EXHIBIT 4.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 15th day of January 2004,
by and between Diversinet Corp. (the "Company"), a corporation organized under
the laws of the province of Ontario, Canada, with its principal offices at 2225
Xxxxxxxx Avenue East, Suite 1801, Xxxxxxx, Xxxxxxx, X0X 0X0, Xxxxxx, and the
purchasers whose names and addresses are set forth on the signature page hereof
(collectively the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchaser agree as follows:
SECTION 1. AUTHORIZATION OF ISSUANCE OF SECURITIES. The Company has authorized
the issuance to the Purchaser of one million (1,000,000) common shares of the
Company (the "Shares"), no par value (a "Common Share") and one million and one
hundred thousand (1,100,000) purchase warrants of the Company (a "Warrant"), set
forth on the signature page hereof. The Warrants will be substantially in the
form of Appendix III to this Agreement.
SECTION 2. CONSIDERATION. At the Closing (as defined in Section 3), the Company
will issue the Shares and the Warrants to the Purchaser as set forth on the
signature page hereof, and the Purchaser will enter into a consulting agreement
with the Company and pay U.S.$2,000,000 to the Company, upon the terms and
conditions hereinafter set forth.
SECTION 3. DELIVERY OF SECURITIES AT THE CLOSING. The completion of the
transaction (the "Closing") shall occur simultaneously with the execution hereof
and the consulting agreement (the "Closing Date"). At the Closing, the Company
will issue to the Purchaser (i) one or more stock certificates representing the
Shares and (ii) one or more warrant certificates (in the form of Appendix III)
representing the Warrants, in each case registered in the name of the Purchaser,
or in such nominee name(s) as designated by the Purchaser in writing,
representing the Shares. The name(s) in which the stock certificates and warrant
certificates are to be registered are set forth in the Stock Certificate
Questionnaire attached hereto as APPENDIX I. The Company's obligation to
complete the transaction herein contemplated at the Closing shall be subject to
the following conditions, any one or more of which may be waived by the Company:
(a) receipt by the Company of same-day funds in the full amount of U.S.
$2,000,000; (b) the accuracy in all material respects of the representations and
warranties made by the Purchaser and the fulfillment of those undertakings of
the Purchaser to be fulfilled prior to or at the Closing, and (c) the Company
agreeing to accept the Purchaser's subscription prior to or at the Closing. The
Purchaser's obligation to complete the transaction herein contemplated at the
Closing shall be subject to the accuracy in all material respects of the
representations and warranties made by the Company herein and the fulfillment of
those undertakings of the Company to be fulfilled prior to or at the Closing.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company
hereby represents and warrants to, and covenants with, the Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Ontario,
Canada.
4.2 AUTHORIZED CAPITAL STOCK. The authorized capital stock of the Company
consists of an unlimited number of Common Shares. The number of Common Shares
and all subscriptions, warrants, options, convertible securities, and other
rights to purchase or otherwise acquire equity securities of the Company issued
and outstanding as at December 31, 2003, are 11,042,944 common shares, purchase
warrants to acquire 965,404 common shares and stock options to acquire up to
1,800,000 common shares.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES. The Shares and Warrants
have been duly authorized, and when issued, delivered and paid for in the manner
set forth in this Agreement, will be duly authorized, validly issued, fully paid
and non-assessable.
