OPTION AGREEMENT
----------------
THIS AGREEMENT made and entered into as of the 14th day of January, 2004.
AMONGST: DURAVEST, INC., a Florida corporation with a registered office located
at 00 Xxxxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx Xxxxxx, X0X
0X0;
(hereinafter called "Duravest")
INNOVACOR, LIMITED PARTERNSHIP, limited partnership duly formed under
the laws of Quebec, having a place of business at 0000 Xxxxxxxx Xxxxxx
Xxxx, Xxxxxxxx, Xxxxxx, X0X 0X0, acting through and represented for
the purposes hereof by its general partner, Innovacor Management Inc.,
represented by Xx. Xxxxxxx Xxxxx Xxxxxx, its President, duly
authorized as he so declares; (hereinafter called "Innovacor")
CARDIO AT WORK INC., corporation duly incorporated under the laws of
Canada, having its head office at X.X. Xxx 000, Xxxxx-Xxxxx Xxxxxxx
X0X 0X0, represented for the purpose hereof by Xx. Xxxx-Xxxxxxxx
Xxxxxxx, its President, duly authorized as he so declares;
(hereinafter called "CAT")
XX. XXX XXXXXXXXX, residing and domiciled at 5101 Xxxxxx, Penthouse 0,
0x Xxxxx, Xxxxxxxx, Xxxxxx, X0X 0X0; (hereinafter called "Xxxxxxxxx")
ESTRACURE INC., corporation duly incorporated under the laws of
Canada, having its head office at 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxx, X0X 0X0, represented for the purpose hereof by Xx. Xxxx-
Xxxxxxxx Xxxxxxx, its President, duly authorized as he so declares;
(hereinafter called "Estracure")
RECITALS
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WHEREAS pursuant an Agreement in Principle dated November 16, 2004 (the
"AIP") the parties entered into an agreement which when closed will vest voting
control of Estracure in Cardio Management Systems Inc. ("Cardio");
AND WHEREAS pursuant to Section 3.1 of the AIP, Innovacor, CAT and
Xxxxxxxxx (collectively the "Initial Shareholders ") and Duravest agreed to
enter into this Option Agreement which would permit the Initial Shareholders,
collectively and not individually, to have the right to exchange all but not
less than all of their Estracure Shares with Duravest;
AND WHEREAS the parties desire to enter into this Agreement pursuant to
Section 3.1 of the AIP, and to set out the terms and conditions under which the
Initial Shareholders Option 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:
ARTICLE 1
DEFINITION AND INTERPRETATION
-----------------------------
1.1 Definitions
The following words and expressions, when used in this Agreement, its
schedules and any and all documents ancillary hereto, shall have, unless
incompatible with the context, the following meanings:
1.1.1 "Agreement" means this Option Agreement;
1.1.2 "AIP" means the Agreement In Principle dated November 16, 2004;
1.1.3 "Appraisal" means the appraisals of the Fair Market Value of Estracure
prepared pursuant to Article 4 hereof;
1.1.4 "Appraiser" means a person who is a Chartered Business Evaluator of
the Canadian Institute of Chartered Evaluators;
1.1.5 "business day" means a day which is not a Saturday or Sunday or a
civic or statutory holiday in the City of Montreal, Quebec;
1.1.6 "Closing Date" means the date on which the Initial Shareholders Option
will be closed;
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1.1.7 "Common Shares" means the common shares in the capital of Duravest, as
such shares exist at the close of business on the date of execution
and delivery of this Agreement provided that in the event of a
subdivision, redivision, reduction, combination or consolidation
thereof, or successive such subdivisions, redivisions, reductions,
combinations or consolidations, then "Common Shares" shall thereafter
mean the shares resulting from such subdivision, redivision,
reduction, combination or consolidation;
1.1.8 "Currency" unless otherwise indicated, all amounts mentioned in
dollars herein are in Canadian currency;
1.1.9 "Duravest" means Duravest, Inc., and includes any successor
corporation to or of Duravest;
1.1.10 "Duravest Market Capitalization" means an amount equal to the Market
Price multiplied by the number of Common Shares outstanding at the
Closing Date, such amount converted into Canadian Dollars at the spot
rate for U.S. and Canadian Dollars as quoted and published by the Main
Branch of the Xxxxx Xxxx xx Xxxxxx, Xxxxxxx, Xxxxxxx, Xxxxxx at the
close of business on the last trading day immediately preceding the
Closing Date;
1.1.11 "Estracure " means Estracure Inc. and includes any successor
corporation to or of Estracure;
1.1.12 "Estracure Shares" means the common shares in the capital stock of
Estracure, as well as all common shares issued following the exchange,
conversion, division, consolidation, reclassification or any other
modification of or change to such shares. Common shares include the
common shares of the capital of Estracure that are currently issued
and outstanding as well as the common shares and special common shares
that may be issued in the future and that are outstanding on the date
of the occurrence of the event that requires the determination of the
number of common shares of Estracure, and without limitation means all
of the Estracure shares owned or controlled by the Initial
Shareholders at the time of exercise of the Initial Shareholders
Option;
1.1.13 "Exchange Shares" shall mean that number of Common Shares of Duravest
to be issued to the Initial Shareholders upon the exercise of the
Initial Shareholders Option as provided for in Article 7, Section 7.3;
1.1.14 "Exchange Shares Formula" means the formula set out in Article 7,
Section 7.5.4 of this agreement to determine the number of Common
Shares in the capital of Duravest to be issued to the Initial
Shareholders upon closing of the Initial Shareholders Option;
1.1.15 "Fair Market Value" -means the fair market value of Estracure as a
going concern to be determined in accordance with Article 4 of this
Agreement;
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1.1.16 "Independent Committee" means the three (3) person committee to be
struck by the Initial Shareholders and Duravest which will prepare and
deliver the Report as contemplated in Article 3, Sections 3.2 and 3.3
of this Agreement;
1.1.17 "Initial Shareholders " means collectively Innovacor, CAT and
Xxxxxxxxx;
1.1.18 "Initial Shareholders Option" means the right of the Initial
Shareholders, collectively and not individually, to exchange all but
not less than all of their Estracure Shares with Duravest in
accordance with the terms hereof;
1.1.19 "Market Price" means the sixty (60) day weighted average trading price
of the Common Shares on the OTC:BB (or, if the Common Shares of
Duravest no longer trade on the OTC:BB, on such stock exchange or
other self-regulatory organization (such as Nasdaq) on which the
Common Shares are listed as may be selected for such purpose by the
directors of Duravest) with the last of the said sixty (60) days
falling on Thirtieth (30th) day following delivery to Duravest and the
Initial Shareholders of the Report pursuant to Article 3, Section
3.3of this Agreement;
1.1.20 "Option" means where the context permits the Initial Shareholders
Option;
1.1.21 "person" means any individual, corporation, company, partnership,
association or trust;
1.1.22 "Purchase Price" shall have the meaning ascribed in Article 7, Section
7.2;
1.1.23 "Purchased Shares" where the context permits, means all of the
Estracure Shares owned or controlled by the Initial Shareholders to be
exchanged for Common Shares of Duravest as contemplated by this
Agreement;
1.1.24 "Purchased Share Percentage " means the percentage, rounded to the
nearest two decimal places, represented by the following equation:
X - (59,319 + Y)
---------------
Z
where "X" is the number of Purchased Shares at the Closing Date, "Y"
is the number of options to acquire Estracure Shares outstanding at
the Closing Date and "Z" is the total number of Estracure Shares
outstanding at the Closing Date;
1.1.25 "Registration Statement " means the registration statement to be filed
with the United States Securities and Exchange Commission (the "SEC")
by Duravest pursuant to the United States Securities Act of 1933 as
amended (the "Securities Act") to register the Common Shares of the
Initial Shareholders resulting from the exercise of the Initial
Shareholders Option.
