the Meeting, shareholders are being asked to reelect each of our current
directors who is not an outside director (see Item II below), Messrs. Chaim Mer,
Lior Salansky, Isaac Ben-Bassat, Steven J. Glusband and Yaacov Goldman, to hold
office until our 2009 Annual General Meeting of Shareholders and until their
successors are elected and qualified. All of the directors standing for
reelection at the Meeting were elected to serve in such capacity by our
shareholders at our 2007 annual general meeting of shareholders, other than Mr.
Lior Salanksy who was elected to serve in such capacity by our board of
directors in April 2008.
In general, NASDAQ Marketplace Rules require that a majority of our board
of directors qualify as independent directors within the meaning of the NASDAQ
Marketplace Rules and our audit committee must have at least three members and
be comprised only of independent directors each of whom satisfies the respective
"independence" requirements of the Securities and Exchange Commission and
NASDAQ. We are in compliance with such requirements.
We do not follow the requirements of the NASDAQ Marketplace Rules with
regard to the nomination process of directors, and instead, we follow Israeli
law and practice, in accordance with which our directors are recommended by our
Board of Directors for election by our shareholders. Should any of the director
nominees be unavailable for election, the proxies will be voted for a substitute
nominee designated by our Board of Directors. None of the nominees are expected
to be unavailable.
2
Under the Israeli Companies Law, the affirmative vote of the holders of a
majority of the ordinary shares represented at the Meeting, in person or by
proxy, entitled to vote and voting thereon, is required to elect as directors
each of the nominees named above.
Set forth below is information about each nominee, including age,
position(s) held with the company, principal occupation, business history and
other directorships held.
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
Chaim Mer 60 Chairman of the Board of Directors
Lior Salansky 43 President and Director
Isaac Ben-Bassat 54 Director
Steven J. Glusband 61 Director
Yaacov Goldman 53 Director
NOMINEES FOR ELECTION AS DIRECTOR FOR TERMS EXPIRING IN 2009
CHAIM MER has served as Chairman of our Board of Directors and a director
since our inception in December 1995. Mr. Mer has been the Chairman of the Board
of Directors of C. Mer Industries Ltd., or C. Mer, a publicly traded company,
since 1988 and served as its President and Chief Executive Officer from 1988
until January 2005. Mr. Mer holds a B.Sc. degree in Computer Sciences and
Mathematics from the Technion - Israel Institute for Technology.
LIOR SALANKSY has served as our President since February 2008 and was
elected as a director by our Board of Directors on April 2, 2008. In 1991, Mr.
Salansky founded MIND C.T.I. Ltd., a global provider of real-time, product-based
mediation, billing and customer care solutions for voice, data, video and
content services, where he served until February 2000 in a number of positions,
including Co-Chief Executive Officer, Vice President of Business Development and
Research and Development Manager and also served as a director from its
inception until 2004. Mr. Salansky holds a B.Sc. degree in Computer Science from
the Technion, Israel Institute of Technology and an MBA degree from Tel Aviv
University.
ISAAC BEN-BASSAT has served as a director since our inception in December
1995. Mr. Ben-Bassat has been Executive Vice President and a director of C. Mer
Industries Ltd. since 1988. Mr. Ben-Bassat holds a B.Sc. degree in Civil
Engineering from the Technion - Israel Institute for Technology.
STEVEN J. GLUSBAND has served as a director since August 1, 1996. Mr.
Glusband has been a partner with Carter Ledyard & Milburn LLP, our U.S. counsel,
since March 1987. Mr. Glusband holds a B.B.A. degree from the City College of
the City University of New York, a J.D. degree from Fordham University School of
Law and an L.L.M. degree from the New York University School of Law.
YAACOV GOLDMAN has served as a director since May 2004 and is a member of
our audit committee. Mr. Goldman provides consulting services to companies in
strategic-financial areas, through his wholly owned company, Maanit-Goldman
Management & Investments (2002) Ltd. Mr. Goldman serves as a director of Bank
Leumi Le-Israel Ltd., Elron Electronic Industries Ltd, Golden House Ltd., Tagor
Capital Ltd. and Renewable Resources Ltd. Mr. Goldman serves as the Professional
Secretary of the Peer Review Institute of the Certified Public accountants
Institute in Israel. From September 2000 until November 2001, Mr. Goldman served
as Managing Director of Argoquest Holdings, LLC, a U.S.-based investment company
focused on early stage high-technology companies. From November 1981 until
August 2000, Mr. Goldman was associated with Kessleman & Kessleman, the Israeli
member firm of PricewaterhouseCoopers, and was a Partner and Senior Partner at
such firm from January 1991 through August 2000. Mr. Goldman is a Certified
Public Accountant (Israel) since 1981 and holds a B.A. degree in Economics and
Accounting from Tel Aviv University.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH NOMINEE
FOR DIRECTOR NAMED ABOVE.
3
BOARD OF DIRECTORS AND COMMITTEES
BOARD OF DIRECTORS
Our Articles of Association provide for a board of directors consisting of
up to ten members or such other number as may be determined from time to time at
a general meeting of shareholders. Our Board of Directors is currently composed
of seven directors.
Pursuant to our articles of association, all of our directors (except the
outside directors) are elected at our annual general meeting of shareholders by
a vote of the holders of a majority of the voting power represented and voting
at such meeting and hold office until the next annual general meeting of
shareholders and until their successors have been elected. The Board of
Directors, may, at any time from time to time, appoint any other person as a
director, whether to fill a casual vacancy or to add to their number. All the
members of our Board of Directors (except the outside directors) may be
reelected upon completion of their term of office.
The Israeli Companies Law requires the board of directors of a public
company to determine a minimum number of directors with "accounting and
financial expertise." Our board of directors determined, accordingly, that at
least one director must have "accounting and financial expertise."
We do not follow the requirements of the NASDAQ Marketplace Rules with
regard to the nomination process of directors, and instead, we follow Israeli
law and practice, in accordance with which our directors are recommended by our
board of directors for election by our shareholders.
