SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
INAMED CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Persons(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
<PAGE>
(5) Total fee paid:
/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- - --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- - --------------------------------------------------------------------------------
(3) Filing Party:
- - --------------------------------------------------------------------------------
(4) Date Filed:
-2-
<PAGE>
INAMED CORPORATION
3800 HOWARD HUGHES PARKWAY
SUITE 900
LAS VEGAS, NEVADA 89109
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON ____________, 1998
------------------------------------
TO THE SHAREHOLDERS OF INAMED:
A Special Meeting of Shareholders of INAMED Corporation, a Florida
corporation, will be held at
_________________________________________________________________, on
____________, 1998, at __________, local time, to consider and vote on the
following proposals:
(1) To elect to the Board of Directors five (5) directors, to serve
until the next annual meeting of shareholders of the Company and until their
successors have been duly elected and shall have qualified;
(2) To approve a change in the Company's state of incorporation from
Florida to Delaware by means of a merger of the Company with and into a
wholly-owned subsidiary;
(3) To provide in the Company's Certificate of Incorporation (in the
form attached hereto as Appendix B) to be filed in Delaware in connection with
the Reincorporation for the number of authorized shares of common stock of the
Company, $.01 par value, to be increased from 20,000,000 to 25,000,000;
(4) To provide in the Company's Certificate of Incorporation to be
filed in Delaware in connection with the Reincorporation for the authorization
of the issuance of up to 1,000,000 shares of preferred stock, par value $.01 per
share;
(5) To adopt Bylaws (in the form attached hereto as Appendix C) in
connection with the Reincorporation;
(6) To provide in the Company's Certificate of Incorporation to be
filed in Delaware in connection with the Reincorporation and Bylaws to be
adopted in connection with the Reincorporation, for advance notice of
shareholder proposals and nominations for the election of directors;
(7) To approve the Company's 1998 Stock Option Plan; and
(8) To transact such other business as may properly come before the
Special Meeting of Shareholders and any adjournments thereof.
ONLY SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON ________, 1998
(THE "RECORD DATE") ARE ENTITLED TO NOTICE OF AND TO VOTE AT THE MEETING. IF ANY
OF PROPOSALS 2-6 ARE NOT APPROVED, THEN NONE OF SUCH PROPOSALS WILL BE ENACTED.
PLEASE FILL IN, SIGN, DATE, AND RETURN THE ENCLOSED PROXY TO THE
COMPANY'S TRANSFER AGENT, ATTN: PROXY SERVICES, WHETHER OR NOT YOU EXPECT TO
ATTEND THE MEETING. A RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Directors
INAMED CORPORATION
By:________________________________
Carol Brennan
Secretary
Dated: _________, 1998
<PAGE>
INAMED CORPORATION
3800 HOWARD HUGHES PARKWAY
SUITE 900
LAS VEGAS, NEVADA 89109
-------------------------
SPECIAL MEETING OF SHAREHOLDERS
_________, 1998
-----------------------
PROXY STATEMENT
-------------------------
This Proxy Statement is being mailed to the shareholders of INAMED
Corporation (the "Company") on or about __________, 1998 in connection with the
solicitation by the Board of Directors of the Company (the "Board of Directors")
of proxies for use at a Special Meeting of shareholders of the Company (the
"Meeting") to be held at the ______________, on _________ at ________. The
Meeting has been called for the following purposes: (i) to elect to the Board of
Directors five (5) directors, to serve until the next annual meeting of
shareholders of the Company and until their successors have been duly elected
and shall have qualified; (ii) to approve a change in the Company's state of
incorporation from Florida to Delaware; (iii) to provide in the Company's
Certificate of Incorporation (in the form attached hereto as Appendix B) to be
filed in Delaware in connection with the Reincorporation (the "Certificate of
Incorporation") for the number of authorized shares of common stock of the
Company, $.01 per value per share ("Common Stock"), to be increased from
20,000,000 to 25,000,000; (iv) to provide in the Company's Certificate of
Incorporation to be filed in Delaware in connection with the Reincorporation for
the authorization of the issuance of up to 1,000,000 shares of preferred stock,
par value $.01 per share ("Preferred Stock"); (v) to adopt Bylaws (in the form
attached hereto as Appendix C) in connection with the Reincorporation (the
"Bylaws"); (vi) to provide in the Company's Certificate of Incorporation to be
filed in Delaware in connection with the Reincorporation and Bylaws to be
adopted in connection with the Reincorporation for advance notice of shareholder
proposals and nominations for the election of directors; (vii) to approve the
Company's 1998 Stock Option Plan (the "Option Plan"); and (viii) for any other
matter that may properly be brought before the Meeting in accordance with the
judgment of the person or persons voting the Proxy. Shareholders of record are
being asked to vote "FOR" or "AGAINST" the proposals set forth above. However,
if any of Proposals 2-6 (the "Reincorporation Proposals") are not approved, then
none of the Reincorporation Proposals will be enacted.