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1.1.26
"Report" means the report to be prepared and delivered by the Independent
Committee to the Initial Shareholders and Duravest pursuant to Article 3,
Section 3.3 hereof;
1.1.27 "Subsidiary" or "Subsidiary Corporation" means any
corporation which more than 50% of the outstanding voting shares are owned,
directly or indirectly, by or for Duravest, provided that the ownership of such
shares confers the right to elect at least a majority of the board of directors
of such corporation and includes any corporation in like relation to a
Subsidiary.
1.2 Number and Gender
Words importing the singular number only shall include the plural and vice
versa and words importing the masculine gender shall include the feminine gender
and words importing persons shall include firms and corporation and vice versa.
1.3 Headings, etc.
The division of this Agreement into Articles and sections and the
insertions of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement.
1.4 Governing Law
This Agreement shall be governed by and interpreted in accordance with the
laws of the Province of Quebec and the laws of Canada applicable thereto.
1.5 Day Not a Business Day
In the event that any day on or before which any action is required to be
taken hereunder is not a business day, then such action shall be required to be
taken on or before the requisite time on the next succeeding day that is a
business day.
ARTICLE 2
INITIAL SHAREHOLDERS OPTION
---------------------------
2.1 The Initial Shareholders, collectively and not individually, will have the
right to exchange all but not less than all of their Estracure Shares with
Duravest for the Purchase Price.
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2.2 The Purchase Price will be satisfied by Duravest issuing that number of
Common Shares of Duravest based upon the Market Price and calculated in
accordance with the Exchange Shares Formula.
2.3 The Initial Shareholders Option may only be exercised by the Initial
Shareholders after the date upon which the conditions precedent set out in
Article 3 have been met and in any event, only between March 1st, 2005 and
September 30th, 2005.
ARTICLE 3
CONDITIONS PRECEDENT OF EXERCISE OF
THE INITIAL SHAREHOLDERS OPTION
-------------------------------
3.1 The Initial Shareholders Option can only be exercised from and after the
date upon which Estracure will have provided Duravest with evidence satisfactory
to Duravest acting reasonably that (i) the human clinical trials presently being
undertaken by Estracure have had a positive scientific outcome, (ii) the human
clinical trials presently being undertaken by Estracure have provided proof of
va lidation and (iii) the science of Estracure that is the subject of said
trials is commercially viable. In this respect, the parties agree that the
evaluation of such evidence will be effected by the Independent Committee
pursuant to the provisions of Schedule A annexed to this Agreement.
3.2 The Independent Committee will deliver to the Initial Shareholders and
Duravest the Report containing its findings and conclusions, such findings and
conclusions will be conclusively binding on both Duravest and the Initial
Shareholders.
3.3 The cost of the Independent Committee including the preparation and delivery
of its Report will be borne equally by Duravest and Estracure.
3.4 If the Independent Committee's Report concludes that the human clinical
trials presently being undertaken by Estracure have not had a positive
scientific outcome, have not have provided proof of validation or that the
science of Estracure that is the subject of said trials is not commercially
viable, the Initial Shareholders Option will cease and expire and all rights
granted to the Initial Shareholders pursuant to the Initial Shareholders Option
contained in Article 2 above will no longer be in full force and effect.
3.5 Acknowledgements
The parties acknowledge that:
(a) The Initial Shareholders may deliver to Duravest an Exercise Notice as
provided for in Article 6 provided that Estracure delivers, concurrently with
the delivery of the Exercise Notice by the Initial Shareholders, the necessary
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information to the Independent Committee to allow it to undertake its mandate
pursuant to Section 3.1 and Schedule A.
(b) The Appraisal of the Fair Market Value of Estracure will not be
commissioned as provided for in Article 4 below unless the Report of the
Independent Third Party concludes that (i) the human clinical trials presently
being undertaken by Estracure have had a positive scientific outcome, (ii) said
trials have provided proof of validation and (iii) the science of Estracure that
is the subject of said trials is commercially viable.
ARTICLE 4
DETERMINATION OF FAIR MARKET VALUE OF ESTRACURE
-----------------------------------------------
4.1 In the event that the Report of the Independent Committee to be provided to
the parties as per Article 3 above concludes that (i) the human clinical trials
presently being undertaken by Estracure have had a positive scientific outcome,
(ii) said trials have provided proof of validation and (iii) the science of
Estracure that is the subject of said trials is commercially viable, the parties
agree that the Exercise Notice of delivered pursuant to Section 3.5 (a) above
will be deemed to be the Exercise Notice to be delivered pursuant to Article 6
of this Agreement and that the delivery date of the Exercise Notice shall be the
date of the delivery of the Report to Duravest and the Initial Shareholders.
4.2 During the Thirty (30) days following the delivery of the Exercise Notice by
the Initial Shareholders as provided for in Article 6, the Appraisals will be
prepared pursuant to Schedule B to determine the Fair Market Value of Estracure.
4.3. The cost of the Appraisals will be borne equally by Duravest and Estracure.
4.4 The Appraisals together with their findings and conclusions as to Fair
Market Value of Estracure will be conclusively binding on both Duravest and the
Initial Shareholders.
4.5 The parties agree that in making the determination of the Fair Market Value
of Estracure the Appraisers will:
(a) be given access to and copies of such documents as the Appraisers shall
request and without limitation a copy of the Report;
(b) take into account the value of Estracure as a going concern, having
regard to:
(i) the tax position of Estracure based on the Initial Shareholders
position, including the market value, book value and tax value of the assets and
liabilities owned or owing by Estracure and when taxes are payable.
(ii) the existing and contingent liabilities of Estracure, and in
respect of the contingent liabilities of Estracure, the Appraisers shall obtain
the opinion or advice of the corporate Solicitors for Estracure, provided that
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the Appraisers shall incur no personal liability or responsibility for deciding
in good faith the weight to be placed upon such opinion or advice;
(iii) not making any provision for discounting the value of the
Estracure Shares owned by the Initial Shareholders notwithstanding that such
Estracure Shares do not confer control of the business affairs of Estracure or
represent a minority interest in Estracure;
(c) consider any written representations of which any one or all of the
Initial Shareholders or Duravest may make;
ARTICLE 5
CLOSING
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5.1 The closing of this Agreement will be no later than THIRTY (30) DAYS
following the delivery of the Appraisals to Duravest and the Initial
Shareholders.