OUTSIDE DIRECTORS AND INDEPENDENT DIRECTORS
OUTSIDE DIRECTORS. Under the Israeli Companies Law, companies incorporated
under the laws of the State of Israel whose shares have been offered to the
public are required to appoint at least two outside directors. The Israeli
Companies Law provides that a person may not be appointed as an outside director
if the person, or the person's relative, partner, employer or an entity under
that person's control, has or had during the two years preceding the date of
appointment any affiliation with the company, or any entity controlling,
controlled by or under common control with the company. The term "relative"
means a spouse, sibling, parent, grandparent, child or child of spouse or spouse
of any of the above. The term affiliation includes:
o an employment relationship;
o a business or professional relationship maintained on a regular basis;
o control; and
o service as an officer holder (excluding service as an outside director
of a company that is offering its shares to the public for the first
time).
In addition, 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 director or may otherwise interfere with the
person's ability to serve as director. If, at the time an outside director is
appointed all members of the board of directors are of the same gender, then
that outside director must be of the other gender. A director of one company may
not be appointed as an outside director of another company if a director of the
other company is acting as an outside director of the first company at such
time.
At least one of the outside directors elected must have "accounting and
financial expertise" and any other outside director must have "accounting and
financial expertise" or "professional qualification," as such terms are defined
by regulations promulgated under the Israeli Companies Law.
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 voted on the matter. 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.
4
In general, 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 provided in regulations adopted
under the Israeli Companies Law and is otherwise prohibited from receiving any
other compensation, directly or indirectly, in connection with such service.
INDEPENDENT DIRECTORS. In general, NASDAQ Marketplace Rules require that a
majority of our board of directors qualify as independent directors within the
meaning of the NASDAQ Marketplace Rules and our audit committee must have at
least three members and be comprised only of independent directors each of whom
satisfies the respective "independence" requirements of the Securities and
Exchange Commission and NASDAQ.
Our Board of Directors has determined that Mr. Eytan Barak and Dr. Orna
Berry both qualify as independent directors under the rules of the Securities
and Exchange Commission and NASDAQ and as outside directors under the
requirements of the Israeli Companies Law. Our Board of Directors has further
determined that Messrs. Steven Glusband and Yaacov Goldman both qualify as
independent directors under the requirements of the Securities and Exchange
Commission and NASDAQ.
AUDIT COMMITTEE
Under the Israeli Companies Law, the board of directors of any public
company must establish an audit committee. The audit committee must consist of
at least three directors and must include all of the outside directors. The
audit committee may not include: the chairman of the board of directors; any
director employed by the company or providing services to the company on an
ongoing basis; or a controlling shareholder or any of the controlling
shareholder's relatives.
Under the Israeli Companies Law, the approval of the audit committee is
required for specified actions and transactions with office holders and
controlling shareholders. Additionally, under the Israeli Companies Law, the
role of the audit committee is to identify faults in the business practices of
the company, among other things, by consulting with the company's independent
registered public accounting firm and internal auditor, and to make
recommendations to the board for remedying such faults.
In addition, the NASDAQ Marketplace Rules require us to establish an audit
committee comprised of at least three members, all of whom must be independent
directors, each of whom is financially literate and satisfies the respective
"independence" requirements of the Securities and Exchange Commission and NASDAQ
and one of whom has accounting or related financial management expertise at
senior levels within a company.
Our audit committee consists of three members of our Board of Directors who
satisfy the respective "independence" requirements of the Securities and
Exchange Commission, NASDAQ and Israeli law for audit committee members. Our
audit committee is currently composed of Mr. Eytan Barak, Dr. Orna Berry and Mr.
Yaacov Goldman. Our Board of Directors has determined that Mr. Goldman qualifies
as an audit committee financial expert, as defined by rules of the Securities
and Exchange Commission. The audit committee meets at least once each quarter.
The composition and function of the audit committee meets the requirements of
Israeli law, the Securities and Exchange Commission and NASDAQ Marketplace
Rules.
5
INTERNAL AUDIT
Under the Israeli Companies Law, the board of directors of a public company
must appoint an internal auditor nominated by the audit committee. A person who
does not satisfy the Israeli Companies Law's independence requirements may not
be appointed as an internal auditor. The role of the internal auditor is to
examine, among other things, the compliance of the company's conduct with
applicable law and orderly business practice.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Our shareholders may communicate with the members of our Board of Directors
by writing directly to the Board of Directors or specified individual directors
to:
Corporate Secretary
Mer Telemanagement Solutions Ltd.
22 Zarhin Street
Ra'anana 43662, Israel
Our Corporate Secretary will deliver any shareholder communications to the
specified individual director, if so addressed, or to one of our directors who
can address the matter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of July 18, 2008
regarding the beneficial ownership by (i) all shareholders known to us to own
beneficially more than 10% of our ordinary shares, (ii) each director and
nominee for director and (iii) all directors and executive officers as a group:
NUMBER OF PERCENTAGE OF
ORDINARY SHARES OUTSTANDING
BENEFICIALLY ORDINARY
NAME OWNED (1) SHARES (2)
---- ----------- -----------
Chaim Mer 2,023,954 (3) 31.0%
Lior Salansky 1,102,484 (4) 16.7%
Roni Ben David 764,963 (5) 15.1%
Isaac Ben-Bassat 689,214 (6) 10.6%
Eytan Barak -- --
Dr. Orna Berry -- --
Steven J. Glusband 11,000 (7) *
Yaacov Goldman -- --
All directors and executive
officers as a group (9 persons) 4,145,461 (8) 60.4%
----------
* Less than 1%.
(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 the date of
this table 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 6,523,845 ordinary shares (excluding
10,800 ordinary shares held in treasury) issued and outstanding as of July
18, 2008.
