SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant
to Rule 14a-11(c) or Rule 14a-12
Paradigm Advanced Technologies, Inc.
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(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.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
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PARADIGM ADVANCED TECHNOLOGIES, INC.
30 LEEK CRESCENT, SUITE 103
RICHMOND HILL, ONTARIO L4B 4N4
CANADA
-----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 5, 2001
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders
(the "Meeting") of Paradigm Advanced Technologies, Inc. (the "Company") will be
held at the Sheraton Parkway Toronto North, 600 Highway 7 East, Richmond Hill,
Ontario, Canada on Thursday, July 5, 2001, at 10 a.m., Eastern Standard Time, to
consider and act upon the following matters:
1. The election of three directors of the Company to serve as the
Board of Directors until the next annual meeting of
stockholders and until their successors are duly elected and
qualified;
2. The approval of an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
the Company's Common Stock, par value $0.0001, from
100,000,000 shares to 250,000,000 shares;
3. The transaction of such other business as may properly come
before the Meeting or any adjournment or postponement thereof.
Information regarding the matters to be acted upon at the
Meeting is contained in the accompanying Proxy Statement.
The close of business on June 7, 2001 has been fixed as the
record date for the determination of stockholders entitled to notice of and to
vote at the Meeting and any adjournment or postponement thereof. A list of such
stockholders will be open for examination by any stockholder for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting at ______________________________________________.
By Order of the Board of Directors,
David Kerzner,
Chairman
Richmond Hill, Ontario, Canada
June 12, 2001
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. EACH STOCKHOLDER
IS URGED TO SIGN, DATE AND RETURN THE ENCLOSED FORM OF PROXY WHICH IS BEING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. AN ENVELOPE ADDRESSED TO THE
COMPANY'S TRANSFER AGENT IS ENCLOSED FOR THAT PURPOSE AND NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
PARADIGM ADVANCED TECHNOLOGIES, INC.
30 LEEK CRESCENT, SUITE 103
RICHMOND HILL, ONTARIO L4B 4N4
CANADA
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
JULY 5, 2001
This Proxy Statement is furnished to the holders of our common
stock, par value $.0001 per share, in connection with the solicitation of
proxies by our Board of Directors for use at our Annual Meeting of Stockholders
to be held on Thursday, July 5, 2001, at 10:00 a.m., Eastern Standard Time, at
the Sheraton Parkway Toronto North, 600 Highway 7 East, Richmond Hill, Ontario,
Canada, and at any adjournment or postponement of such meeting. The Annual
Meeting is being held for the purposes set forth in the accompanying Notice of
Annual Meeting. The approximate mailing date of this Proxy Statement is June 12,
2001.
The close of business on June 7, 2001 has been fixed by the
Board of Directors as the record date for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting and any adjournment or
postponement of such meeting. As of the record date, there were 72,853,679
shares of our common stock outstanding, which is the only class of our voting
securities issued and outstanding. Each share of our common stock outstanding on
the record date will be entitled to one vote on all matters to come before the
Annual Meeting. Cumulative voting is not permitted. A majority of our total
issued voting shares, represented in person or by proxy, is required to
constitute a quorum for the transaction of business at the Annual Meeting.
Proxies submitted which contain abstentions or broker non-votes will be deemed
present at the Annual Meeting in determining the presence of a quorum.
The affirmative vote of a plurality of the votes cast, in
person or by proxy, at the Annual Meeting will be required to elect each
director (Proposal 1) and a majority of the outstanding shares of common stock
will be required to approve the amendment to the Company's Articles of
Incorporation (Proposal 2). Abstentions, broker non-votes and votes not
otherwise cast at the Annual Meeting will not be counted for the purpose of
determining the outcome of the vote on Proposals 1 and 2. Our Board of Directors
has unanimously recommended a vote in favor of each nominee named in the Proxy
and FOR Proposal 2.
