UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the securities Exchange Act of 1934
(Amendment No. 2)*
OraLabs Holding Corp.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
684029200
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(CUSIP Number)
Douglas B. Koff, Esq., Koff, Corn & Berger, P.C.
303 E. 17th Ave., Ste. 940, Denver, CO 80203 (303) 861-1166
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
February 23, 2005
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box |_|
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover letter.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SEC 1746 (11-03) Persons who respond to the collection of information
contained in this form are not required to respond unless
the form displays a currently valid OMB control number.
CUSIP No. 684029200
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above
persons (entities only).
Gary H. Schlatter
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) .................................................................
(b) .................................................................
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3. SEC Use Only..........................................................
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4. Source of Funds (See Instructions)....OO..............................
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e)..........................................................
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6. Citizenship or Place of Organization..USA.............................
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Number of Shares 7. Sole Voting Power..............3,629,350.............
Bene-ficially by -------------------------------------------------------------
Owned by Each 8. Shared Voting Power............100,000...............
Reporting Person -------------------------------------------------------------
With 9. Sole Dispositive Power.........3,629,350.............
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10. Shared Dispositive Power.......100,000...............
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11. Aggregate Amount Beneficially Owned by Each Reporting
Person........3,729,350...............................................
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions).........................................................
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13. Percent of Class Represented by Amount in Row (11)......79.47%........
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14. Type of Reporting Person (See Instructions)
.....................................IN...............................
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INFORMATION SHEET FOR SCHEDULE 13D
Item No. 1 Security and Issuer. The class of equity securities to which this
statement relates is common stock of OraLabs Holding Corp. (the
"Company"). The principal executive offices of the Company are
located at 18685 E. Plaza Drive, Parker, Colorado 80134.
Item No. 2 Identity and Background. (a) Gary H. Schlatter; (b) 18685 E.
Plaza Drive, Parker, Colorado 80134; (c) Mr. Schlatter's present
principal occupation is the chief executive officer of the
Company, whose principal business is the manufacture and sale of
breath products and lip balm products; (d) During the last five
years, Mr. Schlatter has not been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors); (e) During the last five years, Mr. Schlatter was
not a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction as a result of which he was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws; (f) Mr. Schlatter is a citizen of the
United States.
Item No. 3 Source and Amount of Funds or Other Consideration. Under a Stock
Exchange Agreement entered into between OraLabs Holding Corp.,
NVC Lighting Investment Holdings Limited ("NVC"), and the owners
of NVC, Mr. Schlatter agreed that if closing of the transactions
contemplated in the Stock Exchange Agreement occurs, all of the
shares owned by Mr. Schlatter individually in OraLabs Holding
Corp. would be redeemed by the Company and the Company would
transfer to Mr. Schlatter all of the Company's shares that it
owns in its wholly-owned subsidiary, OraLabs, Inc. This Schedule
13D is not being filed with respect to any proposed acquisition
of shares of OraLabs Holding Corp. by the undersigned, but rather
is being filed with respect to certain contracts described in
Item 6 below.
Item No. 4 Purpose of Transaction. The purpose of the proposed transaction
is not for the acquisition of any securities of the Company by
the undersigned. If the transactions described in the Stock
Exchange Agreement are consummated, it would result in a
reorganization of the Company under which: (a) the business of
the Company would be that of NVC rather than that of OraLabs,
Inc., the Company's subsidiary, and the business previously
conducted by OraLabs would be wholly-owned by Mr. Schlatter as a
private company; (b) substantially all of the assets of the
Company, which is the ownership of its wholly-owned subsidiary,
would be transferred to Mr. Schlatter and the Company would
redeem all of the shares in the Company owned individually by Mr.
Schlatter; (c) the Company would acquire all of the assets of NVC
through its acquisition of ownership of that entity as a
wholly-owned subsidiary; (d) all existing board members would
resign and a new slate of directors would be elected who were
nominated by principals of NVC; and (e) control of the Company
would change from Mr. Schlatter to the NVC principals, or their
designees, who will acquire approximately 94% of the outstanding
shares of the Company.
Item No. 5 Interest in Securities of the Issuer. (a) The aggregate number of
securities owned by Mr. Schlatter is 3,729,350, which comprises
approximately 79.47% of the common stock of the Company and which
includes 100,000 shares held in The Schlatter Family Partnership,
of which Mr. Schlatter and his wife are general partners; (b) Mr.
Schlatter has the sole power to vote and to direct the vote of
all of the securities being reported upon except for the 100,000
shares in The Schlatter Family Partnership, in which he and his
spouse are the General Partners who share voting power. Mr.
Schlatter disclaims any beneficial interest in securities of the
Company titled in his spouse's name and in her capacity as a
general partner of The Schlatter Family Partnership, and the
filing of this schedule shall not be construed as an admission
that he is, for the purposes of Section 13(d) or 13(g) of the
Securities Exchange Act of 1934, as amended, or otherwise, the
beneficial owner of such securities; (c) Mr. Schlatter did not
engage in any other transactions in the class of securities
reported on during the past 60 days; (d) none; (e) not
applicable.
Item No. 6 Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer. The Stock Exchange Agreement
described above constitutes a contract and arrangement under
which Mr. Schlatter has agreed to vote his shares in favor of the
transactions contemplated by that Agreement, and specifically but
not as a limitation, Mr. Schlatter agrees to vote in favor of the
transactions under which OraLabs will acquire the business of
NVC, issue shares to NVC principals (or their designees) in an
amount equal to approximately 94% of all outstanding shares of
the Company, redeem all of the shares of the Company owned
individually by Mr. Schlatter, and transfer ownership of the
Company's wholly-owned subsidiary to Mr. Schlatter.
Item No. 7 Materials to be Filed as Exhibits. The Stock Exchange Agreement
entered into between the Company, NVC, and NVC Shareholders, and
consented to by OraLabs, Inc. and the undersigned, dated February
23, 2005, is attached hereto as Exhibit 1.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 5, 2005
By: /s/ Gary H. Schlatter
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Gary H. Schlatter
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EXHIBIT 1
(STOCK EXCHANGE AGREEMENT)
THE SECURITIES TO BE ISSUED BY ORALABS HOLDING CORP. ("ORALABS") UNDER THIS
STOCK EXCHANGE AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"), IN RELIANCE UPON REGULATION S AND OTHER
EXEMPTIONS UNDER THE 1933 ACT. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR INADEQUACY OF THIS STOCK EXCHANGE
AGREEMENT AND OTHER RELATED DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL. THE PERSONS ACQUIRING THE COMMON STOCK OF ORALABS MUST REPRESENT THAT
THEY WILL NOT ENGAGE IN ANY HEDGING TRANSACTIONS FOR ONE YEAR UNLESS IN
COMPLIANCE WITH THE 1933 ACT.
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (hereinafter referred to as this
"Agreement"), is entered into as of this 23 day of February, 2005, by and among
OraLabs Holding Corp., a Colorado corporation ("OraLabs"); NVC Lighting
Investment Holdings Limited ("NVC"), a company organized in the Hong Kong
Special Administrative Region in The People's Republic of China, including its
wholly owned subsidiary, NVC Industrial Development Co., Limited ("NVCI"), a
company organized as a Sino-foreign joint investment enterprise in Huizhou,
Guangdong Province in The People's Republic of China ; and Mr. Chang-Jiang Wu,
Mr. Yong-Hong Wu, and Mr. Du Gang listed on Schedule 1(a) to this Agreement,
being the only shareholders and sole registered capital owners of NVC ( the
"Shareholders"), upon the following premises:
RECITALS
A. OraLabs is presently a registered public company with the U.S.
Securities and Exchange Commission under the Securities Exchange Act of 1934
(File No. 000-23039). OraLabs has a subsidiary, OraLabs, Inc., which is its
principal operating company, as well as another subsidiary, O.H. Sub Corp.,
which has never conducted any business. OraLabs.
B. The Shareholders of NVC own all of the issued and outstanding
registered ordinary shares of NVC (the "NVC Stock") which in turn owns the
entire registered capital of NVCI.
C. The Shareholders of NVC have agreed to transfer to OraLabs, and
OraLabs has agreed to acquire, and exchange all of their ownership of the
registered ordinary shares of NVC from the Shareholders in exchange for shares
representing ninety percent (90%) of the total fully diluted outstanding common
stock of OraLabs calculated after this stock exchange and after the completion
of the redemption of shares described in Recital D that will be completed
immediately following the stock exchange described in this Recital C, subject to
and pursuant to the terms and conditions set forth in this Agreement, which
percentage may increase up to ninety four percent (94%) as described in Section
1.1 of this Agreement.
D. Immediately following the stock exchange described in Recital C,
OraLabs will redeem all of the shares of common stock of OraLabs owned by Gary
H. Schlatter in his individual name in exchange for the issuance to Gary
Schlatter of all of the common stock of OraLabs, Inc., 100% of which is owned by
OraLabs, and OraLabs will have no tangible assets or liabilities as of the
closing of the stock exchange with NVC.
E. NVC together with its wholly-owned foreign subsidiary, NVCI, will
become wholly-owned subsidiaries of OraLabs upon closing of the stock exchange.
AGREEMENT
NOW THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
PLAN OF EXCHANGE
1.1 THE EXCHANGE. At the Closing (as defined in Section 1.3 below), the
Shareholders hereby agree to assign, transfer, and deliver to OraLabs, free and
clear of all liens, pledges, encumbrances, charges, restrictions, or claims of
any kind, nature, or description, their shares of NVC Stock duly endorsed for
transfer to OraLabs or accompanied by stock powers executed in blank by the
Shareholders, and OraLabs agrees to acquire such shares on such date by issuing
and delivering in exchange therefor solely shares of OraLabs common voting
stock, par value $.001, which will represent 90% of the fully diluted total
issued and outstanding shares of the Common Stock of OraLabs (the "OraLabs
Stock") after the issuance of shares to non-employee directors pursuant to
Section 4.16 and completion of the redemption of shares owned by Gary H.
Schlatter individually, to be issued to the Shareholders and their designees as
listed on Schedule 1(b), in full satisfaction of any right or interest which the
Shareholders held in the NVC Stock. The OraLabs Stock will be issued to the
Shareholders and their designees with a restrictive legend as set forth in
Section 3.3 hereof. Any fractional shares that will result due to such pro rata
distribution will be rounded up to the next highest whole number. As a result of
the exchange of the NVC Stock in exchange for the OraLabs Stock, NVC will become
a wholly-owned subsidiary of OraLabs and the Shareholders of NVC and its
designees will own ninety percent (90%) of the then fully diluted issued and
outstanding common stock of OraLabs. At the Closing, OraLabs will redeem all of
the shares of Common Stock owned by Gary H. Schlatter in his individual name, in
exchange for the issuance of the OraLabs, Inc. common stock described in Recital
D.
There shall be an adjustment to the number of shares to be issued to
the Shareholders of NVC as described above from 90% to up to 94% in the event
that there is more than $3,380,000 (all references in this Agreement to "$" mean
United States dollars) in NVC net after tax income on a consolidated basis based
upon generally accepted accounting principles in the United States for its
fiscal year ended December 31, 2004, as follows:
(a) if the consolidated net after-tax profits of NVC is $7,000,000
or more for such fiscal year, then the equity Shareholders of
NVC shall be entitled to additional shares of the common stock
of OraLabs such that NVC will own 94% of the total outstanding
shares of the common stock of OraLabs on a fully diluted basis
upon the closing of this Agreement, rather than 90% as
provided above; or
(b) if the consolidated net after-tax profits of NVC is more that
$3,380,000 but less than $7,000,000 then the Shareholders of
NVC shall be entitled to additional shares of the common stock
of OraLabs of up to an additional 3.99% of the total number of
shares to be outstanding on the closing of this Agreement,
determined by the proportionate difference in net profits of
$3,380,000 and $7,000,000; for example, if the net profits of
NVC are $5,190,000 for its fiscal year ended December 31,
2004, then the Shareholders of NVC will be entitled to 92% of
the total outstanding shares of OraLabs on a fully diluted
basis upon the closing of this Agreement, rather than 90% as
provided above.
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1.2 ANTI-DILUTION. The number of shares of OraLabs Stock shall be
appropriately adjusted to take into account any stock split, stock dividend,
reverse stock split, recapitalization, or similar change in the OraLabs common
stock, par value $.001, which may occur between the date of the execution of
this Agreement and the date of delivery of such shares.
1.3 CLOSING. The closing ("Closing") of the transactions contemplated
by this Agreement shall be thirty (30) days after the mailing date (the "Closing
Date") of the Schedule 14A or 14C Proxy Statement or Information Statement to be
sent to the shareholders of OraLabs after it has been approved by the U.S.
Securities and Exchange Commission ("SEC"), unless extended in writing by the
parties. The order of events at the Closing will be as set forth in the
Recitals.
In the event that the Closing is delayed because the proxy or
information statement remains subject to review by the SEC, the Closing Date
will be extended to accommodate the SEC review process and the time required to
thereafter hold a special meeting of the OraLabs shareholders. Notwithstanding
the foregoing, if this Agreement does not close by June 30, 2005, either party
may terminate this Agreement unless said date is extended under Section 8.1(d).
1.4 CLOSING EVENTS. At the Closing, each of the respective parties
hereto shall execute, acknowledge, and deliver (or shall cause to be executed,
acknowledged, and delivered) any and all stock certificates, officers'
certificates, opinions, financial statements, schedules, agreements,
resolutions, rulings, or other instruments required by this Agreement to be so
delivered at or prior to the Closing, including the documents and stock
certificates provided in paragraphs 5.2 and 5.3 herein, together with such other
items as may be reasonably requested by the parties hereto and their respective
legal counsel in order to effectuate or evidence the transactions contemplated
hereby. If agreed to by the parties, the Closing may take place through the
exchange of documents by efax, fax, email and/or express courier.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF NVC
As an inducement to, and to obtain the reliance of, OraLabs, NVC
represents and warrants as follows, which representations and warranties will
remain accurate at the time of Closing :
2.1 ORGANIZATION. NVC is a company duly organized, validly existing,
and in good standing under the laws of the Hong Kong Special Administrative
Region in The People's Republic of China ("PRC"). NVC has the power and is duly
authorized, qualified, franchised, and licensed under all applicable laws,
regulations, ordinances, and orders of public authorities to own all of its
properties and assets and to carry on its business in all material respects as
it is now being conducted, including qualification to do business as a foreign
corporation in jurisdictions in which the character and location of the assets
owned by it or the nature of the business transacted by it requires
qualification. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not, violate any provision of NVC's organizational
documents. NVC has taken all action required by laws, its articles of
organization, certificate of business registration, or otherwise to authorize
the execution and delivery of this Agreement. NVC has full power, authority, and
legal right and has taken all action required by law, and otherwise to
consummate the transactions herein contemplated. NVC owns all of the outstanding
securities of its wholly-owned subsidiary, NVCI, and does not own, beneficially
or of record, any shares of any other corporation. No authorization, approval,
consent, or order of, or registration, declaration, or filing with, any court or
other governmental body is required in connection with the execution and
delivery by NVC of this Agreement and the consummation by NVC of the
transactions contemplated hereby.
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2.2 CAPITALIZATION. The authorized capitalization of NVC consists
solely of 90,999,998 shares of ordinary stock, par value HK$1, of which
11,000,000 ordinary shares are currently issued and outstanding. All issued and
outstanding shares are legally issued, fully paid, and non-assessable and were
not issued in violation of the pre-emptive or other rights of any person. NVC
has not granted any options, warrants, or other convertible securities.
2.3 FINANCIAL STATEMENTS.
(a) Promptly after mutual execution of this Agreement, NVC and its
subsidiary, NVCI, will provide to OraLabs their consolidated
audited balance sheets at December 31, 2003 and 2002, and the
related audited consolidated statements of operations,
stockholders' equity and cash flows for the years ended
December 31, 2003 and 2002, together with notes to such
statements and the opinion of Murrell, Hall, McIntosh & Co.,
PLLP and Henny Wee & Co., independent certified public
accountants, with respect thereto. All of these consolidated
financial statements will be included in the NVC Schedules.
