SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NETWORKS NORTH, INC.
f/k/a NTN CANADA, INC.
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(Exact name of registrant as specified in its charter)
NEW YORK
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(State or other jurisdiction of incorporation or organization)
11-2805051
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(I.R.S. Employer Identification No.)
14 Meteor Drive
Etobicoke, Ontario M9W 1A4
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(Address of Principal Executive Offices) (Zip Code)
TRIOSEARCH, INC. LONG TERM INCENTIVE PLAN
1998 STOCK OPTION PLAN
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(Full title of the plans)
Frederick M. Mintz, Esq.
Mintz & Fraade, P.C.
488 Madison Avenue, New York, NY 10022
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(Name and address of agent for service)
(212) 486-2500
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(Telephone number, including area code, of agent for service)
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<TABLE>
<CAPTION>
Proposed Proposed
Title of maximum maximum
securities to be Amount to be offering price aggregate Amount of
registered registered(1) per share offering price registration fee
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common
Stock, par
value $0.0467 30,000 $2.33 $69,900.00 $20.62
Common
Stock, par
value $0.0467 375 $3.50 $1,312.00 $.39
Common
Stock, par
value $0.0467 489,125 $4.35(2) $2,127,693.70 $627.66
Common
Stock, par
value $0.0467 969,625(3) $3.125(4) $3,030,078.10 $893.87
- ------------------------------------------------------------------------------------------
</TABLE>
(1) Represents an aggregate of 1,000,000 shares of Common Stock underlying
options granted or to be granted pursuant to the Registrant's stock option
plans. As of May 31, 1998, two employees exercised options to purchase an
aggregate of 30,375 shares pursuant to the Registrant's Triosearch, Inc.
Stock Option Plan (the "Triosearch Plan"). Pursuant to the approval of the
shareholders of the Company at the annual meeting of shareholders of the
Registrant on February 27, 1998, the Company replaced the Triosearch Plan
with a new stock option plan (the "1998 Plan") which increased the number
of shares of the Company's Common Stock subject to the Triosearch Plan of
525,000 to 1,000,000 pursuant to the 1998 Plan. The 1,000,000 shares of
the Common Stock being registered represent (a) the 30,375 shares of
Common Stock issued as a result of the exercise of existing options under
the Triosearch Plan, (b) 489,125 shares of Common Stock which may be
acquired pursuant to options which have been granted but not exercised
under the Triosearch Plan which, if not exercised by the applicable expiry
date, may be granted under the 1998 Plan and (c) 480,500 shares of Common
Stock which may be issued pursuant to options that are currently available
for grant under the 1998 Plan, provided, however, that to the extent that
any of the options granted are not exercised under the Triosearch Plan,
the 480,500 options which may be granted pursuant to the 1998 Plan will be
increased by such amount. The terms and conditions of the Triosearch Plan
still apply to the 519,500 options granted to employees of the Registrant
under the Triosearch Plan, however, the remaining options which may be
granted pursuant to the 1998 Plan (up to 969,625 options, less any of the
489,125 options granted under the Triosearch Plan which are exercised)
shall be granted pursuant to the terms
2
<PAGE>
and conditions of the 1998 Plan. An undetermined number of additional
shares may be issued if the antidilution provisions of the Triosearch Plan
or the 1998 Plan become operational.
(2) The exercise price of the remaining 489,125 options granted under the
Triosearch Plan was fixed by the Board of Directors of the Registrant
based upon the price of the Registrant's Common Stock preceding the
authorization of such options. At a duly held meeting of the Board of
Directors of the Registrant on July 10, 1998. the Board of Directors
unanimously approved to lower such exercise price on all options granted
to $3.00 per share, provided the grantees agree not to sell such shares
for a period of six months. As of this date, although the grantees have
not made their election, Management believes the grantees will agree to
such reduction. The average exercise price of the options if any of the
grantees do not agree to the lower option price and the terms and
conditions therewith is $4.35 per share. The Registrant shall pay such
additional registration fee to the Securities and Exchange Commission if
any of the grantees do not agree to such reduction.
(3) Represents the 489,125 shares of Common Stock underlying options not yet
exercised which were granted under the Triosearch Plan, which, if expired,
may be re-granted under the 1998 Plan, and 480,500 shares of Common Stock
underlying options which may be granted under the 1998 Plan. To the extent
that any of the remaining options granted under the Triosearch Plan are
exercised, the number of shares of Common Stock underlying options
eligible to be issued under the 1998 Plan will be reduced proportionately.
(4) Pursuant to Rule 457(c) of the Securities Act, the registration fee has
been calculated based upon the closing sale price as reported by NASDAQ
Small-Cap Market for the Company's Common Stock on August 10, 1998.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: |x|
3
<PAGE>
Part 1
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
All documents furnished to participants in the Registrant's Triosearch
Long Term Incentive Plan and the 1998 Stock Option Plan pursuant to Rule 428 and
containing the information required in Part I of this Form S-8 under the
Securities Act of 1933, as amended, are on file at the Registrant's principal
executive offices.
4
<PAGE>
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents previously filed with the Securities & Exchange
Commission (the "Commission") by NTN Canada, Inc. (the "Registrant") are
incorporated herein by reference and made a part hereof:
1. The description of the Registrants common stock as contained in Item
11 of the Registrants Registration Statement on Form 10, as filed
with the Commission on January 5, 1998;
2. The Registrant's Annual Report on Form 10-K for the year ended
August 31, 1997;
3. The Registrant's Quarterly Reports on Form 10-Q for the quarters
ending May 31, 1998, February 28, 1998 and November 30, 1997;
All reports and other documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated herein by reference
and to be a part hereof from the date of the filing of such reports or other
documents.
Item 6. Indemnification of Directors and Officers
Article Tenth of the Registrant's Amended Certificate of Incorporation
provides for the elimination of personal liabilities of directors of the
registrant for breaches of certain of their fiduciary duties to the full extent
permitted by Sections 717 and 719 of the New York Business Corporation Law
("BCL"). Specifically, it states that no director of the Registrant shall be
personally liable to the corporation or any of its shareholders for damages of
any breach of duty in any such capacity except if a judgment or other final
adjudication adverse to him establishes that his acts or omissions were in bad
faith or involved intentional misconduct or a knowing violation of the law, or
that he personally gained in fact a financial profit or other advantage to which
he was not legally entitled or that his acts violated Section 719 of the BCL.
