SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 8, 2000
NEW HILARITY, INC.
(Exact name of Registrant as specified in its charter)
Nevada 001-03323 91-197860
(State or other jurisdiction Commission (I.R.S. Employer
of incorporation or File number) Identification
organization) Number)
22nd Floor, 161 Bay Street
Canada Trust Tower, BCE Place
Toronto, Ontario, Canada M5J 2S1
(Address of principal (Postal Code)
executive offices)
Registrant's telephone number, including area code: (416) 304-0694
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Item 1. Changes in Control of Registrant.
Acquisition of Orbit
As of September 8, 2000 (the "Closing"), and pursuant to an
Agreement and Plan of Reorganization (the "Acquisition Agreement") dated as
of August 3, 2000 by and between New Hilarity, Inc. (the "Company") and
Orbit Canada Inc., an Ontario corporation ("Orbit"), the Company (i) issued
9,668,334 shares of its common stock, par value $0.005 per share (the
"Common Stock") and (ii) Orbit issued 2,120,497 shares of newly created
non-voting shares (the "Exchangeable Shares") of its capital stock to the
holders of 100% of the outstanding common shares of Orbit, in exchange for
all of the previously issued and outstanding common shares of Orbit, as a
result of which Orbit became a wholly-owned subsidiary of the Company (the
"Orbit Transaction").
In addition, at Closing, and pursuant to the Acquisition Agreement,
all 3,878,571 previously issued and outstanding warrants to acquire shares
of capital stock of Orbit were exchanged for 3,878,571 warrants to acquire
shares of the Common Stock of the Company (the "Warrants"). Each Warrant
entitles the holder thereof to acquire no later than February 20, 2001 one
share of the Company's Common Stock at an exercise price of $0.875 per
share.
Prior to the Closing, and as contemplated by the Acquisition
Agreement, the Company effected as of September 5, 2000 a one-for-five
reverse stock split (the "Reverse Stock Split") whereby the number of then
outstanding shares of Common Stock of the Company was reduced from
7,989,560 to approximately 1,597,912 shares of Common Stock. In addition,
and as a result of the Reverse Stock Split, the number of authorized
shares of Common Stock of the Company was reduced from 100,000,000 shares,
par value $0.001 per share, of Common Stock to 20,000,000 shares, par value
$0.005 per share, of Common Stock.
There are 2,120,497 Exchangeable Shares of Orbit issued and
outstanding as at September 8, 2000. Pursuant to the Exchangeable Share
Support Agreement dated as of September 5, 2000, each Exchangeable Share
provides for a right, exercisable by the holder, at any time, to exchange
an Exchangeable Share for a share of Common Stock of the Company. The
Exchangeable Shares are senior in priority to all other shares of Orbit.
Holders of Exchangeable Shares have the right to dividends and other
distributions equivalent to those of the holders of shares of Common Stock
of the Company.
Assuming the conversion of all 2,120,497 Exchangeable Shares and
all 3,878,571 Warrants into shares of Common Stock of the Company, there
will be approximately 17,265,314 shares of Common Stock issued and
outstanding shares in which the former stockholders and warrant holders of
Orbit will own approximately 91% of the Company's Common Stock.
All of the securities of the Company issued in connection with the
Orbit Transaction were issued in reliance upon the exemption from
registration contained in Regulation S promulgated under the Securities Act
of 1933, as amended.
Directors and Executive Officers
In connection with the Closing, John R. Coghlan and Robert O'Brien,
the Company's sole officers and directors, resigned from their positions,
and the following persons became directors of the Company: J. Gordon
McMehen, Douglas C. Lloyd, Daniel N. Argiros and Donald G. Payne. The
following persons were elected to the offices of the Company set forth
opposite their respective names below:
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J. Gordon McMehen President and Chief Executive
Officer
Douglas C. Lloyd Vice President and Chief
Technology Officer
Daniel N. Argiros Vice President, Chief
Financial Officer
Ian D. Hochberg Vice President - Marketing
None of the directors and officers is related to any other director
or officer of the Company.
Set forth below are brief accounts of the business experience
during the past five years of each director and executive officer of the
Company and each significant employee of the Company.
J. GORDON MCMEHEN, age 48, 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, age 48, 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. His extensive
experience includes designing and building large-scale satellite, microwave
(fixed wireless), and fibre optic networks in Canada and internationally.
DANIEL N. ARGIROS, C.A., age 37, 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.
IAN D. HOCHBERG, MBA, age 43, Vice President, Marketing, has been
providing management, marketing and financial consulting services to
innovative companies in the Information Technology and Telecommunications
sectors for the past 10 years. He is a director of several private and
public organizations in the Information Technology sector including the
Toronto chapter of the MIT Enterprise Forum, Phonetime Inc. and Elysium
Technology Investments Inc. He has also served as the Vice-Chairman of the
<PAGE>
Telecommunications Policy Committee of the Information Technology
Association of Canada. Earlier in his career, Mr. Hochberg held a variety
of marketing positions within a global logistics and transportation
organization. Mr. Hochberg will assist in the ongoing development and
implementation of the Company's strategic and marketing plans.
DONALD G. PAYNE, age 69, Director, is a retired business executive
with extensive experience in the banking, insurance and capital markets
industries. Since retiring in 1992, Mr. Payne has been providing consulting
services in the areas of business planning, cost rationalization, mergers
and acquisitions, due diligence analysis, equity and debt financing, initial
public offerings and interim management for small and medium sized companies
operating in a wide variety of industries. Mr. Payne will bring his extensive
experience to bear on the implementation of the Company's business plan.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the date hereof, 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
individually, (iii) all officers and directors of the Company as a group:
Amount and Nature of Percent of Class
Name Beneficial Ownership (fully diluted)
Dreyfus Securities Inc. 6,640,000 (1) 38.5%
Global Wireless Inc. 5,056,905 (2) 29.3%
Non Orbit Inc. 1,000,000 (3) 5.8%
J. Gordon McMehen * 700,000 (4) 4.1%
Douglas C. Lloyd * 4,100,001 (5) 23.7%
Daniel N. Argiros * 700,000 (6) 4.1%
Donald G. Paine * NIL N/A
Ian D. Hochberg NIL N/A
All Officers and Directors
Directors as a Group 5,500,001 31.9%
* 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) Consists of 2,761,429 shares and 3,878,571 warrants which may
be exercised to acquire shares, on a one-for-one basis, at
$0.875 per share, which shares and warrants are currently owned
of record by Dreyfus Securities Inc. Based upon information
furnished to the Company, such shares and warrants are owned
beneficially for the account of five non-U.S. entities.
(2) See note (5) below.
(3) See notes (4) and(6) below.
(4) 500,000 shares are owned by Non Orbit Inc. the shares of which are
owned indirectly for the benefit of members of Mr. McMehen's family
by a Trust; 200,000 shares are owned by Free Orbit Inc. the shares
of which are owned indirectly for the benefit of members of Mr.
McMehen's family by a Trust.
<PAGE>
(5) 1 share is held by Mr. Lloyd directly; 4,100,000 shares are owned
by Global Wireless Inc., the shares of which are owned indirectly
for the benefit of the members of Mr. Lloyd's family by a Trust.
(6) 500,000 shares are owned by Non Orbit Inc. the shares of which are
owned indirectly for the benefit of members of Mr. Argiros' family
by a Trust; 200,000 shares are owned by Free Orbit Inc. the shares
of which are owned indirectly for the benefit of members of Mr.
Argiros' family by a Trust.
Item 2. Acquisition or Disposition of Assets.
As described in Item 1, as of September 8, 2000, the Company (i)
issued 9,668,334 shares of its Common Stock and (ii) Orbit issued 2,120,497
Exchangeable Shares to the holders of 100% of the outstanding capital stock
of Orbit, in exchange for all of the previously issued and outstanding
capital stock of Orbit, as a result of which Orbit became a wholly-owned
subsidiary of the Company.
Business of Orbit
Orbit Canada Inc. ("Orbit") was incorporated in Ontario, Canada on
October 7, 1999 to implement high-speed digital wireless and fiber optic
based terrestrial services. The first phase of Orbit's Canadian fiber
optic and wireless network is in the final stages of completion and will be
activated in October 2000. This phase will enable Orbit to offer its
services in eight of Canada's largest urban centres (Vancouver, Edmonton,
Calgary, Winnipeg, Hamilton, Toronto, Ottawa and Montreal). Phase II will
see the network expanded to six more Canadian urban centres.
Orbit intends to provide Canadian businesses and individuals with
next generation Internet services that include high speed fixed wireless
Internet delivery, V.90 Internet access, phone-to-phone Voice over IP
("VoIP"), as well as E-mail, and web site hosting services. Orbit's VoIP
service, which will be 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 intends to market its services directly to commercial
enterprises and to residential markets as well as indirectly through
traditional Internet Service Providers, prepaid long distance calling card
companies and others.
Orbit operates in a very competitive environment that includes a
de-regulated long distance telecommunications industry and a multitude of
Internet Service Providers of various sizes and capabilities that offer
many of the same benefits to their subscribers as Orbit. However, to the
best of management's knowledge, no other company in Canada is providing the
same combination of services as Orbit and, in particular, Orbit's phone-to-
phone VoIP service is believed to be unique in Canada.
Orbit's major equipment suppliers include Cisco Systems, Clarent
Corporation and Hybrid Networks Inc. The equipment utilized in Orbit's
network is readily available from these suppliers, although some of this
equipment, notably from Clarent and Hybrid, is proprietary to these
organizations. Orbit utilizes telecommunication network services that are
also readily available from a variety of sources, although network
implementation can take several months to complete from date of commission.
Orbit has no material customers and due to the nature of its
business does not expect to be dependent on any one customer for more than
10% of its revenues.
<PAGE>
Orbit operates in an environment that is regulated by the Canadian
Radio-Television and Telecommunications Commission ("CRTC"). However, the
CRTC has determined that at this time it will not regulate Internet Service
Providers and therefore Orbit does not require specific government
approvals.
At the present time, Orbit has six employees.
Forward-Looking Statements
This report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs and
assumptions made by the Company's management as well as information
currently available to the management. When used in this document, the
words "anticipate", "believe", "estimate", and "expect" and similar
expressions, are intended to identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially
from those described herein as anticipated, believed, estimated or
expected. The Company does not intend to update these forward-looking
statements.
Item 7. Financial Statements and Exhibits
Financial Statements of Businesses Acquired and Pro Forma Financial
Information:
The financial statements and pro forma financial information
required to be filed are presently not available and will be filed by
amendment as soon as possible and no later than 60 days after the due date
of this Report on Form 8-K.
Exhibits:
2.1 Agreement and Plan of Reorganization dated August 3,
2000 by and between New Hilarity, Inc. and Orbit
Canada Inc.
3.1 Certificate of Change in Number of Authorized Shares
of New Hilarity, Inc. (filed August 31, 2000)
99.1 Form of Warrants issued to Warrant Holders of Orbit
Canada Inc.
99.2 Exchangeable Share Support Agreement between New
Hilarity, Inc. and Orbit Canada Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
NEW HILARITY, INC.
(Registrant)
Dated: September 22, 2000 By: /s/ Daniel N. Argiros
Name: Daniel N. Argiros
Title: Vice President and
Chief Financial
Officer
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of the3rd day of
August, 2000, by and between New Hilarity, Inc., a Nevada corporation
("NHI"), and Orbit Canada Inc., an Ontario corporation ("Orbit").