(b) All such consolidated financial statements will have been
prepared in accordance with generally accepted accounting
principles in the United States. The NVC balance sheets will
present fairly as of their date the consolidated financial
condition of NVC. NVC and its wholly-owned subsidiary, NVCI,
will not have, as of the date of such consolidated balance
sheets, except as and to the extent reflected or reserved
against therein, any liabilities or obligations (absolute or
contingent) which should be reflected in the consolidated
balance sheets or the notes thereto, prepared in accordance
with generally accepted accounting principles in the United
States, and all assets reflected therein will be properly
reported and present fairly the value of the assets of NVC and
its wholly-owned subsidiary, NVCI, in accordance with such
generally accepted accounting principles. The consolidated
statements of income, condensed consolidated stockholders'
equity, and consolidated cash flows will reflect fairly the
information required to be set forth therein by generally
accepted accounting principles in the United States.
(c) NVC will deliver unaudited balance sheets and the related
unaudited statements of income, changes in stockholders'
equity and cash flow for the year ended December 31, 2004
promptly after execution of this Agreement as well as such
statements for each quarter thereafter which shall be
delivered to OraLabs not later than 30 days after the end of
each quarter, including in each case the notes thereto. Such
financial statements and notes will fairly present the
financial condition and the results of operations, changes in
stockholders' equity, and cash flow of NVC as at the
respective dates of and for the periods referred to in such
financial statements, all in accordance with generally
accepted accounting principles, subject in the case of interim
financial statements to normal recurring year-end adjustments
(the effect of which will not, individually or in the
aggregate, be materially adverse). NVC shall provide such
unaudited financial information and pro forma financial
information to OraLabs as may be necessary for the Form 8-K
current reports, Schedule 14C or proxy statement requirements
of the U.S. Securities and Exchange Commission regarding this
Agreement and the Closing. NVC will complete and deliver to
OraLabs its audit of its consolidated financial statements for
its fiscal year ended December 31, 2004, as soon as reasonably
possible, but in any event by no later than March 31, 2005.
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(d) NVC and its wholly-owned subsidiary, NVCI, have filed all
national, province, and local income tax returns required to
be filed by them from inception to the date hereof and all
taxes have been paid or are being paid when due. None of such
income tax returns have been examined or audited in the PRC.
NVC and the Shareholders acknowledge and agree that they are
relying solely upon their own analysis of the tax consequences
to them and to OraLabs upon completion of the transactions
contemplated by this Agreement and are not relying upon
OraLabs or any of its officers, directors, attorneys or agents
with respect thereto.
(e) NVC and its wholly-owned subsidiary, NVCI, do not owe any
unpaid national, province, county, local, or other taxes
(including any deficiencies, interest, or penalties), except
for taxes accrued but not yet due and payable, for which NVC
and its wholly-owned subsidiary, NVCI, may be liable in their
own right or as a transferee of the assets of, or as a
successor to, any other corporation or entity. Furthermore,
except as accruing in the normal course of business, NVC and
its wholly-owned subsidiary, NVCI, do not owe any past due
accrued and unpaid taxes to the date of this Agreement.
(f) The books and records, financial and otherwise, of NVC and its
subsidiary, NVCI, are in all material respects complete and
correct and have been maintained in accordance with good
business and accounting practices.
(g) NVC and its wholly-owned subsidiary, NVCI, have good and
marketable title to their assets and, except as set forth in
the NVC Schedules or the consolidated financial statements of
NVC or the notes thereto, has no material contingent
liabilities, direct or indirect, matured or unmatured.
(h) The audited consolidated financial statements of NVC for the
year ended December 31, 2004 will show not less than
$3,380,000 in net after-tax income on a consolidated basis in
accordance with generally accepted accounting principles in
the United States.
2.4 INFORMATION. The information concerning NVC set forth in this
Agreement and in the NVC Schedules is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading. All information
provided by NVC to OraLabs in writing or in any other media form will be in the
English language and will be a complete and accurate translation of the other
language, if any, in which such information was originally prepared.
2.5 OPTIONS OR WARRANTS. There are no existing options, warrants,
calls, or commitments of any character relating to the authorized and unissued
NVC Stock.
2.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in this
Agreement or the NVC Schedules, as of the most recent NVC consolidated balance
sheet, when received:
(a) except in the normal course of business, there will not be (i)
any material adverse change in the business, operations,
properties, assets, or condition of NVC and its wholly-owned
subsidiary, NVCI; or (ii) any damage, destruction, or loss to
NVC and its wholly-owned subsidiary, NVCI (whether or not
covered by insurance) materially and adversely affecting the
business, operations, properties, assets, or condition of NVC
and its wholly-owned subsidiary, NVCI;
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(b) NVC and its wholly-owned subsidiary, NVCI, will not have (i)
borrowed or agreed to borrow any funds or incurred, or become
subject to, any material obligation or liability (absolute or
contingent) not otherwise in the ordinary course of business,
and except for capital raised by issuance of debt or equity in
a private placement or other capital raising transaction
deemed advisable by NVC; (ii) paid any material obligation or
liability not otherwise in the ordinary course of business
(absolute or contingent) other than current liabilities
reflected in or shown on the most recent NVC consolidated
balance sheet, and current liabilities incurred since that
date in the ordinary course of business; (iii) sold or
transferred, or agreed to sell or transfer, any of its assets,
properties, or rights not otherwise in the ordinary course of
business (except assets, properties, or rights not used or
useful in its business which, in the aggregate have a value of
less than $1,000,000), or canceled, or agreed to cancel, any
debts or claims (except debts or claims which in the aggregate
are of a value of less than $1,000,000); (iv) made or
permitted any amendment or termination of any contract,
agreement, or license to which they are a party not otherwise
in the ordinary course of business if such amendment or
termination is material, considering the business of NVC and
its wholly-owned subsidiary, NVCI; or (v) issued, delivered,
or agreed to issue or deliver any stock, bonds or other
corporate securities including debentures (whether authorized
and unissued or held as treasury stock).
2.7 TITLE AND RELATED MATTERS. NVC and its wholly-owned subsidiary,
NVCI, have good and marketable title to all of their properties, inventory,
interests in properties, and assets, real and personal, which will be reflected
in the most recent NVC consolidated balance sheet or acquired after that date
(except properties, interests in properties, and assets sold or otherwise
disposed of since such date in the ordinary course of business), free and clear
of all liens, pledges, charges, or encumbrances except:
(a) as such assets may be affected by laws of the Hong Kong
Special Administrative Region and The People's Republic of
China;
(b) statutory liens or claims not yet delinquent;
(c) such imperfections of title and easements as do not and will
not materially detract from or interfere with the present or
proposed use of the properties subject thereto or affected
thereby or otherwise materially impair present business
operations on such properties; and
(d) except as set forth in the NVC Schedules, NVC and its
wholly-owned subsidiary, NVCI, own, free and clear of any
liens, claims, encumbrances, royalty interests, or other
restrictions or limitations of any nature whatsoever, any and
all properties it is currently constructing and all
procedures, techniques, marketing plans, business plans,
methods of management, or other information utilized in
connection with NVC and its wholly-owned subsidiary's
business. Except as set forth in the NVC Schedules, no third
party has any right to, and NVC and its wholly-owned
subsidiary, NVCI, have not received any notice of infringement
of or conflict with asserted rights of others with respect to
any product, technology, data, trade secrets, know-how,
proprietary techniques, trademarks, service marks, trade
names, or copyrights which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling, or finding, would
have a materially adverse affect on the business, operations,
financial condition, income, or business prospects of NVC and
its wholly-owned subsidiary, NVCI, or any material portion of
its properties, assets, or rights.
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2.8 LITIGATION AND PROCEEDINGS. Except as set forth in the NVC
Schedules, there are no actions, suits, proceedings, or investigations pending
or, to the knowledge of NVC after reasonable investigation, threatened by or
against NVC and its wholly-owned subsidiary, NVCI, or affecting NVC and its
wholly-owned subsidiary, NVCI, or their properties, at law or in equity, before
any court or other governmental agency or instrumentality, domestic or foreign,
or before any arbitrator of any kind. NVC does not have any knowledge of any
default on its part with respect to any judgment, order, writ, injunction,
decree, award, rule, or regulation of any court, arbitrator, or governmental
agency or instrumentality or of any circumstances which, after reasonable
investigation, would result in the discovery of such a default. There is no
claim against NVC or its subsidiary that either is or may be infringing on or
otherwise acting adversely to the rights of any person under or in respect of
any patent, trademark, service mark, trade name, copyright, license, franchise,
permission or other intangible right. Neither NVC nor its subsidiary is
obligated or under any liability to make any payments by way of royalties, fees
or otherwise to any owner or licensor of, or other claimant to, any patent,
trademark, trade name, copyright or other intangible asset with respect to the
use thereof, in connection with the conduct of its business or otherwise.
2.9 CONTRACTS.
(a) NVC has provided, or will provide OraLabs on reasonable
request, copies of all material contracts, agreements,
franchises, license agreements, or other commitments to which
NVC and its wholly-owned subsidiary, NVCI, are parties or by
which they or any of their assets, products, technology, or
properties are bound;
(b) All contracts, agreements, franchises, license agreements, and
other commitments to which NVC and its wholly-owned
subsidiary, NVCI, are parties or by which their properties are
bound and which are material to the operations of NVC and its
wholly-owned subsidiary, NVCI, taken as a whole are valid and
enforceable by NVC and its wholly-owned subsidiary, NVCI, in
all respects, except as limited by bankruptcy and insolvency
laws and by other laws affecting the rights of creditors
generally; and
(c) Except as described in the NVC Schedules, NVC and its
wholly-owned subsidiary, NVCI, are not parties to or bound by,
and the properties of NVC and its wholly-owned subsidiary,
NVCI, are not subject to, any contract, agreement, other
commitment or instrument; any charter or other corporate
restriction; or any judgment, order, writ, injunction, decree,
or award which materially and adversely affects, or in the
future may (as far as NVC or its wholly-owned subsidiary,
NVCI, can now foresee) materially and adversely affect, the
business, operations, properties, assets, or condition of NVC
and its wholly-owned subsidiary, NVCI.
2.10 MATERIAL CONTRACT DEFAULTS. NVC and its wholly-owned subsidiary,
NVCI, are not in default in any material respect under the terms of any
outstanding contract, agreement, lease, or other commitment which is material to
the business, operations, properties, assets, or condition of NVC and its
wholly-owned subsidiary, NVCI, and there is no event of default in any material
respect under any such contract, agreement, lease, or other commitment in
respect of which NVC and its wholly-owned subsidiary, NVCI, have not taken
adequate steps to prevent such a default from occurring.
2.11 NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust, or other material contract, agreement, or instrument to which NVC and its
wholly-owned subsidiary, NVCI, are parties or to which any of their properties
or operations are subject.
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2.12 COMPLIANCE WITH LAWS AND REGULATIONS. NVC and its wholly-owned
subsidiary, NVCI, have complied with all applicable statutes and regulations of
any national, province, county, or other governmental entity or agency thereof,
except to the extent that noncompliance would not materially and adversely
affect the business, operations, properties, assets, or condition of NVC and its
wholly-owned subsidiary, NVCI, or except to the extent that noncompliance would
not result in the incurrence of any material liability for NVC or its
wholly-owned subsidiary, NVCI. Neither NVC nor NVCI is aware of, or has received
notice of, any conditions which may reasonably be expected to interfere with or
adversely affect their business, their assets or the financial condition of
either, or prevent compliance or continued compliance with any environmental
laws.
2.13 APPROVAL OF AGREEMENT. The members and owners of NVC shown on
Schedule 1(a) have authorized the execution and delivery of this Agreement by
NVC, have or will have approved the transactions contemplated hereby, and
approved the submission of this Agreement and the transactions contemplated
hereby to the members of NVC for their approval with the recommendation that the
reorganization be accepted.
2.14 MATERIAL TRANSACTIONS OR AFFILIATIONS. Set forth in the NVC
Schedules is a brief description or summary of every material contract,
agreement, or arrangement between NVC and its wholly-owned subsidiary, NVCI, and
any predecessor and any person who was at the time of such contract, agreement,
or arrangement an officer, director, or person owning of record, or known by NVC
to own beneficially, 10% or more of the issued and outstanding interests of NVC
and which is to be performed in whole or in part after the date hereof or which
was entered into not more than three years prior to the date hereof. In all of
such transactions, the amount paid or received, whether in cash, in services, or
in kind, is, had been during the full term thereof, and is required to be during
the unexpired portion of the term thereof, no less favorable to NVC and its
wholly-owned subsidiary, NVCI, than terms available from otherwise unrelated
parties in arm's length transactions. Except as disclosed in the NVC Schedules
or otherwise disclosed herein, no officer, director, or 10% shareholder of NVC
has, or has had since inception of NVC, any material interest, direct or
indirect, in any material transaction with NVC or its wholly-owned subsidiary,
NVCI. There are no commitments by NVC and its wholly-owned subsidiary, NVCI,
whether written or oral, to lend any funds to, borrow any money from, or enter
into any other material transaction with, any such affiliated person.
2.15 NVC SCHEDULES. NVC will deliver, as soon as practicable but in any
event within 10 days after the date of this Agreement, the following schedules,
which are collectively referred to as the "NVC Schedules" and which consist of
separate schedules dated as of the date of execution of this Agreement and
instruments and data as of such date, all certified by the chief executive
officer of NVC as complete, true, and correct:
(a) a schedule containing complete and correct copies of the
organizational documents, in the English language, as amended,
of NVC and its wholly-owned subsidiary, NVCI, in effect as of
the date of this Agreement;
(b) a schedule containing the consolidated financial statements of
NVC and its wholly-owned subsidiary, NVCI, identified in
paragraph 2.3(c);
(c) a schedule containing true and correct copies, in the English
language, of all material contracts, agreements, or other
instruments to which NVC or its wholly-owned subsidiary, NVCI,
is a party or by which they or their properties are bound,
specifically including all contracts, agreements, or
arrangements referred to in Section 2.9;
8
(d) a schedule setting forth a description of any material adverse
change in the business, operations, property, inventory,
assets, or condition of NVC or its wholly-owned subsidiary,
NVCI, since the date of the most recent NVC consolidated
balance sheet, required to be provided pursuant to section 2.6
hereof; and
(e) a schedule setting forth any other information, together with
any required copies of documents, required to be disclosed in
the NVC Schedules by sections 2.1 through 2.15. NVC shall
cause the NVC Schedules and the instruments and data delivered
to OraLabs hereunder to be updated after the date hereof up to
and including the Closing Date.
2.16 TRADING. NVC agrees to take all necessary precautions to prevent
any trading in OraLabs securities by its officers, directors, employees,
affiliates, agents or others having knowledge of this Agreement. NVC for itself
and on behalf of all of its shareholders, and the Shareholders of NVC, jointly
and severally, hereby agree that until the earlier to occur of (i) the date that
is three months after the termination of this Agreement, or (ii) the date of the
Closing of this Agreement, they will not, without the prior written consent of
OraLabs:
(a) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, any voting securities or
direct or indirect rights to acquire any voting securities of
OraLabs or any subsidiary thereof, or of any successor to or
person in control of OraLabs, or any assets of OraLabs or any
subsidiary or division thereof or of any such successor or
controlling person;
(b) make or in any way participate, directly or indirectly, in any
"solicitation" or "proxies" to vote (as such terms are used in
the rules of the Securities and Exchange Commission), or seek
to advise or influence any person or entity with respect to
the voting of any voting securities of OraLabs;
(c) make any public announcement with respect to, or submit a
proposal for, or offer of (with or without conditions) any
extraordinary transaction involving OraLabs or its securities
or assets;
(d) form, join or in any way participate in a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1034, as
amended (the "Exchange Act"), in connection with any of the
foregoing; or
(e) otherwise act, alone or in concert with others, to seek to
control the management, board of directors, or policies of
OraLabs.