6
(3) Mr. Chaim Mer and his wife, Mrs. Dora Mer, are the holders of 159,971
ordinary shares, and are the beneficial owners of 1,703,453 ordinary shares
through their controlling interest in Mer Ofekim Ltd., 11,539 ordinary
shares through their controlling interest in Mer Services Ltd. and 95
ordinary shares through their controlling interest in Mer & Co. (1982) Ltd.
(4) Inlcudes 50,000 ordinary shares subject to currently exercisable stock
options and 10,424 ordinary shares subject to currently exercisable
warrants that have an exercise price of $4.00 per share and expire on
August 10, 2009.
(5) Based solely upon, and qualified in its entirety with reference to, a
Schedule 13G/A filed with the Securities and Exchange Commission on June
16, 2008.
(6) Includes 630,045 ordinary shares held by Ron Dan Investments Ltd., a
corporation controlled by Mr. Ben-Bassat.
(7) Includes 10,000 ordinary shares subject to currently exercisable stock
options.
(8) Includes 336,024 ordinary shares subject to currently exercisable stock
options and warrants.
EXECUTIVE 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, 2007.
SALARIES, FEES, PENSION,
COMMISSIONS AND SIMRETIREMENT AND
BONUSES SIMILAR BENEFITS
----------- -----------
All directors and executive
officers as a group (11 persons*) $589,086 $75,922
----------
* Inlcudes our former chief financial officer, Shlomi Hagai, who ceased to
serve in such capacity in September 2007 and two former directors who
ceased to serve in such capacity in June 2007.
All our executive officers work full time for us. Mr. Chaim Mer, the
Chairman of our Board of Directors, devotes approximately 20% of his time to the
management of our company in consideration of which we pay him a monthly salary
of $7,000 per month (as approved by our Audit Committee and Board of Directors
on November 8, 1999). We provide automobiles to our executive officers at our
expense.
During the year ended December 31, 2007, we paid to our directors an annual
fee of approximately $8,400 (three of our directors who served in such capacity
for six months during 2007 received approximately $4,200) and a per meeting
attendance fee of $300, other than to Mr. Chaim Mer, the Chairman of our Board
of Directors and Mr. Yaacov Goldman, an independent director and our financial
expert. During the year ended December 31, 2007, we paid Mr. Yaacov Goldman an
annual fee of approximately $16,800 and a per meeting attendance fee of $400.
As of December 31, 2007, our directors and executive officers as a group,
consisting of 11 persons, held options to purchase an aggregate 330,500 ordinary
shares, having exercise prices ranging from $1.23 to $3.87. The options vest
over a four-year period. Of such options, options to purchase 320,500 ordinary
shares were granted under our 2003 Israeli Share Option Plan (of which, options
to purchase 252,500 ordinary shares will expire in December 2008, options to
purchase 5,000 ordinary shares will expire in May 2010, options to purchase
30,000 ordinary shares will expire in September 2010, options to purchase 3,000
ordinary shares will expire on March 2011 and options to purchase 30,000
ordinary shares will expire on September 2012) and options to purchase 10,000
ordinary shares were granted under our 1996 Stock Option Plan (all of which will
expire in December 2008).
7
STOCK OPTION PLANS
1996 STOCK OPTION PLAN
Under our 1996 Stock Option Plan, as amended, or the 1996 Plan, options to
purchase up to 400,000 ordinary shares were issuable under options granted to
our employees, management, officers and directors or those of our subsidiaries.
Any options which are canceled or forfeited within the option period became
available for future grants. The 1996 Plan terminated on May 31, 2006.
The 1996 Plan provides that it is administered by the Board of Directors or
an Option Committee which may be appointed by the Board of Director. The
exercise price of options granted under the 1996 Plan may not be less than 100%
of the fair market value of our ordinary shares on the date of the grant of
incentive stock options and 75% in the case of options not designated as
incentive stock options. Fair market value is the mean between the highest and
lowest quoted selling prices on the date of grant of our shares traded on NASDAQ
or a stock exchange on which such shares are principally traded.
Options granted under the 1996 Plan are generally exercisable under such
circumstances as the Board or Option Committee determines. Such options are not
transferable by an optionee other than by will or by laws of descent and
distribution, and during an option holder's lifetime are exercisable only by
such option holder or by his or her legal representative. Options granted under
the 1996 Plan terminate at such time and under such circumstances as the Board
or Option Committee determines.
During 2007, no options were granted under the 1996 Plan and no options
were exercised into ordinary shares. At December 31, 2007, options to purchase
62,100 ordinary shares were outstanding under the 1996 Plan, exercisable at an
average exercise price of $3.44 per share.
1996 SECTION 102 STOCK OPTION PLAN
In 1996, we adopted a Section 102 Stock Option Plan, as amended, or the
1996 102 Plan, providing for the grant of options to our Israeli employees,
management, officers and directors or those of our subsidiaries. The 1996 102
Plan was adopted pursuant to Section 102 of the Israeli Income Tax Ordinance
[New Version] - 1961, or Section 102, and provided recipients with tax
advantages under the Israeli Income Tax Ordinance. As of January 1, 2003,
Section 102 was amended, pursuant to which certain new tax advantages are
afforded with respect to option grants to employees and directors. In order to
enable employees and directors to benefit from such tax advantages with respect
to future grants of options and issuance of shares upon exercise thereof, such
grants have to be performed under a share option plan that is adjusted to the
amended Section 102, and therefore we adopted our 2003 Israeli Share Option
Plan. Upon the adoption of our 2003 Israeli Share Option Plan, we did not intend
to grant any more options under the 1996 102 Plan and the ordinary shares that
remained available for grant under the 1996 102 Plan were rolled-over into our
2003 Israeli Share Option Plan for issuance thereunder. The 1996 102 Plan
terminated on May 31, 2006.
Options granted under our 1996 102 Plan are exercisable under such
circumstances as the Board of Directors or Option Committee determined. Options
granted under the this plan are not transferable by an optionee other than by
will or by laws of descent and distribution, and during an option holder's
lifetime will be exercisable only by such option holder or by his or her legal
representative.
