As filed with the Securities and Exchange Commission on March 12, 1998
Registration No. 333-_____
- -------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_____________________________________________
STARNET COMMUNICATIONS INTERNATIONAL INC.
(Exact name of issuer as specified in its charter)
Delaware 52-2027313
- ---------------------------- --------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
425 Carrall Street, Mezzanine Level,
Vancouver, British Columbia, Canada V6B 6E3 (604) 685-7619
- -------------------------------------------------------------------------
(Address and telephone number, of Registrant's principal executive offices)
STARNET COMMUNICATIONS INTERNATIONAL INC.
1997 NON-QUALIFIED STOCK OPTION PLAN
(Full title of the plan)
Christopher H. Zacharias
Starnet Communications International Inc.
425 Carrall Street, Mezzanine Level
British Columbia, Canada V6B 6E3
(604) 685-7619
(Name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Title of Securities Amount To Proposed Maximum Proposed Maximum Amount of
To Be Registered Be Registered Offering Price Per Share* Aggregate Offering Price Registration Fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares 3,000,000 $0.935 $2,805,000 $827.48
$.001 par value
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Pursuant to Rules 457(c) and (g), the proposed maximum offering price
per share is the average of the bid and asked prices as of March 6, 1998.
<PAGE>
PART II
-------
INFORMATION NOT REQUIRED IN PROSPECTUS
--------------------------------------
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
---------------------------------------
Starnet Communications International Inc. (the "Company") hereby
incorporates by reference in this Registration Statement the following
documents:
(a) The Company's Registration Statement on Form 10-SB, as
amended, as declared effective by the Securities and Exchange Commission on
August 19, 1997, including the description of the Company's Common Stock
under the caption "Description of Securities";
(b) The Company's Quarterly Reports on Form 10-QSB for the
quarters ended July 31, 1997 and October 31, 1997; and
(c) The Company's Current Report on Form 8-K as filed with the
Securities and Exchange Commission on December 11, 1997.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended, which documents shall be deemed incorporated by reference in this
Registration Statement as a part hereof from the date of filing such
documents until a post-effective amendment to this Registration Statement
is filed which indicates that all shares of Common Stock being offered
hereby have been sold or which deregisters all shares of Common Stock then
remaining unsold.
Item 4. DESCRIPTION OF SECURITIES
-------------------------
Not Applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
--------------------------------------
Not Applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
The Company's Bylaws require the Company to indemnify, to the fullest
extent authorized by applicable law, any person who is or is threatened to
be made a party to any civil, criminal, administrative, investigative, or
other action or proceeding instituted or threatened by reason of the fact
that he is or was a director or officer of the Company or is or was serving
at the request of the Company as a director or officer or another
corporation, partnership, joint venture, trust or other enterprise.
The Company's Certificate of Incorporation provides that, to the
fullest extent permitted by the Delaware General Corporation Law, directors
and officers of the Company shall not be
2
<PAGE>
liable to the Company or any of its shareholders for damages caused by a
breach of a fiduciary duty by such directors or officers.
The above discussion of the Company's Certificate of Incorporation,
Bylaws and the Delaware General Corporation Law is only a summary and is
qualified in its entirety by the full text of each of the foregoing.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
-----------------------------------
Not Applicable.
Item 8. EXHIBITS
--------
3.2 Bylaws of the Company(1)
3.3* Certificate of Incorporation of the Company
5.1* Opinion of Parcel, Mauro & Spaanstra, P.C. as to the legality
of the Company's Common Stock being registered.
10.5* Starnet Communications International Inc. 1997 Stock
Option Plan
23.1* Consent of Ernst & Young
_______
* Filed herewith.
(1) Exhibit 3.2 is incorporated by reference from Exhibit 1 to the
Company's Quarterly Report on Form 10-QSB for the period ended July 31, 1997.
Item 9. UNDERTAKINGS
------------
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement; and (iii) to include any additional or changed
material information on the plan of distribution.
(2) That, for the purpose of determining any liability under the
Securities Act each post-effective amendment shall be treated as a new
registration statement relating to the securities offered, and the offering
of such securities at that time shall be treated as the initial bona fide
offering thereof.
3
<PAGE>
(3) To file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Company's annual report pursuant to
section 13(a) or section 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to section
15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(5) That, insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
4
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, as
amended, Starnet Communications International Inc. certifies that it has
reasonable grounds to believe that it meets all of the requirements for
filing on Form S-8, and has duly caused this Registration Statement, as
amended, to be signed on its behalf by the undersigned, thereunto duly
authorized, in Vancouver, British Columbia on February 25, 1998.