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF
THE SHAREHOLDERS OF NVC
As an inducement to, and to obtain reliance of OraLabs, the
Shareholders of NVC represent and warrant as follows:
9
3.1 OWNERSHIP OF NVC SHARES. The NVC Shareholders hereby represent and
warrant with respect to themselves that they are the legal and beneficial owners
of the percentage of NVC registered capital and ordinary stock set forth on
Schedule 1(a) of this Agreement, free and clear of any claims, charges,
equities, liens, security interests, and encumbrances whatsoever, and the
Shareholders have full rights, powers, and authority to transfer, assign,
convey, and deliver their NVC stock; and delivery of such registered capital at
the closing will convey to OraLabs good and marketable title to such stock free
and clear of any claims, charges, equities, liens, security interests, and
encumbrances whatsoever.
3.2 KNOWLEDGE OF REPRESENTATIONS. To the best of their knowledge and
belief, the representations of NVC in Article II, above, are true, accurate and
complete.
3.3 RESTRICTED STOCK. The Shareholders understand that the Shares of
OraLabs to be acquired pursuant to this Agreement have not been registered under
the 1933 Act with the SEC in reliance upon the exemption from the registration
requirements thereof afforded by Regulation S and/or other exemptions under the
1933 Act, or with any state securities commission or agency. The Shareholders
agree and acknowledge that OraLabs will issue stop transfer instructions to its
registrar and transfer agent prohibiting the transfer of the Shares of OraLabs
delivered under this Agreement to any U.S. person for a period of one year after
the date of closing of this Agreement. The Shareholders and their designees
understand that the Shares to be issued to them will have the following
restrictive legend or similar legend affixed thereto:
"These Shares have not been registered under the Securities Act of 1933
(the "Act"), and have been issued pursuant to an exemption pursuant to
Regulation S under the Act. Until one year after the date of purchase, no amount
of the Shares may be offered, sold, or transferred to any U.S. Person and no
hedging transactions involving these securities may be conducted during this
period. Offers, sales, or transfers in the U.S. or to a U.S. person (as defined
in Regulation S promulgated under the Act) or for the account and benefit of a
U.S. person are not permitted, except as provided in said Regulation S, unless
the Shares are registered under the Act or an exemption from such registration
under the Act is applicable."
3.4 CITIZENSHIP AND RESIDENCY. The Shareholders hereby represent and
warrant to OraLabs that they are citizens and residents of The People's Republic
of China, and are not U.S. Persons within the meaning of Rule 902(a) of
Regulation S.
3.5 RESTRICTIONS ON TRANSFER. The Shareholders and any assigns of the
Shares agree that the Shares of OraLabs acquired by the Shareholders and/or by
them pursuant to this Agreement shall not be voluntarily sold, transferred or
otherwise disposed of in the United States or to any U.S. Person for a minimum
period of one year from the Closing Date of this transaction, except by
registration of such Shares under the 1933 Act and any applicable state
securities laws.
3.6 NO HEDGING TRANSACTIONS. The Shareholders and any assigns of the
Shares of OraLabs acquired pursuant to this Agreement agree that hedging
transactions involving these Shares shall not be conducted during a period of
one year, unless in compliance with the 1933 Act.
3.7 TRANSFERS. The Shareholders understand that any disposition of the
Shares of OraLabs in violation of this Agreement shall be null and void. No
transfer of the Shares shall be made by OraLabs' registrar and transfer agent
upon OraLabs' transfer books or records unless there has been compliance with
the terms of this Agreement, including the above provisions. OraLabs will issue
stop transfer instructions to its registrar and transfer agent to the effect
that the Shares of OraLabs may not be transferred for a period of one year after
the Closing Date and may be transferred thereafter only except as provided
herein. The Shareholders agree to indemnify and hold OraLabs and OraLabs, Inc.
harmless from and against liabilities, claims, damages and expenses (including
reasonable attorneys fees) that may result from or arise out of any disposition
thereof in violation of this Agreement.
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3.8 NON-U.S. TRANSACTIONS. In connection with the transaction which is
the subject of this Agreement, the Shareholders acknowledge that offers
respecting the sale of the Shares directed by OraLabs were received outside of
the United States and that the Shareholders have not and are not engaged in or
directed any unsolicited offers to buy the Shares of OraLabs into the United
States or to any U.S. person.
3.9 RESTRICTIVE LEGEND. Any documents received by the Shareholders
included statements to the effect that the Shares have not been registered under
the 1933 Act and that no sale of such Shares may occur during a period
commencing on the Closing Date and ending one year thereafter unless the Shares
are registered under the 1933 Act or are sold pursuant to an exemption from
registration.
3.10 INVESTMENT INTENT. The Shareholders are purchasing the Shares of
OraLabs only for their own account and not on behalf of any U.S. person, and no
sale by the Shareholders has been pre-arranged with any prospective buyer in the
United States.
3.11 AGREE TO REGISTER SALES OF SHARES. The Shareholders agree that all
offers and sales of the Shares of OraLabs prior to the expiration of a period
commencing on the date of the closing of this transaction and ending one year
thereafter shall only be made in compliance with the restrictions of Regulation
S, or pursuant to registration of such securities under the 1933 Act or pursuant
to an exemption thereunder, and the terms hereof.
ARTICLE IV
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF ORALABS
As an inducement to, and to obtain the reliance of NVC and the
Shareholders, OraLabs represents and warrants as follows:
4.1 ORGANIZATION. OraLabs is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Colorado, and has
the corporate power and is duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, and there is no
jurisdiction in which it is not qualified in which the character and location of
the assets owned by it or the nature of the business transacted by it requires
qualification. Included in the OraLabs filings with the SEC are complete and
correct copies of the Certificate of Incorporation and all amendments thereto
and the bylaws of OraLabs, and all amendments thereto, as in effect on the date
hereof. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of OraLabs's Certificate of Incorporation or bylaws. OraLabs has taken
all action required by law, its Certificate of Incorporation, its bylaws, or
otherwise to authorize the execution and delivery of this Agreement, and OraLabs
has full power, authority, and legal right and has taken all action required by
law, its Certificate of Incorporation, bylaws, or otherwise to consummate the
transactions herein contemplated, subject to satisfaction of the conditions
described in Article VI below.
4.2 CAPITALIZATION. OraLabs's authorized capitalization includes
100,000,000 shares of common stock, par value $.001, of which no more than
4,580,615 shares (plus shares issued upon exercise of options and the shares to
be issued under Section 4.16 below) will be issued and outstanding immediately
prior to the Closing. All presently issued and outstanding shares are legally
issued, fully paid, and non-assessable and not issued in violation of the
pre-emptive or other rights of any person.
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OraLabs authorized capitalization includes 1,000,000 shares of
preferred stock, $.001 par value, of which no preferred shares are or will be
issued and outstanding at Closing.
4.3 SUBSIDIARIES. OraLabs does not have any subsidiaries and does not
own, beneficially or of record, any shares of any other corporation, except
OraLabs, Inc. and O.H. Sub Corp.
4.4 FINANCIAL STATEMENTS.
(a) Included in the Form 10-KSB filed with the SEC for the year
ended December 31, 2003, are the audited consolidated balance
sheets of OraLabs as of December 31, 2003, and the related
audited statements of operations, stockholders' equity, and
cash flow for the two fiscal years ended December 31, 2003
together with the notes to such statements and the opinion of
Ehrhardt Keefe Steiner & Hottman PC, independent certified
public accountants, with respect thereto. Included in the Form
10-QSB filed with the SEC for the period ended September 30,
2004, are the unaudited consolidated balance sheets of OraLabs
as of September 30, 2004, and the related unaudited statements
of operations, stockholders' equity, and cash flow for the
nine-month period ended September 30, 2004, together with the
notes to such statements.
(b) All such financial statements have been prepared in accordance
with generally accepted accounting principles in the United
States consistently applied throughout the periods involved.
The OraLabs balance sheets present fairly as of their
respective dates the financial condition of OraLabs. OraLabs
did not have as of the date of any such OraLabs balance sheet,
except as and to the extent reflected or reserved against
therein, any liabilities or obligations (absolute or
contingent) which should be reflected in a balance sheet or
the notes thereto prepared in accordance with generally
accepted accounting principles, and all assets reflected
therein are properly reported and present fairly the value of
the assets of OraLabs, in accordance with generally accepted
accounting principles. The statements of operations,
stockholders' equity, and cash flow reflect fairly the
information required to be set forth therein by generally
accepted accounting principles.
(c) OraLabs has no liabilities with respect to the payment of any
federal, state, county, local, or other taxes (including any
deficiencies, interest, or penalties), except for taxes
accrued but not yet due and payable.
(d) OraLabs has filed all federal, state, or local income tax
returns required to be filed by it from inception to the date
hereof. Included in the OraLabs Schedules are true and correct
copies of the federal income tax returns of OraLabs filed
since 2001. None of such federal income tax returns have been
examined by the Internal Revenue Service. Each of such income
tax returns reflects the taxes due for the period covered
thereby, except for amounts which, in the aggregate, are
immaterial. OraLabs, Inc. acknowledges and agrees that it is
relying solely upon its own analysis of the tax consequences
to it upon completion of the transactions contemplated by this
Agreement and is not relying upon the Shareholders or NVC, or
any of its officers, directors, attorneys or agents with
respect thereto.
12
(e) The books and records, financial and otherwise, of OraLabs are
in all material respects complete and correct and have been
maintained in accordance with good business and accounting
practices.
(f) OraLabs has good and marketable title to its assets and,
except as set forth in the OraLabs Schedules or the Financial
Statements of OraLabs or the notes thereto, has no material
contingent liabilities, direct or indirect, matured or
unmatured.
4.5 INFORMATION. The information concerning OraLabs set forth in this
Agreement and the OraLabs Schedules are and will be complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading as of the
Closing date. All outstanding stock options and any other convertible
securities, if any, of OraLabs will be exercised, terminated or cancelled as of
the Closing date.
4.6 OPTIONS OR WARRANTS. Except as set forth in Schedule 2, there are
no existing options, warrants, calls, or commitments of any character relating
to authorized and unissued stock of OraLabs. All outstanding stock options and
warrants, and any other convertible securities, if any, will be terminated and
cancelled as of the Closing Date.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as described herein,
in any filings made by OraLabs with the SEC, or in the OraLabs Schedules, since
the date of the most recent OraLabs balance sheet:
(a) there has not been (i) any material adverse change in the
business, operations, properties, assets, or condition of
OraLabs (whether or not covered by insurance) materially and
adversely affecting the business, operations, properties,
assets, or condition of OraLabs;
(b) OraLabs has not (i) recently amended its Certificate of
Incorporation or bylaws; (ii) declared or made, or agreed to
declare or make any payment of dividends or distributions of
any assets of any kind whatsoever to stockholders or purchased
or redeemed, or agreed to purchase or redeem, any of its
capital stock; (iii) waived any rights of value which in the
aggregate are extraordinary or material considering the
business of OraLabs; (iv) made any material change in its
method of management, operation, or accounting; (v) entered
into any other material transactions; (vi) made any accrual or
arrangement for or payment of bonuses or special compensation
of any kind or any severance or termination pay to any present
or former officer or employee; or (vii) made any increase in
any profit sharing, bonus, deferred compensation, insurance,
pension, retirement, or other employee benefit plan, payment,
or arrangement, made to, for, or with its officers, directors,
or employees;
(c) Except as described in Schedule 2, OraLabs has not (i) granted
or agreed to grant any options, warrants, or other rights for
its stocks, bonds, or other corporate securities calling for
the issuance thereof; (ii) borrowed or agreed to borrow any
funds or incurred, or become subject to, any material
obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business; (iii)
paid or agreed to pay any material obligation or liability
(absolute or contingent) other than current liabilities
reflected in or shown on the most recent OraLabs balance sheet
and current liabilities incurred since that date in the
ordinary course of business and professional and other fees
and expenses incurred in connection with the preparation of
this Agreement and the consummation of the transactions
contemplated hereby; (iv) made or permitted any amendment or
termination of any contract, agreement, or license to which it
is a party if such amendment or termination is material,
considering the business of OraLabs; or (v) issued, delivered,
or agreed to issue or deliver any stock, bonds, or other
corporate securities including debentures (whether authorized
and unissued or held as treasury stock), except in connection
with this Agreement;
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(d) It is understood and agreed that OraLabs will have no material
assets, liabilities or accounts payable upon completion of the
Closing; and
(e) to the best knowledge of OraLabs, it has not become subject to
any law or regulation which materially and adversely affects,
or in the future may adversely affect, the business,
operations, properties, assets, or condition of OraLabs.
4.8 TITLE AND RELATED MATTERS. OraLabs has good and marketable title to
all of its properties, interest in properties, and assets, real and personal,
which are reflected in the OraLabs balance sheet or acquired after that date
(except properties, interest in properties, and assets sold or otherwise
disposed of since such date in the ordinary course of business), free and clear
of all liens, pledges, charges, or encumbrances except
(a) statutory liens or claims not yet delinquent;
(b) such imperfections of title and easements as do not and will
not materially detract from or interfere with the present or
proposed use of the properties subject thereto or affected
thereby or otherwise materially impair present business
operations on such properties; and
(c) as described in the OraLabs Schedules.
4.9 LITIGATION AND PROCEEDINGS. Except in the ordinary course of
OraLabs business there are no actions, suits, or proceedings pending or, to the
knowledge of OraLabs, threatened by or against or affecting OraLabs, at law or
in equity, before any court or other governmental agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind. OraLabs does not have
any knowledge of any default on its part with respect to any judgment, order,
writs, injunction, decree, award, rule, or regulation of any court, arbitrator,
or governmental agency or instrumentality.
4.10 CONTRACTS. OraLabs is not a party to any material contract,
agreement, or other commitment, except as described in any filing by OraLabs
with the SEC.
4.11 NO CONFLICT WITH OTHER INSTRUMENTS. The consummation of the
transactions contemplated by this Agreement will not result in the breach of any
term or provision of, or constitute a default under, any indenture, mortgage,
deed of trust, or other material agreement or instrument to which OraLabs is a
party or to which it or any of its assets or operations are subject.
4.12 GOVERNMENTAL AUTHORIZATIONS. OraLabs has all licenses, franchises,
permits, and other government authorizations, that are legally required to
enable it to conduct its business operations in all material respects as
conducted on the date hereof. Except for compliance with federal and state
securities or corporation laws, as hereinafter provided, no authorization,
approval, consent, or order of, or registration, declaration, or filing with,
any court or other governmental body is required in connection with the
execution and delivery by OraLabs of this Agreement and the consummation by
OraLabs of the transactions contemplated hereby.
14
4.13 COMPLIANCE WITH LAWS AND REGULATIONS. To the best of its
knowledge, OraLabs has complied with all applicable statutes and regulations of
any federal, state, or other applicable governmental entity or agency thereof,
except to the extent that noncompliance would not materially and adversely
affect the business, operations, properties, assets, or conditions of OraLabs or
except to the extent that noncompliance would not result in the incurrence of
any material liability. This compliance includes, but is not limited to, the
filing of all reports to date with the SEC and state securities authorities.
4.14 APPROVAL OF AGREEMENT. The board of directors of OraLabs has
authorized the execution and delivery of this Agreement by OraLabs and has
approved this Agreement and the transactions contemplated hereby.
4.15 CONTINUITY OF BUSINESS ENTERPRISES. Except for the transactions
contemplated by this Agreement, OraLabs has no commitment or present intention
to liquidate OraLabs, Inc. or sell or otherwise dispose of a material portion of
its business or assets following the consummation of the transactions
contemplated hereby.
4.16 MATERIAL TRANSACTIONS OF AFFILIATIONS. Except as disclosed herein
and in the OraLabs Schedules, there exists no material contract, agreement, or
arrangement between OraLabs and any person who was at the time of such contract,
agreement, or arrangement an officer, director, or person owning of record or
known by OraLabs to own beneficially, 10% or more of the issued and outstanding
common stock of OraLabs and which is to be performed in whole or in part after
the date hereof or was entered into not more than three years prior to the date
hereof. Neither any officer, director, nor 10% shareholder of OraLabs has, or
has had during the last preceding full fiscal year, any known interest in any
material transaction with OraLabs which was material to the business of OraLabs.
