SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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clickNsettle.com, Inc.
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(Name of Registrant as Specified In Its Charter)
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4) Date Filed:
CLICKNSETTLE.COM, INC.
1010 Northern Boulevard, Suite 336
Great Neck, New York 11021
(516) 829-4343
October 26, 2001
Dear Shareholders:
On behalf of the Board of Directors and management of clickNsettle.com,
Inc. (the "Company"), I cordially invite you to attend the Annual Meeting of
Shareholders to be held on Friday, December 14, 2001, at 11:30 a.m., at the
Company's principal offices, located at 1010 Northern Boulevard, Suite 336,
Great Neck, New York 11021.
The matters to be acted upon at the meeting are fully described in the
attached Notice of Annual Meeting of Shareholders and Proxy Statement. In
addition, certain of our directors and executive officers will be present to
respond to any questions that you may have. Accompanying the attached Proxy
Statement is a Proxy Card and our Annual Report. This report describes our
financial and operational activities.
Whether or not you plan to attend the annual meeting, please complete,
sign, and date the enclosed proxy card and return it in the accompanying
envelope as promptly as possible. If you attend the Annual Meeting, and I hope
you will, you may vote your shares in person even if you have previously mailed
in a proxy card.
We look forward to greeting our shareholders at the meeting.
Sincerely,
Roy Israel
Chief Executive Officer, President,
and Chairman of the Board
CLICKNSETTLE.COM, INC.
1010 Northern Boulevard, Suite 336
Great Neck, New York 11021
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 14, 2001
--------------
TO THE SHAREHOLDERS OF
CLICKNSETTLE.COM, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of clickNsettle.com, Inc., a Delaware corporation (the
"Company"), will be held in the main conference room at our principal offices,
located at 1010 Northern Boulevard, Suite 336, Great Neck, New York 11021, on
Friday, December 14, 2001, at 11:30 a.m., for the following purposes:
1. To elect directors of the Company to hold office until the next
Annual Meeting or until their respective successors are duly elected and
qualified;
2. To ratify the appointment of Grant Thornton LLP as our independent
accountants for the fiscal year ending June 30, 2002; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on October 26,
2001 as the record date for the determination of shareholders entitled to notice
of, and to vote at, the Annual Meeting or any adjournments thereof.
Representation of at least a majority of all outstanding shares of our common
stock is required to constitute a quorum. Accordingly, it is important that your
stock be represented at the meeting. The list of shareholders entitled to vote
at the Annual Meeting will be available for examination by any shareholder at
our offices at 1010 Northern Boulevard, Suite 336, Great Neck, New York 11021
for ten (10) days prior to December 14, 2001.
Whether or not you plan to attend the Annual Meeting, please complete,
date, and sign the enclosed proxy card and mail it promptly in the
self-addressed envelope enclosed for your convenience. You may revoke your proxy
at any time before it is voted.
By Order of the Board of Directors,
Roy Israel,
Chairman
Great Neck, New York
October 26, 2001
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YOUR VOTE IS IMPORTANT; ACCORDINGLY, WE URGE YOU TO DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING.
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2
CLICKNSETTLE.COM, INC.
TABLE OF CONTENTS
Page
----
PROXY STATEMENT...................................................................................................4
INFORMATION CONCERNING VOTE.......................................................................................4
General...................................................................................................4
Voting Rights and Outstanding Shares......................................................................4
Revocability of Proxies...................................................................................4
Voting Procedures.........................................................................................4
ELECTION OF THE BOARD OF DIRECTORS................................................................................5
Director Nominees.........................................................................................5
Committees of the Board of Directors and Meeting Attendees................................................6
Executive Officers........................................................................................7
EXECUTIVE COMPENSATION AND OTHER INFORMATION......................................................................8
Summary Compensation Table................................................................................8
Directors' Compensation...................................................................................9
Employment Contracts and Termination of Employment and Change In Control Arrangements.....................9
REPORT OF THE AUDIT COMMITTEE ...................................................................................11
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION..........................................................12
APPOINTMENT OF INDEPENDENT ACCOUNTANTS...........................................................................13
OTHER MATTERS ARISING AT THE ANNUAL MEETING......................................................................13
PRINCIPAL SHAREHOLDERS...........................................................................................14
INTERESTED PARTY TRANSACTIONS....................................................................................16
SHAREHOLDER PROPOSALS............................................................................................16
COST OF SOLICITATION OF PROXIES..................................................................................16
SECTION 16(a) REPORTING DELINQUENCIES............................................................................16
ANNUAL REPORT ON FORM 10-KSB.....................................................................................16
3
CLICKNSETTLE.COM, INC.
1010 Northern Boulevard, Suite 336
Great Neck, New York 11021
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PROXY STATEMENT
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For Annual Meeting of Shareholders
to be Held on December 14, 2001
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Approximate Mailing Date of Proxy Statement and Form of Proxy: October 29, 2001.