Section 801(b)(14) of the BCL enables a corporation in its certificate of
incorporation to strike out, change or add any provision not inconsistent with
the BCL or any other statute, relating to the business of the corporation, its
affairs, its rights or powers or the rights or powers of its shareholders, or
directors or officers. Section 717 provides for the elimination of personal
liabilities of directors provided they act in good faith and with the degree of
care used by an ordinary prudent person under like circumstances. Thus, no such
provision may eliminate or limit the liability of a
II - 1
<PAGE>
director for breaching his duty of loyalty, failing to act in good faith,
engaging in intentional misconduct or knowingly violating the law, paying an
unlawful dividend, approving an illegal stock repurchase or obtaining an
improper personal benefit.
Item 8. Exhibits
The exhibits to the Registration Statement are listed in the Index to
Exhibits included on Page II-4 herein.
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes to file, during any period
in which offers or sales are being made, a post-effective amendment to the
Registration Statement to include any material information about the plan not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement.
B. That for the purpose of determining any liability under the Securities
Act, each post-effective amendment shall be deemed a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed the initial bona fide offering thereof.
C. To remove by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
D. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant 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 Registrant 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 Act and will be governed by the final adjudication of
such issue.
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<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant 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 to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Etobicoke, Province of Ontario, on this 10th day
of August, 1998.
NETWORKS NORTH, INC.
By: /s/ Peter Rona
----------------------------
Peter Rona, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following person in the capacities
and on the date indicated.
Name Title Date
- ---- ----- ----
Peter Rona * President, Chief Executive August 10, 1998
- ----------------------- Officer, Principal Financial
Peter Rona & Accounting Officer and
Chairman of the Board of
Directors of the Registrant
Douglas R. Connolly * Director August 10, 1998
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Douglas R. Connolly
Daniel C. Downs * Director August 10, 1998
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Daniel C. Downs
Dale G. Smith * Director August 10, 1998
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Dale G. Smith
Lorne C. Stephenson * Director August 10, 1998
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Lorne C. Stephenson
Adrian P. Towning * Director August 10, 1998
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Adrian P. Towning
Bart Yabsley * Director August 10, 1998
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Bart Yabsley
* By: /s/ Peter Rona
------------------
Peter Rona
as Attorney-in-Fact
II - 3
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
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4.1 Triosearch, Inc. Long Term Incentive Plan
4.2 1998 Stock Option Plan
5 Opinion of Mintz & Fraade, P.C.
23.1 Consent of Ernst & Young
23.2 Consent of Mintz & Fraade, P.C.
(contained in its opinion filed as Exhibit 5)
24 Powers of Attorney
- ------------------------------
EXHIBIT NO. 4.1
Triosearch, Inc. Long Term Incentive Plan
<PAGE>
TRIOSEARCH, INC.
LONG TERM INCENTIVE PLAN
ARTICLE I
Definitions
1.01 "Agreement" means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of an Option or Restricted Stock award granted to such
Participant.
1.02 "Board" means the Board of Directors of this Company.
1.03 "Code" means the Internal Revenue Service Code of 1986 and any amendments
thereto.
1.04 "Common Shares" means the Common Shares of the Company.
1.05 "Company" means Trioseach, Inc.
1.07 "Fair Market Value" means, on any given date, the closing bid price of the
Company's Common Shares as reported by the National Quotation Bureau.
1.08 "Option" means a stock option that entitles the holder to purchase from the
Company a stated number of Common Shares at the price set forth in an Agreement.
1.09 "Participant" means an employee of the Company, including an employee who
is a member of the Board, who satisfies the requirements of Article IV and is
selected by the Board to receive an Option, a Restricted Stock award, or both.
1.10 "Plan" means the Triosearch, Inc. Long Term Incentive Plan.
1.11 "Restricted Stock" means Common Shares awarded to a Participant under
Article IX. Common Shares shall cease to be Restricted Stock when, in accordance
with the terms of the applicable agreement, they become transferrable and free
of substantial risks of forfeiture.
ARTICLE II
Purposes
The Plan is intended to foster and promote the long-term growth and
financial success of the Company by assisting the Company in recruiting and
retaining key employees with ability and initiative and by enabling employees
who contribute significantly to the Company to participate in its future
success. The proceeds received by the Company from the
<PAGE>
sale of Common Shares pursuant to this Plan shall be used for general corporate
purposes.
ARTICLE III
Administration
The Plan shall be administered by the Board. The Board shall have
authority to grant Options and award Restricted Stock upon such terms (not
inconsistent with the provisions of this Plan) as the Board my consider
appropriate provided, however, that no Options shall be granted and no
Restricted Stock shall be awarded to any director who is also an officer and
employee of the Company without the approval of a majority of those directors
who are not officers and employees of the Company. Such terms may include
conditions (in addition to those contained in this Plan) on the exercisability
of all or any part of an Option or on the transferability or forfeitability of
Restricted Stock. In addition, the Board shall have complete authority to
interpret all provisions of this Plan; to prescribe the form of Agreements, to
adopt, amend, and recind rules and regulations pertaining to the administration
of the Plan; and to make all other determinations necessary or advisable for the
administration of the Plan. The express grant in the Plan of any specific power
to the Board shall not be construed as limiting any power or authority of the
Board. Any decision made, or action taken, by the Board or in connection with
the administration of the Plan shall be final and conclusive. No member of the
Board shall be liable for any act done in good faith with respect to the Plan or
any Agreement, Option, or Restricted Stock award. All expenses of administering
the Plan shall be borne by the Company.
ARTICLE IV
Eligibility
4.01 General. Any employee of the Company who, in the sole judgment of the
Board, has contributed significantly or can be expected to contribute
significantly to the profits or growth of the Company may receive one or more
Options, Restricted Stock awards, or both. Directors of the Company who are
employees are eligible to participate in the Plan.
4.02 Grants. The Board will designate individuals to whom Options and Restricted
Stock awards are to be granted and will specify the number of Common Shares
subject to each grant. All Options and Restricted Stock awards granted under the
Plan shall be evidenced by Agreements which shall be subject to applicable
provisions of the Plan and to such other provisions as the Board may adopt.
ARTICLE V
Shares Subject to Plan
Upon the exercise of any Option or the award of Restricted Stock,
the Company may deliver to the Participant
<PAGE>
authorized but unissued Common Shares. The maximum aggregate number of shares of
Common Shares that may be issued pursuant to the exercise of Options and the
award of Restricted Stock under the Plan is 2,500,000, subject to adjustment as
provided in Article XI. If an Option is terminated, in whole or in part, for any
reason other than its exercise, the number of Common Shares allocated to the
Option or portion thereof may be reallocated to other Options and Restricted
Stock awards to be granted under this Plan. Any shares of Restricted Stock that
are forfeited may be reallocated to other Options or Restricted Stock awards to
be granted under the Plan.