During 2007, no options were granted under the 1996 102 Plan and no options
were exercised into ordinary shares. At December 31, 2007, no options were
outstanding under the 1996 102 Plan.
2003 ISRAELI SHARE OPTION PLAN
Under our 2003 Israeli Share Option Plan, or the 2003 Plan, options to
purchase up to 893,915 ordinary shares may be granted to directors, employees,
consultants, advisors, service providers, controlling shareholders and other
persons not employed by us or by our affiliates. Any options which are canceled
or forfeited within the option period will become available for future grants.
The 2003 Plan will terminate in 2013, unless earlier terminated by the Board of
Directors.
8
Options to Israeli employees, directors and officers, other than
controlling shareholders (as such term is defined in the Israeli Income Tax
Ordinance), under the 2003 Plan may only be granted under Section 102. Under
amended Section 102, options granted pursuant to Section 102 may be designated
as "Approved 102 Options" or "Unapproved 102 Options." An Approved 102 Option
may either be classified as a capital gains option or an ordinary income option.
We elected to initially grant our options pursuant to Section 102 as capitals
gain options. Such election is effective as of the first date of grant of such
capital gains options under the 2003 Plan and shall remain in effect at least
until the lapse of one year following the end of the tax year during which we
first granted capital gains options. All Approved 102 Options (or the ordinary
shares issued upon exercise thereof) must be held in trust by a trustee for the
requisite holding period under Section 102 in order to benefit from the certain
tax advantages. We may also grant Unapproved 102 Options, which do not have any
tax benefit and are not held by a trustee. Options granted under Section 102 are
taxed on the date of sale of the exercised ordinary shares and/or the date of
the release of the options or such exercised ordinary shares from the trust.
The 2003 Plan is administered by the Board of Directors or a committee of
the Board of Directors, if appointed, which has the authority, subject to
applicable law, to determine, the persons to whom options will be granted, the
terms and conditions of the respective options, including the time and the
extent to which the options may be exercised, may designate the type of options,
make an election as to the type of Approved 102 Option. The exercise price of
options granted under the 2003 Plan will be based on the fair market value of
our ordinary shares and is determined by the Board of Directors or the committee
at the time of the grant.
Options granted under the 2003 Plan are not assignable or transferable by
an optionee, other than by will or by laws of descent and distribution, and
during the lifetime of an optionee may be exercised only by the optionee or by
the optionee's legal representative. Such options may be exercised as long as
the optionee is employed by, or providing services to us or any of our
affiliates, to the extent the options have vested.
During 2007, options to purchase an aggregate of 90,000 ordinary shares
were granted under the 2003 Plan at an average exercise price of $1.23 per
share, and no options were exercised. At December 31, 2007, options to purchase
594,500 ordinary shares were outstanding under the 2003 Plan, exercisable at an
average exercise price of $2.36 per share.
2006 STOCK OPTION PLAN
In June 2006, we adopted our 2006 Stock Option Plan, or the 2006 Plan,
under which up to 400,000 ordinary shares may be issued (subject to standard
adjustments) to employees, officers and non-employee directors of ours and our
affiliates. Ordinary shares as to which an option granted under the 2006 Plan
has not been exercised at the time of its expiration, cancellation or forfeiture
may again be subject to new awards under the 2006 Plan. The total number of
ordinary shares with respect to which options may be granted to any eligible
employee during any period of 12 consecutive months may not exceed 100,000
ordinary shares (subject to adjustment as provided in the 2006 Plan).
The 2006 Plan will be administered by our Board of Directors or to the
extent permitted by Israeli law, a Compensation Committee of our Board of
Directors, if established by our Board of Directors at its discretion. All
references below to the "Committee" refers to the Board of Directors or
compensation committee established by our Board of Directors, as applicable. The
Committee will have the authority, in its discretion, to establish from time to
time guidelines or regulations for the administration of the 2006 Plan, to
interpret the 2006 Plan, and to make all determinations it considers necessary
or advisable for the administration of the 2006 Plan, in addition to the other
responsibilities and powers assigned to the Committee in the 2006 Plan. All
decisions, actions or interpretations of the Committee under the 2006 Plan will
be final, conclusive and binding upon all parties.
Each option granted under the 2006 Plan will be either an option intended
to be treated as an "incentive stock option," within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended, or the Code, or an option that
will be treated as a "non-qualified stock option." No incentive stock may be
granted to any individual who is not an eligible employee of our company or a
"subsidiary" within the meaning of the Code. No incentive stock option may be
granted to an employee if, as of the date of grant of such option, such employee
owns stock possessing more than ten percent of the total combined voting power
of all classes of stock of our company or any affiliated company, a "10%
Holder," unless (a) the exercise price per share under such option is at least
110% of the fair market value of an ordinary share determined as of the date of
grant of such option, and (b) such option is not exercisable after the
expiration of five years from the date of grant of such option. No incentive
stock option may be granted under the 2006 Plan after the ten year anniversary
of its adoption.
9
In no event may the term of any option exceed ten years from the date of
grant of the option. However, in no event may the term of any option granted to
a 10% Holder exceed five years from the date of grant of the option. No option
may be exercised after its expiration.
Each option granted under the 2006 Plan will become exercisable, in whole
or in part, at such time or times during its term as the instrument evidencing
the grant of such option may specify.
The price at which ordinary shares may be purchased upon any exercise of an
option granted under the 2006 Plan will be the price per share determined by the
Committee, and specified in the instrument evidencing the grant of such option,
but in no event may the exercise price per share be less than (i) the fair
market value of an ordinary share determined as of the date of grant of the
option, or (ii), if greater, the par value of an ordinary share. However, with
respect to an option granted to a 10% Holder, in no event may the exercise price
per share be less than 110% of the fair market value of our ordinary shares
determined as of the date of grant of such option.
