<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
NTN CANADA, INC.
- -----------------------------------------------------------------------------
(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):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/x/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
NTN CANADA, INC.
14 Meteor Drive
Etobicoke, Ontario
Canada M9W 1A4
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
February 28, 1997
January 27, 1997
To the Shareholders of NTN Canada, Inc.:
NOTICE IS HEREBY GIVEN that an Annual Meeting (the "Annual Meeting") of
Shareholders of NTN Canada, Inc., a New York corporation (the "Company"), will
be held at 10:00 a.m., local time, on February 28, 1997, at the offices of the
Company, 14 Meteor Drive, Etobicoke, Ontario, Canada M9W 1A4, for the following
purposes:
(a) To elect a seven member Board of Directors to serve until
the next Annual Meeting of Shareholders of the Company and until their
successors are duly elected and qualified;
(b) To ratify the Board of Directors' selection of auditors,
Ernst & Young, Chartered Accountants; and
(c) To transact such other business as may properly come
before the Annual Meeting and any adjournments thereof.
In accordance with the provisions of the Company's By-laws, the Board
of Directors has fixed the close of business on January 15, 1997 as the date for
determining the shareholders of record entitled to receive notice of, and to
vote at, the Annual Meeting and any adjournments thereof.
By Order of the Board of Directors,
DAVID AUGER, Secretary
SHAREHOLDERS ARE URGED TO FILL IN, DATE, SIGN AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING PREPAID
ENVELOPE.
It is desirable that as many shareholders as possible be represented,
in person or by proxy, at the Annual Meeting. Consequently, whether or not you
now expect to be present, please execute and return the enclosed proxy. You have
the power to revoke your proxy at any time before it is voted, and the giving of
a proxy will not affect your right to vote in person if you attend the Annual
Meeting.
<PAGE>
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE>
NTN Canada, Inc.
14 Meteor Drive
Etobicoke, Ontario
Canada M9W 1A4
(416) 675-6666
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
February 28, 1997
January 27, 1997
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of NTN Canada, Inc. (the
"Company") for use at the Company's Annual Meeting of Shareholders to be held on
February 28, 1997, and at any adjournment thereof (the "Annual Meeting").
Further, solicitation of proxies may be made personally, or by telephone or
telegraph, by regularly employed officers and other employees of the Company,
who will receive no additional compensation for such. The cost of soliciting
proxies will be borne by the Company which may enlist the assistance, and
reimburse the reasonable expenses, of banks and brokerage houses in the
additional solicitation of proxies and proxy authorizations, particularly from
their customers whose stock is not registered in the owner's name, but in the
name of such banks or brokerage houses.
All shares represented at the Annual Meeting by proxies will be voted
provided that such proxies are properly signed and dated. In cases where a
choice is indicated, the shares represented will be voted in accordance with the
specifications so made. In cases where no specifications are made, the shares
represented will be voted FOR the election as directors of the nominees listed
below and FOR the ratification of the Board of Directors' selection of auditors.
Any shareholder executing and returning a proxy has the power to revoke
such proxy at any time prior to the voting thereof by: (a) written notice to the
Secretary of the Company at the Company's headquarters delivered prior to the
commencement of the Annual Meeting, (b) providing a signed proxy bearing a later
date, or (c) appearing in person and voting at the Annual Meeting.
A copy of the Annual Report on Form 10-K of the Company for the fiscal
year ended August 31, 1996 (the "1996 Fiscal Year"), including financial
statements, is being mailed concurrently herewith (on or about January 27, 1997)
to all shareholders of record at the close of business on January 15, 1997. The
Annual Report does not constitute a part of the proxy solicitation material for
the Annual Meeting.
<PAGE>
VOTING SECURITIES
Only shareholders of record at the close of business on January 15,
1997 are entitled to vote at the Annual Meeting. The total number of shares of
common stock, par value $.0467 per share (the "Common Stock"), of the Company,
issued, outstanding and entitled to be voted on the record date was 2,441,617
shares. Each of such shares of Common Stock is entitled to one vote upon all
matters to be acted upon at the Annual Meeting.(1) In addition, the Company has
outstanding 950,000 shares of Preferred Stock, par value $.01 per share (the
"Preferred Stock"), of the Company. In accordance with the terms of the
Certificate of Designation by which the Preferred Stock was authorized, holders
of Preferred Stock are entitled (after giving effect to the Stock Splits) to
three votes for every fourteen shares of Preferred Stock held of record as of
the record date for the Annual Meeting. Accordingly, there will be 2,441,617
shares (2,441,617 votes) of Common Stock and 950,000 shares (203,571 votes) of
Preferred Stock, or an aggregate of 2,645,188 votes available to be cast at the
Annual Meeting. The holders of a majority of the outstanding votes (i.e.,
1,322,595 votes) shall constitute a quorum, which is necessary for the
transaction of business at the Annual Meeting. In accordance with the Company's
Certificate of Incorporation and By-laws, and applicable law, the election of
directors shall be by a plurality of the votes cast; and a majority of votes
cast is required for the ratification of the Board of Directors' selection of
auditors.
