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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(AMENDMENT NO. 1)
INAMED CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, NO PAR VALUE 453235103
- --------------------------------------------------------------------------------
(Title of class of securities) (CUSIP number)
DAVID E. ZELTNER, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
(212) 310-8000
- --------------------------------------------------------------------------------
(Name, address and telephone number of person authorized to
receive notices and communications)
JUNE 21, 1996
- --------------------------------------------------------------------------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [_].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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NYFS08...:\68\74168\0012\2377\SCH6206K.200
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- ----------------------------------- ----------------------------------
CUSIP No. 453235103 13D-PAGE 2
- ----------------------------------- ----------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: The SC Fundamental Value Fund, L.P.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS: WC/OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e): [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: DELAWARE
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 585,600
OWNED BY
----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 0
REPORTING
----------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 585,600
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 585,600
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES: [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 7.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON PN
- --------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
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- ----------------------------------- ----------------------------------
CUSIP No. 453235103 13D-PAGE 3
- ----------------------------------- ----------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: SC Fundamental Value BVI, Inc.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS: N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e): [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: DELAWARE
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 260,400
OWNED BY
----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 0
REPORTING
----------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 260,400
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 260,400
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES: [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 3.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON CO
- --------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
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- ----------------------------------- ----------------------------------
CUSIP No. 453235103 13D-PAGE 4
- ----------------------------------- ----------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: SC Fundamental, Inc.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS: N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e): [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: DELAWARE
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 585,600
OWNED BY
----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 0
REPORTING
----------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 585,600
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 585,600
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES: [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 7.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON CO
- --------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
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- ----------------------------------- ----------------------------------
CUSIP No. 453235103 13D-PAGE 5
- ----------------------------------- ----------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Gary N. Siegler
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [_]
(B) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS: N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e): [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: UNITED STATES
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 846,000
OWNED BY
----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 0
REPORTING
----------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 846,000
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 846,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES: [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: IN
- --------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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- ----------------------------------- ----------------------------------
CUSIP No. 453235103 13D-PAGE 6
- ----------------------------------- ----------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON: Peter M. Collery
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [_]
(B) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS: N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e): [_]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: UNITED STATES
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 846,000
OWNED BY
----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 0
REPORTING
----------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 846,000
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 846,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES: [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: IN
- --------------------------------------------------------------------------------
SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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This constitutes Amendment No. 1 to the Schedule 13D (the
"Statement") filed with the Securities and Exchange Commission (the
"Commission") by The SC Fundamental Value Fund, L.P., a Delaware limited
partnership (the "Fund"), SC Fundamental Value BVI, Inc., a Delaware
corporation, SC Fundamental Inc., a Delaware corporation, Gary N. Siegler, an
individual, and Peter M. Collery, an individual, with respect to the Common
Stock, no par value (the "Common Stock"), of Inamed Corporation, a Florida
corporation (the "Company").
Item 4. Purpose of the Transaction.
---------------------------
As previously reported in the Statement, on January 23, 1996, the
Fund and SC Fundamental Value BVI, Ltd. (collectively, the "Purchasers")
purchased, in the aggregate, $8,460,000 principal amount of the Company's 11%
Secured Convertible Notes due 1999 (the "Securities"). Such purchase was made
pursuant to the terms of a Note Purchase Agreement dated as of January 23, 1996,
a copy of which is filed as an exhibit hereto and is incorporated herein by
reference. The Securities were issued under an indenture (the "Indenture"),
dated as of January 22, 1996, between the Company and Santa Barbara Bank &
Trust, as trustee (the "Trustee").
The Reporting Persons purchased the Securities for investment
purposes. Except with respect to the transactions contemplated by the Consent
and Waiver (as defined in Item 6
7
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below), the Reporting Persons currently have no plans or proposals which would
result in any of the actions described in clauses (a) through (j) of Item 4 of
Schedule 13D.
The Reporting Persons may from time to time (i) convert any amount
of the Securities owned by the Reporting Persons into Common Stock, (ii) acquire
additional shares of Common Stock, subject to the availability of prices deemed
favorable in the open market, in privately negotiated transactions or otherwise
or (iii) dispose of the Securities owned by the Reporting Persons or the shares
of Common Stock issued upon conversion thereof or subsequently acquired or
sell short such shares of Common Stock, in each case at prices deemed favorable
in the open market, in privately negotiated transactions or otherwise.
Item 5. Interest in Securities of the Issuer
------------------------------------
The percentage of Common Stock reported in this
Amendment as being beneficially owned by the Reporting Persons is
based upon the number of outstanding shares of Common Stock
represented by the Company to the Purchasers in Exhibit A to the
Consent and Waiver.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
-------------------------
The Company has notified the Purchasers that it was in
default of Section 8.16 of the Indenture for the quarter ended March 31, 1996,
which required that the operating profit of the
8
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Company for such quarter be in excess of $2.0 million, and also failed to timely
issue to the Trustee its officers' certificate for such period pursuant to
Section 8.18 of the Indenture (collectively, the "Defaults").
As a result of the occurrence of the Defaults, the Purchasers, at
the request of the Company, entered into a Consent and Waiver Agreement (the
"Consent and Waiver") with the Company, a copy of which is filed as an exhibit
hereto and is incorporated herein by reference. In exchange for waiving the
Defaults and consenting to certain amendments to the Indenture described below,
pursuant to the Consent and Waiver, the Company agreed to issue to the
Purchasers on January 10, 1997 a number of shares of Common Stock (the
"Issuance") equal to 5% of the number of shares of Common Stock that would
otherwise have been issuable to the Purchasers if all of their Securities had
been converted on June 10, 1996. The Company further agreed that it will use its
best efforts to file with the Commission on or before January 10, 1997, and use
its best efforts to cause to become effective on or before February 28, 1997, a
registration statement on Form S-3 with respect to shares of Common Stock issued
in the Issuance. In the event such registration is not so filed and declared
effective, the Company will pay liquidated damages as set forth in the Indenture
with respect to the filing and effectiveness of the registration forms set forth
therein.
9
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The Consent and Waiver also contains the consent of the Purchasers
to certain amendments of the Indenture. Such amendments exclude (i) the Issuance
from the preemptive rights granted to the holders of the Securities to subscribe
for additional offerings of securities of the Company and (ii) the application
of any charges associated with the Issuance for the periods in which such
charges are taken in connection with the calculation of certain financial
covenants contained in the Indenture.
The effectiveness of the Consent and Waiver is conditioned upon
consent to the matters described above by the holders of a majority in principal
amount of Securities and the delivery by the Company to the Trustee of an
officers' certificate with respect to the receipt of such requisite consents.
Effective April 1, 1996, SC Fundamental Value BVI, Ltd. transferred
its economic interest in $371,000 in principal amount of the Securities to the
Fund. Such tranfer has not yet been recorded on the security register of the
Company.
Item 7. Material to be Filed as Exhibits.
---------------------------------
1. Note Purchase Agreement, dated as of January 23,
1996, between the Company and the Purchasers.
2. Consent and Waiver Agreement, dated June 20, 1996,
between the Purchasers and the Company.
10
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SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief, we the
undersigned certify that the information set forth in this Statement is true,
complete and correct.
Dated: June 25, 1996
SC FUNDAMENTAL INC.
By: /s/ Neil H. Koffler
----------------------------
Neil H. Koffler as Attorney-
in-Fact for Peter M. Collery,
Vice President
THE SC FUNDAMENTAL VALUE FUND, L.P.
By: SC FUNDAMENTAL INC.
By: /s/ Neil H. Koffler
----------------------------
Neil H. Koffler as Attorney-
in-Fact for Peter M. Collery,
Vice President
SC FUNDAMENTAL VALUE BVI, INC.
By: /s/ Neil H. Koffler
----------------------------
Neil H. Koffler as Attorney-
in-Fact for Peter M. Collery,
Vice President
/s/ Neil H. Koffler
-----------------------------------
Neil H. Koffler as Attorney-
in-Fact for Gary N. Siegler*
/s/ Neil H. Koffler
-----------------------------------
Neil H. Koffler as Attorney-
in-Fact for Peter M. Collery*
*The Powers of Attorney for Messrs. Collery and Siegler were filed as Exhibit A
to Amendment No. 5 to Schedule 13D relating to US Facilities Corporation on
August 4, 1995 and is hereby incorporated herein by reference.
11
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
1. Note Purchase Agreement, dated as of January 23, 1996, between the
Company and the Purchasers.
2. Consent and Waiver Agreement, dated June 20, 1996, between the
Purchasers and the Company.
