Current Report on Form 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 2, 1998
INAMED CORPORATION
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(Exact name of registrant as specified in its charter)
FLORIDA 1-9741 59-0920629
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
No.)
3800 Howard Hughes Parkway, Suite 900
Las Vegas, Nevada 89109
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Address of principal executive offices
Registrant's telephone number, including area code: 702/791-3388
N/A
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(Former name or former address, if changed since last report.)
Item 5. OTHER EVENTS.
On July 2, 1998, INAMED Corporation (the "Issuer") issued a
news release disclosing that Jim J. McGhan had been terminated as
an employee and officer of the Issuer and its subsidiaries.
On July 9, 1998, the Issuer issued a news release disclosing
that it had converted into 860,000 shares of common stock all of
the $10.8 million indebtedness (including accrued interest) which
was owed to International Integrated Industries, LLC ("3I"), an
entity controlled by Donald K. McGhan (the Issuer's former
chairman and CEO).
The conversion price at which the 3I indebtedness was
converted into common stock was approximately $12.40 per share,
which is a substantial premium to the current trading price. In
connection with that transaction, the Issuer issued a four-year
warrant to purchase 260,000 shares of common stock at $12.40 per
share.
All of the shares of common stock owned by Mr. McGhan and
his affiliates are subject to a five year "standstill" agreement.
The transaction with Mr. McGhan was undertaken in order to
resolve any issues as to the fairness of various related party
transactions between the McGhan entities and the Issuer, and to
improve the Issuer's balance sheet.
For additional information, reference is made to the news
releases and letter agreement, which are attached hereto as
exhibits.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(c) EXHIBITS
99.1 News Release of INAMED Corporation dated July 2, 1998.
99.2 News Release of INAMED Corporation dated July 9, 1998.
99.3 Letter Agreement dated July 8, 1998
Page 2
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
INAMED CORPORATION
Dated: July 13, 1998 By: /s/ Richard G. Babbitt
Name: Richard G. Babbitt
Title: Chairman and Chief
Executive Officer
Page 3
EXHIBIT INDEX
99.1 News Release of INAMED Corporation dated July 2, 1998.
99.2 News Release of INAMED Corporation dated July 9, 1998.
99.3 Letter Agreement dated July 8, 1998
Page 4
Exhibit 99.1
INAMED "Innovation and Medicine" INAMED CORPORATION
3800 Howard Hughes Parkway
Suite 900
Las Vegas, NV 89109
(702) 791-3388
Fax: (702) 791-1922
Company Contact: Richard G. Babbitt
(702) 791-3388
Ilan K. Reich
(212) 626-6800
INAMED CORPORATION ANNOUNCES TERMINATION OF
JIM MCGHAN
July 2, 1998-Las Vegas, Nevada-INAMED Corporation (OTC Bulletin
Board: IMDC) announced today that Jim J. McGhan has been
terminated from his duties as an officer and employee of the
Company and its subsidiaries. Mr. McGhan was Chief Operating
Officer. While Mr. McGhan continues as a director, the Company
does not currently plan to renominate him at the next
shareholders meeting.
Jim J. McGhan is the son of Donald K. McGhan, who was the
Company's Chairman and CEO until earlier this year, when the
Board of Directors installed a new management team, led by
Richard G. Babbitt.
Commenting on Mr. McGhan's departure from the Company, Mr.
Babbitt said: "While Jim was instrumental in stabilizing the
Company during periods of difficulty over the past five years, it
was clear to the new management team that we do not share the
same operating style or business philosophy. Under Jim's
management, there were too many operating units which were
isolated from each other. As a result, the Company lacked
positive direction to these units, as well as the basic financial
and operating disciplines which are essential to run a profitable
enterprise. During the next few months the new management team
is planning to reverse those policies."
INAMED Corporation is a global surgical and medical device
company engaged in the development, manufacturing and marketing
of medical devices for the plastic and reconstructive, bariatric
and general surgery markets.
Exhibit 99.2
INAMED "Innovation and Medicine" INAMED CORPORATION
3800 Howard Hughes Parkway
Suite 900
Las Vegas, NV 89109
(702) 791-3388
Fax: (702) 791-1922
NEWS RELEASE
FOR IMMEDIATE RELEASE
Company Contact: Richard G. Babbitt
(702) 791-3388
Ilan K. Reich
(212) 626-6800
INAMED CORPORATION CONVERTS DEBT INTO EQUITY
LAS VEGAS, NEVADA - July 9, 1998 - INAMED Corporation (OTC
Bulletin Board: IMDC) announced today that it has converted into
860,000 shares of common stock all of the $10.8 million of
indebtedness which was owed to International Integrated
Industries LLC. That entity is controlled by Donald K. McGhan,
who is the Company's former Chairman and CEO. In the period from
April 1997 to January 1998 that entity loaned the Company $9.9
million in order to fund its negative cash flow at that time.