Shares Held By Directors and Named Executive Officers
Set forth in the table below is information concerning the ownership,
as of the close of business on January 15, 1997, of the Common Stock by the
Company's directors and Named Executive Officers(2), and all directors and
present executive officers as a group.
- --------
(1) On August 15, 1996, September 30, 1992, and September 4, 1990, the
Company effectuated three-for-two (3:2), one-for-seven (1:7) and
one-for-ten (1:10) stock splits, respectively, of the Common Stock
(the "Stock Splits"). Throughout this Proxy Statement, all references
to shares of Common Stock refer to shares of Common Stock as adjusted to
reflect the effectuation of the Stock Splits.
(2) The term "Named Executive Officers" includes all persons who served as
Chief Executive Officer of the Company at any time during the Company's
fiscal year ended August 31, 1996 (the "1996 Fiscal Year") and the four
highest paid individuals whose total compensation exceeded $100,000 for the
1996 Fiscal Year and who were serving as executive officers of the Company
at the end of the 1996 Fiscal Year. The only individual meeting this
definition is Peter Rona, the President, Chief Executive Officer and
Principal Financial and Accounting Officer of the Company.
- 2 -
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name Beneficial Ownership (1) Class (1)
- ---- ------------------------ ---------
<S> <C> <C> <C>
James R. Newell (2)....................................... 1,577,701(3) 51.0%
James Thompson (2)........................................ 1,577,701(3) 51.0
Peter Rona (4)............................................ 316,607(5) 11.5
Adrian P. Towning......................................... 3,000(6) 0.1
Daniel C. Downs........................................... -0-(6) 0.0
Douglas Connolly.......................................... -0-(7) 0.0
Dale G. Smith............................................. -0-(6) 0.0
All directors and executive officers as a group
(7 persons)...................................... 1,897,308 (8) 55.6%
</TABLE>
(1) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them. A person is deemed to be the
beneficial owner of securities which may be acquired by such person within
60 days from the date on which beneficial ownership is to be determined,
upon the exercise of options, warrants or convertible securities. Each
beneficial owner's percentage ownership is determined by assuming that
options, warrants and convertible securities that are held by such person
(but not those held by any other person) and which are exercisable within
such 60 day period, have been exercised.
(2) The address for Messrs. Newell and Thompson is c/o NetStar Enterprises
Inc., 2225 Sheppard Avenue East - Suite 100, North York, Ontario, Canada
M2J 5C2.
(3) Includes the 1,577,701 shares of Common Stock beneficially owned by NetStar
Enterprises Inc. ("NetStar"), a wholly owned subsidiary of NetStar
Communications Inc. (formerly, Labatt Communications, Inc. ("NetStar
Communications")). Mr. Newell is Senior Vice President of Finance and Chief
Financial Officer of NetStar Communications and Mr. Thompson is President
of both NetStar and TSN The Sports Network, also a wholly owned subsidiary
of NetStar Communications. The 1,577,701 shares of Common Stock
beneficially owned by NetStar consists of: (a) 925,787 shares held of
record by NetStar and (b) 651,914 shares (subject to adjustment) issuable
upon exercise of an option (the "NetStar Option") granted pursuant to a
Stock Purchase Agreement, dated as of October 4, 1994 (the "NetStar
Agreement"), between the Company and NetStar Communications. The NetStar
Agreement also grants NetStar the right (the "NetStar Ownership Maintenance
Right"), exercisable in the event the Company seeks to issue additional
shares of Common Stock or any options, warrants, shares of preferred stock
or other rights entitling the holder thereof to acquire Common Stock, to
purchase from the Company such additional shares of Common Stock so as to
permit NetStar to maintain its then percentage ownership of outstanding
Common Stock. The NetStar Option expires on April 4, 1998. The NetStar
Ownership Maintenance Right is exercisable as long as NetStar owns any
shares of Common Stock. Messrs. Newell and Thompson disclaim any ownership
interest, beneficial or otherwise, in the shares of Common Stock presently
owned by NetStar or the shares which NetStar has the right to acquire
pursuant to the NetStar Option and NetStar Ownership Maintenance Right.
(4) The address for Peter Rona is c/o NTN Canada, Inc., 14 Meteor Drive,
Etobicoke, Ontario, Canada M9W 1A4
- 3 -
<PAGE>
(5) Includes (a) 192,857 shares of Common Stock issuable upon conversion of the
900,000 shares of Preferred Stock held of record by Anor Management, Ltd.
("Anor") and (b) 123,750 shares issuable upon exercise of options granted
to Mr. Rona which are exercisable within the next sixty days. Mr. Rona is
the President, sole director and sole shareholder of Anor. Does not include
an additional 18,750 shares underlying options which are not exercisable
within the next 60 days.