INFORMATION CONCERNING VOTE
General
This Proxy Statement and the enclosed form of proxy is
furnished in connection with the solicitation of proxies by the Board of
Directors of clickNsettle.com, Inc., a Delaware corporation (the "Company"), for
use at the annual meeting of shareholders to be held on Friday, December 14,
2001 at 11:30 a.m., and at any and all adjournments thereof (the "Annual
Meeting"), with respect to the matters referred to in the accompanying notice.
The Annual Meeting will be held at our principal offices, located at 1010
Northern Boulevard, Suite 336, Great Neck, New York 11021.
Voting Rights and Outstanding Shares
Only shareholders of record at the close of business on
October 26, 2001 are entitled to notice of and to vote at the Annual Meeting. As
of the close of business on October 8, 2001, 1,450,259 shares of our common
stock, par value $.001 per share, were issued, of which 1,410,677 shares were
outstanding. This reflects the 1-for-3 reverse stock split of our common stock
which was effectuated on August 20, 2001. Each share of common stock entitles
the record holder thereof to one (1) vote on all matters properly brought before
the Annual Meeting.
Revocability of Proxies
A shareholder who executes and mails a proxy in the enclosed
return envelope may revoke such proxy at any time prior to its use by notice in
writing to the Secretary of our company, at the above address, or by revocation
in person at the Annual Meeting. Unless so revoked, the shares represented by
duly executed proxies received by us prior to the Annual Meeting will be
presented at the Annual Meeting and voted in accordance with the shareholder's
instructions marked thereon. If no instructions are marked thereon, proxies will
be voted FOR the election as directors of the nominees named below under the
caption "ELECTION OF DIRECTORS" and FOR the ratification of the independent
accountants. In their discretion, the proxies are authorized to consider and
vote upon such matters incident to the conduct of the meeting and upon such
other business matters or proposals as may properly come before the meeting,
that our Board of Directors does not know of in a reasonable time prior to this
solicitation.
Voting Procedures
All votes shall be tabulated by the inspector of elections
appointed for the Annual Meeting, who shall separately tabulate affirmative and
negative votes, abstentions, and broker non-votes. The presence of a quorum for
the Annual Meeting, defined here as a majority of the votes entitled to be cast
at the Annual Meeting, is required. Votes withheld from director nominees and
abstentions will be counted in determining whether a quorum has been reached.
Broker-dealer non-votes are not counted for quorum purposes.
4
Assuming a quorum has been reached, a determination must be
made as to the results of the vote on each matter submitted for shareholder
approval. Director nominees must receive a plurality of the votes cast at the
meeting, which means that a vote withheld from a particular nominee or nominees
will not affect the outcome of the meeting. In order to approve proposal 2, a
majority of the votes cast must be voted affirmatively for such proposal.
PROPOSAL 1: ELECTION OF THE BOARD OF DIRECTORS
The Board of Directors has nominated seven (7) persons to be
elected as Directors at the Annual Meeting and to hold office until the next
annual meeting or until their successors have been duly elected and qualified.
It is intended that each proxy received by us will be voted FOR the election, as
directors of the Company, of the nominees listed below, unless authority is
withheld by the shareholder executing such proxy. Shares may not be voted
cumulatively. Each of such nominees has consented to being nominated and to
serve as a director of the Company if elected. If any nominee should become
unavailable for election or unable to serve, it is intended that the proxies
will be voted for a substitute nominee designated by the Board of Directors. At
the present time, the Board of Directors knows of no reason why any nominee
might be unavailable for election or unable to serve. The proxies cannot be
voted for a greater number of persons than the number of nominees named herein.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF ALL THE
DIRECTOR NOMINEES.
Director Nominees
The following table sets forth certain information with
respect to the nominees for directors:
Company Positions Director of the
Name and Offices Held Company Since
----------------------------- ----------------------------------------------- --------------------
Roy Israel Chief Executive Officer, President and February 1994
Chairman of the Board of Directors
Anthony J. Mercorella Director, Compensation Committee member February 1997
Frank J. Coyne Director, Audit Committee member May 2000
Robert M. Silverson, Jr. Director Nominee (1)
Willem F. Specht Director of Information Technology and (1)
Director Nominee
Corey J. Gottlieb Director Nominee (1)
Randy Gerstenblatt Director Nominee (1)
(1) standing for election for the first time
ROY ISRAEL, age 41, has been our Chairman of the Board of
Directors, Chief Executive Officer, and President since February 1994.
Immediately prior to holding such positions, Mr. Israel was President, Director,
and founder of National Arbitration & Mediation, Inc. ("NA&M"), a wholly-owned
subsidiary of the Company until merged with the Company in June 1999.
