SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
DELTATHREE, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
As filed with the Securities and Exchange Commission on
November 5, 2003
deltathree, Inc.
75 Broad Street
31st Floor
New York, New York 10004
November 5, 2003
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
(the "Meeting") of deltathree, Inc. (the "Company") to be held at The Regent
Wall Street, 55 Wall Street, New York, New York 10005, on December 8, 2003,
commencing at 10:30 a.m., local time. I urge you to be present in person or
represented by proxy at the Meeting.
The enclosed Notice of Annual Meeting and Proxy Statement fully
describes the business to be transacted at the Meeting, which includes (i) the
election of seven directors of the Company, (ii) the ratification of the
appointment by the Board of Directors of Brightman Almagor & Co., a member firm
of Deloitte & Touche, as independent auditors for the year ending December 31,
2003, and (iii) the transaction of any other business that may properly be
brought before the Meeting or any adjournment or postponement thereof.
Our Board of Directors believes that a favorable vote on each of the
matters to be considered at the Meeting is in the best interests of us and our
stockholders and unanimously recommends a vote "FOR" each of the matters.
Accordingly, we urge you to review the accompanying material carefully and to
return the enclosed proxy promptly.
The Board of Directors has fixed the close of business on October 29,
2003 as the record date for the determination of the stockholders entitled to
notice of and to vote at the Meeting. Accordingly, only stockholders of record
at the close of business on that date will be entitled to vote at the Meeting. A
list of the stockholders entitled to vote at the Meeting will be located at our
offices, 75 Broad Street, 31st Floor, New York, New York 10004, at least ten
days prior to the Meeting and will also be available for inspection at the
Meeting.
Our directors and officers will be present to help host the Meeting and
to respond to any questions that our stockholders may have. I hope you will be
able to attend. Even if you expect to attend the Meeting, please sign, date and
return the enclosed proxy card without delay. If you attend the Meeting, you may
vote in person even if you have previously mailed a proxy.
Sincerely,
/s/ Shimmy Zimels
--------------------------------------
Shimmy Zimels
Chief Executive Officer and President
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deltathree, Inc.
75 Broad Street
31st Floor
New York, New York 10004
NOTICE OF 2003 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on December 8, 2003
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of deltathree, Inc. (the "Company") will be held at The Regent Wall
Street, 55 Wall Street, New York, New York 10005, on December 8, 2003,
commencing at 10:30 a.m., local time. A proxy card and a Proxy Statement for the
Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of seven directors for a one-year term expiring at our
Annual Meeting of Stockholders in 2004 and until their successors are
duly elected and qualified;
2. The ratification of the appointment by the Board of Directors of
Brightman Almagor & Co., a member firm of Deloitte & Touche, as
independent auditors for the year ending December 31, 2003;
3. Such other matters as may properly come before the Meeting or any
adjournment or postponement thereof.
The close of business on October 29, 2003 has been fixed as the record
date for determining stockholders entitled to notice of and to vote at the
Meeting or any adjournment or postponement thereof. For a period of at least 10
days prior to the Meeting, a complete list of stockholders entitled to vote at
the Meeting shall be open to examination by any stockholder during ordinary
business hours at our offices at 75 Broad Street, 31st Floor, New York, New York
10004.
Information concerning the matters to be acted upon at the Meeting is
set forth in the accompanying Proxy Statement.
A copy of our Annual Report for 2002, which includes our audited
financial statements, is being mailed together with this proxy material.
YOUR VOTE IS IMPORTANT. STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT
THE MEETING IN PERSON ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY CARD IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.
By Order of the Board of Directors,
/s/ Paul C. White
Paul C. White
Secretary
New York, New York
November 5, 2003
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deltathree, Inc.
75 Broad Street
31st Floor
New York, New York 10004
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 8, 2003
----------------------
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement and accompanying proxy materials are being first
mailed on or about November 6, 2003 to stockholders of deltathree, Inc. (the
"Company") at the direction of our Board of Directors (the "Board") to solicit
proxies in connection with the 2003 Annual Meeting of Stockholders (the
"Meeting"). The Meeting will be held at The Regent Wall Street, 55 Wall Street,
New York, New York, 10005, on December 8, 2003, commencing at 10:30 a.m., local
time, or at such other time and place to which the Meeting may be adjourned or
postponed.
All shares represented by valid proxies at the Meeting, unless the
stockholder otherwise specifies, will be voted (i) FOR the election of the seven
persons named under "Proposal I-Election of Directors" as nominees for election
as our directors for a one-year term expiring at our annual meeting of
stockholders in 2003 and until their successors are duly elected and qualified,
(ii) FOR the ratification of the appointment by the Board of the independent
auditors named under "Proposal II-Ratification of Appointment of Independent
Auditors" and (iii) at the discretion of the proxy holders, with regard to any
matter not known to the Board on the date of mailing this Proxy Statement that
may properly come before the Meeting or any adjournment or postponement thereof.
Where a stockholder has appropriately specified how a proxy is to be voted, it
will be voted accordingly. The Board has designated Paul C. White and Shimmy
Zimels as proxies for the solicitation on behalf of the Board of proxies of our
stockholders to vote on all matters as may properly come before the Meeting and
any adjournment of the Meeting.
A proxy may be revoked at any time by providing written notice of such
revocation to deltathree, Inc., 75 Broad Street, 31st Floor, New York, New York
10004, which notice must be received prior to the Meeting. If notice of
revocation is not received prior to the Meeting, a stockholder may nevertheless
revoke a proxy if he or she attends the Meeting and votes in person.
RECORD DATE AND VOTING SECURITIES
The close of business on October 29, 2003 is the record date (the
"Record Date") for determining the stockholders entitled to vote at the Meeting.
At the close of business on October 29, 2003, we had issued and outstanding
approximately 29,348,083 shares of our Class A Common Stock, par value $0.001
(the "Common Stock"), held by approximately 129 holders of record. No shares of
our Class B Common Stock are outstanding. The Common Stock constitutes the only
outstanding class of voting securities entitled to be voted at the Meeting.
QUORUM AND VOTING
The presence at the Meeting, in person or by proxy relating to any
matter, of the holders of a majority of the outstanding shares of Common Stock
is necessary to constitute a quorum. For purposes of the quorum and the
discussion below regarding the vote necessary to take stockholder action,
stockholders of record who are present at the Meeting in person or by proxy and
who abstain, including brokers holding customers' shares of record who cause
abstentions to be recorded at the Meeting, are considered stockholders who are
present and entitled to vote at the Meeting, and thus, shares of Common Stock
held by such stockholders will count toward the attainment of a quorum. If a
quorum should not be present, the Meeting may be adjourned from time to time
until a quorum is obtained.