ARTICLE 6
NOTICE OF EXERCISE OF THE INITIAL SHAREHOLDERS OPTION
-----------------------------------------------------
6.1 To exercise the Option, the Initial Shareholders shall deliver to Duravest a
written notice (the "Exercise Notice") that they wish to collectively exercise
the Option and will deliver to Duravest the Independent Committee's Report as
provided for in Section 4.1.
ARTICLE 7
PURCHASED SHARES, PURCHASE PRICE AND PAYMENT
--------------------------------------------
7.1 Transfer of Purchased Shares
The Initial Shareholders covenant and agree that they will transfer and
assign the Purchased Shares to DuraVest and covenant and agree with DuraVest to
take such steps and to do such things as may be necessary and expedient to cause
Estracure to enter Duravest upon the books of Estracure as a holder of record of
the Purchased Shares and to issue one or more share certificates representing
the Purchased Shares to Duravest.
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7.2 Purchase Price
7.2.1 Subject to 7.2.2, the aggregate Purchase Price for the Purchased Shares
will be the greater of (i) Fair Market Value of Estracure and (ii) $31,000,000
CDN, multiplied by Purchased Share Percentage. The Purchase Price for each
Purchased Share will be the aggregate Purchase Price divided by the number of
Purchased Shares.
7.2.2 The parties agree that the aggregate Purchase Price for the Purchased
Shares will in no event exceed an amount equal to 80% of the Duravest Market
Capitalization multiplied by Purchased Share Percentage.
7.3 Payment of Purchase Price Duravest shall satisfy the Purchase Price by
issuing to the Initial Shareholders that number of Common Shares of Duravest
based upon the Market Price (the "Exc hange Shares") as calculated by the
Exchange Shares Formula set out in Section 7.5 below.
7.4 Duravest covenants and agrees with the Initial Shareholders to take or cause
to be taken such steps as are necessary and expedient to:
(a) issue the Exchange Shares to the Initial Shareholders as fully paid and
nonassessable shares of Duravest;
(b) record the Initial Shareholders on the books of Duravest as the holder of
record of the Exchange Shares; and
(c) issue one or more certificates representing the Exchange Shares to the
Initial Shareholders.
7.5 Acknowledgements
7.5.1 The parties acknowledge that the common shares of Duravest presently trade
OTC:BB in U.S. Dollars and that the Purchase Price will be in Canadian Dollars.
7.5.2 The Purchase Price shall be satisfied by the issuance of a number of
Common Shares of Duravest equal to the Purchase Price, converted into U.S.
Dollars pursuant to Section 7.5.3, divided by the Market Price.
7.5.3 The conversion of the Purchase Price will be based upon the spot rate for
U.S. and Canadian Dollars as quoted and published by the Main Branch of the
Xxxxx Xxxx xx Xxxxxx, Xxxxxxx, Xxxxxxx, Xxxxxx at the close of business on the
last trading day immediately preceding the delivery of the Report by Independent
Committee to Duravest and the Initial Shareholders.
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7.5.4 Exchange Shares Formula Example
For greater certainty, the parties agree that the following example of the
Exchange Shares Formula would be utilized to determine that number of Common
Shares of Duravest to be issued to the Initial Shareholders on the closing of
this Agreement:
Market Price of DuraVest's Common Shares $ 1.00 USD
Purchase Price of the Purchased Shares $15,000,000 CDN
Spot Rate for a CDN Dollar against USD: CDN$0.8382
Conversion CDN Dollars to US Dollars: $15,000,000 CDN x 0.8382 = $12,573,000 USD
Number of Duravest Shares to be issued: 12,573,000
ARTICLE 8
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF ESTRACURE AND THE INITIAL SHAREHOLDERS
-----------------------------------------
8.1 Estracure and the Initial Shareholders hereby jointly and severally
represent and warrant to Duravest that, as of the date hereof:
(a) Estracure is validly organized, existing and in good standing under the
laws of Canada with an authorized capital consisting of an unlimited number of
common shares, special common shares, Class A "Preferred" Shares and Class B
"Preferred" Shares, of which 1,482,966 common shares are issued and outstanding.
(b) 740,000 common shares are owned or controlled by the Initial
Shareholders and are the shares to be transferred at the Closing, constituting
all of the outstanding shares owned by the Initial Shareholders of Estracure;
(c) there are no outstanding options, contracts, calls, commitments or
demands of any character relating to the authorized but unissued stock of
Estracure. Estracure has no subsidiaries and does not own any interest in any
corporation, partnership or proprietorship.
(d) the Estracure Shares to be transferred by the Initial Shareholders at
the Closing will be validly issued, fully paid and non-assessable.
(e) There is no litigation, governmental proceeding or investigation
threatened or in prospect against Estracure or relating to any of the Estracure
Shares to be transferred.
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(f) Estracure has no employees (excluding officers and directors) to whom
salary has been paid immediately prior to the date hereof, other than those
disclosed to Duravest.
(g) Copies of the articles of incorporation, all amendments thereto, the
bylaws and all minutes of Estracure are contained in the minute book of
Estracure and are the originals or full, true and correct copies thereof.
(h) The statements made and information given to Duravest concerning
Estracure and the transactions covered by this Agreement are true and accurate
and no material fact has been withheld from Duravest.
(i) Other than in respect of research projects currently undertaken or
known by Innovacor or Xxxx-Xxxxxxxx Xxxxxxx whose eventual commercial
applications may be aimed at the same market as those of Estracure's, the
Initial Shareholders have no knowledge of any developments or threatened
developments of a nature that would be materially adverse to the business of
Estracure.
(j) Estracure has the corporate power to carry on its business as now
conducted;
(k) The execution and delivery of this Agreement by Estracure and the
performance by Estracure of its covenants and undertakings hereunder have been
duly authorized by all requisite corporate action, and Estracure has the
corporate power and authority to enter into this Agreement and to perform the
covenants and undertakings to be performed by it hereunder.
(l) 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
Estracure, as amended, or any Agreement or instrument to which Estracure is now
a party.
8.2 Representations of Each Initial Shareholder
Except for the Amended and Restated Unanimous Shareholders Agreement of
Estracure dated as of the date hereof, each Initial Shareholder represents,
warrants and agrees that the Estracure Shares to be transferred by the Initial
Shareholders to Duravest hereunder are free and clear of all voting trusts,
agreements, arrangements, encumbrances, liens, claims, equities and liabilities
of every nature and each Initial Shareholder is conveying clear and unencumbered
title to Duravest.
ARTICLE 9
REPRESENTATIONS OF DURAVEST
---------------------------
9.1 Duravest hereby makes the following representations and warranties to the
Initial Shareholders, 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:
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(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 common stock,
$.0001 par value per share, of which as of the date of this Agreement 36,766,640
Common Shares will be issued and outstanding; and 20,000,000 shares of preferred
stock, $.0001 par value, none of which will be outstanding as of the Closing.