<PAGE>
EXHIBIT 1
========================================
INAMED CORPORATION
_______________
NOTE PURCHASE AGREEMENT
Dated January 23, 1996
_______________
11% Secured Convertible Notes due 1999
========================================
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TABLE OF CONTENTS
Page
----
Section 1. ISSUANCE OF SECURITIES . . . . . . . . . . . . . . . 1
Section 1.1. Authorization . . . . . . . . . . . . . . . . 1
Section 1.2. Purchase and Sale of the Securities; the
Closing . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3. Representations of the Purchaser . . . . . . . 2
Section 2. REPRESENTATIONS OF THE COMPANY . . . . . . . . . . . 2
Section 2.1. Organization and Authority of the Company . . 2
Section 2.2. Business, Properties and Other Information
Regarding the Company . . . . . . . . . . . . . . . . 3
Section 2.3. Capital Stock . . . . . . . . . . . . . . . . 3
Section 2.4. Compliance with Laws and Other Instruments . . 4
Section 2.5. Governmental Authorizations, etc. . . . . . . 4
Section 2.6. Litigation; Observance of Statutes,
Regulations and Orders . . . . . . . . . . . . . . . . 4
Section 2.7. Taxes . . . . . . . . . . . . . . . . . . . . 5
Section 2.8. Title to Property . . . . . . . . . . . . . . 5
Section 2.9. Licenses, Permits, etc. . . . . . . . . . . . 5
Section 2.10. Compliance with ERISA . . . . . . . . . . . . 6
Section 2.11. Existing Indebtedness . . . . . . . . . . . . 6
Section 2.12. Investment Company Act . . . . . . . . . . . . 6
Section 2.13. Environmental Matters . . . . . . . . . . . . 6
Section 2.14. Security Documents . . . . . . . . . . . . . . 7
Section 2.15. Labor Relations . . . . . . . . . . . . . . . 7
Section 2.16 Reports . . . . . . . . . . . . . . . . . . . 7
Section 2.17 Solvency . . . . . . . . . . . . . . . . . . . 8
Section 2.18 Use of Proceeds . . . . . . . . . . . . . . . 8
Section 2.19 Litigation Settlement . . . . . . . . . . . . 8
Section 3. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. . . . . . 9
Section 3.1. Proceedings Satisfactory . . . . . . . . . . . 9
Section 3.2. Opinion of Counsel . . . . . . . . . . . . . . 9
Section 3.3. Representations True, etc.; Officer's
Certificate . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.4. No Material Judgment or Order . . . . . . . . 9
Section 3.5. Security Interests . . . . . . . . . . . . . . 9
Section 4. FINANCIAL STATEMENTS AND INFORMATION . . . . . . . . 10
Section 5. COVENANTS . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.1. Inspection . . . . . . . . . . . . . . . . . . 11
Section 5.2 Additional Guarantees . . . . . . . . . . . . 12
i
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Section 6. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . 12
Section 6.1. Reliance on and Survival of Representations . 12
Section 6.2. Successors and Assigns . . . . . . . . . . . . 12
Section 6.3. Notices . . . . . . . . . . . . . . . . . . . 13
Section 6.4. Counterparts . . . . . . . . . . . . . . . . . 13
Section 6.5. Governing Law . . . . . . . . . . . . . . . . 13
Section 6.6. Waiver of Jury Trial . . . . . . . . . . . . . 14
Exhibit A - Form of Security
Exhibit B - Form of Opinion of Nida & Maloney
ii
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<PAGE>
Inamed Corporation
3800 Howard Hughes Parkway, Suite 900
Las Vegas, Nevada 89109
NOTE PURCHASE AGREEMENT
-----------------------
January 23, 1996
To the Purchaser named on
the Signature Page Hereof
Ladies and Gentlemen:
Inamed Corporation, a Florida corporation (the "Company"), hereby
agrees with you as follows:
SECTION 1. ISSUANCE OF SECURITIES.
SECTION 1.1. AUTHORIZATION. The Company has duly
-------------
authorized the issue of its 11% Secured Convertible Notes due 1999, in
the aggregate principal amount of up to $35,000,000 (the "Secured
Notes" or the "Securities"), substantially in the form of Exhibit A,
---------
to be issued pursuant to an Indenture (the "Indenture"), dated as of
January 2, 1996 between the Company and Santa Barbara Bank & Trust, as
Trustee. Each Secured Note shall mature, shall bear interest, shall
be payable and shall be otherwise as provided herein and in Exhibit A.
---------
SECTION 1.2. PURCHASE AND SALE OF THE SECURITIES; THE
----------------------------------------
CLOSING. In reliance upon the representations of the Purchaser
-------
contained in Section 1.3 hereof and subject to the terms and
-----------
conditions set forth herein, the Company shall sell to the Purchaser
on the Closing Date (as defined below) and, subject to the terms and
conditions hereof, the Purchaser shall purchase from the Company on
the Closing Date (as defined below) the Securities in the aggregate
principal amount set forth below the Purchaser's signature, at an
aggregate purchase price equal to 100% of the aggregate principal
amount thereof. The closing (the "Closing") of the Purchaser's
purchase of the Securities shall be held at 10:00 a.m., Las Vegas
time, on January 23, 1996 (the "Closing Date"), at the offices of the
Company, 3800 Howard Hughes Parkway, Suite 900, Las Vegas, Nevada
89109, or at such other time or place as the parties hereto may
mutually agree.
On the Closing Date the Company will deliver to the
Purchaser one Secured Note, registered in the Purchaser's name or in
the name of the Purchaser's nominee, as may be specified by the
Purchaser by timely written notice to the Company, in the aggregate
principal amount specified above, duly executed and dated the Closing
Date, against the Purchaser's delivery to the Company (or to persons
at the direction of the Company) of immediately available funds in the
amount of such purchase price.
<PAGE>
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SECTION 1.3. REPRESENTATIONS OF THE PURCHASER.
--------------------------------
The Purchaser represents and warrants to the Company that on
the date hereof:
(a) Distribution. The Purchaser is not acquiring the
------------
Securities with a view to the distribution or sale of the Securities
in violation of the Securities Act of 1933, as amended (the
"Securities Act"), subject, however, to any requirement of law that
the disposition of its property be at all times within its control.
(b) Offering of Securities. The Purchaser has not offered
----------------------
the Securities for sale by any means of general solicitation or
general advertising including, but not limited to, any advertisements,
articles, notices or other communications published in any newspaper,
magazine or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees were invited by any general
solicitation or general advertising.
(c) Accredited Investor. The Purchaser is an "accredited
-------------------
investor" within the meaning of Rule 501 under the Securities Act and
the Purchaser has had an opportunity to investigate the terms of the
Securities, the business and financial condition of the Company and to
obtain such information as the Purchaser requires from the Company.
SECTION 2. REPRESENTATIONS OF THE COMPANY. The Company
represents and warrants to the Purchaser that on the date hereof and
as of the Closing Date:
SECTION 2.1. ORGANIZATION AND AUTHORITY OF THE COMPANY.
-----------------------------------------
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida
and each Guarantor (as defined in the Indenture) is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation and each of the Company and each
such Guarantor has all requisite power and authority to own or hold
under lease the property it purports to own or hold under lease, to
transact the business it transacts and proposes to transact, to
execute and deliver this Agreement and the Secured Notes, the
Indenture governing the Secured Notes, the Collateral Documentation
(as defined in the Indenture), the Guarantee Agreements (as defined in
the Indenture), the Securities to be issued to other purchasers and
all other documents and agreements contemplated hereby and thereby
(this Agreement, and all such other documents and agreements,
collectively, the "Transaction Documents") and to perform the
provisions hereof and thereof and to consummate the transactions
contemplated hereby and thereby. Each of the Company and each
Guarantor is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which the character of the properties
owned or held under lease by it or the nature of the business
transacted by it requires such qualification, except where the failure
to be so qualified would not have a material adverse effect on the
business, prospects, properties, assets, operations or financial
condition of the Company. Schedule 2.1A hereto sets forth the name of
-------------
each Subsidiary (as defined in the Indenture), the jurisdiction in
which it is incorporated or organized, the number of shares of its
authorized capital stock, the number and class of shares thereof duly
issued and outstanding, the names of all stockholders or other
2
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equity owners and the number of shares of stock owned by each
stockholder or the amount of equity owned by each equity owner.
(b) The execution, delivery and performance of the
Transaction Documents, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized and
approved by the Company and, with respect to each such agreement to
which it is a party, each Guarantor. The Transaction Documents to
which it is a party have each been duly authorized, executed and
delivered by, and each is the valid and binding obligation of, the
Company and each Guarantor, enforceable against the Company and such
Guarantor in accordance with its terms, except as may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws or by legal or equitable principles relating to or
limiting creditors' rights generally.
