EXHIBIT 10.53
PURCHASE AGREEMENT
AND
LETTER OF INVESTMENT INTENT
Orphan Medical, Inc.
Ridgedale Office Center
00000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Ladies and Gentlemen:
Each of the undersigned (each a "Subscriber") hereby agrees to
purchase, and the Company hereby agrees to sell to each Subscriber, that number
of shares of common stock (the "Shares") of Orphan Medical, Inc., a Minnesota
corporation (the "Company"), as is set forth opposite each Subscriber's name and
signature below, for a purchase price of Eight Dollars ($8.00) per Share and
upon the other terms and conditions set forth below. Each Subscriber shall wire
funds equal to such Subscriber's purchase price for the Shares being purchased
by such Subscriber, which wire transfer shall be made on or before the close of
business on February 23, 2000. The date on which the Company shall have received
the entire purchase price from all Subscribers shall be referred to as the
"Closing Date." Subscriber acknowledges that the Company is relying upon the
accuracy and completeness of the representations contained herein in complying
with its obligations under applicable securities laws.
1. Representation of Subscriber. Each Subscriber acknowledges and
represents to the Company as follows:
(a) The Shares are being purchased by Subscriber for investment
purposes in Subscriber's name solely for Subscriber's own beneficial interest
and not as nominee for, or on behalf of, or for the beneficial interest of, or
with the intention to transfer to, any other person, trust or organization.
(b) Subscriber is in a financial position to hold the Shares for
an indefinite period of time and is able to bear the economic risk and withstand
a complete loss of Subscriber's investment in the Shares.
(c) Subscriber believes that Subscriber, either alone or with
the assistance of Subscriber's professional advisor, has such knowledge and
experience in financial and business matters that Subscriber is capable of
evaluating the merits and risks of the prospective investment in the Shares.
Subscriber has obtained, to the extent Subscriber deems necessary, Subscriber's
own professional advice with respect to assessing the risks inherent in an
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investment in the Shares and the suitability of an investment in the Shares in
light of Subscriber's financial condition and investment needs.
(d) Subscriber believes that the investment in the Shares is
suitable for Subscriber based upon Subscriber's investment objectives and
financial needs, and Subscriber has adequate means for providing for
Subscriber's current financial needs and business contingencies and has no need
for liquidity of investment with respect to the Shares.
(e) Subscriber has been given access to information regarding
the Company and has utilized such access to Subscriber's satisfaction for the
purpose of obtaining such information as Subscriber has determined to be
necessary or appropriate to assess the merits and risks of an investment in the
Company and the Shares.
(f) Subscriber recognizes that the Shares as an investment
involve a high degree of risk including, but not limited to, those risks
described in Exhibit 99 to the Company's Annual Report on Form 10-K and most
recent Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission.
(g) Subscriber understands that the Company may be required to
sell additional shares of its capital stock in the future to finance its
anticipated development and operational efforts. Subscriber understands that
such additional shares may have rights and preferences that may be superior in
certain respects to the rights attributable to the Shares and, depending upon
future developments, the Company's financial condition, the Company's success in
achieving its development objectives and the general economic environment at
that time, may be sold at a price which is less than the price which Subscriber
pays for the Shares. No representations are being made by the Company that it
will be successful in selling any shares of its capital stock that it may seek
to sell in the future or that it will be otherwise able to raise sufficient
monies, through borrowings, internal operations or otherwise, to achieve its
development, revenues or other business or financial objectives.
(h) Subscriber is an "accredited investor" as defined in Rule
501(a) of Regulation D of the Securities Act.
(i) Subscriber was not organized for the specific purpose of
acquiring the Shares.
(j) This Purchase Agreement and Letter of Investment Intent has
been duly authorized by all necessary action on the part of Subscriber, has been
duly executed by an authorized officer or representative of Subscriber, and is a
legal, valid and binding obligation of Subscriber enforceable in accordance with
its terms.
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(k) Subscriber certifies, under penalties of perjury, that
Subscriber is NOT subject to the backup withholding provisions of section
3406(a)(i)(C) of the Internal Revenue Code of 1986, as amended (Note: you are
subject to backup withholding if (i) you fail to furnish your Social Security
number or taxpayer identification number herein; (ii) the Internal Revenue
Service notifies the Company that you furnished an incorrect Social Security
number or taxpayer identification number; (iii) you are notified that you are
subject to backup withholding; or (iv) you fail to certify that you are not
subject to backup withholding or you fail to certify your Social Security number
or taxpayer identification number.)
(l) Subscriber acknowledges that a legend will be placed on the
certificates evidencing the Shares, which legend shall refer to the restrictions
on transferability.
Subscriber is aware of the significance to the Company of the
foregoing representations, and they are made with the intention that the Company
will rely on them.