STARNET COMMUNICATIONS INTERNATIONAL INC.
By: /s/ Mark Dohlen
----------------------------------------
Mark Dohlen, Chief Executive Officer
By: /s/ Jack Carley
----------------------------------------
Jack Carley, Principal Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Date: February 25, 1998 By: /s/ Mitchell White
----------------- -----------------------------------
Mitchell White, Director
Date: February 25, 1998 By: /s/ Mark Dohlen
----------------- -----------------------------------
Mark Dohlen, Director
Date: February 25, 1998 By: /s/ Jack Carley
----------------- -----------------------------------
Jack Carley, Director
Date: February 25, 1998 By: /s/ Christopher Zacharias
----------------- -----------------------------------
Christopher Zacharias, Director
Date: February 25, 1998 By: /s/ Jason Bolduc
----------------- -----------------------------------
Jason Bolduc, Director
5
EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
STARNET COMMUNICATIONS INTERNATIONAL INC.
FIRST: The name of the corporation is Starnet Communications
International Inc. (the "Corporation").
SECOND: The Corporation's registered office in the State of Delaware
is located at 1300 Delaware Trust Building, 902 Market Street, Wilmington,
New Castle County, Delaware, 19801. The Corporation's registered agent at
that address shall be The Delaware Corporation Agency, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful
acts or activities for which a corporation may be organized under the
General Corporation Law of the State of Delaware.
FOURTH: The Corporation may have and maintain offices at such places
within and without Delaware as the Board of Directors of the Corporation
may determine from time to time.
FIFTH: The aggregate number of shares which the Corporation shall
have authority to issue is Two Hundred Million (200,000,000) shares, as
follows: One Hundred Million (100,000,000) shares of Class A Voting Common
Stock with a par value of $.00l per share, Fifty Million (50,000,000)
shares of
<PAGE>
Class B Nonvoting Common Stock with a par value of $.001 per share, which
Class B Nonvoting Common Stock shall have no voting rights except as
required by law, and Fifty Million (50,000,000) shares of Preferred Stock
with a par value of $.001 per share.
The Board of Directors of the Corporation is authorized,
subject to limitations prescribed by law and the provisions of this
Article, to provide for the issuance of shares of Preferred Stock in
series, and by filing a certificate pursuant to the applicable law of the
State of Delaware, to establish from time to time the number of shares to
be included in each such series, and, subject to the voting limitations set
forth herein, to fix the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or
restrictions thereof.
The authority of the Board of Directors with respect to each
series of Preferred Stock shall include all rights conferred by the General
Corporation Law upon directors, including, but not limited to,
determination of the following:
(a) the number of shares constituting that series and the
distinctive designation of that series;
(b) the dividend rate on the share of that series, whether
dividends shall be cumulative, and, if so, from
-2-
<PAGE>
which date or dates, and the relative rights or priorities, if any, of
payment of dividends on shares of that series;
(c) whether the shares of that series shall have voting
rights, in addition to the voting rights required by law and, if so, the
terms of such voting rights;
(d) whether the shares of that series shall have conversion
privileges, and, if so, the terms and conditions of such privileges,
including provision for adjustment of conversion rate(s) in relation to
such events as the Board of Directors shall determine;
(e) whether the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the date
or dates upon or after which amount they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
(f) whether there shall be a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(g) the rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or
-3-
<PAGE>
winding up of the Corporation, and the relative rights of priority, if any,
of payment of shares of that series; and
(h) any other relative rights, preferences and limitations
of that series now or hereafter permitted by law.
Dividends on outstanding shares of Preferred Stock shall be paid
or declared, and set apart for payment before any dividends shall be paid
or declared and set apart for payment on the common stock of the
Corporation with respect to the same dividend period.
If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets available for distribution to
holders of shares of Preferred Stock of all series shall be insufficient to
pay such holder the full preferential amount to which they are entitled,
then such assets shall be distributed ratably among the shares of all
series of Preferred Stock in accordance with the respective preferential
amounts (including unpaid cumulative dividends, if any) payable with
respect thereto.
SIXTH: One-third of the shares entitled to vote, represented
in person or by proxy, shall constitute a quorum at a meeting of
stockholders. If voting by classes is required, this provision shall apply
with respect to each such class.