ARTICLE VI
Option Price
The price per share for Common Shares purchased on an exercise of an
Option shall be determined by the Board on the date of grant.
ARTICLE VII
Exercise of Options
7.01 Maximum Open Period. No Option shall be exercisable after the expiration of
ten years from the date the Option was granted. The Board, at the time of grant,
may direct that an Option be exercisable for a period less than such maximum
period.
7.02 Nontransferability. Any Option granted under the Plan shall not be
transferable except by will or by the laws of descent and distribution. During
the lifetime of the Participant to whom the Option is granted, the Option may be
exercised only by the Participant. No right or interest of a Participant in any
Option shall be liable for, or subject to, any lien, obligation, or liability of
such Participant.
7.03 Employee Status. In the event that the terms of any Option provide that it
may be exercised only during employment or within a specified period of time
after termination of employment, the Board may decide in each case to what
extent loaves of absence for governmental or military service, illness,
temporary disability, or other reason shall not be deemed interruptions of
continuous employment.
ARTICLE VIII
Exercise of Options
8.01 Exercise. Subject to the provisions of Articles VII and XI, an Option may
be exercised in whole at any time or in part from time to time at such times and
in compliance with such requirements as the Board shall determine. An Option
granted under the Plan may be exercised with respect to any number of
<PAGE>
whole shares less than the full number for which the Option could be exercised.
Such partial exercise of an Option shall not affect the right to exercise the
Option from time to time in accordance with the Plan with respect to the
remaining shares subject to the Option.
8.02 Payment. Unless otherwise provided by the Agreement, payment of the Option
price shall be made In cash or a cash equivalent acceptable to the Board. If the
Agreement provides, payment of all or part of the Option price may be made by
surrendering Common Shares to the Company. If Common Shares are used to pay all
or part of the Option price, the shares surrendered must have a Fair Market
Value (determined as of the date of exercise) that is not less than such price
or part thereof.
8.03 Shareholder Rights. No Participant shall, as a result of receiving any
Option, have any right as a shareholder until the date he exercises such Option.
ARTICLE IX
Restricted Stock
9.01 Award. In accordance with the provisions of Article IV, the Board will
designate individuals to whom an award of Restricted Stock is to be made and
will specify the number of Common Shares covered by the award.
9.02 Vesting. The Board, on the date of the award, may prescribe that the
Participant's rights in the Restricted Stock shall be forfeitable or otherwise
restricted for a period of time set forth in the Agreement. By way of example
and not limitation, the restrictions may postpone transferability of the shares
or may provide that the shares will be forfeited if the Participant separates
from the service of the Company before the expiration of a stated term.
9.03 Shareholder Rights. Prior to their forfeiture in accordance with the terms
of the Agreement and while the shares are Restricted Stock, a Participant will
have all rights of a shareholder with respect to Restricted Stock, including the
right to receive dividends and vote the shares; provided, however, that (i) a
Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise
dispose of Restricted Stock, (ii) the Company shall retain custody of the
certificates evidencing shares of Restricted Stock, and (iii) the Participant
will deliver to the Company a stock power, endorsed in blank, with respect to
each award of Restricted Stock. The limitations set forth in the preceding
sentence shall not apply after the shares cease to be Restricted Stock.
<PAGE>
ARTICLE X
Adjustment Upon Change in Common Shares
10.01 Should the Company effect one or more stock dividends, stock splits,
subdivisions or consolidations of shares or other similar changes in
capitalization, then the maximum number of shares as to which Options and
Restricted Stock awards may be granted under the Plan shall be proportionately
adjusted and the terms of Options and Restricted Stock awards shall be adjusted
as the Board shall determine to be equitably required. Any determination made
under this Article X by the Board shall be final and conclusive.
10.02 The issuance by the Company of shares of any class, or securities
convertible into shares of any class, for cash or property or for labor or
services, either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, Options or
Restricted Stock awards.
ARTICLE XI
Compliance with Law and Approval of Regulatory Bodies
No Option shall be exercisable, no Common Shares shall be issued, no
certificates for Common Shares shall be delivered, and no payment shall be made
under this Plan except in compliance with all applicable federal and state laws
and regulations (including, without limitation, withholding tax requirements).
The Company shall have the right to rely on an opinion of its counsel as to such
compliance. Any certificate issued to evidence Common Shares for which an Option
is exercised or Restricted Stock awarded may bear such legends and statements as
the Board may deem advisable to assure compliance with federal and state laws
and regulations. No Option shall be exercisable, no Common Shares shall be
issued, no certificate for shares shall be delivered, and no payment shall be
made under the Plan until the Company has obtained such consent or approval as
the Board may deem advisable from regulatory bodies having jurisdiction over
such matters.
ARTICLE XII
General Provisions
13.01 Effect on Employment. Neither the adoption of the Plan, its operation, nor
any documents describing or referring to the Plan (or any part thereof) shall
confer upon any employee the right to continue in the employ of the Company or
in any way affect any right and power of the Company to terminate the employment
of any employee at any time with or without assigning a reason therefor.
<PAGE>
13.02 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under the Plan. Any liability of the
Company to any person with respect to any grant under the Plan shall be based
solely upon any contractual obligations that may be created pursuant to the
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.
13.03 Rules of Construction. Headings are given to the articles and sections of
the Plan solely as a convenience to facilitate reference. The reference to any
statute, regulation, or other provision of law shall be construed to refer to
any amendment to or successor of such provision of law.
ARTICLE XIII
Amendment
The Board may amend or terminate this Plan from time to time;
provided, however, that no amendment may become effective until shareholder
approval is obtained if the amendment (i) materially increases the aggregate
number of shares that may be issued pursuant to Options and Restricted Stock
awards, (ii) materially increases the benefits accruing to Participants under
the Plan, or (iii) materially changes the class of employees eligible to become
Participants. No amendment shall, without a Participant's consent, adversely
affect any rights of such Participant under any Option or Restricted Stock award
outstanding at the time such amendment Is made.
ARTICLE XIV
Duration of Plan
No Option or Restricted Stock award may be granted under the Plan
after August 31, 1998. Options and Restricted Stock awards granted before that
date shall remain valid in accordance with their terms.
<PAGE>
However, if any other matters come before the meeting, it is the intention of
the persons named in the enclosed proxy to vote such proxy in accordance with
their judgment on such matters.
May 20, 1988 By Order of the
Board of Directors
William Gilsig
Secretary
EXHIBIT NO. 4.2
1998 Stock Option Plan
<PAGE>
NTN CANADA, INC.
