INFORMATION REQUIRED IN PROXY STATEMENT
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:
[ x ] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NEW HILARITY, INC.
(Name of Registrant as Specified in Its Charter)
New Hilarity, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] 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: N/A
(2) Form, schedule or registration statement no.: N/A
(3) Filing party: N/A
(4) Date filed: N/A
NEW HILARITY, INC.
22nd Floor, 161 Bay Street
Canada Trust Tower, BCE Place
Toronto, Ontario M5J 2S1 Canada
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 12, 2001
To the Stockholders:
PLEASE TAKE NOTICE that a Special Meeting of Stockholders (the
"Special Meeting") of New Hilarity, Inc. (the "Company") will be held on
April 12, 2001, at 10:00 a.m., local time, at
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx, for the
following purposes:
1. To elect four Directors to serve as the Board of Directors
of the Company until the next Annual Meeting of Stockholders and until
their successors shall be elected and shall qualify;
2. To change the name of the Company from "New Hilarity, Inc."
to "Orbit E-Commerce, Inc." (the "Corporate Name Change");
3. To authorize an amendment to the Certificate of
Incorporation of the Company to increase the number of authorized shares
of Common Stock and to authorize a new class of Preferred Stock (the
"Capitalization Amendment");
4. To approve the adoption of the Company's 2001 Stock
Incentive Plan (the "2001 Plan");
5. To ratify the selection of BDO Dunwoody LLP as the
Company's independent auditors for the fiscal year ending July 31, 2001;
and
6. To transact such other business as may properly come before
the Special Meeting or any adjournment thereof.
The close of business on February 12, 2001 has been fixed as the
record date for determining stockholders entitled to receive notice of and
to vote at the Special Meeting and at any adjournment thereof.
Your attention is called to the proxy statement on the following
pages. We hope that you will attend the Special Meeting. If you do not
plan to attend, please sign, date and mail the enclosed proxy card in the
enclosed envelope, which requires no postage if mailed in the United
States.
By Order of the Board of Directors,
J. GORDON McMEHEN,
Chairman
Toronto, Ontario
March 15, 2001
NEW HILARITY, INC.
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 12, 2001
_____________________________
INTRODUCTION
This Proxy Statement is being furnished to stockholders of New
Hilarity, Inc., a Nevada corporation (the "Company"), in connection with
the solicitation of proxies by the Board of Directors of the Company (the
"Board of Directors") for use at a Special Meeting of Stockholders of the
Company to be held on April 12, 2001, at 10:00 a.m., local time, at
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx, and at any adjournment thereof (the
"Special Meeting").
The Board has fixed the close of business on February 12, 2001 as
the record date for the determination of stockholders entitled to receive
notice of, and vote at, the Special Meeting (the "Record Date").
Accordingly, only stockholders of record on the books of the Company at
the close of business on the Record Date will be entitled to vote at the
Special Meeting. On the Record Date, the Company had outstanding
approximately 14,316,272 shares of Common Stock, par value $.005 per share
(the "Common Stock") which are the only outstanding voting securities of
the Company. On all matters, each share of Common Stock is entitled to
one vote.
The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, officers, directors and other employees
of the Company may solicit proxies by personal contact, telephone,
facsimile or other electronic means without additional compensation. This
Proxy Statement and the accompanying proxy card are first being mailed to
stockholders on or about March 15, 2001.
Proxies in the accompanying form which are properly executed, duly
returned and not revoked, will be voted in accordance with the
instructions thereon. If no instructions are indicated thereon, proxies
will be voted FOR all matters listed in the Notice of Special Meeting of
Stockholders and in accordance with the discretion of the person(s) voting
the proxies with respect to all other matters properly presented at the
Special Meeting. Execution of a proxy will not prevent a stockholder from
attending the Special Meeting and voting in person. Any stockholder
giving a proxy may revoke it at any time before it is voted by delivering
to the Secretary of the Company written notice of revocation bearing a
later date than the proxy, by delivering a later-dated proxy, or by voting
in person at the Special Meeting. Attendance at the Special Meeting will
not, in and of itself, constitute revocation of a proxy. The holders of
33-1/3% of the shares of Common Stock outstanding and entitled to vote as
of the Record Date, present in person or represented by proxy, shall
constitute a quorum for the transaction of business at the Special
Meeting. A plurality of the votes cast at the Special Meeting will be
required for the election of directors. Approval of the Corporate Name
Change and Capitalization Amendment requires the affirmative vote of a
majority of the outstanding shares entitled to vote thereon. Approval of
the 2001 Plan and the ratification of the selection of BDO Dunwoody LLP as
independent auditors requires the affirmative vote of a majority of the
votes cast at such meeting. If a stockholder, present in person or
represented by proxy, abstains on any matter, the stockholder's shares
will not be voted on such matter. Thus, an abstention from voting on a
matter has the same legal effect as a vote "against" the matter, even
though the stockholder may interpret such action differently.
Information Concerning The Company
The Company was incorporated under the laws of the State of Idaho
on February 27, 1930, for the primary purpose of exploring and the
development of mining properties. Prior to 1993, the Company had owned
fifteen unpatented lode mining claims in the Coeur d'Alene Mining
District of Shoshone County, Idaho. Due to the increased fees from
the Bureau of Land Management on unpatented mining claims, and the
depressed prices for silver and lead, the Company decided to abandon
these mining claims in 1993. Accordingly, as of 1993, the Company
became an inactive mining company, and the Company thereupon decided to
explore alternative business opportunities. In April 1999, the Company
reorganized under the laws of the State of Nevada and changed its name
to New Hilarity, Inc.
As of September 8, 2000, and pursuant to an Agreement and Plan of
Reorganization dated as of August 3, 2000 by and between the Company and
Orbit Canada Inc., an Ontario corporation ("Orbit"), the Company acquired
Orbit as a result of which Orbit became a wholly-owned subsidiary of the
Company (the "Orbit Transaction"). The Orbit Transaction resulted in a
reverse take over, therefore, giving the stockholders of Orbit control of
the Company. In connection with the Orbit Transaction, the existing Board
of Directors of the Company resigned and the directors of Orbit were
appointed to the Board of the Company.
Orbit was incorporated on October 7, 1999 in Ontario, Canada.
Since inception, Orbit's efforts have been devoted to the development of
its principal products and raising capital. As of the end of the July 31,
2000 fiscal year and as of October 31, 2000, it had not received any
revenues from the sale of its products or services. Accordingly, through
the end of fiscal 2000 (July 31, 2000) and through October 31, 2000, Orbit
was considered to be in the development stage. The Company is marketing a
variety of internet services including an internet based long distance
voice service to Canadian businesses and individuals.
Orbit intends to provide Canadian businesses and individuals with
next generation Internet services that include V.90 Internet access,
phone-to-phone Voice over IP ("VoIP"), as well as E-mail, web site hosting
services and high speed fixed wireless Internet delivery. Orbit's VoIP
service, which is included in a low monthly flat rate bundle of Internet
services, will enable subscribers to call between points on Orbit's
network as well as to certain destinations internationally at no
additional charge utilizing their own telephones. Orbit is marketing its
services directly to commercial enterprises and to residential markets and
intends to commence doing so indirectly through traditional Internet
Service Providers, prepaid long distance calling card companies and
others. No assurance can be given that Orbit's business will prove to be
successful or that it will be able to operate profitably.
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of the Record Date, certain
information with regard to the record and beneficial ownership of the
Company's Common Stock by (i) each stockholder owning of record or
beneficially 5% or more of the Company's Common Stock, (ii) each director
of the Company, each person nominated to be a Director and each executive
officer of the Company named in the Summary Compensation Table, and (iii)
all executive officers and directors of the Company as a group:
Amount and Nature of Percent
Name Beneficial Ownership of Class
Global Wireless Inc. 5,056,905(1) 35.3%
Dreyfus Securities Inc. 4,000,370(2) 26.4%
Non Orbit Inc. 1,000,000(3) 7.0%
J. Gordon McMehen * 700,000(4) 4.9%
Douglas C. Lloyd * 4,100,001(1) 28.6%
Daniel N. Argiros * 700,000(5) 4.9%
Donald G. Payne * 8,100(6) 0.1%
Robert J. Picard* - (7) -
All Executive Officers
and Directors as a Group 5,508,101 38.5%
________________________
* Indicates a Director of the Company. The address for each is 22nd
Floor, 161 Bay Street, Canada Trust Tower, BCE Place, Toronto,
Ontario, Canada, M5J 2S1.
(1) Global Wireless Inc. holds of record 5,056,905 shares of which
4,100,000 shares are owned indirectly for the benefit of the
members of Mr. Lloyd's family by a Trust. Mr. Lloyd also owns
one share directly. The amount reported for Mr. Lloyd does not
include shares which Mr. Lloyd has the right to acquire pursuant
to the exercise of stock options granted under the 2001 Plan
subsequent to the Record Date provided the 2001 Plan is approved
by stockholders as described elsewhere herein.