-4-
<PAGE>
SEVENTH: The name and mailing address of the incorporator is Marla
H. Norton, Esquire, Bayard, Handelman & Murdoch, P.A., 902 Market Street,
13th Floor, Wilmington, Delaware, 19801.
EIGHTH: Except as otherwise provided in Section 102(b)(7) of the
General Corporation Law, as amended from time to time, or in any analogous
provision of any successor law, no director of the Corporation shall have
personal liability to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.
NINTH: The Corporation reserves the right to amend, alter, change
and repeal any provision contained in this Certificate of Incorporation in
the manner now or hereafter prescribed by law and all rights conferred on
officers, directors and stockholders herein are granted subject to this
reservation.
TENTH: The names and mailing addresses of the persons who are to
serve as directors until the first annual meeting of the Corporation's
stockholders or until their successors are elected and qualify are:
Jason Bolduc Jack Carley
425 Carrall St., Mezzanine Level 425 Carrall St., Mezzanine Level
Vancouver, B.C. Canada V6B 6E3 Vancouver, B.C. Canada V6B 6E3
Mark Dohlen Mitchell White
425 Carrall St., Mezzanine Level 425 Carrall St., Mezzanine Level
Vancouver, B.C. Canada V6B 6E3 Vancouver, B.C. Canada V6B 6E3
Christopher Zacharias
425 Carrall St., Mezzanine Level
Vancouver, B.C. Canada V6B 6E3
-5-
<PAGE>
The election of directors need not be by written ballot unless the by-laws
of the Corporation shall so provide.
ELEVENTH: In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware, the Board of Directors is expressly
authorized to make, amend and repeal the By-Laws of the Corporation.
I, the undersigned, being the incorporator for the purpose of forming
a corporation pursuant to the General Corporation Law of Delaware, and the
acts amendatory thereof and supplemental thereto, do make and file this
Certificate of Incorporation, hereby declaring and certifying that the
facts stated herein are true and accordingly hereunto have set my hand and
seal this 4th day of March, 1997.
/s/ MARLA H. NORTON
________________________________(SEAL)
MARLA H. NORTON
-6-
EXHIBIT 5.1
Parcel, Mauro & Spaanstra, P.C.
ATTORNEYS AT LAW
SUITE 3600
1801 CALIFORNIA STREET
DENVER, COLORADO 80202-2636
TELEPHONE (303) 292-6400
TELECOPIER (303) 295-3040
March 6, 1998
Starnet Communications International Inc.
425 Carrall Street
Vancouver, British Columbia
Canada V6B 6E3
Gentlemen:
In connection with the Registration Statement on Form S-8, being filed
by Starnet Communications International Inc. (the "Company") with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, relating to the registration of 3,000,000 shares of the Company's
Common Stock, $.001 par value, offered under the Company's Stock Option
Plan (the "Plan"), we are of the opinion that:
1. The Company is a validly organized and existing corporation under
the laws of Delaware.
2. All necessary corporate action has been duly taken to authorize
the establishment of the Plan and the issuance of 3,000,000 shares of the
Company's Common Stock under the Plan; and
3. The shares of the Company's Common Stock, when issued in
accordance with the Plan, will be legally issued, fully paid and
nonassessable shares of the Common Stock of the Company.
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement
referred to above.
Very truly yours,
/s/ Parcel, Mauro & Spaanstra, P.C.
EXHIBIT 10.5
STARNET COMMUNICATIONS INTERNATIONAL, INC.
1997 STOCK OPTION PLAN
- -------------------------------------------------------------------------
SECTION 1
INTRODUCTION
1.1 ESTABLISHMENT. Starnet Communications International Inc., a Delaware
Corporation, hereby establishes the Starnet Communications International,
Inc. 1997 Stock Option Plan (the "Plan") for employees, consultants,
directors, and other advisors associated with the Company whom the Board
wishes to incentivize. Starnet International Inc., together with its
affiliated corporations, as defined in Section 2.1(a) hereafter, are
referred to as the "Company", except where the context otherwise requires.
1.2 PURPOSES. The purpose of the Plan is to provide the Eligible
Participants selected for participation in the Plan with added incentives
to continue in the long-term service of the Company and to create in such
persons a more direct interest in the future success of the operations of
the Company by relating incentive compensation to increases in stockholder
value, so that rewards for the Eligible Participants is more closely
aligned with the pursuit of value for the Company and the Company's
stockholders. The Plan is also designed to attract Eligible Participants
and to retain and motivate such persons by providing an opportunity for
investment in the Company.