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Each share of Common Stock entitles the holder thereof to one vote with
respect to each proposal to be voted on at the Meeting. Each proposal scheduled
to be voted on at the Meeting requires a majority of the outstanding shares
entitled to vote on such proposal to be voted in favor of the proposal in order
for the proposal to be passed.
Atarey Hasharon Chevra Lepituach Vehashkaot Benadlan (1991) Ltd., an
Israeli company ("Atarey") beneficially owns over a majority of our outstanding
Common Stock. Therefore, Atarey will control the outcome of any matter submitted
to a vote of our stockholders, including the election of the directors at the
Meeting.
The accompanying proxy card is designed to permit each holder of Common
Stock as of the close of business on the Record Date to vote on each of the
matters to be considered at the Meeting. A stockholder is permitted to vote in
favor of, or to withhold authority to vote for, any or all nominees for election
to the Board and to vote in favor of or against or to abstain from voting with
respect to the proposal to ratify the appointment by the Board of the
independent auditors.
Brokers holding shares of record for customers generally are not
entitled to vote on certain matters unless they receive voting instructions from
their customers. As used herein, "uninstructed shares" means shares held by a
broker who has not received instructions from its customers on such matters, if
the broker has so notified us on a proxy form in accordance with industry
practice or has otherwise advised us that it lacks voting authority. As used
herein, "broker non-votes" means the votes that could have been cast on the
matter in question by brokers with respect to uninstructed shares if the brokers
had received their customers' instructions. Although there are no controlling
precedents under Delaware law regarding the treatment of broker non-votes in
certain circumstances, we intend to treat broker non-votes in the manner
described below.
In December 2000, the Securities and Exchange Commission adopted a rule
concerning the delivery of annual disclosure documents. The rule allows us or
brokers holding shares on behalf of our stockholders to send a single set of our
annual report and proxy statement to any household at which two or more of our
stockholders reside, if either we or the brokers believe that the stockholders
are members of the same family. This practice, referred to as "householding,"
benefits both stockholders and us. It reduces the volume of duplicate
information received by stockholders and helps to reduce our expenses. The rule
applies to our annual reports, proxy statements and information statements. Once
stockholders receive notice from their brokers or from us that communications to
their addresses will be "householded," the practice will continue until
stockholders are otherwise notified or until they revoke their consent to the
practice. Each stockholder will continue to receive a separate proxy card or
voting instruction card.
Stockholders whose households received a single set of disclosure
documents this year, but who would prefer to receive additional copies, may
contact our transfer agent, American Stock Transfer and Trust Company, by
calling their toll free number, 1-800-937-5449.
Stockholders who do not wish to participate in "householding" and would
like to receive their own sets of our annual disclosure documents in future
years, should follow the instructions described below. Stockholders who share an
address with another stockholder of the Company and who would like to receive
only a single set of our annual disclosure documents, should follow these
instructions:
o Stockholders whose shares are registered in their own name should
contact our transfer agent, American Stock Transfer and Trust
Company, and inform them of their request by calling them at
1-800-937-5449 or writing them at 6201 15th Avenue, Brooklyn, NY
11219.
o Stockholders whose shares are held by a broker or other nominee
should contact the broker or other nominee directly and inform
them of their request. Stockholders should be sure to include
their name, the name of their brokerage firm and their account
number.
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SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to the
beneficial ownership of shares of our Common Stock as of October 29, 2003 by:
o each person who we know owns beneficially more than 5% of our
Common Stock;
o each of our directors individually;
o each of our named executive officers individually; and
o all of our executive officers and directors as a group.
Unless otherwise indicated, to our knowledge, all persons listed below
have sole voting and investment power with respect to their shares of Common
Stock. Each person listed below disclaims beneficial ownership of their shares,
except to the extent of their pecuniary interests therein. Shares of Common
Stock that an individual or group has the right to acquire within 60 days of
October 29, 2003 pursuant to the exercise of options are deemed to be
outstanding for the purpose of computing the percentage ownership of such person
or group, but are not deemed outstanding for the purpose of calculating the
percentage owned by any other person listed.
Number Percentage(1)
------ -------------
Shares of deltathree Class A Common Stock
Beneficially Owned
------------------------------------------
Principal Stockholder:
Atarey Hasharon Chevra Lepituach Vehashkaot
Benadlan (1991) Ltd.............................. 20,655,402 70.4%
7 Giborey Israel St., P.O. Box 8468.
South Netanya Industrial Zone 42504, Israel.
Executive Officers and Directors:
Noam Bardin(2)(3).................................. 757,421 2.5%
Shimmy Zimels(2)(4)................................ 473,407 1.6%
Paul C. White(2)(5)................................ 260,000 *
Ehud Erez (2)(5)(6)................................ 24,848 *
Amir Gera (2)(5)................................... 24,848 *
Elie Housman (2)(5)................................ 24,848 *
Joshua Maor (2)(7)................................. 40,999 *
Lior Samuelson (2)(5).............................. 24,848 *
All Directors and Executive Officers as a group
(10 persons)(8).................................. 1,453,847 4.8%
- -----------
* Less than 1%.
(1) Percentage of beneficial ownership is based on 29,348,083 shares of Common
Stock outstanding as of October 29, 2003.
(2) The address for the director or executive officer listed is c/o the
Company.
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(3) Includes (a) 253,483 shares of Common Stock and (b) options to purchase
603,938 shares of Common Stock.
(4) Includes (a) 86,469 shares of Common Stock and (b) options to purchase
483,938 shares of Common Stock.
(5) Represents options to purchase shares of Common Stock.
(6) Excludes the 20,655,402 shares of Common Stock owned by Atarey. Mr. Erez is
currently the Chief Executive Officer of Atarey.
(7) Includes (a) 16,151 shares of Common Stock and (b) options to purchase
24,848 shares of Common Stock.
(8) Includes options to purchase 1,196,964 shares of Common Stock.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
Our amended and restated certificate of incorporation provides that the
number of members of our Board shall be not less than three and not more than
thirteen. There are currently seven directors on the Board. At each annual
meeting of stockholders, directors will be elected to hold office for a term of
one year and until their respective successors are elected and qualified. All of
the officers identified below under "Executive Officers" serve at the discretion
of our Board.
The Board had five regular and no special meetings during the fiscal
year ended December 31, 2002. During the fiscal year ended December 31, 2002,
each member of the Board participated in at least 75% of all Board and
applicable committee meetings held during the period for which he or she was a
director. The Board has established an executive committee, a compensation
committee and an audit committee to devote attention to specific subjects and to
assist the Board in the discharge of its responsibilities. The functions of
these committees and their current members are set forth below.