PROXIES AND VOTING RIGHTS
The voting securities of the Company outstanding on October 9, 1998
consisted of 11,420,363 shares of Common Stock, entitling the holders thereof to
one vote per share. Shareholders of record at the close of business on
___________ (the "Record Date") are entitled to notice of and to vote at the
Meeting. Each of such shares is entitled to one vote. There was no other class
of voting securities of the Company outstanding on that date. All shares of
Common Stock have equal voting rights. A majority of the outstanding shares of
Common Stock is required to be present in person or by proxy to constitute a
quorum.
All proxies delivered pursuant to this solicitation may be revoked by
the person executing the same by notice in writing received at the office of the
Company at any time prior to exercise. If not revoked, the shares of Common
Stock represented thereby will be voted at the Meeting. All proxies will be
voted in accordance with the instructions specified thereon. If no specification
is indicated on the proxy, the shares of Common Stock represented thereby will
be voted (i) to elect to the Board of Directors five (5) directors, to serve
until the next annual meeting of shareholders of the Company and until their
successors have been duly elected and shall have qualified; (ii) to approve a
change in the Company's state of incorporation from Florida to Delaware; (iii)
to provide in the
<PAGE>
Company's Certificate of Incorporation to be filed in Delaware in connection
with the Reincorporation for the number of authorized shares of Common Stock to
be increased from 20,000,000 to 25,000,000; (iv) to provide in the Company's
Certificate of Incorporation to be filed in Delaware in connection with the
Reincorporation for the authorization of the issuance of up to 1,000,000 shares
of Preferred Stock; (v) to adopt Bylaws in connection with the Reincorporation;
(vi) to provide in the Company's Certificate of Incorporation to be filed in
Delaware in connection with the Reincorporation and Bylaws to be adopted in
connection with the Reincorporation for advance notice of shareholder proposals
and nominations for the election of directors, (vii) to approve the Company's
1998 Stock Option Plan (the "Option Plan"); and (viii) for any other matter that
may properly be brought before the Meeting in accordance with the judgment of
the person or persons voting the proxy.
The required quorum for the transaction of business at the Meeting is a
majority of the votes eligible to be cast by holders of shares of Common Stock
issued and outstanding on the Record Date. Shares that are voted "FOR" or
"AGAINST" a matter are treated as being present at the Meeting for purposes of
establishing a quorum and are also treated as shares entitled to vote at the
Meeting with respect to such matter. In the absence of a quorum, the
shareholders present in person or by proxy, by majority vote and without further
notice, may adjourn the meeting from time to time until a quorum is attained. At
any reconvened meeting following such adjournment at which a quorum shall be
present, any business may be transacted which might have been transacted at the
Meeting as originally notified.
The Company will count abstentions for purposes of determining both:
(i) the presence or absence of a quorum for the transaction of business, and
(ii) the total number of votes cast with respect to a proposal (other than the
election of directors). Accordingly, abstentions will have the same effect as a
vote against the proposal (other than the election of directors).
Further, broker non-votes will be counted for the purpose of
determining the presence or absence of a quorum for the transaction of business,
although broker non-votes will not be counted for purposes of determining the
number of votes cast with respect to the particular proposal on which the broker
has expressly not voted. Thus, a broker non-vote will not affect the outcome of
the voting on a proposal.
-2-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the shares of Common
Stock owned as of October __, 1998, by (i) each person who, insofar as the
Company has been able to ascertain, beneficially owned more than five percent of
the outstanding common stock of the Company, (ii) each director, (iii) each of
the officers named in the Summary Compensation Table and (iv) all the directors
and officers as a group. Unless otherwise indicated in the footnotes following
the table and subject to community property laws where applicable, the person(s)
as to whom the information is given had sole voting and investment power over
the shares of common stock shown as beneficially owned.
