DIVERSINET CORP.
PRIVATE PLACEMENT
SUMMARY INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire Stock Purchase Agreement which
follows)
A. Complete the following items on BOTH copies of the Stock Purchase
Agreement:
1. Signature Page: (i) Name of Purchaser (ii) Signature, Name and Title
of Individual representing Purchaser.
2. Appendix I - Stock Certificate Questionnaire: Provide the
information requested by the Stock Certificate Questionnaire.
Appendix II - Registration Statement Questionnaire: Provide the
information requested by the Registration Statement Questionnaire.
B. Return BOTH copies of a properly completed and signed Stock Purchase
Agreement including the properly completed Appendix I to:
Diversinet Corp.
2225 Sheppard Avenue East, Suite 1700
Toronto, Ontario, M2J 5C2
Attention: David Hackett, Chief Financial Officer
C. Funds (the "Funds") representing the aggregate purchase price for the
Shares (as defined in the attached Stock Purchase Agreement) must be
forwarded to Diversinet Corp.'s Canadian attorneys, Lang Michener, by wire
transfer in accordance with the attached instructions.
Lang Michener will not be acting for any of the purchasers and will release
the funds as noted below:
(i) funds will be released to Diversinet Corp. once a direction from
Sunrise Securities has been received by Lang Michener and Diversinet
Corp. confirms to Lang Michener that it has accepted the subscription;
or
(ii) funds will be returned (without interest) to investors if the
conditions in paragraph (i) are not satisfied by July 15, 2003, such
funds to be paid by check made payable to the Purchaser (and mailed at
the address noted in the subscription agreement);
D. The resale of any of the Shares will not be permitted under applicable
securities legislation (except pursuant to an exemption from applicable
registration requirements) unless a Registration Statement covering the
Shares is effective. In connection with any such sale, the Purchaser will
be required to deliver a current prospectus of the Company to the buyer
(prospectuses may be obtained from the Company at the Purchaser's request).
E. The Shares are not being offered for sale in Canada and the Shares may
not be traded to any person or company in Canada before the date which is
12 months from the Closing Date (as defined in the Agreement).
BANK OF MONTREAL
ROUTING INSTRUCTIONS FOR WIRE PAYMENTS
TO TRUST ACCOUNTS FOR LANG MICHENER
BCE PLACE, SUITE 2500, 181 BAY STREET
TORONTO, ONTARIO CANADA M5J 2T7
TRUST ACCOUNTS
U.S. DOLLAR WIRE PAYMENTS FROM CANADIAN FINANCIAL INSTITUTIONS OR CORRESPONDENT
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BANKS WORLDWIDE:
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Send direct and pay to:
Bank of Montreal SWIFT BIC ADDRESS BOFMCAM2
International Banking
H.O., Montreal
Beneficiary:
(Lang Michener in Trust -
U.S. $ ACCOUNT) 00022001-4603083
Lang Michener
BCE Place, Suite 2500
181 Bay Street
Toronto, Ontario
M5J 2T7
REFERENCE: Diversinet Corp.
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U.S. DOLLAR WIRE PAYMENT PAID THROUGH THE U.S.A. (USING CHIPS OR FEDWIRE)
- -------------------------------------------------------------------------
Pay through: Harris Bank International Corporation SWIFT BIC ADDRESS BOFMCAM2
New York, N.Y.
FEDWIRE ABA: 026007760
or if CHIPS network used:
CHIPS PARTICIPANT ID: ABA 0776
Account with: 21027937
Bank of Montreal SWIFT BIC ADDRESS BOFMCAM2
International Banking
H.O., Montreal
or if CHIPS network used:
CHIPS UID: 046440
Beneficiary:
(Lang Michener in Trust - U.S. $ACCOUNT) 00022001-4603083
Lang Michener
BCE Place, Suite 2500
181 Bay Street
Toronto, Ontario
M5J 2T7
REFERENCE: Diversinet Corp.