SECTION 2
DEFINITIONS
2.1 DEFINITIONS. The following terms will have the meanings set forth
below:
"AFFILIATED CORPORATION" means any corporation or other entity (including,
but not limited to, a partnership) that is affiliated with Starnet
Communications International Inc. through stock ownership or otherwise and
is treated as a common employer under the provisions of Code Sections
414(b) and (c).
"BOARD" means the Board of Directors of Starnet Communications
International Inc.
"CODE" means the Internal Revenue Code of 1986, as it may be amended form
time to time.
"EFFECTIVE DATE" means the effective date of the Plan, which will be
September 1, 1997.
"ELIGIBLE PARTICIPANTS" means all employees (including, without
limitation, all officers), directors, consultants and all other advisors
whom the Board wishes to incentivize to contribute to the fortunes of the
Company.
<PAGE>
2
"FAIR VALUE" means the value of a Share of Stock as determined by the Stock
Option Committee acting in good faith and in its sole discretion.
Notwithstanding the above, if the Stock is actively traded in an
established stock or quotation market, "FAIR VALUE" will mean the
officially quoted closing price of the Stock on such exchange (a "National
Exchange") on a particular date selected by the Stock Option Committee in
establishing the purchase price of Shares of the Option.
"STOCK OPTION COMMITTEE" means the Board, as defined in Section 2.1(b) or
a committee (which may or may not be composed solely of members of the
Board) selected by the Board and vested with the requisite powers.
"NON-STATUTORY OPTION" means an Option granted under this Plan in
accordance with the requirements of Code Section 83.
"OPTION" means a right to purchase Stock granted under this Plan at a
stated price for a specified period of time.
"OPTION PRICE" means the price at which shares of Stock subject to an
Option may be purchased, determined in accordance with Section 6.2(b)
"OPTION HOLDER" means an Eligible Participant designated by the Stock
Option Committee from time to time during the term of the Plan to receive
one or more Options under the Plan.
"SHARE" or "SHARES" means a share or shares of Stock.
"STOCK" means the common stock, par value $0.001, of the Company.
2.2 GENDER AND NUMBER. Except where otherwise indicated by the context,
the masculine gender also will include the feminine gender, and the
definition of any term herein in the singular also will include the plural.
SECTION 3
PLAN ADMINISTRATION
3.1 STOCK OPTION COMMITTEE. The Stock Option Committee will administer
the Plan. In accordance with the provisions of the Plan, the Stock Option
Committee will, in accordance with policies approved by the Board and
otherwise in its sole discretion, select the Eligible Participants to whom
Options will be granted, the form of each Option, the amount of each
Option, and any other terms and conditions of each Option as the Stock
Option Committee may deem necessary and consistent with the terms of the
Plan. The Stock Option Committee will determine the form or forms of the
agreements with Option Holders. The agreements will evidence the
particular provisions, terms, conditions, rights and duties of the Company
and the Option Holders with respect to Options granted pursuant to the
Plan, which provisions need not be identical except as
<PAGE>
3
may be provided herein. The Stock Option Committee may from time to time
adopt such rules and regulations for carrying out the purposes of the Plan
as it may deem proper and in the best interests of the Company. The Stock
Option Committee may correct any defect, supply any omission or reconcile
any inconsistency in the Plan or in any agreement entered into hereunder in
the manner and to the extent it may deem expedient and it will be the sole
and final judge of such expediency. No member of the Stock Option
Committee will be liable for any action or determination made in good
faith, and all members of the Committee will, in addition to their rights
as directors, be fully protected by the Company with respect to any such
action, determination or interpretation. The determinations,
interpretations and other actions of the Stock Option Committee pursuant to
the provisions of the Plan will be binding and conclusive for all purposes
and on all persons.
SECTION 4
STOCK SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. 3,000,000 Shares are authorized for issuance under
the Plan in accordance with the provisions of the Plan. Shares that may be
issued upon the exercise of Options will be applied to reduce the maximum
number of Shares remaining available under the Plan and while any Options
are outstanding, the Company will retain as authorized and unissued Stock
at least the number of Shares from time to time required under the
provisions of the Plan or otherwise assure itself of its ability to perform
its obligations hereunder.