Options granted under the 2006 Plan are nontransferable, other than by will
or the laws of descent and distribution, and may be exercised during the
grantee's lifetime only by the grantee. However, if the instrument evidencing
the grant of an option other than an incentive stock option so provides, the
grantee may transfer his or her rights with respect to such option or any
portion thereof, without consideration, to any "family member," as such term is
defined in the 2006 Plan.
The terms and conditions of an option grant may not be waived or amended
without the consent of the grantee if it would adversely affect, to any material
extent, any of the rights or obligations of the grantee with respect to such
grant, or in the case of any option that was intended to constitute an incentive
stock option, if such waiver or amendment would cause such option to fail to be
treated as an incentive stock option.
Our Board of Directors may, with prospective or retroactive effect, amend,
suspend or terminate the 2006 Plan or any portion of the 2006 Plan at any time.
However, no amendment, suspension or termination of the 2006 Plan may adversely
affect the rights of any grantee with respect to any options previously granted
to the grantee without his or her written consent. Also, no amendment which
constitutes a "material revision" of the 2006 Plan, as the term material
revision is defined in the applicable rules of the National Association of
Securities Dealers, may be effective unless approved by our shareholders in the
manner required by such rules and by applicable law.
During 2007, options to purchase an aggregate of 20,000 ordinary shares
were granted under the 2006 Plan at an average exercise price of $1.23 per
share, and no options were exercised. At December 31, 2007, options to purchase
20,000 ordinary shares were outstanding under the 2006 Plan, exercisable at an
average exercise price of $1.23 per share.
CERTAIN TRANSACTIONS
Prior to May 2008, Mrs. Dora Mer, the wife of Chaim Mer, provided legal
services to us, and we paid her a monthly retainer of $5,000 for such services.
The conditions of retaining the services of Mrs. Mer were approved by our Audit
Committee and Board of Directors. In May 2008, Mrs. Mer joined the Israeli law
firm of M. Firon & Co., Advocates and Notaries, and provides legal services to
us through that firm since such date for a monthly retainer of $5,000, to be
paid in NIS. We may cancel the agreement with M. Firon & Co. upon thirty (30)
days' prior notice. The conditions of retaining the services of M. Firon & Co.
were approved by our Audit Committee and Board of Directors on April 2, 2008.
Our subsidiaries, MTS Asia Ltd. and MTS IntegraTRAK, entered into an
agreement with C. Mer Industries Ltd, or C. Mer, pursuant to which they
distribute and support certain of C. Mer's products and provide certain services
on behalf of C. Mer. Generally, C. Mer compensates MTS Asia Ltd. for these
activities at cost plus 10% and compensates MTS IntegraTRAK at cost plus 5%. C.
Mer is a publicly traded company controlled by Mr. Chaim Mer, and Mr. Mer has
been the Chairman of its Board of Directors since 1988 and served as its
President and Chief Executive Officer from 1988 until January 2005.
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Presently, the only service provided to us by C. Mer is our participation
in its umbrella liability insurance coverage. We believe that the terms under
which C. Mer provides such participation to us is on a basis no less favorable
than could be obtained from an unaffiliated third party.
On August 10, 2005, we entered into definitive agreements with
institutional and private investors, including our Chief Executive Officer, Mr.
Eytan Bar, for a private placement of ordinary shares and warrants to purchase
ordinary shares that raised $2.8 million. Pursuant to the agreements, the
investors, other than Mr. Eytan Bar, paid $3.00 per share for the aggregate
937,500 ordinary shares issued in the private placement. Mr. Bar purchased
14,000 shares at $3.88 per share, the closing price of our ordinary shares on
the day prior to the closing of the private placement. The private placement
also involved the acquisition by the investors of warrants to purchase an
aggregate 375,000 additional ordinary shares at an exercise price of $4.00 per
share (subject to anti-dilution adjustments), exercisable from February 10, 2006
until August 10, 2009. Each investor, including Mr. Eytan Bar, received warrants
to purchase two ordinary shares for each five ordinary shares purchased.
Mr. Chaim Mer, the Chairman of our Board of Directors, devotes
approximately 20% of his time to the management of our company in consideration
of which we pay him a monthly salary of $7,000 per month (as approved by our
Audit Committee and Board of Directors on November 8, 1999). Mr. Isaac
Ben-Bassat, a director and one of our major shareholders, receives an annual fee
of approximately $8,400 and a per meeting attendance fee of $300 in connection
with his service as a director of our company. See above "Executive
Compensation."
Effective as of February 10, 2008, Mr. Lior Salansky, one of our major
shareholders, was appointed as our President and on January 24, 2008, we entered
into an employment agreement with Mr. Salansky in connection with such
appointment. For details of the terms of Mr. Salansky's employment agreement see
Item 3. In April 2008, Mr. Salanksy was elected to serve as a director of our
company by our Board of Directors and he is standing for reelection at the
Meeting (see Item 2). Due to the closeness of the date of Mr. Salansky's
appointment as a director following the date of his appointment as our
President, we believe it would be appropriate to seek the ratification and
approval of our shareholders of his employment agreement (see Item 3).
II. ELECTION OF OUTSIDE DIRECTOR
(Item 2 on the Proxy Card)
Under the Israeli Companies Law, companies incorporated under the laws of
the State of Israel whose shares have been offered to the public are required to
appoint at least two outside directors. The Israeli Companies Law provides that
a person may not be appointed as an outside director if the person, or the
person's relative, partner, employer or an entity under that person's control,
has or had during the two years preceding the date of appointment any
affiliation with the company, or any entity controlling, controlled by or under
common control with the company. The term "relative" means a spouse, sibling,
parent, grandparent, child or child of spouse or spouse of any of the above. The
term affiliation includes an employment relationship; a business or professional
relationship maintained on a regular basis; control; and service as an officer
holder, (excluding service as an outside director of a company that is offering
its shares to the public for the first time).
