STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (" Agreement"), dated the 14th day of January,
2005, is entered into by and between DuraVest, Inc., a Florida corporation
("Company") and Xxxxxxx-Xxxxx Xxxxxx ("the Optionee").
WHEREAS, Cardio Management Systems, Inc., a corporation organized under the
laws of Canada ("Cardio") has acquired a majority of the voting stock of
Estracure, Inc., a corporation organized under the laws of Canada ("Estracure")
pursuant to an Agreement in Principal dated November 16, 2004 ("AIP") between
Cardio, Innovacor Limited Partnership, a Quebec limited partnership
("Innovacor"), Cardio at Work, Inc., a corporation organized under the laws of
Canada ("CAT"), Xxx Xxxxxxxxx, a resident of Montreal, Quebec ("Xxxxxxxxx") and
the Company; and
WHEREAS, pursuant to Section 3.1 of the AIP, Innovacor, CAT, Xxxxxxxxx
(collectively the "Initial Shareholders"), the Company and Estracure have
entered into an Option Agreement dated January 14th, 2005 ("Option Agreement")
under which the Initial Shareholders collectively have the right to exchange all
of their Estracure shares into shares of the Common Stock of the Company; and
WHEREAS, the Optionee holds a stock option under which he has the right and
option to acquire up to 4% of the participating stock of Estracure; and
WHEREAS, the Company desires that if the Initial Shareholders exchange
their Estracure Stock for stock of the Company, that the Company then holds,
directly or indirectly through a wholly owned subsidiary all of the outstanding
stock of Estracure with there then being no outstanding options or other rights
under which another could acquire Estracure stock; and
WHEREAS, the Optionee is willing to renounce and terminate his right and
option to purchase Estracure stock (the "Estracure Option"), if the Company will
grant and issue to the Optionee a stock option to acquire shares of the
Company's common stock on terms and conditions agreed to by the Optionee and the
Company:
WHEREAS the parties intend that the renunciation and termination of the
Estracure Option by the Optionee in consideration for the granting of the Stock
Option, as defined hereinbelow, by the Company shall constitute an "exchange"
and that subsection 7(1.4) of the Income Tax Act (Canada) and the corresponding
sections of the Taxation Act (Quebec) shall apply to the exchange of the
options;
WHEREAS the Company's grant of the Stock Option to the Optionee hereunder
without filing a prospectus in connection therewith is subject to the consent of
the Quebec Securities Commission (the "Commission's Consent ");
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and promise set forth herein, IT HAS BEEN AND IT HEREBY IS AGREED by the parties
hereto as follows:
The parties, in consideration of the mutual covenants forth herein, agree
as follows:
1. Option Grant. In consideration of exchange of the Estracure Option and
subject to the provisions set forth herein and to the Company's receipt of the
Commission's Consent, the Company hereby grants to the Optionee the right and
option to purchase up to an aggregate of 600,000 shares of its Common Stock (the
"Stock Option").
2. Grant Date, Stock Option Price and Vesting. The date of action by the
Company in granting this Stock Option is January 14th, 2005. The purchase price
of each optioned share of Common Stock ("Optioned Shares") is $0.76 per share
(the "Stock Option Price"). The right of the Optionee to exercise this Stock
Option shall vest on the earlier of the date of the exercise by the Initial
Shareholder of their put to exchange their Estracure shares into Company shares
under the Option Agreement or September 30, 2005 ("Vesting Date").
3. Manner of Exercise.
(a) Time of Exercise of Stock Option. The Stock Option may be exercised
in whole at any time and in part from time to time on or after the Vesting Date
in lots of no less than 200,000 shares (or, in the event any ba1ance as to which
the Option remains unexercised is less than 200,000 shares, in a lot equal to
such balance) on or before January 14th, 2008 (the "Option Period").
