Trans-Pharma Corporation
EXHIBIT
10.5
Trans-Pharma
Corporation
0000
Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx
Xxxxx,
XX 00000
September
17, 2007
Mr.
Xxx
Xxxxxxxxx
Granite
Financial Group, LLC
00000
Xx
Xxxxxx Xxxx, Xxxxx 000
Xxx
Xxxxx, XX 00000
Dear
Xx.
Xxxxxxxxx:
The
undersigned, Trans-Pharma Corporation, a Nevada corporation ("Corporation"),
by
this letter confirms its agreement (the "Agreement") with Granite Financial
Group, LLC, a Delaware limited liability company (the "Broker-Dealer"),
regarding
the
Broker-Dealer acting as a placement agent in connection with an offering of
up
to $5.0 million of units consisting of shares of common stock and warrants
to
purchase common stock (the
"Units") under
the
terms set forth in those certain Subscription Agreements, in the form attached
hereto as Exhibit
A,
and all
exhibits and supplements thereto (the "Offering Materials") prepared by
Corporation and delivered to you for distribution to the offerees. The Units
are
to be offered on a "Best Efforts, Minimum- Maximum" basis with respect to all
Units. The Units will be offered and sold in accordance with 17 CFR 203.506
("Rule 506"), promulgated under Regulation D of the Securities Xxx 0000, as
amended.
Upon
execution and delivery of subscription documents (the "Subscription Documents"),
which shall be in the form of the Subscription Documents included in the
Offering Materials, the subscribers for Units shall, upon acceptance thereof
by
Corporation (which acceptance shall be in Corporation’s sole discretion), become
Unit Holders pursuant to the terms set forth in the Offering Materials. The
offering of the Units shall begin when the Offering Materials are first made
available to you by Corporation and shall continue until the termination date,
and through the end of any extension, unless the offering has been terminated
as
of any earlier time (the "Subscription Period").
Section
1. Appointment
of Agent. On
the
basis of the representations, warranties and covenants contained in this
Agreement, but subject to the terms and conditions herein set forth, you are
hereby appointed as non-exclusive selling agent of Corporation for the Units
offered under the Offering Materials. The appointment shall continue until
the
earliest of (i) 120 days from the date of this Agreement, or (ii) the
termination of the Subscription Period, or (iii) the sale of all of the Units,
or (iv) the termination of the offering of Units by Corporation for any reason,
whichever occurs first. Subject to the performance by Corporation of all of
its
obligations under this Agreement, and to the completeness and accuracy of all
of
its representations and warranties contained in this Agreement, you agree to
use
your best efforts during the Subscription Period to find subscribers for the
Units.
Section
2. Definitions. Certain
terms used herein are defined in the Offering Materials and shall have the
same
meanings given therein.
Section
3. Representations,
Warranties and Covenants of Corporation.
Corporation represents, warrants and covenants, to the best of its knowledge,
that:
a. Corporation
is a corporation duly and validly organized and in good standing under the
laws
of the State of Nevada and has full power and authority to conduct the business
described in the Offering Materials.
b. Corporation
will deliver to you a reasonable number of copies of the Offering Materials,
and
the information made available to each offeree pursuant to subsection 3(i)
hereof shall be sufficient to comply with, and conform to, the requirements
of
Rule 506.
c. All
action required to be taken by Corporation to offer and sell the Units to
qualified subscribers has been or will be taken.
d. Upon
payment of the subscription amount specified in the Subscription Documents,
acceptance by Corporation of the subscriptions from qualified subscribers (which
acceptance shall be at the sole discretion of Corporation), and delivery by
the
subscribers for Units of such additional documents as may reasonably be required
by Corporation, such subscribers will become Unit Holders.
e. During
the Subscription Period, the Offering Materials will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order
to make the statements made therein, in the light of the circumstances under
which they were made, not materially misleading.
f. This
Agreement has been duly and validly authorized, executed, and delivered by
or on
behalf of Corporation and constitutes a valid and binding agreement of
Corporation.
g. Execution
by Corporation of a subscriber’s Subscription Documents will be duly and validly
authorized by or on behalf of Corporation and will constitute a valid and
binding agreement of Corporation.
h. The
execution and delivery of this Agreement and the incurrence of the obligations
set forth herein and the consummation of the transactions contemplated in this
Agreement and the Offering Materials will not constitute a breach or default
under:
(i)
any
instruments by which Corporation is bound; or
(ii)
any
order, rule or regulation (applicable to Corporation) issued by any court,
governmental body or administrative agency having jurisdiction over
Corporation.