(2) Consists of 3,171,799 shares and 828,571 warrants which as of the
Record Date may be exercised to acquire shares, on a one-for-one
basis, at $0.875 per share, which shares and warrants are owned
of record by Dreyfus Securities Inc. as of the Record Date. To the
Company's knowledge, such shares and warrants are held
beneficially for the account of non-U.S. persons none of whom are
affiliated with the Company. Subsequent to the Record Date,
Dreyfus Securities Inc. exercised said 828,571 warrants into
828,571 shares.
(3) See notes (4) and(5) below.
(4) Non Orbit Inc. holds of record 1,000,000 shares of which 500,000
shares are owned indirectly for the benefit of members of Mr.
McMehen's family by a Trust. In addition, Free Orbit Inc. holds
of record 400,000 shares of which 200,000 shares are owned
indirectly for the benefit of members of Mr. McMehen's family by a
Trust. The amount reported for Mr. McMehen does not include
shares which Mr. McMehen has the right to acquire pursuant to the
exercise of stock options granted under the 2001 Plan subsequent
to the Record Date provided the 2001 Plan is approved by
stockholders as described elsewhere herein.
(5) Non Orbit Inc. holds of record 1,000,000 shares of which 500,000
shares are owned indirectly for the benefit of members of Mr.
Argiros' family by a Trust. In addition, Free Orbit Inc. holds of
record 400,000 shares of which 200,000 shares are owned indirectly
for the benefit of members of Mr. Argiros' family by a Trust. The
amount reported for Mr. Argiros does not include shares which Mr.
Argiros has the right to acquire pursuant to the exercise of stock
options granted under the 2001 Plan subsequent to the Record Date
provided the 2001 Plan is approved by stockholders as described
elsewhere herein.
(6) Consists of 8,100 shares owned by Xoom Capital Corp. ("Xoom").
Mr. Payne is the President and
a director of Xoom and may be
deemed to have beneficial ownership of such shares. Mr. Payne
disclaims beneficial ownership of the shares held by Xoom except
to the extent of his pecuniary interest therein. Mr. Payne is not
standing for re-election to the Board of Directors.
(7) The amount reported for Mr. Picard does not include shares which
Mr. Picard has the right to acquire pursuant to the exercise of
stock options granted under the 2001 Plan subsequent to the Record
Date provided the 2001 Plan is approved by stockholders as
described elsewhere herein.
ELECTION OF DIRECTORS
Proposal 1
A Board of Directors consisting of four members is to be elected
by the stockholders, to hold office until the next Annual Meeting of
Stockholders and until their successors are duly elected and qualify.
Unless authority is withheld, it is intended that proxies will be
voted for the election of the four nominees below, three of whom are
currently serving as directors. The Board of Directors does not
contemplate that any of these nominees will be unable or will decline to
serve. However, if any of them is unable or declines to serve, the
persons named in the accompanying proxy may vote for another person or
persons in their discretion.
Information Concerning Nominees
The following table sets forth certain information with respect to
the four nominees for election to the Board of Directors.
Present Position Has Served as
Name Age and Offices Director Since
J. Gordon McMehen 48 President and September 2000
Chief Executive Officer
Douglas C. Lloyd 48 Vice President and September 2000
Chief Technology Officer
Daniel N. Argiros 37 Vice President and September 2000
Chief Financial Officer
Robert J. Picard 39 None -
J. GORDON MCMEHEN, President, Chief Executive Officer and
Director, is an experienced business executive with a background in
corporate administration and mergers and acquisitions. Prior to this
appointment, he served as Executive Vice President and Chief Operating
Officer of Central Park Lodges Ltd., a national provider of nursing and
retirement home accommodation and related health care services from May,
1998 until July, 2000. Prior to this, Mr. McMehen was a partner in the
Toronto law firm of Gardiner, Roberts. Mr. McMehen has over 20 years of
experience in the practice of corporate and commercial law specializing in
project and corporate finance. In his role as President and CEO, Mr.
McMehen is responsible for executing Orbit's aggressive business strategy
and expansion plans and managing the Company's relationships with its
business partners and the financial community.
DOUGLAS C. LLOYD, Vice President and Chief Technology Officer and
Director, with his unique focus on the changing needs of the market, has
been the driving force responsible for building the Company's state-of-
the-art telecommunications network. For the past 5 years, Mr. Lloyd has
been a consultant in the telecommunications field. As a result of his
vision, Orbit's advanced fibre optic and wireless network will provide the
next generation of Internet-based voice, data and video services to
commercial and residential customers across Canada. In addition to
overseeing the implementation and daily operations of Orbit's network, Mr.
Lloyd is also responsible for Research & Development and the application
of new technologies. Over the past 20 years, Mr. Lloyd has been at the
forefront in the development, marketing and management of some of Canada's
most innovative telecommunications and broadcast initiatives.
DANIEL N. ARGIROS, C.A., Vice President, Chief Financial Officer
and Director, is a chartered accountant with 15 years experience in
financial management. Mr. Argiros began his career with Deloitte Haskins &
Sells, where he held a number of positions in the audit, tax and real
estate specialty groups. In 1988, he moved to Corporate Planning
Associates, a consulting firm whose mandate is to assist high income or
high net worth individuals in a wide range of financial and investment
planning issues, including income taxes and investment planning. Prior to
his appointment as CFO of Orbit, Mr. Argiros held the positions of
President, Chief Executive Officer and Director of Acanthus Real Estate
Corporation, a TSE listed company which was founded in 1997. Mr. Argiros
is responsible for the Company's treasury and finance functions and will
assist in the execution of its business strategy.
ROBERT J. PICARD is a lawyer and a member of the law firm of
Gardiner Roberts LLP, located in Toronto, Ontario, Canada, having been
with the firm since 1995 and practices in the areas of securities and
corporate law.
There are no executive officers of the Company other than those
named above.
Executive Compensation
The following summary compensation table sets forth information
concerning the annual and long-term compensation for services in all
capacities to Orbit from inception (October 7, 1999) to July 31, 2000 (the
end of fiscal 2000), of those persons who were, at July 31, 2000, (i) the
chief executive officer and (ii) the other most highly compensated
executive officers of Orbit, whose annual base salary and bonus
compensation was in excess of $100,000 (the named executive officers):
Summary Compensation Table
Annual Long-Term
Compensation Compensation
Awards/
Name and Principal Fiscal Options All Other
Position Year Salary Bonus (shares) Compensation
J. Gordon McMehen 2000 $0 $0 0 0
President and Chief
Executive Officer
Douglas C. Lloyd 2000 $0 $0 0 $151,300(1)
Vice President and
Chief Technology
Officer
_______________________
(1) Consists of consulting fees paid to him and other entities affiliated
with him during the fiscal year ended July 31, 2000.
Compensation of Directors
Since inception, no director of Orbit has received any cash
compensation for his services as such. In the past, directors have been
and will continue to be reimbursed for reasonable expenses incurred on
behalf of the Company.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
The Company does not have any termination or change in control
arrangements with any of its executive officers and has no written
employment agreements with any of its executive officers.
Certain Transactions
As of July 31, 2000, Orbit had no related party transactions in
which the amount involved in the transaction or a series of similar
transactions exceeded $60,000, except as otherwise disclosed in the
Summary Compensation Table provided elsewhere herein.
Material Proceedings
There are no material proceedings to which any director or
executive officer of the Company is a party adverse to the Company or any
if its subsidiaries or has a material interest adverse to the Company or
any of its subsidiaries.
Additional Information
During the fiscal year ended July 31, 2000, the Board of Directors
of Orbit held no formal meetings. The Board of Directors took action by
unanimous written consent and met informally on other occasions during the
period. The Company does not currently have a standing audit or
nominating committee, or a compensation committee.
PROPOSED CORPORATE NAME CHANGE
Proposal 2
At the Special Meeting, holders of shares of Common Stock will be
asked to consider and vote upon a proposal to change the name of the
Company from "New Hilarity, Inc." to "Orbit E-Commerce, Inc." (the
"Corporate Name Change"), by means of an amendment to the Company's
Articles of Incorporation. The Board of Directors has adopted
resolutions approving the Corporate Name Change and recommending that
the Corporate Name Change be submitted to the stockholders for their
approval at the Special Meeting. If the proposed amendment to the
Articles of Incorporation is approved by the requisite number of shares
of Common Stock entitled to vote at the Special Meeting, the Corporate
Name Change and the proposed amendment to the Company's Articles of
Incorporation will become effective upon the filing of a Certificate of
Amendment to the Articles of Incorporation with the Secretary of State
of Nevada, which is expected to occur shortly after stockholder approval.
As a result of the Orbit Transaction (see "Introduction -
Information Concerning The Company"), the business of Orbit has become the
Company's primary business operation. Accordingly, management believes
that with the name "New Hilarity, Inc.", there is no clear relationship to
the Company's current business activities. Management believes that the
name "Orbit E-Commerce, Inc." more clearly and accurately describes the
type of business engaged in by the Company. The Company's management
further believes that, as a result of the Corporate Name Change, the
Company may develop a clearer and more recognizable identity in the
marketplace.
The Board of Directors believes that the Corporate Name Change,
and accordingly the proposed amendment, are in the best interests of the
Company and its stockholders and recommends that the stockholders approve
the Corporate Name Change and the proposed amendment of the Company's
Articles of Incorporation.