5
ANTHONY J. MERCORELLA, Esq., age 74, is a senior partner of
the law firm of Wilson, Elser, Moskowitz, Edelman & Dicker and has been a
partner with such firm since 1984, which he joined upon his retirement as a
Justice of the Supreme Court of the State of New York. Judge Mercorella
currently serves as an independent hearing officer for us.
FRANK J. COYNE, age 52, has been the President and Chief
Executive Officer of Insurance Services Office, Inc. since July 2000. Prior
thereto, he served as President and Chief Operating Officer of Insurance
Services Office, Inc. from February 1999 through June 2000. From May 1998
through January 1999, Mr. Coyne was the Executive Vice President - Specialty and
Risk Management Groups at Kemper Insurance Companies. From 1985 through 1998, he
served in a variety of positions with General Accident Insurance and was elected
its President and Chief Operating Officer in 1991.
ROBERT M. SILVERSON, JR., Esq., age 58, is a principal in the
law firm of Silverson, Pareres & Lombardi LLP and has been a principal with such
firm since founding it in 1992. Judge Silverson currently serves as legislative
counsel to a New York State Senator who is a member of the New York State Senate
Insurance Committee. Judge Silverson previously served as a Judge of the Civil
Court of the City of New York. Judge Silverson currently serves as an
independent hearing officer for us.
WILLEM F. SPECHT, age 41, has been our Director of Information
Technology since May 1998 and previously held the position of Systems Analyst
with us since April 1995.
COREY J. GOTTLIEB, age 38, is the President/CEO of Targeted
Media Partners LTD, a sales, marketing and consulting company for established
and start-up ventures in the commercial advertising sector. From January 1998
through August 2001, Mr. Gottlieb was the Senior Vice President & National Sales
Manager for Transportation Displays Incorporated (TDI). Prior to holding this
position, Mr. Gottlieb was Senior Vice President & National Sales Manager for
Paramount Pictures Domestic Television Group for seven years and the first
Senior Vice President of Sales for the UPN television network. Mr. Gottlieb
holds a BS degree in Finance and a minor in Computer Science.
RANDY GERSTENBLATT, age 42, is currently the Vice
President/Director of ESPN/ABC Sports Customer Marketing and Sales. Prior to
holding this position, Mr. Gerstenblatt was Vice President of ESPN Customer
Marketing and Sales from January 2000 through October 2000. From November 1997
through January 2000, Mr. Gerstenblatt was the Director of Integrated Sales and
Marketing at ESPN. From 1991 through November 1997, he was the Director of Group
Station Sales at ABC National Television Sales.
Committees of the Board of Directors and Meeting Attendees
The Board of Directors held twelve (12) meetings during fiscal
year 2001.
The Compensation Committee is authorized to review and make
recommendations to our Board of Directors on all matters regarding the
remuneration of our executive officers, including the administration of our
compensation plans, other than our Stock Option Plan. The current member of this
committee is Judge Mercorella. We intend to add Judge Silverson as a member of
this committee upon his election to the Board. The Compensation Committee held
one (1) meeting during fiscal year 2001.
The Audit Committee is responsible for making recommendations
to our Board of Directors as to the selection of our independent auditor,
maintaining communication between our Board and the independent auditor,
reviewing the annual audit report submitted by the independent auditor, and
determining the nature and extent of issues, if any, presented by such audit
warranting consideration by our Board. The current member of this committee is
Mr. Coyne. We intend to add Judge Silverson and Corey Gottlieb as members of
this committee upon their election to the Board. The Audit Committee held one
(1) meeting during fiscal year 2001.
6
Executive Officers
In addition to Mr. Israel, we have two additional executive
officers:
PATRICIA GIULIANI-RHEAUME, age 43, has been our Vice
President, Chief Financial Officer, and Treasurer since February 1997.
Immediately prior to holding such positions, Ms. Giuliani-Rheaume was the Vice
President and Corporate Controller of The Robert Plan Corporation, an insurance
services company, since April 1991. Prior thereto, Ms. Giuliani-Rheaume was an
audit senior manager with KPMG Peat Marwick LLP. Ms. Giuliani-Rheaume is a
certified public accountant and a member of the AICPA and the New York State
Society of CPAs.
KATHLEEN O'DONNELL, age 37, has been our Vice President of
Operations since October 2000. Prior to holding such position, Ms. O'Donnell was
our Executive Vice President of Client Services since February 2000. Prior
thereto, Ms. O'Donnell held various positions with us since 1994; Vice
President, Marketing from February 1999 to February 2000; New York Regional
Manager from March 1997 to February 1999; Team Leader from December 1995 to
March 1997 and Account Executive from September 1994 to December 1995.
