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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
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(Amendment No. 2)
INAMED CORPORATION
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(Name of Issuer)
Common Stock, no par value 453235103
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(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
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(Name, address and telephone number of person authorized to receive
notices and communications)
March 4, 1997
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(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 [_].
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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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 Delaware
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 613,095
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE 613,095
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY 613,095
OWNED BY EACH REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 6.8%
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 Delaware
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 275,205
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE 275,205
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY 275,205
OWNED BYACH REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 3.0%
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 Delaware
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 613,095
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE 613,095
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY 613,095
OWNED BY EACH REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 6.8%
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 United States
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 888,300
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE 888,300
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY 888,300
OWNED BY EACH REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.8%
14 TYPE OF REPORTING PERSON: IN
SEE INSTRUCTIONS BEFORE FILLING OUT!
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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 United States
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 888,300
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 0
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE 888,300
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY 888,300
OWNED BY EACH REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.8%
14 TYPE OF REPORTING PERSON: IN
SEE INSTRUCTIONS BEFORE FILLING OUT!
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This constitutes Amendment No. 2 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
(collectively, the "Reporting Persons"), 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 and Amendment No. 1
thereto, 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
"Notes"). Such purchase was made pursuant to the terms of a Note
Purchase Agreement dated as of January 23, 1996 (as amended from time
to time, the "Note Purchase Agreement") and the Notes were issued
under an indenture, dated as of January 22, 1996 (as amended from time
to time, the "Indenture"), between the Company and Santa Barbara Bank
& Trust, as trustee.
On March 4, 1997, the Purchasers, at the request of the
Company, have entered into that certain letter agreement, dated
February 27, 1997 (the "Letter Agreement"), with the Company, a copy
of which is filed as an exhibit hereto and is incorporated
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herein by reference. Pursuant to the Letter Agreement, the Purchasers
have agreed to a restructuring of the Company's indebtedness held by
the Purchasers in order to accomplish the following: (i) terminate
those certain Escrow Agreements, each dated as of January 2, 1996 (as
amended from time to time, the "Escrow Agreements"); (ii) return the
escrowed funds held pursuant to the Escrow Agreements to the
Purchasers and the other holders of the Notes (collectively, the
"Holders"); and (iii) resolve certain Note Purchase Agreement issues
and effect certain amendments to the Indenture.
As contemplated by the Letter Agreement and subject to the
terms thereof, in addition to the termination of the Escrow Agreements
and the release of the escrowed funds as described above, the Company
has agreed (i) to issue to the Purchasers and the other Holders
warrants to purchase 1,640,952 shares of Common Stock (the "Warrants")
pro rata based upon the respective principal amounts of the Notes
owned by the Purchasers and the other Holders on the date of issuance
of the Warrants and (ii) to amend the terms of the Notes as described
below and in the Letter Agreement.
The Warrants will be exercisable, at any time, in whole or
in part, by the holders thereof after August 15, 1997, and prior to
March 31, 2000 at an exercise price of $9.00 per share. The
Purchasers will receive Warrants that will represent, in the
aggregate, the right to purchase 403,000 shares of Common Stock.
The Company will have the right to repurchase any
outstanding Warrants, upon not less than 30 days' prior written
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notice to the Holders, at a repurchase price of $.01 per warrant, only
after (a) the earlier of (i) the issuance by the United States
District Court, Northern District of Alabama, Southern Division (or
any successor court with jurisdiction over the Silicone Gel breast
Implant Products Liability Litigation (MDL 926)), of a final non-
appealable order certifying the Company's Mandatory (non-"opt-out"
Limited Fund) Class under Rule 23(b)(1)(B) of the Federal Rules of
Civil Procedure or (ii) "Circling of the Class" with ninety-seven
percent (97%) of the silicone breast implant litigation currently
existing against the Company settled in whatever way is in the best
interest of the Company; and (b) after the occurrence of the earlier
of events described in clause (a) of this paragraph the closing volume
weighted average trading price of the Common Stock as reported on the
Bloomberg Nasdaq Market Reporting System, shall average $13.00 per
share for 20 consecutive trading days.
