1
EXHIBIT 2.3
September 23, 1995
Xx. Xxxxxxx X. Xxxxxx
0000 Xxxxx Xxxx 000xx Xxxxxx
Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000
RE: Neuromed, Inc.
Dear Xxxx:
Reference is made to the February 10, 1995 Agreement for the Purchase and Sale
of All of the Issued Capital Stock of Neuromed, Inc. between Quest Medical,
Inc. ("Quest") and you, as amended (the "Purchase Agreement"). When executed by
Quest and you, this letter will constitute an agreement between Quest and you
with respect to the matters covered herein.
In consideration of the mutual covenants contained herein, Quest and you agree
as follows:
1. You hereby agree to resign as a member of the board of directors of
Quest at the time this agreement is executed. You hereby fully and completely
release and discharge Quest and its management and directors of any and all
liability and obligations under Section 7.6 of the Purchase Agreement, and
Section 7.6 shall be null and void and of no further force and effect, subject
to possible reinstatement pursuant to 4.b. hereof. The obligations contained
in the Agreement Regarding Confidential Information and Solicitation dated June
22, 1995 signed by you will continue in full force and effect.
2. You agree to sign and deliver to Quest or Ernst & Young, at the time
this letter is executed, the management representations requested of you by
Ernst & Young with respect to their audits of the financial statements of
Neuromed for the fiscal years ended October 31, 1993 and 1994, in the form of
Exhibit 1 hereto.
3. Contemporaneously with (or immediately before if required by the
underwriters) the completion of the public offering referred to in 4 hereof,
Quest will issue to you 200,000 shares of Quest stock as the amount of stock
due to you (one-half of the Contingent Consideration) with respect to the First
Determination Period (as defined in Schedule 1.2) (the "1995 Additional
Stock"), and, on or before January 10, 1996, Quest will pay to you the sum of
$1,500,000 in satisfaction of the cash portion (one-half) of the Contingent
Consideration due to you with respect to the First Determination Period, in
full and complete satisfaction and discharge of Quest's
2
Xx. Xxxxxxx X. Xxxxxx
September 23, 1995
Page 2
obligations under Section 1.2(iii) and Schedule 1.2 (Contingent Consideration)
of the Purchase Agreement with respect to the First Determination Period. If
the public offering referred to in paragraph 4 hereof is completed and all of
your stock is sold, Quest's obligations with respect to the Second
Determination Period (as defined in Schedule 1.2) are hereby converted solely
to a monetary obligation, and Quest will be obligated to pay to you, on or
before January 10, 1997, the sum of (a) an amount equal to the product of (1)
the price per share (net of underwriting and brokerage discounts, fees and
commissions and expenses of the offering) of Quest stock in such public
offering times (2) the number of shares of Quest stock (one-half of the
Contingent Consideration) to which you would have been entitled for the Second
Determination Period plus (b) the cash amount (the other half of the Contingent
Consideration) to which you are entitled for the Second Determination Period).
If and when Contingent Consideration for the Second Determination Period
becomes due and payable, if Quest determines that less than the maximum amount
is payable, you will be entitled, upon written request, to conduct, at your
expense, a reasonable examination of the books and records of Quest related to
the Neuromed Business (as defined on Schedule 1.2), during normal business
hours.
4. Quest has decided to commence preparation for a public offering of
common stock to be completed on or before November 30, 1995.
a. If, by September 30, 1995, Quest delivers to you a letter of
intent or underwriting commitment from an investment banker for a
public offering which includes all of your stock (including the 1995
Additional Stock) or files a registration statement which includes all
of your stock, you hereby commit and agree to and will include all of
your stock in such offering. As used in this letter, "your stock"
means your stock in Quest owned on the date hereof plus the 1995
Additional Stock.
b. If Quest delivers such letter of intent or underwriting
commitment or files such registration statement by September 30, 1995,
Quest will complete the offering by November 30, 1995, failing which 1
and 3 of this agreement will be null and void and of no force and
effect, and Quest and Xxxxxx will be relegated to their respective
rights and obligations under the Purchase Agreement with respect to
the subject matter thereof.
c. Completion of a registration of your stock pursuant to
subparagraph (a) preceding will be deemed to satisfy Quest's
obligations under Section 2(a) of the Registration Rights Agreement
with respect to your existing Quest stock and the 1995
3
Xx. Xxxxxxx X. Xxxxxx
September 23, 1995
Page 3
Additional Stock. The provisions of the Registration Rights Agreement
with respect to registration procedures, underwriting,
indemnification, payment of expenses and payment of underwriting
discounts, fees and other compensation in connection with any offering
or registration pursuant to the foregoing provisions of this paragraph
4 shall be applicable.
d. You acknowledge that you are aware of your contractual and
legal confidentiality obligations with respect to Quest and understand
that confidentiality with respect to Quest and the prospective public
offering is particularly important and sensitive until the completion
or abandonment of such offering and that you may not trade, and may
not aid, abet or encourage anyone else in the trading, of Quest stock
until the completion or abandonment of such offering. Nothing in the
foregoing sentence is intended to relieve you of any confidentiality
obligations which you may have after the completion or abandonment of
such offering. You also acknowledge that you understand that a copy
of this agreement may be filed with the Securities and Exchange
Commission by Quest.
If the foregoing correctly states our agreement, please sign in the space
provided below, whereupon this letter will become a binding agreement between
Quest and you.
QUEST MEDICAL, INC. ACCEPTED AND AGREED TO:
By /s/ XXXXXX X. XXXXXXXX /s/ XXXXXXX X. XXXXXX
------------------------------ ------------------------------
Xxxxxx X. Xxxxxxxx, President Xxxxxxx X. Xxxxxx
cc: Xxxxxxx Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxxx Xxxxx Xxxxx Xxxxxx
F. Xxxxxx Xxxxxxx III Xxxxxx X. Xxxxxx
Xxxxxxx Xxxxxx
