AMENDMENT TO
NOTE PURCHASE AGREEMENT
AMENDMENT TO NOTE PURCHASE AGREEMENT, dated as of November 16, 1998, among
Q-Med, Inc., a Delaware corporation (the "Company"), and Xxxxx Partners III,
L.P., a Delaware limited partnership, Xxxxx Partners International III, L.P., a
Delaware limited partnership, and Xxxxx Employee Fund III, L.P., a Delaware
limited partnership (collectively, the "Purchaser").
WHEREAS, the parties have heretofore entered into that certain Note
Purchase Agreement dated as of December 18, 1997 (the "Note Purchase Agreement")
whereby, inter alia, the Purchaser purchased from the Company 8.00% Subordinated
Convertible Notes due December 18, 2002 in the aggregate original
principal amount of $2,000,000 (the "Notes");
WHEREAS, subject to the terms and conditions specified in that certain
Common Stock Purchase Agreement entered into as of the date hereof between the
Company and certain investors including the Purchaser (the "Stock Purchase
Agreement"), the Purchaser has agreed to purchase from the Company, and the
Company has agreed to issue and sell to the Purchaser, shares of the Common
Stock, $.001 par value per share (the "Shares"), of the Company, and the
Purchaser has agreed to surrender a portion of the Notes in exchange for the
issuance of certain of the Shares;
WHEREAS, subject to the terms and conditions specified in that certain
Option Agreement entered into as of the date hereof between the Company, the
Purchaser and certain other holders of the Shares of Common Stock (the "Option
Agreement"), the Company has agreed to purchase Shares from the Purchaser under
certain conditions;
WHEREAS, in consideration of, and as a material inducement to, the
agreement of the Purchaser to surrender a portion of the Notes and to enter into
the transactions contemplated under the Stock Purchase Agreement, the Company
has agreed to provide to the Purchaser the benefit of certain collateral
security to secure the payment by the Company of the remaining Notes to be held
by the Purchaser following consummation of the transactions under the Stock
Purchase Agreement, to secure the performance by the Company of its obligations
to the Purchaser under the Option Agreement, and to issue to the Purchaser an
aggregate of 500,000 warrants to purchase shares of Common Stock pro rata
according to the principal amounts of the original Notes held by the respective
Purchasers;
WHEREAS, the parties hereto desire to amend the Note Purchase Agreement as
hereinafter set forth in order to reflect the foregoing amendments and other
agreements of the parties;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree to amend the Note Purchase Agreement as set forth
below.
1. Definitions. All capitalized terms used herein, and not otherwise
defined herein, shall have the meanings for such terms as set forth in the Note
Purchase Agreement. In addition, Section 12 of the Note Purchase Agreement shall
be amended to add or amend the following defined terms:
"Accounts" and Accounts Receivable" shall include, without limitation,
"accounts" as defined in the UCC, and also all: accounts, accounts receivable,
credit card receipts, notes, drafts, acceptances, and other forms of obligations
and receivables and rights to payment for credit extended and for goods sold or
leased, or services rendered, whether or not yet earned by performance; all
Inventory which gave rise thereto, and all rights associated with such
Inventory; all reclaimed, returned, rejected or repossessed Inventory (if any)
the sale of which gave rise to any Account.
"Equipment" shall include, without limitation, "equipment" as defined
in the UCC, and also all motor vehicles, rolling stock, machinery, office
equipment, plant equipment, tools, dies, molds, store fixtures, furniture, and
other goods, property, and assets which are used and/or were purchased for use
in the operation or furtherance of any of the Company's or any Subsidiary's
business, and any and all accessions, additions thereto, and substitutions
therefor.