The Company has further agreed (i) to use its best efforts
to register with the Commission on an appropriate form under the
Securities Act of 1933, as amended (the "Securities Act"), on or
before March 22, 1997 (or cause an appropriate post-effective
amendment to be made to an existing registered registration statement
on or prior to such date), and use its best efforts to become
effective on or before May 31, 1997, such registration statement with
respect to the Warrants and the aggregate amount of shares of Common
Stock to be issued upon exercise of the Warrants and (ii) to keep such
registration statement effective for a period of time required for the
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disposition of such Warrants or Common Stock by the Holders. In the
event such registration statement is not filed or declared effective
on or prior to the applicable date set forth above, the exercise price
of the Warrants will be reduced by $.50 and, if such registration
statement is not filed or declared effective within 45 days after the
applicable date set forth above, the exercise price of the Warrants
will be reduced by an additional $.50 (and thereafter educed by an
additional $.50 for each subsequent period of 45 consecutive days that
such filing and/or effectiveness does not occur). The Letter
Agreement further provides that the Company will use its best efforts
to amend the Company's existing effective S-3 registration statement
in order to register under the Securities Act all of the shares of
Common Stock issuable upon conversion of the Notes (as the terms of
such Notes are to be amended as described below and in the Letter
Agreement) and keep such registration statement effective for a period
of time required for the disposition of such Common Stock by the
Holders. The Purchasers agreed that they will not sell the Warrants
issued to them prior to August 15, 1997.
The Letter Agreement also provides that the conversion terms
of the Notes will be amended such that such Notes may be converted at
any time, in whole or in part, by the Holders thereof into that number
of shares of Common Stock obtained by dividing the principal amount of
the Note or portion thereof to be converted by a conversion price
equal to the lesser of (i) $8.00 per share, as adjusted from time to
time as provided in the Indenture (as amended as described below), and
(ii) an amount
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equal to 85% of the closing volume weighted average trading price of
the Common Stock as reported on the Bloomberg Nasdaq Market Reporting
System for the 10 day period prior to delivery of a conversion notice
to the Company by the applicable Holder; provided, however, that,
subject to certain de minimis exceptions, each Holder may only convert
up to forty percent (40%) of the initial aggregate principal amount of
Notes held by such Holder in any 60-day period.
In addition, the Letter Agreement provides that the
Indenture will be amended to include (A) full anti-dilution price
protections in the event shares of capital stock of the Company (i)
are issued or sold by the Company (or shares of capital stock may be
issued upon exercise of options, warrants, convertible securities or
similar securities issued or sold after the date hereof) for $5.50 or
less per share (subject to any appropriate proportionate adjustments
as a result of the occurrence of certain events relating to the
capital stock as contemplated in the Letter Agreement), other than
shares issued as part of a settlement of identified breast implant
product litigation, or (ii) are issued or sold by the Company outside
the United States in a transaction or series of transactions pursuant
to Regulation S of the Securities Act or any successor regulation, and
(B) other anti-dilutive adjustment features with respect to the number
of shares of Common Stock of the Company.
The Company has agreed to use its best efforts to cause the
execution and delivery of all documents contemplated by the Letter
Agreement on or prior to March 6, 1997. Upon execution
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and delivery of the documents contemplated therein, the Purchasers
have agreed to waive any default of Section 2.18 of the Note Purchase
Agreement with respect to the requirement that approximately $10
million of the proceeds from the issuance of the Notes be used for
long-term capital investments and improvements.
The Reporting Persons purchased the Notes for investment
purposes. Except with respect to the transactions contemplated by the
Letter Agreement, 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 Notes owned by the Reporting Persons into Common Stock,
subject to the limitations of the Letter Agreement, (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 Notes 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.
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Item 5. Interest in Securities of the Issuer
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The percentage of Common Stock reported in this Amendment as
being beneficially owned by the Reporting Persons is based upon
9,024,850 shares of outstanding Common Stock, representing the number
of outstanding shares of Common Stock identified in the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996
and increased by the number of shares of Common Stock issued to the
Holders on January 10, 1997, as previously described in Amendment No.
1 to this Statement, and after giving effect to the number of shares
of Common Stock beneficially owned by the Reporting Persons.
Item 6. Contracts, Arrangements, Understandings or Relationships
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with Respect to Securities of the Issuer.
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The information in Item 4 is incorporated herein by
reference.
Item 7. Material to be Filed as Exhibits.