(b) Notice of Exercise. The Stock Option may be exercised by the
Optionee by providing written notice to the Company, which notice (i) shall
state the election to exercise the Option and the number of shares as to which
the Stock Option is then being exercised; (ii) shall be accompanied by payment
in full of the Stock Option Price of said shares; (iii) shall be signed by the
person so exercising the Stock Option; and (iv) in the event that the Stock
Option is being exercised by any person other than the Optionee, will be
accompanied by appropriate written proof of the right of such person to exercise
the Stock Option.
(c) Payment of the Stock Option Price. The Stock Option Price may be
paid to the extent permitted by applicable statutes and regulations: (i) in cash
(including check, bank draft or money order); (ii) in whole shares of the
Company's Common Stock, (iii) by the withho lding of shares of Common Stock
issuable upon such exercise of the Stock Option; or (iv) any combination of the
foregoing methods of payment acceptable to the Company's Board of Directors,
(d) Subsequent Tax Liability. Canadian, United States, state and local
income tax liability resulting from the exercise of Stock Option or the ultimate
-2-
disposition of the Common Stock purchased pursuant to the Stock Option will be
the sole responsibility of the Optionee.
(e) Issuance of Stock. Within a reasonable time from the date of
receipt by the Company of the foregoing notice and all required payments and
other documentation, a certificate or certificates for the shares of Common
Stock as to which the Stock Option will have been so exercised, registered in
the name of the person so exercising the Stock Option and, if deemed necessary
by counsel to the Company, including one or more legends as set forth in
paragraph 6 below, will be issued by the Company and delivered to such person.
All shares issued as provided herein will be fully paid and non-assessable.
4. Rights of Optionee. The Optionee shall have no rights as a stockholder
with respect to any shares of Common Stock covered by the Stock Option until the
Optionee shall have become the holder of record of such shares and no
adjustments shall be made for dividends or other distributions or other rights
as to which there is a record date preceding the date the Optionee becomes the
holder of record of such shares.
5. Transferability. No right or interest of any Optionee in the Stock
Option prior to its exercise shall be assignable or transferable or subjected to
any lien, during the lifetime of the Optionee, either voluntarily or
involuntarily, directly or indirectly, by operation of law or otherwise,
including, without limitation, execution, levy, garnishment, attachment, pledge,
divorce or bankruptcy. Any attempted assignment, transfer, pledge or
hypothecation or other disposition of the Stock Option, other than in accordance
with the terms set forth herein, shall be null and void and of no force or
effect. Notwithstanding the foregoing, in the event of an Optionee's death, an
Optionee's right and interest in the Stock Option shall be transferable by
testamentary will or the laws of decent and distribution, any payment of any
amounts due hereunder shall be made to, and exercise of the Stock Option (to the
extent permitted under this Agreement) may be made by, the Optionee's legal
representatives, heirs or legatees. Such assignee shall be subject to all of the
terms and provisions of this Stock Option with respect to this Agreement.
6. Investment Restrictions. The Optionee acknowledges that he understands:
(a) Securities Not Registered. Neither the Stock Option, the Company's
Common Stock which may be acquired under the Stock Option nor the sale of any of
these secur ities have been registered under the securities laws of the United
States of America or the laws of any other jurisdiction. The Common Shares of
the Company cannot be sold or transferred by the Optionee or any other person or
entity unless they are subsequently registered under applicable laws or an
exemption from registration is then available for the proposed transaction.
Subject to the undertaking of the Company set out in paragraph 7 below, the
Company is not required to register the Common Shares of the Company or to make
an exemption from registration available, accordingly the Optionee must bear the
economic risk if their investment for an indefinite period of time.
-3-
(b) Optionee's Representative. The execution of the Stock Option and
its exercise constitutes and will constitute the Optionee's representation and
warranty that he is acquiring the Common Shares of the Company hereunder for
investment and not with a view of distribution and for the Optionee's own
accounts and that no other person or entity will have any interest in the Common
Stock of the Company.