"General Intangibles" shall mean "general intangibles" as defined in
the UCC.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits or
advances of any kind (excluding, however, payments or advances received in
connection with the sale of the Company's disease management services, referred
to as "Disease Management Payments"), (ii) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (iii) all
obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person including sale
leasebacks, (iv) all obligations of such Person issued or assumed as the
deferred purchase price of property or services (other than accounts payable to
suppliers, Disease Management Payments, deferred Warranty revenue and similar
accrued liabilities incurred in the
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ordinary course of business and paid or discharged in a manner consistent with
prior practice), (v), all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any lien or security interest on property owned or acquired by
such Person whether or not the obligations secured thereby have been assumed,
(vi) all Capitalized Lease Obligations of such Person, (vii) all Guarantees of
such Person (excluding, however, those guarantees related to the performance of
the Company's disease management services), (viii) all obligations (including
but not limited to reimbursement obligations) relating to the issuance of
letters of credit for the account of such Person, (ix) all obligations arising
out of foreign exchange contracts, and (x) all obligations arising out of
interest rate and currency swap agreements, cap, floor and collar agreements,
interest rate insurance, currency spot and forward contracts and other
agreements or arrangements designed to provide protection against fluctuations
in interest or currency exchange rates.
"Initial Conversion Price" shall mean the average of the closing prices
of a share of Common Stock for the 10 Trading Days following the date hereof as
certified by the Chief Financial Officer of the Company. For purposes of this
definition, the closing price per share of Common Stock shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the transaction reporting system applicable to securities designated
as a "national market system security" or "small cap market security" on NASDAQ.
"Inventory" shall include, without limitation, "inventory" as defined
in the UCC and also all: goods, wares, merchandise, raw materials, work in
process, finished goods, and all packaging, advertising, and shipping materials
and documents related to any of the foregoing, and all labels, and other
devices, names or marks affixed or to be affixed thereto for identifying or
selling the same, and other personal property of every description held for sale
or lease or furnished or to be furnished under a contract or contracts of sale
or service by the Company or any Subsidiary, or used or consumed or to be used
or consumed in the Company's or any Subsidiary's business, and all goods of said
description which are in transit, and all returned, repossessed and rejected
goods of said description, and all such goods of said description which are
detained from or rejected for entry into the United States, and all documents
(whether or not negotiable) which represent any of the foregoing.
"Proceeds" include, without limitation, "Proceeds" as defined in the
UCC and each type of property described in Section 6A.1.
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"UCC" shall mean the Uniform Commercial Code as presently in effect in
the State of New Jersey.
2. Surrender and Exchange of Notes. (a) At and upon the closing of the
transactions contemplated under the Stock Purchase Agreement, the Purchaser
shall surrender to the Company Notes in an aggregate principal amount of
$2,000,000 (plus all accrued and unpaid interest on the Notes from the date of
issuance thereof to the date of such closing) in exchange for (i) the issuance
by the Company of certain shares of the Common Stock, all in accordance with the
terms and provisions as specified in the Stock Purchase Agreement, and (ii) the
new Notes described below. Upon surrender for exchange of the Notes, the Company
shall execute and deliver, at its expense, new Notes registered in the names of
Xxxxx Partners III, L.P., Xxxxx Partners International III, L.P. and Xxxxx
Employee Fund III, L.P., in an aggregate principal amount of $950,000; such new
Notes to be issued to the payees thereof in the respective principal amounts in
the same proportion as the original Notes.
(b) As an additional inducement for the Purchaser to enter into this
Amendment, the Company, at and upon the closing of the transactions contemplated
by the Stock Purchase Agreement, will issue and deliver at its expense, warrants
substantially in the form annexed hereto as Exhibit I to purchase an aggregate
of 500,000 shares of Common Stock to the payees of the Notes in the respective
principal amounts as the original Notes without the payment of any consideration
therefor.
3. Amendments to Note Purchase Agreement.
Subject to Section 5 hereof, the Note Purchase Agreement is hereby
amended as set forth below:
I. Section 6.3 is hereby amended to reflect a change in the interest
rate payable on the Notes from 8.00% to 16.00% per annum effective on the
date of issuance of the new Notes described in Section 2.