4.2 UNUSED AND FORFEITED STOCK. Any Shares that are subject to an Option
under this Plan that are not used because the terms and conditions of the
Option are not met or any Shares that are used for full or partial payment
of the purchase price of Shares with respect to which an Option is
exercised or any Shares retained by the Company for any purpose of this
Plan automatically will be returned to the Plan pool and become available
for use under the Plan.
4.3 ADJUSTMENTS FOR STOCK SPLIT, STOCK DIVIDEND, ETC. If the Company at
any time increases or decreases the number of its outstanding Shares of
Stock, or changes in any way the rights and privileges of such Shares by
means of the Payment of a Stock dividend or any other distribution upon
such Shares payable in Stock, or through a stock split, subdivision,
consolidation, combination, reclassification or recapitialization involving
the Stock, then, in relation to the Stock that is affected by the above
events, the provisions of this Section 4.3 will apply. In such event, the
numbers, rights and privileges of the following will be increased,
decreased or changed in like manner as if such shares had been issued and
outstanding, fully paid and nonassessable at the time of such event:
(i) adjustment to the shares of Stock as to which Options may be
granted under the Plan; and
<PAGE>
4
(ii) adjustment to the exercise price of each outstanding Option
granted hereunder.
4.4 GENERAL ADJUSTMENT RULES. If any adjustment or substitution provided
for in this Section 4 will result in the creation of a fractional Share
under any Option, the number of Shares subject to the option will be
rounded to the next higher Share.
4.5 DETERMINATION BY STOCK OPTION COMMITTEE, ETC. Adjustments under this
Section 4 will be made by the Stock Option Committee, whose determinations
with regard thereto will be final and binding upon all parties.
SECTION 5
REORGANIZATION OR LIQUIDATION
5.1 REORGANIZATION AND OPTIONS. In the event that the Company is merged
or consolidated with another corporation (other than a merger or
consolidation in which the Company is the continuing corporation and that
does not result in any reclassification or change of outstanding Shares),
or if all or substantially all of the assets or more that 20% of the
outstanding voting stock of the Company is acquired by any other
corporation, business entity or person (other than by a sale or conveyance
in which the Company continues as a holding company of an entity or
entities that conduct the business of businesses formerly conducted by the
Company), or in case of a reorganization (other than a reorganization under
the United States Bankruptcy Code) or liquidation of the Company, the Stock
Option Committee will have the power and discretion to prescribe the terms
and conditions for the exercise or modification of any outstanding Options
granted hereunder. By way of illustration, and not by way of limitation,
the Stock Option Committee may provide for the complete or partial
acceleration of the dates of exercise of the Options, or may provide that
such Options will be exchanged or converted into options to acquire
securities of the surviving or acquiring cooperation, or may provide for a
payment or distribution in respect of outstanding Options (or the portion
thereof that currently is exercisable) in cancellation thereof. The Stock
Option Committee may provide that Options must be exercised in connection
with the closing of such transaction and that if not so exercised such
Options will expire. Any such determinations by the Stock Option Committee
may be made generally with respect to all Option Holders, or may be made on
a case-by-case bases with respect to particular Option Holders. The
provisions of this Section 5 will not apply to any transaction undertaken
for the purpose of reincorporating the Company under the laws of another
jurisdiction, if such transaction does not materially affect the beneficial
ownership of the Company's capital stock. Any determination by the Stock
Option Committee hereunder shall not amend the terms of any Option without
the consent of the Option Holder unless, in the opinion of the Committee
acting reasonably, such amendment is necessary to permit the alterations to
the Company to be effected and such is in the interest of shareholders
generally.
<PAGE>
5
SECTION 6
STOCK OPTIONS
6.1 GRANT OF OPTIONS. An Eligible Participant may be granted one or more
Options. Options granted under the Plan will be Non-Statutory Options.
6.2 OPTION AGREEMENTS. Each Option granted under the Plan will be
evidenced by a written stock option agreement that will be entered into by
the Company and the Eligible Participant to whom the Option is granted (the
"Option Holder"), and will contain the following terms and conditions, as
well as such other terms and conditions not inconsistent therewith, as the
Stock Option Committee may consider appropriate in each case. In the event
of any inconsistency between the provisions of the Plan and any such
agreement entered into hereunder, the provisions of the agreement will
govern where not inconsistent with law. However, the provisions of the
Plan will govern where the agreement omits to provide for a matter governed
by the Plan and the agreement will not be complete nor enforceable where it
fails to provide for the following matters, unless such matters are
elsewhere provided or are herein provided by the terms of this Plan:
(a) NUMBER OF SHARES. Each Stock option agreement will state that it
covers a specified number of Shares, as determined by the Stock Option
Committee.