The Executive Committee is empowered to act on any matter except those
matters specifically reserved to the full Board by applicable law. The Executive
Committee had no meetings during 2002. Amir Gera and Joshua Maor are the current
members of the Executive Committee.
The Compensation Committee is responsible for evaluating our
compensation policies, determining our executive compensation policies and
guidelines and administering our stock option and compensation plans. The
Compensation Committee had one meeting during 2002. Amir Gera and Joshua Maor
are the current members of the Compensation Committee. Please see also the
report of the Compensation Committee set forth elsewhere in this Proxy
Statement.
We do not have a standing nominating committee.
The Audit Committee recommends to the Board the appointment of the firm
selected to serve as our independent auditors and our subsidiaries and monitors
the performance of such firm; reviews and approves the scope of the annual audit
and evaluates with the independent auditors our annual audit and annual
financial statements; reviews with management the status of internal accounting
controls; evaluates issues having a potential financial impact on us which may
be brought to the Audit Committee's attention by management, the independent
auditors or the Board; evaluates our public financial reporting documents;
reviews the non-audit services to be performed by the independent auditors, if
any; and considers the effect of such performance on the auditor's independence.
During the year ended December 31, 2002, the Board examined the composition of
the Audit Committee in light of the adoption by The Nasdaq Stock Market of new
rules governing audit committees. Based upon this examination, the Board
confirmed that all members of the Audit Committee during the year ended December
31, 2002 were "independent" within the meaning of Nasdaq's new rules. The Audit
Committee had five meetings during 2002. Ehud Erez, Elie Housman and Lior
Samuelson are the current members of the Audit Committee. Under new listing
rules adopted by the Securities and Exchange Commission in connection with the
Sarbanes-Oxley Act of 2002, Mr. Erez will no longer meet the required criteria
for audit committee member independence due to his position with Atarey, an
affiliate of the Company. The SEC has stated that listed issuers will be
required to comply with the new listing rules by the date of their first annual
meeting of shareholders after January 15, 2004. The Company intends to replace
Mr. Erez on the Audit Committee with a new member who meets the criteria for
audit committee independence prior to such date.
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Audit Committee Report
The Audit Committee of the Board of Directors, which consists entirely
of directors who meet the independence and experience requirements of the Nasdaq
SmallCap Market, has furnished the following report:
The Audit Committee assists the Board in overseeing and monitoring the
integrity of the Company's financial reporting process, its compliance with
legal and regulatory requirements and the quality of its internal and external
audit processes. The role and responsibilities of the Audit Committee are set
forth in a written Charter adopted by the Board. The Audit Committee reviews and
reassesses the Charter annually and recommends any changes to the Board for
approval. The Audit Committee is responsible for overseeing the Company's
overall financial reporting process. In fulfilling its responsibilities for the
financial statements for fiscal year 2002, the Audit Committee has, among other
activities, reviewed and discussed our audited financial statements for the
fiscal year ended December 31, 2002 with management and with our independent
auditors, Brightman Almagor & Co., a member firm of Deloitte & Touche. The Audit
Committee has discussed with Brightman Almagor & Co. the matters required to be
discussed by American Institute of Certified Public Accountants Auditing
Standards Board Statement on Auditing Standards No. 61 ("Communications with
Audit Committees") relating to the conduct of the audit. The Audit Committee has
received written disclosures and a letter from Brightman Almagor & Co. including
disclosures required by the Independence Standards Board Standard No. 1,
"Independence Discussions with Audit Committees," and has discussed with
Brightman Almagor & Co. their independence. The Audit Committee has considered
the compatibility of the provision of non-audit services with maintaining the
auditor's independence.
Based on the Audit Committee's review of the audited financial
statements and the review and discussions described in the foregoing paragraph,
the Audit Committee recommended to the Board of Directors that the audited
financial statements for the fiscal year ended December 31, 2002 be included in
our Annual Report on Form 10-K for the fiscal year ended December 31, 2002 for
filing with the Securities and Exchange Commission.
The Audit Committee
Ehud Erez
Elie Housman
Lior Samuelson
The Audit Committee Report in this Proxy Statement shall not be deemed
filed or incorporated by reference into any other filings by us under the
Securities Act of 1933 or the Securities Exchange Act of 1934 except to the
extent that we specifically incorporate this information by reference.
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PROPOSAL I
ELECTION OF DIRECTORS
General
At the Meeting, seven directors will be elected to the Board to serve
until our next annual meeting of stockholders and until their respective
successors have been elected and qualified.
Our Amended and Restated Certificate of Incorporation provides that a
director shall hold office until the annual meeting for the year in which his or
her term expires except in the case of elections to fill vacancies or newly
created directorships. Each director is elected for a one-year term. Each of the
nominees is now serving as director on our Board. Elie Housman, one of our
current directors, is not standing for reelection as a director on our Board.
Under our Amended and Restated By-laws, directors are elected by a
majority of the outstanding shares of Common Stock present in person or
represented by proxy at the Meeting, and thus, the seven nominees for election
as directors who receive the most votes cast will be elected. Instructions
withholding authority and broker non-votes will not be taken into account in
determining the outcome of the election of directors.
Unless authority to vote for any of the nominees named above is
withheld, the shares represented by the enclosed proxy will be voted FOR the
election as directors of such nominees. In the event that any nominee shall
become unable or unwilling to serve, the shares represented by the enclosed
proxy will be voted for the election of such other person as the Board of
Directors may recommend in that nominee's place. The Board has no reason to
believe that any nominee will be unable or unwilling to serve.
The Board recommends a vote in favor of the election of the seven
nominees to the Board.
Nominees for Director
Set forth below is certain information regarding each nominee as of
October 29, 2003, including such individual's age and principal occupation, a
brief account of such individual's business experience during at least the last
five years and other directorships currently held.
Noam Bardin, Chairman of the Board. Mr. Bardin co-founded deltathree
and has served as Chief Executive Officer and President from 2000 through June
17, 2002. Mr. Bardin has served as Chairman of the Board since April 2001. Mr.
Bardin served as Vice President of Technology and Chief Technology Officer of
deltathree since June 1997 before being named President and Chief Executive
Officer in April 2000. He served as Global Network Director from November 1996
to May 1997. Prior to founding deltathree, he served as Director of Operations
at Ambient Corporation. Mr. Bardin earned an MPA from Harvard University and a
BA in Economics from the Hebrew University.