In addition, 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 director or may otherwise interfere with the
person's ability to serve as director. If, at the time an outside director is
appointed all members of the board of directors are of the same gender, then
that outside director must be of the other gender. A director of one company may
not be appointed as an outside director of another company if a director of the
other company is acting as an outside director of the first company at such
time.
11
At least one of the outside directors elected must have "accounting and
financial expertise" and any other outside director must have "accounting and
financial expertise" or "professional qualification," as such terms are defined
by regulations promulgated under the Israeli Companies Law.
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 provided in regulations adopted
under the Israeli Companies Law and is otherwise prohibited from receiving any
other compensation, directly or indirectly, in connection with such service.
Outside directors are elected by shareholders by a special majority. In
general, 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.
Mr. Eytan Barak was elected to serve as an outside director of our company
at our 2007 annual general meeting of shareholders for an initial three-year
term, following which the service of Mr. Eytan Barak as an outside director may
be renewed for only one additional three-year term. Dr. Orna Berry was reelected
to serve as an outside director of our company at our 2007 annual general
meeting of shareholders for a second three-year term expiring on January 28,
2011. Dr. Orna Berry has informed us that effective as of the Meeting, she will
resign from the office of outside director due to other commitments.
Accordingly, at the Meeting, shareholders will be asked to elect Ms. Varda
Trivaks as an outside director of our company for an initial three-year term.
Our Board of Directors has determined that Mr. Barak and Ms. Trivaks each
qualifies as an outside director within the meaning of the Israeli Companies
Law. Our Board of Directors has further determined that Mr. Barak has accounting
and financial expertise and that Ms. Trivaks has professional qualification, as
such terms are defined by regulations promulgated under the Israeli Companies
Law.
Set forth below is information about the nominee for outside director,
including principal occupation, business history and any other directorships
held.
VARDA TRIVAKS (51) has served as the Managing Director and is one of the
two founding partners of Mimtar Business Consulting, established in 2001. In
that position, Ms. Trivaks acts as an advisor to companies on investments,
mergers, spin offs, valuation, control, budgeting, with a special focus on
advising global companies and management of companies during times of
restructuring and recovery. Ms. Trivaks serves as a member of the audit
committee, board of directors and/or financial committee of Ginegar Plastic
Products Ltd. and E. SCHNAPP & CO. WORKS LTD. From 1998 to 2004, Ms. Trivaks was
a member of the Israel Accounting Institute's communications committee for
Capital Markets and Insurance. Between 1998 to 2001, Ms. Trivaks was a partner
with the accounting and consulting firm, Shlomo Ziv and Co. - BDO, and served as
the managing director of one of its subsidiaries. Ms. Trivaks is a Certified
Public Accountant (Israel) since 1987 and holds a B.A. degree in Economics and
Accounting from Tel Aviv University and a Master of Science in Management (MSM)
from Boston University.
The election of the nominee for outside director requires the affirmative
vote of a majority of ordinary shares represented at the Meeting, in person or
by proxy, entitled to vote and voting on the matter, provided that either (i)
the shares voting in favor of such resolution include at least one-third of the
shares of non-controlling shareholders who vote on the matter (excluding the
vote of abstaining shareholders), or (ii) the total shareholdings of the
non-controlling shareholders who vote against such proposal do not represent
more than 1% of the voting rights in our company.
We are not aware of any reason why the nominee, if elected, would be unable
or unwilling to serve as an outside director. In the event that the named
nominee for outside director would be unable to serve, the proxies will be voted
for the election of such other person as shall be nominated by our Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEE
FOR OUTSIDE DIRECTOR.
12
OUTSIDE DIRECTOR CONTINUING IN OFFICE
Biographical information concerning the outside director continuing in
office follows for informational purposes only.
EYTAN BARAK (63) has served as an outside director since August 2007 and is
a member of our audit committee. Mr. Barak is joint owner and chief executive
officer of Dovrat - Barak, Investments in Advanced Technologies Ltd., a company
which provides financial resources and management assistance to start-up
companies. Mr Barak also serves as a member of the board of directors, audit
committee and investment committee of various Israeli companies, including ICTS
International N.V. traded on the OTC Bulletin Board (OTCBB: ICTS). From 1973 to
1997, Mr. Barak was with the Israel Corporation Ltd., initially serving as its
corporate controller and thereafter as its chief financial officer, and also
served as chairman or member of the board of directors of some of its
subsidiaries. From 1967 until 1973, Mr. Barak was associated with Kesselman &
Kesselman, the Israeli member firm of PricewaterhouseCoopers International
Limited. Mr. Barak is a Certified Public Accountant (Israel) since 1971 and
holds a B.A. degree in accounting from Tel Aviv University.
III. APPROVAL OF COMPENSATION TO BE PAID TO NEW OUTSIDE DIRECTOR
(Item 3 on the Proxy Card)
Under the Israeli Companies Law, the payment of compensation to an outside
director, within the meaning of the Israeli Companies Law, is required to be
approved by the audit committee, board of directors and shareholders, in that
order. The form and amount of compensation of an outside director, is governed
by regulations promulgated under the Israeli Companies Law, and an outside
director is otherwise prohibited from receiving any other compensation, directly
or indirectly, in connection with such service. According to the applicable
regulations, in general, all outside directors are required to receive the same
compensation, an outside director must be informed of the compensation prior to
his or her acceptance to serve as an outside director and the compensation may
not be modified during each three year term of service as an outside director
other than other than to conform to the terms of a newly appointed outside
director. Under the applicable regulations, a company must pay its outside
directors compensation in the form of an annual fee and a per meeting attendance
fee in an amount determined in such regulations, unless it elects to pay an
alternative form of compensation permitted under the regulations.
Subject to and effective as of the election of Ms. Trivaks as an outside
director for an initial three year term at the Meeting (see Item II), and for
the duration of her service in such capacity, it is proposed to pay to Ms.
