Exhibit 10.1
Execution Copy
SYNVISTA THERAPEUTICS,
INC.
NOTE PURCHASE
AGREEMENT
Synvista
Therapeutics, Inc.
1.
Purchase and Sale . On the Closing Date (as
defined herein), Synvista Therapeutics, Inc., a Delaware
corporation (the “ Company ”) hereby agrees to
issue and sell to each of the undersigned holders of the
Company’s Series B Preferred Stock, $0.01 par value per share
(each a “ Holder ” and, collectively, the
“ Holders ”), a Senior Secured Promissory Note,
in the form attached hereto as Exhibit A (each, a “
Note ” and, collectively, the “ Notes
”), in the principal amount set forth opposite such
Holder’s name on Schedule A .
2.
Closing Date and Payment . The closing (the “
Closing ”) of the issuance and sale of the Notes shall
take place at the offices of the Company at 10:00 a.m. on the date
hereof (the “ Closing Date ”).
3.
Representations and Warranties of each Holder
. Each Holder hereby acknowledges, represents, warrants
and/or agrees as follows:
(a) The
sale of the Notes has not been registered under the Securities Act
of 1933, as amended, or any successor statute (the “
Securities Act ”), or any state securities
laws. The Holder understands that the offering and sale
of the Notes is intended to be exempt from registration under the
Securities Act, by virtue of Section 4(2) and/or Section 4(6) of
the Securities Act and the provisions of Regulation D promulgated
thereunder;
(b)
The Holder is acquiring the Notes solely for its own account for
investment and not with a view to resale or distribution and has no
present intention of transferring the Notes to any other person or
entity;
(c) The
Holder is an “accredited investor” as that term is
defined in Rule 501 of Regulation D under the Securities
Act;
(d) The
Holder is a sophisticated investor and has such knowledge and
experience in financial, tax, and business matters, including,
without limitation, experience in investments by actual
participation, so as to enable it to utilize the information made
available to it in connection with the offering of the Notes, to
evaluate the merits and risks of an investment in the Notes and to
make an informed investment decision with respect
thereto;
(e)
The Holder is either a natural person or an entity which was not
formed for the specific purpose of acquiring the
Notes. With respect to any entity-Holder, the execution,
delivery and performance of this Agreement by the Holder have been
duly authorized and the Agreement is a valid and legally binding
agreement of the Holder;
(f)
The Holder has received all documents requested by the Holder
regarding the Company and has reviewed them and believes it is
well-informed about the Company;
(g) The
Holder acknowledges that neither the U.S. Securities and Exchange
Commission (“ SEC ”) nor any U.S. state or
foreign securities commission has approved the Notes or passed upon
or endorsed the merits of the offering;
(h) The
Holder is aware that an investment in the Notes involves a number
of very significant risks;
(i) The
Holder must bear the economic risk of the investment indefinitely
because the Notes may not be sold, hypothecated or otherwise
disposed of unless subsequently registered under the Securities Act
and applicable state securities laws or an exemption from
registration is available. Legends shall be placed on
the Notes to the effect that they have not been registered under
the Securities Act or applicable state securities laws and of the
resulting limitations on transfer and that appropriate notations
thereof will be made in the Company’s books and stock
transfer records;
(j) The
aggregate purchase price of the Notes does not exceed twenty
percent (20%) of the investor’s net worth;
(k) The
Holder has taken no action which would give rise to any claim by
any person for brokerage commission, finders’ fees or the
like relating to this Agreement or the transactions contemplated
hereby; and
(l)
The information contained herein is accurate and may be relied upon
by the Company in determining the availability of an exemption from
registration under Federal and state securities laws in connection
with the offering of the Notes.
4.
Representations and Warranties of the Company
. The Company hereby acknowledges, represents, warrants
and/or agrees as follows:
(a)
Organization, Standing and Qualification of the Company
. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. The Company has all requisite corporate power
and authority to own and operate its properties and to carry on its
business as now being conducted and as proposed to be
conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each
jurisdiction in which failure to so qualify would materially and
adversely affect the business, properties, operations or condition,
financial or otherwise, of the Company. The resolutions
adopted by the directors of the Company on February 20, 2009
authorizing the transactions contemplated by this Agreement have
not been amended or modified in any way, have not been rescinded
and are in full force and effect on the date hereof.