(b) PRICE. The price at which each Share covered by an Option may be
purchased will be determined by the Stock Option Committee and set forth
in the stock option agreement.
(c) VESTING PERIOD. Each Stock Option will state the time and the amount
of the Shares of the Option which vest, and are exercisable thereafter, at
specified times during the Option Period. Unless otherwise provided in the
Option agreement, Options will vest and be exercisable for types of Option
Holders as follows:
(i) DIRECTORS AND SENIOR OFFICERS TO VICE-PRESIDENT - 25% of the
amount of the Shares under Option upon granting and 25% each six
months thereafter;
(ii) EMPLOYEES GENERALLY - 10% at the end of the later of the first
three months or the stated probation period and 5% at the end of each
calendar month thereafter; and
(iii) OTHER OPTION HOLDERS - 10% at the end of the first 30 days of
engagement, 20% upon completion of 50% of the term, where a particular
term, or upon 50% of project completion, where project contract
specific, and the remainder upon, and for a period of 90 days
thereafter, the Company certifying substantial satisfaction, acting
reasonably, with contract and/or project completion.
(d) DURATION OF OPTIONS. Each Stock option agreement will state the period
of time within which the Option may be exercised by the Option Holder (the
"Option Period"). The Option Period must expire, in all cases, not more
than ten years from the date an
<PAGE>
6
Option is granted. Unless otherwise stated, director and senior officer
Options shall be the lesser of five years or the term of their office plus
60 days, employee Options the lesser of five years or the term of their
employment plus 60 days, and other Option Holders the lesser of five years
or the term of the engagement agreement plus 60 days.
(e) TERMINATION OF EMPLOYMENT, DEATH, DISABILITY ETC. Except as otherwise
determined by the Stock Option Committee, each Stock Option agreement will
provide as follows with respect to the exercise of the Option upon
termination of the employment or the death of the Option Holder:
(i) TERMINATION. If the Option Holder's employment or office with
the Company is terminated within the Option Period for cause, as
determined by the Company in its sole discretion, or if the Option
Holder resigns without appropriate or agreed notice and agreed
termination terms, the Option will be void for all purposes
immediately upon notice of termination or resignation, as the case may
be, unless otherwise agreed by the Company. As used in this Section,
"cause" means a gross violation, as determined by the Company, of the
Company's established policies and procedures. If the Option Holder
is terminated for another reason, not contemplated in this agreement,
then the Option shall be exercisable, as to the vested portion only on
the date of termination, for a period of 30 days after termination,
except as otherwise permitted by the Stock Option Committee or the
Option agreement and not to exceed the Option Period. The effect of
this Section will be limited to determining the consequences of a
termination and nothing in this Section will restrict or otherwise
interfere with the Company's discretion with respect to the
termination of any employee.
(ii) DEATH OR DISABILITY. If the Option Holder's employment with
the Company is terminated within the Option Period because of the
Option Holder's death or disability (within the meaning of Code
Section 22(e)) the Option will remain exercisable, to the extent that
it was vested and exercisable on the date of the Option Holder's death
or disability, for a period of twelve months after such date;
provided, however, that in no event may the Option be exercised after
the expiration of the Option Period.
(iii) NON-EMPLOYEES OR NON-OFFICE HOLDERS. For all purposes under
this Section, an Eligible Participant who is not an employee or office
holder of the Company will be considered to have a termination at the
conclusion of the relevant contract or upon notice by the Company of
termination for default or breach of agreement. If the contract is
terminated for breach or default then the Option shall terminate
immediately. Otherwise the Option shall terminate in accordance with
its terms or sections 6.2(c)(iii) and 6.2(d) above.
(f) TRANSFERABILITY OF OPTION. Each stock option agreement will provide
that the Option and exercise rights granted therein are not transferable or
subject to assignment or lien for security purposes by the Option Holder
except to the Option Holder's legal
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representative, his estate, a family corporation or personal holding
corporation, a bona fide lender or in such other circumstance as the Stock
Option Committee may approve, subject to legal advice and at its sole
unfettered discretion which may be exercised contrary without reason. Each
assignment of an interest in an Option must be approved before such will be
enforceable.