The Common Shares of Duravest to be issued to the Initial Shareholders 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 Initial Shareholders 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 Estracure and the Initial Shareholders copies of
its Form 10-QSB for the quarterly period ending September 30, 2004.
(f) DuraVest will deliver to Estracure and the Initial Shareholders copies of
its Annual Report on Form 10-KSB for the year ended December 31, 2004 the same
time such Annual Report is filed with the SEC. Since September 30, 2004, there
have been no material adverse change in Duravest's condition, financial or
otherwise.
(g) 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.
(h) Duravest is acquiring the Estracure Shares from the Initial Shareholders for
its own account and for investment and not with the view to the distribution or
resale of any thereof.
(i) Duravest has taken all necessary and appropriate actions to provide that the
grant and issuance of the 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.
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ARTICLE 10
CONDITIONS OF CLOSING BY DURAVEST
---------------------------------
10.1 All of the obligations of Duravest under this Agreement are subject to the
fulfillment, prior to or on the Closing of the Agreement, and without limitation
the fulfillment of the Conditions Precedent set out in Article 3, and of each of
the following conditions:
Delivery by the Initial Shareholders of the following:
(a) Certificates for the Estracure Shares described in Section 7.1 above
endorsed in blank with signatures guaranteed by a bank or trust company;
(b) The complete and correct corporate minute books, articles of incorporation,
bylaws and stock transfer books of Estracure;
(c) A certificate of the Initial Shareholders that all representations and
warranties made jointly and severally by the Initial Shareholders as contained
in Article 8 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 Initial
Shareholders will deliver certificates that the representations and warranties
in Article 8 of this Agreement shall be true on and as of the said Closing Date
as though such representations and warranties were made at and as of such date.
ARTICLE 11
CONDITIONS OF CLOSING BY ESTRACURE AND THE INTIAL
-------------------------------------------------
SHAREHOLDERS
------------
11.1 All of the obligations of Estracure and the Initial Shareholders under this
Agreement are subject to the fulfillment, prior to or on the Closing of this
Agreement, each of the following conditions:
Delivery by Duravest of the following:
(a) Certificates for the Common Shares of Duravest described in Article 7 hereof
issued in the name of the Initial Shareholders or as they may direct on Closing;
(b) A certificate of the President of Duravest that all representations and
warranties of Duravest contained in Article 9 of this Agreement shall be true on
and as of the Closing as though such representations and warranties were made at
and as of the Closing;
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(c) An opinion of Xxxxxxx X. XxXxxxx, Counsel for Duravest, that:
(i) 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;
(ii) The Common Shares of Duravest to be issued to the Initial Shareholders
under this Agreement will be validly executed, fully paid and non-assessable;
(iii) 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.
(iv) All corporate actions required by 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.
ARTICLE 12
INVESTMENT REPRESENTATIONS, WARRANTIES AND AGREEMENTS
-----------------------------------------------------
12.1 The Initial Shareholders hereby acknowledge that they understand that:
(a) The sale or trans fer of the Common Shares of Duravest is severely
restricted.
(b) Neither the Common Shares of Duravest 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 Common Shares of Duravest cannot be sold or
transferred by the Initial Shareholders 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 Duravest set out in Section 14.1 of this Agreement, Duravest is
not required to register the Common Shares of Duravest or to make an exemption
from registration available, accordingly the Initial Shareholders must bear the
economic risk of their investment for an indefinite period of time.
(c) The execution of this Agreement constitutes the Initial Shareholders'
representation and warranty that the Initial Shareholders are acquiring the
Common Shares of Duravest hereunder for investment and not with a view of
distribution and for the Initial Shareholders' own accounts and that no other
person or entity will have any interest in the Common Shares of Duravest.
(d) The Common Shares of Duravest being sold and issued by Duravest are
"restricted securities" as defined in Rule 144 under the Securities Act, as
amended; and the certificates and documents to be issued to represent the Common
Shares will
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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."
(e) The Initial Shareholders have had the opportunity to review the corporate
and financial records of Duravest and the documents listed in Article 9,
Sections 9.1 (e) and (f) of this Agreement and they have had the opportunity to
question Duravest through its management and agents and to request information
on matters pertaining to Duravest and the Common Shares of Duravest, and have
been furnished with all requested additional documents and information. The
Initial Shareholders have relied solely on the foregoing information and
documents in determining to enter into this Agreement.
(f) The Initial Shareholders hereby acknowledge 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 Initial Shareholders. Duravest is a start-up
business and has very limited capital and resources. The Initial Shareholders
acknowledge that they understand that an investment in the Common Shares of
Duravest is illiquid and highly speculative. The Initial Shareholders represent
that the Initial Shareholders can afford the loss of their entire investment in
the Common Shares of Duravest.
ARTICLE 13
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
------------------------------------------
13.1 The representations and warranties made herein and in any document,
certificate or other instrument accessory hereto shall continue in full force
and effect as of the Closing Date and shall survive and will continue to be in
full force and effect for a period of TWO (2) YEARS following the Closing of
this Agreement.
-15-
ARTICLE 14
GENERAL PROVISIONS
------------------
14.1 REGISTRATION RIGHTS AGREEMENT
Within Five (5) business days of the delivery of the Report to Duravest and the
Initial Shareholders setting out that (i) the human clinical trials presently
being undertaken by Estracure have had a positive scientific outcome, (ii) the
human clinical trials presently being undertaken by Estracure have provided
proof of validation and (iii) the science of Estracure that is the subject of
said trials is commercially viable, the Initial Shareholders and Duravest shall
execute and deliver to one another a Registration Rights Agreement in the form
attached hereto as Exhibit C hereto.
14.2 CLOSING
The parties declare that the closing of this Agreement and all transactions
relating thereto will take place at the registered office of Xxxxxx X'Xxxx
s.e.n.c, 0000 Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxxx, X0X 0X0. At such closing
session, the representatives of all parties involved shall execute and deliver
the documents listed on the closing agenda. Such documents shall be deemed not
to have been executed and the transactions shall be deemed not to have been
concluded until all closing documents are executed by all parties concerned.
14.3 NO BROKER
Each party represents and warrants to the other that the negotiations with
respect to this Agreement and the operations to give effect thereto were
undertaken and performed directly and without the intervention of any person,
inc luding without limitation any broker.
14.4 PRESS RELEASE
The parties acknowledge that Duravest is required by the timely disclosure rules
and regulations of the SEC to issue press releases from time to time which
Duravest in its uncontrolled discretion will file on a timely basis in reference
to this Agreement and other ancillary matters relevant thereto. Notwithstanding
the preceding, the text of any such press release relating to Estracure will be
submitted for prior approval to the Initial Shareholders, such approval not to
be unreasonably withheld.
14.5 NOTICES
All notices or other communications required by this Agreement must be in
writing and shall be delivered by hand or sent by courier, facsimile or email as
follows:
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To the Initial Shareholders at: Innovacor Management Inc.