(b)
Corporate Authority; Enforceability . The Company
has full right, power and authority to issue and sell the Notes as
herein contemplated and the Company has full power and authority to
enter into and perform its obligations under this Agreement, the
Notes, the Security Agreement (defined in Section 7(a)), and the
Intellectual Property Security Agreement (defined in Section
7(a)). The execution and delivery of this Agreement, the
Notes, the Security Agreement, and the Intellectual Property
Security Agreement by the Company and the consummation of the
transactions contemplated herein and therein have been duly
authorized and approved by all requisite corporate action, and each
of this Agreement, the Notes, the Security Agreement, and the
Intellectual Property Security Agreement are a valid and legally
binding obligation of the Company; provided , however
, (i) that insofar as any foreclosure on the Collateral (as defined
in Section 6(a) hereof) would constitute a sale of all or
substantially all of the Company’s assets requiring
stockholder approval, such stockholder approval has not been
obtained, and (ii) that the Company must file a Certificate of
Designations with the Secretary of State of the State of Delaware
to designate 2,100,000 shares of its currently undesignated
Preferred Stock, $0.01 par value per share, as Series B Preferred
Stock, in order to make such shares available for the payment to
the Holders of dividends on such shares of Series B Preferred
Stock, pursuant to the terms of the Company’s Amended and
Restated Certificate of Incorporation (the “Charter”),
and that, in the event that the dividends payable under the Charter
to the Holders are likely to exceed 2,100,000 shares of Series B
Preferred Stock, the Company shall be required to include a
proposal in the proxy statement for its annual meeting of
stockholders to be held in 2009 to amend its Charter to increase
the authorized number of shares of Series B Preferred
Stock.
(c)
Conflicts . Subject to Section 4(b)(i) and (ii)
above, and to the consent of the Holders to the execution by the
Company of this Agreement, the Notes, the Security Agreement and
the Intellectual Property Security Agreement, neither the
authorization, execution and delivery of this Agreement, the Notes,
the Security Agreement, and the Intellectual Property Security
Agreement nor the consummation of the transactions herein and
therein contemplated, will (i) conflict with or result in a breach
of any of the terms of the Company’s Certificate of
Incorporation or By-Laws, (ii) violate any judgment, order,
injunction, decree or award of any court or governmental body,
having jurisdiction over the Company, against or binding on the
Company or to which its property is subject, (iii) violate any
material law or regulation of any jurisdiction which is applicable
to the Company, (iv) violate, conflict with or result in the breach
or termination of, or constitute a default under, the terms of any
material agreement to which the Company is a party, except for such
violations or defaults which do not materially and adversely affect
the business, assets, operations or financial condition of the
Company, or (v) violate or conflict with the rules and regulations
of the NYSE Alternext LLC (the “ NYSE Alternext
”) applicable to the Company.
(d)
Capitalization . The capitalization of the Company is as set
forth on Schedule 4(d) attached hereto. The
Company has not issued any capital stock since its most recently
filed periodic report under the Securities Exchange Act of 1934, as
amended (the “ Exchange Act ”), other than
pursuant to the exercise of employee stock options under the
Company’s stock option plans and the issuance of shares of
Common Stock to employees pursuant to the Company’s employee
stock purchase plan outstanding as of the date of the most recently
filed periodic report under the Exchange Act. All of the
outstanding shares of capital stock of the Company are validly
issued, fully paid and nonassessable. Except for the
consents from BIO-RAP Technologies Ltd. (“BIO-RAP”) and
from the Holders, no approval or authorization of any stockholder
or the Board of Directors of the Company is required for the
issuance and sale of the Notes. The issuance of the
Notes pursuant to the provisions of this Agreement will not violate
any preemptive rights or rights of first refusal granted by the
Company that will not be validly waived or complied with, and will
be free of any liens or encumbrances, other than any liens or
encumbrances created by or imposed upon the Holders through no
action of the Company. There are no stockholders
agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company
is a party or, to the knowledge of the Company, between or among
any of the Company’s stockholders.
(e)
Litigation . There are no actions, suits or proceedings at
law or in equity or by or before any governmental instrumentality
or other agency or regulatory authority now pending, or, to the
best knowledge of the Company, threatened against the Company
which, if adversely determined, could materially and adversely
affect the business, assets, operations or condition, financial or
otherwise, of the Company. There is no action, suit or proceeding
by the Company currently pending or that the Company currently
intends to initiate.
(f)
Compliance with Laws . The Company is not in violation of
any statute, law, rule or regulation, or in default with respect to
any judgment, writ, injunction, decree, rule or regulation of any
court or governmental agency or instrumentality, except for such
violations or defaults which do not materially and adversely affect
the business, assets, operations or condition, financial or
otherwise, of the Company.
