SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the registrant x
Filed by a party other than the registrant
Check the appropriate box:
x Preliminary proxy statement
Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6 (e) (2))
Definitive proxy statement
Definitive additional materials
Soliciting material pursuant to Rule 14a-11(c) or
Rule 14a-12
_____________________NEW PARADIGM SOFTWARE CORP.___________________
(Name of Registrant as Specified in Its Charter)
_______________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
x No fee required.
(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:
________________________________________________________________________
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:
________________________________________________________________________
<PAGE>
October 9, 1997 (logo)
DEAR SHAREHOLDER:
On behalf of the Board of Directors and management, we
cordially invite you to the Annual Meeting of Shareholders to
be held Thursday, November 13, 1997, at 11:00 A.M., at the
principal executive offices of the Corporation, 630 Third
Avenue, 15th Floor, New York City. In the pages that follow
you will find the Notice of Annual Meeting and the Proxy
Statement describing the formal business to be transacted at
this meeting. Please read them carefully.
At the Annual Meeting, there will be a report to shareholders
regarding the operations of New Paradigm Software Corp. In
addition, time will be made available for shareholders to
discuss the formal business items as well as to ask other
questions about your Corporation's operations.
It is important that your shares be voted at the meeting in
accordance with your preference whether or not you plan to
attend in person. We urge you to specify your choices on the
matters presented by filling in the appropriate boxes on the
enclosed Proxy Card. Please sign, date and return the Proxy
Card in the prepaid envelope provided. Your cooperation in
promptly returning the Proxy Card will save your Corporation
additional solicitation costs and is appreciated. If you do
attend the meeting and wish to vote in person, you may
withdraw your Proxy at that time.
Sincerely,
/s/ Daniel A. Gordon
Daniel A. Gordon
Chairman of the Board
<PAGE>
October 9, 1997 (logo)
Re: NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
NOVEMBER 13, 1997
To the Shareholders of New Paradigm Software Corp.:
The Annual Meeting of Shareholders of New Paradigm Software
Corp. (the "Corporation") will be held at the principal
executive offices of the Corporation, 630 Third Avenue, 15th
Floor, New York, New York 10017, Thursday, November 13, 1997,
at 11 A.M., for the purpose of considering and voting upon
the following:
1. Election of three directors;
2. Proposal to adopt a By-Law amendment to eliminate the
applicability of New York Business Corporation Law Section
912 (an anti-takeover provision);
3. Ratification of the appointment of BDO Seidman, LLP as the
independent certified public accountants for the fiscal year
ending March 31, 1998; and
4. Such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Information relating to the above matters is set forth in the
accompanying Proxy Statement.
In accordance with the By-Laws of the Corporation, only
shareholders of record at the close of business on October 1,
1997 shall be entitled to notice of and to vote at the Annual
Meeting.
By Order of the Board of Directors,
/s/ Matthew Fludgate
Matthew Fludgate
Secretary
________________________________________________________________________
Please sign and return the enclosed proxy card in the envelope provided.
No postage is necessary.
________________________________________________________________________
<PAGE>
630 Third Avenue, 15th Floor
New York, New York 10017
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 13, 1997
PROXY STATEMENT
To the Shareholders of New Paradigm Software Corp.:
This statement is furnished in connection with the
solicitation of proxies by the Board of Directors of New
Paradigm Software Corp. (the "Corporation") for use at the
Annual Meeting of Shareholders to be held at 11 A.M. on
November 13, 1997, at the principal executive offices of the
Corporation, 630 Third Avenue, 15th Floor, New York, New
York, and at any adjournment thereof (the "Annual Meeting").
A Notice of Annual Meeting is attached hereto and a form of
proxy is enclosed.
THE PROXY
The persons named as proxies were selected by the Board of
Directors of the Corporation and are directors or officers of
the Corporation.
When the proxies in the enclosed form are properly executed
and returned, the shares they represent will be voted at the
Annual Meeting in accordance with the shareholders'
directions. Any shareholder giving a proxy has the power to
revoke it at any time before it is voted at the Annual
Meeting by filing with the Secretary of the Corporation an
instrument revoking it or by filing a duly executed proxy
bearing a later date.
The proxy cards should be sent to the Corporation
sufficiently in advance of the Annual Meeting so that they
are received at the principal executive offices of the
Corporation prior to the commencement of the Annual Meeting.
The cost of soliciting proxies will be borne by the
Corporation. The Corporation will request banks and brokers
to solicit their customers who have a beneficial interest in
the Corporation's shares registered in the names of nominees
and will reimburse such banks and brokers for their
reasonable out-of-pocket expenses of such solicitations. In
addition, directors, officers and full-time employees of the
Corporation may solicit proxies by telephone, telegraph or
personal interview.
These proxy materials are being mailed to shareholders of the
Corporation commencing on October 21, 1997. A copy of the
Corporation's 10-KSB for the year ended March 31, 1997 is
being mailed to shareholders concurrently or has previously
been mailed.
VOTING SECURITIES
The only securities of the Corporation entitled to vote at
the Annual Meeting are shares of Common Stock, par value $.01
per share (the "Common Stock"), outstanding on October 1,
1997 (the "Record Date"). On that date, there were 2,451,729
shares of Common Stock outstanding. Each share of Common
Stock is entitled to one vote at the Annual Meeting.
VOTING PROCEDURES
Under the New York Business Corporation Law (the "BCL") and
the Corporation's By-Laws, the presence, in person or by
proxy, of the holders of a majority of the outstanding shares
of Common Stock entitled to vote on a particular matter is
necessary to constitute a quorum of shareholders to take
action at the Annual Meeting with respect to such matter. For
these purposes, shares which are present, or represented by a
proxy, at the Annual Meeting will be counted for quorum
purposes regardless of whether the holder of the shares or
proxy fails to vote on any particular matter or whether a
broker with discretionary authority fails to exercise its
discretionary voting authority with respect to any particular
matter. Once a quorum of the shareholders is established,
under the BCL and the Corporation's By-Laws, the directors
standing for election must be elected by a plurality of the
votes cast and each other matter will be decided by a
majority of the votes cast on the matter, except as otherwise
provided by law or the Corporation's Certificate of
Incorporation. For voting purposes (as opposed to for
purposes of establishing a quorum) abstentions and broker
non-votes will not be counted in determining whether the
directors standing for election have been elected and whether
each matter has been approved, except for proposal 2. The
required vote for approval of proposal 2 is set forth
thereunder.
1. ELECTION OF THREE DIRECTORS
Under the Corporation's By-Laws, the number of directors
constituting the entire Board of Directors is currently seven
(7). This number may be increased or decreased (but not to a
number less than three (3)) from time to time by action of
the Board of Directors taken by the affirmative vote of a
majority of the entire Board of Directors. No decrease in
the number of directors shall shorten the term of any
incumbent director. Directors shall be elected at the annual
meeting of shareholders to hold office until the next annual
meeting of shareholders and until their respective successors
are elected and qualified.
Three directors are to be elected at the Meeting. The
persons named as proxies in the enclosed form of proxy cannot
exercise the discretionary authority granted to them by the
proxy to vote for a greater number of persons than the number
of nominees named.
Six directors, including Daniel A. Gordon, Mark Blundell and
Michael Taylor were elected at the 1996 annual meeting of
shareholders.
Beverly Brown, a director of the Corporation from September
1995 to September 1996, resigned from the Board September 16,
1997. Ms. Brown stated that her resignation from the Board of
Directors was to pursue personal business interests.
Jeff Kahn, a director of the Corporation from November 1993
to December 1996, resigned from the Board December 31, 1996.
John Brann, a director and secretary of the Corporation from
November 1993 to May 1997, resigned from the Board May 9,
1997. Mr. Brann stated that his resignation from the Board of
Directors was because he was engaged in employment contract
negotiations with VIE Systems Inc. ("VIE") and thought that
there would be a conflict of interest to him if he remained a
director.
The Corporation has agreed that Mr. Robert S. Trump, an
investor in a 1994 private placement of the Corporation's
securities, may nominate for election one person to serve on
the Board of Directors. Mr. Trump has orally advised the
Corporation that he does not currently intend to nominate
anyone to serve on the Board of Directors.
THE BOARD OF DIRECTORS' RECOMMENDATION
Unless otherwise specified by the shareholder, the Board of
Directors intends the accompanying proxy to be voted FOR the
election of the named three nominees as directors.
The Board of Directors does not contemplate that any nominee
will be unable or unwilling to serve as a director. However,
if that should occur, the individuals named as the proxies
reserve the right to substitute another person as may be
selected by the Board of Directors when voting at the Annual
Meeting.
Following is information about each of the three nominees for
director who are being proposed for election at the Annual
Meeting.
NOMINEES FOR ELECTION AS DIRECTOR FOR TERM EXPIRING AT
THE 1997 ANNUAL MEETING
DANIEL A. GORDON, age 58, an attorney, has been a director
and the Chairman of the Board of Directors of the Corporation
since November 1993. He has been a principal with Corporate
Growth Services since 1992. Corporate Growth Services
provides consulting support services to businesses in the
early stages of development. From 1989 to 1992, Mr. Gordon
served as President of COIN Banking Systems, Inc., which had
been the banking systems division of COIN Financial Systems,
Inc. Mr. Gordon had served as Chairman and Chief Executive
Officer of COIN Financial Systems, Inc., a financial software
development company, from 1984-1989.
MARK BLUNDELL, age 39, is the Chief Executive Officer,
President, Chief Financial Officer and a current director of
the Corporation and has served in these capacities since the
Corporation's inception in July 1993. From October 1991 until
December 1993, Mr. Blundell was initially the Chief Executive
Officer of Management Technologies, Inc.'s ("MTI") European
subsidiary and then the Chief Operating Officer and Chief
Financial Officer of MTI in New York. He was also a director
of MTI from December 1993 to March 1994. MTI is a publicly-
held financial services software company. From May 1988 to
October 1991, Mr. Blundell was the Chief Executive Officer of
London Fox, the futures and options exchange, where he
introduced the first international electronic trading system.