7
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The following summarizes the aggregate compensation paid
during fiscal year 2001 to our Chief Executive Officer and any officer who
earned more than $100,000 in salary and bonus pursuant to their contracts (the
"Named Persons"):
Annual Long Term
Compensation Compensation
----------------------------- ----------------
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options(1) Compensation
--------------------- ---------------- ------------- --------------- --------------- ---------------- -----------------
Roy Israel, 2001 $268,108 -- $17,490 (2) 28,334 (3) $ 14,110 (4)
President, Chief
Executive Officer 2000 $254,755 $100,000 $17,618 (2) 30,000 $ 14,110 (4)
and Chairman of the
Board 1999 $239,417 $ 60,000 $18,064 (2) 70,000 $ 14,110 (4)
Patricia Giuliani- 2001 $137,019 -- -- 10,000 (3) $ 2,400 (4)
Rheaume, Vice
President, Chief 2000 $111,067 -- -- 6,667 $ 2,400 (4)
Financial Officer
and Treasurer 1999 $124,746 -- -- 14,467 $ 2,400 (4)
Kathleen O'Donnell, 2001 $104,115 -- -- 6,667 (3) --
Vice President of 2000 $ 93,708 -- -- 10,000 --
Operations (5) 1999 $ 82,159 -- -- 5,000 --
(1) Such option amounts have been restated to reflect the 1-for-3 reverse stock
split of our common stock effectuated on August 20, 2001.
(2) Such amount represents tax gross ups for Mr. Israel for medical, life and
disability payments.
(3) Such figure is also reflected in the table for Options Granted in Last
Fiscal Year.
(4) Such amount represents premium payments on life insurance policies for the
named executive officer.
(5) Became an Executive Officer in February 2000
8
Options Granted in Last Fiscal Year (1)
Number of Securities Percent of Total Options Exercise Market Price
Name and Underlying Granted to Employees in or Base on Date of
Principal Position Options Granted Fiscal Year Price Grant Expiration Date
------------------ -------------------- ------------------------ --------- -------------- ---------------
Roy Israel,
President, Chief
Executive Officer and
Chairman of the Board 28,334 43.0% (2) $4.314 (3)
Patricia Giuliani-
Rheaume, Vice
President, Chief
Financial Officer
and Treasurer 10,000 15.2% $4.134 $4.134 11/13/10
Kathleen O'Donnell,
Vice President of
Operations 6,667 10.1% $4.134 $4.134 11/13/10
(1) All amounts have been restated to reflect the 1-for-3 reverse stock split of
our common stock effectuated on August 20, 2001.
(2) 14,167 options are exercisable at a price of $4.314 per share and 14,167
options at a price of $4.746 per share.
(3) The expiration date for the 14,167 options priced at $4.314 is 11/13/10 and
the expiration date for the 14,167 options priced at $4.746 is 11/13/05.
Directors' Compensation
Non-employee directors receive a fee of $250 for each meeting
of the Board attended, a fee of $150 for each meeting of any committee of the
Board attended and reimbursement of their actual expenses. In addition, pursuant
to our Amended and Restated 1996 Stock Option Plan (the "Plan"), each
non-employee director will be granted options to purchase 833 shares of our
common stock per annum at an exercise price equal to the closing bid price of
our common stock as reported by the Nasdaq SmallCap Market on the date of grant,
which shall be the last trading date in June of each year.
Employment Contracts and Termination of Employment
and Change In Control Arrangements
Roy Israel. Pursuant to Mr. Israel's employment agreement, he
currently receives an annual base salary of $284,057, an annual base salary
increase equal to the greater of 6% or an amount which reflects the increase in
the Urban Consumer Price Index, and an annual bonus at the discretion of our
Board of Directors. In addition, the agreement provides, among other things,
that we shall pay up to an aggregate of $15,000 per policy year for a key man
life insurance policy in favor of us for $1,000,000 and life insurance in favor
of the estate of Mr. Israel, a disability policy for coverage of 60% of his base
salary, and an allowance for leasing an automobile (up to a monthly lease
payment of $1,000.) If his duties are changed without his consent and such
change results in Mr. Israel no longer being our most senior executive officer,
then he is entitled to terminate the agreement and receive three times the
amount of his then current base salary, payable over a one year period, and the
maintenance of his benefits for a one year period or until the end of the term
of the agreement, whichever is longer. In addition, if within two years of a
change in control of the Company, as such term is defined in the agreement, Mr.
Israel is terminated without cause or the agreement is terminated by Mr. Israel
due to a change of duties, Mr. Israel shall receive a lump sum payment equal to
three times the amount of his then current base salary, and the maintenance of
his benefits for one year. Mr. Israel's employment agreement with us expires
June 30, 2002 and automatically renews for one-year terms unless terminated at
least 90 days prior to the end of an employment term by either party. The
agreement also contains a one-year non-competition clause if the agreement is
terminated for any reason or upon expiration.