Unless otherwise specified, all proxies received will be voted
for the election of all nominees named herein to serve as directors and in favor
of each of the other proposals set forth in the accompanying Notice of Annual
Meeting of Stockholders and described below. A proxy may be revoked at any time
before its exercise by delivering written notice of revocation to our Secretary,
by executing a proxy bearing a later date or by attendance at the Annual Meeting
and electing to vote in person. Attendance at the Annual Meeting without voting
in person will not constitute revocation of a proxy.
1
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 31, 2001, certain information
as to the beneficial ownership of the our common stock by:
o each person known by us to own more than five percent (5%)
of our outstanding shares;
o each of our directors; and
o all of our directors and executive officers as a group.
- ------------------------------------------------------------------------------------------------------------------------
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP (1)
- ----------------------------------------- --------------------------------------- --------------------------------------
Name and Address of Common Percentage of
Beneficial Shareholder Stock Ownership (1)
- ---------------------- ----- -------------
- ----------------------------------------- --------------------------------------- --------------------------------------
David Kerzner 14,187,500 (3) 13.8%
- ----------------------------------------- --------------------------------------- --------------------------------------
Eduardo Guendelman 10,916,667 (4) 11.0%
- ----------------------------------------- --------------------------------------- --------------------------------------
Selwyn Wener 5,000,000 (5) 5.3%
- ----------------------------------------- --------------------------------------- --------------------------------------
David Ghermezian 4,600,000 (6) 5.2 %
- ----------------------------------------- --------------------------------------- --------------------------------------
Triple Five Financial LLC 20,475,000(7) 18.8%
9510 West Sahara Ave., Suite 200
Las Vegas, Nevada 89117
- ----------------------------------------- --------------------------------------- --------------------------------------
Worldlink, L.L.C. 7,500,000 8.5%
1980 Poast Oak Blvd, Suite 1777
Houston, Texas 77056-3809
- ----------------------------------------- --------------------------------------- --------------------------------------
George Guttman 11,757,489(8) 12.6%
80 Broad Street, 26th Floor
New York, NY 10004
- ----------------------------------------- --------------------------------------- --------------------------------------
Watson & Associates 5,775,000 (9) 6.3%
P.O. Box N1826
Marron House, Virginia Street
Nassau, N.P. Bahamas
- ----------------------------------------- --------------------------------------- --------------------------------------
Eastern Investments, LLC 9,936,290 (10) 9.0%
P.O. Box 260027
Pembroke Pines, FL 260027
- ----------------------------------------- --------------------------------------- --------------------------------------
All directors and executive officers as 37,704,167 (11) 29.3%
a group (4 persons)
- ----------------------------------------- --------------------------------------- --------------------------------------
(1) Beneficial ownership is calculated in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934. Shares subject to stock options,
for purposes of this table, are considered beneficially owned only to
the extent currently exercisable or exercisable within 60 days after
January 31, 2001. Percentage of beneficial ownership calculated is
based upon 79,458,829 shares of the common stock of the Company issued
and outstanding as of January 31, 2001.
(2) Except as otherwise indicated, the address for each party is care of
the Company at 30 Leek Crescent, Suite 103, Richmond Hill, Ontario,
Canada L4B 4N4.
(3) Includes 16,187,500 shares of our common stock issuable upon the
exercise of options that are immediately exercisable.
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(4) Includes 10,916,667 shares of our common stock issuable upon exercise
of options that are immediately exercisable.
(5) Includes 5,000,000 shares of our common stock issuable upon exercise of
options that are immediately exercisable.
(6) Based solely upon information contained in a Schedule 13D dated
12/31/00 filed with the Securities and Exchange Commission. Includes
150,000 shares owned of record by Danton Enterprises, Ltd., a holding
and investment company of which Mr. Ghermezian is the President,
450,000 shares owned of record by Regent Ventures LLC, a holding and
investment company of which Mr. Ghermezian is a Manager, and 4,000,000
shares owned of record by Triple Five Investment, Ltd., a holding and
investment company of which Mr. Ghermezian is an executive officer.
(7) Based solely upon information contained in a Schedule 13D dated
12/31/00 filed with the Securities and Exchange Commission. Includes
20,000,000 shares issuable upon the exercise of warrants exercisable
within the next 60 days and 475,000 shares issuable upon conversion of
a note into common stock.