II. New Section 6A is added to the Note Purchase Agreement to read in
full as follows:
6A. Grant of Security Interest
6A.1. Grant of Security Interest. (a) as collateral security for the
prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of all the obligations of the
Company under the Notes and such obligations owed to the Purchaser
under the Option Agreement, the Company hereby assigns, pledges and
transfers to the Purchaser and hereby grants to the Purchaser a
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continuing security interest in, and a lien upon, all of the Company's
right, title and interest in, to and under the following (all of which
being hereinafter referred to, collectively, as the "Collateral"):
(i) All Accounts and Accounts Receivable;
(ii) All Inventory;
(iii) All General Intangibles;
(iv) All Equipment; and
(v) All Proceeds and products of any or all of the
foregoing.
(b) The grant of the security interest herein shall continue in
full force and effect applicable to all obligations of the Company
under the Notes and such obligations owed to the Purchaser under the
Option Agreement until all such obligations have been paid and/or
satisfied in full.
6A.2. Special Representations and Warranties of the Company. The
Company represents and warrants to the Purchaser as of the date hereof, as
follows:
(a) No authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
is required either (i) for the grant by the Company of the security
interest granted hereby or for the execution, delivery or performance
of this Amendment to Note Purchase Agreement, or (ii) for the
perfection of or the exercise by the Purchaser of its rights and
remedies hereunder, except for such financing statements as may be
filed in favor of the Purchaser relating to the security interest
granted hereunder.
(b) Except as reserved in the Company's financial statements,
the Company has no knowledge of any impairment of the validity or
collectibility of any of the Accounts of the Company or any Subsidiary
and shall notify the Purchaser of any such fact promptly upon becoming
aware of any such impairment.
(c) Except for the security interest granted to the Purchaser
hereunder, and as set forth on Schedule 6A.2 attached hereto, the
Company is the separate and absolute owner of each item of the
Collateral, free and clear of any and all mortgages,
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liens, security interests, encumbrances, claims or rights of others.
(d) Except as set forth in Schedule 6A.2 attached hereto, no
security agreement, financing statement, equivalent security or lien
instrument or continuation statement covering all or any part of the
Collateral is on file or of record in any public office, except such as
may have been filed by the Company in favor of the Purchaser hereunder.
The Company has not in the past and does not now conduct business under
any name other than its registered corporate name.
(e) The security interest granted herein constitutes a valid
and enforceable first priority security interest in the Collateral in
favor of the Purchaser, prior to all other liens, encumbrances,
security interests, and rights of others, and is enforceable as such
against creditors of and purchasers from the Company. All filings and
other action necessary to protect and perfect such security interest in
each item of the Collateral has been duly taken.
(f) The place where the Company's records concerning the
Accounts are kept is the principal office of the Company listed in
Section 13.6 of the Note Purchase Agreement, and the Company will not
change such location or remove such records until (i) the Company shall
have given to the Purchaser not less than 60 days' prior notice of its
intention to do so, clearly describing such new location and providing
such other information in connection therewith as the Purchaser may
reasonably request and (ii) with respect to such new location, the
Company shall have taken all action reasonably satisfactory to the
Purchaser to maintain the security interest in the Collateral intended
to be granted hereby at all times fully perfected and in effect.
6A.3. Special Covenants of the Company. The Company
covenants that from and after the date hereof and for so long as any of the
Notes are outstanding or the Purchaser shall retain rights under the Option
Agreement:
(a) At any time and from time to time, upon the written
request of the Purchaser, and at the sole expense of the Company, the
Company promptly and duly shall execute and deliver any and all such
further instruments and documents and take such further action as the
Purchaser reasonably may deem desirable in
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obtaining the full benefits of the security interest granted hereunder and
of the rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the UCC in effect
in any jurisdiction with respect to the liens and security interests
granted hereby. At the request of the Purchaser, the Company shall deliver
to the Purchaser an opinion of the Company's legal counsel each year during
the term of this Agreement opining as to the continued perfection of the
lien and security interest granted herein. The Company also hereby
authorizes the Purchaser to file any such financing or continuation
statement without the signature of the Company to the extent permitted by
applicable law. If any amount payable under or in connection with any of
the Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be immediately pledged to the
Purchaser, duly endorsed in a manner satisfactory to the Purchaser.
