CONDITIONAL
STOCK EXCHANGE AGREEMENT
THIS CONDITIONAL STOCK EXCHANGE AGREEMENT ("Agreement") is made and entered
into this 4th day of April 2002, between and among DuraVest, Inc., a Florida
corporation ("DuraVest") and Cardio Management Systems Inc., a corporation
organized under the Canada Business Corporation Act ("Cardio") and Xxxxx Xxxxx,
( "Stockholder").
RECITALS
WHEREAS, the Stockholder is the record owner of all of the outstanding
stock of Cardio; and
WHEREAS, the parties to this Agreement ("Parties") desire to enter into and
complete a "Business Combination" in which Cardio will become a wholly-owned
subsidiary of DuraVest through a stock exchange involving the transfer of the
stock of Cardio owned by the Stockholder of Cardio to DuraVest in exchange for
shares of DuraVest to be issued to the Stockholder; and
WHEREAS, the principal assets of Cardio are shares of the common stock of
Estracure, Inc., a corporation organized under the Canada Business Corporation
Act ("Estracure") and an optional right to acquire additional shares of
Estracure's common stock, and
WHEREAS, the contractual arrangements between Cardio and Estracure provide
that Cardio may not, at any time, acquire more than 50% of the outstanding
common stock of Estracure (which prohibition is designed to protect valuable and
favourable Canadian Tax treatment for Estracure and its shareholders) and
WHEREAS, if the Business Combination is completed the stock of Estracure
owned by Cardio could be considered to be "investment securities" as such are
defined under the Investment Company Act of l940 ("40 Act") and their ownership
by Cardio as a wholly owned subsidiary of DuraVest could cause DuraVest to
become an unregistered inadvertent investment company under the 40 Act, and
WHEREAS, the parties to the Agreement have been advised that the
circumstances of the Cardio investment in Estracure are such that there is a
reasonable possibility that: (I) DuraVest could apply for and obtain a
"no-action" letter from the United States Securities and Exchange Commission
("SEC") under which the Business Combination could be completed without causing
a violation of the 40 Act by DuravVest; or (ii) if DuraVest would acquire
sufficient additional assets so that the Estracure investment would be less than
40% of its total assets less cash items, DuraVest could obtain an opinion of
counsel that the completion of the Business Combination would not cause a
violation of the 40 Act by DuraVest, and
WHEREAS, the Parties desire to enter into this Agreement to set out the
terms and conditions of the subject Business Combination and the conditions
under which it may be completed:
NOW THEREFORE, in consideration of the foregoing and the mutual promises
and covenants contained herein IT HAS BEEN AND IT HEREBY IS AGREED, as follows:
l. Condition Precedent to Completion of Business Combination.
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The "Condition Precedent" to the completion of the Business
Combination shall be the receipt of DuraVest of either.
(i) A "no-action" letter from the SEC that the completion of the
Business Combination with the resultant ownership by DuraVest of
Cardio with its investment in Estracure (with Estracure no being
a "majority owned subsidiary" of Cardio under the 40 Act) will
not cause a violation of the 40 Act; or (ii) an opinion of
counsel that the completion of the Business Combination with the
resultant ownership by DuraVest of Cardio with its investment in
Estracure (with Estracure not being a "majority owned subsidiary"
of Cardio under the 40 Act) will not cause a violation of the 40
Act.
2. Stock Exchange.
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Upon the satisfaction of the Condition Precedent, the Stockholder
hereby agrees to transfer and convey to DuraVest all of the outstanding capital
stock of Cardio in exchange for which DuraVest hereby agrees to issue and
deliver to each Stockholder 5,000,000 shares of DuraVest's $.0001 par value
common stock ("DuraVest Stock"). The DuraVest shares will be issued and
delivered in the names of the Stockholder. The certificates representing the
Cardio shares exchanged hereunder will be properly endorsed, directly thereon or
on an attached stock power, to DuraVest. The certificates involved in the stock
exchange will be delivered at the closing of this Agreement.