Trivaks compensation in the form of an annual fee and per meeting attendance
fee. The annual fee, payable monthly, will be equal to the higher of the NIS
value of $8,400 (currently approximately NIS 28,500) and the minimum statutory
amount applicable to companies of our size as set forth from time to time in the
applicable regulations. The per meeting attendance fee will be equal to the
higher of the NIS value of $300 (currently approximately NIS 1,020) and the
minimum statutory amount applicable to companies of our size as set forth from
time to time in the applicable regulations. Such compensation has been approved
by our Audit Committee and Board of Directors, subject to shareholder approval,
and is the same as the compensation paid to our current outside directors.
It is therefore proposed that at the Meeting the following resolution be
adopted:
"RESOLVED, subject to and effective as of the appointment of Ms. Varda
Trivaks as an outside director and for the duration of her service in such
capacity, to pay to Ms. Trivaks compensation in the form of an annual fee
and per meeting attendance fee in such amounts as described in the proxy
statement for the 2008 annual general meeting of shareholders."
The affirmative vote of the holders of a majority of the ordinary shares
represented at the Meeting, in person or by proxy, entitled to vote and voting
thereon, is required to approve the foregoing resolution.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOREGOING RESOLUTION.
13
IV. RATIFICATION AND APPROVAL OF EMPLOYMENT AGREEMENT WITH OUR
PRESIDENT, MR. LIOR SALANSKY
(Item 4 on the Proxy Card)
Effective as of February 10, 2008, Mr. Lior Salansky was appointed as our
President and on January 24, 2008, we entered into an employment agreement with
Mr. Salansky in connection with such appointment. In April 2008, Mr. Salanksy
was elected to serve as a director of our company by our Board of Directors.
Under the Israeli Companies Law, an agreement with a director with respect to
the terms of his employment in other positions must be approved by the audit
committee, board of directors and general meeting of shareholders. Mr.
Salansky's employment agreement was approved by our Audit Committee and Board of
Directors in January 2008. Due to the closeness of the date of Mr. Salansky's
appointment as a director following the date of his appointment as our
President, we believe it would be appropriate to seek the ratification and
approval of our shareholders of his employment agreement.
Pursuant to the employment agreement, Mr. Salansky has agreed to devote 60%
of his working time to our business and affairs in his capacity as our
President. Under the terms of the employment agreement, we agreed to provide Mr.
Salansky with the following payment and benefits:
o A gross monthly salary of NIS 31,800 (approximately $9,400).
o An annual bonus equal to: (i) 10% of up to the first $2.0 million of
our net profit (excluding capital gains); and (ii) 5% of $2.0 million
to $4.0 million of our net profit (excluding capital gains).
o Options to purchase 200,000 of our ordinary shares, at an exercise
price equal to $1.08, the closing price of our ordinary shares on the
NASDAQ Capital Market on the date of grant. The options are subject to
the terms of our 2003 Israeli Share Option Plan. The options will vest
in four equal installments, each representing 25% of the options, and
will become exercisable on each of the four six month anniversaries
following the date of grant.
o Company contributions for the benefit of Mr. Salansky to our: (i)
Managers Insurance Policy ("BITUACH MINHAALIM")in the amount of 13.3%
of Mr. Salansky's gross salary (8.3% for severance and 5% for
remuneration); (ii) Education Fund ("KEREN HISHTALMUT") in the amount
of 7.5% of Mr. Salansky's gross salary; and (iii) 2.5% to insurance
for loss of working capacity. If we terminate Mr. Salansky's
employment without cause or Mr. Salansky terminates his employment, he
will be entitled to the severance contributions that we have made to
the Managers Insurance Policy.
o A company car, and all related expenses will be covered by our
company. Alternatively, Mr. Salansky may elect to receive payment
equal to the cost of the car to our company.
o A company mobile phone.
o Up to 14 days of paid vacation per each employment year and
recuperation payments in accordance with applicable law.
The employment agreement contains customary confidentiality and
non-solicitation provisions as well as an undertaking of Mr. Salansky not to
compete with us for 12 months following termination of his employment.
In February 2008, our Audit Committee and Board of Directors authorized the
Chairman of our Board of Directors to change Mr. Salansky's employment terms
within the following 12 months so that he will serve as our full time President,
under the same terms and conditions as the original employment agreement, except
that in such case we will pay him a gross monthly salary of NIS 53,000
(approximately $15,600), and he will be entitled to 24 days of paid vacation per
each employment year. Following Mr. Salansky's appointment as a director in
April 2008, any such amendment to his employment agreement requires, in addition
to the approval of the audit committee and board of directors, also the approval
of our shareholders, pursuant to the Israeli Companies Law. Accordingly, at the
Meeting, shareholders will be also asked to authorize the Chairman of our Board
of Directors to amend Mr. Salansky's employment terms such that he will serve as
our President in a full time role, in accordance with the terms described above
in this paragraph.
14
It is therefore proposed that at the Meeting the following resolutions be
adopted:
"RESOLVED, that the terms of the employment agreement with Mr. Lior
Salanksy, the Company's President and a member of its board of directors,
as described in the proxy statement for the 2008 annual general meeting of
shareholders, be and hereby are ratified and approved effective as of Mr.
Salansky's appointment as President."
"RESOLVED, that the Chairman of the Board of Directors of the Company be,
and hereby is, authorized to amend the employment agreement of Mr. Lior
Salansky so that he will serve as our full time President, under the same
terms and conditions as the original employment agreement, except as
otherwise described in the proxy statement for the 2008 annual general
meeting of shareholders; PROVIDED that such authorization shall expire on
February 24, 2009; it being hereby clarified that no further approval of
the shareholders of the Company will be required in connection with the
amendment of Mr. Salansky's employment agreement in accordance with this
resolution."
The affirmative vote of the holders of a majority of the ordinary shares
represented at the Meeting, in person or by proxy, entitled to vote and voting
thereon, is required to approve the foregoing resolutions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOREGOING RESOLUTIONS.