He is also a director and President of Lancer Holdings, Inc.
("Lancer"), a company formed to hold the intellectual
property rights relating to the New Paradigm Architecture and
which currently conducts no business with the Corporation.
Lancer is a principal shareholder of the Corporation.
MICHAEL TAYLOR, age 55, has been a director of the
Corporation since April, 1996. He is a Managing Director of
Investment Banking at Laidlaw Equities. He was Associate
Director of Investment Banking for Josephthal Lyon & Ross
from June 1989 to March 1996. From December 1981 until
joining Josephthal, he was President of Mostel & Taylor
Securities, Inc., a NASD-member investment banking and
brokerage firm. He has been involved in the securities
industry since 1966, when he joined Lehman Brothers as an
analyst. He has been a director of NDE Environmental, Inc.
since July 1992. He is also Chairman of the Board of Jennifer
Muller/The Works, a contemporary dance company. He attended
Amherst College and Columbia University.
INFORMATION AS TO COMMITTEES, ATTENDANCE
AND FEES OF THE BOARD OF DIRECTORS
The Corporation's Board of Directors has standing Audit and
Compensation Committees. The Board has no standing nominating
committee.
The Audit Committee is comprised of Mr. Gordon and Mr.
Taylor. During the fiscal year ended March 31, 1997, the
Audit Committee held one meeting. The functions performed by
the Audit Committee include: (a) reviewing and approving the
scope and coverage of the Corporation's annual audit; (b)
discussing any significant difficulties encountered or
significant findings made during the annual audit; (c)
reviewing and approving the annual audit, financial
statements and management letters following completion of the
Corporation's annual audit; (d) reviewing with the
Corporation's independent certified public accountants and
the Corporation's management the accounting systems,
financial controls and procedures used by the Corporation;
(e) reviewing and approving the annual audit budget and
actual fees paid to the Corporation's independent certified
public accountants; and (f) recommending to the Board of
Directors each year the firm of independent certified public
accountants to be retained for the following year.
The Compensation Committee is comprised of Mr. Gordon, and
Mr. Taylor. During the fiscal year ended March 31, 1997, the
Compensation Committee held one meeting. The functions
performed by the Compensation Committee include: (a)
establishing and approving the compensation to be paid to
members of the Corporation's senior management; (b)
administering the Corporation's stock incentive plans; and
(c) authorizing and approving any special compensation
arrangements for senior management.
The Board of Directors of the Corporation held a total of
seven meetings during the fiscal year ended March 31, 1997.
During the periods in which they served on the Board of
Directors all directors attended at least 86% of (1) all
meetings of the Board of Directors and (2) all meetings of
all board committees on which they served, except that Jeff
Kahn attended 20% of all meetings of the Board of Directors
before his resignation. The overall attendance record for all
directors as a group during the fiscal year ended March 31,
1997 was 86%.
INDEMNIFICATION
The Corporation's Certificate of Incorporation and By-Laws
contain provisions exculpating the Corporation's directors
from liability to the Corporation's shareholders for certain
actions taken or omitted by them and indemnifying the
Corporation's officers and directors against judgments,
fines, amounts paid in settlement and reasonable attorneys'
fees incurred in the defense of certain actions and
proceedings to the extent permitted under the BCL.
The Corporation purchased directors' and officers' liability
insurance coverage on April 10, 1996. The Corporation's
current insurance coverage was purchased for the one-year
period commencing at 12:01 a.m. on May 10, 1997 and extending
through 12:01 a.m. of May 10, 1998, at an annual aggregate
premium of approximately $45,000. This coverage, subject to a
number of standard exceptions, indemnifies the directors and
officers of the Corporation, whether elected or appointed,
for liabilities or losses incurred in the performance of
their duties up to an aggregate sum of $1,000,000. The
Corporation has purchased this insurance coverage from the
General Star Indemnity Company. No sums have been paid under
this coverage to the Corporation or any directors or officers
nor have any claims for reimbursement been made under this
policy.
DIRECTORS' COMPENSATION
The directors of the Corporation currently receive a retainer
of $1,000 per quarter and a fee of $1,000 for each meeting
of the Board of Directors that they attend. They are also
reimbursed by the Corporation for their direct costs for
attending meetings. On December 8, 1993, Messrs. Kahn, Gordon
and two former directors, were each granted, as remuneration
for service on the Board of Directors, an option ("Directors'
Options") to acquire, at a price of $5.00 per unit, 10,000
units, each unit consisting of one share of Common Stock and
one warrant to purchase one share of Common Stock at an
exercise price of $6.00 per share ("1993 Warrant"). These
options will expire on November 1, 1998. On April 26, 1995
Messrs. Blundell, Brann, Gordon and two former directors were
granted options under the Corporation's Stock Option Plan to
purchase 5,333 shares of Common Stock each at an exercise
price of $4.50 per share. These options became exercisable on
April 26, 1996 and expire on April 26, 2005. On November 30,
1995 Mr. Gordon, Ms. Brown and one former director were each
granted options under the Corporation's Stock Option Plan to
purchase 10,000 shares of Common Stock at an exercise price
of $5.125 per share. Messrs. Blundell and Brann were granted
options under the Corporation's Stock Option Plan to purchase
20,000 shares of Common Stock at the same exercise price.
These options became exercisable on November 30, 1996 and
expire on November 30, 2000. On April 24, 1996, Mr. Taylor
was granted options under the Corporation's Stock Option Plan
to purchase 10,000 shares of Common Stock at an exercise
price of $5.125 per share. These options became exercisable
on April 24, 1997 and expire on April 24, 2001. On October 2,
1996 Messers. Gordon, Taylor and a former director were
granted options under the Corporation's Stock Option Plan to
purchase 20,000 shares of Common Stock at an exercise price
of $1.625 per share. Messrs. Blundell and Brann were granted
options under the Corporation's Executive Stock Option Plan
to purchase up to 149,999 shares of Common Stock at an
exercise price of $1.25 per share.
BENEFICIAL OWNERSHIP OF THE CORPORATION'S COMMON STOCK
(a)
The following table indicates the beneficial ownership of the
Corporation's Common Stock as of October 1, 1997, by (1) each
of the directors, (2) each of the executive officers of the
Corporation, (3) all directors and executive officers of the
Corporation as a group and (4) each person or entity which
beneficially owned in excess of five percent of the Common
Stock, based upon information supplied by each of the
directors, nominees, executive officers and five percent
beneficial owners:
Common Stock
<TABLE>
<S> <C> <C> <C> <C>
Name of Right to Sole Right to Shared Total Number Percent of
Beneficial Voting and Voting and of Shares Common Stock
Owner(a) Investment Power Investment Power Beneficially Owned Beneficially Owned
Mark Blundell 220,665(b) 199,999(c) 420,664 16%
John Brann 219,332(d) 199,999(c) 419,331 16%
Matthew Fludgate 25,508(e) 0 25,508 1%
Daniel Gordon 35,333(f) 0 35,333 1%
Lancer Holdings 199,999(g) 0 199,999 8%
Midland Associates 619,999(h) 0 619,999 24%
Michael Taylor 10,000(i) 0 10,000 (j)
Robert Trump 350,000(k) 619,999(l) 969,999 34%
All Directors
and Executive
Officers of
the Company as
a group (a total
of 5 persons) 510,838(m) 199,999(n) 710,837 23%
<FN>
The business address of each of the foregoing persons is c/o
New Paradigm Software Corp., 630 Third Avenue, New York, New
York 10017, except that the address of Midland Associates is
2611 West Second Street, Brooklyn, New York 11233 and the
address of Robert Trump is 167 Easty 61st Street, New York,
New York 10017.
<F1>
(a) The shares of Common Stock beneficially owned by each
person or by all directors and executive officers as a group,
and the shares included in the total number of shares of
Common Stock outstanding used to determine the percentage of
shares of Common Stock beneficially owned by each person and
such group, have been adjusted in accordance with Rule 13d-3
under the Securities Exchange Act of 1934 to reflect the
ownership of shares issuable upon exercise of outstanding
options, warrants or other common stock equivalents which are
exercisable within 60 days. As provided in such Rule, such
shares issuable to any holder are deemed outstanding for the
purpose of calculating such holder's beneficial ownership but
not any other holder's beneficial ownership.
<F2>
(b) Consists of (i) 26,667 shares of Common Stock, (ii) 5,333
shares of Common Stock issuable upon exercise of warrants
issued in a 1994 private placement of the Corporation's
securities (the "1994 Warrants"), (iii) 38,666 shares of
Common Stock issuable upon exercise of options granted under
the Corporation's Stock Option Plan ("SOP") that are
currently exercisable, and (iv) up to 149,999 shares of
Common Stock underlying stock options granted under the
Executive Stock Option Plan.
<F3>
(c) Represents the holdings of Lancer Holdings, Inc. of which
Mr. Blundell and Mr. Brann are each 33% owners and directors
and officers. Consists of 166,666 shares of Common Stock and
33,333 shares of Common Stock issuable upon exercise of
warrants held by Lancer (the "MBA Warrants").
<F4>
(d) Consists of (i) 26,667 shares of Common Stock, (ii) 4,000
shares of Common Stock issuable upon exercise of 1994
Warrants, (iii) 38,666 shares of Common Stock issuable upon
exercise of options granted under the SOP that are currently
exercisable and (iv) up to 149,999 shares of Common Stock
underlying stock options granted under the Executive Stock
Option Plan.
<F5>
(e) Consists of (i) 534 shares of Common Stock, (ii) 1,307
shares of Common Stock issuable upon exercise of 1994
Warrants and (iii) 23,667 shares of Common Stock issuable
upon the exercise of options granted under the SOP.