Ilan Biran, 57 - Director Nominee. Mr. Biran brings a wealth of
business and management experience from the telecom and defense industries. Most
recently, from 1999 to 2003, Mr. Biran served as the President and CEO of Bezeq
Ltd. - the Israeli PTT, with annual sales of over $2 billion and approximately
16,000 employees. Mr. Biran holds the rank of Major General (res.) in the
Israeli Defense Force where, as Commander of the IDF's Central Command, he
played an active role in reaching the peace agreements with Jordan and the
Palestinian Authority. From 1996 to 1999, he served as the Director General of
the Israeli Ministry of Defense, and prior to that command, he held a wide
variety of senior-level positions in other Israeli units, since 1964. Mr. Biran
holds a B.A. in Economics and Business Administration from Bar-Ilan University,
and holds an Associate Diploma in Strategy and Political Economic Research from
Georgetown University. He is also a graduate of the U.S. Marine Corps Command
and Staff College. In addition, Mr. Biran's public activities include: serving
as the Israeli Prime Minister's Special Coordinator for POWs and MIAs; is a
member of the Board of Trustees of Haifa University; is a member of the
Shevach-Mofet High School Executive Committee and; since 1996, has served as the
Chairman of the Board of Directors of the Israeli Oil Refineries, Ltd.
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Ehud Erez, 47 - Director. Mr. Erez has served as a director of
deltathree since February 2002. Mr. Erez has served as the Chief Executive
Officer of Atarey and President and Chief Financial Officer of El-Ad Group
(Canada) since July 2001. Prior to July 2001, Mr. Erez was Auditor, Accountant
and Partner of several accounting firms, including KPMG and Arthur Andersen.
Prior to January 1985 Mr. Erez was a Revenue Inspector/Auditor for the Treasury
Department in Jerusalem. Mr. Erez was an active member of the Auditing Standards
Board of the Institute of Certified Public Accountants. He is a graduate of
Hebrew University with a BA in Economics and Accounting and holds a CPA.
Amir Gera, 42 - Director. Mr. Gera has served as a director of
deltathree since June 2001. Since January 2002, Mr. Gera has served as the Chief
Executive Officer of Green Venture Capital Ltd., an investment holding company
which engages primarily in acquiring holdings in venture capital funds. In
addition, Mr. Gera has served as the Chief Executive Officer of Commutech
Holding & Investments Ltd since March 2001. From 1993 through 2000, Mr. Gera was
the Assistant Director General of Emet Neveh Savion Ltd., which owns and manages
real estate assets.
Joshua Maor, 67(Y)Director. Since January 2002, Mr. Maor has served as
the Chairman of Green Venture Capital Ltd., an investment holding company which
engages primarily in acquiring holdings in venture capital funds, and the
Chairman of Commutech Holding & Investments Ltd., an investment holding company
which engages primarily in investments in high tech companies. Mr. Maor served
as both the Chairman and Chief Executive Officer Green Venture Capital Ltd from
1997 to January 2002. From 1996 through 1997, Mr. Maor was the Chairman of
I.B.M. Israel Ltd., which distributes and provides services for I.B.M. products,
and I.B.M. Science and Technology Ltd., a research and development company. Mr.
Maor served as a member of our Advisory Board from 1997 through 1998.
Lior Samuelson, 54(Y)Director. Mr. Samuelson has served as a director
of deltathree since August 2001. Since August 1999, Mr. Samuelson has served as
a Co-Founder and Principal of Mercator Capital. His experience includes advising
clients in the Technology, Communications and Consumer sectors on mergers,
acquisitions and private placements. From March 1997 to August 1999, Mr.
Samuelson was the President and CEO of PricewaterhouseCoopers Securities. Prior
to that, he was the President and CEO of The Barents Group, a merchant bank
specializing in advising and investing in companies in emerging markets. Mr.
Samuelson was also the Co-Chairman of Peloton Holdings, a Private Equity
management company. Before that, he was a managing partner with KPMG and a
senior consultant at Booz, Allen & Hamilton. Mr. Samuelson earned B.S. and M.S.
degrees in Economics from Virginia Polytechnic University.
Shimmy Zimels, 38 (Y) President and Chief Executive Officer and
Director. Mr. Zimels has served as Chief Executive Office and President since
2002, and served as Vice President of Operations and Chief Operating Officer of
deltathree since June 1997, before being named President and Chief Executive
Officer in June 2002. Mr. Zimels is responsible for overseeing all operations,
including network operations and customer accounts. Prior to joining deltathree,
Mr. Zimels was the Controller and Vice President of Finance at Net Media Ltd., a
leading Israel-based Internet Service Provider, from June 1995 to June 1997.
From April 1991 to May 1995, Mr. Zimels was a senior tax auditor for the Income
Tax Bureau of the State of Israel. Mr. Zimels graduated with distinction from
Hebrew University with a degree in Economics and Accounting and holds a Masters
in Economics from Hebrew University.
10
PROPOSAL II
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification by our stockholders, on the recommendation of
the Audit Committee, the Board has reappointed Brightman Almagor & Co., a member
firm of Deloitte & Touche, as independent auditors to audit our financial
statements for the fiscal year ending December 31, 2003.
Representatives of Brightman Almagor & Co. are invited to the Meeting
and will have an opportunity to make a statement if they so desire and may be
available to respond to appropriate questions.
The ratification of the selection of Brightman Almagor & Co. as our
independent auditors for the fiscal year ending December 31, 2003 will require
the affirmative vote of the holders of a majority of the outstanding shares of
Common Stock present at the Meeting, in person or represented by proxy, and
entitled to vote. In determining whether the proposal has received the requisite
number of affirmative votes, abstentions will be counted and will have the same
effective as a vote against the proposal; broker non-votes will be disregarded
and will have no effect on the outcome of the vote.
The Board believes that a vote for the proposal to ratify the
appointment by the Board of the independent auditors as described above is in
the best interests of our stockholders and us and unanimously recommends a vote
"FOR" such proposal.
Audit and Non-Audit Fees
The following table presents fees billed or expected to be billed to us
by our independent auditors, Brightman Almagor & Co., a member firm of Deloitte
& Touche, for professional services rendered for the audit of our annual
financial statements for the fiscal years ended December 31, 2002 and December
31, 2001, and fees billed for other services rendered during those periods.
2001 2002
---- ----
Audit fees $ 54,000 $ 54,000
Audit related fees - 4,000
Tax fees - -
Other Fees - -
- -----------------------------------------------------------------------
Total $ 54,000 $ 58,000
- -----------------------------------------------------------------------
In the above table, in accordance with new SEC definitions and rules,
"audit fees" are fees we paid Brightman Almagor & Co. for professional services
for the audit of our annual financial statements and review of financial
statements included in our quarterly reports filed with the SEC, as well as work
generally only the independent auditor can reasonably be expected to provide,
such as statutory audits and consultation regarding financial accounting and/or
reporting standards; "audit-related fees" are fees billed by Brightman Almagor &
Co. for assurance and related services that are reasonably related to the
performance of the audit or review of our financial statements, including due
diligence related to potential merger; "tax fees" are fees for tax compliance,
tax advice and tax planning; and "all other fees" are fees billed by Brightman
Almagor & Co for any services not included in the first three categories.