(b) For the further security of the Purchaser, the Company
agrees that the Purchaser shall have a special property interest in all
of the Company's books and records pertaining to the Collateral and the
Company shall provide access to any such books and records to the
Purchaser or to its representatives for the purpose of examining the
same (including taking extracts therefrom and making photocopies
thereof) during normal business hours upon reasonable advance notice.
(c) The Company will pay promptly when due, all taxes,
assessments and governmental charges or levies imposed upon, or which
at any time are or may become a lien, charge or encumbrance upon, the
Collateral or in respect of its income or profits therefrom, as well as
all claims of any kind, except that no such charge need be paid if (i)
the validity thereof is being contested in good faith by appropriate
proceedings, (ii) such proceedings do not involve any danger of the
sale, forfeiture or loss of any of the Collateral or any interest
therein and (iii) such charge is adequately reserved against in
accordance with generally accepted accounting principles.
(d) The Company will not (i) create, permit or suffer to
exist, and will defend the Collateral against and take such other
action as is necessary to remove, any lien, security interest,
encumbrance, claim or right, in or to the Collateral, other than the
security interest created hereunder, and will defend
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the right, title and interest of the Purchaser in and to any of the
Company's rights under the Collateral and in and to the Proceeds and
products thereof against the claims and demands of all persons
whomsoever, or (ii) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral.
(e) The Company will advise the Purchaser promptly, in
reasonable detail (i) of any lien, security interest, encumbrance or
claim made or asserted against any of the Collateral, (ii) of any
material change in the nature or type of the Collateral, and (iii) of
the occurrence of any other event which would have a material adverse
effect on the aggregate value of the Collateral or on the security
interest created hereunder.
6A.4. Appointment of the Purchaser as Attorney-in-Fact.
(a) Upon the occurrence and during the continuation of an
Event of Default, the Company hereby irrevocably constitutes and
appoints the Purchaser and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of the
Company and in the name of the Company or in its own name, from time to
time in the Purchaser's discretion, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, hereby gives the Purchaser
the power and right, on behalf of the Company, without notice to or
assent by the Company to do the following:
(i) to ask, demand, collect, receive and give acquittance
and receipts for any and all moneys due and to become due under any
Account, and, in the name of the Company or its own name or otherwise,
to take possession of and endorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due
under any Account and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Purchaser for the purpose of collecting any and all
such moneys due under any Account whenever payable;
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(ii) to pay or discharge taxes, liens, security interests
or other encumbrances levied or placed on or threatened against the
Collateral; and
(iii)(A) to direct any party liable for any payment under
any of the Accounts to make payment of any and all moneys due and to
become due thereunder directly to the Purchaser or as it shall direct;
(B) to receive payment of and receipt for any and all moneys, claims
and other amounts due and to become due at any time in respect of or
arising out of the Accounts; (C) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to
enforce any other right in respect of any Collateral; (D) to defend any
suit, action or proceeding brought against the Company with respect to
any Collateral; (E) to settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith, to give such
discharges or releases as the Purchaser may deem appropriate; and (F)
generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as
though the Purchaser were the absolute owner thereof for all purposes,
and to do, at the Purchaser's option and the Company's expense, at any
time, or from time to time, all acts and things which the Purchaser
deems necessary to protect, preserve or realize upon the Collateral and
the Purchaser's security interest therein, in order to effect the
intent of this Agreement.
The Company hereby ratifies all that said attorneys shall lawfully do
or cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
(b) The powers conferred on the Purchaser hereunder are solely
to protect the interests of the Purchaser in the Collateral and shall not
impose any duty upon it to exercise any such powers. The Purchaser shall be
accountable only for amounts that it actually receives in such capacity as
a result of the exercise of such powers and neither it nor any of its
members, partners, employees or agents shall be responsible to the Company
for any act or failure to act, except for its own gross negligence or
willful misconduct.
