<PAGE>
Amendment No. 1
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 14(a)-11(c) or
Rule 14a-12
NetSol International, Inc.
(Name of Registrant as Specified in Its Charter)
Board of Directors of NetSol International, Inc.
(Name of Person(s) Filing Proxy Statement)
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:
...............................................................................
(2) Aggregate number of securities to which transaction
applies:
...............................................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
...............................................................................
(4) Proposed maximum aggregate value of transaction:
...............................................................................
(5) Total fee paid:
...............................................................................
/ / 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
previously paid. 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:
...............................................................................
<PAGE>
NetSol International, Inc.
233 Wilshire Blvd., Suite 510
Santa Monica, California 90401
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held November 5, 1999
To the Stockholders of NetSol International, Inc.:
The Annual Meeting of Stockholders of NetSol International, Inc. (the
"Company") will be held on November 5, 1999, at 10:00 a.m. local time at The Los
Angeles Hilton & Towers located at 5711 West Century Blvd., Los Angeles, CA
90045.
1. To elect directors, each to hold office for a term of one year
ending in 2000 or when their successors are elected.
2. To ratify the appointment of Stonefield Josephson, Inc. as the
Company's independent auditors for fiscal 1999-2000.
3. To ratify the 1999 Incentive and Nonstatutory Stock Option
Plan.
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only stockholders of record as shown on the books of the Company at the
close of business on October 6, 1999, the record date and time fixed by the
Board of Directors, will be entitled to vote at the meeting and any adjournment
thereof.
By order of the Board of Directors
NetSol International, Inc.
/s/ Najeeb U. Ghauri
Najeeb U. Ghauri
PRESIDENT, SECRETARY AND CHIEF
FINANCIAL OFFICER
October 19, 1999
Santa Monica, California
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND
IN PERSON. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE
IN PERSON IF THEY DESIRE.
<PAGE>
NetSol International, Inc.
233 Wilshire Blvd., Suite 510
Santa Monica, California 90404
---------------
PROXY STATEMENT
---------------
GENERAL INFORMATION
SOLICITATION OF PROXIES
This Proxy Statement is furnished to holders of the common stock,
par value $.001 per share, of NetSol International, Inc., a Nevada
corporation (the "Company"), in connection with the solicitation by the
Company's Board of Directors of proxies for use at the Company's Annual
Meeting of Stockholders (the "Annual Meeting") to be held on November 5,
1999, at 10:00 a.m. local time at The Los Angeles Hilton & Towers located at
5711 West Century Blvd., Los Angeles, CA 90045 and any and all adjournments
thereof. The purpose of the Annual Meeting and the matters to be acted on
there are set forth in the accompanying Notice of Annual Meeting of
Stockholders.
The Annual Meeting has been called for the purpose of electing seven
directors to the Company's Board of Directors for a one-year term, to ratify
the appointment of Stonefield Josephson, Inc. as the Company's independent
auditors for fiscal 1999-2000, to ratify the 1999 Incentive and Non Statutory
Stock Option Plan and to consider such other matters as may properly come
before the Annual Meeting.
Solicitations of proxies will be made by preparing and mailing the
Notice of Annual Meeting, Proxy Statement and proxy to stockholders of record
as of the close of business on October 6, 1999. These materials are expected
to be first mailed to stockholders on or about October 25, 1999. The cost of
making the solicitation includes the cost of preparing and mailing the Notice
of Annual Meeting, Proxy Statement and proxy and the payment of charges made
by brokerage houses and other custodians, nominees and fiduciaries for
forwarding documents to stockholders. In certain instances, officers of the
Company may make special solicitations of proxies either in person or by
telephone. Expenses incurred in connection with special solicitations are
expected to be nominal. The Company will bear all expenses incurred in
connection with the solicitation of proxies for the Annual Meeting.
VOTING AND REVOCATION OF PROXIES
A stockholder giving a proxy on the enclosed form may revoke it at
any time prior to the actual voting at the Annual Meeting by filing written
notice of the termination of the appointment with an officer of the Company,
by attending the Annual Meeting and voting in person or by filing a new
written appointment of a proxy with an officer of the Company. The revocation
of a proxy will not affect any vote taken prior to the revocation.