(8) Based solely upon information contained in a Schedule 13G dated
12/31/00 filed with the Securities and Exchange Commission. Includes
10,145,000 shares of common stock held by C-Saw Investments (USA),
Ltd., 1,250,000 of which are issuable upon the exercise of warrants
that are immediately exercisable; and 1,612,489 shares of common stock
held by Jericho Partners, Ltd., 1,500,000 of which are issuable upon
the exercise of warrants that are immediately exercisable. C-Saw
Investments and Jericho Partners are both holding and investment
companies of which Mr. Guttman is the president and control person.
(9) Includes 2,625,000 shares of our common stock issuable upon the
exercise of options that are immediately exercisable
(10) Includes 4,200,000 shares of our common stock placed in an escrow
account and payable upon sale of the escrowed common stock.
(11) Includes 32,104,167 shares of our common stock issuable upon exercise
of options that are immediately exercisable.
---------------------------------------------
PROPOSAL 1
ELECTION OF DIRECTORS
---------------------------------------------
At the Annual Meeting, our stockholders will elect three
directors to serve until the next annual meeting of stockholders and until their
respective successors are elected and qualified. Unless otherwise directed, all
proxies will be voted in favor of the election of Messrs. Kerzner, Guendelman
and Ghermezian to serve as directors. All of the nominees currently serve on our
Board of Directors and their terms expire at the Annual Meeting.
Each nominee has advised us of his willingness to serve as a
director and we have no reason to expect that any of the nominees will be unable
to stand for election at the date of the Annual Meeting. In the event that a
vacancy among the original nominees occurs prior to the Annual Meeting, the
proxies will be voted for a substitute nominee or nominees, if any are named by
our Board of Directors, and for the remaining nominees.
3
INFORMATION ABOUT NOMINEES
The following table sets forth information regarding the
nominees:
NAME AGE DIRECTOR SINCE POSITIONS WITH THE COMPANY
---- --- -------------- --------------------------
David Kerzner 41 1996 Chairman of the Board of Directors
Eduardo Guendelman 49 2000 Chief Executive Officer, President and
Director
David Ghermezian 28 2000 Director
All directors hold office until their respective successors
are elected, or until death, resignation or removal. Officers hold office until
the meeting of the Board of Directors following each Annual Meeting of
Stockholders and until their successors have been chosen and qualified.
DAVID KERZNER, CHAIRMAN. Mr. Kerzner has served as Chairman of
the Board of Directors since July 2000. Mr. Kerzner had served as the President
and a director of the Company since its founding in 1996 until July 2000. He
became CEO in December 1997. From 1990 to 1994, Mr. Kerzner was employed by ISTI
Corporation/Intertec Security, Inc. most recently as President of ISTI
Corporation and as the Marketing Manager of, and as a consultant to, Intertec
Security.
EDUARDO GUENDELMAN, PRESIDENT AND CEO. Mr. Guendelman became
President and CEO of the Company in July, 2000, subsequent to the acquisition of
PowerLOC Technologies, Inc. (a Bahamian corporation) and Power Point
Microsystems Inc. which he founded and of which he became President in 1992. Mr.
Guendelman served from 1994 to 1997 as President and CEO of TelePower
International Inc, a computer telephony integration (CTI) telecommunications
firm, From 1988 to 1994, Mr. Guendelman was President and COO of Computer
Junction Limited, an Ontario systems provider for local and wide area network
connectivity solutions to Fortune 1000 companies in Canada.