W I T N E S S E T H:
WHEREAS, NHI desires to acquire 11,667,402 shares (the "Orbit
Shares") of the capital stock of Orbit (the "Orbit Common Stock")
representing 100% of the issued and outstanding shares of the capital stock
of Orbit (the "Orbit Common Stock") in exchange for 11,667,402 shares of
the New NHI Common Stock (as defined in Section 6.05 below), and 4,000,000
Share Purchase Warrants to acquire common stock in the capital of Orbit
(the "Warrants") in exchange for 4,000,000 share purchase warrants to
acquire common stock in the capital of NHI and Orbit desires to become a
wholly-owned subsidiary of NHI and have all of the Orbit Shares and
Warrants acquired by NHI, upon the terms and conditions herein contained;
NOW, THEREFORE, for and in consideration of the mutual
representations, warranties, covenants and undertakings herein contained,
and on the terms and subject to the conditions set forth herein, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 Sale and Purchase of Stock. Subject to and upon the terms
and conditions contained herein, at the Closing (as hereinafter defined),
each of the shareholders (collectively, the "Shareholders" and individually
the "Shareholder") and warrant holders (collectively the "Warrant Holders"
and individually the "Warrant Holder") of Orbit as set forth on the
shareholder list of Orbit provided to NHI (such list to include the
Warrants and Warrant Holders and referred to as the "Orbit Shareholder
List") shall sell, assign, transfer, convey and deliver to NHI, free and
clear of any liens, claims, encumbrances and charges whatsoever, and NHI
shall purchase, accept and acquire from each of the Shareholders the number
of Orbit Shares designated opposite such Shareholder's name on the Orbit
Shareholder List which Orbit Shares in the aggregate constitute 100% of the
issued and outstanding shares of Orbit Common Stock and owned by the
Shareholders. NHI shall also purchase, accept and acquire from each of the
Warrant Holders, the number of Warrants designated opposite such Warrant
Holder's name on the Orbit Shareholder List which in the aggregate
constitute 100% of the issued and outstanding warrants or other contingent
rights to equity in Orbit and owned by the Warrant Holders.
1.02 Closing. The closing of the transaction contemplated hereby
(the "Closing") shall take place at the offices of Danzig Kaye Cooper &
Fiore, LLP, 30A Vreeland Road, Florham Park, New Jersey 07932, or such
other place as shall be mutually agreed upon on or about September 15,
2000, or on such other date and place as shall be mutually agreed upon by
the parties hereto (the actual time and date of closing being hereinafter
referred to as the "Closing Date").
1.03 Purchase Price. In consideration of the Orbit Shares to be
purchased from the Shareholders, NHI at the Closing shall deliver to each
of the Shareholders, certificates representing the number of shares of New
NHI Common Stock equal to the number of Orbit Shares held by each of the
Shareholders (such number, for clarity, not to be affected by the stock
consolidation/Reverse Stock Split of existing NHI shares described in
section 6.05 below), or an aggregate of 15,667,402 shares of New NHI Common
Stock, free and clear of any liens, claims, encumbrances or charges
whatsoever, except as otherwise provided in this Agreement. In
consideration of the Warrants to be purchased from the Warrant Holders, NHI
at the Closing shall deliver to each of the Warrant Holders, warrant
certificates representing rights to acquire common stock of NHI in the same
quantity, on the same terms and price as the Warrants provided for in
relation to common stock of Orbit (the "New NHI Warrants").
1.04 Instruments of Transfer; Further Assurances. In order to
consummate the transaction contemplated hereby, the following documents and
instruments shall be delivered at Closing:
(a) Documents from Shareholders. Shareholders shall
deliver to NHI at the Closing stock certificates representing the
Orbit Shares plus (i) a duly executed stock power or other
instrument of transfer for each such stock certificate with
appropriate signature guarantees in proper form to transfer to NHI
good and marketable title to the Orbit Shares. All Warrant Holders
shall deliver to NHI at the Closing certificates representing the
Warrants, duly endorsed for transfer or such other evidence of
transfer as is reasonably satisfactory to NHI.
(b) Documents from NHI. NHI shall deliver to the
Shareholders at the Closing stock certificates representing in the
aggregate 11,667,402 shares of New NHI Common Stock to which the
Shareholders are entitled, in accordance with this Agreement. NHI
shall deliver to the Warrant Holders at the Closing the New NHI
Warrants representing in the aggregate 4,000,000 share purchase
warrants of NHI to which the Warrant Holders are entitled, in
accordance with this Agreement. It is agreed that at the Closing it
will be sufficient to satisfy this requirement by delivering to the
Shareholders an appropriate opinion letter from counsel to NHI
together with such assurances from the registrar and transfer agent
of NHI or other relevant party as may reasonably be requested by
Orbit.
(c) Further Documents. At the Closing, and at all times
thereafter as may be necessary (i) the parties shall produce such
other documents and certificates as required by Articles V and VI
hereof, (ii) the Shareholders and Warrant Holders shall execute and
deliver to NHI such other instruments of transfer as shall be
reasonably necessary or appropriate to vest in NHI good and
indefeasible title to the Orbit Shares and Warrants, respectively,
and to comply with the purposes and intent of this Agreement, and
(iii) NHI shall execute and deliver to Shareholders such other
instruments, certificates and documents as shall be reasonably
necessary or appropriate to convey to Shareholders 11,667,402
shares of New NHI Common Stock, to Warrant Holders 4,000,000 New
NHI Warrants and to comply with the purposes and intent of this
Agreement.
ARTICLE II
NHI'S REPRESENTATIONS AND WARRANTIES
NHI represents, warrants and covenants that:
2.01 Organization and Good Standing. NHI is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Nevada, with all requisite power and authority to carry on the
business in which it is and/or has been engaged, to own the properties it
owns, to execute and deliver this Agreement, to consummate the transactions
contemplated hereby and to take all of the other actions provided for in or
contemplated hereby. NHI is and has been qualified to transact business
and is in good standing in all jurisdictions where the nature or conduct of
its business so requires. NHI has no subsidiaries.
2.02 Authorization and Validity. The execution, delivery and
performance of this Agreement by NHI has been duly authorized by the Board
of Directors of NHI and, subject to obtaining stockholder approval,
constitutes the valid and binding agreement of NHI enforceable in
accordance with its terms, and neither the execution or delivery of this
Agreement nor the consummation by NHI of the transactions contemplated
hereby (i) violates any statute or law or any rule, regulation or order of
any court or any governmental authority, or (ii) violates or conflicts
with, or constitutes a default under or will constitute a default under,
any contract, commitment, agreement, understanding, arrangement,
restriction of any kind to which NHI is a party or by which NHI is bound.
Without limitation, stockholder approval in connection with the execution
or delivery of this Agreement or consummation by NHI of the transactions
contemplated hereby does not require compliance with the proxy solicitation
requirements of the Securities Act of 1934.
2.03 No Violation. NHI is not in violation of any term of any
mortgage, indenture loan agreement, credit instrument, judgment, decree,
order, statute, rule or regulation to which it is subject or by which it is
bound. Neither the execution, delivery or performance of this Agreement
nor the consummation of any of the transactions contemplated hereby now or
at any time in the future (whether with the giving of notice or passage of
time or both) will (a) conflict with, or result in a violation or breach of
the terms, conditions and provisions of, or constitute a default under, the
Articles of Incorporation or By-Laws of NHI or any agreement, indenture or
other instrument or undertaking of any kind or nature under which NHI is
bound or to which the assets of NHI are subject, or result in the creation
or imposition of any lien, claim, charge or encumbrance upon any of such
assets or upon any of the stock of NHI, or (b) violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over
NHI or the properties or assets of NHI. To the best of NHI's knowledge,
NHI has complied in all material respect with all applicable laws,
regulations and licensing requirements, and has filed with the proper
authorities all necessary statements and reports, tax returns and all other
filings of any kind or nature due at any time up through the date hereof.
NHI possesses all necessary licenses, franchises, permits and governmental
authorizations to conduct it business as now conducted.
2.04 Capitalization. The authorized capital stock of NHI
consists solely of 100,000,000 shares of Common Stock, $.001 par value per
share (the "Old NHI Common Stock"), of which amount 7,989,560 shares are
issued and outstanding. All of such issued and outstanding shares have
been validly issued and are fully paid and non-assessable. There are no
outstanding warrants, options, subscriptions or other rights of any kind or
nature by which any person or entity can acquire any additional shares of
Common Stock or other securities of any kind or nature of NHI; no
shareholder of NHI or other person or entity is entitled to any preemptive
rights, rights of first refusal or other rights of any kind or nature
arising out of or relating to the issuance of the 15,667,402 shares of the
New NHI Common Stock to the Shareholders under this Agreement; and, except
as disclosed in this Agreement, there are no other commitments requiring
the issuance of any additional shares of the capital stock of NHI. The
15,667,402 shares of New NHI Common Stock to be issued to the Shareholders
at the Closing will be duly authorized, fully paid and non-assessable
shares; subject to no lien, claim, charge or encumbrance of any kind or
nature; will not be subject to any shareholders agreement (except such as
may exist among the Shareholders), right of first refusal or preemptive
rights. NHI agrees to the cause the Reverse Stock Split and Ancillary
Transactions (as defined in Section 6.05 hereof) to be effected prior to
the Closing Date in accordance with all applicable laws and regulations.
2.05 Corporate Records. The copies of the Articles of
Incorporation and all amendments thereto and the By-Laws of NHI that will
be delivered to Orbit at or prior to the Closing are true, correct and
complete. The minute book of NHI, copies of which will be delivered to
Orbit at or prior to the Closing will contain minutes of all meetings of
and consents to all actions taken without meetings by the Board of
Directors and the shareholders of NHI since the formation of NHI, all of
which will be accurate in all material respects. The books and records,
financial and others of NHI are in all material respects complete and
correct.
2.06 Financial Statements/SEC Filings. (a) NHI has furnished
Orbit a copy of NHI's audited financial statements for the fiscal year
ended March 31, 2000 (the "Financial Statements"). The Financial
Statements fairly present the financial condition of NHI as of that date,
and the results of its operations for that period ended, in accordance with
generally accepted accounting principles consistently applied. NHI did not
have, as of the date of such balance sheet, except as to the extent
reflected or reserved against therein, any liabilities or obligations
(absolute or contingent) which should be reflected in the balance sheet or
the notes thereto prepared in accordance with generally accepted accounting
principles. Except as set forth in Exhibit 2.06 hereto, NHI is current in
all applicable Securities and Exchange Commission ("SEC"), tax and other
reporting and filing obligations consistent with law and its contractual
undertakings (if any); (b) NHI is a reporting company for purposes of the
Securities Exchange Act of 1934, as amended (the "1934 Act").
2.07 Absence of Liabilities. NHI has no liabilities, whether
fixed or contingent, due or not yet due, asserted or not yet asserted,
including without limitation all amounts which may be due under any
contracts, agreements or undertakings entered into by or on behalf of NHI
except as set forth in Exhibit 2.07 hereto or the Financial Statements. In
addition, NHI has not guaranteed, become liable for or agreed to stand
behind or assume the obligations of any person or entity, and is not
contingently liable for any debt, obligation, expense or liability.
2.08 Absence of Certain Changes. Except as set forth on Exhibit
2.08 hereto since March 31, 2000, NHI has not: (a) suffered any material
adverse change in its financial condition, assets, liabilities or business;
(b) contracted for or paid any capital expenditures; (c) incurred any
indebtedness or borrowed money, issued or sold any debt or equity
securities or discharged or incurred any liabilities or obligations except
in the ordinary course of business as heretofore conducted; (d) mortgaged,
pledged or subjected to any lien, lease, security interest or other charge
or encumbrance any of its properties or assets; (e) paid any material
amount on any indebtedness prior to the due date, forgiven or cancelled any
material amount on any indebtedness prior to the due date, forgiven or
cancelled any material debts or claims or released or waived any material
rights or claims; (f) suffered any damage or destruction to or loss of any
assets (whether or not covered by insurance); (g) acquired or disposed of
any assets or incurred any liabilities or obligations; (h) made any
payments to its affiliates or associates or loaned any money to any person
or entity; (i) formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity; (j) entered into
any employment, compensation, consulting or collective bargaining agreement
or any other agreement of any kind or nature with any person or group, or
modified or amended in any respect the terms of any such existing
agreement; (k) entered into any other commitment or transaction or
experience any other event that relates to or affect in any way this
Agreement or to the transactions contemplated hereby, or that has affected,
or may adversely affect NHI's business, operations, assets, liabilities or
financial condition; or (l) amended its Certificate of Incorporation or By-
Laws, except as otherwise contemplated herein.
2.09 Title to Assets. NHI holds good and marketable title, free
and clear of all liens and encumbrances, to all properties, assets and
licenses required in connection with its business, except as set forth in
Exhibit 2.09 hereto.
2.10 Certain Agreements. Except as set forth in Exhibit 2.10
hereto, NHI is not in default of any contract, agreement, undertaking or
arrangement material to the operation of its business.
