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 2007
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 Item
1. Mer Telemanagement Solutions Ltd. Proxy Statement for Annual Meeting of
Shareholders to be held on August 9, 2007.
2. Mer Telemanagement Solutions Ltd. Proxy Card for Annual Meeting of
Shareholders to be held on August 9, 2007.
ITEM 1
MER TELEMANAGEMENT SOLUTIONS LTD.
22 Zarhin Street
Ra'anana 43662, Israel
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NOTICE OF 2007 ANNUAL GENERAL MEETING OF SHAREHOLDERS
---------------------
Dear Shareholders:
We are pleased to invite you to the 2007 Annual General Meeting of
Shareholders to be held on Thursday, August 9, 2007 at 10:30 a.m. (Israel time)
at our offices at 22 Zarhin Street, Ra'anana, Israel, for the following
purposes:
1. To reelect four directors for terms expiring at our 2008 Annual
General Meeting of Shareholders;
2. To elect two outside directors for three-year terms;
3. 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, 2007, 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;
4. To review and discuss our Directors' Annual Report to
Shareholders, auditor's report, and consolidated financial
statements for the year ended December 31, 2006; and
5. 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 2, 2007 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
By Order of the Board of Directors
Shlomi Hagai, Corporate Secretary
July 2, 2007
MER TELEMANAGEMENT SOLUTIONS LTD.
22 Zarhin Street
Ra'anana 43662, Israel
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PROXY STATEMENT
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2007 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 2007 Annual General Meeting of
Shareholders, or the Meeting, and at any adjournment thereof, pursuant to the
accompanying Notice of 2007 Annual General Meeting of Shareholders. The Meeting
will be held at 10:30 a.m. (Israel time) on Thursday, August 9, 2007, at our
offices at 22 Zarhin Street, Ra'anana, Israel.
This Proxy Statement, the attached Notice of 2007 Annual General
Meeting and the enclosed proxy card, as well as our Directors' 2006 Annual
Report to Shareholders and audited financial statements for the year ended
December 31, 2006, are being mailed to shareholders on or before July 5, 2007.
Purpose of the Annual General Meeting
At the Meeting, shareholders will be asked to vote upon the following
matters: (i) reelection of four directors for terms expiring at our 2008 Annual
General Meeting of Shareholders; (ii) election of two outside directors for
three-year terms; and (iii) 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, 2007, 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 Directors' Annual Report to Shareholders, auditor's
report and consolidated financial statements for the year ended December 31,
2006 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 2, 2007, 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 2, 2007, the record date for determination of shareholders
entitled to vote at the Meeting, there were outstanding 5,773,845 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. 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 our principal shareholders, Mr. Chaim
Mer, Mrs. Dora Mer and Mr. Isaac Ben-Bassat, who together hold approximately
47.0% of our issued and outstanding ordinary shares, that they presently intend
to vote for all of the nominees for director and in favor of all of the Items to
be acted upon at the Meeting.
I. ELECTION OF 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 is currently
composed of seven directors, including two outside directors appointed in
accordance with the Israeli Companies Law (see Item II below). 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, each of our current directors (other than our outside
directors, see Item II below) will be standing for reelection as directors to
hold office for one year until our 2008 Annual General Meeting of Shareholders
and until their successors are elected and qualified, other than Mr. Alon
Aginksy who will not be standing for reelection to serve as a director due to
other commitments. To reduce costs, our board of directors has determined to not
propose a director nominee for election by the shareholders instead of Alon
Aginsky and to reduce the number of directors serving on our board of director
to six, including the two outside directors within the meaning of the Israeli
Companies Law.
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. Currently we follow such NASDAQ requirements. However, we
have determined that following the Meeting, we will instead follow Israeli law
and practice, which requires that we appoint at least two outside directors,
within the meaning of the Israeli Companies Law, to our board of directors (see
below "Board of Directors and Committees -- Outside and Independent Directors
-Outside Directors"). Following the Meeting, in accordance with the rules of the
Securities and Exchange Commission and NASDAQ, we will continue to have the
mandated three independent directors, as defined by the rules of the Securities
and Exchange Commission and NASDAQ, on our audit committee.
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.