DAVID GHERMEZIAN, DIRECTOR. David Ghermezian oversees much of
the Triple Five Group of Las Vegas, NV real estate activities in the
northwestern and southwestern United States. Triple Five owns substantial
shopping malls and has extensive investments in commercial and residential
developments. Mr. Ghermezian has directed Triple Five's diversification efforts
into venture capital and technology, and has recently been named a member
partner in Selby Venture Partners II, a Silicon Valley based fund that invests
in start-up technology companies. Mr. Ghermezian is a member of the Board of
Directors for Nevada-based Bank of Commerce, Vancouver-based People's Trust, and
7 Crowns listed on the Canadian Venture Exchange.
EXECUTIVE OFFICERS AND KEY EMPLOYEES
SELWYN WENER, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER. Mr. Wener
became Chief Financial Officer of the Company on February 1, 1998. From 1997 to
1998 Mr. Wener has been a Principal of S&L Associates, a financial services and
investor relations consulting firm. From 1994 to 1997 Mr. Wener was the Chief
Financial Officer for SoftQuad International Inc., Toronto Ontario a public
software development company, and from 1989 to 1993 Chief Financial Officer and
General Manager for Legacy Storage Systems Inc., a Markham, Ontario based
computer disk storage manufacturer and distributor. Mr. Wener has a Chartered
Accountant (CA) certification from South Africa where from 1977 to 1983 he was a
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partner in Gross Hendler and Abrams, a medium sized firm of chartered
accountants.
BOARD MEETINGS AND COMMITTEES
Our Board of Directors is responsible for our overall
management. During the fiscal year ended December 31, 2000, our Board of
Directors held six (6) meetings and acted by unanimous written consent on four
occasions. Each incumbent director attended at least 75% of all meetings of the
Board and committees on which the person served which were held during the year.
Our Board of Directors serves as the Company's Compensation Committee, and is
composed of David Kerzner, Eduardo Guendelman and David Ghermezian. The
compensation committee has power and authority with respect to all matters
pertaining to compensation payable and the administration of employee benefits,
deferred compensation and our stock option plans. The Compensation Committee met
once during fiscal year ended December 31, 2000.
COMPENSATION OF DIRECTORS AND NOMINEES
The Company's policy is not to pay compensation to directors
who are also employees of the Company for their service as directors.
Non-employee directors receive compensation of $10,000 per annum for their
service as directors. The Company reimburses directors for out-of-pocket
expenses incurred for attendance at meetings.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the aggregate
compensation we paid or accrued to our Chief Executive Officer. Apart from Mr.
Kerzner, whose annual salary is $100,000, none of our executive officers or any
of our subsidiaries' executive officers received compensation in excess of
$100,000.
5
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------- ----------------------------------
FISCAL
YEAR
NAME AND ENDED OTHER ANNUAL RESTRICTED UNDERLYING
PRINCIPAL POSITION DEC. 31, SALARY ($) BONUS ($) COMPENSATION STOCK AWARDS STOCK OPTIONS
- ----------------------------------------------------- ------------------------------------------------- ---------------
David Kerzner, 2000 $100,000 $0 --- --- 0
President and Chief 1999 100,000 0 --- --- 7,000,000
Executive Officer 1998 70,000 0 --- --- 0
Eduardo Guendelman, 2000 $100,000 $60,000 --- --- 10,416,667
President and Chief 1999 0 0 --- --- 0
Executive Officer 1998 0 0 --- --- 0
Selwyn Wener, Chief 2000 $100,000 $0 --- --- 0
Financial Officer 1999 91, 778 0 --- --- 4,000,000
1998 61,521 0 --- --- 1,000,000
Mr. Guendelman was granted an option to purchase 10,000,000 shares of
our common stock, which is currently exercisable at an exercise price of $0.66
per share.
OPTIONS GRANTED IN FISCAL 2000
The following table sets forth the details of options to purchase
common stock the Company granted to its executive officers during fiscal year
ended December 31, 2000, including the potential realized value over the 5 year
term of the option based on assumed rates of stock appreciation of 5% and 10%,
compounded annually. These assumed rates of appreciation comply with the rules
of the Securities and Exchange Commission and do not represent the Company's
estimate of future stock price. Actual gains, if any, on stock option exercises
will be dependent on the future performance of our common stock. Each option is
immediately exercisable.