1998 STOCK OPTION PLAN
1. Introduction
A. This Plan shall be known as the "1998 Stock Option Plan" (the
"Plan") of NTN Canada., Inc., a New York corporation (the "Company"). The
purpose of this Plan is to provide a method to give incentive to those persons
or entities who, in the sole and absolute discretion of the Board of Directors
of the Company (the "Board"), are responsible for the management, growth and/or
protection of the business of the Company and who are making and can continue to
make substantial contributions to the success of the Company's business
including, but not limited to, present and future officers, directors,
employees, consultants and professional advisors of the Company or any future
Parent (hereinafter defined) or Subsidiary (hereinafter defined) of the Company.
It is anticipated that the Plan will encourage such persons and entities to
acquire capital stock ownership in the Company, thus giving them a proprietary
interest, or increasing their proprietary interest, in the Company, providing
them with greater incentive to make and continue to make substantial
contributions to the success of the Company's business, and encourage them to
continue in the service of, and promote the interests of, the Company and all of
its stockholders. Accordingly, the Company periodically will grant to such
persons and entities as may be selected as hereinafter provided, options (each
an "Option") to purchase shares of Common Stock, par value $.0467 (the "Common
Stock") of the Company, subject to the terms and conditions which are
hereinafter provided.
B. All "ISOs" (as hereinafter defined) which the Board, in its sole
and absolute discretion, desires to grant must be granted on or before the tenth
(10th) annual anniversary date after the date earlier to occur of (i) when this
Plan is adopted by the Board or (ii) when this plan is approved by the
Stockholders of the Company (which date shall be set forth on the last page of
this Plan).
C. "Incentive stock options" ("ISO") are options which qualify
pursuant to Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). An Option which is granted under this Plan, which is not an ISO, shall
be a "Non-Qualified Option". The Stock Option Committee may determine whether
options which are granted to employees or non-employees shall be ISOs or Non
Qualified Options subject to compliance with applicable laws. Anyone who is not
an employee of the Company may only be granted Non-Qualified Options.
D. The terms "Subsidiary," "Subsidiaries" and "Parent" shall have
the same meaning as contained in Section 425 of the Code or under the section or
sections of any future law which is in effect when any relevant event occurs and
which covers the subject matter of said Code section.
1
<PAGE>
2. Administration of the Plan
A. This Plan shall be administered by a Stock Option Committee (the
"Stock Option Committee") of not less than two (2) persons who shall be
appointed by, and serve at the pleasure of the Board and shall only consist of
non-employee directors of the Company. The term "Plan Administrators" shall mean
the Stock Option Committee. To the extent necessary to comply with Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), determinations concerning Options granted to any person who is subject to
Section 16(b) of the Exchange Act shall be made by the Stock Option Committee,
all of whose members shall be "disinterested persons" within the meaning of Rule
16b-3 under the Exchange Act. The Committee may delegate to officers or
employees of the Company or any Subsidiary, the authority, subject to such terms
as the Committee may determine, to perform administrative functions and, with
respect to persons not subject to Section 16 of the Exchange Act, to perform
such other functions as the Committee may determine, to the extent permitted
under Rule 16b-3, if applicable, and other applicable laws.
B. For purposes of administrating this Plan, a majority of the Stock
Option Committee must be present at a meeting and shall constitute a quorum and
acts of a majority of a quorum at a meeting shall be required to be deemed the
acts of the Stock Option Committee. In lieu of a meeting, the Stock Option
Committee may also act by an instrument which is signed by a majority of the
Stock Option Committee.
C. The Stock Option Committee shall select one (1) Member as
Chairman and shall hold meetings when and where they shall deem advisable. The
Stock Option Committee shall appoint a Secretary who need not be a Committee
Member and who shall maintain a record of its actions, decisions and
proceedings. Subject to the provisions hereof, the Stock Option Committee shall:
i. select the persons or entities (each a "Grantee") to
whom, and the times at which, Options shall be granted;
ii. determine the number of shares subject to each Option
and its terms;
iii. prescribe the form (which shall be consistent herewith)
of the instruments evidencing Options which are granted
hereunder, which instruments may vary from one another
and may be amended periodically as the Stock Option
Committee shall deem appropriate;
iv. prescribe rules and regulations periodically for
implementing this Plan as it may deem advisable,
including, but not limited
2
<PAGE>
to, such rules and regulations as it shall deem
advisable so that transactions involving Options may
qualify for exemption from Section 16(b) of the Exchange
Act under such rules and regulations as the Securities
and Exchange Commission may promulgate periodically
exempting transactions from Section 16(b) and;
v. decide every question about the interpretation or
application of any provision of this Plan or of any
instrument evidencing any Option which is granted under
this Plan and may waive any requirement of any such
instrument, to the extent which is permitted by law, if
the Stock Option Committee determines that such action
is consistent with the accomplishment of the purpose of
this Plan; provided, however, that for any ISO such a
waiver shall be effective only if it does not disqualify
the Option as an ISO.
E. No employee may be granted ISO's which are first exercisable by
such employee during any single calendar year (under all plans of the Company,
its Parent and all Subsidiaries if such plan meets the qualification for an ISO
under Section 422 of the Code requirements) for shares of Common Stock which
have an aggregate fair market value (determined at the time the Options are
granted) which exceed $100,000 (the "$100,000 limitation"). The $100,000
limitation shall be applied by taking Options into account in the order in which
such Options were granted. An employee may exercise Options in a single calendar
year for the purchase of shares which exceed the $100,000 limitation if the
Options in excess of $100,000 first became exercisable in prior calendar years.
For example, if options having an aggregate fair market value of $50,000 are
exercisable in 1998 and Options having an aggregate fair market value of
$100,000 first become exercisable in 1999, Options having an aggregate fair
market value of $150,000 can be exercised in 1999. To the extent that the
aggregate fair market value of stock for which ISO's are exercisable for the
first time during any calendar year (under all plans of the Company, its Parent
and all Subsidiaries) exceeds the $100,000 limitation, the amount of such
Options in excess of the $100,000 limitation shall constitute "Non-Qualified"
options. If the Code is amended either to increase or decrease the $100,000
limitation and if said amendment is applicable hereto, then the $100,000
limitation shall be deemed to be amended by such amount.
F. Determinations of the Plan Administrators, if any, shall be
reported to the Board at its next meeting following the determination; provided
however, that the failure to so report shall not affect any prior valid grant of
Options by the Stock Option Committee. The Company shall implement the grant of
Options hereunder, pursuant to determinations of the Stock Option Committee, by
the execution of instruments in such form as are approved by the Stock Option
Committee.