Unless a proxy is revoked or there is a direction to abstain on one
or more proposals, it will be voted on each proposal and, if a choice is made
with respect to any matter to be acted upon, in accordance with such choice.
If no choice is specified, the proxies intend to vote the shares represented
thereby to approve Proposals No. 1, 2, 3, and 4 as set forth in the
accompanying Notice of Annual Meeting of Stockholders, and in accordance with
their best judgment on any other matters that may properly come before the
Annual Meeting.
1
<PAGE>
VOTING AT THE MEETING
Only stockholders of record at the close of business on October 6,
1999 are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. On October 6, 1999, there were 7,632,065 shares of
Common Stock outstanding. Each share of Common Stock is entitled to one vote
on the matters to be presented at the Annual Meeting.
A majority of the votes entitled to be cast on matters to be
considered at the Annual Meeting, present in person or by proxy, will
constitute a quorum at the Annual Meeting. If a share is represented for any
purpose at the Annual Meeting, it is deemed to be present for all other
matters. Abstentions and broker nonvotes will be counted for purposes of
determining the presence or absence of a quorum. "Broker nonvotes" are shares
held by brokers or nominees which are present in person or represented by
proxy, but which are not voted on a particular matter because instructions
have not been received from the beneficial owner. Under applicable Nevada
law, the effect of broker nonvotes on a particular matter depends on whether
the matter is one as to which the broker or nominee has discretionary voting
authority. The effect of broker nonvotes on the specific items to be brought
before the Annual Meeting is discussed under each item.
A list of those stockholders entitled to vote at the Annual Meeting
will be available for a period of ten days prior to the Annual Meeting for
examination by any stockholder at the Company's principal executive offices,
233 Wilshire Blvd., Suite 510, Santa Monica, California 90401, and at the
Annual Meeting.
ELECTION OF DIRECTORS
(PROPOSAL #1)
GENERAL INFORMATION
The Bylaws of the Company provide that the Company is authorized to
have up to nine directors, and that stockholders will elect the directors of the
Company at each annual meeting. Directors are elected to serve a one-year term.
Directors being elected at the Annual Meeting will serve until the Company's
next annual meeting of stockholders, or until their successors have been duly
elected and qualified. The board is currently comprised of six members.
The seven nominees receiving the highest number of affirmative votes
of the shares present in person or represented by proxy and entitled to vote
for them, a quorum being present, shall be elected as directors. Only votes
cast for a nominee will be counted, except that the accompanying proxy will
be voted for all nominees in the absence of instruction to the contrary.
Abstentions, broker nonvotes and instructions on the accompanying proxy to
withhold authority to vote for one or more nominees will result in the
respective nominees receiving fewer votes. However, the number of votes
otherwise received by the nominee will not be reduced by such action.
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
DIRECTOR NOMINEES NAMED BELOW.
INFORMATION REGARDING NOMINEES
All nominees have consented to serve if elected, but if any becomes
unable to serve, the persons named as proxies may exercise their discretion
to vote for a substitute nominee. The stockholders have previously elected
all director candidates. The name, age, business experience and offices held
by each director nominee are as follows:
2
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE DIRECTOR SINCE POSITION WITH THE COMPANY
- ------------ -------------- -------------------------
<S> <C> <C>
Najeeb U. Ghauri (44) 1998 Chief Financial Officer, President, Secretary,
Director
Irfan Mustafa (48) 1997 Chairman of the Board, Director
Salim Ghauri (42) 1999 Chief Executive Officer, Director
Naeem Ghauri (41) 1999 Chief Operating Officer, Director
Shahab Ghauri (48) 1999 Director
Waheed Akbar (48) 1999 Director
Cary G. Burch (38) N/A N/A
</TABLE>
NAJEEB U. GHAURI, age 44. Mr. Ghauri has served as the Chief
Financial Officer, President, Secretary and as a Director of the company
since 1998. In addition to his duties as Chief Financial Officer, President,
and Secretary, Mr. Ghauri is also the one who conceptualized the vision of
the Company's role in the high-tech market. He developed the plan to find a
healthy high tech Company and consummate a business relationship. Mr.