4.4 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The Company
has full legal right, corporate power and authority to enter into this Agreement
and perform the transactions contemplated hereby. This Agreement has been duly
authorized, executed and delivered by the Company. The consummation by the
Company of the transactions herein contemplated will not violate any provision
of the organizational documents of the Company. The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions herein contemplated will not result in the creation of any
lien, charge, security interest or encumbrance upon any assets of the Company
pursuant to the terms or provisions of, or conflict with, result in the breach
or violation of, or constitute, either by itself or upon notice or the passage
of time or both, a default under any material agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument to which
the Company is a party or by which the Company or any of its properties may be
bound or affected and in each case which individually or in the aggregate would
have a material adverse effect on the condition (financial or otherwise),
properties, business, prospects, or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"), or any statute or
any authorization, judgement, decree, order, rule or regulation of any court or
any regulatory body, administrative agency or other governmental body applicable
to the Company or any of its respective properties. Upon its execution and
delivery, and assuming the valid execution thereof by the Purchaser, this
Agreement will constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
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4.5. INTEGRATION, ETC. The Company has not in the past nor will it
hereafter take any action to sell, offer for sale or solicit offers to buy any
securities of the Company which would bring the offer, issuance or sale of the
Shares and Warrants, as contemplated by this Agreement, within the provisions of
Section 5 of the Securities Act. Neither the Company nor any of its Affiliates
(as defined in Rule 501(b) of Regulation D under the Securities Act) has
directly, or through any agent, (i) sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any "security" (as defined in the
Securities Act) which is or could be integrated with the sale of the Shares and
Warrants in a manner that would require the registration under the Securities
Act of the Shares or Warrants or (ii) engaged in any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) in connection with the offering of the Shares and
Warrants or in any manner involving a public offering within the meaning of
Section 4(2) of the Act.
4.6 COMPLIANCE WITH SECURITIES LAWS. Subject to the accuracy of the
representations and warranties of the Purchaser contained herein, the issuance
of the Shares and Warrants to the Purchaser hereunder is exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the "Securities Act").
4.7 ADDITIONAL INFORMATION. The Company has made available to the
Purchaser a true and complete copy of each report, schedule, and definitive
proxy statement filed by the Company with the Commission under the Securities
Exchange Act of 1934 (the "Exchange Act") since November 1, 2001 (as such
documents have since the time of their filing been amended, the "Information
Documents").
As of their respective dates, the Information Documents complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the SEC promulgated thereunder applicable to the Information Documents, and
none of the Information Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the statements made in any such Information Documents is, or
has been, required to be amended or updated under applicable law (except for
such statements as have been amended or updated in subsequent filings prior to
the date hereof). As of their respective dates, the financial statements of the
Company included in the Information Documents complied as to form in all
material aspects with applicable accounting requirements and the published rules
and regulations of the SEC and Canadian regulatory authorities with respect
thereto. Such financial statements have been prepared in accordance with
Canadian generally accepted accounting principles, consistently applied, during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the Information
Documents, the Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business and (ii) liabilities
not required under generally accepted accounting principles to be reflected or
disclosed in such financial statements.
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4.8 ABSENCE OF CERTAIN CHANGES. Since October 31, 2003, there have been no
known changes or developments in the Company, its business or any of its
subsidiaries that may have a Material Adverse Effect.
4.9 ABSENCE OF LITIGATION. Except as disclosed in the Information
Documents, there is no known action, suit, claim, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its subsidiaries, threatened against or affecting the Company or any
of its subsidiaries, or their officers or directors in their capacity as such,
that could have a Material Adverse Effect.
4.10 COMPLIANCE WITH LAW. The Company and its subsidiaries are in
compliance with all applicable laws, rules and regulations, other than such
noncompliance which would not have a Material Adverse Effect.