OPTIONS GRANTED
---------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENT OF TOTAL PER RATE OF STOCK PRICE
SECURITIES TO SHARE APPRECIATION
UNDERLYING EMPLOYEES IN EXERCISE FOR OPTION
NAME OPTIONS FISCAL YEAR PRICE EXPIRATION DATE TERM
- ---------------------------------------------------------------------------------------------------------------------------
5% 10%
- ---------------------------------------------------------------------------------------------------------------------------
Eduardo Guendelman 10,000,000 100% $0.66 July 24, 2003 $55,168 $115,850
- ---------------------------------------------------------------------------------------------------------------------------
In addition to the foregoing, the Company is obligated to issue
2,187,500 shares to David Kerzner in replacement of an equal number of shares
surrendered by him to the Company in 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
During the fiscal year ended December 31, 2000, no executive officer of
the Company exercised options. The following table sets forth the number of
shares of our common stock underlying unexercised stock options granted by us to
our executive officers and the value of those options at December 31, 2000. The
value of each option is based on the positive difference, if any, of the closing
bid price for our common stock on the OTC Bulletin Board on December 31, 2000,
or $.75, under the exercise price of the option.
6
NUMBER OF SECURITIES UNDERLYING
UNEXERCISED OPTIONS AT VALUE OF UNEXERCISED IN THE MONEY
FISCAL YEAR-END OPTIONS AT FISCAL YEAR-END
---------------------------------- --------------------------------------
NAME OF EXECUTIVE OFFICER EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------------- ---------------- ------------------- ------------------
David Kerzner 10,187,500 0 $7,131,250 $0
- ---------------------------------------------------------------------------------------------------------
Selwyn Wener 5,000,000 0 $3,500,000 $0
- ---------------------------------------------------------------------------------------------------------
Eduardo Guendelman 10,000,000 0 $1,150,000 $0
- ---------------------------------------------------------------------------------------------------------
EMPLOYMENT AGREEMENTS
In February 1996, the Company entered into a ten-year consulting agreement, with
David Kerzner, Chairman of the Company. The consulting agreement provides for a
fee of $100,000 per year. The consulting agreement may be terminated early by
the Company in the event of the resignation, death or disability or other
incapacity of Mr. Kerzner, as the case may be. The consulting agreement also
contains provisions regarding confidentiality of information, ownership of
inventions and patents, non-competition and non-solicitation. On July 25, 2000,
the board of directors agreed that it would issue Mr. Kerzner an additional
1,000,000 stock options per quarter at $1.42 per share, to an aggregated maximum
of 4,000,000 stock options, subject to the Company meeting certain business
targets. Mr. Kerzner is eligible to receive a bonus upon the approval of the
Company's board of directors.
In March 2000, the Company entered into a five-year consulting agreement with
Eduardo Guendelman, President and Chief Executive Officer of the Company. The
consulting agreement provides for a fee of $120,000 per year and an annual bonus
of $80,000. The consulting agreement may be terminated early by the Company in
the event of the resignation, death or disability or other incapacity of Mr.
Guendelman, as the case may be. The consulting agreement also contains
provisions regarding confidentiality of information, ownership of inventions and
patents, non-competition and non-solicitation. The board of directors has agreed
to amend Mr. Guendleman's consulting agreement to extend the agreement's term to
ten years. On July 25, 2000 Mr. Guendelman was granted an additional 10,000,000
stock options at an adjusted price of $0.66 per share. Mr. Guendelman is
eligible to receive an additional bonus upon the approval of the Company's board
of directors.
In September 1999, the Company entered into a five-year consulting agreement
with Selwyn Wener, Chief Financial Officer of the Company. The consulting
agreement provides for a fee of $100,000 per year. The consulting agreement may
be terminated early by the Company in the event of the resignation, death or
disability or other incapacity of Mr. Wener, as the case may be. The consulting
agreement also contains provisions regarding confidentiality of information,
ownership of inventions and patents, non-competition and non-solicitation. Mr.
Wener is eligible to receive a bonus upon the approval of the Company's board of
directors.
STOCK OPTION PLAN
Our 1996 Stock Option Plan provides for the grant of:
o options that are intended to qualify as incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986 to key
employees; and
7
o options not intended to so qualify to key employees, including our
directors and officers, and to directors and consultants who are not employees.