The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock is required for approval of the
Corporate Name Change and the proposed amendment of the Articles of
Incorporation.
The text of the proposed amendment to the Articles of
Incorporation is as follows:
That Article 1 of the Articles of Incorporation be and it hereby
is amended to read in its entirety as follows:
"ARTICLE 1. NAME.
The name of the corporation is ORBIT E-COMMERCE, INC."
The Board of Directors recommends a vote "for" the approval of
the Corporate Name Change and the related amendment to the Articles of
Incorporation.
PROPOSED INCREASE IN THE COMPANY'S AUTHORIZED SHARES
OF COMMON STOCK AND AUTHORIZATION OF PREFERRED STOCK
Proposal 3
The Board of Directors has unanimously adopted a resolution
declaring it advisable to amend Article 4 of the Company's Articles of
Incorporation to provide for an increase in the number of authorized
shares of Common Stock from 20,000,000 shares of Common Stock, $0.005 par
value, to 98,000,000 shares and for the authorization of a new class
consisting of 2,000,000 shares of Preferred Stock, $0.005 par value (the
"Capitalization Amendment"), and has directed that the resolution be
submitted to a vote of the stockholders. If the proposed amendment is
approved by the affirmative vote of holders of a majority of the Company's
outstanding shares, the authorized capital stock of the Company will
consist of 98,000,000 shares of Common Stock $0.005 par value, and
2,000,000 shares of Preferred Stock, $0.005 par value, issuable in series.
The Company is presently authorized to issue 20,000,000 of its
Common Stock of which 14,316,272 are outstanding as of the Record Date.
In addition, as of the Record Date, (i) 2,120,497 share are reserved for
issuance pursuant to the conversion rights underlying the 2,120,497 non-
voting exchangeable shares of Orbit which are outstanding, (ii) 828,571
shares are reserved for issuance pursuant to 828,571 warrants issued in
exchange for 828,571 warrants previously outstanding to acquire shares of
Orbit; leaving 2,734,660
shares of Common Stock available as of the
Record Date. In addition, subsequent to the Record Date, an additional
1,450,000 shares have been reserved for issuance pursuant to options
granted under the 2001 Plan.
The Board of Directors believes that the growing complexity of
modern business financing requires greater flexibility in the Company's
capital structure than now exists. The availability of additional shares
might also be used for general corporate purposes such a raising capital,
mergers or acquisitions or attempting to obtain, retain and reward skilled
management in connection with stock options and other stock-related
benefit plans, such as but not limited to the proposed 2001 Plan. (See
"Approval of the 2001 Stock Incentive Plan"). Increasing the number of
shares available for issuance would also permit the Board, if and when it
deemed it advisable, to declare a stock split or stock dividend.
Management recognizes that the Company's present funds, together
with any operating revenues that may be recognized in the immediate
future, may be insufficient to fully implement the business plan of the
Company. Thus, substantial additional capital will, in all likelihood, be
needed in order to fund operations. In this regard, it is anticipated
that a certain portion of the additional authorized shares of Common Stock
and Preferred Stock as contemplated by the Capitalization Amendment will
be needed in order to meet such funding requirements. Management has had
discussions with certain parties and investment banking firms concerning
capital raising possibilities in the future but as of the date hereof
there are no such arrangements or firm intentions which have been made.
The Board of Directors strongly believes that opportunities may
arise which will require prompt action and in which any delay incurred in
seeking stockholder approval for issuance of additional shares could be
detrimental to the Company and its stockholders. In the Board's opinion,
the proposed amendment to the Company's Articles of Incorporation will
give the Company the flexibility to take advantage of such opportunities
and to operate more effectively. Authorization of such additional shares
would permit the issuance at various times of shares which could be
specifically adapted to a wide variety of circumstances. As to each
series of Preferred Stock, the Board of Directors would have the power to
fix the dividend rights, dividend or interest rates, conversion rights,
voting rights, rights and terms of redemption (including sinking fund
provisions), redemption prices and liquidation preferences, and any other
powers, designations, preferences and relative participating, optional or
other rights of the series, as well as any qualifications, limitations or
restrictions on any of the rights of the series, and the number of shares
constituting the series and the designation thereof, all without further
approval of the stockholders, except as may be required by application of
applicable law or stock exchange rules.
Other than the possible issuances described herein, there are no
present negotiations, agreements, or firm intentions regarding the future
issuance of any authorized but unissued shares of Common Stock or
Preferred Stock. No stockholder of the Company presently has, or would
have, any preemptive rights relating to the future issuance of any shares
of Common Stock or Preferred Stock.
Shares of Common Stock or Preferred Stock would be issued only as,
if, and when the Board of Directors believed the issuance to be in the
best interests of the Company and its stockholders. It is possible,
however, that the issuance of shares of Preferred Stock with dividend and
liquidation preferences could diminish the amounts which would otherwise
be available to the holders of Common Stock for these purposes. To the
extent that any series of Preferred Stock is made convertible into shares
of Common Stock of the Company, or that Common Stock or Preferred Stock is
issued for cash or assets, a dilution of the equity and the present voting
interest of the outstanding shares of Common Stock could result.
It is not possible to state the actual effect of the authorization
of the Preferred Stock upon the rights of the Company's Common
stockholders until the Board of Directors has specified the rights of a
series of the Preferred Stock. However, the rights of any such series, if
and when issued, might preclude or make
difficult a merger or takeover,
making the Company a less attractive potential takeover candidate.
Although the Board would make such a determination based on its judgment
as to the best interest of stockholders, the Board could so act to
discourage an acquisition attempt or other transaction viewed favorably by
the holders of a majority of the outstanding voting stock of the Company.
Thus, the authorization of the Preferred Stock might be deemed to have an
anti-takeover effect. On balance, however, the Board believes that the
advantages of increasing its flexibility to act in the face of a proposed
transaction outweighs any resulting disadvantages to the Company's
stockholders. This proposal is not part of a plan by management to adopt
a series of amendments which may have an anti-takeover effect nor does
management presently intend to propose any anti-takeover measures in any
future solicitation of proxies. Management does not believe that any
provisions of the Company's present Articles of Incorporation or By-laws
is likely to have an anti-takeover effect.
The Board of Directors believes that the Capitalization
Amendment is in the best interests of the Company and its Stockholders and
recommends that the stockholders approve the Capitalization Amendment.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock is required for approval of the Capitalization
Amendment.
The text of the proposed amendment to the Articles of
Incorporation is as follows:
That Article 3 of the Articles of Incorporation be and it hereby
is amended to read in its entirety as follows:
"ARTICLE 3. SHARES.
The total number of shares of capital stock which the corporation
is authorized to issue is 100,000,000 of which 98,000,000 shares with a
par value of $0.005 each shall be Common Stock and of which 2,000,000
shares with a par value of $0.005 each shall be Preferred Stock. The
Board of Directors of the corporation is authorized to the full extent now
or hereafter permitted by the laws of the State of Nevada to provide for
the issuance from time to time in one or more series of any number of
shares of Preferred Stock, and, by filing a certificate pursuant to the
Nevada Business Corporation Act, to establish the number of shares to be
included in each such series, and to fix the designations, powers,
preferences, and rights, and the qualifications, limitations and
restrictions of each such series."
The Board of Directors recommends a vote "for" the approval of
the Capitalization Amendment.
APPROVAL OF THE 2001 STOCK INCENTIVE PLAN
Proposal 4
Introduction
In February 2001, the Board of Directors of the Company adopted
the New Hilarity, Inc. 2001 Stock Incentive Plan (the "2001 Plan") subject
to the approval of the stockholders. The 2001 Plan permits the Company to
grant stock options and stock purchase rights. The 2001 Plan is intended
to provide additional compensation and incentives to eligible individuals
whose present and potential contributions are important to the success of
the Company, to afford such persons an opportunity to acquire a
proprietary interest in the Company and to enable the Company to continue
to enlist and retain the best available talent for the successful conduct
of its business. The 2001 Plan was adopted and is recommended for approval
by the Company's stockholders because the Board believes that option
grants and the stock issuances under the
2001 Plan play an important role
in the Company's efforts to attract employees of outstanding ability and
to reward employees for outstanding performance. In the event the adoption
of the 2001 Plan is not approved by the stockholders, the Board believes
that the Company's inability to grant stock options and stock purchase
rights will adversely impact the Company's future hiring, promotion and
operating plans.
A copy of the 2001 Plan, as adopted by the Board subject to
stockholder approval, is set forth in full as Appendix A to this Proxy
Statement. Following is a summary of the principal provisions of the 2001
Plan, qualified by reference to the complete text of the 2001 Plan:
General Provisions
Under the 2001 Plan, eligible participants may be awarded options
to purchase shares of the Company's Common Stock. They may also be awarded
restricted Common Stock (the "Restricted Shares"), either through the
purchase of those shares at fair market value or at less than fair market
value, as compensation for services rendered.