--------------------------------
1. Letter Agreement, dated February 27, 1997, between the
Company and the Purchasers.
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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: March 3, 1997
SC FUNDAMENTAL INC.
By: /s/ Neil H. Koffler
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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
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Neil H. Koffler as Attorney-
in-Fact for Peter M. Collery,
Vice President
/s/ Neil H. Koffler
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Neil H. Koffler as Attorney-
in-Fact for Gary N. Siegler*
/s/ Neil H. Koffler
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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.
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EXHIBIT INDEX
1. Letter Agreement, dated February 27, 1997, between the Company
and the Purchasers.
NYFS08...:\68\74168\0012\2377\SCH2247N.51B
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EXHIBIT 1
INAME Corporation
3800 Howard Hughes Pkwy.
Suite 900
Las Vegas, NV 89109
(702) 791-3388
FAX: (720) 791-1922
February 27, 1997
VIA: FEDERAL EXPRESS
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Neil Koffler
Scott Bommer
SC Fundamental
712 Fifth Avenue, 19th Floor
New York, NY 10019
Re: Revision of Certain Terms and Conditions for the 11% Secured
Convertible Notes Due 1999 ("Notes")
Gentlemen:
Reference is hereby made to the (i) Note Purchase Agreement, dated
January 23, 1996 (as amended as of the date hereof, the "Note Purchase
Agreement"), among INAMED Corporation (the "Company") and the
purchasers of the Company's 11% Secured Convertible Notes due 1999
(the "Notes") party thereto, (ii) Indenture dated January 2, 1996 (as
amended as of the date hereof, the "Indenture") between the Company
and Santa Barbara Bank & Trust, as Trustee, governing the terms of the
Notes and (iii) Escrow Agreements, each dated as of January 2, 1996
(as amended as of the date hereof, the "Escrow Agreements"), between
the Company and Santa Barbara Bank & Trust, as Escrow Agent.
Capitalized terms use herein not otherwise defined shall have the
meaning ascribed thereto in the Indenture.
The Company is hereby requesting that the Holders agree to a
restructuring of the Company's Indebtedness held by the Holders in
order to accomplish the following (a) conclude the existence of the
Escrow Agreements which contained an original termination date of
January 22, 1997, unless amended by the Company and the Trustee, which
amendment needed to be consented to by the Holders of 66 2/3rds of the
outstanding Notes; (b) return the escrowed funds to the Holders thus,
reducing the Company's interest expenses; and (c) resolve Note
Purchase Agreement issues and amendments to the Indenture that are in
the best interest of both the Company and the Holders. Each Escrow
Agreement has previously been extended to March 5, 1997, as a result
of receiving approval of the Holders of 66 2/3rds of the outstanding
Notes.
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The Company hereby requests consent from the Holders to instruct the
Escrow Agent to maintain the escrowed funds by accepting instructions
to continue the Escrow Agreement until the date upon which all
documents necessary to effect the transactions contemplated hereby
(other than the registration statement) have been executed and
delivered by the parties thereto.
As part of such restructuring, the Company is proposing that (i) the
Escrow Agreements be terminated and all of the Escrow Fund (as defined
in the Escrow Agreements) be paid over to the Holders in a
proportionate amount based on the percentage of principal amount of
the Notes surrendered by each Holder in partial redemption thereof in
accordance with Article 9 of the Indenture, (ii) the Holders be issued
Warrants to purchase shares of Common Stock of the Company (the
"Warrants"), containing the terms described below, in a pro rata
amount based on the percentage of the principal amount of the Notes
outstanding on the date of issuance of the Warrants (and before giving
effect to the partial redemption thereof contemplated in clause (i) of
this paragraph) and (iii) the terms of the Notes and certain of the
other Documents be amended as described below.
ISSUANCE OF WARRANTS.
--------------------
The Warrants shall represent, in the aggregate, the right to purchase
1,640,952 shares of Common Stock, and shall be exercisable, at any
time, in whole or in part, by the holder thereof after August 15,
1997, and prior to March 31, 2000 at an exercise price of $9.00 per
share.