4.11 DISCLOSURE. All information relating to the Information Document
provided to the Purchasers in connection with the transactions contemplated
hereby is true and correct in all material respects and the Company has not
knowingly omitted to state any material fact necessary in order to make the
statements made herein or therein, in light of the circumstances under which
they were made, not misleading. No known event or circumstance has occurred or
exists with respect to the Company or any of its subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which has
not been publicly announced or disclosed but under Canadian or United States
law, rule or regulation, requires public disclosure or announcement by the
Company.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
5.1 The Purchaser represents and warrants to, and covenants with, the
Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments in
securities representing an investment decision like that involved hereunder,
including investments in securities issued by the Company, and has requested,
received, reviewed and understood all information it deems relevant in making an
informed decision to purchase the securities hereunder, including, without
limitation, the information contained in the Information Documents; (ii) it
acknowledges that the offering of the securities pursuant to this Agreement has
not been reviewed by the Commission or any state or Canadian regulatory
authority; (iii) the Purchaser is acquiring the securities set forth in the
signature page hereto, for its own account for investment only and with no
present intention of distributing any of the Shares or Warrants or any
arrangement or understanding with any other persons regarding the distribution
thereof; (iv) the Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares or Warrants except
in compliance with the Securities Act, the Securities Act Rules and Regulations
and any applicable state securities or blue sky laws; (v) the Purchaser has
completed or caused to be completed the Registration Statement Questionnaire and
the Stock Certificate Questionnaire, attached hereto as APPENDIX I and APPENDIX
II, for use in preparation of the Registration Statement, and the answers
thereto are true and correct as of the date hereof and will be true and correct
as of the effective date of the Registration Statement; (vi) the Purchaser has,
in connection with its decision enter into this Agreement not relied upon any
representations or other information (whether oral or written) other than as set
forth in the Information Documents and the representations and warranties of the
Company contained herein; (vii) the Purchaser has had an opportunity to discuss
this investment with representatives of the Company and ask questions of them
and such questions have been answered to the full satisfaction of the Purchaser;
and (viii) the Purchaser is an "accredited investor" within the meaning of Rule
501 of Regulation D promulgated under the Securities Act.
5.2 The Purchaser hereby covenants with the Company not to make any sale
of the Shares or Warrants, or of the Common Shares issuable upon exercise of
such Warrants (the "Warrant Shares) without satisfying the prospectus delivery
requirements under the Securities Act, if any.
5.3 The Purchaser further represents and warrants to, and covenants with,
the Company that (i) the Purchaser has full right, power, authority and capacity
to enter into this Agreement and to consummate the transactions contemplated
hereby and has taken all necessary action to authorize the execution, delivery
and performance of this Agreement, (ii) the Purchaser is duly organized, validly
existing and in good standing under the laws of the its jurisdiction of
organization, and (iii) upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of the Purchaser
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
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5.4 The Purchaser recognizes that an investment in the Company's
securities is speculative and involves a high degree of risk, including a risk
of total loss of the Purchaser's investment.
5.5 All of the information provided to the Company or its agents or
representatives concerning the Purchaser's suitability to invest in the Company
and the representations and warranties contained herein, are complete, true and
correct as of the date hereof. The Purchaser understands that the Company is
relying on the statements contained herein to establish an exemption from
registration under U.S. federal and state securities laws.
5.6 The address set forth in the signature page hereto is the Purchaser's
true and correct domicile.
5.7 The Purchaser covenants to provide the Company an updated, accurate
and complete plan of distribution at all times during which the Company is
required to keep the Registration Statement in effect.
5.8 The Purchaser understands and agrees that each certificate or other
document evidencing any of the Shares or Warrant Shares shall be endorsed with
the legend in substantially the form set forth below and the certificate
evidencing the Warrants shall be endorsed with the legend in substantially the
form set forth in Appendix III, as well as any other legends required by
applicable law, and the Purchaser covenants that the Purchaser shall not
transfer the Shares, Warrants or Warrant Shares represented by any such
certificate without complying with the restrictions on transfer described in the
legends endorsed on such certificates:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR
REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS OR
CANADIAN SECURITIES LAWS. THESE SECURITIES MAY NOT BE TRANSFERRED UNLESS
(A) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND REGISTERED OR QUALIFIED UNDER APPLICABLE STATE LAW AND, IF
APPLICABLE, CANADIAN SECURITIES LAWS OR (B) EXEMPTIONS FROM SUCH
REGISTRATION OR QUALIFICATION REQUIREMENTS ARE AVAILABLE. AS A CONDITION
TO PERMITTING ANY TRANSFER OF THESE SECURITIES, THE COMPANY MAY REQUIRE
THAT IT BE FURNISHED WITH AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
TO THE EFFECT THAT NO REGISTRATION OR QUALIFICATIONS IS LEGALLY REQUIRED
FOR SUCH TRANSFER.