The 2001 Plan is administered by the Board of Directors, or in the
discretion of the Board, by a Committee ("Committee") consisting of
directors of the Company. The Plan administrator shall have exclusive
authority to determine participants to whom options will be granted, the
timing and manner of the grant of options, the exercise price, the number
of shares covered by and all of the terms of options, the duration and
purpose of leaves of absence which may be granted to optionees without
constituting termination of employment for purposes of the 2001 Plan and
all other determinations necessary or advisable for administration of the
2001 Plan. Members of the Committee are appointed by and serve at the
pleasure of the Board and may be removed by the Board at its discretion.
The maximum number of shares of Common Stock issuable over the
term of the 2001 Plan is limited to 2,000,000, subject to adjustments in
the event of certain changes in the Company's capital structure.
Under the 2001 Plan options and stock purchase rights may be
granted to employees, directors, officers and consultants. However, the
Plan administrator in its sole discretion determines the actual persons to
whom such grants are to be made.
The Board has exclusive authority to amend the 2001 Plan in any
and all respects. Certain amendments may require the approval of the
Company's stockholders. Unless terminated earlier by the Board in its sole
discretion, the 2001 Plan will expire ten years after its effective date.
The exercise and purchase prices per share are determined by the
Plan administrator and will generally be equal to the fair market value
per share of Common Stock on the date of the option grant. The
exercise price will be fixed for the life of an option even if the value
of the Common Stock increases in the future.
Grant of Options
An option gives the right to purchase a specified number of shares
of Common Stock at a fixed price per share (the "exercise price") payable
at the time the option is exercised. Two types of options may be granted
under the 2001 Plan: Incentive Stock Options and non-qualified stock
options. The two types of options differ as to their treatment under the
federal income tax laws, which is discussed in the U.S. Federal Tax
Consequences section below.
An "exercise" occurs when an option holder purchases the shares of
Common Stock subject to the
option by paying the exercise price for those
shares to the Company. The Plan administrator may, under certain limited
circumstances, permit an option holder to pay the exercise price for the
purchased shares through a full-recourse promissory note. The Plan
administrator will establish the terms of any such promissory note,
including the interest rate and terms of repayment, and any shares
purchased with the note will be held by the Company as security for the
payment of that note. An option holder may exercise an option at any time
after it vests and before the option terminates.
The option or shares of Common Stock purchasable under an option
may be subject to vesting provisions. This means the holder has to remain
in the employ of the Company or an affiliate for a certain period of time
before they can exercise the option or fully own the shares purchased
under the option. An option becomes exercisable in one or more
installments over the period that the holder remains in the Company's
service. The exercise schedule applicable to a particular option will be
determined by the Plan administrator at the time of grant and will be set
forth in the option agreement. The holder may exercise the option at any
time for the shares for which the option is exercisable, provided the
holder does so before the option terminates. The Plan administrator may
accelerate options that are exercisable in installments. In addition, the
Plan administrator may allow holders of non-qualified stock options to
exercise their options for comparable numbers of non-voting exchangeable
shares of Orbit which will be exchangeable for shares of the Company's
Common Stock on a one-for-one basis.
Stock Purchase Rights
Stock purchase rights entitle a participant in the 2001 Plan to
acquire shares of Common Stock which are subject to certain restrictions
at a price which may be equal to or less than the fair market value of the
Common Stock on the date of the grant of such award. The Plan
administrator may grant participants stock purchase rights to purchase
stock for limited periods of up to 30 days under such terms, conditions
and restrictions as the Plan administrator may apply. In addition, shares
may be awarded in connection with services rendered or to be rendered.
The Plan administrator may also allow a participant the right to acquire
non-voting exchangeable shares of Orbit which will be exchangeable for
shares of the Company's Common Stock on a one-for-one basis.
A participant must sign and submit a Notice of Exercise, pay for
shares, and complete and sign a Stock Purchase Agreement. When the stock
certificate for the purchased shares is issued, the Purchaser becomes the
stockholder of record of all the shares he or she has purchased. If the
Company allows the participant to acquire the shares with a promissory
note, then the participant will be required to sign a security agreement
granting the Company a security interest in the shares to secure payment
of the promissory note.
U.S. Federal Income Tax Consequences
The following is a brief summary of the principal U.S. federal
income tax consequences under current U.S. federal income tax laws to the
Company relating to awards under the 2001 Plan and to any person granted
an award under the 2001 Plan who is subject to taxation in the United
States. This summary is not intended to be exhaustive and, among other
things, does not address state, local, Canadian or other foreign tax
consequences.
Incentive Stock Options
No taxable income is recognized by the option holder at the time
of the grant of an incentive stock option, and no taxable income is
generally recognized at the time the option is exercised (subject to the
alternative minimum tax rules discussed below). The option holder will,
however, recognize taxable income
in the year in which the purchased
shares are sold or otherwise made the subject of a taxable disposition.
For federal tax purposes, dispositions are divided into two categories:
(i) qualifying and (ii) disqualifying. A qualifying disposition occurs if
the sale or other disposition is made after the option holder has held the
shares for more than two (2) years after the option grant date and more
than one (1) year after the exercise date. If either of these two holding
periods is not satisfied, then a disqualifying disposition will result.
Upon a qualifying disposition, the option holder will recognize
long-term capital gain in an amount equal to the excess of (i) the amount
realized upon the sale or other disposition of the purchased shares over
(ii) the exercise price paid for the shares. If there is a disqualifying
disposition of the shares, then the excess of (i) the fair market value of
those shares on the exercise date over (ii) the exercise price paid for
the shares will be taxable as ordinary income to the option holder. Any
additional gain or loss recognized upon the disposition will be recognized
as a capital gain or loss by the option holder.
If the option holder makes a disqualifying disposition of the
purchased shares, then the Company will be entitled to an income tax
deduction, for the taxable year in which such disposition occurs, equal to
the excess of (i) the fair market value of such shares on the option
exercise date over (ii) the exercise price paid for the shares. If the
option holder makes a qualifying disposition, the Company will not be
entitled to any income tax deduction.
Non-Qualified Stock Options
No taxable income is recognized by an option holder upon the grant
of a non-qualified option. The option holder will, in general, recognize
ordinary income in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise
date over the exercise price paid for the shares, and the option holder
will be required to satisfy the tax withholding requirements applicable to
such income. If the shares acquired upon exercise of the non-qualified
option are not vested and are subject to forfeiture (by repurchase or
otherwise) in the event of the option holder's termination of service
prior to vesting in those shares, the option holder will not recognize any
taxable income at the time of exercise. Ordinary income will be
recognized, as and when the risk of forfeiture lapses, in an amount equal
to the excess of (i) the fair market value of the shares on the date the
risk of forfeiture lapses over (ii) the exercise price paid for the
shares. The option holder may, however, elect under Section 83(b) of the
Internal Revenue Code to include as ordinary income in the year of
exercise of the option an amount equal to the excess of (i) the fair
market value of the purchased shares on the exercise date over (ii) the
exercise price paid for such shares. If the Section 83(b) election is
made, the option holder will not recognize any additional income as and
when the risk of forfeiture lapses.
The Company will be entitled to an income tax deduction equal to
the amount of ordinary income recognized by the option holder with respect
to the exercised non-qualified option. The deduction will generally be
allowed for the taxable year of the Company in which such ordinary income
is recognized by the option holder.
Stock Purchase Rights
The purchaser of shares under a stock purchase right generally
will not be taxed until any forfeiture restrictions, if any, on such
shares expire or are removed, at which time he or she will recognize
ordinary income, and the Company will be entitled to a deduction in an
amount equal to the excess of the fair market value of the shares at that
time over the purchase price. However, the purchaser may make a Section
83(b) election within thirty days of the date of receipt of the restricted
shares and recognize ordinary income as of the date of receipt. The
Company will be entitled to a deduction, at the time the participant
recognizes ordinary income, equal to the excess, if any, of the fair
market value of the shares on that date over the
purchase price.
Code Section 162(m) generally denies a tax deduction to any
publicly held corporation for compensation that exceeds one million
dollars paid to certain senior executives in a taxable year, subject to an
exception for "performance based compensation" as defined in the Code and
subject to certain transition provisions.
Options and Stock Awards Granted
The following table reflects as of the date hereof the number of
shares subject to options awarded to date under the 2001 Plan and the
current value thereof. As of the date hereof, options to acquire
1,450,000 shares of Common Stock have been granted under the 2001 Plan.
No stock awards have been granted to date under the 2001 Plan. As a
result, there are 550,000 shares available for future grant under the 2001
Plan. If the 2001 Plan is not approved by the stockholders of the
Company, any awards granted thereunder will be rescinded and will be void.
No. of
Current Per Current Shares
Name Share Option Dollar Subject to
and Position Exercise Price Value(1) Options
J. Gordon McMehen,
President and
Chief Executive Officer $6.875 -0- 250,000
Douglas C. Lloyd,
Vice President and
Chief Technology Officer $6.875 -0- 500,000
Daniel N. Argiros,
Vice President and
Chief Financial Officer $6.875 -0- 250,000
Executive Group $6.875 -0- 1,000,000
Non-Executive
Director Group $6.875 -0- 25,000
Non-Executive Officer
Employee Group $6.875 -0- 425,000
________________________
(1) The current dollar value of options granted and reported above is
calculated by multiplying (i) the number of shares subject to the
option by (ii) the difference between the current per share option
exercise price for all such options ($6.875) and the average of
the closing bid and asked prices of the Company's Common Stock at
February 28, 2001. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Company's
Common Stock and other factors such as the general condition of
the stock markets and the timing of the exercise of the options.