(g)
Governmental Consents . Subject to the accuracy
of the representations and warranties of the Holders set forth
herein, no registration or filing with, or consent or approval of
or other action by, any Federal, state or other government agency
under laws and regulations thereof as now in effect is or will be
necessary for the valid execution, delivery and performance by the
Company of this Agreement, the Security Agreement, and the
Intellectual Property Security Agreement, and the issuance, sale
and delivery of the Notes, other than the filing of a Form D with
the SEC and the filings required by state securities
law.
(h)
Title . The Company has good and marketable title in fee
simple to all real property and good and marketable title to all
personal property owned by it which is material to the business of
the Company, in each case free and clear of all liens, encumbrances
and defects except such as do not materially affect the value of
such property and do not interfere with the use made and proposed
to be made of such property by the Company. Any real property and
facilities held under lease by the Company are held by it under
valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the
Company.
(i)
Regulatory Matters . The descriptions of the results of the
clinical, pre-clinical and other trials, studies and tests as set
forth in the SEC Documents (as defined in Section 4(k)), provided
to the Holders are accurate in all material respects and fairly
present the data derived from such trials, studies and tests. To
the Company’s knowledge, with respect to the Collateral, the
Company has operated and currently is in compliance in all material
respects with applicable statutes and implementing regulations
administered or enforced by the United States Food and Drug
Administration (“ FDA ”). Except as set forth in
the SEC Documents, and except with respect to the Company’s
voluntary termination or suspension of the clinical, pre-clinical
and other trials, studies and tests with respect to the Collateral,
the Company has not received any warning letters or other written
correspondence from the FDA and/or any other governmental entity
requiring the termination, suspension or modification of any
clinical, pre-clinical and other trials, studies or tests that are
material to the Collateral, requiring the submission of a Premarket
Approval Application with respect to the Collateral, or requiring
the withdrawal, suspension of use or material modification of any
of the Company’s marketing materials with respect to the
Collateral.
(j)
Material License Agreements . Each of the
Material License Agreements (as defined below) is in full force and
effect, and neither the Company nor, to its knowledge, the
licensor, is in breach of any Material License Agreement and the
Company is aware of no circumstances or grounds that would
reasonably be expected to give rise to a claim of material breach
or right of rescission, termination, revision, or amendment of any
Material License Agreement. Subject to obtaining the
consent of BIO-RAP, any consent of the licensor required pursuant
to any Material License Agreement in connection with the
transactions contemplated by this Agreement, the Security
Agreement, and the Intellectual Property Security Agreement has
been obtained and is in full force and effect. As used
herein, the term “ Material License Agreement ”
shall mean: the Exclusive License Agreement dated as of
September 28, 2004 by and between Oxis International, a Delaware
corporation, and the Company, as amended; the License and Research
Agreement dated as of July 12, 2004 by and between BIO-RAP, on its
own behalf and on behalf of the Rappaport Family Institute for
Research in the Medical Sciences, and the Company, as amended (the
“BIO-RAP License Agreement”); the License Agreement
dated as of February 1, 2009 by and between MicroCoat GmbH and the
Company; the Agreement dated as of January 20, 2009 by and among
Roche Diagnostics GmbH, F. Hoffmann-La Roche Ltd., Roche Diagnostic
Operations Inc. and the Company; and the License Agreement dated as
of June 15, 2004 by and between BIO-RAP and Associated Regional and
University Pathologists, Inc. doing business as ARUP Laboratories,
as assigned to the Company pursuant to an Assignment Agreement by
and between BIO-RAP and the Company dated as of April 1,
2007.
(k)
SEC Documents; Financial Statements . During the
two (2) years prior to the date hereof, the Company has filed
all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed prior
to the date hereof and all exhibits included therein and financial
statements, notes and schedules thereto and documents incorporated
by reference therein being hereinafter referred to as the “
SEC Documents ”). The Company has delivered
to the Holders or their respective representatives true, correct
and complete copies of each of the SEC Documents not available on
the Electronic Data Gathering, Analysis, and Retrieval system of
the SEC (“ EDGAR ”) that have been requested by
each Holder. As of their respective dates, the SEC
Documents complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and
none of the SEC 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 the light of the
circumstances under which they were made, not
misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as
to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC
with respect thereto as in effect as of the time of
filing. Such financial statements have been prepared in
accordance with generally accepted accounting principles (“
GAAP ”), 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 exclude
footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit
adjustments). The Company has no liabilities or
obligations required to be disclosed in the SEC Documents that are
not so disclosed in the SEC Documents, other than those incurred in
the ordinary course of the Company’s business. The
information contained in the Company’s interim balance sheet
as of September 30, 2008 is true and correct in all material
respects.