5.9 The Purchaser acknowledges the reporting requirements under US and
Canadian securities laws which may be applicable to it in connection with the
acquisition of the securities hereunder, including those of (i) section 13(d) of
the Securities and Exchange Act of 1934, (ii) section 101 of the Securities Act
(Ontario) and section 111 of the Securities Act (British Columbia), and (iii)
section 107 of the Securities Act (Ontario) and section 87 of the Securities Act
(British Columbia) (the provisions referred to in sections (ii) and (iii) relate
to early warning requirements and insider reporting requirements applicable in
connection with the acquisition by the Purchaser of common shares resulting in
the Purchaser and persons acting jointly or in concert holding 10% or more of
the common shares of the Company).
SECTION 6. SURVIVAL OF REPRESENTATIVES, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in any certificates or documents delivered pursuant
hereto or in connection herewith shall survive following the delivery to the
Purchaser of the Shares and Warrants being purchased and the payment therefor.
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Each party shall indemnify the others for all losses, claims, damages,
liabilities or expenses actually incurred ("Losses") (including reasonable
attorneys' fees and cost of enforcement) arising out of any breach of that
party's covenants, agreements, representations or warranties in this Agreement;
provided that in no event shall any party be responsible for Losses exceeding,
individually or in the aggregate, the purchase price set out in section 2 of
this Agreement.
SECTION 7. REGISTRATION OF THE SHARES: COMPLIANCE WITH THE SECURITIES ACT.
7.1 REGISTRATION STATEMENT ON FORM F-3. The Company represents and
warrants that the Company currently meets the requirements for use of Form F-3
under the Securities Act. The Company shall file all reports required to be
filed by the Company with the Commission in a timely manner and take such other
actions as shall be necessary for the Company to maintain such eligibility for
the use of Form F-3.
7.2 REGISTRATION PROCEDURES AND EXPENSES. The Company shall:
(a) use its best efforts, but in no event later than 60 days
following the date of Closing, to prepare and file, with the Commission a
Registration Statement under the Securities Act following the date of Closing,
and use its reasonable best efforts to cause the Registration Statement to
become effective as soon as practicable thereafter, relating to the resale
pursuant to Rule 415 under the Securities Act of the Registrable Stock by the
Holders from time to time through the automated quotation system of Nasdaq or
the facilities of any national securities exchange on which the Common Shares
are then traded or in privately-negotiated transactions, and otherwise as
described in the "Plan of Distribution" section of the Company's Form F-3
Registration Statement filed on July 22, 2003; o
(b) Each time the Company shall determine to file a Registration
Statement in connection with the proposed offer and sale for money of any of its
securities by it or any of its security holders, the Company will give written
notice of its determination to all Holders. Upon the written request of a Holder
given within twenty (20) days after the giving of any such notice by the
Company, the Company will use its best efforts to cause all such shares of
Registrable Stock, the Holders of which have so requested registration thereof,
to be included in such Registration Statement, all to the extent requisite to
permit the sale or other disposition by the prospective seller or sellers of the
Registrable Stock to be so registered. If the Registration Statement is to cover
an underwritten distribution, the Company shall use its best efforts to cause
the Registrable Stock requested for inclusion pursuant to this paragraph to be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. If, in the good faith judgment of
the managing underwriter of such public offering, the inclusion of any or all of
the Registrable Stock requested for inclusion pursuant to this paragraph and
other securities would interfere with the successful marketing of a smaller
number of shares to be offered, then the number of shares of Registrable Stock
and other securities to be included in the offering (except for shares to be
issued by the Company in an offering initiated by the Company) shall be reduced
accordingly on a prorata basis with the other security holders.