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 below.
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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................. 59 Chairman of the Board of Directors
Isaac Ben-Bassat.......... 53 Director
Steven J. Glusband........ 60 Director
Yaacov Goldman............ 52 Director
Nominees For Election As Director For Terms Expiring In 2008
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.
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 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, J.D. degree from Fordham University
School of Law and 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.
BOARD OF DIRECTORS AND COMMITTEES
Outside 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;
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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.
As of 2006, 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.
This requirement does not apply to outside directors appointed prior to 2006.
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.
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 Dr. Yehoshua Gleitman 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. Alon Aginsky and Yaacov Goldman both qualify as
independent directors under the requirements of the Securities and Exchange
Commission and NASDAQ. Subject to the election of Mr. Eytan Barak as an outside
director (see Item II below), the Board of Directors has determined that he will
qualify as an independent director under the rules of the Securities and
Exchange Commission and NASDAQ and as an outside director under the requirements
of the Israeli Companies Law.
Audit Committee
Our audit committee, which was established in accordance with Section
114 of the Israeli Companies Law and Section 3(a)(58)(A) of the Securities
Exchange Act of 1934, assists our board of directors in overseeing the
accounting and financial reporting processes of our company and audits of our
financial statements, including the integrity of our financial statements,
compliance with legal and regulatory requirements, our independent public
accountants' qualifications and independence, the performance of our internal
audit function and independent public accountants, finding any defects in the
business management of our company for which purpose the audit committee may
consult with our independent
4
auditors and internal auditor, proposing to the board of directors ways to
correct such defects, and such other duties as may be directed by our board of
directors.
The responsibilities of the audit committee also include approving
related-party transactions as required by law. Under Israeli law an audit
committee may not approve an action or a transaction with a controlling
shareholder, or with an office holder, unless at the time of approval two
outside directors are serving as members of the audit committee and at least one
of the outside directors was present at the meeting in which an approval was
granted.
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 Dr.Yehoshua Gleitman, Dr. Orna Berry
and Mr.Yaacov Goldman. Our Board of Directors has determined that Mr. Goldman
qualifies as a financial expert. The audit committee meets at least once each
quarter.
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. Mr. Shaul
Sofer, Certified Public Accountant (Israel), serves as our internal auditor.
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 2, 2007
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
Name Beneficially Owned (1) Ordinary Shares (2)
---- ---------------------- -------------------
Chaim Mer..................................... 2,023,954 (3) 35.05%
Alon Aginsky.................................. 16,918 *
Isaac Ben-Bassat.............................. 689,214 (4) 11.94%
Dr. Orna Berry................................ -- --
Dr. Yehoshua Gleitman......................... -- --
Steven J. Glusband............................ 11,000 (5) *
Yaacov Goldman ............................... -- --
All directors and executive officers
as a group (13 persons)....................... 3,008,686 (6) 49.83%
-----------
* Less than 1%.
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(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 5,773,845 ordinary shares (excluding
10,800 ordinary shares held in treasury) issued and outstanding as of July
2, 2007.
(3) Mr. Chaim Mer and his wife, Mrs. Dora Mer, are the holders of 267,821
ordinary shares, and are the beneficial owners of 1,744,453 ordinary shares
through their controlling interest in Mer Ofekim Ltd., 11,539 ordinary
shares through their controlling interest in Mer Services Ltd., 95 ordinary
shares through their controlling interest in Mer & Co. (1982) Ltd. and 46
ordinary shares through their controlling interest in C. Mer Industries
Ltd.
(4) Includes 630,045 ordinary shares held by Ron Dan Investments Ltd., a
corporation controlled by Mr. Ben-Bassat.
(5) Includes 10,000 ordinary shares subject to currently exercisable stock
options.
(6) Includes 263,600 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, 2006.
Salaries, fees, Pension,
commissions and retirement and
bonuses similar benefits
--------------- ----------------
All directors and executive officers
as a group (14 persons)............. $1,081,573 $162,803
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, 2006, we paid to each of our
directors an annual fee of approximately $8,400 and a per meeting attendance fee
of $300, except for Mr. Yaacov Goldman, an independent director and our
financial expert, to whom we paid an annual fee of approximately $16,800 and a
per meeting attendance fee of $400.