(6) Does not include 1,500 shares of Common Stock issuable upon exercise of
options granted to each of Messrs. Towning, Downs and Smith, which options
are not exercisable within the next 60 days.
(7) Does not include any of the 196,387 shares which may be issued in lieu of
cash payments due under promissory notes payable to two entities controlled
by Mr. Connolly. No payments under these promissory notes are due within
the next 60 days. [See (b) of "Certain Transactions."]
(8) Includes 968,521 shares issuable upon conversion of the Preferred Stock and
the exercise of the options and rights referred to in notes (3) and (5)
above.
Shares Held by Certain Other Shareholders
The following table sets forth, as of the close of business on January
15, 1997, certain information with respect to each person who is known to the
Company to be the beneficial owner of more than five (5%) percent of the Common
Stock, other than the directors set forth in the Directors and Named Executive
Officers Ownership Table above.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address Beneficial Ownership (1) Class (1)
- ---------------- ------------------------ ---------
<S> <C> <C>
NetStar Enterprises Inc.
2225 Sheppard Avenue East - Suite 100
North York, Ontario
Canada M2J 5C2........................................... 1,577,701 (1) 51.0%
Anor Management Ltd.
c/o Peter Rona
14 Meteor Drive
Etobicoke, Ontario
Canada M9W 1A4............................................ 192,857 (2) 7.3
</TABLE>
(1) Includes (a) 925,787 shares held of record by NetStar and (b) 651,914
shares (subject to adjustment) issuable upon exercise of the NetStar Option
granted pursuant to the NetStar Agreement. The NetStar Agreement also
grants NetStar the NetStar Ownership Maintenance Right, exercisable so as
to permit NetStar to maintain its then percentage ownership of outstanding
Common Stock. The NetStar Option expires on April 4, 1998. The NetStar
Ownership Maintenance Right is exercisable as long as NetStar owns any
shares of Common Stock.
(2) Includes 192,857 shares of Common Stock issuable upon conversion of the
900,000 shares of Preferred Stock held of record by Anor. The 900,000
shares of Preferred Stock have the equivalent voting power of 192,857
shares of Common Stock.
- 4 -
<PAGE>
Voting by Directors and Executive Officers
It is anticipated that the directors and the Named Executive Officers
of the Company will vote FOR the nominees to the Board of Directors, (see
"Election of Directors") and FOR the ratification of the Board of Directors'
selection of auditors (see "Ratification of the Board of Directors' Selection of
Auditors"). Such directors and executive officers, and their affiliates, hold
1,121,644 or 42.4% of the votes entitled to be cast at the Annual Meeting.
ELECTION OF DIRECTORS
The individuals named in the enclosed form of proxy will vote, if so
authorized, FOR the persons named below as directors of the Company, each of
whom has served as a director of the Company for the periods so indicated. Each
such person is to be elected to hold office until the next succeeding Annual
Meeting of Shareholders and until his successor is duly elected and qualified.
Management of the Company is not aware of any reason why any of the nominees
will not be able to serve. If a nominee should subsequently become unavailable
for election, the persons voting the accompanying proxy may, in their sole
discretion, vote FOR such substitute nominee the present Board of Directors may
recommend.
<TABLE>
<CAPTION>
Director
Name Age Principal Positions with the Company Since
- ---- --- ------------------------------------ --------
<S> <C> <C> <C>
Peter Rona 50 President, Chief Executive Officer, Principal 1987
Financial and Accounting Officer and Chairman of
the Board of Directors of the Company
David Auger 46 Secretary of the Company; Director of Corporate N/A
Development of NTN Interactive Network Inc.
Douglas R. Connolly 43 President of Magic Lantern Communications Ltd.; 1996
Director of the Company
Daniel C. Downs 57 Director of the Company 1993
James R. Newell 39 Director of the Company 1994
Dale G. Smith 47 Director of the Company 1993
James Thompson 54 Director of the Company 1997
Adrian P. Towning 52 Director of the Company 1994
</TABLE>
Peter Rona has been the President, Chief Executive Officer, Principal
Financial and Accounting Officer and a director of the Company since September
1, 1987. He has been President of NTN Interactive Network, Inc. (formerly, NTN
Sports, Inc. until 1993), a wholly-owned subsidiary of the Company ("NTNIN"),
from 1985 to 1991 and February 1993 to present. Mr. Rona has also been the
President, sole director and sole shareholder of Anor Management, Ltd., a
personal holding company since 1987.
David Auger was appointed the Company's Secretary in April 1995. He has
been Director of Corporate Development for NTNIN since November 1994. For the
eleven years prior to his joining the Company, Mr. Auger acted as a consultant
to the Company (June 1993 to October 1994) and others, providing consulting
services in developing and marketing interactive programs and technologies to
the hotel, hospitality and financial markets.
- 5 -
<PAGE>
Douglas Connolly has been the President and a director of Magic Lantern
Communications Ltd. (and its predecessor corporation) ("Magic") since 1985. On
October 2, 1996, the Company acquired all of the outstanding stock of Magic. Mr.