Executive Officers
Set forth below is a brief description of the present and past business
experience of each of the persons who serve as our executive officers or key
employees who are not also serving as directors.
11
Paul C. White, 41 - Chief Financial Officer and Secretary. Mr. White has served
as our Chief Financial Officer since September 2000 and is responsible for
corporate finance and all financial aspects of our operations, including
accounting, tax, treasury, financial analysis, billing, internal audit, investor
relations, real estate and procurement functions. Mr. White brings a vast array
of experience in both the telecommunications and Internet industries having
served as President and Chief Executive Officer of TelecomRFQ, Inc., a
business-to-business start-up designed to facilitate telecommunications
procurement between business buyers and major suppliers. Mr. White cultivated
his expertise in both telecommunications and the Internet with senior level
positions at Buyersedge.com, where he served as Vice President of Operations &
Finance, and at Southern New England Telecommunications (SNET), the SBC
Communications, Inc. subsidiary, where he served as Director of IT Strategy &
Finance, Director of Corporate Development and Director of Finance & Business
Development between 1995 and 1999. Mr. White has also worked in senior level
positions at Ernst & Young, LLP and Arthur Andersen, LLP. Mr. White has a BBA
and an MBA from Hofstra University, as well as a CPA.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The following table sets forth certain summary information concerning
the compensation paid or awarded for services rendered during each of our last
three fiscal years to our chief executive officer and each of our two other most
highly compensated executive officers in 2000, 2001 and 2002 whose total salary
and bonus exceeded $100,000. These three executive officers are referred to in
this Proxy Statement as "named executive officers".
Annual Compensation Long-Term Compensation
---------------------- ---------------------------
Securities
Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options(#) Compensation
- --------------------------- ---- ---------- --------- ---------- ------------
Shimmy Zimels (1)
President and Chief Executive 2002 182,335 -- 100,000 --
Officer and former Chief 2001 214,395 -- -- --
Operating Officer................ 2000 187,500 112,000 130,000 --
2002 182,335 -- 100,000 --
Paul C. White 2001 201,391 -- -- --
Chief Financial Officer........... 2000 59,500 21,000 160,000 --
Noam Bardin (1)
Chairman of the Board and 2002 111,060 -- 100,000 --
Former President and Chief 2001 264,267 -- -- --
Executive Officer................ 2000 229,167 142,000 250,000 --
(1) Mr. Noam Bardin was our President and Chief Executive Officer until June 16,
2002. Mr. Shimmy Zimels, our former Chief Operating Officer, was appointed our
Chief Executive Officer effective June 17, 2002.
Option Grants During 2002
The following table sets forth information regarding each stock option
granted during fiscal year 2002 to each of the named executive officers.
Individual Grants
----------------------------------------------------------------------------------------------
Shares of Potential
Common Stock % of Total Exercise Realizable Value at
Underlying Options Price Assumed Rates of
Options Granted to Per Stock Price
Granted (#) Employees in Share Expiration Appreciation for
Name (1) Fiscal Year ($/Sh) Date Option Term (2)
----------------------------------------------------------------------------------------------
5% 10%
----------------------------------------------------------------------------------------------
Shimmy Zimels 100,000 7.45% 1.02 3/12/09 $41,524 $96,769
----------------------------------------------------------------------------------------------
Paul C. White 100,000 7.45% 1.02 3/12/09 $41,524 $96,769
----------------------------------------------------------------------------------------------
Noam Bardin 100,000 7.45% 1.02 3/12/09 $41,524 $96,769
----------------------------------------------------------------------------------------------
12
(1) The options were granted pursuant to the Company's 1999 Stock Incentive
Plan (the "Plan"). The options granted to the named executive officers
are non-qualified stock options and vest annually in three equal
installments commencing one year from the date of grant.
(2) The amounts shown in this table represent hypothetical gains that could
be achieved for the respective options if exercised at the end of the
option term. These gains are based on assumed rates of stock
appreciation of 5% and 10% compounded annually from the date the
respective options were granted to their expiration date. The gains
shown are net of the option exercise price, but do not include
deductions for taxes or other expenses associated with the exercise.
Actual gains, if any, on stock option exercises will depend on the
future performance of the Common Stock, the optionee's continued
employment through the option period and the date on which the options
are exercised.
Option Exercises in Fiscal 2002 and Year-End Option Values
The following table sets forth information for the named executive
officers with respect to option exercises during 2002 and the value as of
December 31, 2002 of unexercised in-the-money options held by each of the named
executive officers.
- --------------------------------------------------------------------------------------------------------------------
Number of
Securities Value of
underlying Unexercised
Unexercised In-The-Money
Options at Options at
Shares Year End (#) Year-End ($)
Acquired Value Exercisable Exercisable
Name On Exercise (#) Realized ($) /Unexercisable /Unexercisable
- --------------------------------------------------------------------------------------------------------------------
Shimmy Zimels.......... -- -- 383,938 /100,000 --
- --------------------------------------------------------------------------------------------------------------------
Paul C. White.......... -- -- 160,000/100,000 --
- --------------------------------------------------------------------------------------------------------------------
Noam Bardin ........... -- -- 503,938/100,000 --
- --------------------------------------------------------------------------------------------------------------------
Compensation Committee Interlocks and Insider Participation
Executive compensation decisions in 2002 were made by the Compensation
Committee. During 2002, no interlocking relationship existed between our Board
and the board of directors or compensation committee of any other company.
Director Compensation
During 2002, we paid $10,000 to each of Lior Samuelson and Elie Housman
for their services as directors, and paid $5,000 to Noam Bardin for his services
as a director for the one-half year term he served as a non-management director.
We anticipate paying $10,000 to each outside director in 2003.
Directors are reimbursed for the expenses they incur in attending
meetings of the Board and Board committees. Under our 1999 Directors' Plan, each
director who is not our employee receives options to purchase 24,848 shares of
Common Stock on the date such director is elected to the Board. In addition,
under our 1999 Directors' Plan, each non-employee director will be eligible to
receive on an annual basis options to purchase 10,000 shares of Common Stock
with an exercise price equal to the fair market value on the date of grant at
the time of our Annual Meeting.