(g) EXERCISE, PAYMENTS, ETC. Each stock option agreement will provide
that the method for exercising the Option granted will be by delivery to
the office of the Corporate Secretary of the Company of written notice
specifying the particular Option (or portion thereof) that is being
exercised and the number of Shares with respect to which such Option is
exercised, together with payment of the Option Price. Such notice shall be
in a form satisfactory to the Stock Option Committee. The exercise of the
Option will be deemed effective upon receipt of such notice by the
Corporate Secretary and payment to the Company of the Option Price. The
purchase of such Stock will take place at the principal offices of the
Company upon delivery of such notice. A properly executed certificate or
certificates representing the Stock will be issued by the Company and
delivered to the Option Holder. Unless restricted by the Option agreement,
the exercise price shall be paid by any of the following methods or any
combination of the following methods:
(i) in cash;
(ii) by cashier's check, certified cheque, or other acceptable
banker's note payable to the order of the Company;
(iii) by net exercise notice whereby the Option Holder will authorize
the return to the Plan pool, and deduction from the Option Holder's
Stock Option, of sufficient Option Shares whose net value (Share Fair
Value less Option exercise price) is sufficient to pay the Option
Price of the Shares exercised. The Fair Value of the Shares of the
Option to be returned to the Plan pool as payment will be determined
by the closing price of the Company's Shares on the date notice is
delivered;
(iv) by delivery to the Company of a properly executed notice of
exercise together with irrevocable instructions (referred to in the
industry as 'delivery against payment') to a broker to deliver to the
Company promptly the amount of the proceeds of the sale of all or a
portion of the Stock or of a loan from the broker to the Option Holder
necessary to pay the exercise price; or
(v) such other method as the Option Holder and the Stock Option
Committee may determine as adequate including delivery of acceptable
securities (including securities of the Company), set-off for wages or
invoices due, property, or other adequate value.
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8
In the discretion of the Stock Option Committee, the Company may guarantee
a third-party loan obtained by an Option Holder to pay part or all of the
Option Price of the Shares provided that such loan or the Company's
guaranty is secured by the Shares.
(h) DATE OF GRANT. An Option will be considered as having been granted on
the date specified in the grant resolution of the Stock Option Committee.
6.3 STOCKHOLDER PRIVILEGES. Prior to the exercise of the Option and the
transfer of Shares to the Option Holder, an Option Holder will have no
rights as a stockholder with respect to any Shares subject to any Option
granted to such person under this Plan and, until the Option Holder becomes
the holder of the record of such Stock, no adjustments, other than those
described in Section 4, will be made for dividends or other distributions
or other rights to which there is a record date preceding the date such
Option Holder becomes the holder of record of such Stock.
SECTION 7
RIGHTS OF EMPLOYEES AND OPTION HOLDERS
7.1 EMPLOYMENT. Nothing contained in the Plan or in any Option will
confer upon any Eligible Participant any right with respect to the
continuation of employment by the Company, or interfere in any way with the
right of the Company, subject to the terms of any separate employment
agreement to the contrary, at any time to terminate such employment or to
increase or decrease the compensation of such Eligible Participant form the
rate in existence at the time of the grant of an Option.
SECTION 8
GENERAL RESTRICTIONS
8.1 INVESTMENT REPRESENTATIONS. The Company may require any person to
whom an Option is granted, as a condition of exercising such Option or
receiving Stock under the Option, to give written assurances, in substance
and form satisfactory to the Company and its counsel, to the effect that
such person is acquiring the Stock subject to the Option for his own
account for investment and not with any present intention of selling and to
such other effects as the Company deems necessary or appropriate in order
to comply with U.S. and Canadian federal and applicable state and
provincial securities laws. Legends evidencing such restrictions may be
placed on the certificates evidencing the Stock.
8.2 COMPLIANCE WITH SECURITIES LAWS. Each Option will be subject to the
requirement that if at any time counsel to the Company determines that the
listing, registration or qualification of the Shares subject to such Option
upon any securities exchange or under any U.S. or Canadian provincial,
state or federal law, or the consent or approval of any governmental or
regulatory body, is necessary as a condition of, or in connection with, the
issuance or purchase of Shares thereunder, such Option may not be exercised
in
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9
whole or in part unless such listing, registration, qualification, consent
or approval will have been effected or obtained on conditions acceptable to
the Stock Option Committee. Nothing herein will be deemed to require the
Company to apply for or to obtain such listing, registration or
qualification.