9
Patricia Giuliani-Rheaume. Ms. Giuliani-Rheaume's employment
agreement with us currently expires December 31, 2001. It automatically renews
for one-year terms unless terminated at least 45 days prior to the end of an
employment term by either party. Pursuant to this agreement, she currently
receives an annual base salary of $140,000, is eligible for an annual bonus at
the discretion of the Company's Chief Executive Officer, and received a one-time
grant of options to purchase 13,333 shares of our common stock (as restated to
reflect the 1-for-3 reverse stock split of our common shares effectuated on
August 20, 2001) in 1997. In addition, the agreement provides, among other
things, that we shall pay for a life insurance policy of $250,000, full family
health insurance, and a $400 a month allowance for leasing an automobile. The
agreement also contains a one-year non-competition clause if the agreement is
terminated for any reason or upon expiration. If the agreement is terminated
without cause, Ms. Giuliani-Rheaume shall receive a payment of severance of an
amount equal to six months of the base salary in effect at such time.
Kathleen O'Donnell. Ms. O'Donnell's employment agreement
contains a one-year non-competition clause if the agreement is terminated for
any reason.
Willem Specht. Mr. Specht's employment agreement contains a
one-year non-competition clause if the agreement is terminated for any reason.
10
REPORT OF THE AUDIT COMMITTEE
The following Report of the Audit Committee does not constitute
soliciting material and should not be deemed filed or incorporated by reference
into any other Company filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent we specifically incorporate this
Report by reference therein.
The Audit Committee of the Board of Directors developed a written
charter for the Committee, which was approved by the full Board on May 11, 2000.
The complete text of the charter, which reflects standards set forth in SEC
regulations and Nasdaq rules, is reproduced in the appendix to this proxy
statement.
As set forth in more detail in the charter, the Audit Committee's
primary responsibilities fall into three broad categories:
a. the Committee is charged with monitoring the preparation of quarterly
and annual financial reports by our management, including discussions
with our management and the outside auditors about draft annual
financial statements and key accounting and reporting matters;
b. the Committee is responsible for matters concerning the relationship
between us and the outside auditors, including recommending their
appointment or removal; reviewing the scope of their audit services and
related fees, as well as any other services being provided to us; and
determining whether the outside auditors are independent (based in part
on the annual letter provided to us pursuant to Independence Standards
Board Standard No. 1); and
c. the Committee oversees management's implementation of effective systems
of internal controls, including review of policies relating to legal
and regulatory compliance, ethics and conflicts of interests.
The Committee has implemented procedures to ensure that during the
course of each fiscal year it devotes the attention that it deems necessary or
appropriate to each of the matters assigned to it under the Committee's charter.
To carry out its responsibilities, the Committee met one time during fiscal year
2001. Each member of the audit committee is independent pursuant to Rule 4200
(a)(15) of the Nasdaq Listing Standards.
In overseeing the preparation of our financial statements, the
Committee met with both management and the outside auditors to review and
discuss all financial statements prior to their issuance and to discuss
significant accounting issues. Management advised the Committee that all
financial statements were prepared in accordance with generally accepted
accounting principles, and the Committee discussed the statements with both
management and the outside auditors. The Committee's review included discussion
with the outside auditors of matters required to be discussed pursuant to
Statement on Auditing Standards No. 61 (Communication With Audit Committees).
With respect to the outside auditors, the Committee, among other
things, discussed with Grant Thornton LLP matters relating to its independence,
including the disclosures made to the Committee as required by the Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees).
On the basis of these reviews and discussions, the Committee
recommended to the Board of Directors that the Board approve the inclusion of
our audited financial statements in our Annual Report on Form 10-KSB for the
fiscal year ended June 30, 2001 for filing with the Securities and Exchange
Commission.
The Audit Committee
Ronald Katz, Chairman*
Frank J. Coyne
September 2001
*Mr. Katz resigned his position as a Board member and as a member of the Audit
Committee effective October 16, 2001.
11
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
It is the duty of the Compensation Committee to develop, administer and
review our compensation plans, programs, and policies; to monitor the
performance and compensation of executive officers; and to make appropriate
recommendations and reports to the Board of Directors relating to executive
compensation.
Our compensation program is intended to motivate, retain and attract
management, thus linking incentives to financial performance and creating
enhanced shareholder value. The program's fundamental philosophy is to tie the
amount of compensation "at risk" for an executive to his or her contribution to
our success in achieving superior performance objectives.
It is currently anticipated that the compensation program will consist
of two components: (1) a base salary as set forth in each executive's employment
agreement, and (2) the potential for an annual cash and/or stock option bonus
equal to a percentage of the executive's base salary, depending upon the
satisfaction of certain general performance criteria established by the
Compensation Committee for each position and evaluated at the end of each fiscal
year. The criteria may relate to overall Company performance, the individual
executive's performance, or a combination of the two, depending upon the
particular position at issue. The second component constitutes the "at risk"
portion of the compensation program.