The amount of the loan which was converted includes accrued
interest of approximately $900,000.
The conversion of this debt obligation represents a substantial
premium to the current market price of the common stock. This
transaction was undertaken for two reasons: to improve t he
Company's financial condition and to resolve all outstanding
issues between various McGhan entities and INAMED. As a result
of this transaction, Mr. McGhan and his affiliates now own
approximately 19.95% of the 10,980,290 shares of common stock
which are currently outstanding. Using the SEC's rules for
defining beneficial ownership, Mr. McGhan and his affiliates are
the second largest shareholder after Appaloosa Management LP.
The Company agreed to amend its Shareholder Rights Plan so as to
allow Mr. McGhan and his affiliates to beneficially own up to 20%
of the outstanding common stock, and Mr. McGhan agreed for a five-
year period to comply with various traditional "standstill"
provisions, including to vote all of his shares (including those
beneficially owned by affiliates) in proportion to the votes of
all other shareholders.
As part of this transaction, the Company issued Mr. McGhan a four-
year warrant to purchase 260,000 shares at $12.40 per share.
That warrant is not exercisable if and to the extent that it
would result in Mr. McGhan and his affiliates becoming the
beneficial owners of more than 20% of the outstanding common
stock at that time.
As a result of this transaction, as of December 31, 1997 on a
proforma basis the Company's long-term debt would have been $23.6
million (rather than $32.4 million), and shareholders' equity
would have been $(37.5) million (rather than $(46.7) million).
Mr. Richard G. Babbitt, Chairman and CEO of INAMED, stated:
"This transaction represents a fair resolution of the complex
issues between the Company and Don McGhan. It allows us to
improve the balance sheet and focus our attention on the other
challenges which lie ahead."
INAMED Corporation is a global surgical and medical device
company engaged in the development, manufacturing and marketing
of medical devices for the plastic and reconstructive, bariatric
and general surgery markets.
Exhibit 99.3
INAMED CORPORATION
3800 Howard Hughes Parkway
Suite 900
Las Vegas, NV 89109
(702) 791-3388
Fax: (702) 791-1922
July 8, 1998
Mr. Donald K. McGhan
3800 Howard Hughes Parkway
Suite 1800
Las Vegas, Nevada 89109
Dear Don:
This will confirm our understanding that until July 8, 2003, you
and your affiliates (including International Integrated
Industries, LLC and Medical Device Alliance, Inc. ("MDA")) agree,
without the consent of the Company's Board of Directors: 1) not
participate in or otherwise support in any manner any proxy
contest on any issue submitted to a vote or consent of
stockholders; 2) not commence a tender offer for any shares of
the Company's common stock, or otherwise make any proposal for a
business combination, recapitalization or other similar
transaction, or other major corporate transaction involving the
Company; 3) not transfer any of the shares of common stock
beneficially owned in one or a series of transactions in a manner
which would result in the acquiror(s) owning 5% or more of the
outstanding common stock of the Company, except (a) transfers by
will or the laws of descent and distribution, or (b) transfers to
MDA, provided that in both such instances the transferees would
continue to be bound by this letter agreement; 4) vote all of the
shares of common stock owned (including shares which may be
acquired after today) in proportion to the votes (or abstentions)
of all other shareholders on any matter submitted to a vote or
consent of stockholders, except for a vote to any proposed
business combination, recapitalization or other similar
transaction, in which case you and your affiliates may vote the
shares; 5) not join in any "group" or otherwise take any action,
directly or indirectly, which may contravene the purposes or
intentions of this letter agreement. The Company will be
entitled to place an appropriate legend on your share
certificates so as to reflect the provisions of this letter
agreement.
The Company shall provide you and your affiliates with customary
registration rights with respect to all of the shares of common
stock owned (including those issuable upon the exercise of
warrants), including one demand right (for which the Company
shall pay all expenses, other than commissions and underwriting
discounts) and three "piggyback" rights; subject, in all such
instances, to any limitations imposed by the underwriter of as a
result of marketing conditions. At the time such registration
rights are utilized the parties shall enter into a customary
agreement providing for indemnification and contribution.
Each party to this letter agreement (including your affiliates)
represents and warrants to the other that this agreement has been
duly approved and authorized. This letter agreement may not be
amended or altered except in writing signed by a duly authorized
officer or representative of each party.
Please confirm your agreement with the foregoing by
countersigning below.
Sincerely,
INAMED CORPORATION
By: /s/ Ilan K. Reich
Ilan K. Reich
Executive Vice President
Agreed and accepted as of
the date first written above
By: /s/ Donald K. McGhan
Donald K. McGhan, both
individually and on behalf
of all affiliates
