Q-MED, INC.
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Notice of Consent Requested and
Given to Amend Certain Option Agreements
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Dated May 17, 1999
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Reference is made to the Option Agreement between you and Q-Med, Inc. (the
"Company") dated November 16, 1998 (the "Option Agreement"). The Company has
requested and obtained the consent of Xxxxx Partners III, L.P. ("Xxxxx") to
amend the Option Agreements held by you and all participants in the Company's
November 1998 financing (the "Financing") to eliminate all rights to require the
Company to redeem shares issued to you. The Company requested the Amendment in
order to substantially increase the Company's stockholders' equity reported on
its balance sheet to improve the Company's prospects in negotiating contracts
with managed care organizations, among other things. By the terms of the Option
Agreements, such an amendment may be made by the Company with the consent of the
holders of a majority of the outstanding shares of the Company's common stock
issued as part of the Financing. Xxxxx owns 1,201,870 of 1,866,821 such shares
and therefore is the only investor from whom a consent was requested.
NO CONSENT IS REQUESTED FROM YOU AND YOU NEED NOT REPLY TO THIS NOTICE.
In exchange for relinquishing the rights described above, Xxxxx requested
and the Company agreed to issue an aggregate of 290,000 warrants exercisable at
$1.67 per share and 200,000 warrants exercisable at $2.87 per share, pro rata to
the investors that participated in the Financing. Both warrants are exercisable
until November 15, 2005 and the warrant exercise prices may be adjusted in
certain events to protect the warrant holders from dilution. In addition, the
warrant exercise prices will be increased to $3.00 in the event the Company has
entered into binding contracts with managed health care organizations managing
1,000,000 or more lives by August 31, 1999.
Accompanying this Notice are a copy of the signed Amendment to the Option
Agreement, manually signed documents representing the Warrants. This Notice and
the enclosures should be kept in a safe place, together with your documents
related to the Financing.
Very truly yours,
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Secretary
