POWER STRUGGLE IS ON AT NETSOL.

Byline: Jesse Hiestand Staff Writer

CALABASAS - Insurgents, armed guards and declarations of power seized: Software maker NetSol International Inc. is an unlikely candidate for a palace coup.

But a lingering standoff between management and a group of dissident shareholders escalated Tuesday, with NetSol saying it had obtained a temporary restraining order to oust the ``insurgents'' from its headquarters.

Members of the dissident NetSol Shareholders Group LLC are now prohibited from ``taking any action whatsoever with respect to the company'' after improperly entering the corporate offices early Monday with the help of armed security guards, NetSol said in a statement.

``We believe that the insurgent shareholder group's public claim of victory was irresponsible and, at the very least, premature,'' said NetSol Chief Executive Najeeb Ghauri.

Premature, that is, because NetSol believes that a majority of shareholders still has confidence in the current management and eight-member board, who are said to still run the company. They have scheduled a special meeting on this issue for Friday but did not provide details.

The opposing shareholder group said it got 55 percent of shareholders to give written consent in its favor late last week, entitling it to expand the board from eight to 15 members and fill the newly created vacancies with its handpicked nominees.

That would put dissidents in control of the company because one of the original board members, Cary Burch, is on their side so they have majority control of the board, said the group's attorney John C. Kirkland.

A board meeting on Sunday was attended by only one member of the original board, Ghauri. He objected to the meeting and did not vote as the new board elected Burch as chairman and chief executive, Kirkland said.

``We voted to throw out the old management and put in our new management,'' Kirkland said. ``They're like Al Gore. They won't accept defeat.''

Members of NetSol Shareholders Group LLC hold more than 25 percent of NetSol's stock and initiated a proxy contest to gain control of the company from its current owners in April.

At the time, they said they wanted to hire an investment bank to help them buy, merge with or be bought by another public company.

The restraining order obtained by NetSol is valid until Friday, when a hearing is set to determine if it was proper for the shareholders group to elect the seven new members.

Kirkland believes the dispute will be resolved before Friday.

There was no sign of surrender from Irfan Mustafa, NetSol's chairman of the board.

``We remain confident that we will win this proxy contest,'' said Mustafa. ``We are looking forward to directing our energy toward increasing shareholder value as opposed to fighting this wasteful proxy contest.''

NetSol's work force of more than 400 develops asset-based finance and leasing software for tasks such as credit valuations and financial comparisons. It also offers information technology support. Its clients include Mercedes-Benz business units in Australia and Thailand, CFS Groups U.K. and GMAC in Australia.

Shares of NetSol gained 43 cents to close at $4 in trading Tuesday.