2.11 Labor Agreements and Labor Relations. Except as set forth
in Exhibit 2.11 hereto, NHI has no collective bargaining or union contracts
or agreements. Except as set forth in Exhibit 2.11 hereto, NHI is in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and is
not engaged in any unfair labor practices; there are no charges of
discrimination or unfair labor practice charges or complaints against NHI
pending or threatened before any governmental or regulatory agency or
authority; and, there is no labor strike, dispute, slowdown or stoppage
actually pending or threatened against or affecting NHI.
2.12 Employment Arrangements. Except as set forth in Exhibit
2.12 hereto, NHI has no employment or consulting agreements or
arrangements, written or oral, which are not terminable at the will of NHI,
or any pension, profit-sharing, option, other incentive plan, or any other
type of employment benefit plan, or any obligation to or customary
arrangement with employees for bonuses, incentive compensation, vacations,
severance pay, insurance or other benefits.
2.13 Material Contracts. Set forth in Exhibit 2.13 hereto is a
true and complete list of all material leases, agreements, contracts,
commitments and equipment rentals to which NHI may be a party or by which
it or any of its property may be bound, including without limitation, all
loan agreements, labor agreements, mortgages, security agreements and the
like, whether written or oral.
2.14 Patents, Trademarks and Service Marks. Exhibit 2.14 hereto
lists all patents, trade names, trademarks and service marks, all patent,
trademark and service mark registrations or applications, both domestic and
foreign, presently owned, possessed, used or held by NHI and all copyrights
and copyright applications and registrations, domestic and foreign,
relating to the business or proposed business of NHI, all of which are
collectively referred to as the "Proprietary Rights". Exhibit 2.14 hereto
also lists all licenses, if any, granted by or to NHI. Except as set forth
in Exhibit 2.14 hereto, NHI has not granted to any person, firm or
corporation, any right, license or privilege in any of the Proprietary
Rights or the know-how used in the business or proposed business of NHI nor
have such Proprietary Rights or know-how been revealed to any persons other
than its employees, customers and consultants. No Proprietary Rights or
applications or grants of licenses set forth in Exhibit 2.14 hereto are
subject to any pending or threatened challenge. NHI possesses all rights
necessary to continue to conduct its business or proposed business, and to
utilize the processes and market its products and services heretofore
utilized and marketed in the conduct of such business, without payment of
any royalties, fees or other consideration except as disclosed in Exhibit
2.14 hereto.
2.15 Disclosure. No representation or warranty by NHI in this
Agreement nor any statement or certificate furnished or to be furnished by
it pursuant hereto or in connection with the transaction contemplated
hereby contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the
statements contained therein not false or misleading.
2.16 Consents. No authorization, consent, approval, permit or
license of, or filing with any governmental or public body or authority,
any lender or lessor or any other person or entity is required to
authorize, or is required in connection with the execution, delivery and
performance of this Agreement, the agreements contemplated hereby, or the
consummation of the transactions contemplated hereby or thereby, on the
part of NHI, except for obtaining approval from the stockholders of NHI.
2.17 Compliance with Laws. There are no existing violation of
any applicable federal, state or local law or regulation involving the
property or business of NHI; there are no known, noticed or threatened
violations or any state of facts involving NHI which would constitute such
a violation; and this Agreement and the consummation of the transactions
contemplated hereby will not give rise to any such violation.
2.18 Litigation. NHI has not had any legal action or
administrative proceeding or investigation instituted or, to the best of
NHI's knowledge, threatened against it. NHI is not (a) subject to any
continuing court or administrative order, writ, injunction or decree
applicable specifically to NHI or to its business, assets, operations or
employees, or (b) in default with respect to any such order, writ,
injunction or decree. NHI knows of no basis for any such action,
proceeding or investigation.
2.19 Tax and Franchise Returns. NHI has prepared and filed, or
has caused to be prepared and filed, with the appropriate United States,
state and local government agencies, and all political subdivisions
thereof, all tax and franchise returns required to be filed by, on behalf
of or on account of the operations of NHI; all such returns required to be
filed have been so filed; and all taxes, assessments, interest and
penalties required to be paid in respect of all periods covered thereby
have and will be paid. Such returns accurately reflect the taxes due for
the periods covered thereby, except for amounts which, in the aggregate,
are immaterial. There are no present disputes as to taxes of any nature
payable by NHI.
2.20 Environmental Matters. (a) The operations of NHI comply in
all material respects with all federal, state and local environmental,
health and safety statutes and regulations; (b) None of the operations of
NHI is subject to any judicial or administrative proceeding alleging the
violation of any federal, state or local environmental, health or safety
statute or regulation; (c) None of the operations of NHI is the subject of
any federal or state investigation evaluating whether any remedial action
is needed to respond to a release of any hazardous or toxic waste,
substance or constituent, or other substance, into the environment; (d) NHI
has not in connection with its operations, filed any notice under any
federal or state law indicating past or present treatment, storage or
disposal of a hazardous waste or reporting a spill or release of a
hazardous or toxic waste, substance or constituent, or other substance,
into the environment; (e) NHI has no contingent liability in connection
with any release of any hazardous or toxic waste, substance or constituent,
or other substance, into the environment in connection with the operations
of NHI; (f) None of NHI's operations involve the generation,
transportation, treatment or disposal of hazardous waste; (g) NHI has not
disposed of any hazardous waste or substance by placing it in or on the
ground of any premises owned, leased or used by NHI in connection with its
operation and, to the best knowledge of NHI, neither has any lessee, prior
owner, or other person; (h) No underground storage tanks or surface
impoundments are on any real property owned, leased or otherwise occupied
by NHI; and (i) No lien in favor of any governmental authority for (A) any
liability under federal or state environmental laws or regulations, or (B)
damages arising from or costs incurred by such governmental authority in
response to a release of a hazardous or toxic waste, substance or
constituent, or other substance into the environment has been filed or
attached to any real property owned, leased or otherwise occupied by NHI.
For purposes of this Section 2.20, "federal, state and local
environmental, health and safety laws statutes or regulations" means the
Comprehensive Environmental Response, Compensation, and Liability Act, the
Hazardous Material Transportation Act, the Resource Conservation and
Recovery Act, the Federal Water Pollution Control Act, the Clean Air Act,
the Toxic Substances Control Act, the Occupational Safety and Health Act,
as these laws have been amended or supplemented, and any analogous state or
local statutes and all rules and regulations promulgated pursuant thereto.
For purposes of this Section 2.20, "hazardous or toxic waste,
substance or constituent or other substance" means those substances which
are regulated by or form the basis of liability under any federal, state
and local environmental, health and safety statutes or regulations.
2.21 NHI Schedules. NHI has delivered to Orbit or will deliver,
the following separate schedules, which are collectively referred to as
"NHI Schedules", certified by an officer of NHI to be complete and
accurate:
(a) Schedule "A": copies of all SEC filings made by NHI
for each of the last three fiscal years;
(c) Schedule "B": a schedule showing the name and
location of each bank or other institution in which NHI has an account or
safe deposit box, the names of all persons authorized to draw thereon or to
have access thereto, and the amount deposited in each account and a
description of the property held in each safe deposit box;
(d) Schedule "C": copies of Certificate of Incorporation
and all amendments thereto and By-Laws; and
(e) Schedule "D": A stockholders list containing the
names and addresses of record.
2.22 Delivery of Exhibits and Schedules. Any Exhibit provided
for hereunder and any NHI Schedule not delivered contemporaneously with the
execution of this Agreement shall be delivered by NHI as soon as
practicable and, in any event, prior to the Closing. All lists or other
statements, information or documents set forth in or attached to any
Exhibit or NHI Schedule delivered herewith or delivered hereunder after the
execution of this Agreement shall be deemed to be representations and
warranties by NHI with the same force and effect as if such lists,
statements, information and documents were set forth herein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ORBIT
Orbit represents, warrants and covenants that:
3.01 Organization and Good Standing. Orbit is a corporation duly
organized, validly existing and in good standing under the laws of its
state of incorporation, with all requisite power and authority to carry on
the business in which it is and/or has been engaged, and to own the
properties it owns. Orbit has all requisite power and authority to execute
and deliver this Agreement, to consummate the transactions contemplated
hereby and to take all of the other actions provided for in or contemplated
hereby. Orbit is and has been qualified to transact business and is in
good standing in all jurisdictions where the nature or conduct or its
business so requires. Orbit has no subsidiaries, direct or indirect.
3.02 Authorization and Validity. The execution, delivery and
performance of this Agreement by Orbit has been duly authorized by the
Board of Directors of Orbit and constitutes the valid and binding agreement
of Orbit, enforceable in accordance with its terms, and neither the
execution or delivery of this Agreement nor the consummation by Orbit of
the transactions contemplated hereby (i) violates any statute or law or any
rule, regulation or order of any court or any governmental authority, or
(ii) violates or conflicts with, or constitutes a default under or will
constitute a default under, any contract, commitment, agreement,
understanding, arrangement, or restriction of any kind to which Orbit is a
party or by which Orbit is bound.
3.03 No Violation. Orbit is not in violation of any term of any
mortgage, indenture, loan agreement, credit instrument, judgment, decree,
order, statute, rule or regulation to which it is subject or by which it is
bound. Neither the execution, delivery or performance of this Agreement
nor the consummation of any of the transactions contemplated hereby now or
at any time in the future (whether with the giving of notice or passage of
time or both) will (a) conflict with, or result in a violation or breach of
the terms, conditions and provisions of, or constitute a default under, the
Articles of Incorporation or By-Laws of Orbit, or any agreement, indenture
or other instrument or undertaking of any kind or nature under which Orbit
is bound or to which the assets of Orbit are subject, or result in the
creation or imposition of any lien, claim, charge or encumbrance upon any
of such assets or upon any of the stock of Orbit, or (b) violate or
conflict with any judgment, decree, order, statute, rule or regulation of
any court of any public, governmental or regulatory agency or body having
jurisdiction over Orbit or the properties or assets of Orbit. Orbit has
complied in all material respects with the applicable laws, regulations and
licensing requirements, and has filed with the proper authorities all
necessary statements and reports, tax returns and all other filings of any
kind or nature due at any time up through the date hereof. Orbit possesses
all necessary licenses, franchises, permits and governmental authorizations
to conduct its business as now or heretofore conducted and as this
Agreement contemplates it will be conducting after the Closing.
3.04 Capitalization. Exhibit 3.04 hereto sets forth the
authorized and issued and outstanding shares of capital stock of Orbit.
Each outstanding share of capital stock of Orbit is legally and validly
issued and fully paid and nonassessable. Other than the Warrants, there are
no outstanding warrants, options, subscriptions or other rights of any kind
or nature by which any person or entity can acquire any additional shares
of capital stock of Orbit or other securities of any kind of nature of
Orbit; no shareholder of Orbit, or other person or entity is entitled to
any preemptive rights, rights of first refusal or other rights of any kind
or nature arising out of or relating to the sale of the Orbit Shares to NHI
under this Agreement; and there are no other commitments requiring the
issuance of any additional shares of the capital stock of Orbit. The Orbit
Shares are duly authorized, fully paid and non-assessable shares; and will
constitute 100% of the issued and outstanding shares of Orbit Common Stock.
3.05 Corporate Records. The copies of the Articles of
Incorporation and all amendments thereto and the By-Laws of Orbit that will
be delivered to NHI at the Closing are true, correct and complete. The
minute book of Orbit, copies of which will be delivered to NHI at the
Closing contain minutes of all meetings of and consents to all actions
taken without meetings by the Board of Directors and the shareholders of
Orbit, since the formation of Orbit, all of which are accurate in all
material respects. The books and records, financial and others of Orbit
are in all material respects complete and correct.
3.06 Financial Statements. Orbit has furnished NHI copies of the
following unaudited financial statements (hereinafter collectively referred
to as the "Financial Statements"): unaudited balance sheet dated as of
August 30, 2000. Orbit did not have, as of the date of each such balance
sheet, except as to the extent reflected or reserved against therein or
otherwise disclosed to NHI, any liabilities or obligations (absolute or
contingent) which should be reflected in the balance sheet or the notes
thereto prepared in accordance with generally accepted accounting
principles.