Ghauri's contacts worldwide, produced the prime candidate to advance the
Company to the next millennium with investment in the high technology field.
(The Company's Form 10-KSB filed with the SEC on September 27, 1999
discussing the Company's 100% acquisition of outstanding Capital Stock of
Network Solutions (Pvt.) Limited and NetSol (U.K.) Ltd. is hereby
incorporated by reference.) Mr. Ghauri has an M.B.A. in Marketing Management
from the Claremont Graduate School (1983) and a B.S. degree in
Management/Economics from Eastern Illinois University. Prior to joining the
Company, Mr. Ghauri was part of the marketing team of Atlantic Richfield
Company ("ARCO"), a Fortune 500 company, from 1987-1997.
IRFAN MUSTAFA, age 48, has been the Chairman of the Board and
Director of NetSol International, Inc. since the inception of the Company in
April 1997. Mr. Mustafa's technology experience was instrumental in the 100%
acquisition of the outstanding capital of Network Solutions (Pvt.) Limited
and NetSol (U.K.) Ltd. Mr. Irfan continuously advised the Board of Directors
and Officers of the Company, of the different benefits acquiring a high tech
company would bring to the Company. Mr. Mustafa has an M.B.A. from IMD
(formerly Imede), Lausanne, Switzerland (1975); an M.B.A. from the Institute
of Business Administration, Karachi, Pakistan (1974); and a B.S.C. in
Economics, from Punjab University, Lahore, Pakistan (1971). Mr. Mustafa has
been employed by Pepsicola Company from 1990 to 1997. His current position at
Tricon International, Inc. is as a senior executive managing North Africa and
Middle East regions while based in Dubai.
SALIM GHAURI is the Chief Executive Officer and Director of the
Company. Mr. Ghauri is also the CEO of Network Solutions (Pvt.) Ltd., a
wholly owned subsidiary of the Company located in Lahore, Pakistan. Mr.
Ghauri received his Bachelor of Science degree in Computer Science from
University of Punjab in Lahore, Pakistan. Before Network Solutions (Pvt.)
Ltd., Mr. Ghauri was employed with BHP in Sydney, Australia from 1987-1995,
where he commenced his employment as a consultant.
NAEEM GHAURI is the Chief Operating Officer and Director of the
Company since 1999. Mr. Ghauri is also the Managing Director of NetSol (UK)
Ltd., a wholly owned subsidiary of the Company located in Milton Keys,
England. Prior to joining the Company, Mr. Ghauri was Project Director for
Mercedes-Benz Finance Ltd., a subsidiary of Daimler - Chrysler, Germany from
1994-1999. Mr. Ghauri supervised over 200 project managers, developers,
analysis and users in nine European Countries. Mr. Ghauri earned his degree
in Computer Science from Brighton University, England and a diploma in
programming and maintenance from Computer Learning Center in Los Angeles,
California.
SHAHAB GHAURI is a Director of the Company since 1999. Mr. Ghauri is
currently the Managing Director of S.G. Sports Ltd., in London, England. Mr.
Ghauri received his Bachelor of Arts degree in Economics from the University
of Punjab in Pakistan in 1971.
3
<PAGE>
WAHEED AKBAR was recently elected to the Board of Directors of the
Company. Dr. Akbar is a prominent orthopedic surgeon with licenses in New
York, Michigan, Florida and California. Dr. Akbar is the past President of
Saginaw County Medical Society, Past President of Medical Staff at St. Mary's
Hospital and a present board member of Field Neuroscience Institute. Dr.
Akbar received his medical degree from King Edward Medical College in Lahore,
Pakistan in 1976 and continued his graduate training in general surgery at
the Booth Memorial Medical Center in Flushing, New York; residency in
Orthopaedic Surgery at The Jewish Hospital and Medical Center, Brooklyn, New
York in 1980-1981. Dr. Akbar was also a visiting fellow in Orthopaedic
Surgery Service specializing in spinal surgery at The New York Orthopaedic
Hospital at Columbia - Presbyterian Medical Center in New York in 1981-1982.