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(c) The Company also authorizes the Purchaser, following the
occurrence of an Event of Default, (i) to communicate in its own name with
any party to an Account with regard to any matter relating thereto and (ii)
to execute, in connection with the sale provided for in paragraph (b) of
Section 6A.6. hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
6A.5. Performance by the Purchaser of the Company's Obligations. If
the Company fails to perform or comply with any of its agreements contained
herein and the Purchaser, as provided for by the terms hereof, shall itself
perform or comply, or otherwise cause performance or compliance, with such
agreement), the expenses of the Purchaser incurred in connection with such
performance or compliance, together with interest thereon at the annual
default rate specified in Section 8.3 of the Note Purchase Agreement, shall
be payable by the Company on demand and shall constitute obligations of the
Company under the Notes secured hereby.
6A.6. Remedies, Rights Upon An Event of Default.
(a) If an Event of Default shall occur and be continuing:
(i) All payments received by the Company under or in
connection with any of the Collateral shall be held by them in
trust for the Purchaser, shall be segregated from other funds of
the Company and shall forthwith upon receipt by any of them, be
turned over to the Purchaser, in the same form as received by it
(duly endorsed to the Purchaser, if required); and
(ii) Any and all such payments so received by the
Purchaser may, in the sole discretion of the Purchaser, be held
by the Purchaser as collateral security for, and/or then or at
any time thereafter applied in whole or in part by the
Purchaser, against all or any part of the obligations of the
Company under the Notes or under the Option Agreement in such
order as the Purchaser shall elect. Any balance of such payments
held by the Purchaser and remaining after payment in full of all
such obligations shall be paid over to the Company.
(b) If any Event of Default shall occur and be continuing, the
Purchaser may exercise in addition to all other rights and remedies
granted to it
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hereunder and in any other instrument or agreement securing, evidencing
or relating to the obligations under the Notes or under the Option
Agreement, all rights and remedies of a secured party under the UCC.
Without limiting the generality of the foregoing, the Company expressly
agrees that in any such event the Purchaser, without demand of
performance or other demand, advertisement or notice of any kind
(except the notice specified below of time and place of public or
private sale) to or upon the Company or any other person (all and each
of which demands, advertisements and/or notices are hereby expressly
waived), may forthwith collect, receive appropriation and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give option or options to purchase, or sell or otherwise
dispose of and deliver said Collateral (or contract to do so), or any
part thereof, at public or private sale or sales, at any place or time
and at such prices and on such terms as it may deem best, for cash or
on credit or for future delivery without assumption of any credit risk.
The Purchaser shall have the right upon any such public sale or sales,
and to the extent permitted by law, upon any such private sale or sales
to purchase the whole or any part of said Collateral so sold, free of
any right or equity or redemption in the Company, which right or equity
is hereby expressly released. The Purchaser shall apply the net
proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses
of every kind incurred therein or incidental to the care, safekeeping
or otherwise of any or all of the Collateral or in any way relating to
the rights of the Purchaser hereunder, including reasonable attorneys'
fees and legal expenses, to the payment in whole or in part of the
obligations under the Notes or under the Option Agreement, in such
order as the Purchaser may elect, the Company remaining liable for any
deficiency remaining unpaid after such application, and only after so
paying over such net proceeds and after the payment by the Purchaser of
any other amount required by any provision of law, need the Purchaser
account for the surplus, if any, to the Company. To the extent
permitted by applicable law, the Company waives all claims, damages,
and demands against the Purchaser arising out of the collection,
retention or sale of the Collateral. The Company agrees that the
Purchaser need not give more than ten (10) days' notice (which
notification shall be deemed given when mailed, postage prepaid,
addressed to the Company at its address set forth in Section 13.6
hereof) of the time and place of any public sale or of the time after
which a private
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sale may take place and that such notice is reasonable notification of
such matters. The Company shall remain liable for any deficiency if the
proceeds of any sale or disposition of the Collateral are insufficient
to pay all amounts to which the Purchaser is entitled, the Company also
being liable for the reasonable fees of any attorneys employed by the
Purchaser to collect such deficiency.