Connolly also has been President, director and a principal shareholder of
Connolly-Daw Holdings Inc. ("Connolly-Daw") (since 1987) and 1199846 Ontario
Ltd. (since September 1996), two personal holding companies.
Daniel C. Downs has been Executive Vice-President (1983 to April 1994),
Chief Operating Officer (1983 to October 1996), President (since April 1994) and
a director (1985 to present) of NTN Communications, Inc., a developer and
distributor of interactive programs. Under a License Agreement, dated March 23,
1990 (the "License Agreement"), between Communications and NTNIN, the Company,
through NTNIN, holds the exclusive license to market the products and programs
of Communications throughout Canada through December 31, 2015. Mr. Downs was an
independent marketing consultant from 1981 to 1983, during which time he also
worked on the development of the interactive game QB1. From 1979 to 1981, he
served as Executive Vice-President and General Manager of Hollywood Park Race
Course. From 1974 to 1979, he served as Executive and General Manager for the
Southern California Racing Association at Los Alamitos Race Course.
James R. Newell is the Senior Vice President of Finance and Chief
Financial Officer (October 1993 to present) of NetStar Communications, a company
involved in broadcast operations. Mr. Newell was the Assistant Treasurer (1986
to 1987), Treasurer (1987 to 1989) and Vice President of Finance and Chief
Financial Officer (1989 to October 1993) of Gandalf Technologies Inc., a
manufacturer of data communications products. He was an auditor with KPMG
(formerly, Peat Marwick Mitchell), an international firm of chartered
accountants from 1980 to 1986. Mr. Newell is currently a director of The
Discovery Channel (since March 1995).
Dale G. Smith has been an officer and part owner of Montebello Farms
Inc., the world's second largest breeders of Straight Egyptian Arabian Horses,
since 1990. From 1988 to 1990, he was the President of Oden Capital Corporation,
a privately owned venture capital company. From 1969 to 1988, he was a member of
Deloitte & Touche, certified public accountants, having been elected a partner
in 1980.
James Thompson is the President of NetStar (since November 1996) and
President (since June 1994) of TSN The Sports Network ("TSN"), a cable network
providing sports, news and entertainment programming throughout Canada. NetStar
and TSN are wholly owned subsidiaries of NetStar Communications. Mr. Thompson
also served as General Manager (July 1988 to January 1997), Vice-President (July
1988 to June 1994), Vice-President of Programming (January 1986 to July 1988)
and Program Director (July 1985 to January 1986) of TSN. Prior to joining TSN,
Mr. Thompson was employed for over twenty years by the Canadian Broadcasting
Corporation, serving in positions of increasing responsibility up to the level
of Executive Producer.
Adrian P. Towning is a private, independent investor in several
companies involved in the communications industry. As a result of his
investments, he has served as a director of some of these companies, including
Medical Communications Corporation ("MCC") (1994 to July 1996) and Faxcast
Broadcasting Corporation (1991 to present), a public traded company on the
London Stock Exchange, which owns proprietary technology for the simultaneous
broadcasting of data using airwaves, and takes an active part in their
management decisions. On May 14, 1996, MCC filed a petition under Chapter 7 of
the United States Bankruptcy Code and the Bankruptcy Court appointed a Trustee
of MCC on July 11, 1996. On July 16, 1996, MCC was dissolved. From 1983 to 1989,
he established and managed Anglo-Massachusetts Investments Incorporated, with
offices in Boston and London, which was involved in providing financial advice
to Europeans.
- 6 -
<PAGE>
Pursuant to a Designation Agreement, dated as of October 4, 1994, among
the Company, NTNIN and NetStar, the Company has granted NetStar the right to
designate one-third (1/3) of the members of the Company's Board of Directors as
long as NetStar is the owner of at least 20% and not greater than 50% of the
outstanding Common Stock. Should NetStar's ownership be at least 10% and less
than 20% of the outstanding Common Stock, NetStar would be entitled to designate
one-sixth (1/6) of the members of the Company's Board. Further, should NetStar's
ownership exceed 50% of the outstanding Common Stock, NetStar shall be entitled
to designate one-half (1/2) of the members of the Company's Board. In accordance
with the terms of the Designation Agreement, James R. Newell and James Thompson
have been designated by NetStar as directors of the Company and the Board of
Directors, acting on that designation, has included their names as part of the
Board of Directors' slate of nominees for which proxies are being sought by
means of this Proxy Statement.
Pursuant to a Management Agreement, dated October 1, 1996 (the "Magic
Management Agreement"), between Magic and Connolly-Daw, Magic recommended that
Douglas Connolly be elected as a director of the Company. On November 25, 1996,
the Board of Directors of the Company acted on such recommendation by expanding
the size of the Board to seven members and elected Mr. Connolly as an additional
director to fill the newly created directorship. In accordance with the terms of
the Magic Management Agreement, the Board of Directors has nominated Mr.