CARY G. BURCH is nominated to the Board of Directors of the Company
for the first time this fiscal year. Mr. Burch is a Senior Vice President of
First American Credco where he is responsible for managing the technology and
financial day-to-day activities of First American Credco. First American
Credco is the service bureau division of First American Financial Corporation
which has revenues of over $200 million and operates at a profit margin of
25%. Mr. Burch was also responsible for the recent acquisition of CreditNet
Software and is acting as President and CEO of that company. Prior the his
position with First American Credco, Mr. Burch was a Senior Vice President
and Chief Information Officer of Advanta Corporation from July 1993-October
1998. Mr. Burch received his BA in Human Resources Management from University
of California at Santa Cruz and his Masters of Business Admininsteration in
Technology/Finance from Pepperdine University. Mr. Burch also completed an
executive education program at the Harvard Business School.
Messrs. Najeeb Ghauri, Salim Ghauri, Naeem Ghauri and Shahab Ghauri
are brothers.
BOARD COMMITTEES
On October 14, 1999 the Company formed an Audit Committee to oversee
the work of the Company's auditors and to provide the auditors with the
opportunity to bring items deserving the attention of the stockholders to the
Committee for review and discussion. The members of the Committee are Irfan
Mustafa, Najeeb Ghauri and Waheed Akbar.
EXECUTIVE COMPENSATION
GENERAL. The Compensation paid to the Company's executive officers
is administered by the Board of Directors and consists of base salaries,
annual bonuses, awards made pursuant to the Company's Incentive Plan. The
following table summarizes the total compensation for each of the last two
fiscal years awarded to, earned by or paid to the Company's Chief Executive
Officer and four most highly compensated executive officers of the Company
(other than the Chief Executive Officer) who were serving as executive
officers at the end of Fiscal 1999 (the "Named Executive Officers").
4
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Name and Principal Year Annual Awards(2)
Position Ended Compensation(1) -----------------------------------
June Bonus Restricted Securities
30 Stock Underlying
Awards(3) Options(4)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Najeeb U. Ghauri, 1999 $100,000 -0- 490,000 220,000(5)
President and 1998 91,150 250,000 25,000(6)
Secretary,
Chief Financial
Officer,
Director
- -----------------------------------------------------------------------------------------------------------
Naeem Ghauri, Chief 1999 150,000 30,000(11) 1,157,666 150,000(7)
Operations Officer, 1998 N/A N/A N/A N/A
Director
- -----------------------------------------------------------------------------------------------------------
Irfan Mustafa, 1999 -0- -0- -0- 20,000(8)
Director 1998 -0- -0- 100,000 45,000(9)
- -----------------------------------------------------------------------------------------------------------
Salim Ghauri, Chief 1999 100,000 -0- 1,320,666 150,000(7)
Executive Officer, 1998 N/A N/A N/A N/A
Director
- -----------------------------------------------------------------------------------------------------------
Shahab Ghauri, 1999 -0- -0- 1,157,666 -0-
Director 1998 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------
Waheed Akbar, 1999 -0- -0- -0- -0-
Director 1998 N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------
All Officers and 1999 $350,000 $30,000 $4,125,998 $560,000
Directors, as a Group 1998 182,300 -0- 350,000 70,000
(7 persons)
- -----------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------
(1) No officers received or will receive any bonus or other annual
compensation other than salaries during fiscal 1998-1999. The table
does not include any amounts for personal benefits extended to officers
of the Company, such as the cost of automobiles, life insurance and
supplemental medical insurance, because the specific dollar amounts of
such personal benefits, if any, cannot be ascertained.
5
<PAGE>
(2) No officers received or will receive any long term incentive plan
(LTIP) payouts or other payouts during fiscal 1999.
(3) All stock awards are shares of Common Stock of the Company.