The Board of Directors recommends a vote "for" the approval of
the 2001 Plan.
SELECTION OF AUDITORS
Proposal 5
The Board of Directors has appointed BDO Dunwoody LLP, independent
certified public accountants, as the Company's independent auditors for
the fiscal year ending July 31, 2001, subject to ratification by the
Company's stockholders. Said firm audited the financial statements of
Orbit for the fiscal year ended July 31, 2000. It is expected that a
representative of BDO Dunwoody LLP will be present at the Special Meeting,
with the opportunity to make a statement if he or she desires to do so,
and will be available to respond to appropriate questions. The Board of
Directors recommends that the stockholders ratify the selection of BDO
Dunwoody LLP as the Company's independent auditors by voting for this
proposal.
STOCKHOLDERS' PROPOSALS
Any stockholder who wishes to present a proposal for action at the
next Annual Meeting of Stockholders and who wishes to have it set forth in
the proxy statement and identified in the form of proxy prepared by
management must notify management of the Company so that such notice is
received by management at its principal executive offices at 22nd Floor,
161 Bay Street, Canada Trust Tower, BCE Place, Toronto, Ontario Canada M5J
2S1 by November 15, 2001 and is in such form as is required under the
rules and regulations promulgated by the Securities and Exchange
Commission.
MISCELLANEOUS
The Board of Directors knows of no other business to be presented
at the Special Meeting but if other matters properly do come before the
meeting, it is intended that the persons named in the accompanying proxy
will vote the shares for which they hold proxies in accordance with their
judgment.
The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 2000 and the Company's Current Report on Form 8-K, dated
September 8, 2000, as amended, are being delivered to the Company's
stockholders with this Proxy Statement. Such reports are not to be
considered part of the soliciting material.
By Order of The Board of Directors,
J. GORDON McMEHEN,
Chairman
Dated: March 15, 2001
Toronto, Ontario
APPENDIX A
NEW HILARITY, INC.
2001 STOCK INCENTIVE PLAN
SECTION 1: GENERAL PURPOSE OF PLAN
The name of this plan is the 2001 Stock Incentive Plan (the
"Plan"). The purpose of the Plan is to enable New Hilarity, Inc., a Nevada
corporation (the "Company"), and any Parent or any Subsidiary to obtain
and retain the services of the types of employees, consultants, officers
and Directors who will contribute to the Company's long range success and
to provide incentives which are linked directly to increases in share
value which will inure to the benefit of all shareholders of the Company.
SECTION 2: DEFINITIONS
For purposes of the Plan, the following terms shall be defined as
set forth below:
"Administrator" shall have the meaning as set forth in Section 3,
hereof.
"Board" means the Board of Directors of the Company.
"Cause" means (i) failure by an Eligible Person to substantially
perform his or her duties and obligations to the Company (other than any
such failure resulting from his or her incapacity due to physical or
mental illness); (ii) engaging in misconduct or a fiduciary breach which
is or potentially is materially injurious to the Company or its
shareholders; (iii) commission of a felony; (iv) the commission of a crime
against the Company which is or potentially is materially injurious to the
Company; or (v) as otherwise provided in the option agreement. For
purposes of this Plan, the existence of Cause shall be determined by the
Administrator in its sole discretion.
"Change in Control" shall mean:
(i) The consummation of a merger or consolidation of
the Company with or into another entity or any other corporate
reorganization, if more than 50% of the combined voting power of the
continuing or surviving entity's securities outstanding immediately after
such merger, consolidation or other reorganization is owned, directly or
indirectly, by persons who were not stockholders of the Company
immediately prior to such merger, consolidation or other reorganization;
or
(ii) The sale, transfer or other disposition of all or
substantially all of the Company's assets. A transaction shall not
constitute a Change in Control if its sole purpose is to change the state
of the Company's incorporation or to create a holding company that will be
owned in substantially the same proportions by the persons who held the
Company's securities immediately before such transaction.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Committee" means a committee of the Board designated by the Board
to administer the Plan.
"Company" means New Hilarity, Inc., a corporation organized under
the laws of the State of Nevada (or any successor corporation).
"Date of Grant" means the date on which the Administrator adopts a
resolution expressly granting a Right to a Participant or, if a different
date is set forth in such resolution as the Date of Grant, then such date
as is set forth in such resolution.
"Director" means a member of the Board.
"Disability" means that the Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment. For purposes of determining the term of an
ISO pursuant to Section 6.6 hereof, the Disability must be expected to
result in death or to have lasted or be expected to last for a continuous
period of not less than 12 months. The determination of whether an
individual has a Disability shall be determined under procedures
established by the Administrator.
"Eligible Person" means an employee, officer, consultant or
Director of the Company, any Parent or any Subsidiary.
"Exercise Price" shall have the meaning set forth in Section 6.3
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" of a share of Stock as of a given valuation
date shall be determined as follows:
(i) If the Stock is traded on a stock exchange, the
Fair Market Value will be equal to the closing price of the Stock on the
principal exchange on which the Stock is then trading as reported by such
exchange (or as reported by any composite index which includes such
principal exchange) for the trading day previous to the date of valuation,
or if the Stock is not traded on such date, on the next preceding trading
day during which a trade occurred;
(ii) If the Stock is traded over-the-counter on the
Nasdaq National Market on the date in question, the Fair Market Value will
be equal to the last transaction-price of the Stock as reported by Nasdaq
for the trading day previous to the date of valuation, or if the Stock is
not traded on such date, on the next preceding trading day during which a
trade occurred;
(iii) If the Stock is traded over-the-counter on the
Nasdaq SmallCap Market, the Fair Market Value will equal the mean between
the last reported closing representative bid and asked price for the Stock
as reported by Nasdaq for the trading day previous to the date of
valuation, or if the Stock is not traded on such date, on the next
preceding trading day during which a trade occurred; or
(iv) If the Stock is not publicly traded on an exchange
and is not traded over-the-counter on Nasdaq, the Fair Market Value shall
be determined by the Board acting in good faith on such basis as it deems
appropriate, including quotations by market makers if the Stock is traded
over-the-counter on the OTC Bulletin Board or Pink Sheets on the date in
question should the Administrator deem such quotations to be appropriate
given the volume and circumstances of trades.
"ISO" means a Stock Option intended to qualify as an "incentive
stock option" as that term is defined in Section 422(b) of the Code.
"Non-qualified Stock Option" means a Stock Option not described in
Section 422(b) of the Code.
"Offeree" means a Participant who is granted a Purchase Right
pursuant to the Plan.
"Optionee" means a Participant who is granted a Stock Option
pursuant to the Plan.
"Orbit Canada" means Orbit Canada Inc., a corporation existing
under the laws of the Province of Ontario and a Subsidiary of the Company.
"Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the
other corporations in such chain. A corporation that attains the status of
a Parent on a date after the adoption of the Plan shall be considered a
Parent commencing as of such date.
"Participant" means any Eligible Person selected by the
Administrator, pursuant to the Administrator's authority in Section 3, to
receive grants of Rights.
"Plan" means this 2001 Stock Incentive Plan, as the same may be
amended or supplemented from time to time.
"Purchase Price" shall have the meaning set forth in Section 7.3.
"Purchase Right" means the right to purchase Stock granted
pursuant to Section 7.
"Repurchase Right" shall have the meaning set forth in Section 8.7
of the Plan.
"Rights" means Stock Options and Purchase Rights.
"Service" shall mean service as an employee, officer, consultant
or Director of the Company, any Parent or any Subsidiary.
"Stock" means Common Stock of the Company.
"Stock Option" means an option to purchase shares of Stock granted
pursuant to Section 6.
"Stock Option Agreement" shall have the meaning set forth in
Section 6.1.
"Stock Purchase Agreement" shall have the meaning set forth in
Section 7.1.
"Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of
such date.
"Ten Percent Shareholder" means a person who on the Date of Grant
owns, either directly or through attribution as provided in Section 424 of
the Code, Stock constituting more than 10% of the total combined voting
power of all classes of stock of his or her employer corporation or of any
Parent or Subsidiary.
SECTION 3: ADMINISTRATION
3.1 Administrator. The Plan shall be administered by either (i)
the Board or (ii) the Committee (the group that administers the Plan is
referred to as the "Administrator").
3.2 Powers in General. The Administrator shall have the power
and authority to grant to Eligible Persons, pursuant to the terms of the
Plan, (i) Stock Options, (ii) Purchase Rights or (iii) any combination of
the foregoing.