3
<PAGE>
G. ISOs and Non-Qualified Options shall be evidenced by an option
agreement (the "Option Agreement"). Each Option Agreement shall be signed by the
Company and the grantee of the Option (the "Grantee") and shall be in such form
as the Stock Option Committee in its sole and absolute discretion, periodically
shall designate. The Option Agreement shall state that the Options have been
granted subject to the terms of this Plan as a condition pursuant to which the
Options have been granted and received and may contain such additional
provisions and restrictions as may be approved by the Stock Option Committee;
provided, however that such provisions and restrictions are not inconsistent
with this Plan. Each Option Agreement shall constitute a binding contract
between the Company and the Grantee.
H. Every action, decision, interpretation or determination by the
Plan Administrators with respect to the application or administration of this
Plan shall be made in the sole and absolute discretion of the Stock Option
Committee subject to compliance with this Plan and, if not inconsistent with
this Plan, shall be final and binding upon the Company and each person holding
or claiming any right pursuant to this Plan or any Option which is granted
pursuant to this Plan.
3. Stock Subject to this Plan
A. The shares of Common Stock to be issued upon exercise of Options
which are granted pursuant to this Plan shall be made available, in the sole and
absolute discretion of the Board, either from the authorized but unissued shares
of Common Stock or from shares of Common Stock which are reacquired by the
Company, including shares which are purchased in the open market.
B. The number of shares of Common Stock which may be granted
pursuant to this Plan shall be 1,000,000.
C. If any Option which is granted under this Plan shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares of Common Stock shall (unless this Plan shall have been terminated)
become available for the granting of Options to the same grantee or to other
grantees.
D. If the number of outstanding shares of Common Stock shall be
changed through any recapitalization, stock split or stock dividend, or similar
transaction, the number and kind of shares of Common Stock for which Options may
be granted thereafter pursuant to this Plan and the number of shares of Common
Stock subject to Options theretofore granted pursuant to this Plan and the price
per share payable upon exercise of such outstanding Options shall be adjusted as
determined by the Stock Option Committee so as to reflect such change; provided,
however, that no such adjustment shall be made because additional shares of the
Common Stock have been issued for services, property or money; provided further,
however that if shares of Common Stock are issued
4
<PAGE>
for services, property, or money, the quantity of such services, property or
money shall be deemed to be adequate consideration for purposes of this
Paragraph "D" of this Article "3" of this Plan.
E. If the existence of the Company is terminated because of the
dissolution, liquidation, merger or consolidation of the Company, or a sale of
all or substantially all of the assets of the Company, every Option held by a
person or entity pursuant to this Plan, or because of such person or entity's
relationship with the Company, its Parent and all Subsidiaries (the question of
whether an Option is held as because of such relationship with the Company, its
Parent and all Subsidiaries shall be determined by the Stock Option Committee),
shall be canceled simultaneously with the occurrence of such event upon written
notice to the Grantees unless the Board shall by resolution provide otherwise;
provided, however, that for a period of fifteen (15) days after receiving
written notice of the occurrence of such event each such Grantee shall have the
right to exercise his, her or its option immediately to the extent it shall not
theretofore have been exercised, regardless of whether such Option was then
exercisable because of the vesting requirements of Article "7" of this Plan, but
in no event may any Option be exercised after the original expiration date of
the Option; provided further, however, that any other limitation upon the
exercise of such Option which may then be in effect upon the date of exercise
shall be applicable.
F. The granting of an Option under this Plan shall not affect in any
way the right or power of the Company, its Parent or a Subsidiary to make
adjustments, reorganizations, reclassifications, or changes of its capital or
business structure or to merge, consolidate, dissolve, liquidate, or sell or
transfer all or any part of its business or assets.
4. Eligibility of Grantees; Restricted Stock
A. An ISO may be granted only to persons who are employees of the
Company, its Parent or a Subsidiary. The term "employees" shall include officers
who are employees of the Company, its Parent or a Subsidiary and shall include
directors who are also employees of the Company, its Parent or a Subsidiary. Any
person who is not an employee of the Company may be granted only Non-Qualified
Options.
B. In deciding to whom and for how many shares of Common Stock an
Option shall be granted, the Stock Option Committee shall consider the
relationship of the Grantee to the Company, the present and potential
contributions of the Grantee to the success of the Company, the anticipated
number of years of additional service of the Grantee to the Company and such
other factors which are deemed relevant by the Stock Option Committee for
accomplishing the purpose of this Plan.
5
<PAGE>
C. No ISO shall be granted to any person who, after taking into
account stock attributed to such individual under Section 424 (d) of the Code
owns, at the time when the Option is granted, more than ten (10%) percent of the
total combined voting power of all classes of shares of the Company, its Parent
or a Subsidiary (the "ten (10%) percent limitation"); provided, however, that
the foregoing does not disqualify an ISO whose exercise increases the employee's
ownership and voting power from ten (10%) percent or less to more than ten (10%)
percent; provided however, that the ten (10%) percent limitation shall not be
applicable if the Option price is at least one hundred ten (110%) percent of the
fair market value of the shares which are subject to the Option and the Option
is exercisable for a period not exceeding five (5) years after it is granted;
provided, further, however that if the Code is amended to revise any of the
foregoing and if such amendment is applicable to this Plan, then the foregoing
shall be deemed amended and modified to comply with such amendment. The
foregoing restrictions which are contained in this Paragraph "C" of this Article
"4" of this Plan shall not be applicable to Non-Qualified Options.
D. Any person who has been granted one or more Options under this
Plan or otherwise may, if this Plan so allows, be granted one or more additional
Options under this Plan.
E. Non-employee Directors of the Company shall be eligible to
receive Options under the Plan only pursuant to the provisions of this Paragraph
"E" of this Article "4" of this Plan. Each individual who agrees to become a
Non-employee Director on the effective date of this Plan shall be granted,
without the exercise of the discretion of any person, a Non-Qualified Option,
for the purchase of one thousand five hundred (1,500) shares of Common Stock.
Each individual who becomes a Non-Employee Director, following the effective
date of this Plan shall, on the date such individual becomes a Non- employee
Director, be granted, without the exercise of the discretion of any person, a
NonQualified Option for the purchase of one thousand five hundred (1,500) shares
of Common Stock. In addition, on the day of each annual stockholders meeting,
each individual who is a continuing Non-employee Director upon conclusion of
such annual stockholders meeting (other than a Non-employee Director who was
first granted an Option pursuant to this Section 6 within ninety (90) days prior
to the date of any such annual stockholders meeting) shall receive, without the
exercise of the discretion of any person, a NonQualified Option for the purchase
of one thousand five hundred (1,500) shares of Common Stock. If there is an
insufficient number of shares of Common Stock available under this Plan to allow
for the grant to each Non-employee Director of a Non-Qualified Option for the
number of shares provided in this paragraph "E" of this Article "6" of this
Plan, each Non-Employee Director shall receive a Non-Qualified Option in a pro
rata amount to the total number of shares of Common Stock available under this
Plan. The exercise price of each share of Common Stock subject to a
Non-Qualified Option granted to a Non- Employee Director shall equal the Fair
Market Value of a share of Common Stock on the date such Option is granted.