The Compensation Committee
Honorable Anthony J. Mercorella
September 2001
12
PROPOSAL 2: APPOINTMENT OF INDEPENDENT ACCOUNTANTS
It is proposed that the shareholders ratify the appointment of
Grant Thornton LLP ("Grant Thornton") as our independent accountants for fiscal
year 2002. Grant Thornton has served as our independent accountants since March
4, 1997.
Representatives of Grant Thornton, who audited our fiscal year
2001 financial statements, are expected to be present at the Annual Meeting with
the opportunity to make a statement, if they so desire, and they are expected to
be available to respond to appropriate questions. Approval by the shareholders
of the appointment of independent accountants is not required, but the Board
deems it desirable to submit the matter to the shareholders for ratification. If
the majority of shareholders voting at the meeting should not approve the
selection of Grant Thornton, the selection of independent accountants will be
reconsidered by the Board of Directors.
The following table sets forth the fees billed by our
independent auditors, Grant Thornton, for the fiscal year ended June 30, 2001:
Audit fees and quarterly reviews $50,400
Financial information systems design and implementation fees --
All other fees:
Tax return preparation $21,300
Audit related services 10,885
Non-audit related services - 32,185
----------- --------
Total Fees $82,585
The Audit Committee considered and determined that the services
performed for "financial information systems design and implementation fees" and
"all other fees" are compatible with maintaining the independence of the
independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
RATIFICATION OF THE INDEPENDENT ACCOUNTANTS.
OTHER MATTERS ARISING AT THE ANNUAL MEETING
The matters referred to in the Notice of Annual Meeting and
described in this Proxy Statement are, to the knowledge of the Board of
Directors, the only matters that will be presented for consideration at the
Annual Meeting. If any other matters should properly come before the Annual
Meeting, the persons appointed by the accompanying proxy will vote on such
matters in accordance with their best judgment pursuant to the discretionary
authority granted to them in the proxy.
13
PRINCIPAL SHAREHOLDERS
Security Ownership of Management
The following table sets forth, as of October 8, 2001, certain
information with respect to the beneficial ownership of each class of our voting
equity securities by each director and director nominee, beneficial owners of 5%
or more of our common stock, the Named Persons and all our directors and
executive officers as a group:(1)
Amount and Nature of
Name of Beneficial Owner(2) Beneficial Ownership(3) Percent of Total
------------------------------------------------- ---------------------------------- -------------------------------
Roy Israel(4) 538,380 34.8%
President, Chief Executive Officer and Chairman
of the Board
Frank J. Coyne (5) 281,244 19.1%
Director
Anthony J. Mercorella(6) 3,333 *
Director
Robert M. Silverson, Jr. (7) 1,000 *
Director Nominee
Willem F. Specht (8) 6,000 *
Director of Information Technology and Director
Nominee
Corey J. Gottlieb 3,333 *
Director Nominee
Randy Gerstenblatt (9) 4,780 *
Director Nominee
Patricia A. Giuliani-Rheaume (10) 42,800 2.9%
Vice President, Chief Financial Officer and
Treasurer
Kathleen O'Donnell (11) 9,333 *
Vice President of Operations
ISO Investment Holdings, Inc. (12) 280,411 19.1%
Joseph Stevens & Company, Inc. (13) 83,000 5.6%
M. D. Sabbah (14) 97,500 6.9%
All Officers, Directors and Director 890,203 53.3%
Nominees as a Group
(9 persons) (4)(5)(6)(7)(8)(9)(10)(11)
------------------
* Less than one percent (1%).
14
(1) Applicable percentage of ownership is based on 1,410,677 shares of our
common stock, which were outstanding on October 8, 2001, plus, for each
person or group, any securities that person or group has the right to
acquire within sixty (60) days pursuant to options and warrants.
(2) The address for each individual is c/o clickNsettle.com, Inc., 1010
Northern Boulevard, Suite 336, Great Neck, New York 11021.
(3) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934, as amended, and unless otherwise
indicated, represents shares for which the beneficial owner has sole voting
and investment power. The percentage of class is calculated in accordance
with Rule 13d-3.
(4) Includes options to purchase 119,167 shares of our common stock and
warrants to purchase 2,334 shares of our common stock, all of which have
vested and are exercisable or will vest and become exercisable within 60
days. Also includes 20,634 shares owned by Mr. Israel's wife, Carla Israel,
the Secretary of our company, and options to purchase 15,166 shares of our
common stock which will vest and become exercisable within 60 days. Mr.
Israel disclaims beneficial ownership as to such securities.
(5) Includes warrants to purchase 60,000 shares of our common stock and options
to purchase 833 shares of our common stock, all of which are vested and are
currently exercisable. The common shares and warrants are owned by ISO
Investment Holdings, Inc. Mr. Coyne disclaims beneficial ownership of these
securities.