SECTION 2.2. BUSINESS, PROPERTIES AND OTHER INFORMATION
------------------------------------------
REGARDING THE COMPANY.
---------------------
(a) The Company has provided the Purchaser with the
Confidential Offering Memorandum dated January 10, 1996 that (when
read in conjunction with this Agreement and the schedules and exhibits
hereto and thereto (including the Company's Annual Report on Form 10-K
for the year ended December 31, 1994 and the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, June 30 and
September 30, 1995) as amended or supplemented (collectively, the
"Disclosure Documents") describes, among other things, in all material
respects the business, prospects, properties, assets, operations and
financial condition of the Company.
(b) As of their respective dates, neither the Disclosure
Documents nor any certificate executed by the Company or any Guarantor
in connection with the transactions contemplated hereby, contained,
and as of the Closing Date no Disclosure Document or certificate
contains, any untrue statement of a material fact or omitted to state
any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
Since September 30, 1995, there has been no material adverse change in
the business, prospects, properties, assets, operations or financial
condition of the Company or any Guarantor not described in the
Disclosure Documents. Neither the Company nor any Guarantor has
actual knowledge, except as disclosed in the Disclosure Documents, of
any fact that materially adversely affects or, so far as the Company
or any Guarantor can now reasonably foresee, will materially adversely
affect the business, prospects, properties, assets, operations or
financial condition of the Company or the Guarantors, or the ability
of the Company or the Guarantors to perform its respective obligations
under the Transaction Documents.
SECTION 2.3. CAPITAL STOCK.
-------------
(a) On the date hereof and on the Closing Date, the
authorized capital stock of the Company will consist of 20,000,000
shares of common stock, no par value (the
3
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<PAGE>
"Common Stock"). On the date hereof and on the Closing Date,
7,677,617 shares of Common Stock will be issued and outstanding.
(b) As of September 30, 1995, the Company had reserved for
issuance an aggregate of approximately 295,400 shares of Common Stock
issuable pursuant to: (i) outstanding vested and non-vested options,
warrants and similar rights; and (ii) contingent obligations to issue
additional shares. The Company is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire
any of its capital stock or other securities or obligation evidencing
the right of the holder thereof to purchase any of its capital stock
or other securities.
SECTION 2.4. COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS.
------------------------------------------
The consummation of the transactions contemplated by the Transaction
Documents and the performance of the terms and provisions of the
Transaction Documents will not (i) contravene, result in any breach
of, or constitute a default under, or result in the creation of any
Lien (except for Liens created under the Indenture or the Collateral
Documentation) in respect of any property of the Company or any
Guarantor under, any other material agreement or instrument to which
the Company or any Guarantor is a party or by which the Company or any
Guarantor, or any of its respective properties is bound, (ii) conflict
with any provision of any of the certificate of incorporation or
bylaws or comparable organizational documents of the Company or any
Guarantor or conflict with or result in a breach of any of the terms,
conditions or provisions of any order of any court, arbitrator or
governmental entity applicable to the Company or any Guarantor or
(iii) violate any material provision of any statute or other rule or
regulation of any governmental entity applicable to the Company or any
Guarantor.
SECTION 2.5. GOVERNMENTAL AUTHORIZATIONS, ETC. No consent,
---------------------------------
approval or authorization of, or registration, filing or declaration
with, any governmental entity or third party is required for the
issuance of the Securities or the valid execution and delivery of the
Securities or for the performance by the Company or the Guarantors of
the Transaction Documents, other than the filings, registrations or
qualifications under the securities laws or "blue sky" laws of any
State that may be required to be made or obtained in connection with
the offer, issuance, sale or delivery of the Securities or any
interest therein.
SECTION 2.6. LITIGATION; OBSERVANCE OF STATUTES,
-----------------------------------
REGULATIONS AND ORDERS.
----------------------
(a) Except as disclosed or referred to in the Company's
Disclosure Documents, or other reports filed with the Securities and
Exchange Commission, or with respect to which resolution will be
effected with the proceeds of this Offering as described in Section
2.18, there are no actions, suits or proceedings pending or, to the
knowledge of the Company or any Guarantor, threatened against or
involving the Company or any Guarantor or any property of the Company
or any Guarantor in any court or before any arbitrator of any kind or
before or by any governmental entity except actions, suits or
proceedings arising in the ordinary course of business that
individually or in the aggregate, if adversely determined, would not
materially adversely affect the business, operations, prospects,
properties, assets or
4
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financial condition of the Company or any Guarantor or the ability of
the Company or any Guarantor to perform its obligations under the
Transaction Documents.
(b) Neither the Company nor any Guarantor is in default
under or in breach of any order of any court, arbitrator or
governmental entity, and neither the Company nor any Guarantor is
subject to or a party to any order of any court or governmental entity
arising out of any action, suit or proceeding under any statute or
other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters. Neither the Company nor any Guarantor
is in violation of any law or statute, or other rule or regulation of
any governmental entity, including without limitation laws relating to
the production, use, storage or disposal of hazardous materials (the
"Hazardous Materials Laws"), the violation of which would materially
adversely affect the business, operations, prospects, properties,
assets or financial condition of the Company or any Guarantor or the
ability of the Company or any Guarantor to perform its obligations
under the Transaction Documents.
SECTION 2.7. TAXES. Except for approximately $4,400,000 in
-----
unpaid taxes which will be paid from the proceeds of this Offering and
other taxes reflected in the Company's balance sheet dated September
30, 1995, the Company and each Guarantor has filed all tax returns
that are required to have been filed by it in any jurisdiction, and
has paid all taxes shown to be due and payable on such returns and all
other taxes and assessments payable by the Company or any Guarantor to
the extent the same have become due and payable and before they have
become delinquent, except for any taxes and assessments the amount,
applicability or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which the
Company has set aside on its books reserves (segregated to the extent
required by GAAP (as defined in the Indenture)) deemed by it in its
reasonable discretion to be adequate. Neither the Company nor any
Guarantor has actual knowledge of any proposed material tax assessment
against the Company or any Guarantor, and in the opinion of the
Company all tax liabilities of the Company and the Guarantors are
adequately provided for on the books of the Company.
SECTION 2.8. TITLE TO PROPERTY. The Company and each
-----------------
Guarantor has good and marketable title to its respective real
properties and good and merchantable title to each of its other
respective assets and properties, except as sold or otherwise disposed
of in the ordinary course of business. Except as expressly permitted
by the Indenture, all assets and properties of the Company and each
Guarantor are owned by the Company or such Guarantor free and clear of
all Liens.
The Company and each Guarantor enjoys full and undisturbed
possession under all leases necessary in any material respect for the
operation of its respective businesses (the "Leases"). None of the
Leases contains any provisions that, individually or in the aggregate,
would materially impair the operation of the businesses of the Company
or the Guarantors. The Leases are valid and subsisting and are in
full force and effect, and there are no existing material defaults by
the Company or events that with notice or lapse of time or both would
constitute material defaults by the Company under any of the Leases.
5
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SECTION 2.9. LICENSES, PERMITS, ETC. The Company and each
-----------------------
Guarantor possesses all material licenses, permits, franchises,
authorizations, patents, copyrights, trademarks and trade names and
any other tangible or intangible intellectual property rights, or
rights thereto, required to conduct its respective business
substantially as now conducted and as currently proposed to be
conducted, without known conflict with the rights of others.
SECTION 2.10. COMPLIANCE WITH ERISA. Neither the Company
---------------------
nor any of its Subsidiaries (as defined in the Indenture) has any
employee benefit plan established or maintained by the Company or any
of its Subsidiaries or to which the Company or any of its Subsidiaries
has made contributions that is subject to Part 3 of Subtitle B of
Title 1 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 412 of the Internal Revenue Code of
1954, as amended (the "Code").
SECTION 2.11. EXISTING INDEBTEDNESS. The Company's
---------------------
September 30, 1995 balance sheet as contained in the Disclosure
Documents includes all Indebtedness (as defined in the Indenture) of
the Company and its Subsidiaries on a consolidated basis as of the
date thereof, including the aggregate principal amount outstanding.
Neither the Company nor any Guarantor is in default in the performance
or observance of any of the terms, covenants or conditions contained
in any material instrument evidencing such Indebtedness or pursuant to
which such Indebtedness was issued or secured and has not requested
any waiver in respect of any default and no event has occurred and is
continuing which, with notice or the lapse of time or both, would
constitute such a default.
SECTION 2.12. INVESTMENT COMPANY ACT. Neither the Company
----------------------
nor any Guarantor is an investment company subject to registration
under the Investment Company Act of 1940, as amended.
SECTION 2.13. ENVIRONMENTAL MATTERS.