X0000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxx, Xxxxxx X0X 0X0
Attention: Xx. Xxxxxxx Xxxxx Belair, President
Telephone: 000-000-0000
Facsimile: 000-000-0000
E-Mail: Xxxxxxx.Xxxxx.Xxxxxx@xxx-xxx.xxx
To Duravest at: Duravest, Inc.
Attention: Xx. Xxxxxxx X. Xxxxxxx, Secretary
00 Xxxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx Xxxxxx X0X 0X0
Telephone: 000-000-0000
Facsimile: 000-000-0000
E-Mail: xxxxxxx.xxxxxxx@xxxxxxxxx.xx
With a copy to: Xxxxxx, X'Xxxx
0000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxx Xxxxxx X0X 0X0
Attention: Xx. Xxxxxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
E-Mail: xxxxxxxx@xxxxxxxxxxx.xxx
To Estracure at: Estracure Inc.
0000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxx, Xxxxxx X0X 0X0
Attention: Xx. Xxxxxxx Xxxxx Xxxxxx, President
Telephone: 000-000-0000
Facsimile: 000-000-0000
E-Mail: Xxxxxxx.Xxxxx.Xxxxxx@xxx-xxx.xxx
With a copy to: Xxxxxx Xxxxxxx
0000 Xxxx-Xxxxxxxx Blvd. West
Suite 2500
Montreal, Quebec Canada H3B 4Y1
Attention: Xx. Xxxxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
E-Mail: xxxxxxx@xxxxxx.xx
Such notice shall be deemed to have been given FIVE (5) business days after the
date it was mailed, or at the time of delivery by courier, facsimile or e-mail,
whichever is earlier.
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14.6 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and enure to the benefit of the heirs,
executors, legatees, legal representatives, successors and assigns of the
parties.
14.7 ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement amongst the parties pertaining
to the subject matter hereof and supercedes all prior and contemporaneous
agreements and understandings of the parties in conjunction herewith.
14.8 PROFESSIONAL FEES
Each party will be responsible for and undertakes to pay all reasonable legal
and other professional fees and costs it incurs in connection with the
preparation, negotiation and implementation of this Agreement and any other
agreement ancillary thereto.
14.9 FURTHER ACTS & DEEDS
The parties hereto agree to execute all such further acts and deeds as may be
necessary or essential in the execution of this Agreement. Upon request from
time to time, the Initial Shareholders shall execute and deliver all documents,
testify in any proceedings and do all other acts which may be necessary or
desirable, in the opinion of counsel for Duravest, to perfect the record and
title of Duravest, or any successor of Duravest, to the Estracure Shares to be
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 the Initial
Shareholders.
14.10 LANGUAGE
The parties hereto agree that this Agreement be drawn in the English language.
Les parties aux presentes conviennent que le present contrat soit redige en
anglais.
14.11 COUTERPARTS AND FAX SIGNATURES
This Agreement may be executed in one or more counterparts each of which so
executed shall constitute an original and all of which together shall constitute
one and the same agreement.
14.12 SEVERABILITY
The Initial Shareholders 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.
14.13 AMENDMENTS
The provisions of this Agreement may be modified or amended solely by written
instrument duly signed by the parties hereto.
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(signatures appear on next page)
-19-
IN WITNESS WHEREOF, THE PARTIES HAVE SIGNED THIS AGREEMENT STATING THE
TRANSACTION WHICH HAS INTERVENED AT THE PLACE AND ON THE DATE FIRST MENTIONED.
INNOVACOR, LIMITED CARDIO AT WORK INC.
PARTNERSHIP, per
Innovacor Management Inc.,
its general partner
Per: (s) Xxxxxxx Xxxxx Belair Per: (s) Xxxx-Xxxxxxxx Xxxxxxx
------------------------- -------------------------
Xxxxxxx Xxxxx Xxxxxx Xxxx-Xxxxxxxx Xxxxxxx
ESTRACURE INC.
Per: (s) Xxxx-Xxxxxxxx Xxxxxxx
-------------------------
Xxxx-Xxxxxxxx Xxxxxxx
DURAVEST, INC.
(s) Xxx Xxxxxxxxx Per: (s) Xxxxx Xxxxx
----------------------------- -------------------------
XXX XXXXXXXXX Xxxxx Xxxxx
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SCHEDULE A
----------
STRIKING OF THE INDEPENDENT COMMITTEE
1. The Independent Committee shall be comprised of three (3) members (each, a
"Member").
2. After February 1st 2005 and before March 1st 2005,
2.1. each of Duravest and the Initial Shareholders shall notify the other
of the name and contact information of its designated Member; and
2.2. these two (2) Members shall agree on an independent third Member and
notify Duravest and the Initial Shareholders of the identity and the
contact information in respect of such third Member.
WORKING OF THE INDEPENDENT COMMITTEE
1. Within Fifteen (15) days of the Independent Committee's receipt from
Estracure of the information necessary to the execution of the Independent
Committee's mandate hereunder, the Independent Committee shall deliver the
Report to Duravest and to the Initial Shareholders setting out the
Independent Committee's opinion, either unanimous or by majority, either:
1.1. (i) the human clinical trials presently being undertaken by Estracure
have had a positive scientific outcome, (ii) the human clinical trials
presently being undertaken by Estracure have provided proof of
validation and (iii) the science of Estracure that is the subject of
said trials is commercially viable; or
1.2. (i) the human clinical trials presently being undertaken by Es tracure
have not had a positive scientific outcome, (ii) the human clinical
trials presently being undertaken by Estracure have not provided proof
of validation or (iii) the science of Estracure that is the subject of
said trials is not commercially viable.
2. In the event the Report is not delivered within the Fifteen (15) day delay
set forth in Section 1 above, the last Member named shall, within the Five
(5) days following the expiry said Fifteen (15) day delay, prepare and sign
the Report as if he were the sole Member of the Independent Committee and
shall deliver the Report to Duravest and to the Initial Shareholders.
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SCHEDULE B
----------
APPRAISALS
----------
1. Duravest and the Initial Shareholders agree that the Appraisers shall be
selected from the following list:
KPMG
Xxxxx Xxxxxxx
Ernst & Young
Xxxxxx Xxxxxx Deloitte & Touche
PricewaterhouseCoopers
2. After February 1st 2005 and before March 1st 2005, the names of Two (2)
Appraisers shall be drawn at random from those listed above (the "Named
Appraisers"), such drawing to be effected in the presence of a
representative of Duravest and of the Minority Shareholders.
3. Upon their selection, representatives of Duravest and the Initial
Shareholders shall meet with the Named Appraisers and advise of their
mandate.
4. In the Thirty (30) days following the Named Appraisers' receipt of the
Report, each of the Named Appraisers shall prepare an Appraisal in
accordance with the terms of this Agreement and deliver same to Duravest
and to the Initial Shareholders.
5. Duravest and the Initial Sha reholders agree that the Fair Market Value of
Estracure for the purposes of this Agreement shall be the average of the
Fair Market Values of Estracure set out in the Appraisals received from the
Named Appraisers.