<F6>
(f) Consists of (i) 10,000 shares of Common Stock and 10,000
shares of Common Stock underlying 1993 Warrants issuable upon
exercise of Directors' Options granted in 1993 to non-
employee directors of the Corporation and (ii) 15,333 shares
of Common Stock issuable upon exercise of options granted
under the SOP that are currently exercisable.
<F7>
(g) Consists of 166,666 shares of Common Stock and 33,333
shares of Common Stock issuable upon exercise of the MBA
warrants held by Lancer Holdings, Inc. Lancer Holdings, Inc.
is owned 33% by Mr. Blundell, the Corporation's President,
33% by Mr. Brann, a former officer and director of the
Corporation, 33% by Red Giant, a Jersey corporation owned by
parties unrelated to the Corporation or any of its principal
stockholders and 1% by Mr. Fludgate, the Corporation's
Secretary.
<F8>
(h) Consists of 439,999 shares of Common Stock and 180,000
shares of Common Stock issuable upon exercise of warrants.
These securities were previously owned by Management
Technologies, Inc. ("MTI") and transferred to Midland
Associates in satisfaction of a loan to MTI by Midland
Associates. Midland Associates is owned by Robert S. Trump,
Maryanne Trump Barry, Elizabeth Trump Grau, Donald J. Trump,
Fred C. Trump III, and Mary L. Trump
<F9>
(i) Consists of 10,000 shares of Common Stock issuable upon
exercise of options granted under the SOP.
<F10>
(j) Less than 1%.
<F11>
(k) Consists of (i) 200,000 shares of Common Stock issuable
upon exercise of 1994 Warrants (ii) 150,000 shares of Common
Stock issuable upon exercise of warrants having an exercise
price of $2.00 per share issued by the Corporation in
connection with a loan by Mr. Trump that was subsequently
canceled as partial consideration for issuance of the Series
C Redeemable Preferred Stock (the "Trump Warrants").
<F12>
(l) Represents the holdings of Midland Associates. Consists
of the securities listed in note h above.
<F13>
(m) Consists of all of the securities in notes b-f above.
<F14>
(n) Consists of the securities in note g above.
INFORMATION AS TO EXECUTIVE COMPENSATION
The following table sets forth information concerning the
compensation of the Corporation's chief executive officer and
each of the other executive officers (the "Named Officers")
for services rendered in all capacities to the Corporation.
The Corporation has only four executive officers.
</TABLE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------- ---------------------------------------
Name and Principal Position Fiscal Year Salary Bonus Other Securities Restricted All Other
Ended Annual underlying Stock Compen-
March 31, Compen- options Awards sation
sation
<S> <C> <C> <C> <C> <C> <C> <C>
Mark Blundell - Chief Exec- 1995 $150,000 $0 $45,000(1) 0 $0 $1,456(2)
utive Officer, Chief Finan- 1996 $150,000 $20,000 $57,000(1) 38,666 $0 $1,100(2)
cial Officer & President 1997 $150,000 $0 $57,000(1) 149,999 $0 $1,100(2)
John Brann - 1995 $100,000 $0 $0 0 $0 $0
Vice President - Technology 1996 $75,000 $0 $25,000(4) 38,666 $0 $810(2)
(3) 1997 $100,000 $0 $0 149,999 $0 $810(2)
Philip V. Caltabiano - 1995 $100,000 $0 $0 0 $188(6) $0
Senior Vice President - 1996 $100,000 $0 $0 33,333 $188(6) $0
Sales and Marketing (5) 1997 $50,000 $0 $29,000(7) 100,000 $188(6) $0
Nicholas Field 1995 $70,000 $0 $0 0 $100(9) $0
Vice President - 1996 $80,000 $0 $0 22,500 $50(9) $0
Implementation(8) 1997 $80,000 $0 $0 66,000 $0 $0
Matthew Fludgate 1995 $33,000 $0 $0 0 $0 $0
Secretary and Vice President 1996 $35,000 $5,000 $0 8,667 $0 $0
- - Administration 1997 $42,000 $0 $0 15,000 $0 $0
<FN>
<F1>
(1) Reflects a non-accountable expense allowance of $4,000
per month and a car allowance of $750 per month paid to Mr.
Blundell.
<F2>
(2) Reflects the insurance premium paid by the Corporation
for term life insurance for Mr. Blundell and Mr. Brann.
<F3>
(3) Resigned effective May 9, 1997.
<F4>
(4) Reflects severance pay paid to Mr. Brann when his
employment terminated on March 18, 1996 upon expiration of
his visa to work in the United States. Mr. Brann was
reemployed by the Corporation upon being granted a new visa
on August 1,1996.
<F5>
(5) Resigned effective September 25, 1996.
<F6>
(6) Upon first joining the Corporation in 1993, the
Corporation awarded Mr. Caltabiano a stock grant of 20,000
shares of Common Stock, 15,000 of which have vested. The
amounts included in the table reflects 5,000 shares of Common
Stock that vested in each of the fiscal years ended March 31,
1995 and March 31, 1996. These shares were awarded in
connection with the organization of the Corporation and have
been valued at par value ($.01 per share) before giving
effect to a reverse split of the Corporation's Common Stock
that was approved by the Corporation's shareholders on April
18, 1995.
<F7>
(7) Reflects payment paid in respect of a termination
agreement dated September 25, 1996.
<F8>
(8) Resigned effective March 21, 1997.
<F9>
(9) Upon first joining the Corporation in 1993, the
Corporation awarded Mr. Field a stock grant of 8,000 shares
of Common Stock, all of which have vested. The amount
included in this table reflects 2,667 shares that vested
during the year ended March 31, 1995 and 1,333 shares that
vested during the year ended March 31, 1996. These shares
were awarded in connection with the organization of the
Corporation and have been valued at par value ($.01 per
share) before giving effect to a reverse split of the
Corporation's Common Stock that was approved by the
Corporation's shareholders on April 18, 1995.
</FN>
</TABLE>
OPTION GRANTS IN FISCAL YEAR ENDED MARCH 31, 1997
The following table sets forth all grants of stock options
made during the fiscal year ended March 31, 1997 pursuant to
the Corporation's Stock Option Plan to the Named Officers:
Individual Grants
<TABLE>
<CAPTION>
Individual Grants
Name Number of % of Total Average Expiration
Securities Options Exercise Date
Underlying Granted to or Base
Options Employees Price
Granted in Fiscal Per Share
ended March
31, 1997 (a)
<S> <C> <C> <C> <C>
Mark Blundell 149,999 21% $1.25 November 2000
John Brann (b) 149,999 21% $1.25 November 2000
Philip V. Caltabiano 100,000 14% $1.25 November 2000
Nicholas Field (b) 66,000 9% $1.25 November 2000
Matthew Fludgate 15,000 2% $1.625 November 2000
All Shareholders N/A N/A N/A N/A
All Optionees (a) 715,000 N/A $1.35 November 2000
<FN>
<F1>
(a) Includes 30,000 shares of Common Stock issuable upon
exercise of options granted to outside directors.
<F2>
(b) Mr Field resigned on March 21, 1997 and Mr. Brann
resigned on May 9, 1997. The terms of the Option Plan
provide that these options will expire 90 days after the date
of resignation unless exercised prior to such date. As at
August 31, 1997 none of these options have been exercised.
</FN>
</TABLE>
AGGREGATE OPTION EXERCISES IN FISCAL YEAR ENDED MARCH
31, 1997 AND YEAR-END OPTION VALUES
The following table sets forth information with respect to
options exercised by each of the Named Officers during the
fiscal year ended March 31, 1997 and the number and value of
unexercised options as of March 31, 1997:
<TABLE>
<CAPTION>
Number ofSecurities Value of Uexercised
Underlying Unexercised In-the-Money Options
Options at March 31, 1997 at March 31 1997(a)
Name Shares Value Exercisable Unexercisable Exercisable Unexercisable
Acquired on Realized
Exercise
<S> <C> <C> <C> <C> <C> <C>
Mark Blundell 0 $0 38,666 149,999 $0 $0
John Brann 0 0 38,666 149,999 $0 $0
Philip V. Caltabiano 0 0 0 0 $0 $0
Nicholas Field 0 0 22,200 66,000 $0 $0
Matthew Fludgate 0 0 8,667 15,000 $0 $0
<FN>
<F1>
(a) Based on the closing price of New Paradigm Software Corp.
Common Stock on March 31, 1997 of $0.50 as reported on NASDAQ
Bulletin Board.
</FN>
</TABLE>
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
The following table sets forth information with respect to
options granted to each of the Named Officers during the
fiscal year ended March 31, 1997 and the number and value of
unexercised options as of March 31, 1997:
<TABLE>
Estimated Future Payouts Under
Non-Stock Price Based Plans
<S> <C> <C> <C> <C> <C>
Name Number of Performance or
Shares, Unites or Other Period Until
Other Rights Maturation Or Payout Threshold Target Maximum
Mark Blundell 0 $0 0 0 0
John Brann 0 0 0 0 0
Philip V. Caltabiano 0 0 0 0 0
Nicholas Field 0 0 0 0 0
Matthew Fludgate 0 0 0 0 0
</TABLE>
Employment Contracts
The Corporation has entered into employment contracts with
Messrs. Blundell, Brann and Caltabiano. The employment
contracts of Messrs. Blundell, Brann and Caltabiano contain
the following principal features.
Mr. Blundell: Term: Five years with a remaining term of
approximately two years (1994-1999); Base Salary: $200,000
per annum (Mr. Blundell has waived $50,000 per annum of this
Base Salary (which is not being accrued) until such time as
the Corporation would otherwise be able to report a pre-tax
annual profit in excess of $75,000); Allowances: Mr.
Blundell receives a non-accountable expense allowance of
$4,000 per month and a car allowance of $750 per month.