(c) Nothing in this Agreement is intended, nor shall it be
construed, to preclude the Purchaser from pursuing any other remedy
provided by law for the collection of any or all of the obligations of
the Company under the Notes or under the Option Agreement or for the
recovery of any other sum to which the Purchaser may be or becomes
entitled in connection with a breach of the Note Purchase Agreement or
the Option Agreement.
(d) The Company hereby waives presentment, demand, protest or
any notice (to the extent permitted by applicable law) of any kind in
connection with any Collateral.
6A.7. Limitation on Duty of the Purchaser in Respect of Collateral.
Beyond the safe custody thereof, the Purchaser shall not have any duty as
to any Collateral in its possession or control or in the possession or
control of any agent or nominee of it or any income thereon or as to the
preservation of rights against prior partes or any other rights pertaining
thereto.
III. Section 7.1 is hereby amended by designating the existing
provision as paragraph (a), deleting the sum of $3,000,000 therefrom and
inserting the sum of $1,000,000 in its place, and adding a new paragraph
(b) to read in full as follows:
(b) The Company will not, either alone or together with its
Subsidiaries, incur, create or permit to exist at any time outstanding
expenses relating to leases of any kind and accounts payable of any
kind of more than $900,000 in the aggregate.
IV. Section 7.14 is hereby amended by adding paragraph (c) thereto to
read as follows:
(c) The Company shall use its best efforts to cause (i) the
Board of Directors of the Company to be composed of no more than six
members; and (ii) each of the audit committee and the compensation
committee
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of the Board of Directors to include as one of its members the
Purchaser Designee.
V. Section 7.16 is hereby amended by adding clauses (e) and (f) to the
end thereto to read as follows:
or (e) create, incur or assume Indebtedness of the Company or
any of its Subsidiaries, or
(f) authorize or approve any transaction or series of related
transactions resulting in or constituting a Change in Control.
VI. Section 7.2 is hereby amended by adding to the end of clause (ii)
thereof the following:
, except for any purchase or redemption of shares of Common
Stock under the terms of the Option Agreement.
VII. Section 7.10 is hereby amended by adding a paragraph (v) thereto
to read as follows:
and (v) it will, not later than 30 days prior to the beginning
of each fiscal year, submit to the Board of Directors and the Purchaser
a detailed operating plan with respect to such fiscal year; such
operating plan to include operating, market and competitive
information, as well as supporting internal financial statements
(including a balance sheet, income statement, a statement of cash flows
and cost and expense details), in such form as shall be specified by
the Board of Directors.
VIII. Section 9.1 is hereby amended by deleting the existing provision
in its entirety and inserting in lieu thereof the following:
9.1 Optional Redemption. (a) Subject to the last sentence of this
Section 9.1(a) and the Purchaser's right of conversion set forth in Section
10, the Company shall have the right, at its sole option and election made
in accordance with Section 9.3(d) and subject to Section 9.3(d), to redeem
the Notes, in whole but not in part, at the following Redemption Prices
(plus accrued and unpaid interest):
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Redemption Price
Year (as % of principal)
---- -------------------
1998 ........................................ 105%
1999 ........................................ 104%
2000 ........................................ 103%
2001 ........................................ 102%
2002 ........................................ 100%
Notwithstanding the foregoing, the Company shall have the right to redeem
the Notes pursuant to this Section 9.1(a), only if (x) the Current Market
Price for the Common Stock is equal to or greater than two times the
Initial Conversion Price (subject to appropriate adjustments for stock
splits, combinations and similar transactions) for at least 20 consecutive
Trading Days prior to delivery of the notice of redemption and (y) the
Current Market Price of the Common Stock is equal to or greater than two
times the Initial Conversion Price (subject to appropriate adjustments for
stock splits, combinations and similar transactions) on the date and at the
time of redemption.