---------------------
(a) None of the Company, any Guarantor or, to the Company's
best knowledge, any previous owner, lessee, tenant, occupant or user
of any real property owned or leased on or prior to the date hereof by
the Company or any Guarantor (such real property and any and all
buildings and other improvements thereon being herein referred to as
the "Property") used, generated, manufactured, treated, handled,
refined, processed, released, discharged, stored or disposed of any
Hazardous Materials on, under, in or about the Property, or
transported any Hazardous Materials to or from the Property in
violation of any Hazardous Materials Laws. "Hazardous Materials" as
used herein, refers to any flammable explosives, radioactive
materials, asbestos, compounds known as polychlorinated byphenyls,
chemicals now known to cause cancer or reproductive toxicity,
pollutants, contaminants, hazardous wastes, toxic substances or
related materials, including, without limitation, any substances
defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," or "toxic substances" under
the Hazardous Materials Laws. No underground tanks or underground
deposits or Hazardous Materials, to the Company's best knowledge,
existed on, under, in or about any Property previously owned or leased
by the Company or any Guarantor on or prior to the date that fee or
leasehold title to such Property
6
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was transferred to a third party by the Company or any Guarantor. No
underground tanks or underground deposits or Hazardous Materials, to
the Company's best knowledge, exist on, under, in or about any
Property that is currently owned or leased by the Company or any
Guarantor.
(b) While any Property was owned or leased by the Company
or any Guarantor, the Company or such Guarantor kept and maintained
such Property, including, without limitation, the groundwater on or
under such Property, and conducted its businesses in material
compliance with all applicable Hazardous Materials Laws and other
applicable federal, state and local laws, ordinances or regulations,
now or previously in effect, relating to environmental conditions,
industrial hygiene or Hazardous Materials on, under, in or about such
Property.
(c) As of the date hereof there are no (i) enforcement,
clean-up, removal, mitigation or other governmental or regulatory
actions instituted, contemplated or threatened pursuant to any
Hazardous Materials Laws affecting any of the Property, (ii) claims
made or threatened by any person or governmental entity relating to
the Property against the Property, the Company or any Guarantor
relating to damage, contribution, cost recovery, compensation, loss or
injury resulting from any Hazardous Materials nor (iii) to the
Company's best knowledge, any occurrence or condition on any Property
that is currently owned or leased by the Company or any Guarantor that
could subject the Company, any Guarantor or such Property to any
material restrictions on occupancy, transferability or use of any
Property under any Hazardous Materials Laws.
SECTION 2.14. SECURITY DOCUMENTS. Upon proper filing of
------------------
the Form UCC-1 financing statements (or assignments thereof) in the
offices of the Secretary of State of Nevada with respect to the
Company and upon proper filing of the Form UCC-1 financing statements
(or assignments thereof) in the locations identified in the Guarantee
and Security Agreement (as defined in the Indenture) with respect to
the Domestic Guarantors (as defined in the Indenture), the lien of the
Collateral Documentation shall constitute a fully perfected security
interest in all right, title and interest of the Company or such
Domestic Guarantor, as the case may be, in and to the personal
property therein prior to any other security interests against such
property or interests therein other than Permitted Liens (as defined
in the Indenture).
SECTION 2.15. LABOR RELATIONS. No unfair labor practice
---------------
complaint for sex, age, race or other discrimination claim has been
brought during the last three years against the Company or any
Guarantor before the National Labor Relations Board, the Equal
Employment Opportunity Commission or any other governmental entity.
During such period, the Company and each Guarantor has complied in all
material respects with all applicable laws relating to the employment
of labor including without limitation those relating to wages, hours
and collective bargaining.
SECTION 2.16 REPORTS. Since December 31, 1992, the
-------
Company has filed all forms, reports and documents with the Securities
and Exchange Commission (the "SEC")
7
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required to be filed by it pursuant to the federal securities laws and
the SEC rules and regulations thereunder, all of which have complied
in all material respects with all applicable requirements of the
Securities Act and the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the rules and regulations promulgated
thereunder (collectively, the "SEC Reports"). None of the SEC
Reports, including without limitation, any financial statements or
schedules included therein and all documents incorporated therein by
reference, at the time filed contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
The balance sheets and the related statements of income,
shareholders' equity and cash flows (including the related notes
thereto) of the Company included in the SEC Reports complied as to
form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior periods
(except as otherwise noted therein), and presented fairly the
financial position of the Company as of their respective dates, and
the results of its operations and its cash flows for the periods
presented therein (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments).
SECTION 2.17 SOLVENCY. The Company and each Guarantor is,
--------
and after giving effect to the purchase of the Securities and the
application of the proceeds therefrom the Company and each Guarantor
will be, solvent.
SECTION 2.18 USE OF PROCEEDS. The Company will, to the
---------------
extent it has rights therein, apply the proceeds of the sale of the
Securities hereunder as follows: (i) $10 million to be placed in
escrow pursuant to the Escrow Agreement between the Company and Santa
Barbara Bank & Trust for transfer in accordance with the terms
thereof, (ii) an additional $5 million to be placed in escrow
immediately concurrently with the Closing pursuant to a second Escrow
Agreement between the Company and Santa Barbara Bank & Trust,
(iii) approximately $10 million for long-term capital investments and
improvements relating to production capacity expansion, and
(iv) approximately $2 million for short-term capital investments and
improvements relating to production capacity expansion, with the
remainder of the proceeds to be used by the Company for general
business purposes. The Company will apply the proceeds as specified
in clauses (iii) and (iv) of this paragraph in the due course of
business. The use of such proceeds shall be in compliance with all
applicable laws, rules and regulations. No part of the proceeds from
the sale of the Securities hereunder will be used, directly or
indirectly, for the purpose of buying or carrying any "margin stock"
within the meaning of Regulation G of the Board of Governors of the
Federal Reserve System (12 CFR Section 207), or for the purpose of buying
or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12
CFR Section 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR Section 220). The assets of the Company
do not include any margin stock, and the Company does not have any
present intention of acquiring any margin stock.
8
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SECTION 2.19 LITIGATION SETTLEMENT. The Company
---------------------
represents and warrants that, to the best of its knowledge, the
certification and implementation of a Mandatory (non "opt-out" Limited
Fund) Class under Rule 23(b)(1)(B) of the Federal Rules of Civil
Procedure in the Company's and certain of its Subsidiaries' litigation
pending in the United States District Court for the Northern District
of Alabama, Southern Division stylized as "Silicone Gel Breast Implant
Products Liability Litigation (MDL 926)" will preclude further
litigation by all persons who are within the scope of the class and
whose claims arise during the class period.
SECTION 3. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The
obligation of the Purchaser to purchase and pay for the Securities on
the Closing Date shall be subject to the satisfaction on or before the
Closing Date of the conditions hereinafter set forth.
SECTION 3.1. PROCEEDINGS SATISFACTORY. All proceedings
------------------------
taken on or prior to the Closing Date in connection with the issuance
of the Securities and the consummation of the transactions
contemplated hereby and all documents and papers relating thereto
shall be satisfactory in form and substance to the Purchaser and its
counsel, and each such person shall have received copies of such
documents and papers, all in form and substance satisfactory to such
persons, as the Purchaser or its counsel may reasonably request in
connection therewith.
SECTION 3.2. OPINION OF COUNSEL. The Purchaser shall have
------------------
received an opinion dated the Closing Date from Nida & Maloney,
substantially in form and substance as attached hereto as Exhibit B.
---------
SECTION 3.3. REPRESENTATIONS TRUE, ETC.; OFFICER'S
-------------------------------------
CERTIFICATE. All representations and warranties of the Company
-----------
contained in Section 2 not qualified as to materiality shall be true
---------
and correct in all material respects and all representations and
warranties of the Company contained in Section 2 qualified as to
---------
materiality shall be true and correct, on and as of the Closing Date
with the same effect as though such representations and warranties had
been made on and as of the Closing Date; the Company shall have
performed in all respects all agreements on its part required to be
performed under this Agreement on or prior to the Closing Date; no
Default or Event of Default (each as defined in the Indenture) shall
have occurred and be continuing; the Company shall not have
consolidated with, merged into, or sold, leased or otherwise disposed
of its properties as an entirety or substantially as an entirety to
any person; and the Purchaser shall have received a certificate signed
by the chairman of the board, the president or other officer of the
Company, dated the Closing Date, certifying to the effect specified in
this Section.
SECTION 3.4. NO MATERIAL JUDGMENT OR ORDER. There shall
-----------------------------
not be on the Closing Date any judgment or order of a court of
competent jurisdiction or any ruling of any agency of the federal,
state or local government that, in the reasonable judgment of the
Purchaser, would prohibit the purchase of the Securities hereunder, or
any interest or participations therein, or subject the Purchaser to
any material penalty if the Securities were to be purchased as
contemplated hereunder.