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2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 15th day of May, 2003, 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
Sheppard Avenue East, Suite 1700, Toronto, Ontario, M2J 5C2, Canada, and the
purchaser whose name and address is set forth on the signature page hereof (the
"Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchaser agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES. Subject to the terms and
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conditions of this Agreement, the Company has authorized the sale to the
Purchaser of the number of common shares, no par value, of the Company (the
"Shares") set forth on the signature page hereof.
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES. At the Closing (as
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defined in Section 3), the Company will sell the Shares to the Purchaser, and
the Purchaser will buy the Shares from the Company, upon the terms and
conditions hereinafter set forth, at a price of $0.62 per Share for an aggregate
purchase price set forth on the signature page hereof. The Purchaser
acknowledges that the Closing price of its common shares on the Over the Counter
Bulletin Board on May 8, 2003 was $0.60. The Purchaser acknowledges further that
the sale of the Shares is part of a distribution by the Company of a minimum of
3,226,000 and a maximum of 5 million Shares.
SECTION 3. DELIVERY OF SHARES AT THE CLOSING. The completion of the purchase
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and sale of the Shares (the "Closing") shall occur simultaneously with the
execution of stock purchase agreements for the purchase of a minimum of $2
million of Shares (the "Closing Date"). At the Closing, the Company will issue
to the Purchaser one or more stock certificates representing the Shares
registered in the name of the Purchaser, or in such nominee name(s) as
designated by the Purchaser in writing. The name(s) in which the stock
certificates are to be registered are set forth in the Stock Certificate
Questionnaire attached hereto as APPENDIX I. The Company's obligation to
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complete the purchase and sale of the Shares being purchased hereunder and
deliver such certificates to the Purchaser 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 the purchase
price for the Shares being purchased hereunder; (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 accept
delivery of such certificates and to pay for the Shares evidenced thereby 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
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Company hereby represents and warrants to, and covenants with, the Purchaser as
follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of Ontario,
Canada. Each of the Company and its subsidiaries is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
makes such qualification or leasing necessary unless the failure to so qualify
has not and could not reasonably be expected to have a material adverse effect.
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 January 31, 2003, are as set forth in the unaudited
financial statements of the Company for the quarter ended January 31, 2003 as
provided to the Purchaser in the Information Documents. With the exception of
142,500 previously issued warrants, the Company has not granted any person the
right to require the Company to register any securities of the Company under the
Securities Act of 1933, as amended (the "Securities Act") whether on demand
basis or in connection with the registration of securities of the Company for
its own account or for the account of any other person.
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4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES. The Shares being
-----------------------------------------------
purchased hereunder 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
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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).
4.5. INTEGRATION, ETC. The Company has not in the past nor will it
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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, 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 in a manner
that would require the registration under the Securities Act of the Shares
which form the Shares 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 or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act.
4.6 COMPLIANCE WITH SECURITIES LAWS. Subject to the accuracy of the
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representations and warranties of the Purchaser contained herein, the issuance
of the Shares to the Purchaser hereunder is exempt from the registration and
prospectus delivery requirements of 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 Securities and Exchange Commission
(the "Commission) under the Securities Exchange Act of 1934 (the "Exchange Act")
since November 1, 2000 (as such documents have since the time of their filing
been amended, the "Information Documents"). The Information Documents are the
only filings required of the Company pursuant to the Exchange Act for such
period. In addition, the Company has provided to the Purchaser a copy of a
Confidential Offering Memorandum.
4.8 No Material Adverse Change. Since January 31, 2003, except as
identified and described in the Information Documents, there has not been: (a)
any change in the consolidated assets, liabilities, financial condition or
operating results of the Company from that reflected in the financial statements
included in the Company's Form 20-F for 2002 and the Form 6-K for April 2003,
except for changes in the ordinary course of business which have not and could
not reasonable be expected to have a Material Adverse Effect, individually or in
the aggregate; (b) any declaration or payment of any distribution, on any of the
capital stock of the company, or any redemption or repurchase of any securities
of the Company; (c) any material damage, destruction or loss, whether or not
covered
4
by insurance to any assets or properties of the Company or its subsidiaries; or
(d) any waiver, not in the ordinary course of business, by the Company or any
subsidiary of a material right or of a material debt owed to it.