Common Stock Award: Mr. Blundell received 26,667 shares of
Common Stock. If the Corporation achieves at least $2.5
million in sales in any period of twelve consecutive months,
Mr. Blundell will be paid a bonus of $50,000. Mr. Blundell's
employment contract provides that if such bonus target is
achieved and such bonus paid, he and the Corporation will
negotiate a new bonus arrangement. Mr. Blundell is entitled
to receive a death benefit of $1,000,000 payable to a
beneficiary named by him. The Corporation has obtained a life
insurance policy to fund this benefit. Mr. Blundell's
employment agreement will renew automatically from year to
year unless Mr. Blundell or the Corporation gives notice of
termination to the other on or before May 1 of any year
beginning in 1999. In the event that the Corporation
terminates the contract other than for cause, or in the event
of a change of control or a sale of substantially all the
assets of the Corporation, Mr. Blundell is entitled to
receive a payment equivalent to two year's benefits under the
contract. The sale of COPERNICUS constituted such a sale and
Mr. Blundell has verbally indicated his willingness to
receive a lesser amount. Negotiations are currently underway
to determine this amount.
Mr. Brann: Term: Three years with a remaining term of
approximately one year(1995-1998); Base Salary: $125,000 per
annum (Mr. Brann has waived $25,000 per annum of this Base
Salary (which is not being accrued) until such time as the
Corporation would otherwise be able to report a pre-tax
annual profit in excess of $75,000); Common Stock Award: Mr.
Brann received 26,667 shares of Common Stock. Mr. Brann is
entitled to a death benefit of $1,000,000 payable to a
beneficiary named by him. The Corporation has obtained a life
insurance policy to fund this benefit. Mr. Brann's employment
agreement will renew automatically from year to year unless
Mr. Brann or the Corporation gives notice of termination to
the other on or before May 1 of any year beginning in 1999.
Mr. Brann's employment as Vice President of Technology was
terminated on March 21, 1996 when his visa to work in the
United States expired. On May 13, 1997 the Corporation
entered into an agreement with John Brann, the former
Secretary and Vice President of the Corporation, to terminate
his employment agreement with the Corporation (the
"Termination Agreement"). Termination of Mr. Brann's
employment was a condition under the purchase agreement with
VIE. As consideration for the termination under the
Termination Agreement the Corporation agreed to pay Mr. Brann
a total of $50,000. The Corporation will receive a $30,000
loan from Mr. Brann to be repaid under the following terms
(a) 50% of all royalties due to the Corporation under the
purchase agreement with VIE up to a total of $40,000, or (b)
full payment of the principal of the loan at any time
including interest at 8% per annum.
Mr. Caltabiano: Term: Three years (but terminated as set
forth below); Base Salary: $100,000 per annum plus
commissions on sales; Common Stock Award: Mr. Caltabiano
received 20,000 shares of Common Stock, 15,000 of which have
vested. On September 25, 1996, Mr. Caltabiano left the
Corporation and the employment agreement was terminated for
5,000 shares of Common Stock, and a $46,000 termination fee.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
INTRODUCTION
The Compensation Committee of the Board of Directors (the
"Committee") is composed of the individuals listed below, who
are independent outside directors of the Corporation. The
Committee has sole responsibility for all compensation
matters with respect to the Corporation's senior management.
PHILOSOPHY
The Corporation seeks to attract, motivate and retain senior
management by providing a fully competitive total
compensation opportunity based on performance. The
compensation package of each member of senior management
consists of two key elements: (1) base salary which reflects
competitive marketplace data and evaluated individual
performance; and (2) long-term stock-based incentive
opportunities consisting of annual stock option grants. The
long-term stock-based incentive opportunities are intended to
align the interests of senior management with those of the
Corporation's shareholders.
The Corporation's executive compensation program is
structured so that at higher management levels a larger
portion of total compensation is composed of long-term stock-
based compensation.
The Committee strives to balance short- and long-term
incentive objectives and to employ prudent judgment in
establishing financial performance criteria, evaluating
performance and determining actual incentive payments.
Following is a discussion of each of the elements of the
Program and a description of the specific decisions and
actions taken by the Committee with regard to compensation
for the fiscal year ended March 31, 1997.
PROGRAM COMPETITIVENESS
Each element of the compensation arrangements for senior
management is intended to be fully competitive with
comparable elements of competitor companies in the computer
software industry. Salary ranges are established for each
position using published survey information of computer
software industry compensation practices, which includes
reports from the Gartner Group, a technology consulting
company, and accounting companies.
The long-term incentive option grant guidelines are reviewed
by the Committee based upon total options granted to
employees of the Corporation, seniority and position. These
grant guidelines are intended to provide competitive long-
term compensation opportunities if the assumptions as to goal
achievement and stock price growth are realized.
ANNUAL SALARY AND BONUSES
Annual total cash compensation for senior management consists
of base salary and bonus. The base salaries for senior
executives other than the CEO are recommended by Mr. Blundell
based on the competitive marketplace, evaluated position
responsibilities and individual performance, and are reviewed
and approved by the Committee. Bonuses are awarded as
compensation for extraordinary goals achieved by individual
members. No bonuses were awarded in the fiscal year ended
March 31, 1997. Mr. Caltabiano received a 2% commission on
all sales of the Corporation's COPERNICUS software. Mr.
Blundell's employment contract provides that he will be paid
a bonus of $50,000 if the Corporation achieves at least $2.5
million in sales in any twelve consecutive months.
LONG-TERM INCENTIVE COMPENSATION
The long-term incentive compensation program for senior
management consists of stock options. All option awards were
granted under the Corporation's Stock Option Plan, which Plan
was approved by shareholders on September 13, 1994 and
amended by shareholders October 12, 1996. Stock options
provide the right to purchase shares of Common Stock at the
fair market value (the average of the high and low trading
prices) on the date of grant. These grants are awarded under
the general principal that larger grants will be made to
employees at higher salary and management levels. Each stock
option becomes exercisable one year after grant, and has a
ten-year maximum term.
The size of the awards of stock options are not reduced for
any current stock holdings or previous awards held by a
participant.
FISCAL YEAR ENDED MARCH 31, 1997 CEO COMPENSATION
Mr. Blundell's base salary is fixed in his employment
contract. The appropriateness of his base salary is reviewed
annually by the Committee. As part of its review, the
Committee considers competitive CEO base salary information
from computer software industry companies identified by the
Committee, Mr. Blundell's individual performance and
contributions since his last review, and the merit increase
guidelines in effect for other salaried employees during this
period.
In early 1997, the Committee reviewed and approved the 1997
Executive Stock Option Plan for the Corporation's management
employees, including Mr. Blundell and the other Named
Officers.
The option awards granted under the Stock Option Plan which
the Committee approved for Mr. Blundell were made in
accordance with the grant guidelines established in 1995. Mr.
Blundell's awards for the year ended March 31, 1997 consist
of up to 149,999 stock option shares, and are disclosed in
the Option Grants Table along with the awards for the fiscal
year ended March 31, 1997 to the other Named Officers.
CLOSING STATEMENT
The Committee believes that the caliber and motivation of the
Corporation's key employees and the quality of their
leadership makes a significant difference in the long-term
performance of the Corporation. The Committee further
believes that compensation should vary with the Corporation's
financial performance so that executives are well rewarded
when performance meets or exceeds standards established by
the Committee.
In its view, the Committee believes that New Paradigm
Software Corp.'s executive compensation program is meeting
and fulfilling the goals contained in the program's
philosophy.
The foregoing report has been furnished by
Mr. Gordon (Chairman)
Mr. Taylor
The Compensation Committee Report on Executive Compensation
shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission or
subject to Regulation 14A or 14C under the Securities
Exchange Act of 1934 or to the liabilities of Section 18 of
such Act.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The Compensation Committee is comprised of Mr. Gordon and Mr.
Taylor. Mr. Gordon and Mr. Taylor served on the Compensation
Committee during the entire fiscal year ended March 31, 1997.
Mr. Gordon, a member of the Committee, has been the Chairman
of the Board of Directors of the Corporation since its
inception. No member of the Committee was an officer or
employee of the Corporation or any of its subsidiaries during
the fiscal year ended March 31, 1997 or at any prior time.
In addition, there are no transactions, relationships or
indebtedness for which disclosure is required under the rules
of the Securities and Exchange Commission with respect to any
member of the Committee.
CERTAIN TRANSACTIONS
The following is a discussion of certain transactions entered
into by the Corporation with officers, directors, security
holders and affiliates thereof. The Corporation believes that
the terms of these transactions were no less favorable to the
Corporation than would have been obtained from a non-
affiliated third party for similar transactions at the time
of entering into such transactions.
The Corporation has adopted a policy whereby any future
transactions between the Corporation and its directors,
officers, principal shareholders and other affiliates, will
be on terms no less favorable to the Corporation than could
be obtained from unaffiliated third persons on an arm's-
length basis at the time that the transaction was entered
into and will be reviewed and approved by a majority of the
Corporation's directors, including a majority of the
Corporation's independent disinterested directors.
Issuance of Securities to Directors, Executive
Officers and Their Affiliates
In a private placement of the Corporation's securities for
which a closing was held on October 20, 1994 (the "1994
Financing"), Mr. Blundell purchased for $15,000 a fractional
unit comprised of (i) a two-year promissory note with an
increasing interest rate starting at 10% per annum (a "1994
Note") in the principal amount of $15,000 and (ii) 1994
Warrants exercisable for 12,000 shares of Common Stock; Mr.
Brann purchased for $5,000 a fractional unit comprised of (i)
a 1994 Note in the principal amount of $5,000 and (ii) 1994
Warrants exercisable for 4,000 shares of Common Stock; Mr.
Blundell subsequently transferred 1994 Warrants exercisable
for 6,667 shares of Common Stock. The shares of Common Stock
issuable upon exercise of the 1994 Warrants purchased in the
1994 Financing by the foregoing directors and executive
officers are registered for sale under the Securities Act of
1933.