The Company shall have the right to repurchase any outstanding
Warrants, upon not less than 30 days' prior written notice to the
Holders at a repurchase price of $.01 per warrant, only after (a) the
earlier of (i) the issuance by United States District Court, Northern
District of Alabama, Southern Division (or any successor court with
jurisdiction over the Silicone Gel breast Implant Products Liability
Litigation (MDL 926)), of a Final Order certifying the Company's
Mandatory (non-"opt-out" Limited Fund) Class under Rule 23(b)(1)(B) of
the Federal Rules of Civil Procedure or (ii) "Circling of the Class"
with ninety-seven percent (97%) of the silicone breast implant
litigation currently existing against the Company settled in whatever
way is in the best interest of the Company; and (b) after the
occurrence of the earlier of events described in clause (a) of this
paragraph the closing volume weighted average trading price of the
Common Stock as reported on the Bloomberg Nasdaq Market Reporting
System, shall average $13.00 per share for 20 consecutive trading
days. The giving of notice by the Company to the Holders to
repurchase the Warrants as contemplated by this paragraph shall not
affect the right of the Holders to exercise the Warrants prior to the
repurchase date specified in such notice.
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The Company (i) shall use its best efforts to register with the
Commission on an appropriate form under the Securities Act, on or
before March 22, 1997 (or cause an appropriate post-effective
amendment to be made to an existing registered registration statement
on or prior to such date), and use its best efforts to cause to become
effective on or before May 31, 1997, such registration statement with
respect to the Warrants and the aggregate amount of shares of Common
Stock to be issued upon exercise of the Warrants and (ii) keep such
registration statement effective for a period of time required for the
disposition of such Warrants or Common Stock by the Holders. In the
event such registration statement is not filed or declared effective
on or prior to the applicable date set forth above, the exercise price
of the Warrants shall be reduced by $.50 and, if such registration
statement is not filed or declared effective within 45 days after the
applicable date set forth above, the exercise price of the Warrants
shall be reduced by an additional $.50 (and thereafter reduced by an
additional $.50 for each subsequent period of 45 consecutive days that
such filing and/or effectiveness does not occur). The Company shall
use its best efforts to maintain a trading market for the Warrants
upon the effectiveness of such registration statement. The Company
acknowledges that its obligation to register the Warrants and Common
Stock issuable upon exercise thereof shall not affect in any manner
any of its other obligations to register securities under the
Securities Act, including its obligations under the Indenture with
respect to the registration under the Securities Act of the Common
Stock issuable upon conversion of the Notes. To the extent necessary
or appropriate, the Company agrees to use it best efforts to amend the
Company's existing effective S-3 registration statement in order to
register under the Securities Act all of the shares of Common Stock
issuable upon conversion of the Notes (as the terms of such Notes are
to be amended as described below) and keep such registration statement
effective for a period of time required for the disposition of such
Common Stock by the Holders. The Holders agree that they will not
sell the Warrants until after August 15, 1997.
AMENDMENT OF NOTES AND OTHER DOCUMENTS.
--------------------------------------
The conversion terms of the Notes not redeemed in connection with the
payment of the Escrow Fund to the Holders as contemplated above shall
be amended such that such Notes may be converted at any time, in whole
or in part, by the Holders thereof into that number of shares of
Common Stock obtained by dividing the principal amount of the Note or
portion thereof to be converted by a conversion price equal to the
lesser of (i) $8.00 per share, as adjusted from time to time as
provided in the Indenture (as amended as contemplated below), and
(ii) an amount equal to 85% of the closing volume weighted average
trading price of the Common Stock as reported on the Bloomberg
Nasdaq Market Reporting System for the 10 day period prior to
delivery of a conversion notice to the Company by
the applicable Holder; provided, however, that each Holder may only
convert up to forty percent (40%) of the initial aggregate principal
amount of Notes held by such Holder (after giving effect to the
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partial redemption of Notes contemplated in connection with the
payment of the Escrow Fund to the Holders as described above) in any
60-day period.
The limitations with respect to conversion of the Notes contained in
the immediately preceding sentence shall not be applicable to the
extent that (i) a Holder owns Notes in an aggregate principal amount
less than $100,000 (the "De Minimis Amount") and (ii) the De Minimis
Amount did not result from a previous conversion made when such Holder
owned Notes in excess of the De Minimis Amount.