Connolly for a full term as a director of this Company and has included his name
as part of the Board of Directors' slate of nominees for which proxies are being
sought by means of this Proxy Statement. In addition, the Employment Agreement,
dated October 1, 1996 (the "D. Connolly Employment Agreement"), between Magic
and Douglas Connolly, which covers the employment term of October 1, 1997
through September 30, 1999, contains a provision under which Magic is to
recommend that Douglas Connolly be elected as a director of the Company. It is
not known at this time how the Board of Directors will act on such
recommendation once the D. Connolly Employment Agreement becomes effective.
Board Committees and Attendance Records
The Company's Audit and Compensation Committee currently consists of
Messrs. James Newell and Dale G. Smith. Neither Messrs. Newell nor Smith are
officers or employees of the Company and neither has served in such capacities
with the Company in the past.
During the 1996 Fiscal Year, there were five formal meetings of the
Board of Directors of the Company. All of the directors were in attendance at
such meetings, with the exception of one absence by Daniel Downs.
Additional Board actions were conducted by unanimous written consent.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
ABOVE-LISTED SLATE OF DIRECTOR-NOMINEES
RATIFICATION OF THE BOARD OF DIRECTORS' SELECTION OF AUDITORS
Subject to shareholder ratification, the Board has selected Ernst &
Young, Chartered Accountants, as independent auditors for the fiscal year ending
August 31, 1997, and until its successor is selected. Ernst & Young has audited
the Company's financial statements for the Company's fiscal years ended August
31, 1995 and 1996. No representative of Ernst & Young is expected to be present
at the Annual Meeting, and accordingly it will not have an opportunity to make a
statement or be available to answer questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
BOARD OF DIRECTORS SELECTION OF AUDITORS
- 7 -
<PAGE>
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not
aware of any other matter which is to be presented for action at the Annual
Meeting. If any matter other than those described above (i.e., election of
directors and ratification of the Board's selection of auditors) does properly
come before the Annual Meeting, the individuals named in the enclosed Proxy
will, unless indicated otherwise, vote the shares represented thereby in
accordance with their best judgment.
MANAGEMENT REMUNERATION
General
The Company compensates its employees and directors in Canadian dollars
("Cdn$"). The amounts provided in the Compensation Table below, along with other
disclosures on transactions with the Company's directors and officers, are set
forth in U. S. dollars ("US$"). For information concerning the applicable
exchange rates, see "Exchange Rates."
Summary Compensation Table
The following table sets forth information concerning the compensation
paid or accrued by the Company during the three years ended August 31, 1996 to
the Company's Named Executive Officer.
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Annual Compensation Awards
------------------------------------------- ------------
Securities
Year Ended Other Annual Underlying
Name and Principal Position August 31, Salary Bonus Compensation Options
--------------------------- ---------- ------ ----- ------------ ----------
<S> <C> <C> <C> <C> <C>
Peter Rona, President and Chief 1996 US$115,090 US$10,961 US$3,483 37,500
Executive Officer 1995 111,674 11,167 -0- 75,000
1994 70,012 7,293 -0- -0-
</TABLE>
During the three year period ended August 31, 1996, the Company did not
grant any restricted stock awards or stock appreciation rights. Additionally,
all of the Company's group life, health, hospitalization, medical reimbursement
or relocation plans, if any, do not discriminate in scope, terms or operation,
in favor of the Named Executive Officer and are generally available to all
salaried employees. Further, the Named Executive Officer did not receive, in any
of the periods specified in the Summary Compensation Table, perquisites and
other personal benefits, securities or property in an aggregate amount in excess
of the lesser of $50,000 or 10% of the total salary and bonus reported for the
Named Executive Officer in the fiscal year in which such benefits were received,
and no single type of perquisite or other personal benefits exceeded 25% of the
total perquisites and other benefits reported for the Named Executive Officer in
the applicable fiscal year.
- 8 -
<PAGE>
Option Grants Table
The following table sets forth (a) the number of shares underlying
options granted to the Named Executive Officer during the 1996 Fiscal Year, (b)
the percentage the grant represents of the total number of options granted to
all Company employees during the 1996 Fiscal Year, (c) the per share exercise
price of each option, (d) the expiration date of each option, and (e) the
potential realized value of each option based on: (i) the assumption of a five
(5%) percent annualized compounded appreciation of the market price of the
Common Stock from the date of the grant of the subject option to the end of the
option term, and (ii) the assumption of a ten (10%) percent annualized
compounded appreciation of the market price of the Common Stock from the date of
the grant of the subject option to the end of the option term.