i. Corporation
shall make available, during the Subscription Period and prior to the sale
of
any Units, to each purchaser or his purchaser representative(s) or both:
(i) such
information (in addition to that contained in the Offering Materials) concerning
the offering of Units, Corporation, and any other relevant matters, as
Corporation possesses or can acquire without unreasonable effort or expense;
and
(ii) the
opportunity to ask questions of, and receive answers from, Corporation
concerning the terms and conditions of the offering of the Units, and to obtain
any additional information, to the extent Corporation possesses the same or
can
acquire it without unreasonable effort or expense, necessary to verify the
accuracy of the information furnished to the purchaser or his purchaser
representative(s).
j. With
respect to those activities undertaken by it, Corporation has endeavored to
ensure that the offering and sale of Units complies, in all respects, with
the
requirements of the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, and the securities or "blue sky" laws of
any
state or jurisdiction in which an offer and/or sale takes place.
k.
There
is
no litigation or proceeding at law or in equity before any federal or state
authority against Corporation wherein an unfavorable decision, ruling, or
finding would materially and adversely affect the business, operations or
financial condition or income of Corporation or any proposed Corporation
investment, and neither the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated, nor the fulfillment of
or
compliance with the terms hereof will conflict with, or result in a breach
of,
any of the terms, provisions, or conditions of any agreement or instrument
to
which Corporation is a party.
l. Corporation
will endeavor in good faith to qualify, or assist you in qualifying, the Units
for offer and sale, or to establish, or assist you in establishing, the
exemption of the offer and sale of the Units from qualification or registration
under the applicable securities or "blue sky" laws of such jurisdictions as
you
may reasonably designate, and will promptly notify you, orally or in writing
(but if orally then prompt written confirmation shall be delivered to you),
as
each jurisdiction is so qualified or as an exemption from registration or
qualification is established therein; provided, however, that Corporation shall
not be obligated to do business or to qualify as a dealer in any jurisdiction
in
which it is not so qualified.
m. Corporation
will pay all expenses in connection with the printing and delivery to you in
reasonable quantities of copies of the Offering Materials and the qualification
of the Units under the securities or "blue sky" laws.
n. As
compensation for your services, Corporation will pay you a sales commission
equal in cash to (i) seven percent (7%) of the gross proceeds received by
Corporation from the Units placed by you (the “Cash
Fee”)
and
(ii) three-year warrants to purchase a number of shares of common stock equal
to
three percent (3%) of the number of shares included within the Units placed
by
you; provided, however, that immediately prior to each closing of the offering
of the Units you shall subscribe for that number of Units equal in value to
the
Cash Fee payable to you with respect to such closing and acknowledge that you
will not be entitled to any sales commissions with respect to Units purchase
by
you using the Cash Fee pursuant to this Section 3(n).
o. If
any
event relating to or affecting Corporation shall occur during the Subscription
Period, as a result of which it is necessary, in the opinion of your counsel
and
counsel to Corporation, to amend or supplement the Offering Materials so that
it
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of
the
circumstances under which they are made, not misleading, Corporation shall
forthwith prepare and furnish to you a reasonable number of copies of an
amendment or amendments of, or supplement or supplements to, the Offering
Materials, which you shall promptly deliver to all offerees then being
solicited. For purposes of this subsection o., Corporation will furnish such
information with respect to Corporation as you may from time to time reasonably
request.
p. Corporation
will deliver to you such reports and documents as Corporation is required,
under
the terms of the Offering Materials or any document referred to therein, to
furnish to its prospective investors.
Section
4. Representations,
Warranties and Covenants of the Broker-Dealer.
The
Broker-Dealer represents, warrants and covenants, to the best of its knowledge,
that:
a. It,
or
any person acting on its behalf, will not offer any of the Units for sale,
or
solicit any offers to subscribe for or buy any Units, or otherwise negotiate
with any person with respect to the Units, on the basis of any communications
or
documents, except the Offering Materials, the information provided by
Corporation pursuant to Section 3(i), or any other documents and any transmittal
letter reasonably satisfactory in form and substance to Corporation and counsel
to Corporation.
b. It,
or
any person acting on its behalf, shall not use any form of general solicitation
or general advertising in the course of any offer or sale of the Units
including, but not limited to:
(i) any
advertisement, article, notice or other communication published in any
newspaper, magazine, website, or similar media or broadcast over television
or
radio; and
(ii) any
seminar or meeting whose attendees have been invited by any general solicitation
or general advertising.
c. It,
or
any person acting on its behalf, shall solely make offers to sell Units to,
solicit offers to subscribe for or purchase any Units from, or otherwise
negotiate with respect to the Units with, persons whom it has reasonable grounds
to believe and does believe are "accredited investors" within the meaning of
17
CFR 230.501(a).