As of December 31, 2006, our directors and executive officers as a
group, consisting of 14 persons, held options to purchase an aggregate 238,625
ordinary shares, having exercise prices ranging from $1.844 to $3.87. The
options vest over a four-year period. Of such options, options to purchase
228,625 ordinary shares were granted under our 2003 Israeli Share Option Plan
(of which, options to purchase 205,000 ordinary shares will expire in December
2008, options to purchase 7,500 ordinary shares will expire in August 2009,
options to purchase 2,500 ordinary shares will expire in May 2010, options to
purchase 7,500 ordinary shares will expire in September 2010, options to
purchase 2,500 ordinary shares will expire in November 2010 and options to
purchase 3,625 ordinary shares will expire on March 2011) and options to
purchase 10,000 ordinary shares were granted under our 1996 Stock Option Plan
(all of which will expire in December 2008).
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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
Directors, which has the authority, subject to applicable law, to determine the
persons to whom options will be granted, the number of ordinary shares to be
covered by each option the time or times at which options will be granted or
exercised, and the terms and conditions of the options. 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 2006, options to purchase 15,000 ordinary shares were granted
under our 1996 Plan, with an average exercise price of $3.45, and no options
were exercised into ordinary shares. At December 31, 2006, options to purchase
62,400 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 2006, no options were granted under the 1996 102 Plan and
options to purchase 30,000 ordinary shares were exercised. At December 31, 2006,
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,
7
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.
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 are 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 2006, options to purchase an aggregate of 45,000 ordinary shares
were granted under the 2003 Plan at an average exercise price of $3.33 per share
and options to purchase 10,341 ordinary shares were exercised. At December 31,
2006, options to purchase 608,000 ordinary shares were outstanding under the
2003 Plan, exercisable at an average exercise price of $2.66 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
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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.
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 will be 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 2006, no options were granted under the 2006 Plan, and no
options were outstanding under the 2006 Plan.
Warrants
On August 3, 2005, we issued a warrant to purchase 37,000 ordinary
shares to Mr. Avraham Ziv in connection with financial services that he provided
to our company. The warrant has an exercise price of $4.00 per share, subject to
anti-dilution adjustments, and is exercisable from February 3, 2006 until August
3, 2009. Mr. Ziv has provided financial services to us from to time during the
last five years.
In connection with our August 2005 private placement to institutional
and private investors, we issued to the investors warrants to purchase an
aggregate 375,000 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.
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Certain Transactions
Ms. Dora Mer, the wife of Chaim Mer, provides legal services to us and
receives a monthly retainer of $5,000. The conditions of retaining the services
of Ms. Mer were approved by our Board of Directors and Audit Committee.
Our subsidiaries, MTS Asia Ltd. and MTS IntegraTRAK, entered into an
agreement with 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.
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 President, 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
our President, 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."
II. ELECTION OF OUTSIDE DIRECTORS
(Items 2A and 2B 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 office
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.
As of 2006, 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.
This requirement does not apply to outside directors appointed prior to 2006.
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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.
Dr. Yehoshua Gleitman was reelected to serve as an outside director of
our company at our 2004 annual general meeting of shareholders for a second
three-year term expiring at our 2007 annual general meeting of shareholders,
following which the service of Dr. Gleitman as an outside director may not be
extended. Dr. Orna Berry was elected to serve as an outside director of our
company at an extraordinary general meeting of shareholders held in January 2005
for an initial three-year term expiring January 28, 2008, following which the
service of Dr. Berry as an outside director may be renewed for only one
additional three-year term.
At the Meeting, shareholders will be asked to reelect Dr. Orna Berry as
an outside director of our company for a second three-year term effective as of
the expiration of her initial three-year term on January 28, 2008 and expiring
three years thereafter on January 28, 2011 or until her successor is elected and
qualified. At the Meeting, shareholders will also be asked to elect Mr. Eytan
Barak as an outside director of our company for an initial three-year term
expiring at our 2010 annual general meeting of shareholders or until his
successor is elected and qualified.