1999 Directors' Plan
The purposes of the 1999 Directors' Plan are to enable us to attract,
maintain and motivate qualified directors and to enhance a long-term mutuality
of interest between our directors and stockholders of our Common Stock by
granting our directors options to purchase our shares.
Under the Directors' Plan, on the first business day following each
annual meeting of our stockholders during the term of the Directors' Plan, each
director who is not our employee will be granted options to acquire 10,000
shares of our
13
Common Stock with an exercise price per share equal to the fair market value of
a share of our Common Stock on the date of grant. These options will have a
seven-year term and will become exercisable on the first anniversary of the date
of grant. In addition, each director who was not our employee on the date of the
completion of our initial public offering was granted options to acquire 24,848
shares of our Common Stock with an exercise price per share equal to the initial
public offering price. Each individual who becomes a director will be granted
options to acquire 24,848 shares of our Common Stock with an exercise price per
share equal to the fair market value on the date of grant. These options will
have a seven-year term and will be immediately exercisable. The maximum number
of shares that may be issued under the Directors' Plan is 600,000 shares of
Common Stock. The plan will terminate December 31, 2009, unless sooner
terminated by our stockholders.
Employment Agreements
We currently have employment agreements in place with Messrs. White and
Zimels, each with the following principal terms:
o The agreements, as amended, are effective until August 31,
2004, and shall thereafter automatically renew for one-year
periods unless either party provides the other party with
written notice of non-renewal at least 60 days prior to
expiration of a term.
o Pursuant to the agreements, Mr. Zimels and Mr. White are
entitled to receive a base salary of $225,000 and $213,000,
respectively. Such base salary shall be increased on each
January 1, commencing January 1, 2003, by an amount equal to
his base salary then in effect, multiplied by the applicable
cost of living index during the prior year. The employee's
base salary, as adjusted for cost of living increases, may be
further increased at the option and in the discretion of the
Board.
o The employee's options are immediately exercisable in full
upon a change of control. The employee's options, following
any termination of the employee's employment, other than for
cause, remain exercisable for the lesser of two years and the
remaining term of his options.
o If employee's employment is terminated by us without cause or
by the employee for good reason (which includes, without
limitation, a reduction in salary and/or bonus opportunity, a
change of control and a material reduction in duties and
responsibilities), the employee is entitled to receive
previously earned, but unpaid salary, vested benefits and a
payment equal to his base salary as in effect immediately
prior to the termination date.
o If employee dies or is unable to perform his duties, he or his
representative, estate or beneficiary will be paid, in
addition to any previously earned but unpaid salary and vested
benefits, 12 months' total base salary reduced, in the case of
disability, by any disability benefits he receives.
On September 1, 2002, the employment agreements that were then in place
for Mr. Zimels and Mr. White were extended until August 31, 2004. Messrs.
Zimels' and White's have kept their voluntary pay reduction in effect at
$180,000 each whereas their current contractual salaries have increased to
$232,650 and $220,242, respectively, due to a cost-of-living increase clause
included in their respective contracts.
Compensation Committee Report on Executive Compensation
The Compensation Committee is responsible for recommending to the Board
of Directors the overall executive compensation strategy of the Company and for
the ongoing monitoring of the compensation strategy's implementation. In
addition to recommending and reviewing the compensation of the executive
officers, it is the responsibility of the Compensation Committee to recommend
new incentive compensation plans and to implement changes and improvements to
existing compensation plans, including the 1999 Stock Incentive Plan, the 1999
Performance Incentive Plan, the 1999 Employee Stock Purchase Plan and the 1999
Directors' Plan. The Compensation Committee makes its compensation
determinations based upon its own analysis of information it compiles and the
business experience of its members.
14
Overall Policy
The Compensation Committee believes that the stability of the Company's
management team, as well as the Company's ability to continue to incentivize
management and to attract and retain highly qualified executives for its
expanding operations, will be a contributing factor to the Company's continued
growth and success. In order to promote stability, growth and performance, and
to attract new executives, the Company's strategy is to compensate its
executives with an overall package that the Company believes is competitive with
those offered by similarly situated companies and which consists of (i) a stable
base salary set at a sufficiently high level to retain and motivate these
officers but generally targeted to be in the lower half of its peer group
comparables, (ii) an annual bonus linked to the Company's overall performance
each year and to the individual executive's performance each year and (iii)
equity-related compensation which aligns the financial interests of the
Company's executive officers with those of the Company's stockholders by
promoting stock ownership and stock performance through the grant of stock
options and stock appreciation rights, restricted stock and other equity and
equity-based interests under the Company's various plans.
Executive officers are also entitled to customary benefits generally
available to all employees of the Company, including group medical and life
insurance. Base salary, bonuses and benefits are paid by the Company and its
subsidiaries.
Federal Income Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), limits the amount of compensation a publicly held corporation may
deduct as a business expense for Federal income tax purposes. The limit, which
applies to a company's chief executive officer and the four other most highly
compensated executive officers, is $1 million (the "Deductibility Limit"),
subject to certain exceptions. The exceptions include the general exclusion of
performance-based compensation from the calculation of an executive officer's
compensation for purposes of determining whether his or her compensation exceeds
the Deductibility Limit. The Compensation Committee has determined that
compensation payable to the executive officers should generally meet the
conditions required for full deductibility under section 162(m) of the Code.
While the Company does not expect to pay its executive officers compensation in
excess of the Deductibility Limit, the Compensation Committee also recognizes
that in certain instances it may be in the best interest of the Company to
provide compensation that is not fully deductible.
With respect to the 1999 Performance Incentive Plan described below,
because the 1999 Performance Incentive Plan was in existence prior to the
completion of the Company's initial public offering, the Deductibility Limit
generally will not apply to payments under such plan until the Company's annual
general meeting of stockholders to be held in 2001, the first meeting of the
Company's stockholders at which directors will be elected after the close of the
third calendar year following the calendar year in which the initial public
offering was closed.
Base Salary
The base salaries for the named executive officers are based upon
employment agreements between the Company and such officers.
Annual Incentive Bonuses
The Board of Directors approved the 1999 Performance Incentive Plan
established by RSL COM. The Company established the Performance Incentive Plan
to enable the Company and its subsidiaries to attract, retain, motivate and
reward the best qualified executive officers and key employees by providing them
with the opportunity to earn competitive compensation directly linked to the
Company's performance. The Performance Incentive Plan is effective through and
including the year 2005, unless extended or earlier terminated by the Board of
Directors. As part of the Performance Incentive Plan, the Compensation Committee
may determine that any bonus payable under the Performance Incentive Plan be
paid in cash, in shares of Common Stock or in any combination thereof, provided
that at least 50% of such bonus is required to be paid in cash. In addition, the
Performance Incentive Plan permits a participant to elect to defer payment of
his or her bonus on terms and conditions established by the Compensation
Committee. No more than 400,000 shares of Common Stock may be issued under the
Performance Incentive Plan.