3.3 Specific Powers. In particular, the Administrator shall
have the authority: (i) to construe and interpret the Plan and apply its
provisions; (ii) to promulgate, amend and rescind rules and regulations
relating to the administration of the Plan; (iii) to authorize any person
to execute, on behalf of the Company, any instrument required to carry out
the purposes of the Plan; (iv) to determine when Rights are to be granted
under the Plan; (v) from time to time to select, subject to the
limitations set forth in this Plan, those Eligible Persons to whom Rights
shall be granted; (vi) to determine the number of shares of Stock to be
made subject to each Right; (vii) to determine whether each Stock Option
is to be an ISO or a Non-Qualified Stock Option; (viii) to prescribe the
terms and
conditions of each Stock Option and Purchase Right, including,
without limitation, the purchase price and medium of payment, vesting
provisions and repurchase provisions, and to specify the provisions of the
Stock Option Agreement or Stock Purchase Agreement relating to such grant
or sale; (ix) to amend any outstanding Rights for the purpose of modifying
the time or manner of vesting, the purchase price or exercise price, as
the case may be, subject to applicable legal restrictions and to the
consent of the other party to such agreement; (x) to determine the
duration and purpose of leaves of absences which may be granted to a
Participant without constituting termination of their employment for
purposes of the Plan; (xi) to make decisions with respect to outstanding
Stock Options that may become necessary upon a change in corporate control
or an event that triggers anti-dilution adjustments; and (xii) to make any
and all other determinations which it determines to be necessary or
advisable for administration of the Plan.
3.4 Decisions Final. All decisions made by the Administrator
pursuant to the provisions of the Plan shall be final and binding on the
Company and the Participants.
3.5 The Committee. The Board may, in its sole and absolute
discretion, from time to time, delegate any or all of its duties and
authority with respect to the Plan to the Committee whose members are to
be appointed by and to serve at the pleasure of the Board. From time to
time, the Board may increase or decrease the size of the Committee, add
additional members to, remove members (with or without cause) from,
appoint new members in substitution therefor, and fill vacancies, however
caused, in the Committee. The Committee shall act pursuant to a vote of
the majority of its members or, in the case of a committee comprised of
only two members, the unanimous consent of its members, whether present or
not, or by the written consent of the majority of its members or, in the
case of a Committee comprised of only two members, the unanimous written
consent of its members, and minutes shall be kept of all of its meetings
and copies thereof shall be provided to the Board. Subject to the
limitations prescribed by the Plan and the Board, the Committee may
establish and follow such rules and regulations for the conduct of its
business as it may determine to be advisable.
3.6 Indemnification. In addition to such other rights of
indemnification as they may have as Directors or members of the Committee,
and to the extent allowed by applicable law, the Administrator shall be
indemnified by the Company against the reasonable expenses, including
attorney's fees, actually incurred in connection with any action, suit or
proceeding or in connection with any appeal therein, to which the
Administrator may be party by reason of any action taken or failure to act
under or in connection with the Plan or any option granted under the Plan,
and against all amounts paid by the Administrator in settlement thereof
(provided that the settlement has been approved by the Company, which
approval shall not be unreasonably withheld) or paid by the Administrator
in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such Administrator did not act in good
faith and in a manner which such person reasonably believed to be in the
best interests of the Company, and in the case of a criminal proceeding,
had no reason to believe that the conduct complained of was unlawful;
provided, however, that within 60 days after institution of any such
action, suit or proceeding, such Administrator shall, in writing, offer
the Company the
opportunity at its own expense to handle and defend such
action, suit or proceeding.
SECTION 4: STOCK SUBJECT TO THE PLAN
4.1 Stock Subject to The Plan. Subject to adjustment as
provided in Section 9, 2,000,000 shares of Common Stock shall be reserved
and available for issuance under the Plan. Stock reserved hereunder may
consist, in whole or in part, of authorized and unissued shares or
treasury shares.
4.2 Additional Shares. In the event that any outstanding Option
or other right for any reason expires or is canceled or otherwise
terminated, the shares allocable to the unexercised portion of such Option
or other right shall again be available for the purposes of the Plan. In
the event that shares issued under the Plan are reacquired by the Company
pursuant to the terms of any forfeiture provision such shares shall again
be available for the purposes of the Plan.
SECTION 5: ELIGIBILITY
Eligible Persons who are selected by the Administrator shall be
eligible to be granted Rights hereunder subject to limitations set forth
in this Plan; provided, however, that only employees shall be eligible to
be granted ISOs hereunder.
SECTION 6: TERMS AND CONDITIONS OF OPTIONS
6.1 Stock Option Agreement. Each grant of an Option under the
Plan shall be evidenced by a Stock Option Agreement between the Optionee
and the Company. Such Option shall be subject to all applicable terms and
conditions of the Plan and may be subject to any other terms and
conditions which are not inconsistent with the Plan and which the
Administrator deems appropriate for inclusion in a Stock Option Agreement.
The provisions of the various Stock Option Agreements entered into under
the Plan need not be identical.
6.2 Number of Shares. Each Stock Option Agreement shall specify
the number of shares of Stock that are subject to the Option and shall
provide for the adjustment of such number in accordance with Section 9,
hereof. The Stock Option Agreement shall also specify whether the Option
is an ISO or a Non-Qualified Stock Option. In addition, the Administrator
may allow holders of Non-Qualified Stock Options to exercise their options
for comparable numbers of non-voting exchangeable shares of Orbit Canada
which will be exchangeable for shares of Common Stock on a one-for-one
basis.
6.3 Exercise Price.
6.3.1 In General. Each Stock Option Agreement shall state
the price at which shares subject to the Stock Option may be purchased
(the "Exercise Price"), which shall, with respect to Incentive Stock
Options, be not less than 100% of the Fair Market Value of the Stock on
the Date
of Grant. In the case of Non-Qualified Stock Options, the
Exercise Price shall be determined in the sole discretion of the
Administrator; provided, however, that the Exercise Price shall be no less
than 85% of the Fair Market Value of the shares of Stock on the Date of
Grant of the Non-Qualified Stock Option. The Exercise Price shall be
payable in a form described in Section 8 hereof.
6.3.2 Ten-Percent Stockholders. An individual who owns
more than 10% of the total combined voting power of all classes of
outstanding stock of the Company, its Parent or any of its Subsidiaries
shall not be eligible for designation as an Optionee or Purchaser of an
ISO, unless the Exercise Price is at least 110% of the Fair Market Value
of a Share on the Date of Grant and such ISO by its terms is not
exercisable after the expiration of five years from the Date of Grant.
6.4 Withholding Taxes. As a condition to the exercise of an
Option, the Optionee shall make such arrangements as the Administrator may
require for the satisfaction of any federal, state, local or foreign
withholding tax obligations that may arise in connection with such
exercise or with the disposition of shares acquired by exercising an
Option.
6.5 Exercisability. Each Stock Option Agreement shall specify
the date when all or any installment of the Option becomes exercisable.
The exercise provisions of any Stock Option Agreement shall be determined
by the Administrator in its sole discretion. Notwithstanding any
provision to the contrary herein or the terms of vesting provided in any
Stock Option Agreement, all Stock Options will become exercisable
immediately if a Change in Control occurs.
6.6 Term. The Stock Option Agreement shall specify, the term of
the Option. No Option shall be exercised after the expiration of ten years
after the date the Option is granted. In addition, no option may be
exercised (i) three months after the date the Optionee's Service with the
Company, its Parent or its Subsidiaries terminates if such termination is
for any reason other than death, Disability or Cause, (ii) one year after
the date the Optionee's Service with the Company and its subsidiaries
terminates if such termination is a result of death or Disability, and
(iii) if the Optionee's Service with the Company and its subsidiaries
terminates for Cause, all outstanding Options granted to such Optionee
shall expire as of the commencement of business on the date of such
termination; provided, however, that the Stock Option Agreement for any
Option may provide for longer or shorter periods, and the Administrator
may, in its sole discretion, waive the accelerated expiration provided for
in (i) or (ii). Outstanding Options that are not exercisable at the time
of termination of employment for any reason shall expire at the close of
business on the date of such termination. In the case of an ISO granted to
an employee who owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any of its Parent
or Subsidiary corporations, the term set forth in (i), above, shall not be
more than five years after the date the Option is granted.
6.7 Nontransferability. Except as provided herein, an Optionee
may not assign, sell or transfer the Option, in whole or in part, other
than by will or by operation of the laws of descent and distribution. The
Administrator, in its sole discretion may permit the transfer of a
Non-Statutory Option (but not an ISO) to (i) a member of the Participant's
immediate family; (ii) a trust solely for
the benefit of the Participant
and/or one or more members of Participant's immediate family; or (iii) a
partnership or limited liability company, all of whose interests are owned
by the Participant and/or one or more members of his immediate family (any
of (i), (ii) and (iii) referred to as a "Permitted Transferee"). A
transfer permitted under this Section 6.7 hereof may be made only upon
written notice to and approval thereof by Administrator. A Permitted
Transferee may not further assign, sell or transfer the transferred
Option, in whole or in part, other than by will or by operation of the
laws of descent and distribution. A Permitted Transferee shall agree in
writing to be bound by the provisions of this Plan. For purposes of this
Section 6.7, "immediate family" shall mean the Optionee's spouse
(including a former spouse subject to terms of a domestic relations order)
children, children-in-law and grandchildren, including adopted and
stepchildren and grandchildren.