<TABLE>
<CAPTION>
Percent of Class
-----------------------------------------------------------------
Based on Based on shares
shares actually owned and Based on fully
Name of Beneficial Owner or beneficially currently diluted shares
Identity of Group Number of Shares owned(1) outstanding(2) outstanding
5% HOLDERS
<S> <C> <C> <C> <C>
Appaloosa Management LP 5,172,867(4) 32.8% 7.3% 26.5%
26 Main Street
Chatham, New Jersey 07928
Donald K. McGhan 2,189,668(5) 19.16% 19.1% 11.24%
3800 Howard Hughes
Parkway
Suite 1800
Las Vegas, Nevada 89109
Oracle Partners, L.P. 1,195,891(6) 9.53% 0.63% 6.14%
712 Fifth Avenue, 45th Floor
New York, New York 10019
Richard L. Chilton, Jr. 657,000 5.75% 5.75% 3.37%
Chilton Investment Co., Inc.
320 Park Avenue, 22nd Floor
New York, NY 10022
</TABLE>
<TABLE>
<CAPTION>
Percent of Class (based on shares
Number of Shares beneficially owned)(1)
OFFICERS AND DIRECTORS
<S> <C> <C>
Richard G. Babbitt(7) 30,000(8) 0 .27%
Ilan K. Reich(7) 102,900(9) 0.93%
Tom K. Larson, Jr.(7) 20,000 (10) 0.18%
Jim J. McGhan(7) 0 0
Jeffrey J. Barber(7) 12,000 0.11%
Harrison E. Bull(7) 35,000(11) 0.31%
Richard Wm. Talley(7) 60,000 (11) 0.53%
John E. Williams(7) 35,000(11) 0.31%
All officers and directors as a group 294,900 2.21%
</TABLE>
-3-
<PAGE>
- - -----------------
(1) The percentages are calculated on the basis of the amount of
outstanding securities, plus securities underlying each holder's
options, warrants and securities convertible into Common Stock which
have been issued and are exercisable within 60 days hereof.
(2) The percentages are calculated on the basis of the amount of
outstanding securities, which is 11,420,363, without giving effect to
additional securities, underlying each holder's options, warrants and
convertible securities.
(3) The percentages are calculated on the basis of shares outstanding on a
fully-diluted basis, including 11,420,363 shares of Common Stock
outstanding, options to purchase 60,000 shares of Common Stock,
warrants to purchase 4,321,071 shares of Common Stock and securities
convertible into 3,687,668 shares of Common Stock.
(4) Includes 2,660,344 shares of which Appaloosa Management LP has
beneficial ownership by reason of the ownership of $14,205,714
aggregate principal amount of the Company's 11% Secured Convertible
Notes due 1999. Also includes 1,098,214 shares of Common Stock issuable
upon the exercise of warrants to purchase shares of Common Stock at
$7.50 per share and 579,510 shares of Common Stock issuable upon the
exercise of warrants to purchase shares of Common Stock at $6.50 per
share.
(5) Includes 207,310 shares of Common Stock owned by Shirley M. McGhan, the
wife of Donald K. McGhan, to which Mr. McGhan disclaims beneficial
ownership; 107,985 shares owned by a corporation of which Mr. McGhan is
the chairman; 8,036 shares owned by a limited partnership of which Mr.
McGhan is the general partner; and 173,453 shares owned by a limited
liability corporation of which Mr. McGhan is the managing member. Also
includes 8,571 shares of Common Stock issuable upon exercise of
warrants to purchase Common Stock at $7.50 per share. Does not include
a four-year warrant to purchase 260,000 shares of Common Stock which 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. Pursuant to a letter
agreement dated July 8, 1998, Mr. McGhan agreed for a five-year period
to comply with various traditional "standstill" provisions, including,
among others, to vote all of the Common Stock owned by him in
proportion to the votes (or abstentions) of all other shareholders on
any matter submitted to a vote or consent of shareholders, except for a
vote on any proposed business combination, recapitalization or other
similar transaction.
(6) Includes 749,091 shares of which Oracle Partners L.P. has beneficial
ownership by reason of the ownership of $4,000,000 aggregate principal
amount of the Company's 11% Secured Convertible Notes due 1999. Also
includes 375,000 shares of Common Stock issuable upon exercise of
warrants to purchase Common Stock at $7.50 per share.
(7) The address of these officers and directors is 3800 Howard Hughes
Parkway, Suite 900, Las Vegas, Nevada 89109.
(8) Does not include a warrant to purchase 400,000 shares, which begins to
vest in 1999.
(9) Includes a warrant to purchase 75,000 shares of Common Stock at $5.51
per share, which is currently exercisable. Does not include a warrant
to purchase 400,000 shares, which begins to vest in 1999.