(l)
Sarbanes-Oxley; Internal Accounting Controls
. The Company’s certifying officers have evaluated
the effectiveness of the Company’s disclosure controls and
procedures as of the end of the period covered by the
Company’s most recently filed periodic report under the
Exchange Act (such date, the “ Evaluation Date
”). The Company presented in its most recently filed periodic
report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation
Date.
(m)
Absence of Changes . Except as disclosed in
Schedule 4(m) , since September 30, 2008, and except as
otherwise disclosed in the SEC Documents, the Company has not
(i) declared or paid any dividends, (ii) sold any assets,
individually or in the aggregate, in excess of One Hundred Thousand
Dollars ($100,000) outside of the ordinary course of business, or
(iii) had capital expenditures, individually or in the
aggregate, in excess of One Hundred Thousand Dollars ($100,000).
During the two (2) years prior to the date hereof, except as
disclosed in the SEC Documents (i) the Common Stock has been
designated for quotation on the NYSE Alternext, (ii) trading
in the Common Stock has not been suspended by the SEC or the NYSE
Alternext and (iii) the Company has received no communication,
written or oral, from the SEC or the NYSE Alternext regarding the
suspension or delisting of the Common Stock from the NYSE
Alternext. The Company has not taken any steps
to seek protection pursuant to any bankruptcy law nor does the
Company have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead any creditor or
creditors having claims individually or in the aggregate in excess
of One Hundred Thousand Dollars ($100,000) to do so. The SEC
Documents set forth as of the dates thereof all outstanding secured
and unsecured Indebtedness of the Company or any Subsidiary, or for
which the Company or any Subsidiary has commitments. For the
purposes of this Agreement, “ Indebtedness ”
shall mean (a) any liabilities for borrowed money or amounts owed
(other than trade accounts payable incurred in the ordinary course
of business), (b) all guaranties, endorsements and other contingent
obligations in respect of Indebtedness of others, whether or not
the same are or should be reflected in the Company’s balance
sheet (or the notes thereto), except guaranties by endorsement of
negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the
present value of any lease payments due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any
Subsidiary is in default with respect to any
Indebtedness.
(n)
Patents and Trademarks . To the Company’s knowledge,
the Company has rights to use all patents, patent applications,
trademarks, trademark applications, service marks, trade names,
trade secrets, inventions, copyrights, licenses and other
intellectual property rights and similar rights necessary or
material for use in connection with its business as described in
the SEC Documents and which the failure to so have would have a
material adverse effect on the results of operations, assets,
business, or condition (financial or otherwise) of the
Company (collectively, the “ Intellectual Property
Rights ”). The Company has not received any notice
(written or otherwise) that the Intellectual Property Rights used
by the Company violate or infringe upon the rights of any other
person or entity. To the knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no
existing infringement by another person or entity of any of the
Intellectual Property Rights. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value
of all of its Intellectual Property Rights.
(o)
Labor Relations . No material labor dispute exists or, to
the knowledge of the Company, is imminent with respect to any of
the employees of the Company which could reasonably be expected to
result in a material adverse effect on the results of operations,
assets, business, prospects or condition (financial or otherwise)
of the Company. To the knowledge of the Company, no executive
officer is, or is now expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or
proprietary information agreement or non-competition agreement, or
any other contract or agreement or any restrictive covenant, and
the continued employment of each such executive officer does not
subject the Company to any liability with respect to any of the
foregoing matters. The Company is in compliance with all U.S.
federal, state, local and foreign laws and regulations relating to
employment and employment practices, terms and conditions of
employment and wages and hours, except where the failure to be in
compliance could not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or
otherwise) of the Company.
(p)
Offering . Assuming the accuracy of the
representations and warranties of the Holders contained in
Section 3 hereof, the offer, issue, and sale of the Notes are
exempt from the registration and prospectus delivery requirements
of the Securities Act and the registration or qualification
requirements of all applicable state securities
laws. Neither the Company nor any authorized agent
acting on its behalf will knowingly take any action hereafter that
would cause the loss of such exemptions.
(q)
Acknowledgment . The Company acknowledges that no
Holder is acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby, and any advice given by any
Holder or any of its representatives or agents in connection with
this Agreement and the transactions contemplated hereby is merely
incidental to such HolderR
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