4.9 Intellectual Property. "Intellectual Property" means all of the
following: (i) patents, patent applications, patent disclosures and inventions
(whether or not patentable and whether or not reduced to practice); (ii)
trademarks, service marks, trade dress, trade names, corporate names, logos,
slogans and Internet domain names, together with all goodwill associated with
each of the foregoing; (iii) copyrights and copyrightable works; (iv)
registrations, applications and renewals for any of the foregoing; (v) trade
secrets, confidential information and know-how (including but not limited to
ideas, formulae, compositions, manufacturing and production processes and
techniques, research and development information, drawings, specifications,
designs, business and marketing plans, and customer and supplier lists and
related information); and (vi) proprietary computer software (including but not
limited to data, data bases and documentation).
(a) All Intellectual Property of the Company and its subsidiaries is
currently in compliance with all legal requirements (including timely filings,
proofs and payments of fees) and is valid and enforceable. No Intellectual
Property of the Company or its subsidiaries which is necessary for the conduct
of Company's and each of its subsidiaries' respective businesses as currently
conducted or as currently proposed to be conducted has been knowingly or is now
involved in any cancellation, dispute or litigation, and, to the Company's
knowledge, no such action is threatened. No patent of the Company or its
subsidiaries has been involved in any interference, reissue, re-examination or
opposition proceeding.
(b) All of the licenses and sublicenses and consent, royalty or other
agreements concerning Intellectual Property which are necessary for the conduct
of Company's and each of its subsidiaries' respective businesses as currently
conducted or as currently proposed to be conducted to which the Company or any
subsidiary is a party or by which any of their assets are bound (other than
generally commercially available, non-custom, off-the-shelf software application
programs having a retail acquisition price of less than $50,000 per license)
(collectively, "License Agreements") are valid and binding obligations of the
Company or its subsidiaries that are parties thereto and, to the Company's
knowledge, the other parties thereto, enforceable in accordance with their
terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally, and
there exists no event or condition which will result in a material violation or
breach of or constitute (with or without due notice or lapse of time or both) a
default by the Company or any of its subsidiaries under any such License
Agreement.
(c) The Company and its subsidiaries own or have the valid right to use
all of the Intellectual Property necessary for the conduct of the Company's and
each of its subsidiaries' businesses substantially as currently conducted or as
currently proposed to be conducted and for the ownership, maintenance and
operation of the Company's and its subsidiaries' properties and assets.
(d) The Company and its subsidiaries own the Intellectual Property that
is necessary for the conduct of Company's and each of its subsidiaries'
respective businesses as currently conducted or as currently proposed to be
conducted, free and clear of all liens, encumbrances, adverse claims or
obligations to license all such owned Intellectual Property, other than licenses
entered into in the ordinary course of the Company's and its subsidiaries'
businesses. The Company and its subsidiaries have a valid and enforceable right
to use all other Intellectual Property used or held for use in the respective
businesses of the Company and its subsidiaries. The Company and its subsidiaries
have the right to use all of the owned and licensed Intellectual 'Property which
is necessary for the conduct of Company's and each of its subsidiaries'
respective businesses as currently conducted or as currently proposed to be
conducted in all jurisdictions in which they conduct their businesses.
(e) The Company and each of its subsidiaries have taken reasonable
steps to maintain, police and protect the Intellectual Property which they own
and which is necessary for the conduct of Company's and each of its
subsidiaries' respective businesses as currently conducted or as currently
proposed to be conducted, including the execution of appropriate confidentiality
agreements and intellectual property and work product assignments and releases.