9
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SECTION 3.5. SECURITY INTERESTS. Each of the Transaction
------------------
Documents shall have been duly executed and delivered by the parties
thereto (together with any financing statements relating thereto).
The Collateral Documentation shall be duly filed or recorded in all
places necessary or advisable to perfect and maintain the Liens
respectively purported to be created thereby and all governmental
charges in connection therewith shall have been paid in full. The
Collateral Documentation shall be in full force and effect and no term
or condition thereof shall have been amended, modified or waived
without the Purchaser's prior written consent.
SECTION 4. FINANCIAL STATEMENTS AND INFORMATION. The
Company will furnish:
A. copies of the annual and quarterly reports and of the
other information, documents, and other reports which the Company
files or is required to file with the SEC pursuant to the
Exchange Act and of any other reports or information which the
Company delivers or makes available to any of its
securityholders, at the time of filing such reports with the SEC
or of delivery to the Company's securityholders, as the case may
be;
B. quarterly reports for the first three quarters of each
fiscal year of the Company and annual reports which the Company
would have been required to file under any provision of the
Exchange Act if it had a class of securities listed on a national
securities exchange, within fifteen (15) Business Days of when
such report is filed under Section 13 of the Exchange Act,
together with copies of a consolidating balance sheet of the
Company and its Subsidiaries as of the end of each such
accounting period and of the related consolidating statements of
income and cash flow for the portion of the fiscal year then
ended, all in reasonable detail and all certified by the
principal financial officer of the Company to present fairly the
information contained therein in accordance with GAAP (and in the
case of annual reports, including financial statements, audited
and certified by the Company's independent public accountants as
required under the Exchange Act);
C. within ninety (90) days after the end of each fiscal
year, a written statement by the Company's independent certified
public accountants stating as to the Company whether in
connection with their audit examination, any Default or Event of
Default (each as defined in the Indenture) has come to their
attention;
D. (1) within forty-five (45) days after the end of the
first three quarters of the Company's fiscal year and within
ninety (90) days after the end of the Company's fiscal year, a
certificate of the chief executive officer or principal financial
officer of the Company setting forth computations in reasonable
detail showing, as at the end of such quarter or fiscal year, as
the case may be, the Company's compliance with Sections 8.7 and
----------------
8.8 of the Indenture, and (2) within twenty (20) days after the
---
end of each month, a certificate of the chief executive officer
or the principal financial officer
10
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of the Company and a vice president of the Company stating that
as of the date of such certificate, based upon such examination
or investigation and review of the Indenture as in the opinion of
such signer is necessary to enable the signer to express an
informed opinion with respect thereto, to the best knowledge of
such signer, the Company has kept, observed, performed and
fulfilled each and every covenant contained in the Indenture, and
is not in default in the performance or observance of any of the
terms, provisions and conditions hereof, and to the best of such
signer's knowledge, no Default or Event of Default exists or has
existed during such period or, if a Default or Event of Default
shall exist or have existed, specifying all such defaults, and
the nature and period of existence thereof, and what action the
Company has taken, is taking or proposes to take with respect
thereto;
E. promptly after becoming aware of (1) the existence of a
Default or Event of Default or any default in any of the
Collateral Documentation or (ii) any default or event of default
under any Indebtedness of the Company or any of its Subsidiaries,
a certificate of the chief executive officer or the principal
financial officer of the Company specifying the nature and period
of existence thereof and what action the Company is taking or
proposes to take with respect thereto; and
F. such other information, including financial statements
and computations, relating to the performance of the provisions
of this Agreement and the affairs of the Company and any of its
Subsidiaries as any Holder may from time to time reasonably
request.
The Company shall make the reports referred to in
Subsections A, B, C, D and E above available promptly to each Holder
of the Securities. In addition, the Company shall make available to
securities analysts and broker-dealers, upon their reasonable request,
copies of all annual, quarterly and interim reports filed by the
Company with the SEC pursuant to the Exchange Act. The Company shall
keep at its principal executive office a true copy of this Agreement
(as at the time in effect), and cause the same to be available for
inspection at said office, during normal business hours and after
reasonable notice to the Company by the Holders or any prospective
purchaser of any Secured Note or any interest or participation
therein.
SECTION 5. COVENANTS.
SECTION 5.1. INSPECTION.
----------
(a) Any Holder or Holders of at least $5,000,000 in
aggregate principal amount of the Securities and each of such Holder's
authorized representatives shall have the right to visit and inspect
any of the properties of the Company and any Subsidiaries, to examine
the books of account and records of the Company and any Subsidiaries,
to be provided with copies and extracts therefrom, to discuss the
affairs, finances and accounts of the Company and its Subsidiaries
with, and to be advised as to the same by, its and their officers
11
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and employees, and its and their independent public accountants (and
the Company authorizes such independent public accountants to discuss
the Company's or any Subsidiaries' financial matters with such Holder
or Holders and its representatives, regardless of whether any
representative of the Company is present, but provided that an officer
of the Company will be afforded a reasonable opportunity to be present
at any such discussion), all at such reasonable times and intervals
during normal business hours, and upon reasonable prior notice to the
Company as such Holder or Holders and the Company shall agree. Any
copying or similar charges incurred in connection with the visitation
and inspection rights set forth in this Section shall be at the
expense of such Holder or Holders except when a Default or Event of
Default has occurred and is continuing, in which case any such costs
incurred in connection with such visitation and inspection rights
shall be at the expense of the Company. The Company will likewise
afford such Holder or Holders the opportunity to obtain any
information, to the extent the Company or any of its Subsidiaries
possesses such information or can acquire it without unreasonable
effort or expense, necessary to verify the accuracy of any of the
representations and warranties made by the Company hereunder.
(b) Each Holder by receipt of information under this
Section 5 agrees that all information (other than such information
---------
that is publicly available or any other information that is in such
Holder's possession prior to any disclosure under this Section 5)
---------
provided to it pursuant to this Section 5 shall be used by such
---------
holder solely in connection with its investment in the Securities and
for no other purpose, and such holder shall treat such information as
confidential in accordance with such reasonable internal procedures as
it applies generally to information of this kind and shall not
disclose such information to any person, except (i) to any
governmental entity (including for this purpose the National
Association of Insurance Commissioners) having jurisdiction over such
holder in the law or ordinary course of business, (ii) to any other
person pursuant to subpoena or other process, whether legal,
administrative or other (and each holder hereby agrees to provide the
Company with prompt notice of any such subpoena or other process),
(iii) to such holder's officers, directors, trustees, employees, legal
counsel, financial advisors or auditors or accountants who need access
to such information in connection with their duties, (iv) to any
transferee or prospective purchaser of a Security or interest therein
who agrees to be bound by this paragraph, or (v) to the extent
necessary in the enforcement of such holder's rights hereunder and
under the Secured Notes during the continuance of a Default or Event
of Default.
SECTION 5.2 ADDITIONAL GUARANTEES. The Company agrees
---------------------
that all future Subsidiaries shall become Domestic Guarantors or
Foreign Guarantors, as applicable, upon the terms and conditions
provided in Section 8.11 of the Indenture and that any Subsidiary that
shall not be a Guarantor under such Section because it had assets of
less than $100,000 shall become a Domestic Guarantor or Foreign
Guarantor, as applicable, upon achieving such asset threshold.
SECTION 6. MISCELLANEOUS.
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SECTION 6.1. RELIANCE ON AND SURVIVAL OF REPRESENTATIONS.
-------------------------------------------
All representations, warranties, covenants and agreements of the
Company herein and in any certificates or other instruments delivered
pursuant to any of the other Transaction Documents by the Company or
any Guarantor shall (A) be deemed to be material and to have been
relied upon by each Holder, notwithstanding any investigation
heretofore or hereafter made by any Purchaser or on its behalf, and
(B) survive the execution and delivery of this Agreement and of the
Securities, for so long as the Securities are outstanding.
SECTION 6.2. SUCCESSORS AND ASSIGNS. This Agreement shall
----------------------
bind and inure to the benefit of and be enforceable by the Company,
each Purchaser and each of the Purchasers' respective successors and
assigns, and, in addition, shall inure to the benefit of and be
enforceable by each person who shall from time to time be a Holder of
a Secured Note.