(c) promptly and in good faith respond to all Commission's comments
on the Registration Statement, and within two (2) business days of receipt of an
indication from the Commission that it has no further comments, request
acceleration of the effectiveness of the registration at the earliest
practicable time;
(d) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement effective until
the earlier of (i) the third anniversary of the Closing Date, (ii) the date
following exercise of the Warrants on which the Holder may sell all the Shares
then held by the Holder within a three-month period in accordance with Rule 144
under the Securities Act ("Rule 144"), or (iii) such time as all the Registrable
Stock purchased by the Holder have been sold pursuant to a registration
statement;
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(e) so long as the Registration Statement is effective covering the
resale of the Registrable Stock owned by the Holders, furnish to the Holder such
reasonable number of copies of prospectuses and such other documents as the
Holders may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Registrable Stock;
(f) file documents required of the Company for blue sky clearance in
states specified in writing by the Purchaser; provided, however, that the
Company shall not be required to qualify to do business or consent to service of
process in any jurisdiction in which it is not so qualified or has not so
consented;
(g) bear all expenses in connection with the procedures in
paragraphs (a) through (f) of this Section 7.2 and the registration of the
Shares and Warrant Shares pursuant to the Registration Statement, except for any
underwriting discounts, brokerage fees and commissions incurred by the
Purchaser, if any; and
(h) with a view to making available to the Purchaser the benefits of
Rule 144 (or its successor rule) and any other rule or regulation of the
Commission that may at any time permit the Purchaser to sell the Shares and
Warrant Shares to the public without registration, the Company covenants and
agrees to: (i) make and keep public information available, as those terms are
understood and defined in Rule 144, until the earlier of (A) such date as all of
the Purchaser's Shares and Warrant Shares may be resold within a given
three-month period pursuant to Rule 144 or any other rule of similar effect or
(B) such date as all of the Purchaser's Shares and Warrant Shares shall have
been resold and (ii) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and under the
Exchange Act.
(i) notify the Holders participating in such registration, promptly
after it shall receive notice thereof, of the date and time when such
Registration Statement and each post-effective amendment thereto has become
effective or a supplement to any prospectus forming a part of such Registration
Statement has been filed;
(j) notify the Holders participating in such registration promptly
of any request by the Commission or any state securities commission or agency
for the amending or supplementing of such Registration Statement or prospectus
or for additional information;
(k) prepare and promptly file with the Commission, and promptly
notify such participating Holders of the filing of, such amendments or
supplements to such Registration Statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a prospectus relating
to such securities is required to be delivered under the Securities Act, any
event has occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(l) advise such participating Holders, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the Commission or any state securities commission or agency suspending the
effectiveness of such Registration Statement or the initiation or threatening of
any proceeding for that purpose and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order should
be issued;
(m) cooperate with the Holders to facilitate the timely preparation
and delivery (under normal way settlement procedures) of certificates
representing securities to be sold pursuant to any Registration Statement free
of any restrictive legends and in such denominations and registered in such
names as Holders may request prior to sales of securities pursuant to such
Registration Statement;
(n) comply with all applicable rules and regulations of the
Commission and shall make generally available as soon as practicable after the
effective date of the applicable Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act;
(o) permit the Purchaser to assign the rights under this Section 7
to any other person in connection with a transfer of the Registrable Stock.
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7.3 BLACKOUT PERIOD
(a) The Company may suspend, at any time or from time to time, the
use of the prospectus which forms part of the Registration Statement (the
"Prospectus") for a period or periods of time not to exceed an aggregate of 60
calendar days in any 12 month period, provided that during any three month
period such aggregate period of time shall not exceed 30 calendar days (each, a
"Blackout Period"), if the Company determines that the filing or continued use
of the Prospectus would (w) require the public disclosure of material non-public
information concerning any transaction or negotiations involving the Company or
any of its affiliates that, in the good faith judgment of the Board of Directors
of the Company, would materially interfere with such transaction or
negotiations, (x) otherwise require premature disclosure of information that, in
the good faith judgment of the Board of Directors of the Company, would
adversely affect or otherwise be detrimental to the Company, (y) require
amendment or supplement to the Registration Statement due to the happening of
any event that comes to the attention of the Company and as a result of which
the Registration Statement or Prospectus would contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or (z) adversely affect the success
of an offering of securities by the Company which the Company proposes to or has
registered under applicable securities laws. The Company shall provide the
Holders whose Registrable Stock is registered under the Registration Statement
with written notice of the commencement of a Blackout Period and of the
termination of such Blackout Period.