(b) Subject to the Purchaser's right of conversion set forth in
Section 10, at any time the Current Market Price for the Common Stock is
less than two times the Initial Conversion Price (subject to appropriate
adjustments for stock splits, combinations and similar transactions), the
Company shall have the right, at its sole option and election made in
accordance with Section 9.3(d) and subject to Section 9.3(d), to redeem the
Notes, in whole but not in part, at the following Redemption Prices (plus
accrued and unpaid interest):
Redemption Price
Year (as % of principal)
---- -------------------
1998 ........................................ 112.1%
1999 ........................................ 125.6%
2000 ........................................ 140.8%
2001 ........................................ 157.7%
2002 ........................................ 176.8%
IX. Section 10.6(b) is hereby amended by adding to the end of the
first paragraph thereof the following:
Notwithstanding the foregoing, in case the Company shall have issued
shares of Common Stock or any Convertible Securities after the Closing
Date at a price per share (or having a conversion, exercise or
exchange price per share) less than the Initial Conversion Price then,
and in such event, the Conversion Price in effect on the day
immediately prior to such issue shall be reduced, concurrently with
such issue, to a price (calculated to the nearest cent) that
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is equal to such lower price per share (or conversion, exercise or
exchange price) applicable to such newly issued shares of Common Stock
or Convertible Securities.
4. Waiver of Adjustment to Conversion Price. The Purchaser hereby waives
the adjustment to the Conversion Price, as calculated in accordance with Section
10.6(b), that otherwise would be required by the issuance of the Shares pursuant
to the terms of the Stock Purchase Agreement.
5. Effectiveness. This Amendment shall not become effective unless and
until (i) the closing under the Stock Purchase Agreement; provided, that, there
shall not exist at that time an Event of Default hereunder (and no event shall
have occurred which, with the giving of notice or the passage of time or both,
would become an Event of Default) and the Chief Executive Officer of the Company
shall have delivered to the Purchaser a certificate attesting to the absence of
any such Event of Default or event; and (ii) Xxxxxxx X. Xxx (either singly or
together with his spouse) shall have purchased in the aggregate 59,880 shares of
Common Stock under terms and conditions reasonably acceptable to the Purchaser.
6. Effect on Note Purchase Agreement. Except as specifically amended above,
the Note Purchase Agreement shall remain in full force and effect and is hereby
ratified and confirmed.
7. Governing Law. This Amendment shall be governed by, and be construed and
interpreted in accordance with, the laws of the State of New York excluding
choice of law principles of such State that would require the application of the
laws of a jurisdiction other than such State.
8. Expenses. The Company shall pay (x) all reasonable costs and expenses of
Purchaser and each Person who controls the Purchaser (including, without
limitation, their respective fees and expenses of their counsel and accountants)
(collectively, "Expenses") and (y) indemnify the Purchaser and each Person who
controls the Purchaser from all Covered Damages, in each case incurred in
connection with the negotiation, execution and delivery of this Amendment and
the consummation of the transactions contemplated hereby; provided, that, in no
event shall the Company's liability under subclause (x) exceed $40,000.
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9. Miscellaneous. The headings in this Amendment are for purposes of
reference only and shall not limit or define the meaning hereof. This Amendment
may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
and delivered by their respective officers thereunto duly authorized as of the
date first above written.
Q-MED, INC.
By: /s/ XXXXXXX XXX
--------------------------------
Name: Xxxxxxx Xxx
Title: President
XXXXX PARTNERS III, L.P.
By: Claudius, L.L.C.
By: /s/ XXXXX X. XXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Managing Member
XXXXX PARTNERS INTERNATIONAL III, L.P.
By: Claudius, L.L.C.
By: /s/ XXXXX X. XXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Managing Member
XXXXX EMPLOYEE FUND III, L.P.
By: Wesson Enterprises, Inc.
By: /s/ XXXXX X. XXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
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