In
making
or soliciting such offers, or so negotiating, Broker-Dealer will comply with
the
provisions of the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, and the securities or "blue sky" laws of the
jurisdiction in which it makes or solicits such offers, or so
negotiates.
d. It
will
exercise reasonable care to assure that the purchasers are not underwriters
within the meaning of Section 2(11) of the Securities Act of 1933, as amended.
In that connection, it will:
(i) Make
reasonable inquiry to determine that each purchaser is acquiring the Units
for
his own account; and
(ii) Obtain
from the purchaser a signed written agreement (contained in the Subscription
Documents) that the Units will not be sold without registration under the
Securities Act of 1933, as amended, unless an opinion of counsel that an
exemption therefrom is available, satisfactory in form and substance to
Corporation or counsel, is delivered in accordance with such
agreement.
e. It
shall
furnish Corporation with information in sufficient detail (in the form of the
Investor Questionnaire, a copy of which is included in the Offering Materials),
with respect to each purchaser of Units, in order to demonstrate to Corporation
that such purchaser satisfies the requirements of Rule 506, as outlined in
Section 4(c) above.
f. If
a
prospective purchaser uses or consults a purchaser representative (as that
term
is defined in 17 CFR 230.501(h)) in connection with the offering of the Units,
it will obtain and deliver to Corporation, prior to the closing of the offering
of the Units, the prospective purchaser's written acknowledgment that he has
used such person(s) in connection with evaluating the merits and risks of the
prospective investment and such representative's written consent so to act,
as
well as a description of the education and experience of such
representative(s).
g. It
will
offer and sell the Units only in those jurisdictions in which it, or any other
person or entity acting in its behalf, is properly registered, and it will
comply with all laws, rules and regulations related to its activities on behalf
of Corporation pursuant to this Agreement.
h. It
is a
securities broker-dealer registered and in good standing with the Securities
and
Exchange Commission and is a member of the NASD.
i. This
Agreement has been duly and validly authorized, executed, and delivered by
or on
behalf of the
Broker-Dealer
and
constitutes a valid and binding agreement of the Broker-Dealer.
Section
5. Conditions
of the Obligations of Corporation.
The
obligations of Corporation under this Agreement are subject to the accuracy
of
and compliance with your representations, warranties and covenants set forth
in
Section 4, and to the performance by you of your obligations
hereunder.
Section
6. Representations,
Warranties and Agreements to Survive Delivery.
All
representations, warranties and agreements by either Corporation or
Broker-Dealer contained in this Agreement shall remain operative and in full
force and effect, and shall survive the closing of the offering of the Units.
Upon termination of this Agreement, Corporation shall have no further
obligations to Broker-Dealer other than with respect to fees payable to
Broker-Dealer as provided herein.
Section
7. Indemnification.
(a) Corporation
agrees to indemnify, defend and hold Broker-Dealer harmless against any and
all
loss, liability, damage and expense whatsoever, whether or not resulting in
any
liability, that may be incurred under applicable securities laws, at common
law,
or otherwise and which is based upon or arises out of:
(1) any
untrue statement or alleged untrue statement of a material fact contained in
the
Offering Materials or the omission or alleged omission from the Offering
Materials of a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading;
(2) the
offer
and/or sale by Corporation, or anyone acting on its behalf, of Units (unless
due
to the bad faith or gross negligence of the Broker-Dealer); or
(3) any
breach of any representation, warranty or covenant made by Corporation in this
Agreement.
(b) The
Broker-Dealer agrees to indemnify, defend and hold Corporation and its officers,
directors, shareholders and agents harmless against any and all loss, liability,
damage and expense whatsoever, whether or not resulting in any liability, that
may be incurred under applicable securities laws, at common law, or otherwise
and which is based upon or arises out of:
(1) any
violation by Broker-Dealer or its agents of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, or any state
securities statutes, unless such violation is attributable to actions,
misrepresentations or omissions of Corporation; or
(2) any
breach of any representation, warranty or covenant made by Broker-Dealer in
this
Agreement.
(c) In
any
legal or regulatory action or claim brought against Corporation or Broker-Dealer
or their agents, Corporation and the Broker-Dealer shall have the rights and
duties set forth in this Section 7. The indemnification provisions included
in
this Section 7 shall include, but not be limited to, recovery of and payment
of
reasonable legal or other expenses incurred by Broker-Dealer or Corporation
in
connection with defending such actions and claims.