SECTION 6.3. NOTICES. All notices and other communications
-------
provided for in this Agreement shall be in writing and delivered by
registered or certified mail, postage prepaid, or delivered by
overnight courier (for next business day delivery) or telecopied,
addressed as follows, or at such other address as any of the parties
hereto may hereafter designate by notice to the other parties given in
accordance with this Section:
(i) if to the Company:
Inamed Corporation
3800 Howard Hughes Parkway, Suite 900
Las Vegas, Nevada 89109
Attention: Michael D. Farney
Telephone: 702-791-3388
Telecopy: 702-791-0592
With a copy of any notice to:
Nida & Maloney
801 Garden Street, Suite 201
Santa Barbara, California 93101
Attention: Joseph E. Nida
Telephone: 805-568-1151
Telecopy: 805-568-1955
(ii) if to the Holders, at the address of such Holder as it
appears on the Security Register (as defined in the
Indenture).
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Any such notice or communication shall be deemed to have
been duly given on the fifth day after being so mailed, the next
Business Day after delivery by overnight courier, when sent by
telecopier or upon receipt when delivered personally.
SECTION 6.4. COUNTERPARTS. This Agreement may be executed
------------
in two or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same
instrument.
SECTION 6.5. GOVERNING LAW. This Agreement and the
-------------
Securities and (unless otherwise provided) all amendments,
supplements, waivers and consents relating hereto or thereto shall be
governed by and construed in accordance with the laws of the State of
New York.
SECTION 6.6. WAIVER OF JURY TRIAL. THE PURCHASER, EACH
--------------------
HOLDER OF A SECURED NOTE BY ITS ACCEPTANCE THEREOF, AND THE COMPANY
EACH HEREBY AGREE TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE COLLATERAL DOCUMENTATION, THE SECURITIES OR ANY OTHER
AGREEMENTS RELATING TO THE SECURITIES OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. The scope of this
waiver is intended to be all-encompassing of any and all disputes that
may be filed in any court and that relate to the subject matter of
this transaction, including without limitation, contract claims, tort
claims, breach of duty claims and all other common law and statutory
claims. You and the Company each acknowledge that this waiver is a
material inducement to enter into a business relationship, that each
has already relied on the waiver in entering into this Agreement, and
that each will continue to rely on the waiver in their related future
dealings. You and the Company further warrant and represent that each
has reviewed this waiver with its legal counsel, and that each
knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. NOTWITHSTANDING ANYTHING TO THE
CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT
BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT, THE SECURITY DOCUMENTS, THE SECURITIES OR ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE SECURITIES. In the event of
litigation, this Agreement may be filed as a written consent to a
trial by the court.
14
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<PAGE>
If the Purchaser is in agreement with the foregoing, please
sign the form of acceptance in the space provided below whereupon this
Note Purchase Agreement shall become a binding agreement between the
Purchaser and the Company.
Very truly yours,
INAMED CORPORATION,
a Florida corporation
By: /s/ Michael D. Farney
-----------------------------------
Title: Chief Executive Officer
---------------------------------
The foregoing Note Purchase
Agreement is hereby accepted as
of the date first above written:
_____________________________________
By:__________________________________
Title:________________________________
Secured Notes Purchased: $____________
15
<PAGE>
EXHIBIT 2
INAMED CORPORATION
11% SECURED CONVERTIBLE NOTES DUE 1999
CONSENT AND WAIVER
This Consent and Waiver is delivered in connection with the
Indenture (as amended, modified, and supplemented and in effect from
time to time, the "Indenture") dated as of January 2, 1996 between
Inamed Corporation, a Florida corporation (the "Company") and Santa
Barbara Bank & Trust, as trustee (the "Trustee") pursuant to which the
Company issued its 11% Secured Convertible Notes due 1999 (the
"Securities") in the aggregate principal amount of $35,000,000. This
Consent and Waiver is delivered by Holders of record on June 10, 1996
(the "Record Date"), the record date set by the Company pursuant to
Section 7.4 of the Indenture for purposes of this Consent and Waiver.
Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Indenture.
For the quarter ended March 31, 1996 the Company was in
default in the performance or observance of the terms, provisions and
conditions of Section 8.16 of the Indenture requiring that the
Operating Profit of the Company for such period be in excess of $2.0
million. The Company calculates that it had Operating Profit for such
quarter of $90,878. The Company also failed to issue timely to the
Trustee its Officers' Certificate for the period ended March 31, 1996
pursuant to Section 8.18 of the Indenture.
The Company has requested that the Holders waive such
defaults in accordance with Section 4.4 of the Indenture and, in
connection therewith, the Company has proposed that (i) the Company
issue to each Holder of record on the Record Date a number of shares
of Common Stock of the Company equal to 5% of the shares of Common
Stock that would have been issuable to such Holder if all of such
Holder's Securities had been converted on the Record Date (the
"Issuance"), the Issuance to be made on January 10, 1997, (ii) the
Company issue to the Holders the Letter of Representation dated as of
the Record Date in the form of Exhibit A attached hereto and (iii) the
Holders consent to amendments of the Indenture pursuant to Section 7.2
of the Indenture to (a) modify Section 8.12 of the Indenture to
exclude the Issuance from the application of such Section and (b)
modify Sections 8.16 and 8.17 to exclude from such calculations any
charge(s) associated with the Issuance for the period(s) in which such
charge(s) are taken. The Company has agreed that, upon approval by
the Holders of the foregoing, the Company will on January 10, 1997
effect the Issuance and will use its best efforts to file with the
Commission on or before January 10, 1997, and shall use its best
efforts to cause to become effective on or before February 28, 1997, a
registration statement on Form S-3 with respect to the shares issued
in the Issuance. In the event such registration is not so filed and
declared effective, the Company will pay to the Holders as of the
Record Date the liquidated damages set forth in Section 8.14 of the
Indenture with respect to the filing and effectiveness of the
registration statement set forth therein, mutatis mutandis. The
Company will use its best efforts to cause such registration statement
to be effective for as long as reasonably practicable. The Holders
shall receive anti-dilution protection with respect to the shares
issuable in the Issuance for the period from the Record Date to the
January 10, 1997 in a manner, and the Company shall make such
adjustments in the rate of securities issuable in the Issuance, as are
consistent with Section 10.5 of the Indenture with respect to
conversion of the Securities.
The undersigned Holder, by its signature below and delivery
of this Consent and Waiver and pursuant to Section 4.4 of the
Indenture, hereby waives the Company's compliance with the covenants
contained in Sections 8.16 and 8.18 with respect to the quarter ended
March 31, 1996 and waives any Default or Event of Default resulting
<PAGE>
therefrom. Such waivers shall relate solely to the Company's
compliance with such covenants with respect to the quarter ended March
31, 1996 and shall not constitute a waiver with respect to any other
covenant or with respect to such covenants for any other period or in
any other instance.
The undersigned Holder, by its signature below and delivery
of this Consent and Waiver and pursuant to Section 7.2 of the
Indenture, hereby consents and agrees to the amendment of the
Indenture to
<PAGE>
<PAGE>
provide for (a) the modification of Section 8.12 of the Indenture to
exclude the Issuance from the application of such Section and (b) the
modification of Sections 8.16 and 8.17 to exclude from such
calculations any charge(s) associated with the Issuance for the
period(s) in which such charges are taken. The undersigned Holder, by
its signature below and delivery of this Consent and Waiver, hereby
authorizes and instructs the Trustee, pursuant to Section 7.6 of the
Indenture, and the Company, on its behalf and on behalf of the
Guarantors, by its use of this Consent and Waiver agrees, to enter
into and sign such supplemental indentures (together with the
Guarantors) as shall be appropriate (which shall be prepared by the
Company) to reflect such amendments to the Indenture.
The undersigned hereby represents and warrants that the name
and address of the undersigned printed in the designated space below
is the name an address of the registered Holder of the Securities
identified below.
The undersigned hereby represents and warrants that the
undersigned either has full power and authority to issue the foregoing
consents and waivers or is delivering a duly executed Consent and
Waiver from a person or entity having such power and authority. The
undersigned, upon request, will execute and deliver any additional
documents that the Company or the Trustee deems necessary for the
implementation of the transactions described above.
The foregoing waivers and consents shall be conditioned upon
the receipt by the Company of, and delivery to the Trustee of an
Officers' Certificate with respect to, Consents and Waivers (including
this Consent and Waiver) relating to the matters described herein
signed by the Holders of a majority in principal amount of Outstanding
Securities. This Waiver and Consent shall become void and of no
effect if within 90 days of the Record Date Consents and Waivers
relating to the matters described herein shall not have been signed
and delivered to the Company (and not revoked) by the Holders of at
least a majority in principal amount of Outstanding Securities. All
authority conferred or agreed to be conferred in this Consent and
Waiver shall not be affected by, and shall survive, the death,
incapacity, dissolution, liquidation or bankruptcy of the undersigned
and any obligation of the undersigned hereunder shall be binding upon
the heirs, executors, administrators, legal representatives,
successors and assigns of the undersigned.