SECTION 9
OTHER EMPLOYEE BENEFITS
9.1 BENEFITS AND TAXES. The amount of any compensation deemed to be
received by an Option Holder as a result of the exercise of an Option will
not constitute "earnings" with respect to which any other employee benefits
of such Option Holder are determined, including without limitation benefits
under any pension, profit sharing, life insurance or salary continuation
plan. Any taxable consequences of any Option are entirely the
responsibility of the Option Holder and no contribution shall be required
of the Company and, further, if the Company should suffer liability for
unpaid taxes of an Option Holder then the full amount of such shall be a
debt of the Option Holder to the Company payable immediately and for which
the Company may seek judgment and, before judgment or process, may set-off
against any amounts due to the Option Holder or may recover, again before
judgment or process, by exercise of any Options of the Option Holder on the
Option Holder's behalf, at the discretion of the Stock Option Committee.
SECTION 10
PLAN AMENDMENT, MODIFICATION AND TERMINATION
10.1 AMENDMENT. The Board may at any time terminate and, from time to
time, may amend or modify the Plan provided, however, that no amendment or
modification may become effective without approval of the amendment or
modification by the stockholders, if stockholder approval is required to
enable the Plan to satisfy any applicable statutory requirements, or if the
Company, on the advice of counsel, determines that stockholder approval
otherwise is necessary or desirable.
No amendment, modification or termination of the Plan will in any
manner adversely affect any Options theretofore granted under the Plan,
without the consent of the Option Holders holding such Options.
SECTION 11
WITHHOLDING
11.1 WITHHOLDING REQUIREMENT. The Company's obligations to deliver Shares
upon the exercise of an Option will be subject to the Option Holder's
satisfaction of all applicable federal, state and local income and other
tax withholding requirements.
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10
11.2 WITHHOLDING WITH STOCK. At the time an Option is granted the Stock
Option Committee, in its sole discretion, may permit the Option Holder to
pay all such amounts of tax withholding, or any part thereof, that is due
upon exercise of the Option by such adjustments as the Stock Option
Committee determines, including adjustment to a net exercise price or
adjustment to the Option Price.
SECTION 12
BROKERAGE ARRANGEMENTS
12.1 BROKERAGE. The Stock Option Committee, in its discretion, may enter
into arrangements with one or more banks, brokers or other financial
institutions to facilitate the disposition of shares acquired upon exercise
of Stock Options, including, without limitation, arrangements for the
simultaneous exercise of Stock Options and sale of the Shares acquired upon
such exercise.
SECTION 13
NONEXCLUSIVITY OF THE PLAN
13.1 OTHER PLANS. The adoption of the Plan by the Board will not be
construed as creating any limitations on the power or authority of the
Board to adopt such other or additional incentive or other compensation
arrangements of whatever nature as the Board may deem necessary or
desirable or preclude or limit the continuation of any other plan, practice
or arrangement for the payment of compensation or fringe benefits to
employees generally, or to any class or group of employees, that the
Company or any Affiliated Corporation now has lawfully put into effect,
including, without limitation, any retirement, pension, savings and stock
purchase plan, insurance, death and disability benefits and executive
short-term incentive plans.
SECTION 14
REQUIREMENTS OF LAW
14.1 REQUIREMENTS OF LAW. The insurance of Stock and the payment of cash
pursuant to the Plan will be subject to all applicable laws, rules and
regulations.
14.2 GOVERNING LAW. The Plan and all agreements hereunder will be
construed in accordance with and governed by the laws of the State of
Delaware.
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SECTION 15
DURATION OF THE PLAN
15.1 TERMINATION. The Plan will terminate at such time as may be
determined by the Board, and no Option will be granted after such
termination. If not sooner terminated under the preceding sentence, the
Plan will fully cease and expire at midnight on August 31, 2007. Options
outstanding at the time of the Plan termination may continue to be
exercised in accordance with their terms.
EXHIBIT 23.1
ERNST & YOUNG
Chartered Accountants Phone: (604) 683-7133
Pacific Centre Fax: (604) 643-5422
P.O. Box 10101
700 West Georgia Street
Vancouver, Canada V7Y 1C7
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement of Starnet Communications International Inc. on Form S-8 of our
report dated June 23, 1997, on our audits of the consolidated financial
statements of Starnet Communications International Inc. as at and for the
year ended April 30, 1997 and the period from May 19, 1995 to April 30,
1996.
Vancouver, Canada /s/ ERNST & YOUNG
February 11, 1998 Chartered Accountants