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SCHEDULE C
----------
FORM OF REGISTRATION RIGHTS AGREEMENT
-------------------------------------
-23-
EXHIBIT A
---------
Form of
Registration Rights Agreement
This Registration Rights Agreement (this "Agreement") is made and entered into
as of [______________ __], 2005 by and between (i) DuraVest, Inc. a Florida
corporation (the "Company"), (ii) the investors listed on Exhibit A hereto (the
"Optionees") and (iii) Xxxxxxx-Xxxxx Xxxxxx, residing at 0000, Xxxxx-Xxxxxx,
Xxxxxxxx, Xxxxxx, Xxxxxx X0X 0X0 ("Belair") (the Optionees and Belair being
collectively referred to as the "Investors").
BACKGROUND
WHEREAS, the Optionees have elected, pursuant to an Option Agreement between the
Company, the Optionees, and Estracure Inc. dated as of January 14th, 2005 (the
"Minority Option Agreement"), to exercise their option thereunder (the "Minority
Option") to acquire [___] shares of the Common Stock (as defined below) of the
Company; and
WHEREAS, Belair has elected, pursuant to a Stock Option Agreement between the
Company and him dated as of January 14th, 2005 (the "Belair Option Agreement"),
to exercise his option thereunde r (the "Belair Option") to acquire [___] shares
of the Common Stock of the Company; and
WHEREAS, the Minority Option Agreement provides that, upon the Optionees'
delivery of the Exercise Notice (as defined in the Minority Option Agreement),
the Company and the Optioneesare to enter into an agreement granting all of the
Optioneescertain registration rights with respect to the Shares (as defined
below) upon exercise of the Minority Option; and
WHEREAS, the Belair Option Agreement provides that, upon the Optionees' delivery
of the Exercise Notice, the Company undertakes to xxxxx Xxxxxx the same
registration rights as those granted to the Optionees;
NOW, THEREFORE, in consideration of the promises and mutual agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. REGISTRATION RIGHTS.
1.1. DEFINITIONS.
"Common Stock" means the Common Stock, $.0001 par value per share, of the
Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Form S-3" means such form under the Securities Act as is in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
Holder" means any Investor holding (or holding the right to acquire under
the Minority Option Agreement or the Belair Option Agreement) Registrable
Securities or any transferee of record of such Registrable Securities to whom
rights under this Section 1 have been duly assigned in accordance with this
Agreement.
"Initiating Holder" means any Holder or Holders who in the aggregate are
Holders of not less than a majority of the then outstanding Registrable
Securities.
"Person" means a natural person, corporation, association, trust,
(including a business trust), partnership, limited liability company, joint
stock company, organization or proprietorship or similar entity.
"Registrable Securities" means the Shares or any shares of Common Stock
issued or issuable to the Investors on account of the Shares in connection with
any stock split, stock dividend, recapitalization or similar event relating to
the Common Stock; excluding in all cases, however, any such securities sold by a
person in a transaction in which rights under this Section 1 are not assigned in
accordance with this Agreement or any such securities sold to the public or sold
pursuant to Rule 144 promulgated under the Securities Act.
"Register," "Registered," and "Registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act and declared or ordered effective by the SEC.
"Registration Expenses" means all expenses incurred by the Company in
complying with Sections 1.2, 1.3 and 1.5 hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel and accountants for the Company, fees and expenses of one counsel for
all the holders, blue sky fees and expenses and the expense of any special
audits incident to or required by any such registration (but excluding any
underwriting discounts and commissions).
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Expenses" means all underwriting discounts and selling commissions
applicable to the sale of Registrable Securities.
"Shares" means the shares of Common Stock issued or issuable to the
Investors pursuant to the Minority Option Agreement or the Belair Option
Agreement.
1.2. REQUIRED REGISTRATION.
1.2.1. REQUEST FOR REGISTRATION BY INITIATING HOLDER. If the Company
shall receive from an Initiating Holder a written request that
the Company effect any Registration with respect to any of the
Registrable Securities then outstanding held by such Initiating
Holder, the Company will:
1.2.1.1. promptly give written notice of the proposed
registration, qualification or compliance to all other
Holders of Registrable Securities; and
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1.2.1.2. provided that the Company has received, either pursuant
to Section 1.2.1 above or, for Holders other the
Initiating Holder, by written request received by the
Company within 15 days after written notice from the
Company is given under Section 1.2.1.1 above, requests
from Holders that the Company effect the Registration
of an aggregate of at least twenty-five percent (25%)
of the Registrable Securities then outstanding, as soon
as practicable, but in no event later than 45 days
after receipt of such requests, cause to be filed with
the SEC a registration statement on such appropriate
form as would permit or facilitate the public sale and
distribution of all or such portion of such Registrable
Securities as are specified in such requests, and use
its best efforts to cause such registration statement
to become effective as quickly as possible thereafter;
provided, however, that the Company shall not be
obligated to effect, or take any action to effect, any
such registration pursuant to this Section 1.2.1:
1.2.1.2.1. In any particular jurisdiction in which the
Company would be required to execute a
general consent to service of process in
effecting such registration, qualification
or compliance, unless the Company is
already subject to service in such
jurisdiction and except as may be required
by the Securities Act or applicable rules
or regulations thereunder;
1.2.1.2.2. More than twice in any one year period; or
1.2.1.2.3. After the Company has effected two such
registrations pursuant to this Section 1.2
and such registrations have been declared
or ordered effective.
The registration statement filed pursuant to the request of the Initiating
Holder(s) may, subject to the provisions of Section 1.2.2 below, include other
securities of the Company which are held by officers or directors of the Company
or for the Company's own account or which are held by persons who, by virtue of
agreements with the Company, are entitled to include their securities in any
such registration.
1.2.2. UNDERWRITING; REQUEST BY INITIATING HOLDER. If the Initiating
Holder(s) intend(s) to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall
so advise the Company as a part of their request made pursuant to
Section 1.2.2 and the Company shall include such information in
the written notice referred to in Section 1.2.2. In such event,
the right of any Holder to include such Holder's Registrable
Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of
such Holder's Registrable Securities in the underwriting (unless
otherwise agreed by a majority in interest of the Initiating
Holder(s) and such Holder) to the extent provided herein. All
Holders proposing to distribute their securities through such
underwriting shall (together with the Company) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in
interest of the Initiating Holder(s).
Notwithstanding any other provision of Section 1.2.2, if the underwriter
advises the Company and the Initiating Holder(s) in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
the Company shall so advise all Holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated first among all Holders thereof (including the Initiating Holder), in
such proportion (as nearly as practicable) among the Holders pro rata based on
the amount of Registrable Securities owned by each Holder.
1.2.3. WITHDRAWAL BY HOLDER. Notwithstanding the foregoing, any Holder
shall have the right to withdraw from any registration of
-26-
Registrable Securities effected by the Company pursuant to this
Section 1.2 and such withdrawal shall not prevent such Holder
from participating in any registration in the future pursuant to
this Section 1.2.