(c) Configuration Legend. The Company's Common Stock to be acquired
hereunder will constitute "restricted securities" as defined in Rule 144 under
the Securities Act, and the certificates and documents to be issued to represent
the Common Shares will contain a legend denoting the restrictions upon their
sale or transfer under the applicable securities laws reading as follows:
"THESE SECURITIES REPRESENTED BY THIS INSTRUMENT OR DOCUMENT HAVE BEEN
ACQUIRED FOR INVESTMENT, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AS AMENDED (THE "SECURITIES ACT"), HAVE BEEN OFFERED AND
SOLD IN RELIANCE UPON THE EXEMPTION SET FORTH IN SECTION 4(2) OF THE
SECURITIES ACT AND HAVE BEEN SOLD AS "RESTRICTED SECURITIES" AS SUCH
ARE DEFINED IN RULE 144 UNDER THE SECURITIES ACT. WITHOUT SUCH
REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT UPON DELIVERY
TO THE COMPANY ON THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
TO THE EFFECT THAT ANY SUCH TRANSFER WOULD NOT BE IN VIOLAITON OF THE
SECURITIES ACT, APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER."
7. Registration Rights. All of the Company's Common Stock acquired by the
Optionee hereunder shall be subject to the Registration Rights Agreement, a form
of which is attached hereto as Schedule A, if such is entered into by the
Initial Shareholders pursuant to paragraph 14.1 of the Option Agreement. In the
event a Registration Rights Agreement is not entered into pursuant to the Option
Agreement, the Company and the Optionee shall, within Ten (10) business days of
the exercise by the Optionee of all or any part of the Stock Option, enter into
an agreement providing the Optionee with rights identical to those set out in
paragraph 1.3 of the Registration Rights Agreement in Schedule A hereof.
8. Surrender of Agreement. In the event the Stock Option shall be exercised
in whole, this Agreement shall be surrendered to the Company for cancellation.
In the event the Stock Option shall be exercised in part, or a change in the
number of designation of the Common Stock shall be made, this Agreement shall be
delivered by the Optionee to the Company for the purpose of making appropriate
notation thereon, or of otherwise reflecting, in such manner as the Company
shall determine, the partial exercise or the change in the number of designation
of the Common Stock.
-4-
9. Undertaking of the Company. The Company has taken all necessary and
appropriate actions to provide that the grant and issuance of the Stock Option
has been made in accordance with United States and Canadian securities laws and
that the issuance of underlying Common Stock of the Company will be made in
accordance with United States and Canadian securities laws.
10. Counsel. Each party has had the opportunity to obtain separate counsel
of choice. The Company expressly disclaims that it is giving any tax advice to
the Optionee with respect to the grant and exercise of the Stock Option or to
any disposition of the optioned shares. The Optionee acknowledges and accepts
this disclaimer.
11. Indemnification. Each party hereby indemnifies and agrees to hold
harmless the other party from any liability, cost or expense arising from or
related to any act or failure to act of such party which is in violation of this
Agreement.
12. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the Province of Quebec.
13. No Waiver. No waiver of any default under this Agreement shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent default of the same or similar nature.
14. Amendment. This Agreement may be amended only by a written instrument
signed by both parties to this Agreement.
15. Binding Effect. This Agreement is binding upon, and shall inure to the
benefit of, the parties and their respective personal representatives and
permitted successors and assigns.
(SIGNATURES ON NEXT PAGE)
-5-
IN WITNESS WHEREOF, the Company and the Optionee have duly executed this
Stock Option Agreement effective as of the day and year first above written.
COMPANY:
DuraVest, Inc.
By: (s) Xxxxx Xxxxx
------------------------------
Name: Xxxxx Xxxxx
Title: President
OPTIONEE:
(s) Xxxxxxx-Xxxxx Xxxxxx
---------------------------------
(Signature)
Name:
----------------------------
-6-