<TABLE>
<CAPTION>
Potential Realized Value at
Assumed Rates of Stock Price
Appreciation for Option Term
-----------------------------------
Percentage of
Number of Total Options
Shares Granted to
Underlying Employees in Exercise Expiration
Name Options Granted Fiscal Year Price Date 5% 10%
- ---- --------------- ----------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Peter Rona 37,500 33.6% US$3.50 11/20/00 US$36,262 US$80,129
</TABLE>
Options Exercised and Remaining Outstanding
Set forth in the table below is information, with respect to the Named
Executive Officer, as to the (a) number of shares acquired during the 1996
Fiscal Year upon each exercise of options granted to such individual, (b) the
aggregate value realized upon each such exercise (i.e., the difference between
the market value of the shares at exercise and their exercise price), (iii) the
total number of unexercised options held on August 31, 1996, separately
identified between those exercisable and those not exercisable, and (iv) the
aggregate value of in-the-money, unexercised options held on August 31, 1996,
separately identified between those exercisable and those not exercisable.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options at
Options at August 31, 1996 August 31, 1996
---------------------------------- ----------------------------------
Shares
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Peter Rona -0- -0- 123,750 18,750 US$299,688 US$60,938
</TABLE>
Director's Remuneration
Each director not otherwise a full time employee of the Company is
eligible to receive Cdn$500 for each meeting of the Board of Directors or
committee thereof which they attend, along with the reimbursement of their
reasonable expenses incurred on the Company's behalf. The NetStar designees on
the Board declined such compensation in the 1996 Fiscal Year and in previous
fiscal years.
- 9 -
<PAGE>
On April 29, 1996, the following directors were awarded five-year
options to purchase 1,500 shares of Common Stock each, at $4.67 per share:
Daniel C. Downs, Dale G. Smith and Adrian P. Towning.
Employment Contracts with Named Executive Officers and Others
Effective September 1, 1994, NTNIN entered into a three-year employment
agreement (the "Rona Employment Agreement") with Peter Rona, its President and
Chief Executive Officer. Mr. Rona is also the President, Chief Executive
Officer, Chief Financial and Accounting Officer and Chairman of the Board of
Directors of the Company. NTNIN's obligations under the Rona Employment
Agreement have been guaranteed by the Company. Mr. Rona does not receive any
compensation from the Company other than pursuant to the Rona Employment
Agreement.
The Rona Employment Agreement provides for an initial base compensation
of Cdn$150,000 with annual increases to be subject to review by the Board of
Directors, but in no event less than the proportional increase in the Consumer
Price Index as published by Statistics Canada, plus a bonus equal to a
percentage of the annual base compensation paid to Mr. Rona determined by
reference to the excess of NTNIN's actual net income before taxes over specified
amounts set forth in the Rona Employment Agreement. The Rona Employment
Agreement further provides for the granting to Mr. Rona of stock options at the
discretion of the Board of Directors. For the 1996 Fiscal Year, Mr. Rona's base
compensation was Cdn$157,500 (US$115,090), as a result of the Board's
determination to increase Mr. Rona's compensation in excess of the amount
otherwise required under the Rona Employment Agreement pursuant to the
applicable increase in the Consumer Price Index; his bonus was Cdn$15,000
(US$10,961), determined in accordance with the terms of the Rona Employment
Agreement; and the Board awarded him discretionary stock options to purchase
25,000 shares of Common Stock. Under the terms of the Rona Employment Agreement,
if on or prior to August 31, 1996, NTNIN and Mr. Rona failed to extend the term
of the Rona Employment Agreement for an additional three year term, NTNIN would
have been required to pay Mr. Rona an amount equal to his base compensation and
applicable bonus for the period of September 1, 1997 through August 31, 1998.
NTNIN and Mr. Rona did not come to an agreement by August 31, 1996 with respect
to the extension of the Rona Employment Agreement. However, the Board of
Directors and Mr. Rona are in active negotiations with respect to an extension
and modification of the Rona Employment Agreement, although no definitive
agreement as to the terms of such an extension and modification has been entered
into as of the date of this Proxy Statement.
Pursuant to the Magic Management Agreement, Connolly-Daw has been
retained to provide management services to Magic for an eleven month term
terminating on August 31, 1997. Connolly-Daw agreed that the management services
required by the Magic Lantern Agreement would be provided by Douglas Connolly
and Wendy Connolly. Douglas Connolly became a director of the Company on
November 25, 1997 and Wendy Connolly is the wife of Mr. Connolly. For its
services, Connolly-Daw shall receive compensation in the amount of Cdn$197,450
(US$144,928 on October 1, 1996), inclusive of automotive expenses, plus
reimbursement of out-of-pocket expenses and a bonus, not to exceed Cdn$26,813
(US$19,680), to be based upon the actual net income before taxes, if any, of
Magic during the term of the Magic Management Agreement.