V. RATIFICATION AND APPROVAL OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS
(Item 5 on the Proxy Card)
Our Board of Directors first appointed Kost Forer Gabbay & Kasierer,
registered public accountants, a Member of Ernst & Young Global, as our
independent public accountants in 1996 and has reappointed the firm as our
independent public accountants since such time.
At the Meeting, shareholders will be asked to ratify and approve the
re-appointment of Kost Forer Gabbay & Kasierer as our independent registered
public accountants for the year ending December 31, 2008, pursuant to the
recommendation of our Audit Committee and Board of Directors. As a result of
Kost Forer Gabbay & Kasierer's familiarity with our operations and reputation in
the auditing field, our Audit Committee and Board of Directors believe that the
firm has the necessary personnel, professional qualifications and independence
to act as our independent registered public accountants.
At the Meeting, shareholders will also be asked to authorize our Board of
Directors to delegate to our Audit Committee the authority to determine the
compensation of our independent registered public accountants in accordance with
the volume and nature of their services. With respect to fiscal year 2007, we
paid Kost Forer Gabbay & Kasierer $93,000 for audit services, $15,000 for
audit-related services and $7,000 for tax-related services.
It is therefore proposed that at the Meeting the following resolution be
adopted:
"RESOLVED, that the appointment of Kost Forer Gabbay & Kasierer, a member
of Ernst & Young Global, as the independent registered public accountants
of Mer Telemanagement Solutions Ltd. to conduct the annual audit of its
financial statements for the year ending December 31, 2008, be and hereby
is ratified and approved, and that the Board of Directors be, and it hereby
is, authorized to delegate to the Audit Committee the authority to fix the
remuneration of such independent registered public accountants in
accordance with the volume and nature of their services."
15
If the appointment of Kost Forer Gabbay & Kasierer is not approved by our
shareholders, or if Kost Forer Gabbay & Kasierer ceases to act as our
independent registered public accountants, or if the Audit Committee removes
Kost Forer Gabbay & Kasierer as our independent registered public accountants,
the Audit Committee will recommend another independent registered public
accounting firm.
The affirmative vote of the holders of a majority of the ordinary shares
represented at the Meeting, in person or by proxy, entitled to vote and voting
thereon, is required to approve the foregoing resolution.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOREGOING RESOLUTION.
VI. REVIEW AND DISCUSSION OF AUDITOR'S REPORT AND CONSOLIDATED
FINANCIAL STATEMENTS
At the Meeting, our auditor's report and the audited consolidated financial
statements for the year ended December 31, 2007 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.
Our annual report on Form 20-F for the year ended December 31, 2007,
including the auditor's report and consolidated financial statements for the
year ended December 31, 2007, which was filed with the Securities and Exchange
Commission on April 4, 2008, is available on our website at www.mtsint.com or
through the EDGAR website of the Securities and Exchange Commission at
www.sec.gov. None of the auditor's report, consolidated financial statements,
the Form 20-F or the contents of our website form part of the proxy solicitation
material.
VII. OTHER MATTERS
The Board of Directors does not intend to bring any matters before the
Meeting other than those specifically set forth in the Notice of the Meeting and
knows of no matters to be brought before the Meeting by others. If any other
matters properly come before the Meeting, it is the intention of the persons
named in the accompanying proxy to vote such proxy in accordance with the
judgment of the Board of Directors.
By Order of the Board of Directors,
Alon Mualem
Corporate Secretary
Dated: July 18, 2008
16
ITEM 2
MER TELEMANAGEMENT SOLUTIONS LTD.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Eytan Bar and Alon Mualem, 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 MER Telemanagement
Solutions 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 27, 2008 at 10:30
a.m. (Israel time) at the principal offices of the Company, 22 Zarhin Street,
Ra'anana 43662, 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):
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
ANNUAL GENERAL MEETING OF SHAREHOLDERS OF
MER TELEMANAGEMENT SOLUTIONS LTD.
AUGUST 27, 2008
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
DIRECTORS, OUTSIDE DIRECTOR AND PROPOSALS 3 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 five directors for terms expiring at the Company's 2009
Annual General Meeting of Shareholders.
NOMINEES:
FOR AGAINST ABSTAIN
CHAIM MER [_] [_] [_]
ISAAC BEN-BASSAT [_] [_] [_]
STEVEN J. GLUSBAND [_] [_] [_]
YAACOV GOLDMAN [_] [_] [_]
LIOR SALANSKY [_] [_] [_]
2. To elect Varda Trivaks as an outside director for an initial three-year
term.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Subject to the approval of Proposal 2, to approve compensation to be paid
to Varda Trivaks, the Company's new outside director.
[_] FOR [_] AGAINST [_] ABSTAIN
4. To ratify and approve the employment agreement with the Company's
President, Mr. Lior Salansky, and to authorize the Chairman of the Board of
Directors of the Company to amend the employment agreement so that Mr.
Salansky will serve as the Company's President in a full time role.
[_] FOR [_] AGAINST [_] ABSTAIN
5. To ratify and approve the reappointment of Kost Forer Gabbay & Kasierer,
registered public accountants, a member of Ernst & Young Global, as the
Company's independent registered public accountants for the year ending
December 31, 2008, and to authorize the Company's Board of Directors to
delegate to the Audit Committee the authority to fix such independent
registered public accountants' compensation in accordance with the volume
and nature of their services.
[_] FOR [_] AGAINST [_] ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR (I) THE ELECTION OF THE NOMINEES FOR
DIRECTOR AND OUTSIDE DIRECTOR AND (II) PROPOSALS 3 THROUGH 5.
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.
SIGNATURE
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.
MER TELEMANAGEMENT SOLUTIONS LTD.
(Registrant)
By: /s/ Eytan Bar
-----------------
Eytan Bar
Chief Executive Officer
Date: July 23, 2008