On March 22, 1995, 33,333 shares of Common Stock and warrants
(the "MBA Warrants"), which are exercisable for 33,333 shares
of Common Stock at an exercise price of $5.63 per share,
subject to adjustment under certain circumstances, were
issued to Lancer Holdings (formally Mark Blundell &
Associates) in connection with the Corporation's acquisition
of certain software from Lancer. The MBA Warrants will expire
on March 21, 2000 and are not redeemable. The Corporation's
Chief Executive Officer and President, Mark Blundell, and its
former director and Vice President of Technology, John Brann,
collectively own 66% of the voting stock of Lancer. Messrs.
Blundell and Brann have no direct or indirect interest in the
remaining 34% of the voting stock of Lancer. Messrs. Blundell
and Brann are the only directors of Lancer Holdings and Mr.
Blundell is a director of the Corporation.
See "Executive Compensation - Directors Compensation" and
"Options Grants in Fiscal Year Ended March 31, 1997" with
respect to options granted to directors and executive
officers of the Corporation during the fiscal year ended
March 31, 1997.
Other Transactions
Mr. Jeff Kahn, a former director, is the President of Kahn
Communications Group Inc.("KCG"), a division of Ruder Finn.
Kahn Communications Group provided public relations services
to the Corporation from its inception until December 1996 for
which it received a monthly fixed fee from the Corporation of
$5,000. KCG also provided special event related marketing
services to the Corporation for which it received additional
fees on a per engagement basis. In the fiscal year ended
March 31, 1996, KCG received $88,589 and in the fiscal year
ended March 31, 1997, in such fees. The Corporation ceased
using the services of KCG in December 1996 following the
termination of the Corporation's marketing program.
On September 1, 1995 the Corporation entered into a
consulting contract with Corporate Growth Services, a
corporation owned by Mr. Gordon, Chairman of the Board of
Directors. Corporate Growth Services provides small
development stage companies with management consulting. Under
the terms of the contract Corporate Growth Services receives
a consulting fee of $2,000 per month over and above any fees
Mr. Gordon receives for attending meetings of the Board of
Directors. In the fiscal year ended March 31, 1996 Corporate
Growth Services received $18,000 in such fees and in the
fiscal year ended March 31, 1997, $24,000.
Effective March 31, 1996, the Corporation entered into a
five-year value added reseller agreement with Petra, Inc.
("Petra"). Petra's president, Mr. Barrington J. Fludgate, is
a consultant to and a former director of the Corporation. The
Corporation granted to Petra the right to license and
distribute the Corporation's COPERNICUS software program
integrated with Petra's products. Petra never paid the
license fee of $100,000 due to the Corporation on September
30, 1996, and consequently the Corporation terminated the
agreement.
Loan from Mr. Robert Trump
In early January, 1997, in order to continue operating, the
Corporation solicited a $150,000 loan from Mr. Robert Trump
which was received on January 16, 1997. The principal terms
of this loan were as follows:
o Advance: $150,000.
o Term: 6 months (originally to expire July 14th, 1997).
o Interest Rate: To be paid in warrants, see below.
o Warrants: 150,000 three-year warrants with an
exercise price of $2.00 per share, in lieu of interest.
Other terms: The 180,000 Midland Warrants, held by Midland
Associates, an affiliate of Mr. Trump, were amended as
follows: The expiration date was changed from August 11,
1998 to January 16, 2002 and the exercise price reduced from
$3.75 to $2.00 per share.
Series C Redeemable Preferred Stock
On March 13, 1997, Mr. Robert Trump agreed to advance the
Corporation a further $50,000 which the Corporation urgently
required in order to continue its operations and meet its
payroll obligations. The earlier $150,000 advance and the
March 13, 1997 $50,000 advance were combined into $200,000 to
be used to subscribe for 800,000 shares of Series C
Redeemable Preferred Stock, $0.01 par value, with the
following principal terms:
o Each Series C Redeemable Preferred Share had four (4) votes
on any matter to be put to a vote of the Corporation's
shareholders.
o The Series C Redeemable Preferred Stock could be redeemed
at the Corporation's option at any time upon payment of $200,000.
o The Series C Redeemable Preferred Stock could be redeemed
at the holder's option following any investment in the
Corporation or a sale of any of the Corporation's assets
where the proceeds are $2,000,000 or more.
o The Series C Redeemable Preferred Stock had preference in
the event of any liquidation of the Corporation to the
extent of $200,000.
The Corporation redeemed the Series C Redeemable Preferred
Stock using $200,000 of the proceeds of the sale of
COPERNICUS on July 23, 1997
In October 1997, pursuant to Section 4(d) of the Restated
Certificate of Incorporation of the Corporation, the
Corporation created a Series D Convertable Preferred Stock,
$0.01 par value (the "Series D Preferred"). The Corporation
granted several of the employees of its New Paradigm Inter-
Link, Inc. ("NPIL") subsidiary an aggrigate of 100 shares of
Series D Perferred stock, with the following principal terms:
o The Series D Preferred has no right to vote on any matter
requiring the vote of the holders of the Common Stock.
Holders of Series D Preferred shall have the
right to vote on any further issue of Series D
Preferred recommended by the Board of Directors of the Corporation.
o The Series D Preferred is not entitled to any dividends
or other distribution on the Common Stock.
o Upon dissolution of the Corporation the holder of each
share of Series D Preferred is entitled to the same
proportion of the outstanding shares of Common Stock of
NPIL as such shares of Series D Preferred of
the holder shall represent of the then total outstanding
shares of Series D Preferred.
o At any time following December 31, 1998 the holders of
the Series D Preferred may convert all of the Series D
Preferred into shares of the Corporation's Common Stock
using the following formula N=((V-$200,000)/(Dx2))/P where
N is the number of shares of the Corporation's Common
Stock acquired by the holder, V is the value of NPIL on
the conversion date, D is the number of shares of Series D
Preferred issued and outstanding on the conversion date
and P is the value of the Common Stock of the Corporation,
all as calculated pursuant to the terms of the Amended
Certificate of Incorporation. 500,000 shares of Common
Stock of the Corporation have been reserved for such a
conversion.
o Should no conversion by the holders of the Series D
Preferred occur by December 31, 2000, the
Corporation may redeem all of the shares of the Series D
Preferred for $1.00 per share.
2. PROPOSAL TO ELIMINATE THE APPLICABILITY OF SECTION 912 OF THE BCL
The Board of Directors recommends that the shareholders
approve an amendment to the Corporation's By-Laws by the
adoption of a new Section 6.5 which will provide that Section
912 of the BCL shall not apply to the Corporation. The text
of the proposed new Section 6.5 of the Corporation's By-Laws
is set forth below and the text of Section 912 of the BCL
(referred to herein as "Section 912") is set forth in
Appendix A. The description of Section 912 which follows is
qualified in its entirety by reference to the text of Section 912.
The Corporation, as a New York corporation, is subject to the
BCL, including Section 912, an anti-takeover provision. In
general, Section 912 restricts the ability of a public New
York corporation to engage in a "business combination" with
an "interested shareholder" for a period of five years after
the date of the transaction in which the person became an
interested shareholder. As a result, potential acquirors of
the Corporation may find it more difficult or be discouraged
from attempting to effect an acquisition transaction with the
Corporation, thereby possibly depriving holders of the
securities issued by the Corporation of certain opportunities
to sell or otherwise dispose of such securities at a premium
pursuant to such transactions. Section 912 is described in
greater detail below.
The Corporation can elect not to be governed by these
provisions by adopting an amendment to its By-Laws. The new
By-Law Section would not be effective until 18 months after
the Corporation's shareholders have approved it and would not
apply to a business combination with an interested
shareholder who became an interested shareholder on or prior
to the effective date of such amendment. In order to opt out
of these provisions, the Board of Directors has approved and
recommended to the Corporation's shareholders the amendment
of the Corporation's By-Laws by adding to the By-Laws the
following new Section 6.5:
SECTION 6.5. Inapplicability of Section 912 of the New
York Business Corporation Law. Pursuant to subsection
(d)(3)(iii) of Section 912 of the New York Business
Corporation Law, the Corporation hereby elects, to the
maximum extent authorized by such subsection, that
Section 912 shall not apply to the Corporation or to any
business combination involving the Corporation.
In addition, directors Mark Blundell and Daniel A. Gordon
have agreed that they would vote in favor of such amendment.
Section 912
Section 912 defines "business combination" broadly to include
a wide range of transactions involving the Corporation or the
Corporation's assets or securities. Section 912, subject to
certain exceptions, prohibits the Corporation from engaging
in any business combination with any interested shareholder
for five years after the date the interested shareholder
first became an interested shareholder (the "stock
acquisition date") unless the business combination or the
purchase of shares made by the interested shareholder is
approved by the Board of Directors before the interested
shareholder's stock acquisition date.
Further, Section 912 prohibits any business combination with
an interested shareholder, even one following the expiration
of five years after his stock acquisition date, unless either
(i) the business combination or the purchase of shares by the
interested shareholder is approved by the Board of Directors
before the shareholder's stock acquisition date, or (ii) the
business combination is approved by the affirmative vote of
the holders of stock representing a majority of the
outstanding voting stock not beneficially owned by the
interested shareholder at a meeting called for that purpose
no earlier than five years after the interested shareholder's
stock acquisition date, or (iii) the aggregate value of
consideration to be received by the holders of the
Corporation's Common Stock and by the holders of any other
class or series of shares satisfies certain standards
specified in Section 912, the consideration to be received by
the shareholders is distributed promptly and is in cash or
the same form as the interested shareholder used to acquire
the largest number of shares previously acquired by such
shareholder, and except as specified in the statute, the
interested shareholder has not become the beneficial owner of
any additional voting shares of the Corporation after the
stock acquisition date and before the date of consummation of
the business combination.