To the Company's knowledge, the conduct of the Company's and its subsidiaries'
businesses as currently conducted does not infringe or otherwise impair or
conflict with (collectively, "Infringe") any Intellectual Property rights of any
third party, and, to the Company's knowledge, the Intellectual Property rights
of the Company and its subsidiaries which are necessary for the conduct of
Company's and each of its subsidiaries' respective businesses as
5
currently conducted or as currently proposed to be conducted are not being
Infringed by any third party. There is no litigation or order pending or
outstanding or, to the Company's knowledge, threatened or imminent, that seeks
to limit or challenge or that concerns the ownership, use, validity or
enforceability of any Intellectual Property of the Company and its subsidiaries
and the Company's and its subsidiaries' use of any Intellectual Property owned
by a third patty, and, to the Company's knowledge, there is no valid basis for
the same.
(f) The consummation of the transactions contemplated hereby will not
result in the alteration, loss, impairment of or restriction on the Company's or
any of its subsidiaries' ownership or right to use any of the Intellectual
Property which is necessary for the conduct of Company's and each of its
subsidiaries' respective businesses as currently conducted or as currently
proposed to be conducted.
(g) All software owned by the Company or any of its subsidiaries, and,
to the Company's knowledge, all software licensed from third parties by the
Company or any of its subsidiaries, (i) is free from any material defect, bug,
virus, or programming, design or documentation error; (ii) operates and runs in
a reasonable and efficient business manner, and (iii) conforms in all material
respects to the specifications and purposes thereof.
(h) The Company and its subsidiaries have taken reasonable steps to
protect the Company's and its subsidiaries' rights in their confidential
information and trade secrets. Each employee, consultant who has had access to
proprietary Intellectual Property which is necessary for the conduct of
Company's and each of its subsidiaries' respective businesses as currently
conducted or as currently proposed to be conducted has executed an agreement to
maintain the confidentiality of such Intellectual Property and has executed
appropriate agreements that are substantially consistent with the Company's
standard forms thereof. Except under confidentiality obligations, there has been
no material disclosure of any of the Company's or its subsidiaries' confidential
information or trade secrets to any third ply.
4.10 DELIVERIES AT CLOSING.
(a) The Company shall have delivered to Sunrise Securities Corp. a
Certificate, executed on behalf of the Company by its Secretary, dated as of the
Closing Date, certifying the resolutions adopted by the Board of Directors of
the Company approving the transactions contemplated by this Agreement and the
issuance of the shares, certifying the current versions of the articles of the
Company and certifying as to the signatures and authority of persons signing the
Agreements and related documents on behalf of the Company.
(b) The Company shall have delivered to Sunrise Securities Corp. an
opinion from counsel to the Company addressed to the Purchaser, dated as of the
Closing Date, in form and substance reasonably acceptable to Sunrise Securities
Corp.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
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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 in the
purchase of the Shares, 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 Shares, including,
without limitation, the information contained in the Information Documents; (ii)
it acknowledges that the offering of the Shares pursuant to this Agreement has
not been reviewed by the Commission or any state or Canadian regulatory
authority; (iii) the Purchaser is acquiring the number of Shares 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 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 which form such Shares
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
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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 to purchase
the number of Shares set forth on the signature page hereof, not relied upon any
representations or other
6
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 because such Purchaser meets
at least one of the conditions set forth in APPENDIX III hereto.
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5.2 The Purchaser hereby covenants with the Company not to make any
sale of the 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).
5.4 The Purchaser recognizes that an investment in the Shares is
speculative and involves a high degree of risk, including a risk of total loss
of the Purchaser's investment. The Investor can bear the economic risk of this
investment and can afford a complete loss thereof.
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 shall be endorsed with the legend in
substantially the form set forth below, as well as any other legends required by
applicable law, and the Purchaser covenants that the Purchaser shall not
transfer the 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 agrees not to trade any of the Shares to any person
or company resident in Canada before the date which is 12 months from the
Closing Date.
SECTION 6. SURVIVAL OF REPRESENTATIVES, WARRANTIES AND AGREEMENTS.
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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
7
herewith shall survive following the delivery to the Purchaser of the Shares
being purchased and the payment therefor.
SECTION 7. REGISTRATION OF THE SHARES: COMPLIANCE WITH THE SECURITIES ACT.