(d) Within
fourteen (14) calendar days after a claim or action is brought or asserted
against Corporation or the Broker-Dealer or both, which in the opinion of either
is subject to the indemnification provisions contained in this Section 7, the
party seeking indemnification (the "Indemnitee") shall notify, in writing,
the
party from whom indemnification is sought (the "Indemnitor") of the existence
of
the claim or action. Indemnitor shall assume the defense of the claim or action
by employing counsel for the Indemnitee, and shall thereafter be responsible
for
the payment of all legal fees and expenses incurred in connection with such
defense. In the event that a claim or action is brought or asserted against
Corporation and the Broker-Dealer, jointly, Corporation and the Broker-Dealer
shall make a good faith effort determine whether the claim or action can be
defended jointly or if potential conflicts exist which require that separate
legal counsel be employed for Broker-Dealer and Corporation. In such case,
if
Corporation and the Broker-Dealer seek indemnification from the other, each
shall employ separate counsel to represent them and shall be responsible for
the
payment of all expenses associated with employment of such counsel, subject
to
the right of recovery of such expenses as set forth below in this subparagraph
(d). If
either Corporation or Broker-Dealer seek indemnification from the other under
the provisions of this Section 7, and the party from whom indemnification is
sought declines to assume defense of the action or claim, the party seeking
indemnification shall have a right of recovery against the party from whom
indemnification is sought for all losses, liabilities, damages and expenses
incurred in the defense of the action or claim, including all actual attorneys’
fees and costs incurred, in the event that the defense of the action or claim
is
successful and there are no findings of wrongdoing on the part of the party
seeking indemnification.
Section
8. Relief. The
Broker-Dealer agrees that a breach or threatened breach on its part of any
agreement contained in this Agreement will cause such damage to Corporation
as
will be irreparable, and, for that reason, the Broker-Dealer further agrees
that
Corporation shall be entitled as a matter of right to an injunction, by any
court of competent jurisdiction, restraining any further violation of such
covenants by the Broker-Dealer or its employees, partners, officers or agents.
The right of injunction shall be cumulative and in addition to whatever other
remedies Corporation may have, including, specifically, recovery of damages.
The
Broker-Dealer also agrees to pay reasonable attorney's fees incurred by
Corporation in successfully proving that the Broker-Dealer breached any of
the
terms of this Agreement.
Section
9. Notices.
All
communications under this Agreement shall be in writing, and, if sent to you,
shall be mailed, delivered or telegraphed and confirmed to you at the address
initially set forth above or as changed by you in a written notice to
Corporation, or if sent to Corporation, shall be mailed, delivered or
telegraphed and confirmed to it at the address set out in the letterhead
above.
Section
10. Parties.
This
Agreement shall inure to the benefit of, and be binding upon, you, any person
which controls you, and your successors, and upon Corporation and its
representatives and successors. This Agreement and its conditions and provisions
are for the sole and exclusive benefit of the parties and their representatives
and successors, and for the benefit of no other person, firm or
corporation.
Section
11. Relationship
of Parties.
It is
not the intention of the parties to create, nor shall this Agreement be
construed as creating, a partnership, joint venture, agency relationship or
association other than as specifically set forth herein, or to render the
parties liable as partners, co-venturers, or principals. In their relations
with
each other under this Agreement, the parties shall not be considered fiduciaries
or to have established a confidential relationship other than as specifically
set forth herein but rather shall be free to act on an arm's length basis in
accordance with their own respective self-interest, subject, however, to the
obligation of the parties to act in good faith in their dealings with each
other
with respect to activities hereunder.
Section
12. Entire
Agreement.
This
Agreement evidences the entire agreement between Corporation and the
Broker-Dealer, and represents a merger of all preceding agreements between
the
parties hereto pertaining to the subject matter hereof.
Section
13. Severability
of Provisions.
If one
or more of the provisions of this Agreement or any application thereof shall
be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions hereof and any application thereof
shall in no way be affected or impaired.
Section
14. Governing
Law; Jurisdiction. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Nevada, without regard to conflicts of laws or principles
thereof. Each of the parties hereto agrees irrevocably consents to the
jurisdiction and venue of the federal and state courts located in Las Vegas,
Nevada.
Section
15. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
[SIGNATURE
PAGE FOLLOWS]
If
the
foregoing is in accordance with your understanding of our agreement, kindly
sign
and return to us one copy of this Agreement, whereupon this instrument will
become a binding agreement upon you and Corporation in accordance with its
terms.
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Very
truly yours,
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TRANS-PHARMA
CORPORATION,
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a
Nevada Corporation
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By:
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/s/
Xxxxxx Xxxxx, Ph.D.
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Name:
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Xxxxxx
Xxxxx, Ph.D.
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Title:
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Chief
Executive Officer
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The
foregoing Agreement is hereby confirmed and accepted as of the date first set
out above.
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By:
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/s/
Xxx Xxxxxxxxx
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Name:
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Xxx
Xxxxxxxxx
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Title:
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00000 Xx Xxxxxx Xxxx, Xxxxx 000
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Xxx
Xxxxx, XX 00000
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