Magic also has entered into two separate Employment Agreements, each
dated October 1, 1996 (the "Employment Agreements"), with Douglas Connolly and
Wendy Connolly. The Employment Agreements each have two year terms commencing on
September 1, 1997 and terminating on August 31, 1999, and pursuant to which Mr.
and Ms. Connolly shall receive annual base salaries of Cdn$125,000 (US$91,750 at
October 1, 1996) and Cdn$70,000 (US$51,380), respectively, together with
automotive expenses of Cdn$12,000 (US$8,808) and Cdn$8,400 (US$6,166),
respectively. There is a provision in each Employment Agreement for a
cost-of-living
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<PAGE>
adjustment to their base salaries for the second year of the term. In addition,
under their respective Employment Agreements, Mr. and Ms. Connolly shall each be
entitled to a bonus, not to exceed Cdn$50,000 (US$36,700) and
Cdn$28,000(US$20,552), respectively (subject to a cost-of living adjustment for
the second year of their respective terms), to be based upon the actual net
income before taxes, if any, of Magic during each year of the terms of the
Employment Agreements. The D. Connolly Employment Agreement further provides for
Mr. Connolly to serve as President and Chief Operating Officer of Magic during
its term.
Neither the Company or NTNIN has any other employment agreement in
effect with any other executive employee.
CERTAIN TRANSACTIONS
Set forth below is a description of certain transactions between the
Company and its directors, executive officers and beneficial owners of five
percent or more of the outstanding Common Stock, as well as certain business
relationships between the Company and its directors, which occurred or existed
in the 1996 Fiscal Year.
(a) During the 1996 Fiscal Year, both pursuant to the License Agreement
and otherwise, the Company paid NTN Communications, Inc. an aggregate
Cdn$1,339,263 (US$978,636) as commissions and for equipment purchases and
maintenance fees. Under the License Agreement, the Company, through NTNIN, holds
the exclusive license to market the products and programs of Communications
throughout Canada through December 31. 2015. Daniel C. Downs, a director of the
Company, is the President, Chief Operating Officer of NTN Communications, Inc..
(b) On October 2, 1996, pursuant to a Stock Purchase Agreement, dated
October 1, 1996 (the "Magic Lantern Agreement"), the Company, through NTNIN,
acquired all of the outstanding stock of Magic. As consideration for the
purchase of such stock the Company delivered Cdn$200,000 (US$146,800 on October
1, 1996) and a Non-Negotiable Promissory Note (the "Connolly-Daw Note") in the
principal amount of Cdn$703,133 (US$516,099) to Connolly-Daw Holdings
Inc.("Connolly-Daw") and a Non-Negotiable Promissory Note (the "1199846 Note")
in the principal amount of Cdn$546,867 (US$401,400) to 1199846 Ontario Ltd
("1199846"). The Connolly Note requires principal payments of Cdn$78,133
(US$57,350), Cdn$312,500 (US$229,375) and Cdn$312,500 (US$229,375) on August 31,
1998, 1999, and 2000, respectively. In lieu of such cash payments, the Company
has the option to tender payment to Connolly-Daw, and Connolly-Daw has the
option to demand payment, in the form of 12,276, 49,097 and 49,096 shares of
Common Stock (collectively, the "Connolly-Daw Shares"), respectively. The
1199846 Note requires principal payments of Cdn$312,500 (US$229,375) and
Cdn$234,367 (US$172,025) on August 31, 1997 and 1998, respectively. In lieu of
such cash payments, the Company has the option to tender payment to 1199846, and
1199846 has the option to demand payment, in the form of 49,097 and 36,821
shares of Common Stock (collectively, the "1199846 Shares"), respectively. Also
pursuant to the Magic Lantern Agreement, Connolly-Daw, NTNIN and the Company
entered into an Option Agreement, dated October 1, 1996, and 1199846, NTNIN and
the Company entered into an Option Agreement, dated October 1, 1996 (together,
the "Option Agreements"). Under the terms of the Option Agreements, in the event
that either Magic or Mr. Connolly chooses not to extend the term of the D.
Connolly Employment Agreement beyond its initial term expiring on August 31,
1999, on or after September 1, 1999 and on or before September 30, 1999,
Connolly-Daw and 1199846 shall each have the right to cause the Company to
purchase any of the Connolly-Daw Shares or 1199846 Shares, as the case may be,
then held by Connolly-Daw or 1199846 at a price equal to 90% of the market value
(as defined in the Option Agreements) of such shares (Connolly-Daw having been
granted the right in this event to cause acceleration of
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<PAGE>
the September 1, 2000 payment under the Connolly-Daw Note to August 31, 1999)
and the Company shall have the right to cause the Connolly-Daw and 1199846 to
sell to the Company any of the Connolly-Daw Shares or 1199846 Shares, as the
case may be, then held by Connolly-Daw or 1199846 at a price equal to 110% of
the market value (as defined in the Option Agreements) of such shares
(Connolly-Daw having been granted the right in this event to cause acceleration
of the September 1, 2000 payment under the Connolly-Daw Note to August 31,
1999). Douglas Connolly, a director of the Company and President of Magic, is
the President and a principal shareholder of both Connolly-Daw and 1199846.
(c) At the time of the Company's acquisition of Magic, Connolly-Daw was
indebted to Magic in the amount of Cdn$160,000 (US$117,440 on October 1, 1996).