1.3. PIGGYBACK REGISTRATION.
1.3.1. NOTICE. The Company shall notify all Holders of Registrable
Securities in writing not less than 10 days prior to filing any
registration statement under the Securities Act for purposes of
effecting a public sale or distribution of shares of Common Stock
(other than on Form S-4 or Form S-8 promulgated under the
Securities Act or any successor forms thereto) and will afford
each such Holder an opportunity to include in such registration
statement all or any part of the Registrable Securities then held
by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable
Securities held by such Holder shall, within 10 days after
receipt of the abovedescribed notice from the Company, so notify
the Company in writing, and in such notice shall inform the
Company of the number of Registrable Securities such Holder
wishes to include in such registration statement. If a Holder
decides not to include all of its Registrable Securities in any
registration statement hereafter filed by the Company, such
Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by the
Company with respect to offerings of its securities, all upon the
terms and conditions set forth herein.
1.3.2. UNDERWRITING. If a registration statement under which the Company
gives notice under Section 1.3 is for an underwritten offering,
then the Company shall so advise the Holders of Registrable
Securities. In such event, the right of any such Holder's
Registrable Securities to be included in a registration pursuant
to this Section 1.3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent
provided herein. All Holders proposing to distribute their
Registrable Securities through such underwriting shall enter into
an underwriting agreement in customary form with the managing
underwriter or underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the
managing underwriter(s) determine(s) in good faith that marketing
factors require a limitation of the number of shares to be
underwritten, then the managing underwriter(s) may exclude shares
(including Registrable Securities) from the registration and the
underwriting, and the number of shares that may be included in
the registration and the underwriting shall be allocated, first,
to the Company, if and to the extent the Company is issuing any
shares in such registration, and second, to each of the Holders
of Registrable Securities requesting inclusion of their
Registrable Securities in such registration statement pro rata
based on the amount of Registrable Securities of the Company
owned by each such Holder.
1.3.3. WITHDRAWAL BY HOLDER. Any Holder shall have the right to withdraw
from any registration of Registrable Securities effected by the
Company pursuant to this Section 1.3, and such withdrawal shall
not prevent such Holder from participating in any registration in
the future pursuant to this Section 1.3.
1.4. FORM S-3 REGISTRATION. If the Company shall receive from one or more
Holders a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to at least 15% of the then outstanding Registrable Securities (or
such a lesser percentage if the anticipated offering price, net of
underwriters discounts and commissions, would exceed $1,000,000), then the
Company will:
1.4.1. promptly give written notice of the proposed registration,
qualification or compliance to all other Holders of Registrable
Securities; and
-27-
1.4.1.1. as soon as practicable, but in no event later than 45
days after receipt of such request, cause to be filed
with the SEC a registration statement on such
appropriate form as would permit or facilitate the
public sale and distribution of all or such portion of
such Registrable Securities as are specified in such
request, together with all or such portion of the
Registrable Securities of any Holder or Holders
joining in such request as are specified in a written
request received by the Company within 15 days after
written notice from the Company is given under
Section 1.2.1.1 above, and use its best efforts to
cause such registration statement to become effective
as quickly as possible thereafter; provided, however,
that the Company shall not be obligated to effect, or
take any action to effect, any such registration
pursuant to this Section 1.2.1:
1.4.1.1.1. if Form S-3 is not available for such
offering by the Holders;
1.4.1.1.2. in any particular jurisdiction in which the
Company would be required to execute a
general consent to service of process in
effecting such registration, qualification
or compliance, unless the Company is already
subject to service in such jurisdiction and
except as may be required by the Securities
Act or applicable rules or regulations
thereunder.
1.5. EXPENSES OF REGISTRATION. All Registration Expenses incurred in connection
with up to two demand registrations (pursuant to Section 1.2), all
piggyback registrations (pursuant to Section 1.3) and all S-3 registrations
(pursuant to Section 1.4) shall be borne by the Company, and all Selling
Expenses shall be borne by the Holders of the securities so registered pro
rata on the basis of the number of their shares so registered.
1.6. OBLIGATIONS OF THE COMPANY. Whenever required to effect the registration of
any Registrable Securities under this Agreement, the Company shall, in
addition to complying with Sections 1.2 through 1.5 above:
1.6.1. use its reasonable best efforts to provide for appropriate
qualification of such Registrable Securities for sale under
applicable blue sky or other state securities laws;
1.6.2. prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for the period of the distribution contemplated thereby
and comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by such
registration statement in accordance with the selling Holders'
intended method of disposition set forth in such registration
statement for such period;
1.6.3. furnish to each selling Holder of Registrable Securities and to
each underwriter such number of copies of the registration
statement and the prospectus included therein (including each
preliminary prospectus) as such selling Holders reasonably may
request in order to facilitate the public sale or other
disposition of the Registrable Securities covered by such
registration statement;
1.6.4. list the Registrable Securities covered by such registration
statement with any securities exchange, Nasdaq or OTC Bulletin
Board on which the Common Stock of the Company is then listed;
1.6.5. if the Company has delivered preliminary or final prospectuses to
the selling Holders and after having done so the prospectus is
amended to comply with any requirements of the Securities Act,
the Company shall promptly notify the selling Holders and
promptly provide the selling Holders with revised prospectuses
and the selling Holders shall signed immediately cease making
offers of Registrable Securities using the superseded
prospectuses and instead shall use the replacement prospectuses
so provided.; and
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1.6.6. provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration
statement.
1.7. FURNISH INFORMATION. It shall be a condition precedent to the obligations
of the Company to take any action pursuant to Sections 1.2. 1.3 and 1.4
that the selling Holders furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended
method of disposition of such securities as shall be required to timely
effect the registration of Registrable Securities.
1.8. INDEMNIFICATION. In the event any Registrable Securities are included in a
registration statement under Sections 1.2, 1.3 or 1.4:
1.8.1. BY THE COMPANY. To the fullest extent permitted by law, the
Company will indemnify and hold harmless each Holder, and the
stockholders, partners, members, officers and directors of each
Holder, any underwriter (as defined in the Securities Act) of the
Registrable Securities of such Holder and each person, if any,
who controls such Holder or underwriter within the meaning of the
Securities Act or the Exchange Act against any losses, claims,
damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions
or violations (individually a "Violation" and collectively
"Violations"):
1.8.1.1. any untrue statement or alleged untrue statement of a
material fact contained or incorporated by reference in
such registration statement, including any preliminary
prospectus or final prospectus contained therein or any
amendments or supplements thereto;
1.8.1.2. the omission or alleged omission to state therein a
material fact required to be stated therein, or
necessary to make the statements therein not misleading,
or
1.8.1.3. any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any federal or state
securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any
federal or state securities law in connection with the
offering covered by such registration statement;
and the Company will reimburse each such Holder, stockholder, partner, member,
officer or director, underwriter or controlling person for any legal or other
expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that the Company shall not be liable in any such case for any
such loss, claim, damage, liability or action to the extent, and only to the
extent, that it arises from a Violation which resulted from information
furnished in writing, and expressly stated to be used in connection with such
registration, by such Holder, stockholder, partner, member, officer, director,
underwriter or controlling person of such Holder.