-4-
<PAGE>
(10) Does not include a warrant to purchase 25,000 shares, which begins to
vest in 1999.
(11) Includes director options and warrants which are currently exercisable.
Does not include a warrant to purchase 50,000 shares, which begins to
vest in 1999.
-5-
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
Unless otherwise specified, all proxies received will be voted in favor
of the election of the persons named below as directors of the Company, to serve
until the next annual meeting of shareholders of the Company and until their
successors shall be duly elected and shall have qualified. Directors shall be
elected by a plurality of the votes cast, in person or by proxy, at the Meeting.
All nominees for Director are currently directors of the Company. The
terms of the current directors expire at the next annual meeting of shareholders
and when their successors are duly elected and shall have qualified. Jim J.
McGhan, who is currently a director of the Company, has not been nominated for
re-election as a director. Management has no reason to believe that any of the
nominees will be unable or unwilling to serve as a director, if elected. Should
any of the nominees not remain a candidate for election at the date of the
Meeting, the proxies will be voted in favor of those nominees who remain
candidates and may be voted for substitute nominees selected by the Board of
Directors.
The names of the nominees are set forth below, as well as certain
information concerning the nominees for director and the executive officers of
the Company, together with their ages and positions. There are no family
relationships among any of the Company's directors and executive officers.
NOMINEES FOR DIRECTOR
NAME AGE POSITION
- - ---- --- --------
Richard G. Babbitt 72 Chairman of the Board, President
and Chief Executive Officer
Ilan K. Reich 44 Executive Vice President, Director
Harrison E. Bull, Esq. 57 Director
Richard Wm. Talley 54 Director
John E. Williams, M.D. 76 Director
EXECUTIVE OFFICERS WHO ARE NOT
DIRECTORS
Tom K. Larson, Jr. 62 Vice President, Finance and
Administration, Chief Financial
Officer
Jeffrey J. Barber 38 Executive Vice President
-6-
<PAGE>
RICHARD G. BABBITT
Mr. Babbitt has been the President and Chief Executive Officer of
INAMED since January 22, 1998, and Chairman since February 6, 1998. Mr. Babbitt
also serves as Chairman of DNA Technologies, Inc. since June 1997 and President
of B.I. Advisors. He has been associated with Ben Hogan Company, B.I.
Industries, American Safety Equipment Corporation, Welsh Manufacturing and
Medical Supply Company in C.E.O. and Board positions.
ILAN K. REICH
Mr. Reich has been Executive Vice President and a director of INAMED
since January 22, 1998. Until that time he was a partner with the New York law
firm of Olshan Grundman Frome & Rosenzweig LLP, specializing in corporate and
securities law. From 1988 to June 1996, Mr. Reich served in various senior
executive positions with public and private companies controlled by a private
investor, including Western Publishing Group, Inc., the largest U.S. publisher
of children's books, and Rabco Health Services, Inc., a distributor of
medical/surgical products and a wholesale pharmaceutical company. Mr. Reich is a
graduate of Columbia College and Columbia Law School, and a member of various
bar associations.
HARRISON E. BULL, ESQ.
Mr. Bull has served as a Director of INAMED since March 31, 1997. Mr.
Bull is the senior partner of the law firm of Bull, Cohn and Associates and its
predecessor since 1974. The firm is primarily a general practice law firm in
Santa Barbara, California, with general emphasis on civil litigation. Mr. Bull
has been a member of the Florida Bar since 1973, the California Bar since 1974
and is a member of the American Bar Association. Mr. Bull was admitted to
practice before the Supreme Court of the United States in 1984.
RICHARD WM. TALLEY
Mr. Talley has served as a Director of INAMED since March 31, 1997. Mr.
Talley is currently a principal with Talley, King & Co., a NASD broker-dealer
based in Irvine, California, specializing in private placement transactions,
which he founded in 1993. Prior to that he founded Talley, McNeil & Tormey,
Inc., a regionally focused investment bank, which merged in 1990 into a larger
investment banking firm in Irvine, California. Prior to that he opened the Santa
Barbara office of Shearson Lehman Brothers and managed that location until the
merger with American Express Corporation. Mr. Talley is also the founder and
Director of CentraCan Inc., the previous MRI division of HealthCare Merger
Corp., providing cancer-related diagnostic and treatment services in Central
America. He is a graduate of the University of California Santa Barbara and
holds an MBA from Cornell University.
JOHN E. WILLIAMS, M.D.
Dr. Williams has served as a Director of INAMED since March 31, 1997.