Section 10.5 of the Indenture shall be amended to include the full
ratchet price protections with respect to the conversion price of the
Notes not redeemed in connection with the payment of the Escrow Fund
to the Holders.
The Notes shall have (A) full rachet price protection, substantially
in the form set forth in Appendix A, in the event shares of capital
stock of the Company (i) are issued or sold by the Company (or shares
of capital stock may be issued upon exercise of options, warrants,
convertible securities or similar securities issued or sold after the
date hereof) for $5.50 or less per share (subject to any appropriate
proportionate adjustments as a result of the occurrence of certain
events relating to the capital stock as contemplated herein) other
than shares issued as part of a settlement of identified breast
implant product litigation, or (ii) are issued or sold by the Company
outside the United States in a transaction or series of transactions
pursuant to Regulation S of the Securities Act of 1933, as amended
(the "Securities Act"), or any successor regulation, and (B) other
anti-dilutive adjustment features with respect to the number of shares
of Common Stock of the Company.
LETTER OF REPRESENTATIONS.
-------------------------
The Company shall also provide to the Holders in connection with the
delivery of the Warrants and the effectiveness of the amendments
contemplated above a Letter of Representations and warranties of the
Company set forth in the Note Purchase Agreement, other than with
respect to the representation in Section 2.18 of the Note Purchase
Agreement with respect to the requirement that approximately
$10 million of the proceeds from the issuance of the Notes be
used for long-term capital investments and improvements.
The Company agrees to provide the Holders as soon as possible after
the date hereof, and in any event within 7 days of the date hereof,
with drafts of all documents necessary to effect the transactions
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contemplated hereby (including, without limitation, a form of Warrant,
but excluding registration statement) and, after the terms of such
documents have been approved by the Holders, to use its best efforts
to cause the execution and delivery of all such documents within 10
days of the date hereof.
This Agreement shall not constitute a waiver by the Holders of any
default under any of the Documents; provided, however, that, upon the
performance by the Company of all of its obligations hereunder in
accordance with the provisions hereof, including the execution and
delivery of all documents contemplated hereby, the Holders hereby
agree to waive any default of Section 2.18 of the Note Purchase
Agreement with respect to the requirement that approximately $10
Million of the proceeds from the issuance of the Notes be used for
long-term capital investments and improvements. The undersigned
Holders expressly retain and have the right to exercise all rights,
powers and remedies granted to them under the Documents (including,
without limitation, the Escrow Agreements), under applicable law and
otherwise.
If you are in agreement with the foregoing, please so indicate by
signing two copies of this letter in the space set forth below and
returning one of such copies to the undersigned, whereupon this letter
shall constitute our binding agreement in accordance with the terms
and provisions set forth above.
Yours truly,
INAMED CORPORATION AGREED AND ACKNOWLEDGED
THIS 28th DAY OF FEBRUARY, 1997
/s/ Donald K. McGhan SC FUNDAMENTAL VALUE BVI, LTD.
----------------
Donald K. McGhan
Chairman and President By: /s/ Neil H. Koffler
---------------------------------
Name: Neil H. Koffler
Title:
SC FUNDAMENTAL VALUE FUND, L.P.
By:/s/ Neil H. Koffler
-----------------------------------
Name: Neil H. Koffler
Title:
<PAGE>
<PAGE>
APPENDIX A
-----------
ANTI-DILUTION PROVISIONS
------------------------
For purposes of this Appendix A, (i) Conversion Price shall refer to
the amount of Common Stock issued in connection with a conversion of
the Notes and (ii) Securities shall mean the Warrants or the Notes.