2. Representations and Warranties of the Company. The Company
represents and warrants to each Subscriber as follows:
(a) That this Agreement has been duly authorized by all
necessary corporate action on behalf of the Company, has been duly executed and
delivered by an authorized officer of the Company, and is a valid and binding
agreement on the part of the Company; and
(b) That all corporate action necessary to the authorization,
issuance, and delivery of the Shares has been taken on or prior to the date
hereof.
3. Registration. The Company hereby covenants and agrees that,
within 60 days after the date hereof, the Company shall prepare and file a
registration statement on Form S-3 under the Securities Act of 1933, as amended,
relating to the Shares and shall use its best efforts to cause such registration
statement to become effective. The Company shall bear all fees, costs and
expenses incurred in connection with such registration other than fees and
disbursements of special counsel and accountants for the Subscribers.
The parties agree that the Subscribers will suffer damages, and that it
would not be feasible to ascertain the extent of such damages with precision, if
the Registration Statement has not been declared effective under the Securities
Act on or prior to the 120th day following the later of the Closing Date or the
date the Subscribers have provided to the Company all information necessary for
the preparation of the Registration Statement. Such 120th day shall be referred
to as the "Target Effective Date". Accordingly, if the Registration Statement
has not been so declared effective, the Company agrees to pay to the Subscribers
in cash, on the first day after the Target Effective Date, as liquidated damages
and not as a penalty, an amount equal to 1% of the aggregate purchase price paid
by such Subscribers to the Company for the Shares (such
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amount to be allocated among such Subscribers in proportion to their respective
investment amounts). If, as of the 30th day following the Target Effective Date,
the Registration Statement still shall not have been declared effective, then
the Company agrees to pay to each Subscriber in cash, at the end of the first
full month thereafter, and at the end of every successive month thereafter until
the earlier of (i) the date the Registration Statement is declared effective, or
(ii) the second anniversary of the Closing Date, or (iii) such time as all of
the Shares can be sold within any given three-month period without regard to the
trading volume of the Common Stock pursuant to Rule 144, as liquidated damages
and not as a penalty, an amount equal to 2% of the aggregate purchase price paid
by such Subscribers to the Company for the Shares (such amount to be allocated
among such Subscribers in proportion to their respective investment amounts).
4. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 3 of this
Agreement that the selling Subscribers shall furnish to the Company such
information regarding them and the securities held by them as the Company shall
reasonably request and as shall be required in order to effect any registration
by the Company pursuant to Section 3 of this Agreement.
5. Anti-Dilution Protection. If at any time prior to the date the
Registration Statement referenced in Section 3 is declared effective, the
Company shall issue or sell any Common Stock of the Company, any warrants,
options or other rights to acquire Common Stock, or any other securities that
are convertible into Common Stock, for a purchase or exercise price less than
$8.00 per share (the "Lower Price"), then, immediately upon such issuance or
sale, each Subscriber shall be entitled to receive an additional number of
shares as follows:
[(x/y)-1] * z
where:
x = the purchase price per Share paid for the Shares by the Subscribers;
y = Lower Price; and
z = number of Shares previously issued to such Subscriber pursuant to
this Agreement.
6. Attendance at Board Meetings. The Company hereby agrees that, for
so long as the Subscribers in the aggregate own at least 10% of the total number
of outstanding shares of Common Stock of the Company, the Company shall notify
such individual as shall be designated from time to time by the Subscribers of
all regular meetings and special meetings of the Board of Directors of the
Company at least two business days in advance of such meetings, and afford one
representative designated by such Subscribers, and acceptable to the Company,
the right and opportunity to attend any such meeting.
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Dated: February 21, 2000
Subscribers: Purchase Price:
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Caduceus Capital Trust 400,000 Shares $3,200,000
By: /s/ Xxxx Xxxxx
---------------------------------------
Its: OrbiMed Advisors - Investment Advisors
---------------------------------------
Caduceus Capital II L.P. 180,000 Shares $1,440,000
By: /s/ Xxxx Xxxxx
---------------------------------------
Its: OrbiMed Advisors - General Partner
---------------------------------------
Xxxxx Xxxxxx Eucalyptus Fund LLC 650,000 Shares $5,200,000
By: /s/ Xxxx Xxxxx
---------------------------------------
Its: OrbiMed Advisors - Investment Advisors
---------------------------------------
Xxxxx Xxxxxx Eucalyptus Fund Ltd. 35,000 Shares $280,000
By: /s/ Xxxx Xxxxx
---------------------------------------
Its: OrbiMed Advisors - Investment Advisors
---------------------------------------
This Purchase Agreement and Letter of Investment Intent is accepted as of
February 21, 2000.
ORPHAN MEDICAL, INC.
By: /s/ Xxxx Xxxxxx Bullion
-------------------------------------
Its Chief Executive Officer
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