15
Under the 1999 Performance Incentive Plan, bonuses may be payable if
the Company meets any one or more of the following performance criteria, which
are set annually by the Compensation Committee: (i) revenues; (ii) operating
income; (iii) gross profit margin; (iv) net income; (v) earnings per share; (vi)
maximum capital or marketing expenditures; or (vii) targeted levels of
customers.
Under the 1999 Performance Incentive Plan, bonus amounts are determined
as follows: if 100% of such targets are achieved, the bonus potentially payable
to participants will generally equal 35% of their base salary for such year, if
80% of such targets are achieved, the bonus potentially payable to participants
will generally equal 25% of their base salary for such year, and if less than
80% of such targets are achieved, the participants will generally not be
entitled to receive any bonus for such year. To the extent the Company's results
exceed 80% of the targets but is less that 100% of the targets, the amount of
the bonus payable to participants will be adjusted proportionately based on
where such results fall within the ranges set forth above. Any such bonus will
consist of two components. Fifty percent of the amount determined pursuant to
the formula described above will be payable if the targets are achieved. Up to
an additional 50% of such amount will be payable in the discretion of the
Compensation Committee. In addition, the 1999 Performance Incentive Plan permits
the Compensation Committee to grant discretionary bonuses to participants,
notwithstanding that a bonus would not otherwise be payable under the 1999
Performance Incentive Plan, to recognize extraordinary individual performance.
With respect to 2002, there were no bonuses awarded to any executive
officer. Pursuant to the terms of the 1999 Performance Incentive Plan, any
awards would have been paid in the current year, promptly following the
completion of the audit of the Company's 2002 financial statements.
Long-Term Incentive Compensation
The Company reinforces the importance of producing satisfactory returns
to stockholders over the long term through the operation of the 1999 Stock
Incentive Plan and the 1999 Directors' Plan. For a discussion relating to the
1999 Directors' Plan, refer to the section entitled "1999 Directors' Plan" in
this Proxy Statement. Grants of stock, stock options, stock unit awards and
stock appreciation rights under such plans provide executives with the
opportunity to acquire an equity interest in the Company and align the
executive's interest with that of the stockholders to create stockholder value
as reflected in growth in the market price of the Common Stock.
1999 Stock Incentive Plan
The Board of Directors adopted the 1999 Stock Incentive Plan in
conjunction with the Company's initial public offering. The purposes of the 1999
Stock Incentive Plan are to foster and promote the long-term financial success
of the Company and materially increase stockholder value by (i) motivating
superior performance by means of performance-related incentives, (ii)
encouraging and providing for the acquisition of an ownership interest in the
Company by executive officers and other key employees and (iii) enabling the
Company to attract and retain the services of an outstanding management team
upon whose judgment, interest and special effort the successful conduct of its
operations is largely dependent.
Under the 1999 Stock Incentive Plan, the Compensation Committee is
authorized to grant options for up to 4,000,000 shares of Common Stock. This
represented, upon completion of the initial public offering, approximately 15%
of the outstanding shares of the Company, on a fully diluted basis. Options
granted under the 1999 Stock Incentive Plan are to be granted to certain
officers of the Company and to other employees and consultants of the Company.
Directors who are non-employees of the Company are prohibited from participating
in the 1999 Stock Incentive Plan.
The 1999 Stock Incentive Plan is administered by the Compensation
Committee and provides for the grant of (i) incentive and non-incentive stock
options to purchase Common Stock; (ii) stock appreciation rights, which may be
granted in tandem with or independently of stock options; (iii) restricted stock
and restricted units; (iv) incentive stock and incentive units; (v) deferred
stock units; and (vi) stock in lieu of cash. The maximum number of shares for
which options or stock appreciation rights may be granted to any one participant
in a calendar year is 600,000. As of December 31, 2002, the Company has granted
options to acquire an aggregate of [2,591,205] shares of Common Stock.
16
Chief Executive Officer's Fiscal 2002 Compensation
Mr. Noam Bardin was our chief executive officer until June 17, 2002.
Under the terms of his employment agreement, Mr. Bardin was entitled to receive
an aggregate annual base salary of $266,513. However, during 2002, Mr. Bardin
received an aggregate of $111,060, which did not include any bonus compensation,
due to his voluntary pay reduction and subsequent resignation in June 2002. Mr.
Shimmy Zimels, who became our chief executive officer effective June 17, 2002,
is entitled to an annual base salary of $232,650 pursuant to the terms of his
employment agreement. During 2002, Mr. Zimels received an aggregate of $182,335,
which did not include any bonus compensation, due to his voluntary pay
reduction.
Submitted by:
The Compensation Committee
Amir Gera
Joshua Maor
17
STOCK PERFORMANCE CHART
The following chart compares the cumulative total stockholder return on
our Common Stock from the date of our initial public offering (November 22,
1999) through December 31, 2002 with the cumulative total return on The Nasdaq
Stock Market (U.S.) Index and the Nasdaq Telecommunications Index. For purposes
of the chart, it is assumed that the value of the investment in our Common Stock
and each index was $100 on November 22, 1999. Shareholder returns over the
indicated period should not be considered indicative of future shareholder
returns.