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7.1 REGISTRATION STATEMENT ON FORM F-3. The Company represents and
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warrants that the Company meets the requirements for use of Form F-3 under the
Securities Act.
7.2 REGISTRATION PROCEDURES AND EXPENSES. The Company shall:
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(a) as soon as practicable, but in no event later than thirty (30) days
following the date of Closing, prepare and file with the Commission a
Registration Statement on Form F-3 relating to the resale pursuant to Rule 415
under the Securities Act of the Shares by the Purchaser from time to time
through the Over the Counter Bulletin Board or the facilities of any securities
exchange on which the common shares of the Company are then traded or in
privately-negotiated transactions;
(b) The Registration Statement (and each amendment or supplement
thereto and each request for acceleration of effectiveness thereof) shall be
provided to the Purchaser and its counsel prior to its filing or other
submission. If a Registration Statement covering the Shares is not filed with
the Commission within thirty days of the Closing Date, the Company will make pro
rata payments to each Purchaser as liquidated damages and not as a penalty, in
an amount equal to 2.0% of the aggregate amount paid by such Purchaser on the
Closing Date to the Company for any 30-day period or pro rata for any portion
thereof following the date by which such Registration Statement should have been
filed for which no Registration Statement is filed with respect to the Shares.
Such payment shall be made to each Purchaser in additional fully paid and
non-assessable Common Shares not later than three Business Days following, the
end of 30-day period. For this purpose, each Common Share shall be deemed to
have a value equal to the arithmetic mean of the closing sales prices for the
Common Shares for the ten (10) trading days beginning twenty (20) trading days
prior to the issuance of such shares;
(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) use commercially reasonable efforts to have the Registration
Statement declared effective as soon as practicable. If a Registration
Statement covering the Shares is not declared effective by the Commission prior
to 105 days after the Closing Date, then the Company will make pro rata payments
to each Purchaser as liquidated damages and not as a penalty, in an amount equal
to 1.0% of the aggregate amount invested by such Purchaser in the Shares, for
any month or pro rata for any portion thereof following the date by which such
Registration Statement should have been effective (the "Blackout Period"). Such
payments shall be in partial compensation to the Purchaser, and shall not
constitute the Purchaser's exclusive remedy for such events. The amounts payable
as liquidated damages pursuant to this paragraph shall be paid monthly within
three (3) Business Days of the last day of each month following the commencement
of the Blackout Period until the termination of the Blackout Period. Such
payment shall be made to the Purchaser in additional fully paid and
non-assessable Common Shares. Each Common Share shall be deemed to have a value
equal to the arithmetic mean of the closing sales prices for the Common Shares
for the ten (10) trading days beginning twenty (20) trading days prior to the
issuance of such shares;
(e) 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 second anniversary of the Closing Date, (ii) the date on
which the Purchaser may sell all the Shares then held by the Purchaser without
volume limitations in accordance with subsection (k) of Rule 144 under the
Securities Act ("Rule 144"), or (iii) such time as all the Shares purchased by
the Purchaser have been sold pursuant to a registration statement;
(f) so long as the Registration Statement is effective covering the
resale of the Shares owned by the Purchaser, furnish to the Purchaser with
respect to the Shares registered under the Registration Statement such
8
reasonable number of copies of prospectuses and such other documents as the
Purchaser may reasonably request, in order to facilitate the public sale or
other disposition of all or any of the Shares by the Purchaser;
(g) 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;
(h) bear all expenses in connection with the procedures in paragraphs
(a) through (f) of this Section 7.2 and the registration of the Shares pursuant
to the Registration Statement, except for any underwriting discounts, brokerage
fees and commissions incurred by the Purchaser, if any; and
(i) 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 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
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
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.
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.
2225 Sheppard Avenue East, Suite 1700
Toronto, Ontario M2J 5C2, Canada
Facsimile: (416) 756-7346
Attention: David Hackett, 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.
9
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 Shares 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 purchase price of the Shares 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 for Shares.