The total number of shares of our common stock for which options may be granted
under our 1996 Stock Option Plan is 10,000,000 shares.
Our 1996 Stock Option Plan is administered by the compensation
committee of our Board of Directors. The compensation committee will determine
the terms of options exercised, including the exercise price, the number of
shares subject to the option and the terms and conditions of exercise. No option
granted under our 1996 Stock Option Plan is transferable by the optionee other
than by will or the laws of descent and distribution and each option is
exercisable during the lifetime of the optionee only by such optionee or his
legal representatives.
The exercise price of incentive stock options under our 1996 Stock
Option Plan must be at least equal to 100% of the fair market value of such
shares on the date of grant, or 110% of fair market value in the case of an
optionee who owns or is deemed to own stock possessing more than 10% of the
voting rights of our outstanding capital stock. The term of each option will be
established by the compensation committee, in its sole discretion. However, the
maximum term for each incentive stock option granted under our 1996 Stock Option
Plan is ten years, or five years in the case of an optionee who owns or is
deemed to own stock possessing more than 10% of the total combined voting power
of our outstanding capital stock. Options will become exercisable at such times
and in such installments as the compensation committee will provide in the terms
of each individual option.
As of May 31, 2001 we have granted options to purchase 10,000,000
shares of our common stock under our 1996 Stock Option Plan, 8,270,267 of which
have been exercised.
NON-PLAN STOCK OPTIONS
As of May 31, 2001, we have granted non-plan stock options to purchase
57,928,283 shares of our common stock, at an exercise price ranging from $ .01
per share to $12.50 per share. Options with respect to 8,170,267 shares of our
common stock have been exercised pursuant to the foregoing non-plan stock
options.
COMPENSATION COMMITTEE'S REPORT
CONCERNING EXECUTIVE COMPENSATION
OVERVIEW
Executive compensation determinations are made by our compensation
committee through consultation with our Board of Directors and other members of
management. We seek to provide executive compensation that will support the
achievement of our financial goals while attracting and retaining talented
executives and rewarding superior performance. In performing this function, we
may review executive compensation surveys and other available information and
may from time to time consult with independent compensation consultants.
We seek to provide an overall level of compensation to our executives
that is competitive within our industry and/or the industries of our various
subsidiaries, and other companies of comparable size and complexity.
Compensation in any particular case may vary from any industry average on the
basis of our annual and long-term performance as well as individual performance.
We exercise our discretion to set compensation where in our judgment external,
internal or individual circumstances warrant it.
8
In general, we compensate our executive officers through a combination
of base salary, annual incentive compensation in the form of cash bonuses and
long-term incentive compensation in the form of stock options. In addition,
executive officers participate in benefit plans, including medical, dental and
retirement plans, that are available generally to our employees and/or employees
of our subsidiaries.
Our duties include the granting of stock options under our 1996 Stock
Option Plan and, if necessary, outside of that plan to our executive employees.
We feel that options are an effective incentive for our management to create
value for our stockholders, since the value of an option bears a direct
relationship to our stock price. We determine the number of shares granted to
individuals, as well as, among other things, the exercise price and vesting
periods of such options, taking into account each individual's level of
responsibility, compensation level, contribution to our performance, future
goals and the performance expected of him or her.
EXECUTIVE OFFICER COMPENSATION
In March 2000, the Company entered into a five-year consulting
agreement with Eduardo Guendelman, President and Chief Executive Officer of the
Company. The consulting agreement provides for a fee of $120,000 per year and an
annual bonus of $80,000. The consulting agreement may be terminated early by the
Company in the event of the resignation, death or disability or other incapacity
of Mr. Guendelman, as the case may be. The board of directors has agreed to
amend Mr. Guendelman's agreement to extend the term of the agreement to ten
years. The consulting agreement also contains provisions regarding
confidentiality of information, ownership of inventions and patents,
non-competition and non-solicitation. The Company is also currently paying
Selwyn Wener $100,000 per year for consulting services. The base salary,
bonuses, benefits and conditions of these contracts were determined through a
review of previous employment terms for these individuals, if any, and the
expected contribution of these individuals to our future growth and
profitability. We believe that the base salary levels currently in effect are
competitive to salary levels in similarly situated companies. In addition, in
certain instances, we linked employees' compensation directly to our earnings
before interest and taxes.