3. Closing.
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The "Closing" of this Agreement shall be held on the tenth business
day following the day of satisfaction of the Condition Precedent.
4. Representations and Warranties of Cardio and Stockholders.
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Cardio hereby represents and warrants and the Stockholders hereby
jointly and severally represent and warrant that:
(a) Cardio is validly organized, existing and in good standing
under the laws of Canada with authorized capitalization consisting
solely of shares of common stock of which l,000,000 shares are issued
and outstanding, and the shares to be transferred at the Closing
constitute all of the outstanding shares of Cardio. There are no
outstanding options, contracts, calls, commitments or demands for any
character relating to the authorized but unissued stock of Cardio.
Cardio has no subsidiaries and does not own any interest in any
corporation, partnership or proprietorship except for the shares of
Estracure owned by Cardio.
(b) The shares of Cardio to be transferred at the Closing are
validly issued, fully paid and nonassessable.
(c) Cardio was recently organized and its only financial
transactions to date have been the investment by the stockholders in
Cardio for approximately $2,500,000 (Canadian funds) to purchase the
l,000,000 outstanding shares of Cardio common stock and the incurrence
of expenses of its organization and legal fees for the Estracure
transaction all estimated not to exceed $20,000 (Canadian). The
$2,500,000 invested in Cardio was used to purchase the Estracure
stock. As of the closing of the Agreement, the only changes to its
financial condition will be for the expenses incurred under this
Agreement.
(d) There is no litigation, governmental proceeding or
investigation threatened or in prospect against Cardio or relating to
any of the stock to be transferred.
(e) Cardio has no employees (excluding officers and directors) to
whom salary has been paid immediately prior to the date hereof.
(f) Copies of the articles of incorporation, all amendments
thereto, the bylaws and all minutes of Cardio are contained in the
minute book of Cardio and are the originals or full, true and correct
copies thereof.
(g) The statements made and information given to Duravest
concerning Cardio and the transactions covered by this Agreement are
true and accurate and no material fact has been withheld from
DuraVest.
(h) Stockholders have no knowledge of any developments or
threatened developments of a nature that would materially adverse to
the business of Cardio.
(i) Cardio has the corporate power to carry on its business as
now conducted.
(j) The execution and delivery of this Agreement by Cardio and
the performance by Cardio of its covenants and undertakings hereunder
have been duly authorized by all requisite corporate action, and
Cardio has the corporate power and authority to enter into this
Agreement and to perform the covenants and undertakings to be
performed by it hereunder.
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(k) Neither the execution nor the delivery of this Agreement, nor
the consummation of the transaction herein contemplated, nor
compliance with the terms hereof, will conflict with or result in a
breach of any of the terms, conditions or provisions of the articles
of incorporation or by the by-laws of Cardio, as amended, or any
Agreement or instrument to which Cardio is now a Party.
5. Representations of Each Stockholder.
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The Stockholder represents, warrants and agrees that the shares of
stock of Cardio to be transferred by the Stockholder to DuraVest hereunder are
free and clear of all voting trusts, agreements, arrangements, encumbrances,
liens, claims, equities and liabilities of every nature and Stockholder is
conveying clear and unencumbered title to DuraVest.
6. Representations of DuraVest.
----------------------------
DuraVest hereby makes the following representations and warranties to
the Stockholder, each of which is true as of the date hereof and will be true as
of the Closing with the same effect as though such representations and
warranties have been made on the Closing:
(a) DuraVest is a Corporation duly organized and existing under
and by virtue of the laws of the State of Florida and is in good
standing under the laws thereof.
(b) DuraVest has an authorized capitalization of 80,000,000
shares of common stock, $.0001 par value per share, of which
36,766,640 shares will be issued and outstanding as of the Closing and
20,000,000 shares of preferred stock, $.000l par value, none of which
will be outstanding as of the Closing. DuraVest stock to be issued to
Stockholders hereunder will, upon the issuance thereof, be duly and
validly issued, fully paid and non assessable.