SECTION 16. RIGHT TO APPOINT AGENT. The Purchaser acknowledges that the
--------------------------
Company retains the right, in its sole discretion, to appoint a placement agent
in connection with the sale of Shares to the Purchaser and that the Company may
pay to such placement agent a fee which may be calculated by reference to the
purchase price payable by the Purchaser. Sunrise Securities Corp. will be
receiving a selling commission in cash and stock in relation to this private
placement. In addition to its selling commission, Sunrise will receive warrants
to purchase 10% of the number of Shares sold in this offering. The three-year
warrants shall have an exercise price of $0.62 per Share.
10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives shown below:
-------------------------------------------
[Name of Purchaser]
By:
----------------------------------------
Name:
Title:
Address:
-----------------------------------
-----------------------------
-----------------------------
Telephone:
-----------------------------
Facsimile:
-----------------------------
Date:
-----------------------------
Number of Shares Price Per Share in Aggregate Price in
to be Purchased U.S. Dollars U.S. Dollars
- --------------- ------------ ------------
$ 0.62
Accepted and Agreed to by:
DIVERSINET CORP.
By:
-------------------------------------------
Nagy Moustafa, President
and Chief Executive Officer
Date:
-----------------------------------------
11
APPENDIX I
DIVERSINET CORP.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the following
information:
1. The exact name that your Shares are to be registered in (this is the
name that will appear on your stock certificate(s)). You may use a
nominee name if appropriate:
----------------------------------------
2. The relationship between the Purchaser and the Registered Holder
listed in response to item 1 above:
----------------------------------------
3. The mailing address of the Registered Holder listed in response to
item 1 above:
----------------------------------------
----------------------------------------
----------------------------------------
4. The Social Security Number or Tax Identification Number of the
Registered Holder listed in response to item 1 above:
----------------------------------------
5. The name of the financial institution of the Purchaser which will be
wiring funds representing the purchase price of the Shares:
----------------------------------------
----------------------------------------
----------------------------------------
APPENDIX II
DIVERSINET CORP.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information:
1. Pursuant to the "Selling Shareholder" section of the Registration
Statement, please state you or your organization's address and name exactly as
it should appear in the Registration Statement:
----------------------------------------
----------------------------------------
----------------------------------------
2. Please provide the number of Common Shares that you or your
organization will own immediately after Closing, including those Shares
purchased by you or your organization pursuant to this Purchase Agreement and
those Common Shares purchased by you or your organization through other
transactions:
----------------------------------------
----------------------------------------
----------------------------------------
3. Have you or your organization had any position, office or other
material relationship within the past three (3) years with the Company or its
affiliates? Please circle the correct answer.
Yes No
Appendix III
"Accredited Investors" as defined in Regulation D under the Securities Act
of 1933, as amended (the "Act"), include any of the following:
1. Any natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds $1,000,000;
2. Any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year.
3. Any bank as defined in section 3(a)(2) of the Act, or any savings
and loan association or other institution as defined in section 3(a)(5)(A) of
the Act whether acting in its individual or fiduciary capacity; any broker or
dealer registered pursuant to section 15 of the Securities Exchange Act of 1934;
any insurance company as defined in section 2(13) of the Act; any investment
company registered under the Investment Company Act of 1940 or a business
development company as defined in section 2(a)(48) of the Act; any Small
Business Investment Company licensed by the U.S. Small Business Administration
under section 301(d) or (d) of the Small Business Investment Act of 1958; any
plan established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions, for the
benefits of its employees if such plan has total assets in excess of $5,000,000;
any employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 if the investment decision is made by a plan fiduciary, as
defined in section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment advisor, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that are
accredited investors;
4. Any private business development company as defined in section
202(a)(22) of the Investment Advisors Act of 1940;
5. Any organization described in section 501(d)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
6. Any director, executive officer, or general partner of the issuer of
the securities being offered, or sold, or any director, executive officer, or
general partner of a general partner of that issuer;
7. Any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose purchase is
directed by sophisticated person as described in 230.506(b)(2)(ii);
8. Any entity in which all of the equity owners are accredited
investors.