3.07 Title to Assets. Orbit holds good and marketable title,
free and clear of all liens and encumbrances, to all properties, assets and
licenses required in connection with its business, except as set forth in
Exhibit 3.07 hereto.
3.08 Certain Agreements. Except as set forth in Exhibit 3.08
hereto Orbit is not in default of any contract, agreement, undertaking or
arrangement material to the operation of its business.
3.09 Labor Agreements and Labor Relations. Except as set forth
in Exhibit 3.09 hereto, Orbit has no collective bargaining or union
contracts or agreements. Except as set forth in Exhibit 3.09 hereto,
Orbit is in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours, and is not engaged in any unfair labor practices; there are no
charges of discrimination or unfair labor practice charges or complaints
against Orbit pending or threatened before any governmental or regulatory
agency or authority; and, there is no labor strike, dispute, slowdown or
stoppage actually pending or threatened against or affecting Orbit.
3.10 Employment Arrangements. Except as set forth in Exhibit
3.10 hereto, Orbit has no employment or consulting agreements or
arrangements, written or oral, which are not terminable at the will of
Orbit, or any pension, profit-sharing, option, other incentive plan, or any
other type of employment benefit plan, or any obligation to or customary
arrangement with employees for bonuses, incentive compensation, vacations,
severance pay, insurance or other benefits.
3.11 Material Contracts. Set forth in Exhibit 3.11 hereto is a
true and complete list of all material leases, agreements, contracts,
commitments and equipment rentals to which Orbit may be a party or by which
it or any of its property may be bound, including without limitation, all
loan agreements, labor agreements, mortgages, security agreements and the
like, whether written or oral.
3.12 Patents, Trademarks and Service Marks. Exhibit 3.12 hereto
lists all patents, trade names, trademarks and service marks, all patent,
trademark and service mark registrations or applications, both domestic and
foreign, presently owned, possessed, used or held by Orbit and all
copyrights and copyright applications and registrations, domestic and
foreign, relating to the business or proposed business of Orbit, all of
which are collectively referred to as the "Proprietary Rights". Exhibit
3.12 hereto also lists all licenses, if any, granted by or to Orbit.
Except as set forth in Exhibit 3.12 hereto, Orbit has not granted to any
person, firm or corporation, any right, license or privilege in any of the
Proprietary Rights or the know-how used in the business or proposed
business of Orbit nor have such Proprietary Rights or know-how been
revealed to any persons other than its employees, customers and
consultants. No Proprietary Rights or applications or grants of licenses
set forth in Exhibit 3.12 hereto are subject to any pending or threatened
challenge. Orbit possesses all rights necessary to continue to conduct its
business or proposed business, and to utilize the processes and market its
products and services heretofore utilized and marketed in the conduct of
such business, without payment of any royalties, fees or other
consideration except as disclosed in Exhibit 3.12 hereto.
3.13 Disclosure. No representation or warranty by Orbit in this
Agreement nor any statement or certificate furnished or to be furnished by
it pursuant hereto or in connection with the transactions contemplated
hereby contains or will contain any untrue statement or a material fact or
omits or will omit to state a material fact necessary to make the
statements contained therein not false or misleading.
3.14 Consents. No authorization, consent, approval, permit or
license of, or filing with, any governmental or public body or authority,
any lender or lessor or any other person or entity is required to
authorize, or is required in connection with the execution, delivery and
performance of this Agreement, the agreements contemplated hereby, or the
consummation of the transactions contemplated hereby or thereby, on the
part of Orbit.
3.15 Compliance with Laws. There are no existing violations of
any applicable federal, state or local law or regulation involving the
property or business of Orbit; there are no known, noticed or threatened
violations or any state of facts involving Orbit which would constitute
such a violation; and this Agreement and the consummation of the
transactions contemplated hereby will not give rise to any such violation.
3.16 Litigation. Orbit has not had any legal action or
administrative proceeding or investigation instituted or threatened against
it Orbit is not (a) subject to any continuing court or administrative
order, writ, injunction or decree applicable specifically to Orbit or to
its business, assets, operations or employees, or (b) in default with
respect to any such order, writ, injunction or decree. Orbit know of no
basis for any such action, proceeding or investigation.
3.17 Tax and Franchise Returns. Orbit has prepared and filed,
or has caused to be prepared and filed, with all the appropriate United
States, state and local government agencies, and all political subdivisions
thereof, all tax and franchise returns required to be filed by, on behalf
of or on account of the operations of Orbit; all such returns required to
be filed prior to the Closing will be so filed; and all taxes, assessments,
interest and penalties required to be paid in respect of all periods
covered thereby have and will be paid. Such returns accurately reflect the
taxes due for the periods covered thereby, except for amounts which, in the
aggregate, are immaterial. There are no present disputes as to the taxes
of any nature payable by Orbit.
3.18 Orbit Schedules. Orbit has delivered or will deliver to NHI
the following separate schedules, which are collectively referred to as the
"Orbit Schedules", certified by an officer of Orbit to be complete and
accurate.
(a) Schedule "A": copies of the Orbit Financial
Statements; and
(b) Schedule "B": copies of the Certificate of
Incorporation and By-Laws of Orbit, including all amendments thereto.
3.19 Delivery of Exhibits and Schedules. Any Exhibit provided
for hereunder and any Orbit Schedule not delivered contemporaneously with
the execution of this Agreement shall be delivered by Orbit as soon as
practicable and, in any event, prior to the Closing. All lists or other
statements, information or documents set forth in or attached to any
Exhibit or Orbit Schedule delivered herewith or delivered hereunder after
the execution of this Agreement shall be deemed to be representations and
warranties by Orbit with the same force and effect as if such lists,
statements, information and documents were set forth herein.
ARTICLE IV
COVENANTS
4.01 Investigative Rights. As between NHI, on one hand, and
Orbit, on the other, until the Closing Date, each party shall provide to
the other party, and such other party's counsels, accountants, auditors,
and other authorized representatives, full access during normal business
hours and upon reasonable advance written notice to all of each party's
properties, books, contracts, commitments and records (collectively, the
"records") for the purpose of examining the same. Each party shall furnish
the other party with all information concerning each party's affairs as the
other party may reasonably request and shall furnish the exhibits and
schedules required by this Agreement which were not delivered
contemporaneously with the execution of this Agreement.
4.02 Conduct of Business of NHI. Prior to the Closing, and
except as provided for elsewhere herein, NHI shall refrain from taking any
action or conducting any business activities other than to maintain its
corporate existence and file any and all necessary reports and any other
documents with the Securities and Exchange Commission unless NHI has
obtained the prior consent of Orbit to any such action or activities. From
time to time prior to Closing, NHI will deliver or cause to be delivered to
Orbit supplemental information concerning events subsequent to the date
hereof which would render any statement, representation or warranty made in
this Agreement or any information contained in exhibit or any schedule
required by such section inaccurate or incomplete in any material respect.
4.03 Conduct of Business of Orbit. Prior to the Closing, Orbit
shall conduct its business in a manner consistent with its business plan
which has been furnished to NHI. From time to time prior to Closing, Orbit
will deliver or cause to be delivered to NHI supplemental information
concerning events subsequent to the date hereof which would render any
statement, representation or warranty made in this Agreement or any
information contained in exhibit or any schedule required by such section
inaccurate or incomplete in any material respect.
4.04 Best Efforts. Each of the parties shall exert its best
efforts to fulfill in a timely manner all objectives and conditions to
permit consummation of the transactions as contemplated by this Agreement
and execute and deliver to the other any and all documents reasonably
necessary to consummate the transactions contemplated by this Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO
NHI'S PERFORMANCE
5.01 Conditions. NHI's obligations hereunder shall be subject to
the satisfaction, at or before the Closing, of all the conditions set
forth in this Article V. NHI may waive any or all of these conditions in
whole or in part without prior notice; provided, however, that no such
waiver of a condition shall constitute a waiver by NHI of any other
condition of or any of NHI's other rights or remedies, at law or in
equity, if Orbit shall be in default of any of their representations,
warranties or covenants under this Agreement.
5.02 Accuracy of Representation. Except as otherwise permitted
by this Agreement, all representations and warranties by Orbit in this
Agreement, or in any written statement that shall be delivered to NHI by
Orbit under this Agreement shall be true and accurate on and as of the
Closing Date as though made at that time.
5.03 Performance. Orbit shall have performed, satisfied, or
complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by it, on or before the Closing
Date.
5.04 Absence of Litigation. No action, suit or proceeding before
any court or any governmental body or authority, pertaining to the
transaction contemplated by this Agreement or to its consummation, shall
have been instituted or threatened against any of the parties hereto on or
before the Closing Date.
5.05 Schedules. Orbit shall have delivered to NHI all exhibits
and schedules required under Article III hereof and there shall have been
no disclosure in any exhibit or schedule delivered by Orbit after the date
of execution and delivery of this Agreement, or the documents described
therein, which does or may have a materially adverse effect on the value of
the business of Orbit on its assets, properties or goodwill except as
already disclosed to NHI in writing as of the date hereof.
5.06 Good Standing. Orbit shall have delivered to NHI a
certificate dated as of the Closing Date (or such earlier date reasonably
satisfactory to NHI) of the Ministry of Consumer and Commercial Relations
attesting to the corporate existence of Orbit.
5.07 Opinion of Counsel. NHI shall have received an opinion
dated the Closing Date of counsel to Orbit in form and substance reasonably
satisfactory to NHI.
5.08 Orbit Shares. Orbit shall have delivered to NHI all of
the Orbit Shares and Warrants together with duly executed instruments of
transfer for each of the Orbit Shares and Warrants with appropriate
signatures in proper form to transfer to NHI good and marketable title to
the Orbit Shares, and acknowledgments of written representations and
warranties of Orbit.
5.09 Investment Intent. Each of the Shareholders or his or her
agent or representative shall have represented and confirmed to NHI and
Orbit in such form as the parties hereto, and their counsel, agree that he,
she or it (a) is aware of the limits on resale imposed by virtue of the
nature of this Agreement, and (b) is receiving the securities issued
hereunder in exchange for the Orbit Shares without registration under the
Securities Act of 1933, as amended (the "1933 Act") in reliance on the
exemption from registration contained in Section 4(2) of the 1933 Act, for
investment and without any view to the sale, resale or other distribution
thereof in any manner that is in violation of the 1933 Act and the
provisions of the Ontario Securities Laws; the certificates representing
such securities, when delivered to the Shareholders, may have appropriate
orders restricting transfer placed against them on the records of the
transfer agent for such securities and will have placed upon them a legend
in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES
ACT OF 1933 OR AN OPINION OF THE COMPANY'S COUNSEL THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT."
5.10 Certificate. Orbit shall have delivered to NHI a
certificate dated the Closing Date, and signed by an authorized officer of
Orbit certifying that each of the conditions specified in Sections 5.02
through 5.09 hereof have been fulfilled.
5.11 Approval of Ancillary Transactions. Orbit shall provide a
sufficiently detailed description of the Ancillary Transactions to NHI,
which transactions shall be subject to NHI's approval ( not to be
unreasonably withheld).
ARTICLE VI
CONDITIONS PRECEDENT TO ORBIT'S PERFORMANCE
6.01 Conditions. Orbit's obligations hereunder shall be subject
to the satisfaction, at or before the Closing, of all of the conditions set
forth in this Article VI. Orbit may waive any or all of these conditions
in whole or in part without prior notice; provided, however, that no such
waiver of a condition shall constitute a waiver by Orbit of any other
condition of or any of Orbit's rights or remedies at law or in equity, if
NHI shall be in default of any of its representations, warranties or
covenants under this Agreement.
6.02 Accuracy of Representations. Except as otherwise permitted
by this Agreement, all representations and warranties by NHI in this
Agreement or in any written statement that shall be delivered to Orbit by
NHI under this Agreement shall be true and accurate on and as of the
Closing Date as though made at that time.
6.03 Performance. NHI shall have performed, satisfied and
complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by it, on or before the Closing
Date.
6.04 Absence of Litigation. No action, suit or proceeding before
any court or any governmental body or authority, pertaining to the
transaction contemplated by this Agreement or to its consummation, shall
have been instituted or threatened against any of the parties hereto on or
before the Closing Date.