1.8.2. BY SELLING HOLDERS. To the fullest extent permitted by law, each
selling Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such
registration is being effected, indemnify and hold harmless the
Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act,
any underwriter (as defined in the Securities Act) and any other
Holder selling securities under such registration statement or
any of such other Holder's stockholders, partners, members,
directors or officers or any person who controls such underwriter
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or other Holder within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities
(joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder,
member, partner or director, officer or controlling person of
such underwriter or other Holder may become subject under the
Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent, and only to the extent,
that such Violation resulted from written information furnished,
and stated to be specifically for use in such registration, by
such Holder; and each such Holder will reimburse any legal or
other expenses reasonably incurred by the Company or any such
director, officer, controlling person, underwriter or other
Holder, partner, member, officer, director or controlling person
of such other Holder or underwriter in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the total amounts
payable in indemnity by a Holder under this Section 1.8.2 in
respect of any Violation shall not exceed the net proceeds
received by such Holder in the registered offering out of which
such Violation arises.
1.8.3. NOTICE. Promptly after receipt by an indemnified party under this
Section 1.8 of notice of the commencement of any action
(including any governmental action), such indemnified party will,
if a claim in respect thereof is to be made against any
indemnified party under Section 1.8, deliver to the indemnifying
party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right
to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if (i) the indemnifying party fails to
assume the defense of such action or (ii) if representation of
such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or
potential conflict of interests between such indemnified party
and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement
of such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of
liability to the indemnified party under this Section 1.8 to the
extent that the indemnifying party's defense is so materially
prejudiced, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this
Section 1.8.
1.8.4. SURVIVAL. The obligations of the Company and Holders under this
Section 1.8 shall survive the completion of any offering of
Registrable Securities in a registration statement, and
otherwise.
1.9. RULE 144 REPORTING. With a view to making available the benefits of certain
rules and regulations of the SEC which may from time to time permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to:
1.9.1. Make and keep public information available, as those terms are
understood and defined in Rule 144(c) under the Securities Act,
at all times;
1.9.2. File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and
the Exchange Act; and
1.9.3. So long as a Holder owns any Registrable Securities, furnish to
the Holder promptly upon request a written statement by the
Company as to its compliance with the reporting requirements of
Rule 144 and of the Securities Act and the Exchange Act, a copy
of the most recent annual or quarterly report of the Company, and
such other reports and documents of the Company as a Holder may
-30-
reasonably request in availing itself of any rule or regulation
of the SEC allowing a Holder to sell any such securities without
registration.
1.10. ASSIGNMENT OF REGISTRATION RIGHTS. The rights of a Holder under this
Section 1 may be assigned by any Holder to any party in a transfer not
involving a distribution or offering of such shares to the public and not
made pursuant to Rule 144 promulgated under the Securities Act; provided,
however, in each case that such other party agrees in writing with the
Company to be bound by all of the provisions of this Agreement.
1.11. TERMINATION OF REGISTRATION RIGHTS. The registration rights granted
pursuant to Section 1 will terminate as to a Holder at such time as the
Company and such Holder or any successor Holder(s) are reasonably
satisfied that Rule 144 (k) is available for the resale by such Investor
or the then-current Holder(s) of Registrable Securities.
2. MISCELLANEOUS.
2.1. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted transferees and
permitted assigns of the parties; provided that such permitted assigns
comply with the terms hereof.
2.2. GOVERNING LAW. This Agreement shall be, governed in all respects by the
laws of the Province of Quebec, Canada as applied to contracts made and to
be performed entirely within that province between residents of that
province.
2.3. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be seemed an original, and all of which together shall
constitute one instrument.
2.4. TITLES AND SUBTITLES. The titles of the paragraphs and subparagraphs of
this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement.
2.5. STOCK SPLITS, ETC. All share numbers used in this Agreement are subject to
adjustment in the case of any stock split, reverse stock split, combination
or similar event.
2.6. NOTICES. All notices or other communications required by this Agreement
must be in writing and shall be delivered by hand or sent by courier,
facsimile or e-mail as follows:
To the Investors at: To the Addresses set forth in Exhibit A hereto
To the Company at: DuraVest, Inc.
Attention: Xx. Xxxxxxx X. Xxxxxxx, Secretary
00 Xxxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx Xxxxxx X0X 0X0
Telephone: 000-000-0000
Facsimile: 000-000-0000
E-Mail: xxxxxxx.xxxxxxx@xxxxxxxxx.xx
With a copy to: Xxxxxx, O'Neil
0000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxx Xxxxxx X0X 0X0
Attention: Xx. Xxxxxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
E-Mail: xxxxxxxx@xxxxxxxxxxx.xxx
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Such notice shall be deemed to have been given when received, if mailed, or at
the time of delivery by courier, facsimile or e-mail, whichever is earlier.
2.7. ATTORNEYS' FEES. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements
in addition to any other relief to which such party may be entitled.
2.8. AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the Holders of a majority of
the Registrable Securit ies. Any amendment or waiver effected in accordance
with this paragraph shall be binding upon each party to this Agreement,
each Holder of any Registrable Securities then outstanding, each future
Holder of all such Registrable Securities, and the Company.
2.9. SEVERABILITY. If any provision of this Agreement is held to be
unenforceable under applicable law, then such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted
as if such provision was so excluded and shall be enforceable in accordance
with its terms.
2.10. ENTIRE AGREEMENT. This Agreement, together with all Exhibits hereto,
constitute the full and entire understanding and agreement between the
parties with respect to the subject matter hereof and supersedes all prior
negotiations, correspondence, agreements, understandings, duties or
obligations among the parties with respect to the subject matter hereof.
2.11. FURTHER ASSURANCES. From and after the date of this Agreement, upon the
request of a party, the other parties shall execute and deliver such
instruments, documents or other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
[SIGNATURE PAGES FOLLOW]
-32-
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
DURAVEST, INC.
By:
----------------------------------------
Name:
Title:
INNOVACOR, LIMITED PARTNERSHIP
By: Innovacor Management Inc., its
general partner
By:
----------------------------------------
Name:
Title:
CARDIO AT WORK, INC.
By:
----------------------------------------
Name:
Title:
-------------------------------------------
Xxx Xxxxxxxxx
-------------------------------------------
Xxxxxxx-Xxxxx Xxxxxx
-33-
Exhibit A
---------
Optionees
---------
Innovacor, Limited Partnership
C/o Innovacor Management Inc.
0000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxx, Xxxxxx X0X 0X0
Attention: Xx. Xxxxxxx Xxxxx Xxxxxx, President
Telephone: 000-000-0000
Facsimile: 000-000-0000
E-Mail: Xxxxxxx.Xxxxx.Xxxxxx@xxx-xxx.xxx
Cardio At Work, Inc.
X.X. Xxx 000
Xxxxx-Xxxxx Xxxxxxx, Xxxxxx, Xxxxxx X0X 0X0
Xxx Xxxxxxxxx
5101 Xxxxxx, Penthouse 0, 0x Xxxxx
Xxxxxxxx, Xxxxxx, Xxxxxx X0X 0X0
-34-