(c) The execution and delivery of this Agreement by DuraVest and
the performance of DuraVest of its covenants and undertakings
hereunder have been duly authorized by all requisite corporate action,
and DuraVest has the corporate power and authority to enter into this
Agreement and to perform the covenants and undertakings to be
performed by it hereunder.
(d) The copies of the articles of incorporation and the by-laws
of DuraVest heretofore delivered to the Stockholders are true and
correct copies of the articles of incorporation and the by-laws of
DuraVest, as amended to date.
(e) DuraVest has delivered to Cardio and the Stockholders copies
of its Annual Report on Form 10-KSB for the year ended December 13,
2001 Since December 3l, 2001 there has been no material adverse change
in DuraVest's condition, financial or otherwise.
(f) Neither the execution nor the delivery of this Agreement, nor
the consummation of the transaction herein contemplated, nor
compliance with the terms hereof, will conflict with or result in a
breach of any of the terms, conditions or provisions of the articles
of incorporation or the by-laws of DuraVest, as amended, or any
agreement or instrument to which DuraVest is now a party.
(g) DuraVest is acquiring the Stockholder's stock of Cardio for
its own account and for investment and not with the view to the
distribution or resale of any thereof.
7. Conditions of Closing by DuraVest.
---------------------------------
All of the obligations of DuraVest under this Agreement are subject to
the fulfillment, prior to or on the Closing of the Agreement, of each of the
following conditions:
Delivery by Stockholder of the following:
(a) Certificates for the stock of Cardio described in Section 1
hereof, endorsed in blank and with signatures guaranteed on a bank or
trust company.
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(b) The complete and correct corporate minute books, articles of
incorporation, by-laws and stock transfer books of Cardio.
(c) A certificate of the Stockholder that all representations and
warranties made jointly and severally by the Stockholder contained in
Section 4 of this Agreement shall be true on and as of the Closing as
though such representations and warranties were made at and as of such
date, and the Stockholder will deliver a certificate that the
representations and warranties made in Section 5 of this Agreement
shall be true on and as of said closing date as though such
representations and warranties were made at and as of such date.
8. Conditions of Closing by Cardio.
-------------------------------
All of the obligations of Cardio and the Stockholder under this
Agreement are subject to the fulfillment, prior to or in the Closing of this
Agreement, of each of the following conditions:
Delivery by DuraVest of the following:
(a) Certificates for the stock of DuraVest described in Section 1
hereof issued on the name of the Stockholder.
(b) A certificate of the President of DuraVest that all
representations and warranties of DuraVest contained in Section 5 of
this Agreement shall be true on and as of the Closing as though such
representation and warranties were made at and as of the Closing.
(c) An opinion of Xxxxxxx X. XxXxxxx, counsel for DuraVest that:
(1) DuraVest is validly organized, existing and in good
standing under the laws of the State of Florida and is duly
qualified as a foreign corporation in good standing in each state
in which such qualification is necessary.
(2) The shares of DuraVest to be issued to the Stockholder
under this Agreement will be validly executed, fully paid and
nonassessable.
(3) This Agreement has been duly and validly executed and
delivered by DuraVest and is a valid and binding agreement upon
DuraVest in accordance with its terms.
(4) All corporate actions required of DuraVest have been
taken, all reports and returns required to be filed by DuraVest
have been filed and, to the best of the knowledge of counsel,
DuraVest has complied with all applicable state, federal and
local laws.
9. Investment Representations, Warranties and Agreements.
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The Stockholder hereby acknowledge that she understands that:
(a) The sale or transfer of DuraVest Stock is severely
restricted.
(b) Neither DuraVest Stock nor the sale thereof have been
registered under the securities laws of the United States of America
or the laws of any other jurisdiction. The DuraVest stock cannot be
sold or transferred by the Stockholder 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. DuraVest is not required to register the DuraVest stock
or to make an exemption from registration available, accordingly the
Stockholder must bear the economic risk of his investment for an
indefinite period of time.
(c) The execution of this Agreement constitutes the Stockholder's
representation and warranty that the Stockholder is requiring the
DuraVest stock hereunder for investment and not with a view to
distribution and for the Stockholder's own account and that no other
person or entity will have any interest in the DuraVest stock.