(6) Includes warrants to purchase 333 shares of our common stock, which are
currently exercisable, and options to purchase 2,667 shares of our common
stock, which are vested and exercisable.
(7) Includes options to purchase 1,000 shares of our common stock, which are
vested and exercisable.
(8) Includes options to purchase 6,000 shares of our common stock, which are
vested and exercisable.
(9) Includes warrants to purchase 66 shares of our common stock, which are
currently exercisable.
(10) Includes options to purchase 42,800 shares of our common stock, which have
vested or shall vest and become exercisable within 60 days from the date
hereof.
(11) Includes options to purchase 9,333 shares of our common stock, which have
vested or shall vest and become exercisable within 60 days from the date
hereof.
(12) Includes warrants to purchase 60,000 shares of our common stock which are
currently exercisable.
(13) Includes warrants to purchase 1,333 shares of our common stock which are
held in Joseph Stevens & Company, Inc.'s market making account. This
information was taken from Form 13G as filed by Joseph Stevens & Company,
Inc. on February 14, 2001 as well as other information known to the
Company. On such form, Joseph Stevens & Company, Inc. listed Joseph Sorbara
and Steven Markowitz as controlling shareholders and directors of Joseph
Stevens & Company, Inc., and therefore, as beneficial owners of these same
shares and warrants.
(14) This information was taken from an Amendment to Form 13D filed by M. D.
Sabbah on June 2, 2000.
15
INTERESTED PARTY TRANSACTIONS
Since our inception, there have not been any material
transactions between us and any of our officers and directors, except as set
forth herein and no additional transactions are currently contemplated.
On March 23, 2001, we extended our March 1998 purchase plan
(the "Purchase Plan"), pursuant to which the number of shares of our common
stock eligible for purchase under the Purchase Plan was increased from 200,000
to an aggregate of 266,667 shares (as restated to reflect the 1-for-3 reverse
stock split of our common shares effectuated on August 20, 2001). The Purchase
Plan shall expire on the earlier of all of the shares being purchased or March
23, 2002, provided, however, that the Purchase Plan may be discontinued at any
time by us. As of October 8, 2001, we have purchased 39,582 shares under the
Purchase Plan for an aggregate cost of $81,168.
SHAREHOLDER PROPOSALS
A shareholder who wishes to present a proposal for action at
our 2002 Annual Meeting of Shareholders must submit such proposal to us, and
such proposal must be received by us, no earlier than July 20, 2002 and no later
than September 20, 2002.
COST OF SOLICITATION OF PROXIES
The solicitation of proxies pursuant to this Proxy Statement
is made by and on behalf of our Board of Directors. The cost of such
solicitation will be paid by us. Such cost includes the preparation, printing,
and mailing of the Notice of Annual Meeting, Proxy Statement, Annual Report, and
form of proxy. The solicitation will be conducted principally by mail, although
our directors, officers, and employees (at no additional compensation) may
solicit proxies personally or by telephone or telegram. Arrangements will be
made with brokerage houses and other custodians, nominees, and fiduciaries for
the forwarding of proxy material to the beneficial owners of shares held of
record by such fiduciaries, and we may reimburse such persons for their
reasonable expenses in so doing.
SECTION 16(a) REPORTING DELINQUENCIES
Section 16(a) of the Securities Exchange Act of 1934 requires
our directors and executive officers and persons who beneficially own more than
ten percent (10%) of a registered class of our equity securities, to file with
the U.S. Securities and Exchange Commission (the "SEC") and the Nasdaq SmallCap
Market reports of ownership and changes in ownership of our common stock and
other equity securities. Executive officers, directors, and greater than ten
percent (10%) beneficial owners are required by SEC regulation to furnish us
with copies of all Section 16(a) reports that they file. Based solely upon a
review of the copies of such reports furnished to us or written representations
that no other reports were required, we believe that, during fiscal year 2001,
all filing requirements applicable to our executive officers, directors, and
greater than ten percent (10%) beneficial owners were met except for the
reporting officers and directors who filed a Form 5 late relating to the
granting of stock options.
ANNUAL REPORT ON FORM 10-KSB
We are providing the Form 10-KSB as part of our Annual Report
to each person whose proxy is solicited. We do not undertake to furnish without
charge copies of all exhibits to our Form 10-KSB, but will furnish any exhibit
upon the payment of Twenty Cents ($0.20) per page or a minimum charge of Five
Dollars ($5.00). Such written requests should be directed to Patricia
Giuliani-Rheaume, Chief Financial Officer, clickNsettle.com, Inc., 1010 Northern
Boulevard, Suite 336, Great Neck, New York 11021. Each such request must set
forth a good faith representation that, as of October 26, 2001, the person
making the request was a beneficial owner of securities entitled to vote at the
Annual Meeting. We incorporate herein the Annual Report by reference.