The undersigned understands that this Consent and Waiver
constitutes a binding agreement between the undersigned and the
Company upon the terms specified above.
The undersigned has duly signed and delivered this Consent
and Waiver as of the date set forth below.
DATED: June 20, 1996
NAME OF HOLDER:
_________________________________________________________________
(Please print)
PRINCIPAL AMOUNT OF SECURITIES
AS TO WHICH CONSENT AND WAIVER GRANTED:
$_________________________________________________________________
2
<PAGE>
<PAGE>
SIGNATURE:
_________________________________________________________________
TITLE (if acting in representative capacity):
_________________________________________________________________
3
<PAGE>
<PAGE>
EXHIBIT A TO CONSENT AND WAIVER
LETTER OF REPRESENTATION
------------------------
Inamed Corporation, a Florida corporation (the "Company"),
represents and warrants to the Holders of its 11% Secured Convertible
Notes due 1999 (the "Secured Notes") that on the date hereof:
1.1 Organization and Authority of the Company.
-----------------------------------------
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Florida and each Guarantor (as defined in the Indenture governing the
Secured Notes) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and
each of the Company and each such Guarantor has all requisite power
and authority to own or hold under lease the property it purports to
own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver this document and the
Secured Notes, the Indenture, the Collateral Documentation (as defined
in the Indenture), the Guarantee Agreements (as defined in the
Indenture) and all other documents and agreements contemplated thereby
(this document, and all such other documents and agreements,
collectively, the "Transaction Documents") and to perform the
provisions thereof and to consummate the transactions contemplated
hereby and thereby. Each of the Company and each Guarantor is duly
qualified as a foreign corporation and is in good standing in each
jurisdiction in which the character of the properties owned or held
under lease by it or the nature of the business transacted by it
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the business,
prospects, properties, assets, operations or financial condition of
the Company.
(b) The execution, delivery and performance of the
Transaction Documents, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized and
approved by the Company and, with respect to each such agreement to
which it is a party, each Guarantor. The Transaction Documents to
which it is a party have each been duly authorized, executed and
delivered by, and each is the valid and binding obligation of, the
Company and each Guarantor, enforceable against the Company and such
Guarantor in accordance with its terms, except as may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws or by legal or equitable principles relating to or
limiting creditors' rights generally.
1.2 Business, Properties and Other Information Regarding
----------------------------------------------------
the Company.
-----------
(a) The Company has provided the Holders with the
Confidential Offering Memorandum dated January 10, 1996 that when read
in conjunction with the Note Purchase Agreement dated as of January
23, 1996 and the schedules and exhibits thereto, including the
Company's Annual Report on Form 10-K for the year ended December 31,
1994 and the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, June 30 and September 30, 1995 and the Company's
Annual Report on Form 10-K for the year ended December 31, 1995, the
Company's Quarterly Report on Form 10-Q for the quarter ended
<PAGE>
<PAGE>
March 31, 1996 and the Company's Current Report on Form 8-K dated May
24, 1996 (as amended or supplemented, collectively, the "Disclosure
Documents"), describes, among other things, in all material respects
the business, prospects, properties, assets, operations and financial
condition of the Company.
(b) As of their respective dates, neither the
Disclosure Documents nor any certificate executed by the Company or
any Guarantor in connection with the transactions contemplated
thereby, contained and as of the date hereof no Disclosure Document
contains any untrue statement of a material fact or omitted to state
any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
Since January 23, 1996, there has been no material adverse change in
the business, prospects, properties, assets, operations or financial
condition of the Company or any Guarantor not described in the
Disclosure Documents. Neither the Company nor any Guarantor has
actual knowledge, except as disclosed in the Disclosure Documents, of
any fact that materially adversely affects or, so far as the Company
or any Guarantor can now reasonably foresee, will materially adversely
affect the business, prospects, properties, assets, operations or
financial condition of the Company or the Guarantors, or the ability
of the Company or the Guarantors to perform its respective obligations
under the Transaction Documents.
1.3 Capital Stock.
-------------
(a) On the date hereof, the authorized capital stock
of the Company consists of 20,000,000 shares of common stock, no par
value (the "Common Stock"). On the date hereof, 7,647,317 shares of
Common Stock are issued and outstanding.
(b) As of March 31, 1996, the Company had reserved for
issuance an aggregate of approximately 294,400 shares of Common Stock
issuable pursuant to: (i) outstanding vested and non-vested options,
warrants and similar rights; and (ii) contingent obligations to issue
additional shares. The Company is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire
any of its capital stock or other securities or obligation evidencing
the right of the holder thereof to purchase any of its capital stock
or other securities.
1.4 Compliance with Laws and Other Instruments. The
------------------------------------------
consummation of the transactions contemplated by the Transaction
Documents and the performance of the terms and provisions of the
Transaction Documents did not and will not (i) contravene, result in
any breach of, or constitute a default under, or result in the
creation of any Lien (except for Liens created under the Indenture or
the Collateral Documentation) in respect of any property of the
Company or any Guarantor under, any other material agreement or
instrument to which the Company or any Guarantor is a party or by
which the Company or any Guarantor, or any of its respective
properties is bound, (ii) conflict with any provision of any of the
certificate of incorporation or bylaws or comparable organizational
documents of the Company or any Guarantor or conflict with or result
in a breach of any of the terms, conditions or provisions of
2
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<PAGE>
any order of any court, arbitrator or governmental entity applicable
to the Company or any Guarantor or (iii) violate any material
provision of any statute or other rule or regulation of any
governmental entity applicable to the Company or any Guarantor.
1.5 Governmental Authorizations, etc. No consent, approval
---------------------------------
or authorization of, or registration, filing or declaration with, any
governmental entity or third party was required for the issuance of
the Secured Notes or the valid execution and delivery of the Secured
Notes or for the performance by the Company or the Guarantors of the
Transaction Documents, other than the filings, registrations or
qualifications under the securities laws or "blue sky" laws of any
State that may be required to be made or obtained in connection with
the offer, issuance, sale or delivery of the Secured Notes or any
interest therein, including the Company's registration of the common
stock issuable upon conversion of the Secured Notes.
1.6 Litigation; Observance of Statutes, Regulations and
---------------------------------------------------
Orders.
------
(a) Except as disclosed or referred to in the
Company's Disclosure Documents, or other reports filed with the
Securities and Exchange Commission, or with respect to which
resolution has been or will be effected with the proceeds of the
Secured Note Offering (the "Offering") as described in Section 1.18,
there are no actions, suits or proceedings pending or, to the
knowledge of the Company or any Guarantor, threatened against or
involving the Company or any Guarantor or any property of the Company
or any Guarantor in any court or before any arbitrator of any kind or
before or by any governmental entity except actions, suits or
proceedings arising in the ordinary course of business that
individually or in the aggregate, if adversely determined, would not
materially adversely affect the business, operations, prospects,
properties, assets or financial condition of the Company or any
Guarantor or the ability of the Company or any Guarantor to perform
its obligations under the Transaction Documents.
(b) Neither the Company nor any Guarantor is in
default under or in breach of any order of any court, arbitrator or
governmental entity, and neither the Company nor any Guarantor is
subject to or a party to any order of any court or governmental entity
arising out of any action, suit or proceeding under any statute or
other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters. Neither the Company nor any Guarantor
is in violation of any law or statute, or other rule or regulation of
any governmental entity, including without limitation laws relating to
the production, use, storage or disposal of hazardous materials (the
"Hazardous Materials Laws"), the violation of which would materially
adversely affect the business, operations, prospects, properties,
assets or financial condition of the Company or any Guarantor or the
ability of the Company or any Guarantor to perform its obligations
under the Transaction Documents.
1.7 Taxes. Except for approximately $4,400,000 in unpaid
-----
taxes which have been or will be paid from the proceeds of the
Offering and other taxes reflected in the Company's balance sheet
dated March 31, 1996, the Company and each Guarantor has filed all
3
<PAGE>
<PAGE>
tax returns that are required to have been filed by it in any
jurisdiction, and has paid all taxes shown to be due and payable on
such returns and all other taxes and assessments payable by the
Company or any Guarantor to the extent the same have become due and
payable and before they have become delinquent, except for any taxes
and assessments the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and
with respect to which the Company has set aside on its books reserves
(segregated to the extent required by GAAP (as defined in the
Indenture)) deemed by it in its reasonable discretion to be adequate.
Neither the Company nor any Guarantor has actual knowledge of any
proposed material tax assessment against the Company or any Guarantor,
and in the opinion of the Company all tax liabilities of the Company
and the Guarantors are adequately provided for on the books of the
Company.