OraLabs has no commitment, whether written or oral, to lend any funds to, borrow
any money from, or enter into any other material transaction with any such
affiliated person. Notwithstanding the foregoing, on or before the date of
Closing, OraLabs intends to issue 100,000 shares to each of the non-employee
directors of OraLabs, which will be issued under a registration statement on
Form S-8.
4.17 TRANSACTIONS. OraLabs agrees to take all necessary precautions to
prevent any improper transactions in OraLabs securities by its officers,
directors, employees, affiliates, agents or others having knowledge of this
Agreement. OraLabs agrees that until the earlier to occur of (i) the date that
is the termination of this Agreement, or (ii) the date of the Closing of this
Agreement, OraLabs will take such precautions to prevent the officers and
directors of OraLabs, as well as their respective affiliates, from:
(a) acquiring directly or indirectly, by purchase or otherwise,
any voting securities or direct or indirect rights to acquire
any voting securities of OraLabs or any subsidiary thereof, or
of any successor to or person in control of OraLabs, or any
assets of OraLabs or any subsidiary or division thereof or of
any such successor or controlling person, except as provided
in this Agreement and under the option plans for employees and
for non-employee directors;
(b) making or in any way participating, directly or indirectly,
except with respect to the proxy and shareholder meeting
contemplated by this Agreement, in any "solicitation" or
"proxies" to vote (as such terms are used in the rules of the
Securities and Exchange Commission);
15
(c) making any public announcement with respect to, or submitting
a proposal for, or offer of (with or without conditions) any
extraordinary transaction involving OraLabs or its securities
or assets, except as contemplated by this Agreement; or
(d) forming, joining or in any way participating in a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of
1034, as amended (the "Exchange Act"), in connection with any
of the foregoing.
4.18 ORALABS SCHEDULES. OraLabs has delivered to NVC, or will deliver
as soon as practicable at NVC's request but in any event within ten (10) days
after the date of this Agreement, the following schedules, which are
collectively referred to as the "OraLabs Schedules," which are dated the date of
this Agreement, all certified by an officer to be complete, true, and accurate:
(a) a schedule containing complete and accurate copies of the
Certificate of Incorporation and bylaws, as amended, of
OraLabs as in effect as of the date of this Agreement; except
to the extent these documents are available to NVC on EDGAR
Online as part of filings made by OraLabs with the SEC;
(b) a schedule containing any filings by OraLabs with the SEC, not
available on EDGAR;
(c) a schedule containing a copy of the federal income tax returns
of OraLabs identified in paragraph 4.4(d);
(d) a schedule setting forth the description of any material
adverse change in the business, operations, property, assets,
or condition of OraLabs since the date of the most recent
OraLabs balance sheet, required to be provided pursuant to
section 4.7 hereof; and
(e) a schedule setting forth any other information, together with
any required copies of documents, required to be disclosed in
the OraLabs Schedules by sections 4.1 through 4.17; except to
the extent these documents are available to NVC on EDGAR
Online as part of filings made by OraLabs with the SEC.
4.19. OraLabs shall cause the OraLabs Schedules and the instruments
and data delivered to NVC hereunder to be updated after the
date hereof up to and including the Closing Date.
ARTICLE V
SPECIAL COVENANTS
5.1 STOCKHOLDERS' MEETING OF ORALABS. As soon as practicable following
the execution of this Agreement, and prior to the Closing, OraLabs shall cause
to have approved the following proposals by the written consent of the holders
of a majority of the outstanding shares of common stock of OraLabs, which
approval shall then be subject to the filing of a Proxy Statement or an
Information Statement with the SEC and the passage of at least 30 days after the
mailing of the Proxy Statement or Information Statement without objecting action
taken by any shareholder.
(a) the election of Mr. Chang-Jiang Wu and Mr. Yong-Hong Wu as
directors of OraLabs effective at the time of the Closing;
(b) the amendment to the Certificate of Incorporation of OraLabs
to change its name to "NVC Lighting Corporation.," or such
other name to be determined by NVC (the "New Name"), and to
increase the authorized number of shares of OraLabs from
100,000,000 to 200,000,000 shares;
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(c) the approval of the "2005 Stock Option, SAR and Stock Bonus
Plan" of OraLabs covering 5,000,000 shares of common stock,
attached as Schedule 3 hereto;
(d) the approval of this Agreement and the transactions
contemplated herein, including without limitation the
redemption by OraLabs of the common stock owned by Gary
Schlatter as described in Recital D above; and
(e) to take such other actions as the shareholders of OraLabs may
determine are necessary or appropriate.
5.2 ACCESS TO PROPERTIES AND RECORDS. OraLabs and NVC will each afford
to the officers and authorized representatives of the other full access to the
properties, books, and records of OraLabs or NVC and its wholly-owned
subsidiary, NVCI, as the case may be, in order that each may have full
opportunity to make such reasonable investigation as it shall desire to make of
the affairs of the other, and each will furnish the other with such additional
financial and operating data and other information as to the business and
properties of OraLabs or NVC and its wholly-owned subsidiary, NVCI, as the case
may be, as the other shall from time to time reasonably request.
5.3 DELIVERY OF BOOKS AND RECORDS. At the Closing, OraLabs shall
deliver to Stephen A. Zrenda, Jr., Esq., legal counsel of NVC, the originals of
the corporate minute books, books of account, contracts, records, and all other
books or documents of OraLabs now in the possession or control of OraLabs or its
representatives and agents.
5.4 SPECIAL COVENANTS AND REPRESENTATIONS REGARDING THE ORALABS STOCK.
The consummation of this Agreement and the transactions herein contemplated,
including the issuance of the OraLabs Stock to the Shareholders of NVC as
contemplated hereby, constitutes the offer and sale of securities under the
Securities Act of 1933 and any applicable state statutes. Such transactions
shall be consummated in reliance on Regulation S and other exemptions from the
registration requirements of such statutes which depend, inter alia, upon the
circumstances under which the NVC Shareholders acquire such securities. In
connection with reliance upon exemptions from the registration requirements for
such transactions, at the Closing, NVC shall cause to be delivered, and the
Shareholders shall deliver to OraLabs, letters of representation in the form
attached hereto as Schedule 4.
5.5 APPROVAL OF CERTAIN SHAREHOLDERS. OraLabs hereby represents that
holders of in excess of 50% of the issued and outstanding stock of OraLabs have
or will have timely agreed to vote in favor of the matters in Section 5.1,
subject to completion of due diligence and the material accuracy of the
representations and warranties in this Agreement, and subject to fiduciary
obligations, if any. OraLabs will obtain a written agreement from these
shareholders, subject to these conditions within ten (10) days of this
Agreement, not to exceed ten (10) persons.
5.6 THIRD PARTY CONSENTS AND CERTIFICATES. OraLabs and NVC agree to
cooperate with each other in order to obtain any required third party consents
to this Agreement and the transactions herein and therein contemplated.
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5.7 ACTIONS PRIOR TO CLOSING.
(a) From and after the date of this Agreement until the Closing
Date and except as set forth in the OraLabs or NVC Schedules
or as permitted or contemplated by this Agreement, OraLabs and
NVC and its wholly-owned subsidiary, NVCI, respectively, will
each: (i) carry on its business in substantially the same
manner as it has heretofore; (ii) maintain and keep its
properties in states of good repair and condition as at
present, except for depreciation due to ordinary wear and tear
and damage due to casualty; (iii) maintain in full force and
effect insurance comparable in amount and in scope of coverage
to that now maintained by it; (iv) perform in all material
respects all of its obligation under material contracts,
leases, and instruments relating to or affecting its assets,
properties, and business; (v) use its best efforts to maintain
and preserve its business organization intact, to retain its
key employees, and to maintain its relationship with its
material suppliers and customers; and (vi) fully comply with
and perform in all material respects all obligations and
duties imposed on it by all federal and state laws and all
rules, regulations, and orders imposed by federal or state
governmental authorities.
(b) From and after the date of this Agreement until the Closing
Date, neither OraLabs nor NVC and its wholly-owned subsidiary,
NVCI, will: (i) make any change in their organizational
documents, Certificate of Incorporation or bylaws; (ii) take
any action described in section 2.6 in the case of NVC and its
wholly-owned subsidiary, NVCI, or in section 4.7, in the case
of OraLabs (all except as permitted therein or as disclosed in
the applicable party's schedules); or (iii) enter into or
amend any contract, agreement, or other instrument of any of
the types described in such party's schedules, except that a
party may enter into or amend any contract, agreement, or
other instrument in the ordinary course of business involving
the sale of goods or services.
5.8 SALES UNDER RULES 144 OR 145, IF APPLICABLE.
(a) OraLabs will use its best efforts to at all times to comply
with the reporting requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), including timely
filing all periodic reports required under the provisions of
the Securities Exchange Act of 1934 (the "Exchange Act") and
the rules and regulations promulgated thereunder.
(b) Upon being informed in writing by any person holding
restricted stock of OraLabs as of the date of this Agreement
that such person intends to sell any shares under Rule 144 or
Rule 145 promulgated under the Securities Act (including any
rule adopted in substitution or replacement thereof), OraLabs
will certify in writing to such person that it has filed all
of the reports required to be filed by it under the Exchange
Act to enable such person to sell such person's restricted
stock under Rule 144 or 145, as may be applicable in the
circumstances, or will inform such person in writing that it
has not filed any such report or reports.
(c) If any certificate representing any such restricted stock is
presented to OraLabs's transfer agent for registration of
transfer in connection with any sale theretofore made under
Rule 144 or 145, provided such certificate is duly endorsed
for transfer by the appropriate person(s) or accompanied by a
separate stock power duly executed by the appropriate
person(s) in each case with reasonable assurances that such
endorsements are genuine and effective, and is accompanied by
an opinion of counsel satisfactory to OraLabs and its counsel
that such transfer has complied with the requirements of Rule
144 or 145, as the cases may be, OraLabs will promptly
instruct its transfer agent to register such transfer and to
issue one or more new certificates representing such shares to
the transferee and, if appropriate under the provisions of
Rule 144 or 145, as the case may be, free of any stop transfer
order or restrictive legend. The provisions of this Section
5.9 shall survive the Closing and the consummation of the
transactions contemplated by this Agreement. The
indemnification provided for in this paragraph and in the
indemnification agreement shall, subject to the provisions of
Section 9.10, survive the Closing and consummation of the
transactions contemplated hereby and termination of this
Agreement.
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(d) After the Closing, OraLabs will take such other actions as may
be necessary to facilitate sales of the shares described in
Section 4.16 above.
5.9 INDEMNIFICATION.
(a) NVC and the Shareholders hereby agree to indemnify OraLabs and
each of the officers, agents and directors of OraLabs as of
the date of execution of this Agreement against any loss,
liability, claim, damage, or expense (including, but not
limited to, any and all expense whatsoever reasonably incurred
in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever),
to which it or they may become subject arising out of or based
on any inaccuracy appearing in or misrepresentation made under
Article II of this Agreement. The indemnification provided for
in this paragraph shall, subject to the provisions of Section
9.10, survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement.
(b) OraLabs hereby agrees to indemnify NVC and each of the
officers, agents and directors of NVC as of the date of
execution of this Agreement and the Shareholders against any
loss, liability, claim, damage, or expense (including, but not
limited to, any and all expense whatsoever reasonably incurred
in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever),
to which it or they may become subject arising out of or based
on any inaccuracy appearing in or misrepresentation made under
Article IV of this Agreement. The indemnification provided for
in this paragraph shall, subject to the provisions of Section
9.10, survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement.
(c) OraLabs agrees to cause OraLabs, Inc. to enter into an
indemnification agreement (in the form attached hereto as
Exhibit 1) with OraLabs at the Closing to the satisfaction of
NVC and the Shareholders to indemnify OraLabs from any
liabilities of any kind or nature, direct or indirect, known
or unknown, contingent or otherwise, that may exist
immediately prior to the Closing or that may be asserted after
the Closing Date regarding any claim or liability arising from
the operations of OraLabs or any other matter prior to the
Closing.
5.10 FAIRNESS OPINION. OraLabs will seek to obtain a fairness opinion
from an appropriate source that the terms of this Agreement and the transactions
contemplated hereby are fair to the shareholders of OraLabs from a financial
standpoint.
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5.11 STAND-STILL AGREEMENT. From and after the date hereof and up to
and including the Closing of this Agreement, the parties agree not to directly
or through intermediaries solicit, entertain or otherwise discuss with any
person or entity any other similar transaction. The obligations of OraLabs under
this paragraph are subject to all applicable fiduciary obligations.
5.12 DISSENTERS. As used in this paragraph, OraLabs, Inc. will be
referred to as the Subsidiary. After Closing, if there are any dissenting
shares, the Subsidiary will reimburse OraLabs for the total amount, up to
$20,000.00, in cash and within 30 days of receipt of written notification to the
Subsidiary by OraLabs that payment to holders of dissenters shares of up to the
fair value of such shares as determined under applicable Colorado law has been
made. At the option of the Subsidiary, OraLabs will permit the Subsidiary (and
its representatives) to actively participate in the process of determining the
amount payable to dissenters, and no offer amount or settlement will be made by
OraLabs for payments to dissenters without the prior written approval of the
Subsidiary which will not be unreasonably withheld. In consideration for making
those payments, it is agreed that OraLabs will issue to the Subsidiary, on the
next business day following the receipt by OraLabs of each reimbursement
payment, that number of shares which, when multiplied by the average of the
closing bid and ask price of the common stock of OraLabs as of the close of
trading on the date that payment is received by OraLabs , equals the amount paid
by the Subsidiary to reimburse OraLabs . The parties agree that the shares of
OraLabs issuable to the Subsidiary will be restricted securities but that
OraLabs will thereafter use its diligent, good-faith efforts to register those
shares as soon as possible thereafter, and the cost of filing fees paid to the
SEC or under Blue Sky Laws will be paid by the Subsidiary. Applicable Blue Sky
laws will be complied with so as to permit sales and resales of those shares
that are registered under the Registration Statement within the state of
Colorado and any other states chosen by OraLabs.
5.13 DELIVERY OF ADDITIONAL INSTRUMENTS ON REQUEST. Each party agrees
to execute and deliver or cause to be executed and delivered at the Closing and
at such other times and places as shall be reasonably agreed, such additional
instruments as it may reasonably request for the purpose of fully effecting the
transactions contemplated by this Agreement.
5.14 CONTINUED OPERATIONS. After Closing, OraLabs, directly or
indirectly through its subsidiary, NVC, will continue to actively conduct the
business of NVC as it had been conducted prior to Closing.
5.15 NASDAQ LISTING. NVC will use its best efforts to cause the OraLabs
common stock to continue to be listed on the NASDAQ SmallCap Market upon
completion of the Closing and/or to submit a new NASDAQ SmallCap Market listing
application if necessary. If continued listing on NASDAQ SmallCap Market is not
approved by the NASD for reasons attributable to OraLabs, NVC reserves its right
to re-negotiate the relative shareholdings between the Shareholders and members
or OraLabs.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF ORALABS
The obligations of OraLabs under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions, and if
OraLabs shall not consummate the transactions contemplated by this Agreement by
reason of the failure of any of such conditions to be met, OraLabs will have no
liability to NVC or its Shareholders:
6.1 ACCURACY OF REPRESENTATIONS. The representations and warranties
made by NVC and the Shareholders in this Agreement were true when made and shall
be true at the Closing Date with the same force and effect as if such
representations and warranties were made at and as of the Closing Date (except
for changes therein permitted by this Agreement), and NVC and the Shareholders
shall have performed or complied with all covenants and conditions required by
this Agreement to be performed or complied with by NVC and the Shareholders
prior to or at the Closing. OraLabs shall be furnished with a certificate,
signed by a duly authorized officer of NVC and dated the Closing Date, to the
foregoing effect.