Our Board of Directors has determined that Dr. Orna Berry and Eytan
Barak each qualifies as an outside director within the meaning of the Israeli
Companies Law. Our Board of Directors has further determined that Mr. Eytan
Barak has accounting and financial expertise and that Dr. Orna Berry has
professional qualification, as such terms are defined by regulations promulgated
under the Israeli Companies Law.
Set forth below is information about each of the nominees for outside
director, including principal occupation, business history and any other
directorships held.
Dr. Orna Berry (57) has served as an outside director since January
2005 and is a member of our audit committee. Dr. Berry is a Venture Partner in
Gemini Israel Funds Ltd. and since 2000 has served as Chairperson of Lambda
Crossing, Ltd. and Riverhead Networks, Inc., which was sold to Cisco in March
2004. Dr. Berry served as the Chief Scientist of the Ministry of Industry and
Trade of the Government of Israel from 1997 to 2000 and Co-President of Ornet
Data Communications Technologies Ltd., a provider of high-speed switches, which
was acquired by Siemens AG, from 1993 to 1997. From 1992 to 1993, Dr. Berry
served as a consultant to Intel Communications Division and Elbit Systems, Ltd.
Dr. Berry holds a B.A. degree in statistics and mathematics from Haifa
University, M.A. degree in statistics and mathematics from Tel Aviv University
and Ph.D. in computer science from the University of Southern California.
Mr. Eytan Barak (63) 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.
The election of each of the nominees 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
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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 either of the nominees, if elected,
would be unable or unwilling to serve as an outside director. In the event that
either of the named nominees for outside director would be unable to serve, the
proxies will be voted for the election of such other person or persons as shall
be nominated by our Board of Directors.
The Board of Directors recommends a vote FOR the election of each of
the nominees for outside director.
III. RATIFICATION AND APPROVAL OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS
(Item 3 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 fiscal year ending December 31, 2007, 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 fix the
compensation of our independent registered public accountants in accordance with
the volume and nature of their services. With respect to fiscal year 2006, we
paid Kost Forer Gabbay & Kasierer approximately $83,173 for audit services,
approximately $8,601 for audit-related services and approximately $20,528 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,
2007, 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."
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.
IV. REVIEW AND DISCUSSION OF DIRECTORS' REPORT, AUDITOR'S REPORT,
AND CONSOLIDATED FINANCIAL STATEMENTS
At the Meeting, our Directors' Annual Report to Shareholders, auditor's
report and the audited consolidated financial statements for the year ended
December 31, 2006 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.
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V. 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.
A COPY OF THE COMPANY'S 2006 ANNUAL REPORT ON FORM 20-F AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE WITHOUT CHARGE TO THOSE
SHAREHOLDERS WHO WOULD LIKE MORE DETAILED INFORMATION CONCERNING THE COMPANY. TO
OBTAIN A COPY, PLEASE WRITE TO: MR. SHLOMI HAGAI, MER TELEMANAGEMENT SOLUTIONS
LTD., 22 ZARHIN STREET, RA'ANANA 43662, ISRAEL.
By Order of the Board of Directors,
Shlomi Hagai
Corporate Secretary
Dated: July 2, 2007
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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 Shlomi Hagai, 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 9, 2007 at 10:30
a.m. 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 9, 2007
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 DIRECTORS AND PROPOSAL 3.
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 four directors for terms expiring at the Company's 2008
Annual General Meeting of Shareholders.
[ ] FOR ALL NOMINEES NOMINEES:
( ) CHAIM MER
[ ] WITHHOLD AUTHORITY FOR ALL NOMINEES ( ) ISAAC BEN-BASSAT
( ) STEVEN J. GLUSBAND
[ ] FOR ALL EXCEPT ( ) YAACOV GOLDMAN
(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 Dr. Orna Berry as an outside director.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2b. To elect Eytan Barak as an outside director.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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,
2007, 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.
[ ] 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) PROPOSAL 3.
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this method. [
]
Signature of Shareholder [ ] Date [ ]
Signature of Shareholder [ ] Date [ ]
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MER TELEMANAGEMENT SOLUTIONS LTD.
(Registrant)
By: /s/Eytan Bar
------------
Eytan Bar
President and
Chief Executive Officer
Date: July 10, 2007