(b) The Purchaser agrees that, upon receipt of any written notice
from the Company of the happening of any event of the kind described in Section
7.3(a) (a "Material Event"), the Purchaser will forthwith discontinue
disposition of the Registrable Stock under the Prospectus until the Company
confirms in writing that the Blackout Period has terminated and that the
Prospectus may be used for the disposition of Registrable Stock or until receipt
of copies of a supplemented or amended Prospectus, and, if so requested by the
Company, will deliver to the Company all copies of the Prospectus covering the
Registrable Stock in its possession at the time of receipt of such notice.
(c) The Purchaser shall, at any time it is engaged in a distribution
of Registrable Stock, comply with all applicable laws.
7.4 INDEMNIFICATION AND CONTRIBUTION.
(a) The Company will indemnify and hold harmless each Holder of
shares of Registrable Stock which are included in a Registration Statement
pursuant to the provisions of this Agreement, the directors, officers, employees
and agents of such Holder, any underwriter (as defined in the Securities Act)
for such Holder, the directors, officers, employees and agents of such
underwriter, and any person who controls such Holder or such underwriter within
the meaning of the Securities Act or the Exchange Act, and each of their
successors, from and against any and all claims, actions, demands, losses,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, or under Canadian
law, insofar as such claims, actions, demands, losses, damages or liabilities
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in such Registration Statement (including all
documents incorporated therein by reference) as originally filed or in any
amendment thereto, any preliminary or final prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon 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 and agrees to
reimburse each such Holder, as incurred, for any legal or other expenses
reasonably incurred by it in connection with investigating or defending any such
claim, action, demand loss, damage or liability; provided, however, that the
Company will not be liable in any such case to the extent that any such claim,
action, demand, loss, damage, or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in reliance upon and in strict conformity with information furnished or on
behalf of such Holder, specifically for use in the preparation thereof. This
indemnity shall be in addition to any liability which the Company may otherwise
have and shall be in addition to any subsequently executed indemnity agreements.
(b) Each Holder of shares of the Registrable Stock which are
included in a registration pursuant to the provisions of this Agreement will,
severally and not jointly, indemnify and hold harmless the Company, the
directors, officers, employees and agents of the Company and any person who
controls the Company within the meaning of the Securities Act or the Exchange
Act from and against any and all claims, actions, demands, losses, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, or under Canadian law, insofar as
such claims, actions, demands, losses, damages or liabilities arise out of or
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are based upon any untrue statement or alleged untrue statement of any material
fact contained in such Registration Statement (including all documents
incorporated therein by reference) as originally filed or in any amendment
thereto, any preliminary or final prospectus contained therein or any amendment
or supplement thereto, or arise out of or are based upon 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, in each case to the
extent, but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
strict conformity with written information furnished by such Holder for use in
the preparation thereof; provided, that the liability of each Holder hereunder
shall be limited to the proportion of any such claim, action, demand, loss,
damage, liability, cost or expense which is equal to the proportion that the
public offering price of the shares of Registrable Stock sold by such Holder
under such Registration Statement bears to the total offering price of all
securities sold thereunder, but not, in any event, to exceed the proceeds
received by such Holder from the sale of shares of Registrable Stock covered by
the Registration Statement. This indemnity shall be in addition to any liability
which such Holder may otherwise have and shall be in addition to any
subsequently executed indemnity agreements.
(c) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any Holder
exercising rights under this Agreement, or any controlling Person of any such
Holder, makes a claim for indemnification pursuant to this Section but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section provides for indemnification is such
case, or (ii) contribution under the Securities Act may be required on the part
of any such selling Holder or any such controlling Person in circumstances for
which indemnification is provided under this Section; then, and in each such
case, the Company and such Holder will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (including legal and
other expenses reasonably incurred in connection with or defending same
(collectively "Losses")) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and the indemnified
party, on the other. Relative fault shall be determined by reference to whether
any alleged untrue statement or omission relates to information provided by the
indemnifying party, on the one hand, or by the indemnified party, on the other
hand. The parties agree that it would not be just and equitable if contribution
were determined by pro rata allocation or any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (c), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section, each
person who controls a Holder within the meaning of either the Securities Act or
the Exchange Act and each director, officer, employee and agent of such Holder
shall have the same rights to contribution as such Holder, and each person who
controls the Company within the meaning of either the Securities Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d); provided, however, that, in any such case, (A) no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation and (B) no such
Holder will be required to contribute any amount in excess of the public
offering price of all such Registrable Stock offered by it pursuant to such
Registration Statement.