(4) All securities underlying options are shares of Common Stock of the
Company.
(5) Includes 150,000 options granted under Employment Contract between the
Company and Employee at an exercise price of $1.58; includes 20,000
options granted to each Director at an exercise price of $1.44 for five
years from May 18, 1999; includes 50,000 options granted under 1997
Incentive and Non-Statutory Stock Option Plan issued in May 1999 at an
exercise price of $1.44 for five years from May 18, 1999.
(6) Includes 25,000 options issued under the Company's 1997 Incentive and
Non-Statutory Stock Option Plan for five years from May 12, 1997.
(7) Includes 150,000 options granted under the Employment Contract between
the Company and Employee at an exercise price of $1.58.
(8) Includes 20,000 options granted to each Director for the term 1997-1998
at an exercise price of $.01 for five years from May 12, 1997;
(9) Includes 20,000 options granted to each Director for the term 1998-1999
at an exercise price of $1.44 for five years from May 18, 1999;
includes 25,000 options granted as Chairman of the Board at an exercise
price of $1.44 for five years from May 18, 1999;
(10) Naeem Ghauri received a signing bonus upon the execution of his
employment agreement dated April 17, 1999.
The Company does not have a company-sponsored 401(k) retirement
salary plan that is available to its employees.
OPTION EXERCISES AND HOLDINGS. The following table sets forth
information concerning each exercise of a stock option during the fiscal year
ended June 30, 1999 by each of the Named Executives and the number and value
of unexercised options granted by the Company held by each of the Named
Executives on October 6, 1999.
6
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-ENDED OPTION VALUES
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF SHARES VALUE OF UNEXERCISED
NAME ACQUIRED ON VALUE REALIZED(1) UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
EXERCISE OPTIONS AT 06/30/99 06/30/99(2)
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Najeeb U. Ghauri 25,000 $87,500 0 $421,500/0
- ----------------------------------------------------------------------------------------------------------------------
Irfan Mustafa 0 0 0 157,950/0
- ----------------------------------------------------------------------------------------------------------------------
Earl Shannon 0 0 0 39,800/0
- ----------------------------------------------------------------------------------------------------------------------
Salim Ghauri 0 0 0 277,500/0
- ----------------------------------------------------------------------------------------------------------------------
Shahab Ghauri 0 0 0 0/0
- ----------------------------------------------------------------------------------------------------------------------
Naeem Ghauri 0 0 0 $277,500/0
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Market value on the date of exercise of shares covered by options
exercised, less option exercise price.
(2) Market value of the shares covered by in-the-money options on as of the
Company's fiscal year end June 30, 1999.
COMPENSATION OF DIRECTORS; THE 1999 STOCK OPTION PLAN
The Company may reimburse each director for out-of-pocket expenses
incurred in connection with their attendance at meetings. In addition, the
1999 Incentive and Nonstatutory Stock Option Plan provides for the grant of
stock options to nonemployee directors of the Company without any action on
the part of the Board of Directors, upon the terms and conditions set forth
in the 1999 Stock Option Plan. The exercise price of such options shall be
equal to 100 percent of the fair market value of the Common Stock subject to
the option on the date on which such options are granted. Each option shall
be subject to the other provisions of the 1999 Incentive and Nonstatutory
Stock Option Plan.
The Company does not pay its directors who are not employees of or
consultants to the Company. Directors elected will receive 5,000 options at
an exercise price of $5.00 per share, restricted under Rule 144 for the
1999-2000 term served for their services. The Company will reimburse the
directors for their expenses incurred during their term as a director
directly relating to their position as a director.