By Order of the Board of Directors,
Roy Israel
Chairman
Great Neck, New York
October 26, 2001
16
Appendix A
clickNsettle.com, Inc.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
I. PURPOSE
The primary function of the Audit Committee (the "Committee") is to represent
the Board of Directors (the "Board") of clickNsettle.com, Inc. (the
"Corporation") in fulfilling its oversight responsibilities by:
1. Reviewing the financial reports and other financial related
information released by the Corporation to the public, or in
certain circumstances, to governmental bodies.
2. Reviewing the Corporation's system of internal controls regarding
finance, accounting, business conduct, ethics and legal compliance
that management and the Board have established.
3. Reviewing the Corporation's accounting and financial reporting
processes.
4. Reviewing and appraising the performance of the Corporation's
independent auditors.
5. Providing an open avenue of communication between the independent
auditors and the Board.
II. COMPOSITION
The Committee shall be comprised of at least two directors, each of whom shall
be independent directors and free from any relationship that would interfere
with the exercise of his or her independent judgment as a member of the
Committee.
All members of the Committee shall have a working familiarity with basic finance
and accounting practices.
The members of the Committee shall be elected or reappointed by the Board
annually for a one year term. A Chairperson shall be appointed by the Board.
III. MEETINGS
The Committee will meet at least two times annually and be available to meet
more frequently as circumstances dictate. Scheduled meetings of the Committee
are (a) to review and approve the scope of the annual audit to be performed by
the Corporation's independent auditors and (b) to review and discuss the results
of the audit and the Company's 10-K report, prior to its filing. Incidental to
any of these regularly scheduled meetings, the Committee should meet, if
necessary, with management and the independent auditors in separate executive
sessions to discuss any matters that the Committee and each of these groups
believe should be discussed privately.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Committee shall:
Documents/Reports Review
1. Review and reassess the adequacy of this Charter on an annual
basis or as conditions dictate.
2. Review and approve the Corporation's Business Conduct policies.
3. Review the Corporation's annual financial statements and other
reports and financial and related information released to the
public, or in certain circumstances, to governmental bodies,
including any certification, report, opinion or review rendered by
the independent auditors.
4. Review the quarterly financial information with management as
necessary. The Chairperson of the Committee may represent the
entire Committee for purposes of this review.
5. Review with independent auditors the recommendations included in
their management letter, if any, and their informal observations
regarding the adequacy of overall financial and accounting
procedures of the Corporation. On the basis of this review, make
recommendations to senior management for any changes that seem
appropriate.
6. Prepare the minutes of each meeting, distribute to all members of
the Committee and provide periodic summary reports to the Board.
The permanent file of the minutes will be maintained by the
Secretary of the Corporation.
Independent Auditors
7. Review with management and recommend to the Board the selection of
the independent auditors. On an annual basis, the Committee will
review and discuss with the auditors all significant relationships
they have with the Corporation, including non-audit services
proposed or performed, to determine and ensure the auditors'
independence. The independent auditors are ultimately accountable
to the Board and the Committee.
8. Review the fees, expenses and performance of the independent
auditors.
9. Annually consult with the independent auditors out of the presence
of management about internal controls and the completeness and
accuracy of the Corporation's financial statements.
Financial Reporting Process
10. In consultation with the independent auditors, review the
integrity of the Corporation's financial reporting process, both
internal and external.
11. Review and consider the independent auditors' judgments about the
appropriateness of the Corporation's accounting principles and
their application.
12. Review and consider major changes to the Corporation's accounting
principles and practices as proposed by management or the
independent auditors.
Process Improvement
13. Establish regular reporting to the Committee by management and the
independent auditors regarding any principal/critical risks,
emerging or developing issues and significant judgments made or to
be made in management's preparation of the financial statements.
14. Following completion of the annual audit, review separately with
management and the independent auditors any significant
difficulties encountered during the course of the audit, including
any restrictions on the scope of work or access to required
information.
15. Review any significant disagreement among management and the
independent auditors in connection with the preparation of the
financial statements.
16. Review with the independent auditors and management the extent to
which changes or improvements in financial or accounting
practices, as approved by the Committee, have been implemented.
Ethical and Legal Compliance
17. Review the Corporation's operations and determine whether
management has established and maintains effective programs and
processes to ensure compliance with its Business Conduct policies.
18. Review management's programs and processes for risk management and
protection of the Corporation's assets and business.
19. Review management's monitoring of the Corporation's compliance
with the above programs to ensure that management has the proper
review system in place to ensure that the Corporation's financial
statements, reports and other financial information disseminated
to governmental organizations and the public satisfy legal
requirements.
20. With the Corporation's counsel, review legal compliance matters,
including corporate securities trading policies.
21. With the Corporation's counsel, review any legal matter that could
have a significant impact on the Corporation's financial
statements.
22. Perform any other activities consistent with this Charter, the
Corporation's By-laws and government law, as the Committee or the
Board deems necessary or appropriate.