"Interested shareholder" is defined under Section 912 as any
person (other than the Corporation or any of its
subsidiaries) who beneficially owns, directly or indirectly,
20% or more of the Corporation's outstanding voting stock, or
any affiliate or associate of the Corporation who, at any
time within five years immediately before the date in
question, was the beneficial owner of 20% or more of the
Corporation's then outstanding voting stock.
Section 912 permits friendly, negotiated transactions which
are approved in advance by the Board of Directors. It
restricts a hostile acquiror's flexibility in acquiring the
Corporation and may help prevent unfair, coercive, abusive or
self-dealing activities which accompany or follow some
hostile acquisitions, particularly those which are highly
leveraged. Opting out of Section 912 will make the
Corporation more vulnerable to a hostile takeover and reduce
the role of the Board of Directors in opposing any such
takeover. However, the Board of Directors favors the
proposed amendment because it believes it unlikely that the
Corporation will, in the foreseeable future, be involved in a
hostile takeover, opting out of Section 912 may enhance the
Corporation's ability to raise new capital and the Board of
Directors will have other available alternatives to thwart
any takeover attempt which the Board of Directors determines
is not in the best interests of the Corporation and its
shareholders.
Background of Amendment
The Board of Directors approved the proposed amendment at a
meeting held on June 25, 1995 after considering concerns
about Section 912 expressed by the California Department of
Corporations in response to the Corporation's application to
qualify its initial public offering in California. The
Department of Corporations expressed concern about provisions
the effect of which is to exclude shares from voting or to
enable supermajority voting in excess of 66 2/3% of
outstanding shares entitled to vote. As noted above, under
some circumstances Section 912 excludes shares held by an
interested shareholder proposing a combination covered by
Section 912 from voting to approve that business combination.
Unless the Corporation undertook to recommend to its
shareholders that they approve the proposed amendment, the
Department of Corporations would not have approved the
Corporation's application. The Board of Directors determined
that such approval was critical to the success of the
Corporation's then pending initial public offering and
therefore more important to the Corporation's ongoing
viability than the hypothetical possibility that the
Corporation might benefit from the protection against hostile
takeovers offered by Section 912, particularly in light of
the relatively concentrated ownership of the Corporation's
Common Stock. In addition, the Board of Directors believes
it to be in the Corporation's best interest to eliminate
restrictions imposed by Section 912 which might discourage or
delay new investment in the Corporation by investors desiring
to acquire significant amounts of the Corporation's shares.
Robert S. Trump, Midland Associates, Lancer Holdings, Mark
Blundell and John Brann may currently be deemed to be
"interested shareholders" within the meaning of Section 912.
Section 912 provides that the proposed amendment to the
Corporation's By-Laws would not be effective until 18 months
after the Corporation's shareholders approve it and the
proposed amendment would not apply to a business combination
with an interested shareholder who became an interested
shareholder on or prior to the effective date of such
amendment. The Corporation is not a party to, and is unaware
of, any arrangements, agreements, negotiations, or
understandings with respect to any transaction covered by
Section 912 or similar transaction, and no such transaction
is currently under consideration by the Corporation.
Required Vote
Adoption of the proposed amendment requires the affirmative
vote of the holders (excluding interested shareholders and
their affiliates and associates) of a majority of the
outstanding voting stock (excluding the voting stock of
interested shareholders and their affiliates and associates.)
Accordingly, the proposed amendment must be approved by the
affirmative vote of a majority of shares of Common Stock
outstanding on the Record Date, excluding shares held by
Robert S. Trump, Midland Associates, Lancer Holdings, Mark
Blundell and John Brann. Under the BCL, shareholders will
have no appraisal or similar dissenters' rights with respect
to action on the proposed amendment.
THE BOARD OF DIRECTORS' RECOMMENDATION
Your Board recommends that you vote FOR this resolution.
Unless otherwise specified by the shareholder, the Board
intends the accompany proxy to be voted for this resolution.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
During the year ended March 31, 1996, BDO Seidman, LLP
audited the consolidated financial statements of the
Corporation and its subsidiaries.
The Board of Directors, after receiving a favorable
recommendation from the Audit Committee, has again selected
BDO Seidman, LLP to serve as the Corporation's independent
certified public accountants for the fiscal year ending March
31, 1997. Although not required to do so, the Board is
submitting the selection of this firm for ratification by the
Corporation's shareholders to ascertain their views. Should a
majority of the shareholders vote against the ratification of
BDO Seidman, LLP as independent certified public accountants
the audit committee will select a different certified public
acccountant for this role. BDO Seidman, LLP has advised the
Corporation that it has no direct, nor any material indirect,
financial interest in the Corporation or any of its
subsidiaries. A representative of BDO Seidman, LLP is
expected to be present at the Annual Meeting with the
opportunity to make a statement if the representative desires
to do so, and such representative will be available to
respond to appropriate questions.
The following resolution will be offered by the Board of
Directors at the Annual Meeting:
RESOLVED: That the selection by the Board of Directors
of BDO Seidman, LLP as independent certified public
accountants for this Corporation and its subsidiaries for the
year ended March 31, 1997 be, and hereby is, ratified and
approved.
The approval by a majority of the votes cast at the Annual
Meeting on the proposal to ratify the appointment of BDO
Seidman, LLP as the independant certified public accountants
of the Corporation is required to adopt the proposal.
THE BOARD OF DIRECTORS' RECOMMENDATION
Your Board recommends that you vote FOR this resolution.
Unless otherwise specified by the shareholder, the Board
intends the accompanying proxy to be voted for this
resolution.
4. OTHER MATTERS
The Board of Directors knows of no other matters to be
brought before the Annual Meeting. However, if other matters
should properly come before the Annual Meeting, it is the
intention of those named in the solicited proxy to vote such
proxy in accordance with their best judgment.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934
("Section 16(a)") requires the Corporation's directors,
executive officers, and persons who own more than 10% of a
registered class of the Corporation's equity securities, to
file with the Securities and Exchange Commission reports on
Forms 3, 4 and 5 concerning their ownership of the Common
Stock and other equity securities of the Corporation.
Based solely on the Corporation's review of copies of such
reports and written representations that no other reports
were required, the Corporation believes that all its
officers, directors and greater than ten percent beneficial
owners complied with all filing requirements applicable to
them with respect to transactions during the fiscal year
ended March 31, 1997.
SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING OF
SHAREHOLDERS
Shareholder proposals may be submitted for inclusion in the
Corporation's proxy statement and form of proxy for the 1998
Annual Meeting of Shareholders. Shareholders wishing to have
a proposal included in the Corporation's proxy materials must
comply with the applicable requirements of the Securities
Exchange Act of 1934 and the rules and regulations thereunder
and shall have the rights provided by Rule 14a-8 under such
Act. In order to be eligible under Rule 14a-8 for inclusion
in the Corporation's proxy statement and accompanying proxy
for the 1998 Annual Meeting of Shareholders, shareholder
proposals must be received by the Corporation on or before
April 18, 1998. Any such proposal should be submitted in
writing by notice delivered or mailed, postage prepaid, to
the Secretary of the Corporation, 630 Third Avenue, 15th
Floor, New York, New York 10017.
The Corporation's By-Laws contain procedures for shareholder
nomination of directors and for other shareholder proposals
to be presented before annual and other shareholder meetings.
The By-Laws provide that nominations of persons for election
to the Board of Directors of the Corporation may be made at
an annual meeting of shareholders or at a special meeting of
shareholders for which notice of an election of a director or
directors has been duly given by any shareholder of the
Corporation entitled to vote for election of directors at the
meeting who complies with the notice procedures described
below. Such nominations may be made only pursuant to timely
notice in proper written form to the Secretary of the
Corporation. To be timely, a shareholder's request to
nominate a person for director, together with the written
consent of such person to serve as director, must be received
by the Secretary of the Corporation before the close of
business on the eighth day following the day on which notice
of such meeting is given to shareholders. To be in proper
written form, such shareholder's notice shall set forth in
writing (a) as to each person whom the shareholder proposes
to nominate for election or re-election as a director (1) the
name, age, business address and residence address for such
person, (2) the principal occupation or employment of such
person, (3) the class and number of shares of stock of the
Corporation that are beneficially owned by such person, and
(4) such other information relating to such person as is
required to be disclosed in solicitations of proxies for
election of directors, or as otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act
of 1934 and any successor to such Regulation; and (b) as to
the shareholder giving the notice (1) the name and address,
as they appear on the Corporation's books, of such
shareholder, (2) the class and number of shares of stock of
the Corporation that are beneficially owned by such
shareholder, and (3) a representation that the shareholder is
a holder of record of stock of the Corporation entitled to
vote at such meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons
specified in the notice. The Corporation may require any
proposed nominee to furnish such other information as may
reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as a director
of the Corporation or the shareholder to nominate the
proposed nominee.
With respect to shareholder proposals or other business to be
considered at an annual or other meeting of shareholders, the
By-Laws provide that in addition to any other applicable
requirements for business to be properly brought before a
meeting by a shareholder, the shareholder must have given
timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal
executive offices of the Corporation, not less than 90 days
prior to the meeting. A shareholder's notice to the
Secretary shall set forth as to each matter the shareholder
proposes to bring before the meeting (1) a brief description
of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting, (2)
the name and record address of the shareholder proposing such
business, (3) the class and number of shares of the
Corporation that are beneficially owned by the shareholder,
and (4) any material interest of the shareholder in such
business. In addition, any such shareholder shall be
required to provide such further information as may be
requested by the Corporation in advance to comply with
federal securities laws, rules and regulations. The
Corporation may require evidence by any person giving such
notice that such person is a bona fide beneficial owner of
the Corporation's stock.
A copy of the By-Laws is available upon request to the
Secretary of the Corporation, 630 Third Avenue Avenue, 15th
Floor, New York, New York 10017. The person presiding at the
meeting is authorized to determine if a proposed matter is
properly before the meeting if a nomination is properly made.