EMPLOYMENT AGREEMENTS
Messrs. Najeeb Gharui, Naeem Ghauri and Salim Ghauri each have
employment contracts with the Company for a period of three years.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the date hereof, certain
information regarding the ownership of the Common Stock of the Company by (i)
each person who is known to the Company to own, of record or beneficially,
more than five percent of the Common Stock, (ii) each of the Company's
directors and director nominees and (iii) all directors and executive
officers as a group. Where the persons listed have the right to acquire
additional shares of Common Stock through the exercise of options or warrants
within 60 days, such
7
<PAGE>
additional shares are deemed to be outstanding for the purpose of computing
the percentage of outstanding shares owned by such persons, but are not
deemed to be outstanding for the purpose of computing the percentage
ownership interests of any other person. Unless otherwise indicated, each of
the stockholders shown in the table below has sole voting and investment
power with respect to the shares beneficially owned.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
NUMBER OF PERCENTAGE BENEFICIALLY
NAME SHARES(1) OWNED
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Najeeb Ghauri 985,000(2) 12.9%
- ----------------------------------------------------------------------------------------------------
Naeem Ghauri 1,307,666(3) 17%
- ----------------------------------------------------------------------------------------------------
Irfan Mustafa 165,000(4) 2.2%
- ----------------------------------------------------------------------------------------------------
Salim Ghauri 1,470,666(3) 19.3%
- ----------------------------------------------------------------------------------------------------
Shahab Ghauri 1,157,666 15%
- ----------------------------------------------------------------------------------------------------
Earl Shannon 20,000(5) *
- ----------------------------------------------------------------------------------------------------
Waheed Akbar -0- -0-
- ----------------------------------------------------------------------------------------------------
All officers and directors as a group 5,105,998 66.4%
(7 persons)
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Less than one percent
(1) Except as otherwise indicated, the Company believes that the beneficial
owners of Common Stock listed below, based on information furnished by
such owners, have sole investment and voting power with respect to such
shares, subject to community property laws where applicable. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Shares of Common Stock subject to options or
warrants currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage of the person holding
such options or warrants, but are not deemed outstanding for purposes of
computing the percentage of any other person.
(2) Includes 150,000 options granted under Employment Contract between the
Company and Employee at an exercise price of $1.58; includes 20,000
options granted to each Director at an exercise price of $1.44 for five
years from May 18, 1999; includes 50,000 options granted under 1997
Incentive and Non-Statutory Stock Option Plan issued in May 1999 at an
exercise price of $1.44 for five years from May 18, 1999. Includes 25,000
options issued under the Company's 1997 Incentive and Non-Statutory Stock
Option Plan for five years from May 12, 1997.
(3) Includes 150,000 options granted under the Employment Contract between the
Company and Employee at an exercise price of $1.58.
(4) Includes 20,000 options granted to each Director for the term 1997-1998 at
an exercise price of $.01 for five years from May 12, 1997; Includes
20,000 options granted to each Director for the term 1998-1999 at an
exercise price of $1.44 for five years from May 18, 1999; includes 25,000
options granted as Chairman of the Board at an exercise price of $1.44 for
five years from May 18, 1999.
(5) Includes 20,000 options granted to each Director for the term 1998-1999 at
an exercise price of $1.44 for five years from May 18, 1999.
8
<PAGE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
On April 17, 1999, the Company increased its ownership interest in
NetSol Pvt and NetSol UK to 100% of the outstanding capital stock. The Chief
Executive Officer, President, and Director of NetSol Pvt Ltd. is Salim
Ghauri; a Director of NetSol Pvt is Shahab Ghauri; and another Director of
NetSol UK Ltd. is Naeem Ghauri; all brothers of Najeeb U. Ghauri, President,
Secretary, Chief Financial Officer and a Director of the Company. The Company
believes that its acquisition of NetSol Pvt and NetSol UK was on terms at
least as favorable to the Company as would be obtainable in arm's length
dealings with unrelated third persons. It is further the Company's intention
that all future transactions between the Company and NetSol will be on terms
at least as favorable to the Company as would be obtainable in arm's-length
dealings with unrelated third persons. However, the ongoing familial
relationship between management of the Company could result in conflicts of
interest, which could result in actions taken by the Company that do not
fully reflect the interests of all shareholders of the Company.
