[Letterhead of Q-Med AB (publ)]
====================================================================
July 14, 2000
Xxxxxx X. Xxxxxx,
Chairman and Chief Executive Officer
Ixion Biotechnology, Inc
00000 Xxxxxxxx Xxxx
Xxxxxxx Xxxxxxx 00000
Re: Stock Purchase Agreement between Ixion Biotechnology, Inc
("Company") and QVESTOR LLC ("Purchaser") dated as of July 14,
2000 ("Stock Purchase Agreement")
Dear Xx. Xxxxxx:
This letter confirms that:
1) Q-Med AB (publ) ("Q-Med") will cause Purchaser to be sufficiently
capitalized or to otherwise have sufficient funds to enable Purchaser to pay the
second payment of the Purchase Price, as defined in the Stock Purchase
Agreement, subject to the terms set forth in section 1.2 ("Purchase Price and
Method of Payment") of the Stock Purchase Agreement.
2) Q-Med will cause Purchaser to be sufficiently capitalized or to
otherwise have sufficient funds to enable Purchaser to meet the obligations of
Purchaser pursuant section 8.3 ("Indemnification by the Purchaser") of the Stock
Purchase Agreement.
3) Q-Med and Qvestor are aware that the board of directors of the
Company will consider making the following offer to holders of the Company's
unsecured convertible notes in the event the Company decides to make such
offers:
i) All holders of variable rate unsecured convertible notes
will be given 90 days from Closing under the Stock Purchase Agreement
to elect to convert their notes into the Company's shares at the
price of $2.10 per share.
ii) At the maturity date of the unsecured convertible notes,
Q-Med will have a right of first refusal to offer to redeem, at the
maturity date, from all holders electing not to convert at such date,
all unsecured debt at a price equal to par, plus, in the case of
variable rate unsecured convertible notes only, an amount equal to
accrued simple interest at 10% for the life of the notes. If Q-Med
elects not to make such offer, the offer will be made by the Company
utilizing the funds received under the Stock Purchase Agreement or
otherwise.
4) Q-Med agrees to proceed in good faith to negotiate a license
agreement relating to its intellectual property rights to non-animal stabilized
hyaluronic acid ("NASHA") on the following specific terms:
o the license will be an exclusive, worldwide license in the Field,
as defined below, to use NASHA in the Company's business,
provided that, such license shall not include the right, directly
or indirectly, to manufacture the NASHA ;
o the "Field," as used herein, will be restricted to encapsulation
of islets, IPSCs, IPCs, and ISCs, all being insulin producing
cells or stem or progenitor cell progenitors to such cells;
o the license will not include any right of the Company to
sublicense the NASHA, in whole or in part, to any third party;
o any improvements made by Q-Med, the Company, or any other person
or entity, in the NASHA gel will be the exclusive property of
Q-Med, provided that the Company shall have the right to use such
improvements as set forth in the license; and
o the license shall be royalty free, meaning that the Company shall
not pay royalties on its net sales of devices containing NASHA to
or through other purchasers. However, the transfer price paid by
the Company to Q-Med to purchase NASHA shall be the subject of
good faith negotiations, diligently pursued.
5) Q-Med represents and warrants that:
o The Purchaser has the power to enter into the Stock Purchase
Agreement and to carry out its obligations thereunder.
o The execution and delivery of this letter and the consummation of
the transactions contemplated herein have been duly authorized by
Q-Med and no other proceeding on the part of Q-Med will be
necessary to authorize the execution and delivery of this letter
and the consummation of the transactions contemplated herein.
o This Letter constitutes a valid and binding agreement Q-Med and
is enforceable in accordance with its terms subject to applicable
bankruptcy, insolvency, and similar laws affecting the rights of
creditors and subject to general principles of equity.
6) In the event that Purchaser should fail to pay the balance of the
Purchase Price, as required by section 1.2(b) of the Stock Purchase Agreement,
the Company may elect to pursue its remedies under the Stock Purchase Agreement,
or may, in its absolute discretion, seek the return of the number of shares not
paid for from the Purchaser as a result of such failure by the Purchaser to pay
the balance of the Purchase Price. The Company shall have the right to seek to
compel specific enforcement of such obligation by the Purchaser and Q-Med in any
court having appropriate jurisdiction over such matter. The Purchaser and Q-Med
agree that a failure by the Purchaser to pay the balance of the Purchase Price,
as set forth above, would irreparably injure the Company and would leave the
Company with no adequate remedy
2
at law. In the event the Company elects to seek, and subsequently obtains an
order specifically enforcing the above-referenced obligation, upon the return of
the unpaid shares, the Company shall have no further liability arising from
Purchaser's failure to pay the balance of such Purchase Price.
Sincerely yours,
-------------------------
Per Xxxx Xxxxxxxxx
President and CEO
3