6.05 Stockholders' Approval and Ancillary Transactions.
(a) NHI shall have (a) obtained authorization and approval from
its Board of Directors of a one-for-five reverse stock split (the
"Reverse Stock Split") of the Old NHI Common Stock pursuant to
Section 78.207 of the Nevada Revised Statutes (the "Nevada
Statutes"), and (b) filed a certificate of change pursuant to
Section 78.209 of the Nevada Statutes in order to recapitalize the
Old NHI Common Stock into such number of shares of Common Stock
(the "New NHI Common Stock") necessary for NHI to effect the
Reverse Stock Split and sufficient to issue the shares of the New
NHI Common Stock contemplated hereby, and (c) obtained the
resignation of all of the officers and directors of NHI and
election of persons specified by Orbit as directors of NHI.
(b) NHI shall have effected all steps required to allow Orbit
Shareholders and Warrant Holders to enter into an arrangement with
NHI, Orbit and subsidiaries of either or both of them (herein the
"Participating Companies") under which their existing Orbit
securities can be exchanged, at the holder's option, for securities
of a Participating Company exchangeable for common stock of NHI
(the "Ancillary Transactions") and the Ancillary Transactions shall
have been completed.
6.06 Outstanding Number of Shares. As of the Closing, NHI shall
have 1,597,912 shares of the New NHI Common Stock outstanding, excluding
the shares of the New NHI Common Stock to be issued by NHI to the
Shareholders hereunder. The foregoing amount does not take into
consideration the possible rounding of fractional shares as a result of the
Reverse Stock Split.
6.07 Schedules. NHI shall have delivered to Orbit all exhibits
and schedules required under Article II hereof and there shall have been no
disclosure in any exhibit or schedule delivered after the date of execution
and delivery of this Agreement, or the documents described therein, which
does or may have a materially adverse effect on the value of the business
of NHI or on its assets, properties or goodwill except as already disclosed
to Orbit in writing as of the date hereof.
6.08 Good Standing. NHI shall have delivered to Orbit a
certificate dated as of the Closing Date (or such earlier date reasonably
satisfactory to Orbit) of the Secretary of State of the State of
incorporation of NHI attesting to its good standing.
6.09 Opinion of Counsel. Orbit shall have received the opinion
dated the Closing Date of counsel for NHI in form and substance
satisfactory to Orbit which opinion shall, without limitation,
confirm stockholder approval in connection with the execution or delivery
of this Agreement and that consummation by NHI of the transactions
contemplated hereby does not require compliance with the proxy solicitation
requirements of the Securities Act of 1934 [confirm citation].
6.10 New NHI Common Stock. Orbit shall have received from NHI
stock certificates representing in the aggregate 11,667,402 shares of New
NHI Common Stock to which the Shareholders are entitled, in accordance with
this Agreement and New NHI Warrants representing in the aggregate 4,000,000
warrants to acquire NHI common stock to which the Warrant Holders are
entitled in accordance with this Agreement.
6.11 Officer's Certificate. NHI shall have delivered to Orbit a
certificate, dated the Closing Date, and signed by an authorized officer of
NHI, certifying that each of the conditions specified in Sections 6.02
through 6.10 have been fulfilled.
ARTICLE VII
SURVIVAL OF OBLIGATIONS, INDEMNIFICATION
7.01 Survival of Obligations. The terms and conditions of this
Agreement, and all certifications, representations, and warranties
respectively made herein by Orbit and NHI, and their respective obligations
to be performed pursuant to the terms hereof, shall survive the Closing
Date hereunder (i) for a period of two (2) years thereafter with respect to
representations and warranties (except in the case of representations and
warranties regarding taxes, which will be for a period of three (3) years
thereafter), and (ii) for a period of four (4) years thereafter with
respect to all other obligations of the parties, notwithstanding any notice
of any inaccuracy, breach, or failure to perform not waived in writing, and
notwithstanding the consummation of the transactions contemplated herein,
with knowledge of such inaccuracy, breach, or failure.
7.02 Indemnification by NHI. NHI covenants and agrees to
indemnify and save harmless Orbit and its directors, officers, employees
and agents from any and all costs, expenses, losses, damages and
liabilities incurred or suffered directly or directly by any of them
(including reasonable legal fees and costs) proximately resulting from or
attributable to the breach of, or misstatement in, any one or more of the
representations or warranties of NHI made in or pursuant to this Agreement.
7.03 Indemnification by Orbit. Orbit covenants and agrees to
indemnify and save harmless NHI and its directors, officers, employees and
agents from any and all costs, expenses, losses, damages and liabilities
incurred or suffered directly or directly by any of them (including
reasonable legal fees and costs) proximately resulting from or attributable
to the breach of, or misstatement in, any one or more of the
representations or warranties of Orbit made in or pursuant to this
Agreement.
ARTICLE VIII
MISCELLANEOUS
8.01 Amendment. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by the party against
which enforcement of the amendment, modification or supplement is sought.
8.02 Parties in Interest. This Agreement shall be binding on and
inure to the benefit of and be enforceable by NHI and Orbit, their
respective successors and assigns.
8.03 Assignment. Neither this Agreement nor any right created
hereby shall be assignable by any party hereto.
8.04 Notice. All notices or other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier to
the parties at the following addresses or sent by electronic transmission,
with confirmation of receipt, to the telecopy numbers specified below (or
at such other address or telecopy number for the party as shall be
specified by like notice):
If to NHI:
New Hilarity, Inc.
5102 S. Morrill Lane
Spokane, Washington 99223
Attn: Bradley Herr, Esq.
Telecopier No.: (509) 448-4901
Telephone No.: (509) 448-5128
If to Orbit:
Orbit Canada, Inc.
48 Steeplechase Avenue
Aurora, Ontario L4G 6W5
Attn: Douglas Lloyd
Telecopier No.: (905) 726-8865
Telephone No.: (905) 304-0694
With a copy to:
Danzig Kaye Cooper & Fiore, LLP
30A Vreeland Road
Florham Park, New Jersey 07932-0333
Attn: David M. Kaye, Esq.
Telecopier No.: (973) 443-0609
Telephone No.: (973) 443-0600
8.05 Entire Agreement. This Agreement and the exhibits and
schedules hereto supersede all prior agreements and understandings between
the parties relating to the subject matter hereof, except that the
obligations of any party under any agreement executed pursuant to this
Agreement shall not be affected by this Section.
8.06 Costs, Expenses and Legal Fees. Whether or not the
transactions contemplated hereby are consummated, each party hereto shall
bear its own costs and expenses (including attorneys' fees) except that
each party hereto agrees to pay the costs and expenses, including
reasonable attorneys' fees, incurred by the other parties in successfully
(i) enforcing any of the terms of this Agreement against a party alleged to
be in breach, or (ii) proving that the other parties breached any of the
terms of this Agreement in any material respect.
8.07 Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance hereof. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement, a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and still be legal, valid and
enforceable.
8.08 Governing Law. This Agreement and the rights and
obligations of the parties hereto shall be governed, construed and enforced
in accordance with the laws of the State of Nevada.
8.09 Termination of Agreement. This Agreement may be terminated
at any time before the Closing,
(a) by mutual consent of the parties hereto;
(b) Upon five (5) days written notice by NHI (provided it is
not in breach hereunder) if any of the conditions precedent set forth in
Article V hereof have not been met or waived in writing by NHI on or before
the Closing Date and such condition or conditions are not fulfilled within
such five (5) days after notice thereof;
(c) Upon five (5) days written notice by Orbit (provided they
are not in breach hereunder) if any of the conditions precedent set forth
in Article VI hereof have not been met or waived in writing by Orbit on or
before the Closing Date and such condition or conditions are not fulfilled
within such five (5) days after notice thereof.
Unless the termination has been caused by the willful failure of
NHI, on one hand, or Orbit, on the other hand, as the case may be, to
perform or satisfy any agreement, undertaking or condition to be performed
or satisfied by it hereunder, NHI shall have no further obligation or
liability to Orbit under this Agreement, and Orbit shall have no further
obligation or liability to NHI under this Agreement.
8.10 Brokers. The parties hereto represent and agree that no
broker has brought about the transactions contemplated by this Agreement
and no finder's fee has been paid or is payable by any party. Each of the
parties hereto shall indemnify and hold the others harmless from and
against any and all claims, losses, liabilities or expenses which may be
asserted against it as a result of its dealings, arrangements or agreements
with any such broker or person.
8.11 Announcements. NHI and Orbit will consult and cooperate
with each other as to the timing and content of any announcements of the
transactions contemplated hereby to NHI's stockholders, the general
public, or to employees, customers or suppliers.
8.12 Captions and Gender. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any
of the terms or provisions hereof. Whenever required by the context
hereof, the singular shall include the plural and vice versa; the masculine
gender shall include the feminine and neuter gender and vice versa; the
word "person" shall include a natural person as well as a corporation,
partnership, firm of other form of association.
8.13 Counterparts and/Shareholder/Warrant Holder Obligations.
This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, and all of which shall constitute one and the
same instrument. NHI acknowledges and agrees that the participating
Shareholders and Warrant Holders shall sign and deliver any documents
pursuant to this Agreement by Orbit or its designated officers as their
respective authorized agent and that none of the Shareholders or Warrant
Holders has any obligation hereunder except as specified in any such
documents, once delivered.
8.14 Waiver. No waiver of any term or provision hereof shall be
effective unless in writing, signed by the parties to be charged.
8.15 Confidential Information. Except in connection with the
consummation of the transactions contemplated herein, each party agrees not
to disclose any confidential information or trade secrets received by it
from any other party pursuant to the terms of this Agreement, including but
not limited to, the contents of customer lists. In the event this
Agreement is terminated for any reason, each party shall continue to hold
such information in confidence and shall, to the extent requested by the
party from which the information was received, promptly return to the
latter all written material received from it.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date first written above.
NEW HILARITY, INC.
By: /s/John R. Coghlan
Name: John R. Coghlan
Title: President
ORBIT CANADA, INC.
By: /s/ J. Gordon McMehen
Name: J. Gordon McMehen
Title: President
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF CHANGE IN NUMBER OF AUTHORIZED SHARES
OF
NEW HILARITY, INC., A NEVADA CORPORATION
Pursuant to the provisions of the Nevada Revised Statutes, Chapter 78,
Section 209, the following CERTIFICATE OF CHANGE IN THE NUMBER OF
AUTHORIZED SHARES is submitted for filing.
ARTICLE I
The name of this corporation is NEW HILARITY, INC. (the
"Corporation").
ARTICLE II
78.209(1)(a). The Corporation, prior to the change in number of
authorized shares, is currently authorized to issue 100,000,000 shares of
$0.001 par value common stock.
78.209(1)(b). After the effective date of the change in number of
authorized shares, the Corporation will be authorized to issue 20,000,000
shares of $0.005 par value common stock.
78.209(1)(c). Following the effective date of the change, one share
of common stock shall be issued for each five common shares previously
held. Share certificates representing the pre-split denominations may be
exchanged for share certificates representing the post-split
denominations, at the election of the shareholders, and in any case, new
denomination certificates will be issued upon transfer in the ordinary
course of business (i.e. mandatory exchange is not required).
78.209(1)(d). In the event that the reverse split results in
fractional shares, all fractions will be rounded up to the next whole
number.
78.209(1)(e). Pursuant to NRS78.207(1), shareholder approval is not
required for this reverse stock split. On August 16, 2000, the Board of
Directors of the Corporation adopted a Resolution approving the reverse
stock split and authorizing certain other corporate actions
necessary to effectuate the reverse stock split.
78.209(1)(f). The reverse stock split is to be effective on
September 5, 2000 at the hour of 9:00 a.m., PST. The provisions of the
articles of incorporation of the Corporation regarding the number and par
value of the changed shares shall be deemed amended as provided in this
certificate at the effective date and time of the change.
78.209(2). No other amendment to the articles of incorporation is
required for the actions described in this Certificate of Change.
NEW HILARITY, INC.
By:/s/John R. Coghlan
John R. Coghlan, President and Director
/s/Robert W. O'Brien
Robert W. O'Brien, Secretary and
Director
STATE OF WASHINGTON )
)ss.