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6.2 OFFICER'S CERTIFICATES. OraLabs shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
NVC to the effect that no litigation, proceeding, investigation, or inquiry is
pending or, to the best knowledge of NVC threatened, which might result in an
action to enjoin or prevent the consummation of the transactions contemplated by
this Agreement, or, to the extent not disclosed in the NVC Schedules, by or
against NVC which might result in any material adverse change in any of the
assets, properties, business, or operations of NVC and its wholly-owned
subsidiary, NVCI.
6.3 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there shall
not have occurred any material adverse change in the financial condition,
business, or operations of NVC and its wholly-owned subsidiary, NVCI, nor shall
any event have occurred which, with the lapse of time or the giving of notice,
may cause or create any material adverse change in the financial condition,
business, or operations of NVC and its wholly-owned subsidiary, NVCI.
6.4 OFFICER AND DIRECTOR QUESTIONNAIRES. OraLabs shall have received
officer and director questionnaires completed and signed by each executive
officer and director of NVC in form and substance reasonably satisfactory to
OraLabs and its counsel which shall contain information for use by OraLabs in
reporting the transaction contemplated hereby on Form 8-K and in Schedule 14A or
14C to be filed with the Securities and Exchange Commission.
6.5 OTHER ITEMS.
(a) OraLabs shall have received a members' list of NVC containing
the name, address, and number of shares held by each NVC
shareholder as of the date of Closing certified by an
executive officer of NVC as being true, complete, and
accurate.
(b) OraLabs shall have received such further documents,
certificates, or instruments relating to the transactions
contemplated hereby as OraLabs may reasonably request.
6.6 FAIRNESS OPINION. The Board of Directors of OraLabs shall have
received a fairness opinion satisfactory to it that remains in effect as of the
time of Closing.
6.7 PERFORMANCE. Each of the covenants and agreements of NVC and the
Shareholders to be performed or complied with on or before Closing pursuant to
the terms of this Agreement shall have been duly performed and complied with.
6.8 NO GOVERNMENTAL ACTION. No governmental agency or body shall have
taken any action or made any request of OraLabs, NVC or the Shareholders, as a
result of which OraLabs deems it inadvisable to proceed with the transaction,
including without limitation that the SEC has not objected to the use of the
Proxy Statement or Information Statement at the meeting of the shareholders of
OraLabs and has not otherwise objected to the completion of the transactions
contemplated by this Agreement.
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6.9 CONSENTS. All consents to the consummation of the transactions
contemplated by this Agreement that are required in order to prevent a breach of
or a default under the terms of any instrument to which NVC or the Shareholders
is a party or is bound shall have been obtained.
6.10 APPROVAL BY ORALABS SHAREHOLDERS. The transactions contemplated by
this Agreement shall have been approved at a shareholder meeting of OraLabs at
which a quorum of the shareholders is present by person or by proxy, and such
approval shall have been given by a majority of the shares voted at the meeting.
6.11 DUE DILIGENCE. OraLabs must be satisfied in its sole and absolute
discretion with the results of its due diligence investigation of NVC. Failure
to notify NVC within 30 days following mutual execution of this Agreement, that
OraLabs is not satisfied with the results of its due diligence investigation of
NVC, shall constitute a waiver of this paragraph.
6.12 ACCOUNTANT'S LETTER. OraLabs shall have received a "comfort"
letter from NVC's independent auditors, Murrell, Hall, McIntosh & Co., PLLP
covering the period from December 31, 2004 until that day which is no more than
ten days prior to the date of Closing, in a form reasonably satisfactory to
counsel for OraLabs.
6.13. LEGAL OPINION. OraLabs shall have received a legal opinion from
an attorney authorized to practice in the Hong Kong Special Administrative
Region in The People's Republic of China, that (i) NVC is a company duly
organized, validly existing, and in good standing under the laws of the Hong
Kong Special Administrative Region in The People's Republic of China ("PRC");
(ii) NVC has the power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, including
qualification to do business as a foreign corporation in jurisdictions in which
the character and location of the assets owned by it or the nature of the
business transacted by it requires qualification; (iii) the execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will not,
violate any provision of NVC's organizational documents; (iv) NVC has taken all
action required by laws, its articles of organization, certificate of business
registration, or otherwise to authorize the execution and delivery of this
Agreement; (v) NVC has full power, authority, and legal right and has taken all
action required by law, and otherwise to consummate the transactions herein
contemplated; and (vi) no authorization, approval, consent, or order of, or
registration, declaration, or filing with, any court or other governmental body
is required in connection with the execution and delivery by NVC of this
Agreement and the consummation by NVC of the transactions contemplated hereby,
and specifically that the exchange of the NVC Stock for the OraLabs Stock
requires no such consents and will be legally binding upon NVC.
6.14 NUMBER OF DISSENTERS. The number of shares that shall be the
subject of dissenters' rights exercised by any of the shareholders of OraLabs
shall not exceed 100,000.
Any of the above conditions can be waived by OraLabs in the exercise of
its sole discretion.
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF
NVC AND THE SHAREHOLDERS
The obligations of NVC and the Shareholders under this Agreement are
subject to the satisfaction, at or before the Closing Date, of the following
conditions, and if NVC and the Shareholders shall not consummate the
transactions contemplated by this Agreement by reason of the failure of any of
such conditions to be met, they will have no liability to OraLabs:
7.1 ACCURACY OF REPRESENTATIONS. The representations and warranties
made by OraLabs in this Agreement were true when made and shall be true as of
the Closing Date (except for changes therein permitted by this Agreement) with
the same force and effect as if such representations and warranties were made at
and as of the Closing Date, and OraLabs shall have performed and complied with
all covenants and conditions required by this Agreement to be performed or
complied with by OraLabs prior to or at the Closing. NVC shall have been
furnished with a certificate, signed by a duly authorized executive officer of
OraLabs and dated the Closing Date, to the foregoing effect.
7.2 STOCKHOLDER APPROVAL. The stockholders of OraLabs shall have
approved this Agreement, the transactions contemplated hereby, and the other
matters described in Section 5.1.
7.3 OFFICER'S CERTIFICATE. NVC shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized executive
officer of OraLabs to the effect that no litigation, proceeding, investigation,
or inquiry is pending or, to the best knowledge of OraLabs threatened, which
might result in an action to enjoin or prevent the consummation of the
transactions contemplated by this Agreement.
7.4 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there shall
not have occurred any material adverse change in the financial condition,
business, or operations of OraLabs nor shall any event have occurred which, with
the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business, or operations of OraLabs.
7.5 GOOD STANDING. OraLabs shall have received a certificate of good
standing from the Secretary of State of the State of Colorado or other
appropriate office, dated as of a date within ten days prior to the Closing Date
certifying that OraLabs is in good standing as a corporation in the State of
Colorado and has filed all tax returns required to have been filed by it to date
and has paid all taxes reported as due thereon.
7.6 OTHER ITEMS.
(a) NVC shall have received a shareholders' list of OraLabs from
its transfer agent, current at least within ten (10) days
prior to Closing, containing the name, address and number of
shares held by each such OraLabs shareholder, certified by a
representative of the transfer agent as being true, complete
and accurate.
(b) NVC shall have received such further documents, certificates,
or instruments relating to the transactions contemplated
hereby as NVC may reasonably request.
7.7 PERFORMANCE. Each of the covenants and agreements of OraLabs to be
performed or complied with on or before Closing pursuant to the terms of this
Agreement shall have been duly performed and complied with.
7.8 NO GOVERNMENTAL ACTION. No governmental agency or body shall have
taken any action or made any request of NVC, the Shareholders or OraLabs, as a
result of which NVC deems it inadvisable to proceed with the transaction,
including without limitation that the SEC has not objected to the use of the
Proxy Statement or Information Statement at the meeting of the shareholders of
OraLabs and has not otherwise objected to the completion of the transactions
contemplated by this Agreement.
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7.9 CONSENTS. All consents to the consummation of the transactions
contemplated by this Agreement that are required in order to prevent a breach of
or a default under the terms of any instrument to which OraLabs is a party or is
bound shall have been obtained.
7.10 APPROVAL BY ORALABS SHAREHOLDERS. The transactions contemplated by
this Agreement shall have been approved at a shareholder meeting of OraLabs at
which a quorum of the shareholders is present by person or by proxy, and such
approval shall have been given by a majority of the shares voted at the meeting.
7.11 DUE DILIGENCE. NVC must be satisfied in its sole and absolute
discretion with the results of its due diligence investigation of OraLabs.
Failure to notify OraLabs within 30 days following mutual execution of this
Agreement, that NVC is not satisfied with the results of its due diligence
investigation of OraLabs, shall constitute a waiver of this paragraph.
Any of the above conditions can be waived by NVC or the Shareholders in
their sole and absolute discretion.
ARTICLE VIII
TERMINATION
8.1 TERMINATION.
(a) This Agreement may be terminated by the board of directors of
OraLabs or by the owners of NVC, shown on Schedule 1A attached
hereto, at any time prior to the Closing Date if: (i) there
shall be any actual or threatened action or proceeding before
any court or any governmental body which shall seek to
restrain, prohibit, or invalidate the transactions
contemplated by this Agreement and which, in the judgment of
such board of directors, made in good faith and based on the
advice of its legal counsel, makes it inadvisable to proceed
with the exchange contemplated by this Agreement; or (ii) any
of the transactions contemplated hereby are disapproved by any
regulatory authority whose approval is required to consummate
such transactions or in the judgment of such board of
directors, made in good faith and based on the advice of
counsel, there is substantial likelihood that any such
approval will not be obtained or will be obtained only on a
condition or conditions which would be unduly burdensome,
making it inadvisable to proceed with the exchange.. In the
event of termination pursuant to this paragraph (a) of section
8.1, no obligation, right, or liability shall arise hereunder,
and each party shall bear all of the expenses incurred by it
in connection with the negotiation, drafting, and execution of
this Agreement and the transactions herein contemplated,
subject to Section 9.4.
(b) This Agreement may be terminated at any time prior to the
Closing by action of the board of directors of OraLabs if NVC
shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any
of the representations or warranties of NVC contained herein
shall be inaccurate in any material respect, or if there shall
have been any change after the date of the latest balance
sheets of NVC, in the assets, properties, business, or
financial condition of NVC, which could have a materially
adverse affect on the value of the business of NVC, except any
changes disclosed in the NVC Schedules, dated as of the date
of execution of this Agreement. If this Agreement is
terminated pursuant to this paragraph (b) of section 8.1, this
Agreement shall be of no further force or effect, and no
obligation, right, or liability shall arise hereunder, except
that NVC shall bear its own costs in connection with the
negotiation, preparation, and execution of this Agreement,
subject to Section 9.4.
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(c) This Agreement may be terminated at any time prior to the
Closing by action of the owners of NVC, shown on Schedule 1A
attached hereto, if OraLabs shall fail to comply in any
material respect with any of its covenants or agreements
contained in this Agreement or if any of the representations
or warranties of OraLabs contained herein shall be inaccurate
in any material respect. If this Agreement is terminated
pursuant to this paragraph (c) of section 8.1, this Agreement
shall be of no further force or effect, and no obligation,
right, or liability shall arise hereunder, except that OraLabs
shall bear its own costs incurred in connection with the
negotiation, preparation, and execution of this Agreement,
subject to Section 9.4.
(d) This Agreement may be terminated by either party if the
transactions shall not have been consummated by June 30, 2005,
which date will be extended to July 31, 2005 if the Proxy
Statement or Information Statement has not then been cleared
by the SEC or if such Statement was not cleared by the SEC by
June 30, 2005, in either of which events such date may be
extended at the written election of either party for a period
not to exceed sixty days, or which date may in any case be
extended by mutual agreement of the parties in writing.
Provided, however, that the right to terminate the Agreement
under this paragraph will not be available to a party whose
action or failure to act has contributed to the failure of the
transactions to be consummated on or before such date and such
action or failure to act constitutes a material breach of this
Agreement.
(e) This Agreement may be terminated by either party if within 30
days after mutual execution of this Agreement, such party
gives written notice to the other that it is not satisfied, in
its sole and absolute discretion, with the results of its due
diligence investigation of the other party.
ARTICLE IX
MISCELLANEOUS
9.1 BROKERS. OraLabs and NVC agree that there were no finders or
brokers involved in bringing the parties together or who were instrumental in
the negotiation, execution, or consummation of this Agreement. OraLabs and NVC
each agree to indemnify the other against any claim by any third person for any
commission, brokerage, or finders' fee arising from the transactions
contemplated hereby based on any alleged agreement or understanding between the
indemnifying party and such third person, whether express or implied from the
actions of the indemnifying party.
9.2 GOVERNING LAW. This Agreement shall be governed by, enforced, and
construed under and in accordance with the laws of the United States of America
and, with respect to matters of state law, with the internal laws of the State
of Colorado without giving effect to its choice of law rules. Except as stated
at the end of this paragraph, any dispute, controversy or claim arising under or
in any way related to this Agreement or the breach thereof shall only be
submitted to and settled by binding arbitration before a single arbitrator by
the American Arbitration Association in accordance with the Association's
commercial rules then in effect. The arbitration (or legal proceedings described
at the end of this paragraph) will only be conducted in Denver, Colorado, which
the parties agree is the exclusive venue for the proceedings. Judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The arbitrator may award reasonable attorneys fees to the
prevailing party, or if the arbitrator believes that more than one party has
prevailed in separate aspects of the arbitration, the arbitrator may award
attorneys fees as it deems appropriate. Notwithstanding the foregoing, either
party may institute litigation in connection with seeking to enforce rights
under Section 9.5 below.
25
9.3 NOTICES. Any notices or other communications required or permitted
hereunder shall only be sufficiently given if in writing and hand delivered to
it, sent by overnight delivery by a courier service of United States and
international recognition (such as Federal Express, DHL or UPS) that provides
international delivery, expenses prepaid, or by facsimile addressed as follows:
If to OraLabs, to: OraLabs Holding Corp.
c/o Michael Friess, Authorized Director
5353 Manhattan Circle, Suite 101 Boulder, CO 80303
Telephone: (303) 499-6000 x18
Facsimile: (303) 499-6666
Email: friessco@aol.com
With copies to: Douglas B. Koff, Esq.
Koff, Corn & Berger, P.C.
303 E. 17th Street, Suite 940
Denver, Colorado 80203-1262
Telephone: 303.861.1166
Facsimile: 303.861.0601
Email: dkoff@wckblaw.com
If to NVC, or any one or more
Shareholder, to: NVC Lighting Investment Holdings Limited
c/o Mr. Chang-Jiang Wu and Ms. Tracy Yun Hung
Suite A-C, 20/F Neich Tower
128 Gloucester Road, Wan Chai
Hong Kong, The People's Republic of China
Telephone: 011.852.2517.6226
Facsimile: 011.852.2548.7788
Email: yunhung@hkaudit.com
With copies to: Stephen A. Zrenda, Jr., Esq.
Stephen A. Zrenda, Jr., P.C.
100 N. Broadway Avenue, Suite 2440
Oklahoma City, OK 73102-8608
Telephone: 405.235.2111
Facsimile: 915.975.8003
Email: zrendaesq@aol.com
And
Tracy Wan
Belmont Capital Group Limited
Suite A-C, 20/F Neich Tower
128 Gloucester Road, Wan Chai
Hong Kong, The People's Republic of China
Telephone: 011.852.2517.6226
Facsimile: 011.852.2548.7788
Email: yunhung@hkaudit.com
26
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder. Each notice or other communication shall
only be effective and deemed to have been received (i) if given by facsimile,
one business day after such facsimile is transmitted to the facsimile number
specified above, and confirmation of delivery by the sender's machine is given,
(ii) if given by hand delivery, the date of delivery as evidenced by a written
receipt, or (iii) if given by a courier service, the third business day
following the business day of deposit with such service, with shipping charges
for the most expedited delivery prepaid or prearranged. As used herein, a
"business day" means Mondays through Fridays, excluding days (at the location
where the notice is to be delivered) that are national bank holidays. Notice to
NVC shall be deemed to be notice to all Shareholders for all purposes.
