As filed with the Securities and Exchange Commission on March 10, 1999
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.
1999 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)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------
==============================================================================================================
Proposed Maxi- Proposed Maxi-
Title of Securities Amount To mum Offering mum Aggregate Amount of
To Be Registered Be Registered Price Per Share* Offering Price Registration Fee
==============================================================================================================
==============================================================================================================
<S> <C> <C> <C> <C>
Common Shares 4,000,000 $4.00 $16,000,000 $4,448
$.001 par value
==============================================================================================================
</TABLE>
* Pursuant to Rules 457(c), the proposed maximum offering price per
share is the average of the bid and asked prices as of March 5, 1999.
<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 Annual Report on Form 10-KSB and 10-KSBA for
the year ended April 30, 1998;
(c) The Company's Quarterly Reports on Form 10-QSB for the
quarters ended July 31, 1998 and October 31, 1998; and
(d) The Company's Current Report on Form 8-K as filed with the
Securities and Exchange Commission on December 17, 1998.
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.
2
<PAGE>
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 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
--------
4.1 Articles of Incorporation of the Company(1)
4.2 Bylaws of the Company(2)
5.1* Opinion of Law Office of Reed & Reed, P.C. as to the legality
of the Company's Common Stock being registered
10.7* Starnet Communications International Inc. 1999 Stock Option Plan
23.1* Consent of Ernst & Young
23.2* Consent of Law Office of Reed & Reed, P. C. (contained in
Exhibit 5.1)
_______
* Filed herewith.
(1) Exhibit 4.1 is incorporated by reference from Exhibit 3.3 to the
Registration Statement on Form S-8 filed with the Securities and
Exchange Commission on March 12, 1998.
(2) Exhibit 4.2 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 to include
any additional or changed material information on the plan of distribution.
3
<PAGE>
(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) To file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
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 March 5, 1999.
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: March 5, 1999 By: /s/ Paul Giles
----------------------------------
Paul Giles, Director
Date: March 5, 1999 By: /s/ Mark Dohlen
----------------------------------
Mark Dohlen, Director
Date: March 5, 1999 By: /s/ Jack Carley
----------------------------------
Jack Carley, Director
Date: March 5, 1999 By: /s/ Christopher Zacharias
----------------------------------
Christopher Zacharias, Director
4
EXHIBIT 5.1
LAW OFFICE OF
REED & REED, P.C.
Attorneys At Law
1919 14th Street, Suite 330
Boulder, Colorado 80302
Telephone (303) 413-0691 E-Mail
Fax (303) 413-0645 [email protected]
----------------
SCOTT M. REED
LESLIE M. REED
March 9, 1999
Starnet Communications International Inc.
425 Carrall Street, Mezzanine Level
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 4,000,000 shares of the Company's
Common Stock, to be offered under the Company's 1999 Stock Option Plan (the
"Plan"), we are of the opinion that:
1. The Company is a corporation duly organized and validly existing under
the laws of the State of Delaware.
2. All necessary corporate action has been taken to authorize the
establishment of the Plan and the issuance of 4,000,000 shares of the
Company's Common Stock under the Plan.
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 Common Stock of the Company.
We hereby consent to the filing of a copy of this opinion as an
exhibit to the Registration Statement referred to above.
Very truly yours,
/s/Law Office of Reed & Reed, P.C.
Law Office of Reed & Reed, P.C.
EXHIBIT 10.7
STARNET COMMUNICATIONS INTERNATIONAL, INC.
1999 STOCK OPTION PLAN
SECTION 1
INTRODUCTION
1.1 ESTABLISHMENT. Starnet Communications International Inc., a Delaware
Corporation, hereby establishes the Starnet Communications International,
Inc. 1999 Stock Option Plan (the "Plan") for employees, consultants,
directors, and other advisors associated with the Company whom the Board
wishes to incentivize. Starnet Communications 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
January 1, 1999.
"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.
"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 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
<PAGE>
3
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. 4,000,000 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
(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.
<PAGE>
4
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.
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
<PAGE>
5
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 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. Notwithstanding any other provisions hereof, unless
otherwise determined by the Stock Option Committee, any Option granted to an
officer, director or more than 10% shareholder of the Company hereunder shall
not become exercisable until at least six months following the date of grant.
(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:
<PAGE>
6
(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 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
<PAGE>
7
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.
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
<PAGE>
8
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 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
<PAGE>
9
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.
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,
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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.
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 December 31, 2009. Options
outstanding at the time of the Plan termination may continue to be
exercised in accordance with their terms.
EXHIBIT 23.1
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
(Form S-8), pertaining to the 1999 Stock Option Plan of Starnet
Communications International Inc., of our report dated July 3, 1998 with
respect to the consolidated financial statements of Starnet Communications
International Inc. included in its Annual Report (Form 10-KSB) for the year
ended April 30, 1998, filed with the Securities and Exchange Commission.
Vancouver, Canada /s/ ERNST & YOUNG LLP
March 9, 1999 Chartered Accountants