County of Spokane. )
I, the undersigned, a Notary Public duly commissioned to take
acknowledgements and administer oaths in the State of Washington, certify
that John R. Coghlan, President of New Hilarity, Inc., and Robert W.
O'Brien, Secretary of New Hilarity, Inc., personally appeared before
me and acknowledged that they freely and voluntarily signed this document.
WITNESS my hand and notarial seal this 10th day of April, 1999.
s/
NOTARY PUBLIC in and for the State
of Washington, residing at Spokane.
My Commission Expires: April 15, 2002
<PAGE>
EXHIBIT 99.1
THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT") PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER REGULATION S
PROMULGATED THEREUNDER. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF
OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE 1933, OR AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE. UNLESS SO REGISTERED, SUCH SECURITIES MAY
NOT BE TRANSFERRED, OFFERED, HEDGED OR SOLD PRIOR TO THE END OF THE
ONE-YEAR DISTRIBUTION COMPLIANCE PERIOD PRESCRIBED BY REGULATION S UNLESS
SUCH TRANSFER, OFFER, HEDGE OR SALE IS MADE IN AN "OFFSHORE TRANSACTION"
AND NOT TO OR FOR THE ACCOUNT OF OR BENEFIT OF A "U.S. PERSON" (AS SUCH
TERMS ARE DEFINED IN REGULATION S) AND IS OTHERWISE IN ACCORDANCE WITH THE
REQUIREMENTS OF REGULATION S. FOLLOWING EXPIRATION OF ANY SUCH ONE-YEAR
DISTRIBUTION COMPLIANCE PERIOD, THE SECURITIES REPRESENTED HEREBY MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A U.S.
PERSON UNLESS THE SECURITIES ARE REGISTERED UNDER THE 1933 ACT AND
APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE
MADE PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THOSE LAWS.
THIS WARRANT MAY NOT BE EXERCISED WITHIN THE UNITED STATES AND THE
SECURITIES TO BE ISSUED MAY NOT BE DELIVERED WITHIN THE UNITED STATES UPON
EXERCISE, OTHER THAN IN OFFERINGS DEEMED TO MEET THE DEFINITION OF
"OFFSHORE TRANSACTION" PURSUANT TO PARAGRAPH (h) OF RULE 902 UNDER
REGULATION S, UNLESS REGISTERED UNDER THE 1933 ACT OR AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
No. __________
NEW HILARITY, INC.
(a Nevada corporation)
Warrant for the Purchase of ________________ Shares
of Common Stock, par value $._______ per share
Void after 3:00 p.m., Eastern Time, on ____________
NEW HILARITY, INC., a Nevada corporation (the "Company"), hereby
certifies that ___________________________ (the "Holder"), for value
received, is entitled, subject to the provisions of this Warrant, to
purchase from the Company at any time, or from time to time during the
period commencing on the date hereof and expiring at 3:00 p.m., Eastern
Time, on ____________(the "Expiration Date"), up to ___________________
fully paid and non-assessable shares of Common Stock at a price of $0.875
U.S. per share (the "Exercise Price").
The term "Common Stock" means the common stock, par value $.____
per share, of the Company as constituted on the date hereof (the "Base
Date"), together with any other equity securities that may be issued by the
Company in respect thereof or in substitution therefor. The number of
shares of Common Stock to be received upon the exercise of this Warrant may
be adjusted from time to time as hereinafter set forth. The shares of
Common Stock deliverable or delivered upon such exercise, as adjusted from
time to time, are hereinafter referred to as "Warrant Stock".
This Warrant is being issued in connection with a certain
Investment Agreement (the "Investment Agreement") dated as of
_____________, 2000 among the Company, Orbit Canada, Inc. and the Holder
and is subject to its terms and conditions.
Section 1. Exercise of Warrant. This Warrant may be exercised,
subject to the requirements set forth below, in whole, or in part, at any
time during the period commencing on the date hereof and expiring at 3:00
p.m., Eastern Time, on the Expiration Date set forth above, by presentation
and surrender of this Warrant certificate to the Company at its principal
office, with the Warrant Exercise Form and Warrant Exercise Addendum
attached hereto duly executed and accompanied by payment (either in cash or
by certified or official bank check, payable to the order of the Company)
of the aggregate Exercise Price for the number of shares specified in such
form and instruments of transfer, if appropriate, duly executed by the
Holder. If this Warrant should be exercised in part only, the Company
shall, upon surrender of this Warrant certificate for cancellation, execute
and deliver a new Warrant certificate evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder. The
Holder shall pay any and all documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of shares of Common Stock
on exercise of this Warrant. The Company shall promptly thereafter issue
certificate(s) evidencing the Common Stock so purchased.
Section 2. Reservation of Shares. The Company shall at all
times reserve for issuance and delivery upon exercise of this Warrant all
shares of Common Stock or other shares of capital stock of the Company (and
other securities) from time to time receivable upon exercise of this
Warrant. All such shares (and other securities) shall be duly authorized
and, when issued upon exercise, shall be validly issued, fully paid and
non-assessable.
Section 3. No Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.
Section 4. Non-transferability. This Warrant may not be
assigned, hypothecated, sold or otherwise transferred under any
circumstance.
Section 5. Loss, Theft, Destruction or Mutilation of Warrant.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant certificate, and
(in the case of loss, theft or destruction) of satisfactory
indemnification, and upon surrender and cancellation of this Warrant
certificate, if mutilated, the Company shall execute and deliver a new
Warrant certificate of like tenor and date.
Section 6. Rights of the Holder. The Holder shall not, by
virtue hereof, be entitled to any rights of a shareholder in the Company,
either at law or equity, unless and until this Warrant is exercised. The
rights of the Holder are limited to those expressed in this Warrant and are
not enforceable against the Company except to the extent set forth herein.
Section 7. Anti-Dilution Provisions.
7.1 Stock Splits, Dividends, Etc.
7.1.1 If the Company shall at any time subdivide its
outstanding shares of Common Stock (or other securities at the time
receivable upon the exercise of the Warrant) by recapitalization,
reclassification or split-up thereof, or if the Company shall declare a
stock dividend or distribute shares of Common Stock to its stockholders,
the number of shares of Common Stock subject to this Warrant immediately
prior to such subdivision shall be proportionately increased, and if the
Company shall at any time combine the outstanding shares of Common Stock by
recapitalization, reclassification or combination thereof, the number of
shares of Common Stock subject to this Warrant immediately prior to such
combination shall be proportionately decreased. Any such adjustment and
adjustment to the Exercise Price pursuant to this Section shall be
effective at the close of business on the effective date of such
subdivision or combination or if any adjustment is the result of a stock
dividend or distribution then the effective date for such adjustment based
thereon shall be the record date therefor.
7.1.2 Whenever the number of shares of Common Stock
purchasable upon the exercise of this Warrant is adjusted, as provided in
this Section, the Exercise Price shall be adjusted to the nearest cent by
multiplying such Exercise Price immediately prior to such adjustment by a
fraction (x) the numerator of which shall be the number of shares of Common
Stock purchasable upon the exercise immediately prior to such adjustment,
and (y) the denominator of which shall be the number of shares of Common
Stock so purchasable immediately thereafter.
7.2 Adjustment for Reorganization, Consolidation,
Merger, Etc. In case of any reorganization of the Company (or any other
Company, the securities of which are at the time receivable on the exercise
of this Warrant) after the Base Date or in case after such date the Company
(or any such other Company) shall consolidate with or merge into another
Company or convey all or substantially all of its assets to another
corporation, then, and in each such case, the Holder of this Warrant upon
the exercise as provided in Section 1 at any time after the consummation of
such reorganization, consolidation, merger or conveyance, shall be entitled
to receive, in lieu of the securities and property receivable upon the
exercise of this Warrant prior to such consummation, the securities or
property to which such Holder would have been entitled upon such
consummation if such Holder had exercised this Warrant immediately prior
thereto; in each such case, the terms of this Warrant shall be applicable
to the securities or property received upon the exercise of this Warrant
after such consummation.
7.3 Certificate as to Adjustments. In each case of an
adjustment in the number of shares of Common Stock receivable on the
exercise of this Warrant, the Company at its expense shall promptly compute
such adjustment in accordance with the terms of the Warrant and prepare a
certificate executed by an officer of the Company setting forth such
adjustment and showing the facts upon which such adjustment is based. The
Company shall forthwith mail a copy of each such certificate to the Holder.
7.4 Notices of Record Date, Etc. In case:
7.4.1 the Company shall take a record of the holders of its
Common Stock (or other securities at the time receivable upon the exercise
of the Warrant) for the purpose of entitling them to receive any dividend
(other than a cash dividend at the same rate as the rate of the last cash
dividend theretofore paid) or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any
other securities, or to receive any other right; or
7.4.2 of any voluntary or involuntary dissolution,
liquidation or winding-up of the Company, then, and in each such case, the
Company shall mail or cause to be mailed to each Holder a notice
specifying, as the case may be: (i) the date on which a record is to be
taken for the purpose of such dividend, distribution or right, and stating
the amount and character of such dividend, distribution or right; or (ii)
the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take
place, and the time, if any, to be fixed, as to which the holders of record
of Common Stock (or such other securities at the time receivable upon the
exercise of this Warrant) shall be entitled to exchange their shares of
Common Stock (or such other securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up. Such notice
shall be mailed at least twenty (20) days prior to the date therein
specified, and this Warrant may be exercised prior to said date during the
term of the Warrant.
Section 8. Legend and Stop Transfer Orders. The Warrant Stock
to be received upon exercise of this Warrant shall be considered restricted
securities and certificates representing such shares shall contain
restrictive legends and stop transfer instructions will be placed with the
Company's transfer agent regarding such shares of Warrant Stock.
Section 9. Officer's Certificate. Whenever the number or kind
of securities purchasable upon exercise of this Warrant or the Exercise
Price shall be adjusted as required by the provisions hereof, the Company
shall forthwith file with its Secretary or Assistant Secretary at its
principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted number of kind of securities purchasable
upon exercise of this Warrant and the adjusted Exercise Price determined as
herein provided and setting forth in reasonable detail such facts as shall
be necessary to show the reason for and the manner of computing such
adjustments. Each such officer's certificate shall be made available at
all reasonable times for inspection by the Holder and the Company shall,
forthwith after each such adjustment, mail by certified mail a copy of such
certificate to the Holder.
Section 10. Miscellaneous.
10.1 Modification and Waiver. This Warrant and any
provision hereof may be changed, waived, discharged or terminated only by
an instrument in writing signed by the party against which enforcement of
the same is sought.
10.2 Notices. Any notice, request or other document
required or permitted to be given or delivered to the Holder by the Company
shall be sent by mail, postage prepaid, to the Holder at its address as
shown on the books of the Company or to the Company at the address set
forth in the Investment Agreement, or to such other address as may be duly
given to the Holder.
10.3 Governing Law. This Warrant shall be governed by
and construed in accordance with the laws of the State of Nevada.
10.4 Entire Agreement. This Warrant is intended by the
parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This
Warrant supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
IN WITNESS WHEREOF, this Warrant has been executed by the Company
as of the ____ day of _________________, 2000.
NEW HILARITY, INC.
By: ______________________________
Name:
Title:
WARRANT EXERCISE FORM
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing ______________ shares of Common Stock
of NEW HILARITY, INC. and hereby makes payment of $________________ U.S. in
payment therefor.
[INSTRUCTIONS FOR ISSUANCE OF STOCK]
Name: ___________________________________________________
Address: ___________________________________________________
___________________________________________________
Date: ____________________________
__________________________________________
[Print Name of Holder]
__________________________________________
(Signature and Title]
WARRANT EXERCISE ADDENDUM
The undersigned represents and warrants that:
1. All offers and sales by the undersigned of the shares of
Common Stock issued to the undersigned upon exercise of the Warrant shall
be made in compliance with Regulation S, pursuant to an exemption from
registration under the Securities Act of 1933, as amended (the "1933 Act")
or pursuant to registration of the Common Stock under the Securities Act,
subject to any restrictions on sale or transfer set forth in the Investment
Agreement between the Company and the original holder of the exercised
Warrant.
2. The undersigned has not engaged in any transaction or series
of transactions that is a part of or a plan or scheme to evade the
registration requirements of the 1933 Act.