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<PAGE>
F. Notwithstanding any other provision of this Plan to the contrary,
the Stock Option Committee shall have the right, either in addition to or in
lieu of the grant of Options, to grant awards of restricted stock ("Restricted
Stock") in amounts to be determined in the sole and absolute discretion of the
Stock Option Committee.
The Stock Option Committee may proscribe that the employees'
rights to the Restricted Stock shall be forfeitable or otherwise restricted
pursuant to the terms and conditions set forth in this Plan. Such proscription
of the Restricted Stock shall not limit the employees' rights with respect to
such shares, including, but not limited to the right to receive dividends and
vote the Restricted Stock; provided, however, that the Restricted Stock shall be
subject to such restrictions on the transfer of stock as may be applicable
pursuant to the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
5. Option Price
The exercise price per share of Common Stock under each Option to be
granted shall be determined by the Stock Option Committee but shall not be less
than the fair market value of the Common Stock if such Option is an ISO and at
least eighty five (85%) percent of such value for Non-Qualified options;
provided, however, that if the Grantee, at the time the Option is granted, owns
more than ten (10%) percent of the total combined voting powers of all classes
of stock of the Company, the Option price shall be not less than 110% of the
fair market value of the Common Stock if such Option is an ISO. For purposes of
this Plan, and subject to the limitations herein, fair market value of the
Common Stock on a given date shall be either: (A) if the Common Stock is listed
on a national securities exchange or quoted in a inter-dealer quotation system,
the last sale price per share of, if unavailable, the average of the closing bid
and asked prices per share of the Common Stock on such date (or, if there was no
trading or quotation in the Common Stock on such date, on the next preceding
date on which there was trading or quotation) as provided by such exchange or
system; or (B) if the Common Stock is not listed on a national securities
exchange or quoted in an inter-dealer quotation system, as determined by the
Stock Option Committee. In no event shall such purchase price be less than the
par value of the Common Stock of the Company.
6. Nontransferability of Option
No option granted under this Plan shall be transferable by the
Grantee, either voluntarily or by operation of law, otherwise than by the
Grantee's last will and testament or the laws of descent and distribution, and
no Grantee shall pledge, hypothecate or otherwise create any lien thereon.
During the lifetime of any Grantee, an option shall be exercised only by the
Grantee or the Grantee's guardian or legal representative if the Grantee is
legally incompetent. The Option Agreement shall provide that upon granting
Options pursuant to this Plan, the Grantee shall execute and deliver to the
Company an
7
<PAGE>
Option Agreement in the form annexed hereto as Exhibit "A" in which the Grantee
shall represent and warrant that, among other things, the purchase of Common
Stock pursuant thereto is for investment only, and not with a view to
distribution involving a public offering. Such a provision shall not be required
in any Option Agreement if the Option has been registered by the Company
pursuant to a registration statement filed under the Securities Act of 1933, as
amended.
7. Exercise of Option
A. Each option which is granted under this Plan shall by its terms
expire at such time as designated by the Stock Option Committee at the time such
Option is granted; provided, however, for ISOs such period shall expire not
later than ten (10) years from the date when such Options were granted; provided
further, however, that if any individual owns, at the time the ISO is granted,
shares possessing more than ten (10%) percent of the total combined voting power
or value of all classes of shares of the Company, its Parent or Subsidiary as
set forth in Paragraph "C" of Article "4" of this Plan, such period shall expire
not later than five (5) years from when such ISO was granted. The Plan
Administrators may prescribe a longer period for any Non-Qualified option.
B. Each Option which is granted under this Plan shall become vested
after one year of continued employment by the Grantee by the Company, its Parent
or a Subsidiary immediately following the date of the grant as follows:
one-fourth of the aggregate number of shares subject to the Option shall be
vested one year after the date of grant and, cumulatively, an additional
one-fourth of the aggregate number of shares subject to the Option shall be
vested at the expiration of each year thereafter so that four years after the
grant of the Option, each Option shall be fully vested and exercisable, subject
to the provisions of the Plan; provided, however, that if any individual owns,
at the time the ISO is granted, shares possessing more than ten (10%) percent of
the total combined voting power or value of all classes of shares of the
Company, its Parent or Subsidiary as set forth in Paragraph "C" of Article "4"
of this Plan, ISOs which are first vested at the expiration of the fifth year of
continued employment immediately following the date upon which the option is
granted may be exercised commencing thirty (30) days prior to the expiration of
such fifth year. Notwithstanding the foregoing, the Plan Administrators may
declare any other vesting schedule for any Option, provided that no Stock Option
may vest prior to the first anniversary of the date of grant. An Option may be
exercised only during the continuance of the Grantee's employment, except as
otherwise provided in Articles "8" or "9" of this Plan.
C. A person electing to exercise an Option shall give written notice
to the Company in the form annexed hereto as Exhibit "B" which shall include the
number of shares to be purchased; provided, however, that no Option may be
exercised as to less than 100 shares unless it is exercised as to all of the
shares then purchasable pursuant to this Plan. Such notice shall be accompanied
by payment to the Company of the full
8
<PAGE>
purchase price in cash; provided that, if permitted by the Stock Option
Committee, the purchase price may be paid in whole or in part by surrender or
delivery to the Company of securities of the Company having a fair market value
(determined as provided in Article "5" of this Plan) on the date of exercise
which is equal to the portion of the purchase price being so paid. No shares
shall be delivered upon exercise of an Option until the requirements of such
laws and regulations as may be deemed to be applicable by the Stock Option
Committee have been fulfilled. In addition, upon notification of the amount due,
and not after delivery to the Grantee of a certificate representing such shares,
the Grantee shall pay promptly any amount which is necessary to satisfy federal,
state or local tax requirements. The aforesaid notice shall make such
representations as to the investment intent of the purchaser, the information to
which the purchaser shall have had access, and such other matters as the Stock
Option Committee shall require, including, but not limited to, the statement in
the form annexed hereto as Exhibit "A" which shall satisfy counsel to the
Company that registration under the Securities Act of 1933, as amended, is not
required for the issuance of the shares which are to be purchased. The Board may
waive the making of such representations if the shares which are being purchased
shall have been so registered under the applicable securities laws, but the
Company shall have no obligation to any Grantee to effect any such registration.