The Company's management believes that the terms of these
transactions are no less favorable to the Company than would have been
obtained from an unaffiliated third party in similar transactions. All future
transactions with affiliates will be on terms no less favorable than could be
obtained from unaffiliated third parties, and will be approved by a majority
of the disinterested directors.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS FOR FISCAL 1999
(PROPOSAL #2)
The Board of Directors has appointed Stonefield Josephson, Inc. as
independent auditors of the Company with respect to its operations for fiscal
1999-2000, and has further directed that management submit such appointment
for ratification by the holders of the Common Stock at the annual meeting of
Stockholders. In taking this action, the members of the Board considered
carefully Stonefield Josephson, Inc.'s reputation in providing accounting
services to other companies in the software and retail industries, its
independence with respect to the services to be performed, its general
reputation for adherence to professional auditing standards and the
performance of Stonefield Josephson, Inc. during the audit of the Company's
consolidated financial statements for fiscal 1998 and 1999.
Stockholder ratification of the selection of Stonefield Josephson,
Inc. as the Company's independent auditors is not required by the Company's
Bylaws or otherwise. The Board, however, is submitting the selection of
Stonefield Josephson, Inc. to the stockholders for ratification as a matter
of good corporate practice. Therefore, there will be presented at the Annual
Meeting a proposal for the ratification of this appointment, which the Board
of Directors believes is advisable and in the best interests of the
stockholders. If the appointment of Stonefield Josephson, Inc. is not
ratified, the matter of the appointment of independent public accountants
will be considered by the Board of Directors.
The affirmative vote of holders of a majority of the aggregate
voting power of Common Stock issued, outstanding and entitled to vote,
present or represented at the Annual Meeting, a quorum being present, is
required for the adoption of this proposal. Broker nonvotes with respect to
this matter will be treated as neither a vote "for" nor a vote "against" the
matter, although they will be counted in determining if a quorum is present.
However, abstentions will be considered in determining the number of votes
required to attain a majority of the shares present or represented at the
Annual Meeting and entitled to vote. Accordingly, an abstention from voting
by a stockholder present in person or by proxy at the meeting has the same
legal effect as a vote "against" the matter because it represents a share
present or represented at the Annual Meeting and entitled to vote, thereby
increasing the number of affirmative votes required to approve this proposal.
9
<PAGE>
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF STONEFIELD JOSEPHSON, INC. AS THE COMPANY'S INDEPENDENT
AUDITORS FOR FISCAL 1999.
RATIFICATION OF 1999 INCENTIVE AND NONSTATUTORY STOCK OPTION PLAN
(PROPOSAL #3)
The 1999 Incentive and Nonstatutory Stock Option Plan ("Plan") was
established on May 18, 1999. The Board authorized 5,000,000 share for
issuance under the Plan. The Plan empowers the Board to award compensation
primarily in the form of nonqualified stock options or restricted stock to
key employees. Stock options generally expires five years from the date of
grant.
The affirmative vote of holders of a majority of the aggregate
voting power of Common Stock issued, outstanding and entitled to vote,
present or represented at the Annual Meeting, a quorum being present, is
required for the adoption of this proposal. Broker nonvotes with respect to
this matter will be treated as neither a vote "for" nor a vote "against" the
matter, although they will be counted in determining if a quorum is present.
However, abstentions will be considered in determining the number of votes
required to attain a majority of the shares present or represented at the
Annual Meeting and entitled to vote. Accordingly, an abstention from voting
by a stockholder present in person or by proxy at the meeting has the same
legal effect as a vote "against" the matter because it represents a share
present or represented at the Annual Meeting and entitled to vote, thereby
increasing the number of affirmative votes required to approve this proposal.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE 1999 INCENTIVE AND
NONSTATUTORY STOCK OPTION PLAN.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR 1999
The Rules of the Securities and Exchange Commission permit
stockholders of the Company, after notice to the Company, to present
proposals for stockholder action in the Company's proxy statement where such
proposals are consistent with applicable law, pertain to matters appropriate
for stockholder action and are not properly omitted by Company action in
accordance with the proxy rules published by the Securities and Exchange
Commission. The Company's 1999 annual meeting of stockholders is expected to
be held on or about October 15, 2000, and proxy materials in connection with
that meeting are expected to be mailed on or about September 28, 2000.