We believe that linking executive compensation to corporate performance
results in a better alignment of compensation with corporate goals and
shareholder interests. As performance goals are met or exceeded, resulting in
increased value to our shareholders, executives are rewarded commensurably. We
believe that compensation levels during fiscal year ended December 31, 1999
adequately reflect our compensation goals and policies.
Respectfully submitted,
Eduardo Guendelman
David Ghermezian
David Kerzner
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
David Kerzner, our chief executive officer until July 2000, serves on
our compensation committee, and Eduardo Guendelman, our current chief executive
officer serves on the compensation committee.
9
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
executive officers and directors, and persons who beneficially own more than 10%
of our common stock, to file initial reports of ownership and reports of changes
of ownership with the Securities and Exchange Commission and furnish copies of
those reports to us. Based solely on a review of the copies of the reports
furnished to us to date, the Company believes that the filing requirements
applicable to its current directors and executive officers have not been
complied with by any such persons with respect to the fiscal years ended
December 31, 1999 and 2000.
10
- --------------------------------------------------------------------------------
PROPOSAL 2
TO APPROVE AN AMENDMENT TO THE
COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED COMMON STOCK OF
THE COMPANY
- --------------------------------------------------------------------------------
The Board of Directors has unanimously approved, for submission to the
stockholders, an amendment to Section Fourth of the Paradigm's Certificate of
Incorporation (the "Amendment") to increase the number of authorized shares of
common stock, $.0001 par value, to 250,000,000 shares. The Certificate of
Incorporation presently authorizes 100,000,000 shares of common stock, $.0001
par value. The text of the proposed Amendment is attached hereto as Appendix A.
As of May 31, 2001, 88,701,746 shares of common stock were issued and
outstanding. An additional 93,797,500 shares were reserved for issuance upon
exercise of outstanding stock options and warrants, and 2,550,000 shares were
reserved for issuance upon conversion of convertible debentures. Accordingly, if
all outstanding options were exercised and the debentures were converted, an
aggregate of 185,049,246 shares of common stock would be issued and outstanding.
The Board of Directors believes that the additional 150,000,000 shares
of common stock that would become available if the proposal is approved would
afford the Company greater flexibility in meeting its future capital
requirements and other corporate needs which may arise, including grants of
options under the Plan. We currently have certain agreements and arrangements
that will result in the issuance of additional shares of common stock. There can
be no assurance, however, that any further arrangement or transaction will be
entered into that would result in the issuance of additional shares.
The Certificate of Incorporation and By-Laws currently contain no
anti-takeover provisions. Although the Board of Directors does not consider the
Amendment to increase the authorized number of shares of common stock to be an
anti-takeover proposal, it may be considered to be one. The availability of
additional shares of common stock may make it more difficult for a corporation
or other entity to gain control of the Company. In the event of a proposed
merger, tender offer or proxy contest that is not approved by incumbent
management, the Board of Directors may be able to authorize the issuance of
common stock on terms which could impede the completion of such a transaction.
The Company's officers and directors as a group own approximately 56.3% of its
outstanding Common Stock.
The affirmative vote of the holders of a majority of the outstanding
shares of common stock is required under Delaware law for the adoption of the
Amendment to the Certificate of Incorporation. Accordingly, if the Amendment is
approved, the Board of Directors intends to file an amendment to the Company's
Certificate of Incorporation, following the Special Meeting, to change Section
Fourth to read substantially as set forth in Appendix A to this Proxy Statement,
subject to any changes as may be required by law or otherwise deemed advisable.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE
AMENDMENT TO PARADIGM'S CERTIFICATE OF INCORPORATION.