D. A legal representative, legatee or distributee of a Grantee shall
be deemed to be a holder of any shares upon the Company's receipt of the
exercise of any Option by such legal representative, legatee or distributee with
payment of the full exercise price, after which time the foregoing legal
representative shall have the right to receive any dividends, to vote, and to
exercise any other right as a shareholder as to any such shares, notwithstanding
the fact that such legal representative shall not have received the certificate
or certificates for such shares.
8. Termination of Employment; Leave of Absence
A. Except as otherwise provided in Article "9" hereof, if any
Grantee of an ISO under this Plan shall cease for any reason to be an employee
of the Company, its Parent or a Subsidiary, for any reason, such Grantee's ISO
may be exercised to the extent that the Grantee had the right to exercise such
ISO at the date of termination of employment until the earlier of the expiration
date of such option or three (3) months after the date of the termination of
employment; provided however, that if any employee is terminated for "cause",
such ISOs shall terminate on the date of the termination of employment. For
purposes of this Plan, "cause" shall mean the employee's fraud, misappropriation
or embezzlement.
B. Except as otherwise provided in Article "9" of this Plan, if any
Grantee of a Non-Qualified Option under this Plan shall cease for any reason to
have a relationship with the Company, its Parent or a Subsidiary for any reason,
such Grantee's Non-Qualified Option may be exercised to the extent that the
Grantee had the right to exercise such Non-
9
<PAGE>
Qualified Option at the date of termination of his, her or its relationship with
the Company until the earlier of the expiration date of such Option or three (3)
months after the date when the Grantee ceased for any reason to have a
relationship with the Company, its Parent or a Subsidiary.
C. Any Option which is granted hereunder shall not be affected by
any change of duties or position of the Grantee; provided, however, that for an
ISO, the Grantee shall continue to be an employee of the Company, its Parent or
a Subsidiary.
D. An Option Agreement may contain, to the extent permitted by
applicable law, such provisions as the Stock Option Committee shall approve for
the determination of when a Grantee terminates his or her relationship with the
Company, its Parent or a Subsidiary, and the effect of leaves of absence, which
provisions may vary from one Option Agreement to another.
E. Nothing herein or in any Option Agreement shall confer upon any
officer, director, employee or any other person or entity any right to continue
in his, her or its position or relationship with the Company, its Parent or a
Subsidiary, or affect the right of the Company, its Parent or a Subsidiary, as
the case may be, to terminate such position or relationship at any time unless
otherwise provided for by agreement with the Company, its Parent or a
Subsidiary.
9. Retirement with Consent, or Upon the Death or Total Disability of
Grantee
If a Grantee shall (A) if an employee, retire with the consent of
the Company, its Parent or a Subsidiary, (B) die while he is an officer,
director, employee or consultant of or have another relationship with the
Company, its Parent or a Subsidiary, (C) become permanently and totally disabled
(within the meaning of Section 22(e) (3) of the Code), while he is an officer,
director, employee or consultant of, or have another relationship with, the
Company, its Parent or a Subsidiary or (D) die within three (3) months after his
termination from any such position, such Grantee's Option may be exercised as
follows: by the Grantee within three (3) months after the date of his retirement
or becoming totally disabled, as the case may be, or by the personal
representative of the Grantee within one (1) year after the death of the Grantee
while an officer, director, employee or consultant of, or have another
relationship with, the Company, its Parent or a Subsidiary or within one (1)
year after the death of the Grantee if the Grantee should die within three (3)
months after the date of the Grantee's retirement or becoming totally disabled,
as the case may be. In no event may any Option be exercised after the original
expiration date of the Option and in all events, any Option may be exercised
only to the extent that the Grantee was entitled to exercise the Option
immediately preceding his termination by retirement, death, disability or
otherwise as an officer, director, employee or consultant of, or have another
relationship with, the Company, its Parent or a Subsidiary. If an employee
retires without the consent of the Company, then the provisions of this Article
"9" of this Plan shall not be
10
<PAGE>
applicable and the provisions of Article "8" hereof with respect to termination
shall be applicable.
10. Granting of Options
The grant of any Option pursuant to this Plan shall be in the sole
and absolute discretion of the Stock Option Committee and nothing in this Plan
shall be construed to confer upon any person or entity any rights except as
specifically set forth in this Plan.
11. Indemnification and Exculpation
A. Each person, who is or shall have been a member of the Stock
Option Committee, shall be indemnified and held harmless by the Company against
and from any and all loss, cost, liability or expense which may be imposed upon
or reasonably incurred by such person because of any claim, action, suit or
proceeding to which such person may be a party or in which such person may be
involved by reason of any action taken or failure to act under this Plan and
against and from any and all amounts which are paid by such person in settlement
thereof (with the Company's prior written approval) or paid by such person in
satisfaction of a judgment in any such action, suit, or proceeding, except a
judgment based upon a finding of such person's willful malfeasance or fraud;
provided, however, that as a condition precedent to such indemnification, upon
the institution of any claim, action, suit or proceeding against such person,
such person shall be required to give prompt written notice to the Company of
such claim, action, suit or proceeding which notice shall contain a reasonably
thorough description of the nature and amount of the claim of indemnification.
The Company shall have the right, at its own expense, to participate in and, to
the extent if may wish to, assume the defense thereof before such person
undertakes said defense. The Company's right to assume the defense of any claim,
suit or proceeding shall be a condition precedent to the Company's
indemnification obligation and if the Company is not given said right, it shall
have no obligation to assume such defense and provide indemnification. If such
written notice is not timely provided, the Company shall have no obligation to
indemnify such person. The foregoing right of indemnification shall not be
exclusive of any other right to which such person may be entitled as a matter of
law or otherwise, or any obligation or power that the Company may have to
indemnify such persons or hold harmless such persons, whether pursuant to the
Company's By-Laws or otherwise.
B. Each member of the Board of Directors, and Stock Option
Committee, and each officer and employee of the Company shall be fully justified
in relying or acting upon any information which is furnished to the Company by
any person or persons other than himself or herself for the administration of
this Plan. In no event shall any person who is or shall have been a member of
the Board or Stock Option Committee, or an officer or employee of the Company,
be liable for any determination made or other action taken or
11
<PAGE>
any omission to act in reliance upon any such information, or for any action
taken (including the furnishing of information) or any failure to act, if in
good faith.
12. Tax Withholding
The Company shall have the right to require that the Grantee make
such provision, or furnish the Company such authorization, necessary or
desirable so that the Company may satisfy any obligation it may have under
applicable laws, to withhold or otherwise pay for income or other taxes of the
Grantee attributable to the grant or exercise of Options granted pursuant to
this Plan or the sale of Common Stock issued with respect to Options. This
authority shall include authority to withhold or receive stock or other property
and to make cash payments in respect thereof in satisfaction of a Grantee's tax
obligations.