3. The undersigned represents that this Warrant is not being
exercised within the U.S. and that the Common Stock shall not be delivered
within the U.S. upon issuance, except in an offering deemed to meet the
definition of "offshore transaction" pursuant to paragraph (h) of Rule 902
under Regulation S, unless registered under the 1933 Act or an exemption
from such registration is available.
4. [INITIAL EITHER OF THE FOLLOWING STATEMENTS]
[ ] (a) The undersigned represents that it is not a U.S.
Person, nor is this Warrant being exercised on behalf of a U.S. Person (as
this term is defined in Regulation S); or
[ ] (b) The undersigned is delivering with this Notice of
Exercise an opinion of counsel to the effect that the Warrant and the
Common Stock to be delivered upon exercise have been registered under the
1933 Act or are exempt from registration thereunder.
Date: ____________________________
__________________________________________
[Print Name of Holder]
__________________________________________
[Signature and Title]
<PAGE>
EXHIBIT 99.2
EXCHANGEABLE SHARE SUPPORT AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 5th of September, 2000.
BETWEEN:
NEW HILARITY INC.,
a corporation existing under the laws of the
State of Nevada
("New Hilarity")
- and -
ORBIT CANADA INC.,
a corporation existing under the laws of the
Province of Ontario
("Orbit")
RECITALS:
A. Pursuant to the agreement and plan of reorganization (the
"Reorganization Agreement") dated as of August 3, 2000 between New
Hilarity and Orbit, as amended by a Closing Agreement of even date
(the "Closing Agreement") the shareholders of Orbit agreed to sell,
and New Hilarity agreed to purchase, certain common shares of Orbit
representing 100% of the issued and outstanding shares of Orbit, in
exchange for the same number of new New Hilarity Common Shares;
B. It is beneficial for certain Orbit shareholders to defer the
exchange of their common shares of Orbit for new common shares of
New Hilarity;
C. New Hilarity and Orbit agree to allow certain shareholders of Orbit
to exchange their common shares of Orbit for Exchangeable non-
voting preference shares of Orbit;
IN CONSIDERATION of the respective covenants and agreements provided in
this Agreement and for other good and valuable consideration (the receipt
and sufficiency of which are hereby acknowledged), the parties hereto
covenant and agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms
Each term denoted herein by initial capital letters and not otherwise
defined herein shall have the meaning ascribed thereto in the rights,
privileges, restrictions and conditions (collectively, the "Share
Provisions") attaching to the Exchangeable Shares (as defined in the
Closing Agreement), unless the context requires otherwise.
1.2 Interpretation Not Affected by Headings
The division of this Agreement into Articles, sections and other portions
and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this Agreement.
Unless otherwise indicated, all references to an "Article" or "section"
followed by a number and/or a letter refer to the specified Article or
section of this Agreement. The terms "this Agreement", "hereof", "herein"
and "hereunder" and similar expressions refer to this agreement and not to
any particular Article, section or other portion hereof and include any
agreement or instrument supplementary or ancillary hereto.
1.3 Number, Gender
Words importing the singular number only shall include the plural and vice
versa. Words importing any gender shall include all genders.
1.4 Date for any Action
If any date on which any action is required to be taken under this
Agreement is not a Business Day, such action shall be required to be taken
on the next succeeding Business Day.
ARTICLE 2
COVENANTS OF NEW HILARITY AND ORBIT
2.1 Covenants Regarding Exchangeable Shares
So long as any Exchangeable Shares are outstanding, New Hilarity will:
(a) not declare or pay any dividend on the new New Hilarity
Common Shares unless:
(i) Orbit shall:
(A) simultaneously declare or pay, as the case
may be, an equivalent dividend (as provided
for in the Share Provisions) on the
Exchangeable Shares (an "Equivalent
Dividend"), and
(B) have sufficient money or other assets or
authorized but unissued securities available
to enable the due declaration and the due and
punctual payment, in accordance with
applicable law, of any Equivalent Dividend,
or
(ii) Orbit shall (A) subdivide the Exchangeable Shares in
lieu of a stock dividend thereon (as provided for in
the Share Provisions) (an "Equivalent Stock
Subdivision"), and (B) have sufficient authorized
but unissued securities available to enable the
Equivalent Stock Subdivision;
(b) advise Orbit sufficiently in advance of the declaration by
New Hilarity of any dividend on New Hilarity Common Shares
and take all such other actions as are reasonably necessary,
in co-operation with Orbit, to ensure that:
(i) the respective declaration date, record date and
payment date for an Equivalent Dividend shall be the
same as the declaration date, record date and
payment date for the corresponding dividend on the
New Hilarity Common Shares or,
(ii) the record date and effective date for an Equivalent
Stock Subdivision shall be the same as the record
date and payment date for the corresponding stock
dividend on the New Hilarity Common Shares;
(c) ensure that the record date for any dividend declared on New
Hilarity Common Shares is not less than 10 Business Days
after the declaration date of such dividend;
(d) take all such actions and do all such things as are
reasonably necessary or desirable to enable and permit
Orbit, in accordance with applicable law, to pay and
otherwise perform its obligations with respect to the
satisfaction of the Liquidation Amount, the Retraction Price
or the Redemption Price in respect of each issued and
outstanding Exchangeable Share upon the liquidation,
dissolution or winding-up of Orbit, the delivery of a
Retraction Request by a holder of Exchangeable Shares or a
redemption of Exchangeable Shares by Orbit, as the case may
be, including without limitation all such actions and all
such things as are necessary or desirable to enable and
permit Orbit, to cause to be delivered New Hilarity Common
Shares to the holders of Exchangeable Shares in accordance
with their terms (herein the "Share Provisions").
2.2 Segregation of Funds
New Hilarity will cause Orbit to deposit a sufficient amount of funds in a
separate account of Orbit and segregate a sufficient amount of such other
assets and property as is necessary to enable Orbit to pay dividends when
due and to pay or otherwise satisfy its respective obligations under the
Share Provisions, as applicable.
2.3 Reservation of New Hilarity Common Shares
New Hilarity hereby represents, warrants and covenants in favour of Orbit
that New Hilarity has reserved for issuance and will, at all times while
any Exchangeable Shares are outstanding, keep available, free from
pre-emptive and other rights, out of its authorized and unissued capital
stock such number of New Hilarity Common Shares (or other shares or
securities into which New Hilarity Common Shares may be reclassified or
changed as contemplated by section 2.7 hereof):
(a) as is equal to the sum of:\
(i) the number of Exchangeable Shares issued and
outstanding from time to time and (ii) the number of
Exchangeable Shares issuable upon the exercise of
all rights to acquire Exchangeable Shares
outstanding from time to time and
(b) as are now and may hereafter be required to enable and
permit New Hilarity to meet its obligations hereunder and
under the Share Provisions.
2.4 Notification of Certain Events
In order to assist New Hilarity to comply with its obligations hereunder
Orbit will notify New Hilarity of each of the following events at the time
set forth below:
(a) in the event of any determination by the Board of Directors
of Orbit to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to Orbit or to effect
any other distribution of the assets of Orbit among its
shareholders for the purpose of winding up its affairs, at
least 60 days prior to the proposed effective date of such
liquidation, dissolution, winding-up or other distribution;
(b) promptly, upon the earlier of receipt by Orbit of notice of
and Orbit otherwise becoming aware of any threatened or
instituted claim, suit, petition or other proceedings with
respect to the involuntary liquidation, dissolution or
winding-up of Orbit to effect any other distribution of the
assets of Orbit among its shareholders for the purpose of
winding up its affairs;
(c) immediately, upon receipt by Orbit of a Retraction Request;
(d) on the same date on which notice of redemption is given to
holders of Exchangeable Shares, upon the determination of a
Redemption Date in accordance with the Share Provisions; and
(e) as soon as practicable upon the issuance by Orbit of any
Exchangeable Shares or rights to acquire Exchangeable
Shares.
2.5 Delivery of New Hilarity Common Shares to Orbit
In furtherance of its obligations under sections 2.1 (d) and (e) hereof,
upon notice from Orbit or New Hilarity of any event that requires Orbit or
New Hilarity to cause to be delivered New Hilarity Common Shares to any
holder of Exchangeable Shares, New Hilarity shall forthwith issue and
deliver or cause to be delivered to Orbit or New Hilarity the requisite
number of New Hilarity Common Shares to be received by, and issued to or to
the order of, the former holder of the surrendered Exchangeable Shares, as
Orbit or New Hilarity shall direct. All such New Hilarity Common Shares
shall be duly authorized and validly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim or
encumbrance. In consideration of the issuance and delivery of each such
New Hilarity Common Share, Orbit or New Hilarity, as the case may be, shall
issue to New Hilarity, or as New Hilarity shall direct, common shares of
Orbit or New Hilarity having equivalent value.
2.6 Qualification of New Hilarity Common Shares
New Hilarity will in good faith expeditiously take all such actions and do
all such things as are necessary or desirable to retain its status as a
publically traded company.
2.7 Economic Equivalence
(a) New Hilarity will not without prior approval of Orbit and
the prior approval of the holders of the Exchangeable Shares
given in accordance with the Share Provisions:
(i) issue or distribute New Hilarity Common Shares (or
securities exchangeable for or convertible into or
carrying rights to acquire New Hilarity Common
Shares) to the holders of all or substantially all
of the then outstanding New Hilarity Common Shares
by way of stock dividend or other distribution,
other than an issue of New Hilarity Common Shares
(or securities exchangeable for or convertible into
or carrying rights to acquire New Hilarity Common
Shares) to holders of New Hilarity Common Shares who
exercise an option to receive dividends in New
Hilarity Common Shares (or securities exchangeable
for or convertible into or carrying rights to
acquire New Hilarity Common Shares) in lieu of
receiving cash dividends; or
(ii) issue or distribute rights, options or warrants to
the holders of all or substantially all of the then
outstanding New Hilarity Common Shares entitling
them to subscribe for or to purchase New Hilarity
Common Shares (or securities exchangeable for or
convertible into or carrying rights to acquire New
Hilarity Common Shares); or
(iii) issue or distribute to the holders of all or
substantially all of the then outstanding New
Hilarity Common Shares (A) shares or securities of
New Hilarity of any class other than New Hilarity
Common Shares (other than shares convertible into or
exchangeable for or carrying rights to acquire New
Hilarity Common Shares), (B) rights, options or
warrants other than those referred to in section
2.7(a)(ii) above, (C) evidences of indebtedness of
New Hilarity or (D) assets of New Hilarity,
unless the economic equivalent on a per share basis of such rights,
options, securities, shares, evidences of indebtedness or other
assets is issued or distributed simultaneously to holders of the
Exchangeable Shares, in which case, for greater certainty, no
approval of the holders of Exchangeable Shares is required;
provided that, for greater certainty, the above restrictions shall
not apply to any securities issued or distributed by New Hilarity
in order to give effect to and to consummate the transactions
contemplated by, and in accordance with, the Reorganization
Agreement.
(b) New Hilarity will not without the prior approval of Orbit
and the prior approval of the holders of the Exchangeable
Shares given in accordance with section 10.2 of the Share
Provisions:
(i) subdivide, re-divide or change the then outstanding
New Hilarity Common Shares into a greater number of
New Hilarity Common Shares; or
(ii) reduce, combine, consolidate or change the then
outstanding New Hilarity Common Shares into a lesser
number of New Hilarity Common Shares: or
(iii) reclassify or otherwise change New Hilarity Common
Shares or effect an amalgamation, merger,
reorganization or other transaction affecting New
Hilarity Common Shares,
unless the same or an economically equivalent change shall
simultaneously be made to, or in the rights of the holders of, the
Exchangeable Shares, in which case, for greater certainty, no
approval of the holders of Exchangeable Shares is required provided
that New Hilarity may, notwithstanding any provision herein or of
the Share Provisions, at any time increase its authorized capital
and issue securities of any kind to the market on terms it deems
appropriate.
(c) New Hilarity will ensure that the record date for any event
referred to in section 2-7(a) or 2.7(b) above, or (if no
record date is applicable for such event) the effective date
for any such event, is not less than five Business Days
after the date on which such event is declared or announced
by New Hilarity (with contemporaneous notification thereof
by New Hilarity to Orbit).