1.8 Title to Property. The Company and each Guarantor has
-----------------
good and marketable title to its respective real properties and good
and merchantable title to each of its other respective assets and
properties, except as sold or otherwise disposed of in the ordinary
course of business. Except as expressly permitted by the Indenture,
all assets and properties of the Company and each Guarantor are owned
by the Company or such Guarantor free and clear of all Liens.
The Company and each Guarantor enjoys full and undisturbed
possession under all leases necessary in any material respect for the
operation of its respective businesses (the "Leases"). None of the
Leases contains any provisions that, individually or in the aggregate,
would materially impair the operation of the businesses of the Company
or the Guarantors. The Leases are valid and subsisting and are in
full force and effect, and there are no existing material defaults by
the Company or events that with notice or lapse of time or both would
constitute material defaults by the Company under any of the Leases.
1.9 Licenses, Permits, etc. The Company and each Guarantor
-----------------------
possesses all material licenses, permits, franchises, authorizations,
patents, copyrights, trademarks and trade names and any other tangible
or intangible intellectual property rights, or rights thereto,
required to conduct its respective business substantially as now
conducted and as currently proposed to be conducted, without known
conflict with the rights of others.
1.10 Compliance with ERISA. Neither the Company nor any of
---------------------
its Subsidiaries (as defined in the Indenture) has any employee
benefit plan established or maintained by the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries has
made contributions that is subject to Part 3 of Subtitle B of Title 1
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 412 of the Internal Revenue Code of 1954, as
amended (the "Code").
1.11 Existing Indebtedness. The Company's March 31, 1996
---------------------
balance sheet includes all Indebtedness (as defined in the Indenture)
of the Company and its Subsidiaries on a consolidated basis as of the
date thereof, including the aggregate principal amount outstanding.
Except with respect to the defaults under the Indenture as described
in the Consent and Waiver
4
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<PAGE>
being circulated to Holders concurrently herewith, neither the Company
nor any Guarantor is in default in the performance or observance of
any of the terms, covenants or conditions contained in any material
instrument evidencing such Indebtedness or pursuant to which such
Indebtedness was issued or secured and has not requested any waiver in
respect of any default and no event has occurred and is continuing
which, with notice or the lapse of time or both, would constitute such
a default.
1.12 Investment Company Act. Neither the Company nor any
----------------------
Guarantor is an investment company subject to registration under the
Investment Company Act of 1940, as amended.
1.13 Environmental Matters.
---------------------
(a) None of the Company, any Guarantor or, to the
Company's best knowledge, any previous owner, lessee, tenant, occupant
or user of any real property owned or leased on or prior to the date
hereof by the Company or any Guarantor (such real property and any and
all buildings and other improvements thereon being herein referred to
as the "Property") used, generated, manufactured, treated, handled,
refined, processed, released, discharged, stored or disposed of any
Hazardous Materials on, under, in or about the Property, or
transported any Hazardous Materials to or from the Property in
violation of any Hazardous Materials Laws. "Hazardous Materials" as
used herein, refers to any flammable explosives, radioactive
materials, asbestos, compounds known as polychlorinated byphenyls,
chemicals now known to cause cancer or reproductive toxicity,
pollutants, contaminants, hazardous wastes, toxic substances or
related materials, including, without limitation, any substances
defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," or "toxic substances" under
the Hazardous Materials Laws. No underground tanks or underground
deposits or Hazardous Materials, to the Company's best knowledge,
existed on, under, in or about any Property previously owned or leased
by the Company or any Guarantor on or prior to the date that fee or
leasehold title to such Property was transferred to a third party by
the Company or any Guarantor. No underground tanks or underground
deposits or Hazardous Materials, to the Company's best knowledge,
exist on, under, in or about any Property that is currently owned or
leased by the Company or any Guarantor.
(b) While any Property was owned or leased by the
Company or any Guarantor, the Company or such Guarantor kept and
maintained such Property, including, without limitation, the
groundwater on or under such Property, and conducted its businesses in
material compliance with all applicable Hazardous Materials Laws and
other applicable federal, state and local laws, ordinances or
regulations, now or previously in effect, relating to environmental
conditions, industrial hygiene or Hazardous Materials on, under, in or
about such Property.
(c) As of the date hereof there are no (i)
enforcement, clean-up, removal, mitigation or other governmental or
regulatory actions instituted, contemplated or
5
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<PAGE>
threatened pursuant to any Hazardous Materials Laws affecting any of
the Property, (ii) claims made or threatened by any person or
governmental entity relating to the Property against the Property, the
Company or any Guarantor relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from any Hazardous
Materials nor (iii) to the Company's best knowledge, any occurrence or
condition on any Property that is currently owned or leased by the
Company or any Guarantor that could subject the Company, any Guarantor
or such Property to any material restrictions on occupancy,
transferability or use of any Property under any Hazardous Materials
Laws.
1.14 Security Documents. The lien of the Collateral
------------------
Documentation constitutes a fully perfected security interest in all
right, title and interest of the Company or such Domestic Guarantor,
as the case may be, in and to the personal property therein prior to
any other security interests against such property or interests
therein other than Permitted Liens (as defined in the Indenture).
1.15 Labor Relations. No unfair labor practice complaint
---------------
for sex, age, race or other discrimination claim has been brought
during the last three years against the Company or any Guarantor
before the National Labor Relations Board, the Equal Employment
Opportunity Commission or any other governmental entity. During such
period, the Company and each Guarantor has complied in all material
respects with all applicable laws relating to the employment of labor
including without limitation those relating to wages, hours and
collective bargaining.
1.16 Reports. Since December 31, 1992, the Company has
-------
filed all forms, reports and documents with the Securities and
Exchange Commission (the "SEC") required to be filed by it pursuant to
the federal securities laws and the SEC rules and regulations
thereunder, all of which have complied in all material respects with
all applicable requirements of the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the rules
and regulations promulgated thereunder (collectively, the "SEC
Reports"). None of the SEC Reports, including without limitation, any
financial statements or schedules included therein and all documents
incorporated therein by reference, at the time filed contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
The balance sheets and the related statements of income,
shareholders' equity and cash flows (including the related notes
thereto) of the Company included in the SEC Reports complied as to
form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior periods
(except as otherwise noted therein), and presented fairly the
financial position of the Company as of their respective dates, and
the results of its operations and its cash flows for the periods
presented therein (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments).
6
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<PAGE>
1.17 Solvency. The Company and each Guarantor is solvent.
--------
1.18 Use of Proceeds. The Company has, to the extent it had
---------------
or has rights therein, applied the proceeds of the sale of the Secured
Notes as follows: (i) $10 million was placed in escrow pursuant to
the Escrow Agreement between the Company and Santa Barbara Bank &
Trust for transfer in accordance with the terms thereof, (ii) an
additional $5 million was placed in escrow concurrently with the
Closing pursuant to a second Escrow Agreement between the Company and
Santa Barbara Bank & Trust, (iii) approximately $10 million for long-
term capital investments and improvements relating to production
capacity expansion, and (iv) approximately $2 million for short-term
capital investments and improvements relating to production capacity
expansion, with the remainder of the proceeds being or to be used by
the Company for general business purposes. The Company has and will
apply the proceeds as specified in clauses (iii) and (iv) of this
paragraph in the due course of business. The use of such proceeds has
been and shall be in compliance with all applicable laws, rules and
regulations. No part of the proceeds from the sale of the Secured
Notes has been or will be used, directly or indirectly, for the
purpose of buying or carrying any "margin stock" within the meaning of
Regulation G of the Board of Governors of the Federal Reserve System
(12 CFR Section 207), or for the purpose of buying or carrying or trading
in any securities under such circumstances as to involve the Company in a
violation of Regulation X of said Board (12 CFR Section 224) or to involve
any broker or dealer in a violation of Regulation T of said Board (12
CFR Section 220). The assets of the Company do not include any margin
stock, and the Company does not have any present intention of
acquiring any margin stock.
1.19 Litigation Settlement. The Company represents and
---------------------
warrants that, to the best of its knowledge, the unappealed
certification and implementation of a Mandatory (non "opt-out" Limited
Fund) Class under Rule 23(b)(1)(B) of the Federal Rules of Civil
Procedure in the Company's and certain of its Subsidiaries' litigation
pending in the United States District Court for the Northern District
of Alabama, Southern Division stylized as "Silicone Gel Breast Implant
Products Liability Litigation (MDL 926)" will preclude further
litigation by all persons who are within the scope of the class and
whose claims arise during the class period.
This Letter of Representation is executed as of the 10th day of
June, 1996.
INAMED CORPORATION
By:________________________________
Title:______________________________
7