9.4 ATTORNEYS' FEES. In the event that any party institutes any
arbitration proceeding or a litigation proceeding under Section 9.5 to interpret
or enforce this Agreement or to secure relief from any default hereunder or
breach hereof, the breaching party or parties shall reimburse the nonbreaching
party or parties for all costs, including reasonable attorneys' fees, incurred
in connection therewith and in enforcing or collecting any judgment rendered
therein.
9.5 CONFIDENTIALITY. OraLabs on the one hand, and NVC and the
Shareholders on the other hand, agree that for a period of five (5) years from
and after the date of this Agreement (regardless of whether the transactions
contemplated hereby are consummated), each will hold, and will cause its
directors, officers, employees, affiliates, consultants and advisers
(collectively, "Representatives") to hold, in confidence all documents and
information furnished to it (the "Receiving Party") by or on behalf of the other
party (the "Disclosing Party") either before or after such date, in connection
with the transactions contemplated by this Agreement (the "Confidential
Material"). Each party agrees that it will use the Confidential Material solely
for the purpose of the transactions contemplated by this Agreement (including
without limitation descriptions or attachments of Confidential Material in any
press releases and public filings that OraLabs determines are necessary or
advisable to comply with applicable securities laws or as required by law) and
it will not use the Confidential Material in any way detrimental to the other
party. In the event that either party is requested in any proceeding to disclose
any Confidential Material, such party shall give the other party prompt notice
of such request so that the other party may seek an appropriate protective
order. If, in the absence of a protective order, a party is nonetheless
compelled to disclose Confidential Material, such party may disclose such
information without liability hereunder; provided, however, that such party will
give the other party written notice of the information to be disclosed as far in
advance of its disclosure as is practicable and, upon the request of and at the
expense of such other party, such party will use commercially reasonable efforts
to obtain assurances that confidential treatment will be accorded to such
information. The term "Confidential Material" shall not include information that
was or becomes generally available on a non-confidential basis provided that the
source of such information was not bound by a confidentiality agreement. Without
granting any right or license, the Disclosing Party agrees that the foregoing
shall not apply to any information that the Receiving Party can document: (i) is
(through no improper action or inaction by the Receiving Party or any affiliate,
agent, consultant or employee) generally available to the public, or (ii) was in
its possession or known by it prior to receipt from the Disclosing Party, or
(iii) was rightfully disclosed to it by a third party without restriction,
provided the Receiving Party complies with any restrictions imposed by the third
party, or (iv) was independently developed without use of any Confidential
Material of the Disclosing Party by employees of the Receiving Party who have
had no access to such information. The parties agree that because money damages
may not be a sufficient remedy for any breach of the foregoing covenants and
agreements, the Disclosing Party shall be entitled to specific performance and
injunctive and other equitable relief as a remedy for any such breach of this
Agreement in addition to all monetary remedies available at law or in equity.
27
9.6 EXPENSES OF STOCK EXCHANGE. OraLabs and NVC agree that they will
each bear their own costs and expenses in negotiating and closing the
transactions contemplated by this Agreement, including but not limited to,
attorneys' fees, except as otherwise expressly provided in this Agreement.
9.7 SCHEDULES; KNOWLEDGE. Each party is presumed to have full knowledge
of all information set forth in the other party's schedules (or substitutes
therefor as expressly provided in this Agreement) delivered pursuant to this
Agreement.
9.8 THIRD PARTY BENEFICIARIES. This contract is solely between OraLabs,
NVC and the Shareholders and, except as specifically provided, no director,
officer, stockholder, member, employee, agent, independent contractor, or any
other person or entity shall be deemed to be a third party beneficiary of this
Agreement.
9.9 ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties relating to the subject matter hereof, including this
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations, or warranties, written or oral,
except as set forth herein. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision. Captions appearing in this Agreement are for convenience only and
shall not be deemed to explain, limit or amplify the provisions of this
Agreement.
9.10 SURVIVAL; TERMINATION. All representations, agreements, warranties
and indemnities in this Agreement shall survive only for a period of one year
following the Closing Date or termination of this Agreement (except that the
provisions of Section 9.5 survive for a period of five years after the date of
this Agreement), notwithstanding any investigation by or on behalf of any party,
and will be null and void unless arbitration (or litigation under Section 9.5)
is brought with respect thereto within one month after the expiration of
survival. In addition, all other provisions of this Agreement which by their
terms are to be performed after the Closing Date will survive for a period of
one year following the Closing Date.
9.11 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
9.12 AMENDMENT OR WAIVER. Every right and remedy provided herein shall
be cumulative with every other right and remedy, whether conferred herein, at
law, or in equity, and may be enforced concurrently herewith, and no waiver by
any party of the performance of any obligation by the other shall be construed
as a waiver of the same or any other default then, theretofore, or thereafter
occurring or existing. At any time prior to the Closing Date, this Agreement may
be amended by a writing signed by all parties hereto, with respect to any of the
terms contained herein, and any term or condition of this Agreement may be
waived or the time for performance hereof may be extended by a writing signed by
the party or parties for whose benefit the provision is intended.
9.13 ASSIGNABILITY. This Agreement shall not be assignable by either
party without the prior written consent of the other party, which may be
withheld in the other party's exercise of its sole discretion. This Agreement
shall inure to the benefit of and be enforceable by the permitted successors and
assigns of the parties.
9.14 DRAFTS. The submittal of drafts and redrafts of this Agreement or
of any other instrument(s) between the parties does not impose any legal
obligation upon any party, which will arise only at such time as the parties
choose in the exercise of their sole discretions to execute this Agreement.
28
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
as of the date first above-written.
ORALABS HOLDING CORP.
ATTEST: By: Michael I. Friess,
-------------------------------
Michael I. Friess,
authorized director
By:___________________________
Secretary
NVC LIGHTING INVESTMENT
HOLDINGS LIMITED
By: Chang-Jiang Wu
-------------------------------
Chang-Jiang Wu, President
NVC Shareholders:
----------------------------------
Chang-Jiang Wu
----------------------------------
Yong-Hong Wu
----------------------------------
Du Gang
The signature of the undersigned is to evidence its obligation to
comply with the provisions of Sections 5.9(c) and 5.12 applicable to it:
ORALABS, INC.,
a Colorado corporation
----------------------------------
Gary H. Schlatter, President
The signature of the undersigned is solely for the purpose of evidencing his
obligation to comply with the provisions of Recital D and Section 1.1 applicable
to him, and the undersigned makes no other representations, warranties or
indemnities of any kind:
GARY H. SCHLATTER, Individually
----------------------------------
Gary H. Schlatter
29
Schedule 1(a)
to
STOCK EXCHANGE AGREEMENT
Dated February 23, 2005
The following persons are the sole members and owners of the ordinary
shares of NVC, which are all of the outstanding securities of NVC:
NAME PERCENT OF OWNERSHIP
1. Chang-Jiang Wu 33.34%
2. Yong-Hong Hu 33.33%
3. Gang Du 33.33%
Schedule 1(b)
to
STOCK EXCHANGE AGREEMENT
Dated February 23, 2005
The common shares of common stock of OraLabs to be issued under the
terms of the Stock Exchange Agreement shall be issued as follows:
NAME NUMBER OF SHARES
1. Chang-Jiang Wu
Suites A-C, 20th Floor Neich Tower ________________
128 Gloucester Road, Wanchai
Hong Kong, The People's Republic of China
2. Yong-Hong Hu ________________
Suites A-C, 20th Floor Neich Tower
128 Gloucester Road, Wanchai
Hong Kong, The People's Republic of China
3. Gang Du ________________
Suites A-C, 20th Floor Neich Tower
128 Gloucester Road, Wanchai
Hong Kong, The People's Republic
of China
4. Belmont Capital Group Limited ________________
Suite A-C, 20/F Neich Tower
128 Gloucester Road, Wanchai
Hong Kong, The People's Republic of China
5. Tao Niu ________________
Suites A-C, 20th Floor Neich Tower
128 Gloucester Road, Wanchai
Hong Kong, The People's Republic
of China
6. China Venture Partners ________________
RR3 Box 3087
East Stroudbury, PA 18301
USA
Schedule 2
(OraLabs Options and Commitments per Section 4.6)
Options under the incentive stock option plan for employees and under
the Non-Employee Directors' Option Plan as described in OraLabs' Form 10-KSB/A
for the fiscal year ended December 31, 2003.
Schedule 3
(Proposed 2005 Stock Option, SAR and Stock Bonus Plan)
ORALABS HOLDING INC.
2005 STOCK OPTION, SAR AND STOCK BONUS PLAN
ARTICLE 1
GENERAL PROVISIONS
1.1 PURPOSE. The purpose of the OraLabs Holding Inc. 2005 Stock Option, SAR and
Stock Bonus Plan (the "Plan") shall be to attract, retain and motivate
directors, officers, employees and independent consultants (the "Participants")
of OraLabs, Inc. (the "Company") and its subsidiaries, if any, by way of
granting (i) non-qualified stock options ("Stock Options"), (ii) non-qualified
stock options with stock appreciation rights attached ("Stock Option SARs"),
(iii) incentive stock options ("ISO Options"), (iv) ISO Options with stock
appreciation rights attached ("ISO Option SARs"), and (v) stock bonuses. For the
purpose of this Plan, Stock Option SARs and ISO Option SARs are sometimes
collectively herein called "SARs;" and Stock Options and ISO Options are
sometimes collectively herein called "Options." The ISO Options to be granted
under the Plan are intended to be qualified pursuant to Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"); and the Stock Options to
be granted are intended to be "non-qualified stock options" as described in
Sections 83 and 421 of the Code. Furthermore, under the Plan, the terms "parent"
and "subsidiary" shall have the same meaning as set forth in Subsections (e) and
(f) of Section 425 of the Code unless the context herein clearly indicates to
the contrary.
1.2 GENERAL. The terms and provisions of this Article I shall be applicable to
Stock Options, SARs and ISO Options unless the context herein clearly indicates
to the contrary.
1.3 ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Stock Plan
Committee (the "Committee") appointed by the Board of Directors (the "Board") of
the Company and consisting of at least two (2) members from the Board. The
initial members of the Stock Option Committee shall be
_______________________________ and _________________________. The member(s) of
the Committee shall serve at the pleasure of the Board. The Committee shall have
the power where consistent with the general purpose and intent of the Plan to
(i) modify the requirements of the Plan to conform with the law or to meet
special circumstances not anticipated or covered in the Plan, (ii) suspend or
discontinue the Plan, (iii) establish policies and (iv) adopt rules and
regulations and prescribe forms for carrying out the purposes and provisions of
the Plan including the form of any "stock option agreements" ("Stock Option
Agreements"). Unless otherwise provided in the Plan, the Committee shall have
the authority to interpret and construe the Plan, and determine all questions
arising under the Plan and any agreement made pursuant to the Plan. Any
interpretation, decision or determination made by the Committee shall be final,
binding and conclusive. A majority of the Committee shall constitute a quorum,
and an act of the majority of the members present at any meeting at which a
quorum is present shall be the act of the Committee.
1.4 SHARES SUBJECT TO THE PLAN. Shares of stock ("Stock") covered by Stock
Options, SARs, ISO Options and stock bonuses shall consist of 2,000,000 shares
of the Common Stock, $.001 par value, of the Company. Either authorized and
unissued shares or treasury shares may be delivered pursuant to the Plan. If any
Option for shares of Stock, granted to a Participant lapses, or is otherwise
terminated, the Committee may grant Stock Options, SARs, ISO Options and stock
bonuses for such shares of Stock to other Participants. However, neither Stock
Options, SARs nor ISO Options shall be granted again for shares of Stock which
have been subject to SARs which are surrendered in exchange for cash or shares
of Stock issued pursuant to the exercise of SARs as provided in Article II
hereof.
1.5 PARTICIPATION IN THE PLAN. The Committee shall determine from time to time
those Participants who are to be granted Stock Options, SARs, ISO Options and
stock bonuses and the number of shares of Stock covered thereby. Directors who
are not employees of the Company or of a subsidiary shall not be eligible to
participate in the in ISO Options or ISO in Option SARs. During any period that
the Committee is comprised of less than three Directors each of whom is a
Disinterested Director, the maximum number of shares of Stock for which
employee-Directors may be granted options in any calendar year shall not exceed
10 percent (10%) of the aggregate number of shares of Stock with respect to
which Options may be granted under the Plan.
1.6 DETERMINATION OF FAIR MARKET VALUE. As used in the Plan, "fair market value"
shall mean on any particular day (i) if the Stock is listed or admitted for
trading on any national securities exchange or the National Market System of the
National Association of Securities Dealers, Inc. Automated Quotation System, the
last sale price, or if no sale occurred, the mean between the closing high bid
and low asked quotations, for such day of the Stock on the principal securities
exchange on which shares of Stock are listed, (ii) if Stock is not traded on any
national securities exchange but is quoted on the National Association of
Securities Dealers, Inc., Automated Quotation System, or any similar system of
automated dissemination of quotations or securities prices in common use, the
mean between the closing high bid and low asked quotations for such day of the
Stock on such system, (iii) if neither clause (i) nor (ii) is applicable, the
mean between the high bid and low asked quotations for the Stock as reported by
the National Quotation Bureau, Incorporated if at least two securities dealers
have inserted both bid and asked quotations for shares of the Stock on at least
five (5) of the ten (10) preceding days, (iv) in lieu of the above, if actual
transactions in the shares of Stock are reported on a consolidated transaction
reporting system, the last sale price of the shares of Stock on such system or,
(v) if none of the conditions set forth above is met, the fair market value of
shares of Stock as determined by the Board. Provided, for purposes of
determining "fair market value" of the Common Stock of the Company, such value
shall be determined without regard to any restriction other than a restriction
which will never lapse.
1.7 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate number of shares
of Stock under Stock Options and ISO Options granted under the Plan, the Option
Price and the ISO Price and the total number of shares of Stock which may be
purchased by a Participant on exercise of a Stock Option and an ISO Option shall
be approximately adjusted by the Committee to reflect any recapitalization,
stock split, merger, consolidation, reorganization, combination, liquidation,
stock dividend or similar transaction involving the Company except that a
dissolution or liquidation of the Company or a merger or consolidation in which
the Company is not the surviving or the resulting corporation, shall cause the
Plan and any Stock Option, SAR or ISO Option granted thereunder, to terminate
upon the effective date of such dissolution, liquidation, merger or
consolidation. Provided, that for the purposes of this Section 1.7, if any
merger, consolidation or combination occurs in which the Company is not the
surviving corporation and is the result of a mere change in the identity, form
or place of organization of the Company accomplished in accordance with Section
368(a)(1)(F) of the Code, then, such event will not cause a termination.
Appropriate adjustment may also be made by the Committee in the terms of a SAR
to reflect any of the foregoing changes.
1.8 AMENDMENT AND TERMINATION OF THE PLAN. The Plan shall terminate at midnight,
February____, 2008, but prior thereto may be altered, changed, modified, amended
or terminated by written amendment approved by the Board. Provided, that no
action of the Board may, without the approval of the shareholders, increase the
aggregate number of shares of Stock which may be purchased under Stock Options,
SARs or ISO Options or stock bonuses granted under the Plan; withdraw the
administration of the Plan from the Committee; amend or alter the Option Price
or ISO Price, as applicable; change the manner of computing the spread upon the
exercise of a SAR or amend the Plan in any manner which would impair the
applicability of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, to the Plan. Except as provided in this Article I, no amendment,
modification or termination of the Plan shall in any manner adversely affect any
Stock Option, SAR or ISO Option theretofore granted under the Plan without the
consent of the affected Participant.
1.9 EFFECTIVE DATE. The Plan shall be effective February ____, 2005, subject to
approval by the holders of a majority of the Common Stock of the Company
entitled to vote at a meeting called for such purpose. The Plan will terminate
at midnight on February ____, 2008.