(d) The provisions of this Section will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Company or any of the officers, directors, employees or agents or
controlling persons referred to in this Section, and will survive the sale by a
Holder of securities covered by a Registration Statement.
7.5 DEFINITIONS. The following terms shall be used in this Section with
the following respective meanings:
"Commission" means the Securities and Exchange Commission.
"Holder" means any holder of Registrable Stock.
"Registrable Stock" means the Shares and Warrant Shares whether owned
by a Purchaser or any third party.
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"Registration Statement" means a registration statement filed by the Company
with the Commission for a public offering and sale of securities of the Company
(other than a registration statement on Form S-8, Form F-4, or successor form).
SECTION 8. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed by first-class registered or
certified airmail, confirmed facsimile or nationally recognized overnight
express courier postage prepaid, and shall be deemed given when so mailed and
shall be delivered as addressed as follows:
if to the Company, to:
Diversinet Corp.
0000 Xxxxxxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0, Xxxxxx
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
if to the Purchaser, at its address as set forth at the end of this Agreement,
or at such other address or addresses as may have been furnished to the Company
in writing.
SECTION 9. CHANGES. This Agreement may not be modified or amended except
pursuant to an instrument in writing, signed by the Company and the Purchaser.
SECTION 10. HEADINGS. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
SECTION 11. SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
SECTION 12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
choice of law provisions thereof.
SECTION 13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but both of which,
when taken together, shall constitute but one instrument, and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other party.
SECTION 14. ENTIRE AGREEMENT. This Agreement (including the attachments hereto)
contains the entire agreement of the parties with respect to the subject matter
hereof and supersedes and is in full substitution for any and all prior oral or
written agreements and understandings between them related to such subject
matter, and neither party hereto shall be liable or bound to the other party
hereto in any manner with respect to such subject matter by any representations,
indemnities, covenants or agreements except as specifically set forth herein.
SECTION 15. RIGHT OF ACCEPTANCE. The Purchaser acknowledges and agrees that the
Company shall have the right, at its sole discretion, to accept or reject, up to
the Closing, any subscription for securities and that acceptance thereof is not
subject to the Company having received any minimum amount of subscription
proceeds. The Purchaser further acknowledges and agrees that execution of this
Agreement by the Purchaser shall not result in any obligation on the Company
until such time as this Agreement shall have been duly executed by the Company
and Closing shall have occurred. Any funds received by the Company or its agent
from the Purchaser on account of the transaction contemplated hereby will be
returned to the Purchaser (without interest or deduction) at the address
indicated in Appendix I in the event the Company determines, in its sole
discretion, to reject the Purchaser's subscription.
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SECTION 16. REIMBURSEMENT OF EXPENSES. Upon Closing, the Company will reimburse
the Purchaser for all reasonable out-of-pocket expenses incurred by the
Purchasers (including, without limitation, reasonable outside attorneys' fees).
Such amount shall not exceed US$7,500.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives shown below:
---------------------------------- ---------------------------------------------
Xxx Xxxxxxx Lakefront Partners, LLC
By: Lakefront Capital Management, LLC
By: Xxx Xxxxxxx, Sole Member
000 X. Xxxxxxxxx Xxx, Xxx 000 000 X. Xxxxxxxxx Xxx, Xxx 000
Xxxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
Warrants: 1,100,000 Shares: 1,000,000
---------------------------------- ---------------------------------------------
Date: Date:
Accepted and Agreed to by:
DIVERSINET CORP.
By:
-----------------------------------------
Xxxx Xxxxxxxx, President
and Chief Executive Officer
Date:
---------------------------------------
45