This indebtedness is represented by a Promissory Note, dated October 1, 1996
(the "Magic Lantern Note"), in the principal amount of such indebtedness. The
Magic Lantern Note is due on demand and bears interest, at a specified bank
prime rate, payable monthly.
EXCHANGE RATES
This Proxy Statement contains translations of certain amounts in
Canadian dollars ("Cdn$") into United States dollars ("US$") based upon the
exchange rate in effect at the end of the period to which the amount relates, or
the exchange rate on the date specified. For such purposes, the exchange rate
means the noon buying rate in New York City for cable transfers in Canadian
dollars as certified for customs purposes by the Federal Reserve Bank of New
York (the "Noon Buying Rate"). These translations should not be construed as
representations that the Canadian dollar amounts actually represent such U.S.
dollar amounts or that Canadian dollars could be converted into U.S. dollars at
the rate indicated or at any other rate. The Noon Buying Rate at the end of each
of the five years ended August 31, 1996, the average of the Noon Buying Rates on
the last day of each month during each of such fiscal years and the high and low
Noon Buying Rate for each of such fiscal year's were as follows:
<TABLE>
<CAPTION>
August 31,
--------------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
At end of period........... Cdn$1.3685 Cdn$1.3432 Cdn$1.3712 Cdn$1.3208 Cdn$1.1952
Average for period......... 1.3634 1.3742 1.3573 1.2718 1.1726
High for period............ 1.3815 1.4193 1.3890 1.3208 1.2048
Low for period............. 1.3401 1.3410 1.3095 1.1943 1.1203
</TABLE>
On January 17, 1997 the Noon Buying Rate was Cdn$1.3399.
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
Upon the written request of any shareholder of the Company, as record
or beneficial owner, the Company will provide to such shareholder a copy of the
Company's Annual Report on Form 10-K for its fiscal year ended August 31, 1996,
including the financial statements and the schedules thereto, filed with the
Securities and Exchange Commission. Any request should be directed to the
Corporate Secretary, at the Company's place of business listed above. There will
be no charge for the Form 10-K, unless one or more exhibits thereto are
requested, in which event the Company's reasonable expenses of furnishing such
exhibits may be charged.
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<PAGE>
FUTURE SHAREHOLDER PROPOSALS
From time to time, shareholders present proposals which may be the
proper subject for inclusion in the Company's Proxy Statement and for
consideration at its annual meetings of shareholders. To be considered,
proposals must be submitted on a timely basis. Proposals for the next Annual
Meeting of Shareholders of the Company must be received by the Company no later
than September 23, 1997, for inclusion, if proper, in next year's proxy
solicitation materials.
GENERAL
The Company will pay all of the costs of preparing, assembling and
mailing the form of Proxy, Proxy Statement and other materials which may be sent
to the shareholders in connection with this solicitation, as well as any costs
of soliciting proxies in the accompanying form. Solicitation will be made by
mail, and officers and regular employees of the Company may also solicit proxies
by telephone, telegraph or personal interview for which they will receive no
additional remuneration. The Company expects to request brokers and nominees who
hold stock in their names to furnish this proxy material to their customers and
to solicit proxies from them. The Company will reimburse such brokers and
nominees for their out-of-pocket and reasonable clerical expenses in connection
therewith.
WHILE YOU HAVE THE MATTER IN MIND,
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD.
BY ORDER OF THE BOARD OF DIRECTORS,
Peter Rona, President
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<PAGE>
NTN CANADA, INC.
REVOCABLE PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints PETER RONA and DAVID AUGER, and each of
them, proxies with power of substitution and to vote on behalf of the
undersigned at the Annual Meeting of Shareholders of NTN CANADA, INC. (the
"Company"), to be held at the offices of the Company, 14 Meteor Drive,
Etobicoke, Ontario, Canada M9W 1A4, on the 28th day of February, 1997, at
10:00 a.m., local time, and any adjournment(s) thereof, all shares of Common
Stock of record in the name of the undersigned as follows, and in their
discretion upon such other matters as may properly come before said Annual
Meeting:
(1) Elect the following nominees as directors for the ensuing year:
/ / FOR all nominees listed below / / WITHHOLDING AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
Douglas R. Connolly Daniel C. Downs James R. Newell Peter Rona
Dale G. Smith James Thompson Adrian P. Towning
(Instructions: To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below.)
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(2) Ratification of the selection of Ernst & Young as the Company's
independent auditors for the fiscal year ending August 31, 1997:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
The Board of Directors recommends a vote FOR all of the foregoing.
UNLESS OTHERWISE SPECIFIED AS ABOVE PROVIDED, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF DIRECTORS AS SET FORTH IN THE PROXY
STATEMENT AND "FOR" ITEM 2.
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY. Receipt of the
Notice of Annual Meeting of Shareholders and accompanying Proxy Statement of
the Board of Directors is acknowledged.
Dated: , 1997
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(Signature)
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(Signature)
If stock is held in the name of more than one person, all holders should
sign. Sign exactly as name or names appear at left, persons signing in
fiduciary capacity should include their title as well.