The procedures for shareholder nominations of directors and
proposal of other business described above may have the
effect of precluding a nomination for election of a director
or directors or proposal of other business at a particular
meeting if the required procedure is not followed.
FORM 10-K ANNUAL REPORT
Any shareholder who desires a copy of the
Corporation's Annual Report on Form 10-K for the
fiscal year ended March 31, 1997 filed with the
Securities and Exchange Commission may obtain a copy
(excluding exhibits) without charge by addressing a
request to the Secretary of the Corporation at 630
Third Avenue, 15th Floor, New York, New York 10017.
Exhibits also may be requested, but a charge equal to
the reproduction cost thereof will be made.
By Order of the Board of Directors
Matthew Fludgate
Secretary
New York, New York
October 7, 1997
APPENDIX A
912. Requirements relating to certain business combinations
(a) For the purposes of this section:
(1) "Affiliate" means a person that directly, or
indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, a
specified person.
(2) "Announcement date", when used in reference to any
business combination, means the date of the first public
announcement of the final, definitive proposal for such
business combination.
(3) "Associate", when used to indicate a relationship
with any person, means (A) any corporation or
organization of which such person is an officer or
partner or is, directly or indirectly, the beneficial
owner of ten percent or more of any class of voting
stock, (B) any trust or other estate in which such
person has a substantial beneficial interest or as to
which such person serves as trustee or in a similar
fiduciary capacity, and (C) any relative or spouse of
such person, or any relative of such spouse, who has the
same home as such person.
(4) "Beneficial owner", when used with respect to any
stock, means a person:
(A) that, individually or with or through any of
its affiliates or associates, beneficially owns
such stock, directly or indirectly; or
(B) that, individually or with or through any of
its affiliates or associates, has (i) the right to
acquire such stock (whether such right is
exercisable immediately or only after the passage
of time), pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon
the exercise of conversion rights, exchange
rights, warrants or options, or otherwise;
provided, however, that a person shall not be
deemed the beneficial owner of stock tendered
pursuant to a tender or exchange offer made by such
person or any of such person's affiliates or
associates until such tendered stock is accepted
for purchase or exchange; or (ii) the right to vote
such stock pursuant to any agreement, arrangement
or understanding (whether or not in writing);
provided, however, that a person shall not be
deemed the beneficial owner of any stock under this
item if the agreement, arrangement or understanding
to vote such stock (X) arises solely from a
revocable proxy or consent given in response to a
proxy or consent solicitation made in accordance
with the applicable rules and regulations under the
Exchange Act and (Y) is not then reportable on a
Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(C) that has any agreement, arrangement or
understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except
voting pursuant to a revocable proxy or consent as
described in item (ii) of clause (B) of this
subparagraph), or disposing of such stock with any
other person that beneficially owns, or whose
affiliates or associates beneficially own, directly
or indirectly, such stock.
(5) "Business combination", when used in reference to
any domestic corporation and any interested shareholder
of such corporation, means:
(A) any merger or consolidation of such corporation
or any subsidiary of such corporation with (i) such
interested shareholder or (ii) any other
corporation (whether or not itself an interested
shareholder of such corporation) which is, or after
such merger or consolidation would be, an affiliate
or associate of such interested shareholder;
(B) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction
or a series of transactions) to or with such
interested shareholder or any affiliate or
associate of such interested shareholder of assets
of such corporation or any subsidiary of such
corporation (i) having an aggregate market value
equal to ten percent or more of the aggregate
market value of all the assets, determined on a
consolidated basis, of such corporation, (ii)
having an aggregate market value equal to ten
percent or more of the aggregate market value of
all the outstanding stock of such corporation, or
(iii) representing ten percent or more of the
earning power or net income, determined on a
consolidated basis, of such corporation;
(C) the issuance or transfer by such corporation or
any subsidiary of such corporation (in one
transaction or a series of transactions) of any
stock of such corporation or any subsidiary of such
corporation which has an aggregate market value
equal to five percent or more of the aggregate
market value of all the outstanding stock of such
corporation to such interested shareholder or any
affiliate or associate of such interested
shareholder except pursuant to the exercise of
warrants or rights to purchase stock offered, or a
dividend or distribution paid or made, pro rata to
all shareholders of such corporation;
(D) the adoption of any plan or proposal for the
liquidation or dissolution of such corporation
proposed by, or pursuant to any agreement,
arrangement or understanding (whether or not in
writing) with, such interested shareholder or any
affiliate or associate of such interested
shareholder;
(E) any reclassification of securities (including,
without limitation, any stock split, stock
dividend, or other distribution of stock in respect
of stock, or any reverse stock split), or
recapitalization of such corporation, or any merger
or consolidation of such corporation with any
subsidiary of such corporation, or any other
transaction (whether or not with or into or
otherwise involving such interested shareholder),
proposed by, or pursuant to any agreement,
arrangement or understanding (whether or not in
writing) with, such interested shareholder or any
affiliate or associate of such interested
shareholder, which has the effect, directly or
indirectly, of increasing the proportionate share
of the outstanding shares of any class or series of
voting stock or securities convertible into voting
stock of such corporation or any subsidiary of such
corporation which is directly or indirectly owned
by such interested shareholder or any affiliate or
associate of such interested shareholder, except as
a result of immaterial changes due to fractional
share adjustments; or
(F) any receipt by such interested shareholder or
any affiliate or associate of such interested
shareholder of the benefit, directly or indirectly
(except proportionately as a shareholder of such
corporation) of any loans, advances, guarantees,
pledges or other financial assistance or any tax
credits or other tax advantages provided by or
through such corporation.
(6) "Common stock" means any stock other than preferred
stock.
(7) "Consummation date", with respect to any business
combination, means the date of consummation of such
business combination, or, in the case of a business
combination as to which a shareholder vote is taken, the
later of the business day prior to the vote or twenty
days prior to the date of consummation of such business
combination.
(8) "Control", including the terms "controlling",
"controlled by" and "under common control with", means
the possession, directly or indirectly, of the power to
direct or cause the direction of the management and
policies of a person, whether through the ownership of
voting stock, by contract, or otherwise. A person's
beneficial ownership of ten percent or more of a
corporation's outstanding voting stock shall create a
presumption that such person has control of such
corporation. Notwithstanding the foregoing, a person
shall not be deemed to have control of a corporation if
such person holds voting stock, in good faith and not
for the purpose of circumventing this section, as an
agent, bank, broker, nominee, custodian or trustee for
one or more beneficial owners who do not individually or
as a group have control of such corporation.
(9) "Exchange Act" means the Act of Congress known as
the Securities Exchange Act of 1934, as the same has
been or hereafter may be amended from time to time.
(10) "Interested shareholder", when used in reference to
any domestic corporation, means any person (other than
such corporation or any subsidiary of such corporation)
that
(A)(i) is the beneficial owner, directly or
indirectly, of twenty percent or more of the
outstanding voting stock of such corporation; or
(ii) is an affiliate or associate of such
corporation and at any time within the five-year
period immediately prior to the date in question
was the beneficial owner, directly or indirectly,
of twenty percent or more of the then outstanding
voting stock of such corporation; provided that
(B) for the purpose of determining whether a person
is an interested shareholder, the number of shares
of voting stock of such corporation deemed to be
outstanding shall include shares deemed to be
beneficially owned by the person through
application of subparagraph four of this paragraph
but shall not include any other unissued shares of
voting stock of such corporation which may be
issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
(11) "Market value", when used in reference to stock or
property of any domestic corporation, means:
(A) in the case of stock, the highest closing sale
price during the thirty-day period immediately
preceding the date in question of a share of such
stock on the composite tape for New York stock
exchange-listed stocks, or, if such stock is not
quoted on such composite tape or if such stock is
not listed on such exchange, on the principal
United States securities exchange registered under
the Exchange Act on which such stock is listed, or,
if such stock is not listed on any such exchange,
the highest closing bid quotation with respect to a
share of such stock during the thirty-day period
preceding the date in question on the National
Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or if
no such quotations are available, the fair market
value on the date in question of a share of such
stock as determined by the board of directors of
such domestic corporation in good faith; and
(B) in the case of property other than cash or
stock, the fair market value of such property on
the date in question as determined by the board of
directors of such corporation in good faith.
(12) "Preferred stock" means any class or series of
stock of a domestic corporation which under the by-laws
or certificate of incorporation of such corporation is
entitled to receive payment of dividends prior to any
payment of dividends on some other class or series of
stock, or is entitled in the event of any voluntary
liquidation, dissolution or winding up of the
corporation to receive payment or distribution of a
preferential amount before any payments or distributions
are received by some other class or series of stock.
(13) [Repealed]
(14) "Stock" means:
(A) any stock or similar security, any certificate
of interest, any participation in any profit
sharing agreement, any voting trust certificate, or
any certificate of deposit for stock; and
(B) any security convertible, with or without
consideration, into stock, or any warrant, call or
other option or privilege of buying stock without
being bound to do so, or any other security
carrying any right to acquire, subscribe to or
purchase stock.
(15) "Stock acquisition date", with respect to any
person and any domestic corporation, means the date that
such person first becomes an interested shareholder of
such corporation.
(16) "Subsidiary" of any person means any other
corporation of which a majority of the voting stock is
owned, directly or indirectly, by such person.
(17) "Voting stock" means shares of capital stock of a
corporation entitled to vote generally in the election
of directors.
(b) Notwithstanding anything to the contrary contained in
this chapter (except the provisions of paragraph (d) of this
section), no resident domestic corporation shall engage in
any business combination with any interested shareholder of
such domestic corporation for a period of five years
following such interested shareholder's stock acquisition
date unless such business combination or the purchase of
stock made by such interested shareholder on such interested
shareholder's stock acquisition date is approved by the board
of directors of such corporation prior to such interested
shareholder's stock acquisition date. If a good faith
proposal is made in writing to the board of directors of such
corporation regarding a business combination, the board of
directors shall respond, in writing, within thirty days or
such shorter period, if any, as may be required by the
Exchange Act, setting forth its reasons for its decision
regarding such proposal. If a good faith proposal to purchase
stock is made in writing to the board of directors of such
corporation, the board of directors, unless it responds
affirmatively in writing within thirty days or such shorter
period, if any, as may be required by the Exchange Act, shall
be deemed to have disapproved such stock purchase.