(d) The Board of Directors of Orbit shall determine, in good
faith and in its sole discretion, economic equivalence for
the purposes of any event referred to in section 2.7(a) or
2.7(b) above and each such determination shall be conclusive
and binding on New Hilarity. In making each such
determination, the following factors shall, without
excluding other factors determined by the Board of Directors
of Orbit to be relevant, be considered by the Board of
Directors of Orbit:
(i) in the case of any stock dividend or other
distribution payable in New Hilarity Common Shares,
the number of such shares issued in proportion to
the number of New Hilarity Common Shares previously
outstanding;
(ii) in the case of the issuance or distribution of any
rights, options or warrants to subscribe for or
purchase New Hilarity Common Shares (or securities
exchangeable for or convertible into or carrying
rights to acquire New Hilarity Common Shares), the
relationship between the exercise price of each such
right, option or warrant and the current market
value (as determined by the Board of Directors of
Orbit in the manner above contemplated) of a New
Hilarity Common Share;
(iii) in the case of the issuance or distribution of any
other form of property (including without limitation
any shares or securities of New Hilarity of any
class other than New Hilarity Common Shares, any
rights, options or warrants other than those
referred to in section 2.7(d) (ii) above, any
evidences of indebtedness of New Hilarity or any
assets of New Hilarity), the relationship between
the fair market value (as determined by the Board of
Directors of Orbit in the manner above contemplated)
of such property to be issued or distributed with
respect to each outstanding New Hilarity Common
Share and the current market value (as determined by
the Board of Directors of Orbit in the manner above
contemplated) of a New Hilarity Common Share;
(iv) in the case of any subdivision, re-division or
change of the then outstanding New Hilarity Common
Shares into a greater number of New Hilarity Common
Shares or the reduction, combination, consolidation
or change of the then outstanding. New Hilarity
Common Shares into a lesser number of New Hilarity
Common Shares or any amalgamation, merger,
reorganization or other transaction affecting New
Hilarity Common Shares, the effect thereof upon the
then outstanding New Hilarity Common Shares; and
(v) in all such cases, the general taxation consequences
of the relevant event to holders of Exchangeable
Shares to the extent that such consequences may
differ from the taxation consequences to holders of
New Hilarity Common Shares as a result of
differences between taxation laws of Canada and the
United States (except for any differing consequences
arising as a result of differing marginal taxation
rates and without regard to the individual
circumstances of holders of Exchangeable Shares).
For purposes of the foregoing determinations, the current market
value of any security listed and traded or quoted on a securities
exchange shall be the average of the closing bid and ask prices of
such security during a period of not less than 20 consecutive
trading days ending not more than three trading days before the
date of determination on the principal securities exchange on which
such securities are listed and traded or quoted; provided, however,
that if in the opinion of the Board of Directors of Orbit the
public distribution or trading activity of such securities during
such period does not create a market which reflects the fair market
value of such securities, then the current market value thereof
shall be determined by the Board of Directors of Orbit, in good
faith and in its sole discretion, and provided further that any
such determination by the Board of Directors of Orbit shall be
conclusive and binding on New Hilarity.
(e) Orbit agrees that, to the extent required, upon due notice
from New Hilarity , Orbit, will use its best efforts to take
or cause to be taken such steps as may be necessary for the
purposes of ensuring that appropriate dividends are paid or
other distributions are made by Orbit, or subdivisions,
revisions or changes are made to the Exchangeable Shares, in
order to implement the required economic equivalence with
respect to the New Hilarity Common Shares and Exchangeable
Shares as provided for in this section 2.7.
2.8 Tender Offers
In the event that a tender offer, share exchange offer, issuer bid,
take-over bid or similar transaction with respect to New Hilarity Common
Shares (an "Offer") is proposed by New Hilarity or is proposed to New
Hilarity or its shareholders and is recommended by the Board of Directors
of New Hilarity, or is otherwise effected or to be effected with the
consent or approval of the Board of Directors of New Hilarity, and the
Exchangeable Shares are not redeemed by New Hilarity will use its
reasonable efforts expeditiously and in good faith to take all such actions
and do all such things as are necessary or desirable to enable and permit
holders of Exchangeable Shares to participate in such Offer to the same
extent and on an economically equivalent basis as the holders of New
Hilarity Common Shares, without discrimination. Without limiting the
generality of the foregoing, New Hilarity will use its reasonable efforts
expeditiously and in good faith to ensure that holders of Exchangeable
Shares may participate in all such Offers without being required to retract
Exchangeable Shares as against Orbit (or, if so required, to ensure that
any such retraction, shall be effective only upon, and shall be conditional
upon, the closing of the Offer and only to the extent necessary to tender
or deposit to the Offer). Nothing herein shall affect the rights of Orbit
to redeem Exchangeable Shares, as applicable, in the event of a New
Hilarity Control Transaction.
2.9 Ownership of Outstanding Shares
Without the prior approval of Orbit and the prior approval of the holders
of the Exchangeable Shares given in accordance with section 10.2 of the
Share Provisions, New Hilarity covenants and agrees in favour of Orbit
that, as long as any outstanding Exchangeable Shares are owned by any
person or entity New Hilarity will be and remain the direct or indirect
beneficial owner of all issued and outstanding voting shares in the capital
of Orbit.
2.10 Rule 10b-18 Purchases
For greater certainty, nothing contained in this Agreement, including
without limitation the obligations of New Hilarity contained in section 2.8
hereof, shall limit the ability of New Hilarity or Orbit to make a "Rule
l0b-18 Purchase" of New Hilarity Common Shares pursuant to Rule 10b-18 of
the U.S. Securities Exchange Act of 1934, as amended, or any successor
provisions thereof.
ARTICLE 3
NEW HILARITY SUCCESSORS
3.1 Certain Requirements in Respect of Combination, etc.
New Hilarity shall not consummate any transaction (whether by way of
reconstruction, reorganization, consolidation, merger, transfer, sale,
lease or otherwise) whereby all or substantially all of its undertaking,
property and assets would become the property of any other person or, in
the case of a merger, of the continuing corporation resulting therefrom
unless, but may do so if:
(a) such other person or continuing corporation (the "New
Hilarity Successor") by operation of law, becomes, without
more, bound by the terms and provisions of this Agreement
or, if not so bound, executes, prior to or contemporaneously
with the consummation of such transaction, an Agreement
supplemental hereto and such other instruments (if any) as
are reasonably necessary or advisable to evidence the
assumption by the New Hilarity Successor of liability for
all moneys payable and property deliverable hereunder and
the covenant of such New Hilarity Successor to pay and
deliver or cause to be delivered the same and its Agreement
to observe and perform all the covenants and obligations of
New Hilarity under this Agreement; and
(b) such transaction shall be upon such terms and conditions as
substantially to preserve and not to impair in any material
respect any of the rights, duties, powers and authorities of
the other parties hereunder or the holders of Exchangeable
Shares.
3.2 Vesting of Powers in Successor
Whenever the conditions of section 3.1 have been duly observed and
performed, the parties, if required by section 3.1, shall execute and
deliver a supplemental agreement hereto and thereupon New Hilarity
Successor shall possess and from time to time may exercise each and every
right and power of New Hilarity under this Agreement in the name of New
Hilarity or otherwise and any act or proceeding by any provision of this
Agreement required to be done or performed by the Board of Directors of New
Hilarity or any officers of New Hilarity may be done and performed with
like force and effect by the directors or officers of such New Hilarity
Successor.
3.3 Wholly-Owned Subsidiaries
Nothing herein shall be construed as preventing the amalgamation or merger
of any wholly-owned direct or indirect subsidiary of New Hilarity with or
into New Hilarity or the winding-up, liquidation or dissolution of any
wholly-owned subsidiary of New Hilarity provided that all of the assets of
such subsidiary are transferred to New Hilarity or another wholly-owned
direct or indirect subsidiary of New Hilarity and any such transactions are
expressly permitted by this Article 3.
ARTICLE 4
GENERAL
4.1 Term
This Agreement shall come into force and be effective as of the date hereof
and shall terminate and be of no further force and effect at such time as
no Exchangeable Shares (or securities or rights convertible into or
exchangeable for or carrying rights to acquire Exchangeable Shares) are
held by any person or entity.
4.2 Changes in Capital of New Hilarity and Orbit
At all times after the occurrence of any event contemplated pursuant to
sections 2.7 and 2.8 hereof or otherwise, as a result of which either New
Hilarity Common Shares or the Exchangeable Shares or both are in any way
changed, this Agreement shall forthwith be amended and modified as
necessary in order that it shall apply with full force and effect, mutatis
mutandis, to all new securities into which New Hilarity Common Shares or
the Exchangeable Shares or both are so changed and the parties hereto shall
execute and deliver an Agreement in writing giving effect to and evidencing
such necessary amendments and modifications.
4.3 Severability
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
4.4 Amendments, Modifications
This Agreement may not be amended or modified except by an Agreement in
writing executed by Orbit and New Hilarity and approved by the holders of
the Exchangeable Shares in accordance with section 10.2 of the Share
Provisions.
4.5 Ministerial Amendments
Notwithstanding the provisions of section 4.4, the parties to this
Agreement may in writing at any time and from time to time, without the
approval of the holders of the Exchangeable Shares, amend or modify this
Agreement for the purposes of:
(a) adding to the covenants of any or all parties provided that
the Board of Directors of each of Orbit and New Hilarity
shall be of the good faith opinion that such additions will
not be prejudicial to the rights or interests of the holders
of the Exchangeable Shares;
(b) making such amendments or modifications not inconsistent
with this Agreement as may be necessary or desirable with
respect to matters or questions which, in the good faith
opinion of the Board of Directors of each of Orbit and New
Hilarity it may be expedient to make, provided that each
such Board of Directors shall be of the good faith opinion
that such amendments or modifications will not be
prejudicial to the rights or interests of the holders of the
Exchangeable Shares; or
(c) making such changes or corrections which, on the advice of
counsel to Orbit, and New Hilarity, are required for the
purpose of curing or correcting any ambiguity or defect or
inconsistent provision or clerical omission or mistake or
manifest error, provided that the Boards of Directors of
each of Orbit and New Hilarity shall be of the good faith
opinion that such changes or corrections will not be
prejudicial to the rights or interests of the holders of the
Exchangeable Shares.
4.6 Meeting to Consider Amendments
Orbit, at the request of New Hilarity, shall call a meeting or meetings of
the holders of the Exchangeable Shares for the purpose of considering any
proposed amendment or modification requiring approval pursuant to section
4.4 hereof. Any such meeting or meetings shall be called and held in
accordance with the bylaws of Orbit, the Share Provisions and all
applicable laws.
4.7 Amendments Only in Writing
No amendment to or modification or waiver of any of the provisions of this
Agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by all of the parties hereto.
4.8 Enurement
This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and assigns.
4.9 Notices to Parties
(a) All notices and other communications between the parties to
this Agreement shall be in writing and shall be deemed to
have been given if delivered personally or by confirmed
telecopy to the parties at the registered offices of the
parties (or at such other address for any such party as
shall be specified in like notice).
(b) Any notice or other communication given personally shall be
deemed to have been given and received upon delivery thereof
and if given by telecopy shall be deemed to have been given
and received on the date of confirmed receipt thereof unless
such day is not a Business Day in which case it shall be
deemed to have been given and received upon the immediately
following Business Day.
4.10 Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original. and all of which taken together shall constitute one
and the same instrument.
4.11 Jurisdiction
This Agreement shall be construed and enforced in accordance with the laws
of the Province of Ontario and the laws of Canada applicable therein.
4.12 Attornment
New Hilarity agrees that any action or proceeding arising out of or
relating to this Agreement may be instituted in the courts of Ontario,
waives any objection which it may have now or hereafter to the venue of any
such action or proceeding, irrevocably submits to the jurisdiction of the
said courts in any such action or proceeding, agrees to be bound by any
judgment of the said courts and not to seek, and hereby waives, any review
of the merits of any such judgment by the courts of any other jurisdiction
and hereby appoints Orbit at its registered office in the Province of
Ontario as attorney for service of process.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
NEW HILARITY INC.
By:
Name:
Title:
ORBIT CANADA INC.
By:
Name:
Title