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(d) The DuraVest stock is being sold and issued by DuraVest as
"restricted securities" as that term is defined under the Securities
Act of 1933, as amended; and the certificates and documents to be
issued to represented the Shares and the securities included thereon
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 "ACT"), HAVE BEEN OFFERED AND SOLD IN
RELIANCE UPON THE EXEMPTION SET FORTH IN SECTION 4(2) OF THE ACT AND
HAVE BEEN SOLD AS "RESTRICTED SECURITIES" AS SUCH ARE DEFINED UNDER
THE 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 VIOLATION OF THE ACT, APPLICABLE STATE SECURITIES LAWS OR
ANY RULE OR REGULATION PROMULGATED THEREUNDER."
(e) The Stockholder has had the opportunity to review the
corporate and financial records of DuraVest and the documents listed
in Section 6(e) of this Agreement and she has have had the opportunity
to question DuraVest through its management and agents and to request
information on matters pertaining to DuraVest and the DuraVest Stock,
and have been furnished with all requested additional documents and
information. The Stockholder has relied solely on the foregoing
information and documents in determining to enter into this Agreement.
(f) The Stockholder hereby acknowledges that an investment in
DuraVest has a high degree of risk including, but not limited to those
described in the materials made available to the Stockholder. DuraVest
is a start-up business and has very limited capital and resources. The
Stockholder acknowledges that she understands that an investment in
the DuraVest Stock is illiquid and highly speculative. The Stockholder
represents that the Stockholder can afford the loss of the entire
investment in the DuraVest stock.
10. Representations to Survive Closing.
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All the terms, conditions, warranties, representations and guarantees
contained in this Agreement shall survive delivery of the shares of common stock
of Cardio transferred hereunder at the Closing hereunder and any investigations
made by or on behalf of DuraVest at any time.
11. Notices.
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Any notice or communication necessary or desirable hereunder shall be
considered sufficient and delivery thereof shall be deemed complete if delivered
in person or mailed by registered mail on the part of DuraVest to Xxxxx Xxxxx,
President, DuraVest, Inc., 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, X0X
0X0, Xxxxxx, on the part of Cardio to Xxxxx Xxxxx, President at the same address
and to the Stockholder to the same addresses, or to such other address as any
party may hereafter specify in writing as that party's address to the other
parties.
12. Counterparts.
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Separate counterparts of this Agreement may be signed and together
shall constitute one agreement.
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13. Successors.
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This agreement shall be binding upon and inure in the benefit of the
heirs, next of kin, legatees, legal representatives, successors and assigns of
the Parties.
14. Entire Agreement.
----------------
This agreement constitutes the entire agreement among the Parties
pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings of the Parties in conjunction
herewith.
15. No Broker.
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The Parties represent and warrant that there is no broker or finder
with whom they have dealt in this transaction.
16. Further Assurances.
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Upon request from time to time Stockholders shall execute and deliver
all documents, make all rightful oaths, testify in any proceedings and do all
other acts which may be necessary or desirable, in the opinion of counsel for
DuraVest, to perfect of record the title of DuraVest, or any successor of
DuraVest, to the property of Cardio or the shares transferred at the Closing, or
to aid in the prosecution, defense or other litigation of any rights arising
therefrom, all without further consideration but at the expense of DuraVest
unless arising out of the default of Stockholders.
17. Severability.
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Stockholders and DuraVest hereby agree and affirm that none of the
above provisions is dependent on the validity of any other provision and
invalidity as to any provision or any part thereof shall not affect any other
provision.
18. Term.
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If the condition precedent is not satisfied June 30, 2003, this
Agreement shall terminate unless extended by DuraVest for an additional one year
term by written notice to Cardio and the Stockholder.
In witness whereof, the parties have executed this Agreement the day
and year first above written.
Stockholder:
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
[Seal] DuraVest, Inc.
By: /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx, President
[Seal] Cardio Management Systems, Inc.
By: /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx, President