(c) Notwithstanding anything to the contrary contained in
this chapter (except the provisions of paragraphs (b) and (d)
of this section), no domestic corporation shall engage at any
time in any business combination with any interested
shareholder of such resident domestic corporation other than
a business combination specified in any one of subparagraph
(1), (2) or (3):
(1) A business combination approved by the board of
directors of such corporation prior to such interested
shareholder's stock acquisition date, or where the
purchase of stock made by such interested shareholder on
such interested shareholder's stock acquisition date had
been approved by the board of directors of such
corporation prior to such interested shareholder's stock
acquisition date.
(2) A business combination approved by the affirmative
vote of the holders of a majority of the outstanding
voting stock not beneficially owned by such interested
shareholder or any affiliate or associate of such
interested shareholder at a meeting called for such
purpose no earlier than five years after such interested
shareholder's stock acquisition date.
(3) A business combination that meets all of the
following conditions:
(A) The aggregate amount of the cash and the market
value as of the consummation date of consideration
other than cash to be received per share by holders
of outstanding shares of common stock of such
resident in such business combination is a [at]
least equal to the higher of the following:
(i) the highest per share price paid by such
interested shareholder at a time when he was
the beneficial owner, directly or indirectly,
of five percent or more of the outstanding
voting stock of such corporation, for any
shares of common stock of the same class or
series acquired by it (X) within the five-year
period immediately prior to the announcement
date with respect to such business
combination, or (Y) within the five-year
period immediately prior to, or in, the
transaction in which such interested
shareholder became an interested shareholder,
whichever is higher; plus, in either case,
interest compounded annually from the earliest
date on which such highest per share
acquisition price was paid through the
consummation date at the rate for one-year
United States treasury obligations from time
to time in effect; less the aggregate amount
of any cash dividends paid, and the market
value of any dividends paid other than in
cash, per share of common stock since such
earliest date, up to the amount of such
interest; and
(ii) the market value per share of common
stock on the announcement date with respect to
such business combination or on such
interested shareholder's stock acquisition
date, whichever is higher; plus interest
compounded annually from such date through the
consummation date at the rate for one-year
United States treasury obligations from time
to time in effect; less the aggregate amount
of any cash dividends paid, and the market
value of any dividends paid other than in
cash, per share of common stock since such
date, up to the amount of such interest.
(B) The aggregate amount of the cash and the market
value as of the consummation date of consideration
other than cash to be received per share by holders
of outstanding shares of any class or series of
stock, other than common stock, of such corporation
is at least equal to the highest of the following
(whether or not such interested shareholder has
previously acquired any shares of such class or
series of stock):
(i) the highest per share price paid by such
interested shareholder at a time when he was
the beneficial owner, directly or indirectly,
of five percent or more of the outstanding
voting stock of such corporation, for any
shares of such class or series of stock
acquired by it (X) within the five-year period
immediately prior to the announcement date
with respect to such business combination, or
(Y) within the five-year period immediately
prior to, or in, the transaction in which such
interested shareholder became an interested
shareholder, whichever is higher; plus, in
either case, interest compounded annually from
the earliest date on which such highest per
share acquisition price was paid through the
consummation date at the rate for one-year
United States treasury obligations from time
to time in effect; less the aggregate amount
of any cash dividends paid, and the market
value of any dividends paid other than in
cash, per share of such class or series of
stock since such earliest date, up to the
amount of such interest;
(ii) the highest preferential amount per share
to which the holders of shares of such class
or series of stock are entitled in the event
of any voluntary liquidation, dissolution or
winding up of such resident domestic
corporation, plus the aggregate amount of any
dividends declared or due as to which such
holders are entitled prior to payment of
dividends on some other class or series of
stock (unless the aggregate amount of such
dividends is included in such preferential
amount); and
(iii) the market value per share of such class
or series of stock on the announcement date
with respect to such business combination or
on such interested shareholder's stock
acquisition date, whichever is higher; plus
interest compounded annually from such date
through the consummation date at the rate for
one-year United States treasury obligations
from time to time in effect; less the
aggregate amount of any cash dividends paid,
and the market value of any dividends paid
other than in cash, per share of such class or
series of stock since such date, up to the
amount of such interest.
(C) The consideration to be received by holders of
a particular class or series of outstanding stock
(including common stock) of such corporation in
such business combination is in cash or in the same
form as the interested shareholder has used to
acquire the largest number of shares of such class
or series of stock previously acquired by it, and
such consideration shall be distributed promptly.
(D) The holders of all outstanding shares of stock
of such resident domestic corporation not
beneficially owned by such interested shareholder
immediately prior to the consummation of such
business combination are entitled to receive in
such business combination cash or other
consideration for such shares in compliance with
clauses (A), (B) and (C) of this subparagraph.
(E) After such interested shareholder's stock
acquisition date and prior to the consummation date
with respect to such business combination, such
interested shareholder has not become the
beneficial owner of any additional shares of voting
stock of such corporation except:
(i) as part of the transaction which resulted
in such interested shareholder becoming an
interested shareholder;
(ii) by virtue of proportionate stock splits,
stock dividends or other distributions of
stock in respect of stock not constituting a
business combination under clause (E) of
subparagraph five of paragraph (a) of this
section;
(iii) through a business combination meeting
all of the conditions of paragraph (b) of this
section and this paragraph; or
(iv) through purchase by such interested
shareholder at any price which, if such price
had been paid in an otherwise permissible
business combination the announcement date and
consummation date of which were the date of
such purchase, would have satisfied the
requirements of clauses (A), (B) and (C) of
this subparagraph.
(d) The provisions of this section shall not apply:
(1) to any business combination of a domestic
corporation that does not have a class of voting stock
registered with the Securities and Exchange Commission
pursuant to section twelve of the Exchange Act, unless
the certificate of incorporation provides otherwise; or
(2) to any business combination of a domestic
corporation whose certificate of incorporation has been
amended to provide that such corporation shall be
subject to the provisions of this section, which did not
have a class of voting stock registered with the
Securities and Exchange Commission pursuant to section
twelve of the Exchange Act on the effective date of such
amendment, and which is a business combination with an
interested shareholder whose stock acquisition date is
prior to the effective date of such amendment; or
(3) to any business combination of a domestic
corporation (i) the original certificate of
incorporation of which contains a provision expressly
electing not to be governed by this section, or (ii)
which adopts an amendment to such corporation's by-laws
prior to March thirty-first, nineteen hundred eighty-
six, expressly electing not to be governed by this
section, or (iii) which adopts an amendment to such
corporation's by-laws, approved by the affirmative vote
of the holders, other than interested shareholders and
their affiliates and associates, of a majority of the
outstanding voting stock of such corporation, excluding
the voting stock of interested shareholders and their
affiliates and associates, expressly electing not to be
governed by this section, provided that such amendment
to the by-laws shall not be effective until eighteen
months after such vote of such resident domestic
corporation's shareholders and shall not apply to any
business combination of such corporation with an
interested shareholder whose stock acquisition date is
on or prior to the effective date of such amendment; or
(4) to any business combination of a domestic
corporation with an interested shareholder of such
corporation which became an interested shareholder
inadvertently, if such interested shareholder (i) as
soon as practicable, divests itself of a sufficient
amount of the voting stock of such corporation so that
it no longer is the beneficial owner, directly or
indirectly, of twenty percent or more of the outstanding
voting stock of such corporation, and (ii) would not at
any time within the five-year period preceding the
announcement date with respect to such business
combination have been an interested shareholder but for
such inadvertent acquisition.
(5) to any business combination with an interested
shareholder who was the beneficial owner, directly or
indirectly, of five per cent or more of the outstanding
voting stock of such corporation on October thirtieth,
nineteen hundred eighty-five, and remained so to such
interested shareholder's stock acquisition date.
NEW PARADIGM SOFTWARE CORP.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, NOVEMBER 13, 1997
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mark Blundell Daniel A.
Gordon and Michael Taylor proxies, with power of
substitution, to vote at the Annual Meeting of Shareholders
of New Paradigm Software Corp. to be held on November 13,
1997 at the principal executive offices of the Corporation at
11:00 a.m., and at any adjournment thereof, on the matters
referred to below and described in the accompanying Proxy
Statement, and on any other business before the meeting, with
all powers the undersigned would possess if personally
present. A majority (or, if only one, then that one) of the
proxies or their substitutes acting at the meeting may
exercise all powers hereby conferred.
PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE AND RETURN
THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
[ X ] PLEASE MARK YOUR VOTES LIKE THIS
THIS PROXY WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER. IF
NOT OTHERWISE SPECIFIED, THE PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND FOR PROPOSALS 2 AND 3.
The Board of Directors recommends a vote FOR all nominees in
Item 1, and a vote FOR Proposals 2&3:
1. Election of Mark Blundell, Dan Gordon and Michael Taylor
as directors for a one-year term expiring at the 1998 Annual
Meeting:
FOR THE WITHHOLD AUTHORITY
NOMINEES to vote for the nominee(s)
[ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual
nominee(s) write that nominee's name below.
__________________________________________________________________________
2. Proposal to Adopt a By-Law amendment to eliminate the
applicability of New York Business Corporation Law Section
912 (an anti-takeover provision):
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of the appointment of BDO Seidman, LLP as
independent public accountants for the fiscal year ending
March 31, 1997:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
And, in their discretion, in the transaction of such other
business as may properly come before the Annual Meeting.
Signature(s) --------------------------------------------------
Date ---------------------------
NOTE: Please sign exactly as your name appears on this
card, date this card and return it in the enclosed
envelope.