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MISCELLANEOUS
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the next
Annual Meeting of Stockholders must be received by us not later than February
12, 2002 for inclusion in our proxy statement and form of proxy for that
meeting.
SOLICITATION OF PROXIES
We are bearing the cost of preparing, assembling and mailing
the Notice of Annual Meeting, this Proxy Statement and proxies. We will also
reimburse brokers who are holders of record of our common stock for their
expenses in forwarding proxies and proxy soliciting material to the beneficial
owners of such shares. In addition to the use of the mails, proxies may be
solicited without extra compensation by our directors, officers and employees by
telephone, telecopy, telegraph or personal interview.
OTHER MATTERS
Management does not intend to bring before the Annual Meeting
for action any matters other than those specifically referred to above and is
not aware of any other matters which are proposed to be presented by others. If
any other matters or motions should properly come before the Annual Meeting, the
persons named in the proxy intend to vote thereon in accordance with their
judgment on such matters or motions, including any matters or motions dealing
with the conduct of the Annual Meeting.
Our 2000 Annual Report, including financial statements and
report thereon by Schwartz Levitzky Feldman LLP, and our 1999 Annual Report,
including financial statements and report thereon of Bromberg & Associate,
accompany this Proxy Statement but are not incorporated in and are not to be
deemed a part of this Proxy Statement.
PROXIES
All stockholders are urged to fill in their choices with
respect to the matters to be voted upon, sign and promptly return the enclosed
form of proxy.
By Order of the Board of Directors,
David Kerzner
Chairman
June 12, 2001
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PROXY PROXY
PARADIGM ADVANCE TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - JULY 5, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, as proxies for the undersigned, DAVID
KERZNER and EDUARDO GUENDELMAN, or either of them, with full power of
substitution, to vote all shares of the capital stock of Paradigm Advance
Technologies, Inc. (the "Company") which the undersigned is entitled to vote at
the Annual Meeting of Stockholders of the Company to be held on Thursday, July
5, 2001, at 10:00 a.m., Eastern Standard Time, at Sheraton Parkway Toronto
North, 600 Highway 7 East, Richmond Hill, Ontario, Canada, receipt of Notice of
which meeting and the Proxy Statement accompanying the same being hereby
acknowledged by the undersigned, and at any adjournment or postponement thereof,
upon the matters described in the Notice of Meeting and Proxy Statement and upon
such other business as may properly come before the meeting or any adjournment
or postponement thereof, hereby revoking any proxies heretofore given.
EACH PROPERLY EXECUTED PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE ON THE REVERSE SIDE HEREOF. WHERE NO DIRECTION TO VOTE ON A
SPECIFIC MATTER IS GIVEN, THE PROXIES WILL BE DEEMED AUTHORIZED TO VOTE FOR EACH
LISTED NOMINEE TO SERVE AS A DIRECTOR, FOR PROPOSAL 2 AND WITH DISCRETION ON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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PARADIGM ADVANCE TECHNOLOGIES, INC.
A VOTE FOR EACH NOMINEE AND FOR PROPOSAL 2
IS RECOMMENDED BY THE BOARD OF DIRECTORS.
1. ELECTION OF DIRECTORS - For Withhold For All
Nominees: David Kerzner, Eduardo All All Except
Guendelman and David Ghermezian |_| |_| |_|
________________________________________________________
(Except Nominee(s) written above)
FOR AGAINST ABSTAIN
2. To authorize the amendment to the Company's Articles |_| |_| |_|
of Incorporation to increase the authorized common
stock of the Company from 100,000,000 to 250,000,000.
3. The transaction of such other business as may properly
come before the meeting.
Dated ____________, 2001
Signature(s)
-----------------------------------------
NOTE: Please sign your name or names exactly as set
forth hereon. If signing as attorney, executor,
administrator, trustee or guardian, please indicate
the capacity in which you are acting. Proxies
executed by corporations should be signed by a duly
authorized officer and should bear the corporate
seal.
- -------------------------------------------------------------------------------------------------------------------------------
(DELTA) FOLD AND DETACH HERE (DELTA)
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
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