1.10 SECURITIES LAW REQUIREMENTS. The Company shall have no obligation or
liability to issue any Stock hereunder unless the issuance of such shares would
comply with any applicable federal or state securities laws or any other
applicable law or regulations thereunder, including but not limited to the
effectiveness of a Form S-8 registration statement filed with the U.S.
Securities Exchange Commission.
1.11 SEPARATE CERTIFICATES. Separate certificates representing the Common Stock
of the Company to be delivered to a Participant upon the exercise of any Stock
Option, SAR, or ISO Option will be issued to such Participant.
1.12 PAYMENT FOR STOCK; RECEIPT OF STOCK OR CASH IN LIEU OF PAYMENT.
(A) PAYMENT FOR STOCK. Payment for shares of Stock purchased under this
Plan shall be made in full and in cash or check made payable to the Company.
Provided, payment for shares of Stock purchased under this Plan may also be made
in Common Stock of the Company or a combination of cash and Common Stock of the
Company in the event that the purchase of shares is pursuant to the exercise of
rights under an SAR attached to the Option and which is exercisable on the date
of exercise of the Option. In the event that Common Stock of the Company is
utilized in consideration for the purchase of Stock upon the exercise of a Stock
Option or an ISO Option, then, such Common Stock shall be valued at the "fair
market value" as defined in Section 1.6 of the Plan.
(B) In the alternative, the Committee is authorized to agree to accept
an assignment of the proceeds from the sale of the Common Stock to be issued to
a Participant for the payment of the option price, if daily executed by a
Participant so notarized in sub form deemed necessary and appropriate by The
Company in its sole description and acknowledged by the broker-dealer retained
by the Participant for a resale of The Common Stock of The Company.
(C) RECEIPT OF STOCK OR CASH IN LIEU OF PAYMENT. Furthermore, a
Participant may exercise an Option without payment of the Option Price or ISO
Price in the event that the exercise is pursuant to rights under an SAR attached
to the Option and which is exercisable on the date of exercise of the Option. In
the event an Option with an SAR attached is exercised without payment of the
Option Price or ISO Price, the Participant shall be entitled to receive either
(i) a cash payment from the Company equal to the excess of the total fair market
value of the shares of Stock on such date as determined with respect to which
the Option is being exercised over the total cash Option Price or ISO Price of
such shares of Stock as set forth in the Option or (ii) that number of whole
shares of Stock as is determined by dividing (A) an amount equal to the fair
market value per share of Stock on the date of exercise into (B) an amount equal
to the excess of the total fair market value of the shares of Stock on such date
with respect to which the Option is being exercised over the total cash Option
Price or ISO Price of such shares of Stock as set forth in the Option, and
fractional shares will be rounded to the next lowest number and the Participant
will receive cash in lieu thereof.
1.13 INCURRENCE OF DISABILITY AND RETIREMENT. A Participant shall be deemed to
have terminated employment or consulting and incurred a disability
("Disability") if such Participant suffers a physical or mental condition which,
in the judgment of the Committee, totally and permanently prevents a Participant
from engaging in any substantial gainful employment or consulting with the
Company or a subsidiary. A Participant shall be deemed to have terminated
employment as an employee or a consultant due to retirement ("Retirement") if
such Participant ceases to be an employee or a consultant of the Company or its
subsidiary, without cause, after attaining the age of 65.
1.14 STOCK OPTIONS AND ISO OPTIONS GRANTED SEPARATELY. Since the Committee is
authorized to grant Stock Options, SARs and ISO Options to Participants, the
grant thereof and Stock Option Agreements relating thereto will be made
separately and totally independent of each other. Except as it relates to the
total number of shares of Stock which may be issued under the Plan, the grant or
exercise of a Stock Option or SARs shall in no manner affect the grant and
exercise of any ISO Options. Similarly, the grant and exercise of any ISO Option
shall in no manner affect the grant and exercise of any Stock Option or SARs.
1.15 GRANTS OF OPTIONS AND STOCK OPTION AGREEMENT. Each Stock Option, ISO Option
and/or SAR granted under this Plan shall be evidenced by the minutes of a
meeting of the Committee or by the written consent of the Committee and by a
written Stock Option Agreement effective on the date of grant and executed by
the Company and the Participant. Each Option granted hereunder shall contain
such terms, restrictions and conditions as the Committee may determine, which
terms, restrictions and conditions may or may not be the same in each case.
1.16 USE OF PROCEEDS. The proceeds received by the Company from the sale of
Stock pursuant to the exercise of Options granted under the Plan shall be added
to the Company's general funds and used for general corporate purposes.
1.17 NON-TRANSFERABILITY OF OPTIONS. Except as otherwise herein provided, any
Option or SAR granted shall not be transferable otherwise than by will or the
laws of descent and distribution, and the Option may be exercised, during the
lifetime of the Participant, only by him or her. More particularly (but without
limiting the generality of the foregoing), the Option and/or SAR may not be
assigned, transferred (except as provided above), pledged or hypothecated in any
way, shall not be assignable by operation of law and shall not be subject to
execution, attachment, or similar process. Any attempted assignment, transfer,
pledge, hypothecation, or other disposition of the Option and/or SAR contrary to
the provisions hereof shall be null and void and without effect.
1.18 ADDITIONAL DOCUMENTS ON DEATH OF PARTICIPANT. No transfer of an Option
and/or SAR by the Participant by will or the laws of descent and distribution
shall be effective to bind the Company unless the Company shall have been
furnished with written notice and an unauthenticated copy of the will and/or
such other evidence as the Committee may deem necessary to establish the
validity of the transfer and the acceptance by the successor to the Option
and/or SAR of the terms and conditions of such Option and/or SAR.
1.19 CHANGES IN EMPLOYMENT. So long as the Participant shall continue to be an
employee or consultant of the Company or any one of its subsidiaries, any Option
granted to him shall not be affected by any change of duties or position.
Nothing in the Plan or in any Stock Option Agreement which relates to the Plan
shall confer upon any Participant any right to continue in the employ as an
employee or consultant of the Company or of any of its subsidiaries, or
interfere in any way with the right of the Company or any of its subsidiaries to
terminate his employment or consulting arrangement at any time.
1.20 SHAREHOLDER RIGHTS. No Participant shall have a right as a shareholder with
respect to any shares of Stock subject to an Option prior to the purchase of
such shares of Stock by exercise of the Option.
1.21 RIGHT TO EXERCISE UPON COMPANY CEASING TO EXIST. Where dissolution or
liquidation of the Company or any merger consolidation or combination in which
the Company is not the surviving corporation occurs, the Participant shall have
the right immediately prior to such dissolution, liquidation, merger,
consolidation or combination, as the case may be, to exercise, in whole or in
part, his then remaining Options whether or not then exercisable, but limited to
that number of shares that can be acquired without causing the Participant to
have an "excess parachute payment" as determined under Section 280G of the Code
determined by taking into account all of Participant's "parachute payments"
determined under Section 280G of the Code. Provided, the foregoing
notwithstanding, after the Participant has been afforded the opportunity to
exercise his then remaining Options as provided in this Section 1.21, and to the
extent such Options are not timely exercised as provided in this Section 1.21,
then, the terms and provisions of this Plan and any Stock Option Agreement will
thereafter continue in effect, and the Participant will be entitled to exercise
any such remaining and unexercised Options in accordance with the terms and
provisions of this Plan and such Stock Option Agreement as such Options
thereafter become exercisable. Provided further, that for the purposes of this
Section 1.21, if any merger, consolidation or combination occurs in which the
Company is not the surviving corporation and is the result of a mere change in
the identity, form, or place of organization of the Company accomplished in
accordance with Section 368(a)(1)(F) of the Code, then, such event shall not
cause an acceleration of the exercisability of any such Options granted
hereunder.
1.22 ASSUMPTION OF OUTSTANDING OPTIONS AND SARS. To the extent permitted by the
then applicable provisions of the Code, any successor to the Company succeeding
to, or assigned the business of, the Company as the result of or in connection
with a corporate merger, consolidation, combination, reorganization or
liquidation transaction shall assume Options and SARs outstanding under the Plan
or issue new Options and/or SARs in place of outstanding Options and/or SARs
under the Plan.
ARTICLE II
TERMS OF STOCK OPTIONS AND EXERCISE
2.1 GENERAL TERMS.
(A) GRANT AND TERMS FOR STOCK OPTIONS. Stock Options shall be granted
by the Committee on the following terms and conditions: No Stock Option shall be
exercisable within three months from the date of grant (except as specifically
provided in Subsection 2.l(c) hereof, with regard to the death or Disability of
a Participant), nor more than five years after the date of grant. Subject to
such limitation, the Committee shall have the discretion to fix the period (the
"Option Period") during which any Stock Option may be exercised. Stock Options
granted shall not be transferable except by will or by the laws of descent and
distribution, Stock Options shall be exercisable only by the Participant while
actively employed as an employee or a consultant by the Company or a subsidiary,
except that (i) any such Stock Option granted and which is otherwise
exercisable, may be exercised by the personal representative of a deceased
Participant within 12 months after the death of such Participant (but not beyond
the Option Period of such Stock Option), (ii) if a Participant terminates his
employment as an employee or a consultant with the Company or a subsidiary on
account of Retirement, such Participant may exercise any Stock Option which is
otherwise exercisable at any time within three months of such date of
termination and (iii) if a Participant terminates his employment as an employee
or a consultant with the Company or a subsidiary on account of incurring a
Disability, such Participant may exercise any Stock Option which is otherwise
exercisable at any time within 12 months of such date of termination. If a
Participant should die during the applicable three-month or 12-month period
following the date of such Participant's Retirement or termination on account of
Disability, the rights of the personal representative of such deceased
Participant as such relate to any Stock Options granted to such deceased
Participant shall be governed in accordance with Subsection 2.1(a)(i) of this
Article II.
(B) OPTION PRICE. The option price ("Option Price") for shares of Stock
subject to a Stock Option shall be determined by the Committee, but in no event
shall the Option Price of an ISO be less than 100% of the "fair market value" of
the Stock on the date of grant and in no event shall the Option Price of Stock
Options be less than 85% of the "fair market value" of the Stock on the date of
grant.
(C) ACCELERATION OF OTHERWISE UNEXERCISABLE STOCK OPTION ON RETIREMENT,
DEATH, DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The Committee, in its sole
discretion, may permit (i) a Participant who terminates employment as an
employee or a consultant due to Retirement, (ii) a Participant who terminates
employment as an employee or a consultant due to a Disability, (iii) the
personal representative of a deceased Participant, or (iv) any other Participant
who terminates employment as an employee or a consultant upon the occurrence of
special circumstances (as determined by the Committee) to exercise and purchase
(within three months of such date of termination of employment or consulting
arrangement, or 12 months in the case of a deceased or disabled Participant; all
or any part of the shares subject to Stock Option on the date of the
Participant's Retirement, Disability, death, or as the Committee otherwise so
determines, notwithstanding that all installments, if any, with respect to such
Stock Option, had not accrued on such date. Provided, such discretionary
authority of the Committee shall not be exercised with respect to any Stock
Option (or portion thereof) if the applicable six-month waiting period for
exercise had not expired except in the event of the death or disability of the
Participant when the personal representative of the deceased Participant or the
disabled Participant may, with the consent of the Committee, exercise such Stock
Option notwithstanding the fact that the applicable six-month waiting period had
not yet expired.
(D) NUMBER OF STOCK OPTIONS GRANTED. Participants may be granted more
than one Stock Option. In making any such determination, the Committee shall
obtain the advice and recommendation of the officers of the Company or a
subsidiary which have supervisory authority over such Participants. The granting
of a Stock Option under the Plan shall not affect any outstanding Stock Option
previously granted to a Participant under the Plan.
(E) NOTICE OF EXERCISE OF STOCK OPTION. Upon exercise of a stock
option, a Participant shall give written notice to the Secretary of the Company,
or other officer designated by the Committee, at the Company's main office in
Spain. No Stock shall be issued to any Participant until the Company receives
full payment for the Stock purchased, if applicable, and any required state and
federal withholding taxes.
ARTICLE III
SARS
3.1 GENERAL TERMS.
(A) GRANT AND TERMS OF SARS. The Committee, when comprised of three or
more Directors all of whom are Disinterested Directors, may grant SARs to
Participants in connection with Stock Options or ISO Options granted under the
Plan. SARs shall not be exercisable (i) at such time that the Committee is
comprised of less than three Disinterested Directors or is not comprised solely
of Disinterested Directors, (ii) earlier than six months from the date of grant
except as specifically provided in Subsection 3.l(b) hereof in the case of the
death or Disability of a Participant, and (iii) shall terminate at such time as
the Committee determines and shall be exercised only upon surrender of the
related Stock Option or ISO Option and only to the extent that the related Stock
Option or ISO Option (or the portion thereof as to which the SAR is exercisable)
is exercised. SARs may be exercised only by the Participant while actively
employed as an employee or a consultant by the Company or a subsidiary except
that (i) any SARs previously granted to a Participant which are otherwise
exercisable may be exercised, with the approval of the Committee, by the
personal representative of a deceased Participant, even if such death should
occur within six months of the date of grant (but not beyond the expiration date
of such SAR), and (ii) if a Participant terminates his employment as an employee
or a consultant with the Company or a subsidiary, as the case may be, on account
of Retirement or incurring a Disability, such Participant may exercise any SARs
which are otherwise exercisable, with the approval of the Committee, anytime
within three months of the date of the termination by Retirement or within 12
months of termination by Disability. If a Participant should die during the
applicable three-month period following the date of such Participant's
Retirement or during the applicable 12 month period following the date of
termination on account of Disability, the rights of the personal representative
of such deceased Participant as such relate to any SARs granted to such deceased
Participant shall be governed in accordance with (i) of the second sentence of
this Subsection 3.l(a) of this Article III. The applicable SAR shall (i)
terminate upon the termination of the underlying Stock Option or ISO Option, as
the case may be, (ii) only be transferable at the same time and under the same
conditions as the underlying Stock Option or ISO Option is transferable, (iii)
only be exercised when the underlying Stock Option or ISO Option is exercised,
and (iv) may be exercised only if there is a positive spread between the Option
Price or ISO Price, as applicable and the "fair market value" of the Stock for
which the SAR is exercised.
(B) ACCELERATION OF OTHERWISE UNEXERCISABLE SARS ON RETIREMENT, DEATH,
DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The Committee, in its sole
discretion, may permit (i) a Participant who terminates employment as an
employee or a consultant with the Company or a subsidiary due to Retirement,
(ii) a Participant who terminates employment as an employee or a consultant with
the Company or a subsidiary due to a Disability, (iii) the personal
representative of such deceased Participant, or (iv) any other Participant who
terminates employment as an employee or a consultant with the Company or a
subsidiary upon the occurrence of special circumstances (as determined by the
Committee) to exercise (within three months of such date of termination of such
employment or 12 months in the case of a disabled or deceased Participant) all
or any part of any such SARs previously granted to such Participant as of the
date of such Participant's Retirement, Disability, death, or as the Committee
otherwise so determines, notwithstanding that all installments, if any with
respect to such SARs, had not accrued on such date. Provided, such discretionary
authority of the Committee may not be exercised with respect to any SAR (or
portion thereof if the applicable six-month waiting period for exercise had not
expired as of such date, except (i) in the event of the Disability of the
Participant or (ii) the death of the Participant, when such disabled Participant
or the personal representative of such deceased Participant may, with the
consent of the Committee, exercise such SARs notwithstanding the fact that the
applicable six-month waiting period had not yet expired.
(C) FORM OF PAYMENT OF SARS. The Participant may request the method and
combination of payment upon the exercise of a SAR; however, the Committee has
the final authority to determine whether the value of the SAR shall be paid in
cash or shares of Stock or both. Upon exercise of a SAR, the holder is entitled
to receive the excess amount of the "fair market value" of the Stock (as of the
date of exercise) for which the SAR is exercised over the Option Price or ISO
Price, as applicable, under the related Stock Option or ISO Option, as the case
may be. All applicable federal and state withholding taxes will be paid by the
Participant to the Company upon the exercise of a SAR since the excess amount
described above will be required to be included within taxable income in
accordance with Sections 61 and 83 of the Code.