6.8 Leaves of Absence. For purposes of Section 6.6 above,
Service shall be deemed to continue while the Optionee is on a bona fide
leave of absence, if such leave was approved by the Company in writing and
if continued crediting of Service for this purpose is expressly required
by the terms of such leave or by applicable law (as determined by the
Administrator).
6.9 Modification, Extension and Assumption of Options. Within
the limitations of the Plan, the Administrator may modify, extend or
assume outstanding Options or may accept the cancellation of outstanding
Options (whether granted by the Company or another issuer) in return for
the grant of new Options for the same or a different number of shares and
at the same or a different Exercise Price. The foregoing notwithstanding,
no modification of an Option shall, without the consent of the Optionee,
impair the Optionee's rights or increase the Optionee's obligations under
such Option. However, a termination of the Option in which the Optionee
receives a cash payment equal to the difference between the Fair Market
Value and the exercise price for all shares subject to exercise under any
outstanding Option shall not be deemed to impair any rights of the
Optionee or increase the Optionee's obligations under such Option.
SECTION 7: TERMS AND CONDITIONS OF AWARDS OR SALES
7.1 Stock Purchase Agreement. Each award or sale of shares
under the Plan (other than upon exercise of an Option) shall be evidenced
by a Stock Purchase Agreement between the Purchaser and the Company. Such
award or sale shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are
not inconsistent with the Plan and which the Board deems appropriate for
inclusion in a Stock Purchase Agreement. In addition, the Administrator
may allow a participant the right to acquire non-voting exchangeable
shares of Orbit Canada which will be exchangeable for shares of Common
Stock on a one-for-one basis. The provisions of the various Stock Purchase
Agreements entered into under the Plan need not be identical.
7.2 Duration of Offers and Nontransferability of Rights. Any
right to acquire shares under the Plan (other than an Option) shall
automatically expire if not exercised by the Purchaser within 30 days
after the grant of such right was communicated to the Purchaser by the
Company. Such right shall not be transferable and shall be exercisable
only by the Purchaser to whom such
right was granted.
7.3 Purchase Price. Each Stock Purchase Agreement shall state
the price at which the Stock subject to such Stock Purchase Agreement may
be purchased (the "Purchase Price"), which, with respect to Stock Purchase
Rights, shall be determined in the sole discretion of the Administrator;
provided, however, that the Purchase Price shall be no less than 85% of
the Fair Market Value of the shares of Stock on either the Date of Grant
or the date of purchase of the Purchase Right. The Purchase Price shall
be payable in a form described in Section 8.
7.4 Withholding Taxes. As a condition to the purchase of
shares, the Purchaser shall make such arrangements as the Board may
require for the satisfaction of any federal, state, local or foreign
withholding tax obligations that may arise in connection with such
purchase.
SECTION 8: PAYMENT
8.1 General Rule. The entire Purchase Price or Exercise Price
of shares issued under the Plan shall be payable in full by, as
applicable, cash or check for an amount equal to the aggregate Purchase
Price or Exercise Price for the number of shares being purchased, or in
the discretion of the Administrator, upon such terms as the Administrator
shall approve, (i) in the case of an Option, by a copy of instructions to
a broker directing such broker to sell the Stock for which such Option is
exercised, and to remit to the Company the aggregate exercise price of
such Options (a "Cashless Exercise"), (ii) in the case of an Option or a
sale of Stock, by paying all or a portion of the Exercise Price or
Purchase Price for the number of shares being purchased by tendering Stock
owned by the Optionee, duly endorsed for transfer to the Company, with a
Fair Market Value on the date of delivery equal to the aggregate purchase
price of the Stock with respect to which such Option or portion thereof is
thereby exercised or Stock acquired (a "Stock-for-Stock Exercise") or
(iii) by a Stock-for-Stock Exercise by means of attestation whereby the
Optionee identifies for delivery specific shares of Stock already owned by
Optionee and receives a number of shares of Stock equal to the difference
between the Option shares thereby exercised and the identified attestation
shares of Stock (an "Attestation Exercise").
8.2 Withholding Payment. The Purchase Price or Exercise Price
shall include payment of the amount of all federal, state, local or other
income, excise or employment taxes subject to withholding (if any) by the
Company or any parent or subsidiary corporation as a result of the
exercise of a Stock Option. The Optionee may pay all or a portion of the
tax withholding by cash or check payable to the Company, or, at the
discretion of the Administrator, upon such terms as the Administrator
shall approve, by (i) Cashless Exercise or Attestation Exercise; (ii)
Stock-for-Stock Exercise; (iii) in the case of an option, by paying all or
a portion of the tax withholding for the number of shares being purchased
by withholding shares from any transfer or payment to the Optionee ("Stock
Withholding"); or (iv) a combination of one or more of the foregoing
payment methods. Any shares issued pursuant to the exercise of an Option
and transferred by the Optionee to the Company for the purpose of
satisfying any withholding obligation shall not again be available for
purposes of the Plan. The Fair Market Value of the number of shares
subject to Stock
Withholding shall not exceed an amount equal to the
applicable minimum required tax withholding rates.
8.3 Services Rendered. At the discretion of the Administrator,
shares may be awarded under the Plan in consideration of services rendered
to the Company, a Parent or a Subsidiary prior to the award. At the
discretion of the Administrator, shares may also be awarded under the Plan
in consideration of services to be rendered to the Company, a Parent or a
Subsidiary after the award, except that the par value of such shares, if
newly issued, shall be paid in cash or cash equivalents.
8.4 Promissory Note. To the extent that a Stock Option
Agreement or Stock Purchase Agreement so provides, in the discretion of
the Administrator, upon such terms as the Administrator shall approve, all
or a portion of the Exercise Price or Purchase Price (as the case may be)
of shares issued under the Plan may be paid with a full-recourse
promissory note. However, the par value of the shares, if newly issued,
shall be paid in cash or cash equivalents. The shares shall be pledged as
security for payment of the principal amount of the promissory note and
interest thereon. The interest rate payable under the terms of the
promissory note shall not be less than the minimum rate (if any) required
to avoid the imputation of additional interest under the Code. Subject to
the foregoing, the Administrator (at its sole discretion) shall specify
the term, interest rate, amortization requirements (if any) and other
provisions of such note. Unless the Administrator determines otherwise,
shares of Stock having a Fair Market Value at least equal to the principal
amount of the loan shall be pledged by the holder to the Company as
security for payment of the unpaid balance of the loan and such pledge
shall be evidenced by a pledge agreement, the terms of which shall be
determined by the Administrator, in its discretion; provided, however,
that each loan shall comply with all applicable laws, regulations and
rules of the Board of Governors of the Federal Reserve System and any
other governmental agency having jurisdiction.
8.5 Exercise/Pledge. To the extent that a Stock Option
Agreement or Stock Purchase Agreement so provides and if Stock is publicly
traded, in the discretion of the Administrator, upon such terms as the
Administrator shall approve, payment may be made all or in part by the
delivery (on a form prescribed by the Administrator) of an irrevocable
direction to pledge shares to a securities broker or lender approved by
the Company, as security for a loan, and to deliver all or part of the
loan proceeds to the Company in payment of all or part of the Exercise
Price and any withholding taxes.
8.6 Written Notice. The purchaser shall deliver a written
notice to the Administrator requesting that the Company direct the
transfer agent to issue to the purchaser (or to his designee) a
certificate for the number of shares of Common Stock being exercised or
purchased or, in the case of a cashless exercise or share withholding
exercise, for any shares that were not sold in the cashless exercise or
withheld.
8.7 Repurchase Rights. At any time, the Administrator may, but
shall not be required to, offer to repurchase for a payment in cash or
shares of Common Stock the Participant's Rights previously granted or
awarded based upon such terms and conditions as the Administrator shall
establish and communicate to the Participant at the time the grant or
award is made.
SECTION 9: ADJUSTMENTS; MARKET STAND-OFF
9.1 Effect of Certain Changes.
9.1.1 Stock Dividends, Splits, Etc. If there is any
change in the number of outstanding shares of Stock through the
declaration of stock dividends or through a recapitalization resulting in
Stock splits, or combinations or exchanges of the outstanding shares, then
(i) the number of shares of Stock available for Rights, (ii) the number of
shares of Stock covered by outstanding Rights and (iii) the Exercise Price
or Purchase Price of any Stock Option or Purchase Right, in effect prior
to such change, shall be proportionately adjusted by the Administrator to
reflect any increase or decrease in the number of issued shares of Stock;
provided, however, that any fractional shares resulting from the
adjustment shall be eliminated.