13. Adoption of the Plan
This Plan shall be deemed to be in effect on the date upon which
this Plan has been adopted by the Board of Directors; provided, however, that
this Plan shall be deemed null and void unless the holders of a majority of the
Common Stock shall approve of and consent to such adoption within one (1) year
after the date of Board approval.
14. Amendment and Termination of Plan
A. The Board of Directors may at any time terminate, or from time to
time modify or suspend, this Plan. The Board may make such amendments and
modifications as it deems advisable, in its sole and absolute discretion, except
that the Board of Directors may not, without approval of the Stockholders
increase the total number of shares with respect to which Options may be granted
under this Plan, except as may be effected pursuant to the provisions of Article
"3" hereof or change the class of employees who are eligible to be granted ISOs
under this Plan; provided, however, that if the Code is amended to revise any
provision which is contained in this Plan regarding ISOs, then the foregoing
shall be deemed amended and modified to comply with such amendment and provided,
further, however, that if any shareholder approval is necessary or desirable in
order to comply with Rule 16b-3 under the Exchange Act or with Section 422 of
the Code (or other applicable law or regulation) such shareholder approval shall
be obtained in compliance with each of such laws. In addition, the Plan may not
be amended more than once every six months, other than to comply with changes to
the Code, Employee Retirement Income Security Act, or the rules and regulations
promulgated under each of such laws.
B. No amendment, modification or termination hereof shall in any
manner affect any Option theretofore granted under this Plan without the consent
of the Grantee.
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<PAGE>
C. Unless sooner terminated, no ISOs shall be granted pursuant to
this Plan after the tenth (10th) anniversary date of the date upon which this
Plan is adopted by the Board; provided, however, that any and all options which
are granted under this Plan shall continue in full force and effect until
terminated in accordance with the terms and conditions of this Plan.
Date on which this Plan was
Approved by the Stockholders
of the Company:
February 27, 1998
- ----------------------------
13
EXHIBIT NO. 5
Opinion of Mintz & Fraade, P.C.
<PAGE>
[LETTERHEAD OF MINTZ & FRAADE, P.C.]
August 10, 1998
Networks North, Inc.
14 Meteor Drive
Etobicoke, Ontario M9W 1A4
Gentlemen:
Our firm is acting as counsel for Networks North, Inc., a New York
corporation (the "Company"), with respect to the registration statement on Form
S-8 (the "Registration Statement"), which was filed by the Company with the
Securities and Exchange Commission for the purpose of registering under the
Securities Act of 1933, as amended (the "Act") (i) 519,000 shares of Common
Stock, par value $.0467 per share, of the Company, underlying options granted
under the Triosearch Long Term Incentive Plan (the "Triosearch Plan") and (ii)
969,625 shares of Common Stock, par value $.0467 per share, of the Company,
underlying options which may be granted under the 1998 Stock Option Plan (the
"1998 Plan")(the aggregate of 1,489,125 shares of Common Stock underlying
options are hereinafter the "Shares")
You should assume for purposes of this opinion that our investigation has
been limited solely to those items which are specifically set forth in this
opinion and that no further investigation has been undertaken, and that we have
reviewed only the following documents (hereinafter collectively referred to as
the "Documents"): the Registration Statement, the Triosearch Plan, the 1998
Plan, the Minutes of the Board of Directors of the Company dated November 17,
1997, November 25, 1996, November 20, 1995 and November 23, 1994, the Articles
of Incorporation of the Company filed with the Secretary of State on May 12,
1986 and all amendments and restatements thereto dated June 13, 1988, September
4, 1990, October 15, 1992, October 4, 1994 and March 3, 1998, and the By-Laws of
the Company.
We have assumed, without investigation, the authenticity of the Documents,
the genuineness of all signatures, the legal capacity of the persons who
executed the Documents, due authorization, valid execution, delivery and
acceptance of the Documents and the conformity to the originals of the Documents
which were submitted to us as copies. The scope and application of this opinion
is limited to the Federal Securities Laws and the laws of the State of New York.
No opinion is being rendered hereby with respect to the truth and
accuracy, or completeness of the Registration Statement or any portion thereof.
<PAGE>
Networks North, Inc.
August 10, 1998
page 2
Based upon the foregoing, and subject to the qualifications which are set
forth herein, we are of the opinion that, as of the date hereof, the Shares when
issued and paid for in accordance with the terms of the Triosearch Plan and the
1998 Plan will be duly and validly authorized and issued and fully paid and
nonassessable.
We consent to the filing of this opinion as an Exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters" in
the Prospectus which is a part of the Registration Statement.
Very truly yours,
Mintz & Fraade, P.C.
By: /s/ Alan P. Fraade
-------------------------
Alan P. Fraade
EXHIBIT NO. 23.1
Consent of Ernst & Young
<PAGE>
CONSENT OF INDEPENDENT CHARTERED
ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement [Form
S-8] pertaining to the Triosearch, Inc. Long Term Incentive Plan and 1998 Stock
Option Plan of Networks North, Inc. of our report dated October 31, 1997, with
respect to the consolidated financial statements of Networks North, Inc.
[formerly known as NTN Canada, Inc.] included in its Form 10-K for the year
ended August 31, 1997, filed with the Securities and Exchange Commission.
Toronto, Canada, /s/ Ernst & Young
August 7, 1998. Chartered Accountants
[ERNST & YOUNG LOGO]
EXHIBIT 24
Powers of Attorney
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned Directors of
Networks North, Inc. (formerly NTN Canada, Inc.) constitutes and appoints Peter
Rona, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign a registration statement on Form S-8 under the
provisions of the Securities Act of 1933, as amended, for the registration of
1,000,000 shares of Common Stock, par value $0.0467, of Networks North, Inc.
issuable from time to time pursuant to the provisions of Networks North, Inc.'s
Stock Option Plan, and any and all amendments to the aforementioned registration
statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned members of the Board of Directors of
Networks North, Inc. have hereunder set their hands this 24th day of July, 1998.
/s/ Peter Rona
----------------------------------
Peter Rona
/s/ Douglas Connolly
----------------------------------
Douglas Connolly
/s/ Daniel C. Downs
----------------------------------
Daniel C. Downs
/s/ Dale G. Smith
----------------------------------
Dale G. Smith
/s/ Lorne C. Stephenson
----------------------------------
Lorne C. Stephenson
/s/ Adrian P. Towning
----------------------------------
Adrian P. Towning
/s/ Bart Yabsley
----------------------------------
Bart Yabsley