Stockholder proposals prepared in accordance with the proxy11 rules must be
received by the Company on or before June 18, 2000.
FILINGS UNDER SECTION 16(a)
Section 16(a) of the Exchange Act requires the Company's directors
and officers, and persons holding ten percent or more of a registered class
of the Company's equity securities, to file reports regarding their ownership
and regarding their acquisitions and dispositions of the Company's equity
securities with the Securities and Exchange Commission. Officers, directors
and greater than ten-percent beneficial owners are required by applicable
regulations to furnish the Company with copies of any Section 16(a) forms
they file.
Based solely upon a review of the copies of the forms furnished to the
Company and written representations of the Company's directors and executive
officers, the Company believes that the filings required and applicable to its
officers, directors and ten-percent beneficial owners were complied with during
fiscal 1999.
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OTHER MATTERS
The Board of Directors of the Company does not intend to present any
business at the Annual Meeting other than the matters specifically set forth
in this Proxy Statement and knows of no other business to come before the
Annual Meeting. However, on all matters properly brought before the Annual
Meeting by the Board or by others, the persons named as proxies in the
accompanying proxy will vote in accordance with their best judgment.
It is important that your shares are represented and voted at the
Annual Meeting, whether or not you plan to attend. Accordingly, we
respectfully request that you sign, date and mail your Proxy in the enclosed
envelope as promptly as possible.
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A copy of NetSol International, Inc.'s Annual Report on Form 10-KSB
for the year ended June 30, 1998, which has been filed with the SEC pursuant
to the Exchange Act, may be obtained without charge upon written request to
Najeeb U. Ghauri, President, NetSol International, Inc., 233 Wilshire Blvd.,
Suite 510, Santa Monica, California, 90401 or from the Internet at
WWW.SEC.GOV from the SEC's Edgar database.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Najeeb U. Ghauri
----------------------------------------------
Najeeb U. Ghauri
President, Secretary and Chief Financial Officer
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NetSol International, Inc.
233 Wilshire Blvd., Suite 510
Santa Monica, California 90401
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Najeeb U. Ghauri, with full power of
substitution, as his or her Proxy to represent and vote, as designated below,
all of the shares of the Common Stock of NetSol International, Inc.,
registered in the name of the undersigned on October 6, 1999, with the powers
the undersigned would posses if personally present at the 1999 Annual Meeting
of Stockholders to be held at The Los Angeles Airport Hilton and Towers
located at 5711 West Century Boulevard, Los Angeles, California, at 10:00
a.m., local time, on November 5, 1999 and at any adjournment thereof, hereby
revoking any proxy or proxies previously given.
1. ELECTION OF DIRECTORS:
FOR all nominees listed below / / WITHHOLD AUTHORITY / /
(except as marked to the to vote for all nominees
contrary below) listed below
(To WITHHOLD authority to vote for any individual nominee strike a line
through the nominee's name below)
Najeeb Ghauri Salim Ghauri Shahab Ghauri
Irfan Mustafa Naeem Ghauri Waheed Akbar, M.D. Cary G. Burch
/ / For / / Against / / Abstain
2. Proposal to ratify the appointment of Stonefield Josephson, Inc. as the
Company's independent auditors for fiscal 1999-2000.
/ / For / / Against / / Abstain
3. Proposal to ratify the 1999 Incentive and Nonstatutory Stock Option Plan
/ / For / / Against / / Abstain
Discretionary authority is hereby granted with respect to such other
matters as may properly come before the Annual Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS GIVEN, THE PROXY WILL BE VOTED "FOR" ALL NOMINEES FOR DIRECTOR
AND, "FOR" PROPOSAL #2, AND IN THE PROXY'S DISCRETION ON ANY OTHER MATTERS TO
COME BEFORE THE MEETING.
Dated: __________________________________________, 1999
_______________________________________________________
(Signature)
_______________________________________________________
(Second signature)
PLEASE DATE AND SIGN ABOVE exactly as your name
appears on your Stock Certificate, indicating where
appropriate, official position or representative
capacity.