(D) DISINTERESTED DIRECTORS. As used in this Article III,
"Disinterested Directors" shall have the same meaning as the term "disinterested
person" set forth in Rule 16b-3(d) under the Securities Exchange Act of 1934, as
amended, and shall mean a Director who is not at the time he exercises
discretion in administering the Plan eligible, and has not at any time within
one year prior thereto been eligible for selection as a person to whom stock may
be allocated or to whom stock options or stock appreciation rights may be
granted pursuant to the Plan or any other plan of the Company or its affiliates
entitling the participants therein to acquire stock, stock options or stock
appreciation rights of the Company or any of its affiliates; provided, however,
that in the event that the definition of "disinterested person" contained in
Rule 16b-3 is amended, the term "Disinterested Person" as it is defined herein
shall automatically be deemed amended so as to the have the same meaning as the
amended term "disinterested person" under Rule 16b-3.
ARTICLE IV
GRANTING OF ISO OPTIONS
4.1 GENERAL. With respect to ISO Options granted on or after the effective date
of the Plan the following provisions in this Article IV shall apply to the
exclusion of any inconsistent provision in any other Article in this Plan since
the ISO Options to be granted under the Plan are intended to qualify as
"incentive stock options" as defined in Section 422 of the Code.
4.2 GRANT AND TERMS OF ISO OPTIONS. ISO Options may be granted only to employees
of the Company and any of its subsidiaries. No ISO Options shall be granted to
any person who is not eligible to receive "incentive stock options" as provided
in Section 422 of the Code. No ISO Options shall be granted to any management
employee if, immediately before the grant of an ISO Option, such employee owns
more than 10% of the total combined voting power of all classes of stock of the
Company or its subsidiaries (as determined in accordance with the stock
attribution rules contained in Section 425(d) of the Code). Provided, the
preceding sentence shall not apply if, at the time the ISO Option is granted,
the ISO Price is at least 110% of the "fair market value" of the Stock subject
to the ISO Option, and such ISO Option by its terms is not exercisable after the
expiration of five years from the date such ISO Option is granted.
(A) ISO OPTION PRICE. The option price for shares of Stock subject to
an ISO Option ("ISO Price") shall be determined by the Committee, but in no
event shall such ISO Price be less than the fair market value of the Stock on
the date of grant.
(B) ANNUAL ISO OPTION LIMITATION. The aggregate "fair market value"
(determined as of the time the ISO Option is granted) of the Stock with respect
to which ISO Options are exercisable for the first time by any Participant
during in any calendar year (under all "incentive stock option" plans qualified
under Section 422 of the Code sponsored by the Company and its subsidiary
corporations) shall not exceed $100,000.
(C) TERMS OF ISO OPTIONS. ISO Options shall be granted on the following
terms and conditions: No ISO Option shall be exercisable within six months from
the date of grant (except as specifically provided in Subsection 4.2(d) hereof
with regard to the Disability or death of a Participant), nor more than 10 years
after the date of grant. The Committee shall have the discretion to fix the
period (the "ISO Period") during which any ISO Option may be exercised. ISO
Options granted shall not be transferable except by will or by the laws of
descent and distribution. ISO Options shall be exercisable only by the
Participant while actively employed by the Company or a subsidiary, except that
(i) any such ISO Option granted and which is otherwise exercisable, may be
exercised by the personal representative of a deceased Participant within 12
months after the death of such Participant (but not beyond the expiration date
of such ISO Option), (ii) if a Participant terminates his employment as an
employee with the Company or a subsidiary on account of Retirement, such
Participant may exercise any ISO Option which is otherwise exercisable at any
time within three months of such date of termination and (iii) if a Participant
terminates his employment with the Company or a subsidiary on account of
incurring a Disability, such Participant may exercise any ISO Option which is
otherwise exercisable at any time within 12 months of such date of termination.
If a Participant should die during the applicable three-month or 12 month period
following the date of such Participant's Retirement or Disability, then in such
event, the rights of the personal representative of such deceased Participant as
such relate to any ISO Options granted to such deceased Participant shall be
governed in accordance with Subsection 4.1(c) of this Article IV.
(D) ACCELERATION OF OTHERWISE UNEXERCISABLE ISO OPTION ON RETIREMENT,
DEATH, DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The Committee, in its sole
discretion, may permit (i) a Participant who terminates employment as an
employee with the Company or a subsidiary due to Retirement, (ii) a Participant
who terminates employment as an employee with the Company or a subsidiary due to
a Disability, (iii) the personal representative of a deceased Participant, or
(iv) any other Participant who terminates employment as an employee with the
Company or a subsidiary upon the occurrence of special circumstances (as
determined by the Committee) to exercise and purchase (within three months of
such date of termination of employment as an employee or 12 months in the case
of a disabled or deceased Participant) all or any part of the shares of Stock
subject to ISO Option on the date of the Participant's Retirement, Disability,
death, or as the Committee otherwise so determines, notwithstanding that all
installments, if any, had not accrued on such date. Provided, such discretionary
authority of the Committee may not be exercised with respect to any ISO Option
(or portion thereof if the applicable six-month waiting period for exercise had
not expired as of such date except in the event of the Disability of the
Participant or death of the Participant, when the disabled Participant or the
personal representative of such deceased Participant, may, with the consent of
the Committee, exercise such ISO Option notwithstanding the fact that the
applicable six-month waiting period had not yet expired.
(E) NUMBER OF ISO OPTIONS GRANTED. Subject to the applicable
limitations contained in the Plan with respect to ISO Options, Participants may
be granted more than one ISO Option. In making any such determination, the
Committee shall obtain the advice and recommendation of the officers of the
Company or a subsidiary which have supervisory authority over such Participants.
The granting of an ISO Option under the Plan shall not affect any outstanding
ISO Option previously granted to a Participant under the Plan.
(F) NOTICE TO EXERCISE ISO OPTION. Upon exercise of an ISO Option, a
Participant shall give written notice to the Secretary of the Company, or other
officer designated by the Committee, at the Company's principal executive
offices.
ARTICLE V
OPTIONS NOT QUALIFYING AS
INCENTIVE STOCK OPTIONS
5.1 NON-QUALIFYING OPTIONS. With respect to all or any portion of any option
granted under the Plan not qualifying as an "incentive stock option" under
Section 422 of the Code, such option shall be considered as a Stock Option
granted under this Plan for all purposes.
OraLabs, Inc.
By:______________________________________
_____________________, President
Date Plan adopted and
approved by the Board of
Directors: February ___,
2005.
Date Plan adopted and
approved by the Stockholders:
February ____, 2005.
Schedule 4
(Letters of Representation per Section 5.4)
EXHIBIT 1
(form of indemnification agreement)
INDEMNIFICATION AGREEMENT
This Agreement is made and entered into this ___ day of February, 2005,
by and between NVC Lighting Investment Holdings Limited ("NVC") and OraLabs,
Inc. (the "Company"), a wholly-owned subsidiary of OraLabs Holding Corp.
("OraLabs").
WHEREAS, NVC and OraLabs have entered into a Stock Exchange Agreement
dated February ____, 2005, in which all of the issued and outstanding stock of
NVC was acquired by OraLabs in exchange for 90% to 94% of the total issued and
outstanding shares of Common Stock of OraLabs on a fully diluted basis (the
"Exchange Agreement").
WHEREAS, Section 5.9(c) and Section 5.12 of the Exchange Agreement
provide for the indemnification of OraLabs by the Company after the closing of
the Exchange Agreement.
NOW, THEREFORE, in consideration of the foregoing, it is hereby agreed
as follows:
1. The Company hereby agrees to indemnify OraLabs from any liabilities
of any kind or nature, direct or indirect, known or unknown, contingent or
otherwise, that exist immediately prior to the closing of the Exchange Agreement
or that may be asserted after the closing date of the Exchange Agreement
regarding any claim or liability arising from the operations of OraLabs or its
subsidiaries or any other matter arising prior to the closing date of the
Exchange Agreement, including attorneys' fees and costs in defending any such
actions.
2. The Company further agrees to indemnify OraLabs consistent with the
terms of Section 5.12 of the Exchange Agreement regarding payments to the
holders of dissenters' shares, such terms being hereby incorporated herein by
reference.
3. Any notices or other communications required or permitted hereunder
shall be sufficiently given if personally delivered to it or sent by registered
mail or certified mail, postage prepaid, or by prepaid telegram addressed as
follows:
If to the Company: OraLabs, Inc.
c/o Mr. Gary H. Schlatter, President
18685 East Plaza Drive
Parker, Colorado 80134
Telephone: 303.783.9499
Facsimile: 303.499.6666
With copies to: Charles H. Jacobs
Lohf Shaiman Jacobs Hyman & Feiger PC
900 Cherry Tower
950 S Cherry Street
Denver, CO 80246-2666
Telephone: 303.753.9000
Facsimile: 303.753.9997
e-mail: cjacobs@lohfshaiman.com
If to OraLabs or NVC: NVC Lighting Investment Holdings Limited
c/o Mr. Chang-Jiang Wu and
Ms. Tracy Yun Hung
Suite A-C, 20/F Neich Tower
128 Gloucester Road, Wan Chai
Hong Kong, The People's Republic of China
Telephone: 011.852.2517.6226
Facsimile: 011.852.2548.7788
Email: yunhung@hkaudit.com
With copies to: Stephen A. Zrenda, Jr., Esq.
Stephen A. Zrenda, Jr., P.C.
100 N. Broadway Avenue, Suite 2440
Oklahoma City, OK 73102-8608
Telephone: 405.235.2111
Facsimile: 915.975.8003
Email: ZRENDAESQ@AOL.COM
-----------------
and Belmont Capital Group Limited
Tracy Yun Hung
Suite A-C, 20th Floor Neich Tower
128 Gloucester Road, Wanchai
Hong Kong, The Peoples Republic of China
Telephone: 011.852.2517.6226
Facsimile: 011.852.2548.7788
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder. Each notice or other communication shall
only be effective and deemed to have been received (i) if given by facsimile,
one business day after such facsimile is transmitted to the facsimile number
specified above, and confirmation of delivery by the sender's machine is given,
(ii) if given by hand delivery, the date of delivery as evidenced by a written
receipt, or (iii) if given by a courier service, the third business day
following the business day of deposit with such service, with shipping charges
for the most expedited delivery prepaid or prearranged. As used herein, a
"business day" means Mondays through Fridays, excluding days (at the location
where the notice is to be delivered) that are national bank holidays.
4. The parties agree that facsimile copies of this Agreement and any
signature thereon shall be as legally binding and enforceable as the original or
copy original of this Agreement or any signatures thereof.
5. The parties agree that this Agreement shall be construed in
accordance with the laws of the State of Colorado and that exclusive
jurisdiction and venue for any controversy, claim or suit arising out of or
connected with this Agreement shall be in the courts located in Denver,
Colorado.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
NVC: NVC Lighting Investment Holdings Limited
By:_______________________________
President
The Company: OraLabs, Inc.
By:_______________________________
President
FIRST AMENDMENT TO
STOCK EXCHANGE AGREEMENT
DATED AS OF FEBRUARY 23, 2005
This First Amendment ("Amendment") is dated for referenced purposes
only June 20, 2005, and is by and between ORALABS HOLDING CORP., a Colorado
corporation ("OraLabs"), NVC LIGHTING INVESTMENT HOLDINGS LIMITED ("NVC"), and
Messrs. Chang-Jiang Wu, Yong-Hong Hu and Gang Du (the "Shareholders").
WHEREAS, the parties entered into a Stock Exchange Agreement dated as
of February 23, 2005, as amended by a Letter Agreement dated March 21, 2005
(collectively, the "Original Agreement"); and
WHEREAS, the parties wish to amend the Original Agreement as set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is
acknowledged, the parties agree as follows:
1. Except as modified by this Amendment, all provisions of the Original
Agreement remain in effect. Capitalized terms used in this Amendment that are
not otherwise defined herein, have the same meanings as set forth in the
Original Agreement. In the event of a conflict between any provision of this
Amendment and any provision of the Original Agreement, the provision of this
Amendment will prevail.
2. NVC has delivered to OraLabs its Consolidated Financial Statements
as of December 31, 2004 ("Financial Statements"), including the Report of
Independent Registered Public Accounting Firm. The Consolidated Statement of
Operations included in the Financial Statements shows Net Income for the year
ended December 31, 2004, in the amount of $7,105,027.00.
3. The parties acknowledge that under Section 1.1 of the Original
Agreement, the percentage of shares of OraLabs to be issued to the Shareholders
at Closing is 94 percent to the extent that there is more than $7,000,000 of net
after tax profits on a consolidated basis for the fiscal year ended December 31,
2004. Accordingly, the parties agree that, unless there is subsequently any
restatement of or other revision or adjustment to the Financial Statements that
reduces to below $7,000,000.00 the amount of consolidated net after tax profits
for the fiscal year ended December 31, 2004, then the number of shares to be
issued to the Shareholders will equal 94 percent of the fully diluted, total
issued and outstanding shares of common stock of OraLabs upon completion of the
Closing. The fully diluted, total issued and outstanding shares of common stock
of OraLabs will include the shares currently outstanding plus shares to be
issued at or before Closing as provided in the Original Agreement or otherwise.
4. As a result of delays in delivery of the audited NVC Financial
Statements and OraLabs has yet not delivered a fairness opinion from an
appropriate source that the terms of this Agreement and the transactions
contemplated hereby are fair to the shareholders of OraLabs from a financial
standpoint, the parties wish to confirm certain time periods in the Original
Agreement to reflect existing circumstances. Accordingly, the following
provisions of the Original Agreement are modified:
o The first sentence of Section 8.1(d) will read as follows: "This
Agreement may be terminated by either party if the transaction shall not have
been consummated or cleared by the SEC on or before September 30, 2005, which
date may be extended for a period not to exceed 45 days if the Proxy Statement
or Information Statement shall has been cleared by the SEC on or before
September 30, 2005, and which date may only be extended by mutual agreement of
the parties in writing."
o The final sentence of Section 1.3 will read as follows:
"Notwithstanding the foregoing, if this Agreement does not close by September
30, 2005, either party may terminate this Agreement unless that date is extended
under Section 8.1(d)."
o The NVC financial statements for the first quarter of 2005, which
were required to be delivered by April 30, 2005 in accordance with the
provisions of Section 2.3(c), must be delivered by June 30, 2005.
o Under the Letter Agreement, OraLabs was given ten business days after
receipt of all requested due diligence information within which to advise NVC of
its satisfaction or dissatisfaction with the results of its due diligence
investigation, and the right to terminate the Agreement if it is not satisfied
with such results. Additional due diligence information was delivered to OraLabs
on May 5, 2005, after the April 11, 2005 deadline in the Letter Agreement.
OraLabs has advised NVC that it will be presenting follow-up questions with
respect to the supplied due diligence materials. Accordingly, the parties agree
that OraLabs will continue to have ten business days after it receives the
responses to its follow-up due diligence requests within which to advise NVC of
its satisfaction or dissatisfaction with the results of the due diligence
information, and the right to terminate the Agreement if it is dissatisfied.
5. This Amendment may be executed in multiple counterparts, each of
which shall be deemed an original and all of which taken together shall be but a
single instrument. Facsimile and electronic signatures shall be accepted as
originals.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
ORALABS HOLDING CORP. NVC LIGHTING INVESTMENT HOLDINGS,
LIMITED
By: /s/ Michael L. Friess By: /s/ Chang-Jiang Wu
--------------------- -----------------------
Michael L. Friess, Authorized Director Chang-Jiang Wu, President
/s/ Chang-Jiang Wu
----------------------
Chang-Jiang Wu, Shareholder
/s/ Yong-Hong Hu
-----------------------
Yong-Hong Hu, Shareholder
/s/ Chung Du
-----------------------
Chung Du, Shareholder
2