Cumulative Total Return
---------------------------------------------------------------------------------
11/23/99 12/99 3/00 6/00 9/00 12/00 3/01 6/01 9/01
--------- -------- -------- -------- ------- -------- -------- -------- --------
deltathree, Inc. $100.00 $171.67 $139.59 $97.09 24.17 7.92 8.33 4.93 5.33
Nasdaq Stock Market (U.S.) 100.00 121.58 136.49 118.68 109.21 73.13 54.59 64.34 44.64
Nasdaq Telecommunications Market 100.00 113.25 120.23 94.90 75.76 48.24 42.50 40.24 29.31
---------------------------------------------------------------------------------
12/01 3/02 6/02 9/02 12/02
--------- -------- -------- -------- -------
deltathree, Inc. 6.00 7.13 4.14 3.20 3.20
Nasdaq Stock Market (U.S.) 58.03 55.01 43.85 35.18 40.13
Nasdaq Telecommunications Market 32.29 23.02 13.89 12.74 14.89
---------------------------------------------------------------------------------
18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 6, 2003, we announced that we had received a letter from D3
Acquisition, Inc. relating to a proposal to purchase all of our outstanding
shares not held by Atarey Hasharon Chevra Lepituach Vehashkaot Benadlan (1991)
Ltd. ("Atarey") and its affiliates for a price of $0.70 per share in cash by
means of a cash tender offer. The proposal contemplated that upon successful
completion of the tender offer, D3 Acquisition would merge into us and we would
survive and continue as a wholly owned private subsidiary of Atarey. D3
Acquisition is a wholly owned special purpose acquisition corporation formed by
Atarey. Together, Atarey and its affiliates currently own approximately 71%
(20,655,402 shares) of our outstanding common stock. Ehud Erez, a member of our
Board of Directors, is currently the Chief Executive Officer of Atarey. Our
board of directors formed a special committee comprised of independent directors
to evaluate the proposal and negotiate its terms. The special committee of our
board of directors retained Kaufman Bros., L.P. as its financial advisor to
assist the special committee in evaluating strategic alternatives, including a
possible sale of the company. Among other things, Kaufman Bros. assisted the
special committee in its assessment of the D3 Acquisition proposal. On July 17,
2003, we announced that we had mutually concluded with Atarey that the proposed
tender offer was inadequate, and at such time, D3 Acquisition indicated that it
did not intend to propose any subsequent offer for the shares of deltathree not
held by Atarey and its affiliates. Upon our announcement that we were evaluating
the D3 Acquisition offer, litigation was commenced against our Board members and
us with respect to the transaction contemplated by the proposal. Such litigation
has been dismissed without prejudice in July 2003.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers and persons who own more than 10% of a
registered class of our equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
beneficial ownership of Common Stock and other equity securities of us.
Directors, officers and greater than 10% stockholders are required by SEC
regulations to furnish us with all Section 16(a) forms they file.
To our knowledge, based solely upon our review of the copies of such
reports furnished to us, we believe that all of our directors, officers and
greater than 10% stockholders have complied with the applicable Section 16(a)
reporting requirements, except for the Statements of Beneficial Ownership on
Form 3 relating to the beneficial ownership of shares of Common Stock by Ehud
Erez, Issakhar Hacmun, Elie Housman and Lior Samuelson, which were not filed on
a timely basis.
STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for
stockholder action at our subsequent annual meetings consistent with Rule 14a-8
promulgated under the Securities Exchange Act of 1934, which in certain
circumstances may require the inclusion of qualifying proposals in our Proxy
Statement. For such proposals to be considered for inclusion in the Proxy
Statement and proxy relating to our 2004 Annual Meeting of Stockholders, all
applicable requirements of Rule 14a-8 must be satisfied and such proposals must
be received by us no later than June 1, 2004. Such proposals should be directed
to us at 75 Broad Street, 31st Floor, New York, New York 10004.
Except in the case of proposals made in accordance with Rule 14a-8, our
Amended and Restated By-laws require that stockholders desiring to bring any
business before our 2004 Annual Meeting of Stockholders deliver written notice
thereof to us not less than 90 days nor more than 120 days prior to such meeting
and comply with all other applicable requirements of the By-laws. However, in
the event that our 2004 Annual Meeting is called for a date that is not within
30 days before or after the date of the Meeting, the notice must be received by
the close of business on the 10th day following the public disclosure of the
date of the annual meeting or the mailing of notice of the annual meeting.
19
OTHER MATTERS
The Board knows of no matters other than those described herein that
will be presented for consideration at the Meeting and does not intend to bring
any other matters before the Meeting. However, should any other matters properly
come before the Meeting or any adjournment or postponement thereof, it is the
intention of the persons named in the accompanying proxy card to vote in
accordance with their best judgment in the interests of the Company.
MISCELLANEOUS
We will bear all costs incurred in the solicitation of proxies. In
addition to the solicitation by mail, our officers and employees may solicit
proxies by mail, facsimile, telephone or in person, without additional
compensation. We may also make arrangements with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation
materials to the beneficial owners of Common Stock held of record by such
persons, and we may reimburse such brokerage houses and other custodians,
nominees and fiduciaries for their out-of-pocket expenses incurred in connection
therewith.
ADDITIONAL COPIES OF OUR ANNUAL REPORT WILL BE FURNISHED AT NO CHARGE
TO EACH PERSON TO WHOM A PROXY STATEMENT IS DELIVERED UPON RECEIPT OF A WRITTEN
OR ORAL REQUEST OF SUCH PERSON ADDRESSED TO DELTATHREE, INC., 75 BROAD STREET,
31ST FLOOR, NEW YORK, NEW YORK 10004.
By Order of the Board of Directors,
/s/ Paul C. White
Paul C. White
Secretary
New York, New York
November 5, 2003
ANNUAL MEETING OF STOCKHOLDERS OF
DELTATHREE, INC.
DECEMBER 8, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
- --------------------------------------------------------------------------------
1. Election of Directors:
[ ] FOR ALL NOMINEES O Noam Bardin
O Ilan Biran
[ ] WITHHOLD AUTHORITY O Ehud Erez
FOR ALL NOMINEES O Amir Gera
O Joshua Maor
[ ] FOR ALL EXCEPT O Lior Samuelson
(See instructions below) O Shimmy Zimels
2. To ratify the appointment of Brightman Almagor & Co., a member firm of
Deloitte & Touche, as our independent auditors for the fiscal year
ending December 31, 2003.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no specification is given, this Proxy will be
voted (i) FOR the election of each of the nominees for director; (ii) FOR the
ratification of the appointment by the Board of Directors of the independent
auditors; and (iii) at the discretion of the proxy holders with regard to any
other matter that may properly come before the Meeting or any adjournment or
postponement thereof. FOR AGAINST ABSTAIN
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: [ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 Stockholder _________________________________________
Date: ___________
Signature of Stockholder _________________________________________
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.
DELTATHREE, INC.
75 BROAD STREET, 31ST FLOOR
NEW YORK, NEW YORK 10004
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON DECEMBER 8, 2003
The undersigned hereby appoints Paul C. White and Shimmy Zimels, each
of them with full power of substitution and resubstitution, as proxies to
represent the undersigned at the Annual Meeting of Stockholders of deltathree,
Inc. (the "Company") to be held on Monday, December 8, 2003 at 10:30 a.m., local
time, at The Regent Wall Street, 55 Wall Street, New York, New York 10005, and
at any adjournment or postponement thereof and thereat to vote all of the shares
of the common stock which the undersigned would be entitled to vote, with all
the powers the undersigned would possess if personally present. The Board of
Directors recommends that you vote FOR the following proposals.
You are encouraged to specify your choice by marking the appropriate
box but you need not mark any box if you wish to vote in accordance with the
Board of Directors' recommendations. The proxies cannot vote your shares unless
you sign and return this card.
(Continued and to be signed on the reverse side)