(i) In the event the Company shall, at any time
or from time to time, issue or sell any shares of
Common Stock (including treasury shares) (x) for
consideration per share equal to $5.50 or less (subject
to any appropriate proportionate adjustments as a
result of the occurrence of certain events relating to
the capital stock as contemplated in the Securities) or
(y) outside the United States in a transaction or
series of transactions pursuant to Regulation S of the
Securities Act or any successor regulation, then,
forthwith upon such issue or sale, in the event the
Conversion Price at such time is less than price paid
or to be paid for such Common Stock pursuant to clause
(x) or (y), the Conversion Price for such Securities
shall be reduced to a price equal to the consideration
per share paid for such Common Stock. For purposes of
this paragraph (i), the following provisions shall also
be applicable:
(A) In the event the Company shall, in any
manner, grant any right to subscribe for or to
purchase, or any option for the purchase of,
Common Stock or any stock or other securities
convertible into or exchangeable for Common Stock
(such convertible or exchangeable stock or
securities being hereinafter referred to as
"Convertible Securities"), whether or not such
rights or options are immediately exercisable, and
the minimum price per share for which Common Stock
is issuable pursuant to such rights or options or
upon conversion or exchange of such Convertible
Securities (determined by dividing (i) the
total amount, if any, received or
receivable by the Company as consideration
for the granting of such rights or
options, plus the minimum aggregate amount of
additional consideration payable upon the
conversion or exchange thereof, by (ii) the total
maximum number of shares of Common Stock issuable
upon the exercise of such rights or options or
upon the conversion or exchange of all such
Convertible Securities) shall be less than the
Conversion Price in effect for the Securities
immediately prior to the time of the granting of
such rights or options, then for the purposes of
determining the Conversion Price for such
Securities,
<PAGE>
<PAGE>
the Company shall be deemed to have issued shares
of Common Stock at such price per share as of the
date of granting of such rights or options, and
the adjustment of the Conversion Price required by
this paragraph (i) shall be made as of the date of
granting of such rights or options; provided,
--------
however, that no further adjustment of such
-------
Conversion Price shall be made upon the actual
issue of Common Stock or Convertible Securities
upon the exercise of such rights or options or
upon the issue of such Common Stock upon
conversion or exchange of such Convertible
Securities.
(B) In the event the Company shall in any
manner issue or sell any Convertible Securities,
whether or not the rights to convert or exchange
thereunder are immediately exercisable, and the
price per share for which shares of Common Stock
are issuable upon the conversion or exchange of
such Convertible Securities (determined by
dividing (i) the total amount, if any received or
receivable by the Company in consideration of the
issue or sale of such Convertible Securities, plus
the minimum aggregate amount of additional
consideration, if any, payable to the Company upon
conversion or exchange thereof by (ii) the total
number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible
Securities) shall be less than the Conversion
Price in effect for the Securities immediately
prior to the time of the issue or sale of such
Convertible Securities, then for purposes of
determining the Conversion Price for such
Securities, the Company shall be deemed to have
issued shares of Common Stock at such price per
share as of the date of the issue or sale of such
Convertible Securities, and the adjustment of the
Conversion Price required by this paragraph (i)
shall be made as of the date of the issue or sale
of such Convertible Securities, provided, however,
-------- -------
that no further adjustment of such Conversion
Price shall be made upon the actual conversion or
exchange of such Convertible Securities.
(C) In the event any shares of Common Stock
or Convertible Securities or any rights or options
to purchase any such stock or securities shall be
issued for cash, the consideration received
therefor, less any out-of-pocket expenses incurred
and any underwriting commissions or concessions
paid or allowed by the Company in connection
<PAGE>
<PAGE>
therewith, shall be deemed to be the amount of
consideration received by the Company therefor.
The Board of Directors of the Company shall
determine (irrespective of any treatment thereof
on the books of account of the Company) the fair
value of any consideration other than money
received upon any such issue, and shall, in case
any of the foregoing is issued with other stock,
securities or assets of the Company determine what
part of the consideration received therefor is
applicable to the issue of the Common Stock,
Convertible Securities or rights or options for
the purchase thereof.
(ii) In the event that (A) there shall be any
decrease in the purchase price provided for in any
right or option referred to in paragraph (i)(A) hereof
or the additional consideration, if any, payable upon
the conversion or exchange of any Convertible
Securities referred to in paragraph (i)(A) hereof or
paragraph (i)(B) hereof, or (B) there shall be any
increase in the rate at which any Convertible
Securities referred to in paragraph (i)(A) hereof or
paragraph (i)(B) hereof are convertible into or
exchangeable for shares of Common Stock, the Conversion
Price in effect at the time of such decrease or
increase shall forthwith be reduced to the Conversion
Price which would have been in effect at such time had
such outstanding rights or options or Convertible
Securities provided for such decreased purchase price
or additional consideration or increased conversion
rate, as the case may be, at the time initially
granted, issued or sold.
(iii) Each adjustment in the Conversion Price
shall be calculated to the nearest cent.
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