9.1.2 Liquidation, Dissolution, Merger or Consolidation.
In the event of: a dissolution or liquidation of the Company, or any
corporate separation or division, including, but not limited to, a
split-up, a split-off or a spin-off, or a sale of substantially all of the
assets of the Company; a merger or consolidation in which the Company is
not the surviving corporation; or a reverse merger in which the Company is
the surviving corporation, but the shares of Company stock outstanding
immediately preceding the merger are converted by virtue of the merger
into other property, whether in the form of securities, cash or otherwise,
then, the Company, to the extent permitted by applicable law, but
otherwise in its sole discretion may provide for: (i) the continuation of
outstanding Rights by the Company (if the Company is the surviving
corporation); (ii) the assumption of the Plan and such outstanding Rights
by the surviving corporation or its parent; (iii) the substitution by the
surviving corporation or its parent of Rights with substantially the same
terms for such outstanding Rights; or (iv) the cancellation of such
outstanding Rights without payment of any consideration, provided that if
such Rights would be canceled in accordance with the foregoing, the
Participant shall have the right, exercisable during the later of the
ten-day period ending on the fifth day prior to such merger or
consolidation or ten days after the Administrator provides the Rights
holder a notice of cancellation, to exercise such Right in whole or in
part without regard to any installment exercise provisions in the Right
agreement.
9.1.3 Par Value Changes. In the event of a change in the
Stock of the Company as presently constituted which is limited to a change
of all of its authorized shares with par value, into the same number of
shares without par value, or a change in the par value, the shares
resulting from any such change shall be "Stock" within the meaning of the
Plan.
9.2 Decision of Administrator Final. To the extent that the
foregoing adjustments relate to stock or securities of the Company, such
adjustments shall be made by the Administrator, whose determination in
that respect shall be final, binding and conclusive; provided, however,
that each ISO granted pursuant to the Plan shall not be adjusted in a
manner that causes such Stock Option to fail to continue to qualify as an
ISO without the prior consent of the Optionee thereof.
9.3 No Other Rights. Except as hereinbefore expressly provided
in this Section 9, no Participant shall have any rights by reason of any
subdivision or consolidation of shares of Company
stock or the payment of any dividend or any other increase or decrease in
the number of shares of Company stock of any class or by reason of any of
the events described in Section 9.1, above, or any other issue by the
Company of shares of stock of any class, or securities convertible into
shares of stock of any class; and, except as provided in this Section 9,
none of the foregoing events shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of
Stock subject to Rights. The grant of a Right pursuant to the Plan shall
not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital
or business structures or to merge or to consolidate or to dissolve,
liquidate or sell, or transfer all or part of its business or assets.
9.4 Market Stand-off. Each Stock Option Agreement and Stock
Purchase Agreement shall provide that, in connection with any firm
commitment underwritten public offering by the Company of its equity
securities pursuant to an effective registration statement filed under the
Securities Act of 1933, as amended, the Participant shall agree not to
sell, make any short sale of, loan, hypothecate, pledge, grant any option
for the repurchase of, or otherwise dispose or transfer for value or
otherwise agree to engage in any of the foregoing transactions with
respect to any Stock without the prior written consent of the Company or
its underwriters, for such period of time from and after the effective
date of such registration statement as may be requested by the Company or
such underwriters.
SECTION 10: AMENDMENT AND TERMINATION
The Board may amend, suspend or terminate the Plan at any time
and for any reason. At the time of such amendment, the Board shall
determine, upon advice from counsel, whether such amendment will be
contingent on shareholder approval.
SECTION 11: GENERAL PROVISIONS
11.1 General Restrictions.
11.1.1 No View to Distribute. The Administrator may
require each person acquiring shares of Stock pursuant to the Plan to
represent to and agree with the Company in writing that such person is
acquiring the shares without a view towards distribution thereof. The
certificates for such shares may include any legend that the Administrator
deems appropriate to reflect any restrictions on transfer.
11.1.2 Legends. All certificates for shares of Stock
delivered under the Plan shall be subject to such stop transfer orders and
other restrictions as the Administrator may deem advisable under the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Stock is then listed and any
applicable federal or state securities laws, and the Administrator may
cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
11.1.3 No Rights as Shareholder. Except as specifically
provided in this Plan, a Participant or a transferee of a Right shall have
no rights as a shareholder with respect to any shares covered by the
Rights until the date of the issuance of a Stock certificate to him or her
for such shares, and no adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other property) or
distributions of other rights for which the record date is prior to the
date such Stock certificate is issued, except as provided in Section 9.1
hereof.
11.2 Other Compensation Arrangements. Nothing contained in this
Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to shareholder approval if such
approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
11.3 Disqualifying Dispositions. Any Participant who shall make
a "Disposition" (as defined in Section 424 of the Code) of all or any
portion of an ISO within two years from the date of grant of such ISO or
within one year after the issuance of the shares of Stock acquired upon
exercise of such ISO shall be required to immediately advise the Company
in writing as to the occurrence of the sale and the price realized upon
the sale of such shares of Stock.
11.4 Regulatory Matters. Each Stock Option Agreement and Stock
Purchase Agreement shall provide that no shares shall be purchased or sold
thereunder unless and until (i) any then applicable requirements of state
or federal laws and regulatory agencies shall have been fully complied
with to the satisfaction of the Company and its counsel and (ii) if
required to do so by the Company, the Optionee or Offeree shall have
executed and delivered to the Company a letter of investment intent in
such form and containing such provisions as the Board or Committee may
require.
11.5 Recapitalizations. Each Stock Option Agreement and Stock
Purchase Agreement shall contain provisions required to reflect the
provisions of Section 9.
11.6 Delivery. Upon exercise of a Right granted under this Plan,
the Company shall issue Stock or pay any amounts due within a reasonable
period of time thereafter. Subject to any statutory obligations the
Company may otherwise have, for purposes of this Plan, thirty days shall
be considered a reasonable period of time.
11.7 Special Terms. In order to facilitate the making of any
grant or combination of grants under this Plan, the Administrator may
provide for such special terms for Rights granted to Eligible Persons who
are outside of the United States of America, as the Administrator may
consider necessary or appropriate to accommodate differences in local
law, tax policy or custom. Moreover, the Administrator may approve such
supplements to, or amendments, restatements or alternative versions of,
this Plan as it may consider necessary or appropriate for such purposes
without thereby affecting the terms of this Plan as in effect for any
other purpose, provided that no such supplements, amendments, restatements
or alternative versions shall include any provisions that are
inconsistent
with the terms of this Plan, as then in effect, unless this
Plan could have been amended to eliminate such inconsistency without
further approval by the shareholders of the Company.
11.8 Other Provisions. The Stock Option Agreements and Stock
Purchase Agreements authorized under the Plan may contain such other
provisions not inconsistent with this Plan, including, without limitation,
restrictions upon the exercise of the Rights, as the Administrator may
deem advisable.
SECTION 12: EFFECTIVE DATE OF PLAN
The effective date of this Plan is February 28, 2001. The adoption
of the Plan is subject to approval by the Company's shareholders, which
approval must be obtained within 12 months from the date the Plan is
adopted by the Board. In the event that the stockholders fail to approve
the Plan within 12 months after its adoption by the Board, any grants of
Options or sales or awards of shares that have already occurred shall be
rescinded, and no additional grants, sales or awards shall be made
thereafter under the Plan.
SECTION 13: TERM OF PLAN
The Plan shall terminate automatically on the 10th anniversary of
the effective date. No Right shall be granted pursuant to the Plan after
such date, but Rights theretofore granted may extend beyond that date. The
Plan may be terminated on any earlier date pursuant to Section 10 hereof.
APPENDIX
FORM OF PROXY CARD
PROXY
NEW HILARITY, INC.
SPECIAL MEETING OF STOCKHOLDERS
APRIL 12, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J. Gordon McMehen and Daniel N.
Argiros, and each of them, with power of substitution as proxies for the
undersigned to act and vote at the Special Meeting of Stockholders of New
Hilarity, Inc. (the "Company") to be held on April 12, 2001, at 10:00
a.m., local time, at xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx, and any
adjournments thereof for the following purposes:
1. Election of Directors - Nominees: J. Gordon McMehen,
Douglas C. Lloyd, Daniel N. Argiros and Robert J. Picard.
[ ] FOR [ ] FOR ALL EXCEPT [ ] WITHHOLD
INSTRUCTION: To withhold your vote for any nominee(s), mark "For
All Except" and write that nominee's name on the line below.
2. Proposal to change the name of the Company from "New
Hilarity, Inc." to "Orbit E-Commerce, Inc.".
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to authorize an amendment to the Certificate of
Incorporation of the Company to increase the number of authorized shares
of Common Stock and to authorize a new class of Preferred Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to approve the adoption of the Company's 2001
Stock Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Proposal to ratify the selection of BDO Dunwoody LLP as the
Company's independent auditors for the fiscal year ending July 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. To transact such other business as may properly come before
the Special Meeting or any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. UNLESS OTHERWISE SPECIFIED, THE
SHARES WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4 AND 5.
Signatures of Shareholder(s)
Date:
NOTE: Please sign your name exactly as it appears on this Proxy. Jointly
held shares require only one signature. If you are signing this Proxy as
an attorney, administrator, agent, corporation, officer, executor, trustee
or guardian, etc., please add your full title to your signature.
IMPORTANT: IF YOU RECEIVE MORE THAN ONE CARD, PLEASE SIGN AND
RETURN ALL CARDS IN THE ACCOMPANYING ENVELOPE.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY TODAY