Dr. Williams is a plastic surgeon specializing in aesthetic surgery. He is
currently not practicing. He is a Diplomate of the American Board of Plastic
Surgery and is a Fellow of the American College of Surgeons. He is a member of
the American Society of Plastic and Reconstructive Surgeons and the American
Society of Aesthetic Plastic Surgeons. He holds memberships in state, national
and international plastic surgery societies and is a member of the American
Medical Association and the Los Angeles County Medical Association.
TOM K. LARSON, JR.
Tom K. Larson, Jr. joined INAMED as Chief Financial Officer effective
April 1, 1998. Mr. Larson has broad experience in financial and operating
management in a wide range of industries. He is a 16-year veteran of Xerox
Corporation, with financial and administrative roles in their telecommunications
business, research laboratories
-7-
<PAGE>
and special products division, which included aerospace and medical diagnostic
products. He has also been the CFO of Revell Corporation (a Rothchilds company),
a maker of scale model kits, and for the past eight years was the CFO of a
privately held specialty bed manufacturer. Mr. Larson has a B.A. degree from
Allegheny College, a Masters degree from the University of Pittsburgh and has
attended programs at Harvard Business School.
JEFFREY J. BARBER
Mr. Barber has served as an Executive Vice President of INAMED since
March 31, 1997. Mr. Barber originally joined the Company in 1992 as Worldwide
Marketing Manager for McGhan Medical Corporation . He later became Vice
President of Business Development and Marketing. In 1996 he became a vice
president of the Company responsible for marketing, business development and
international development. Prior to his employment with the Company, Mr. Barber
held positions with Chiron Corporation and Baxter Healthcare, Inc.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES FOR DIRECTOR.
MEETINGS OF DIRECTORS AND DIRECTORS COMPENSATION
For the fiscal year ended December 31, 1997, there were seven meetings
of the Board of Directors. All of the Directors attended each meeting. From time
to time, the members of the Board of Directors act by unanimous written consent
pursuant to the laws of the State of Florida. The Board of Directors does not
have a standing nominating committee.
The Board of Directors has created an Audit Committee, a Compensation
Committee and a Stock Option Committee. The Audit Committee is composed of all
of the independent directors and is charged with reviewing the Company's annual
audit and meeting with the Company's independent auditors to review the
Company's internal controls and financial management practices. The Compensation
Committee, which is also composed of all of the independent directors,
recommends to the Board of Directors compensation for the Company's key
employees. The Stock Option Committee also consists of all of the independent
directors and administers the Company's option plans and awards stock options
thereunder. The members of the Audit Committee , the Compensation Committee and
the Stock Option Committee are Harrison E. Bull, Esq., Richard Wm. Talley and
John E. Williams, M.D.
Directors who are not employees of the Company receive an annual fee of
$25,000 and a fee of $1,000 for each Board of Directors meeting attended and are
reimbursed for their expenses. Employees who are Directors are not entitled to
any compensation for their service as a Director.
-8-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the
compensation of the Company's executive officers as of December 31, 1997 for
services in executive capacities to the Company in fiscal 1995, 1996 and 1997:
<TABLE>
<CAPTION>
Long-Term
Compensation
---------------------
Annual Compensation Stock
--------------------------------------------------------
Other Options/SARs All Other
Annual Granted Compen-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (IN SHARES) SATION (6)
--------------------------- ---- ------ ----- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Donald K. McGhan (1) 1997 $ 27,763 $ -- $ -- $ -- $20,289
Chairman, Chief Executive 1996 6,427 -- -- -- 32,994
Officer and President 1995 299,676 -- -- -- --
Michael D. Farney (2) 1997 56,250 -- -- -- 3,573
Chief Executive Officer, 1996 225,000 -- -- -- 19,302
And Secretary 1995 245,165 714,227 -- -- --
Jim J. McGhan (3) 1997 218,077 3,462 180,000 -- 536
Chief Operating Officer 1996 -- -- 330,000 -- --
1995 -- -- 260,000 -- --
Thomas R. Pilholski (4) 1997 17,692 -- -- -- 3,726
Chief Financial Officer
Jeffrey J. Barber(5) 1997 120,462 9,162 -- -- 5,536
</TABLE>
- - -----------------
(1) Mr. McGhan was Chairman from 1985 to February 6, 1998, President from
January 1987 to March 1997, and Chief Executive Officer from April 1987
until June 1992 and March 31, 1997 until January 22, 1998. Mr. McGhan
is currently Chairman Emeritus, and no longer has any executive or
board responsibilities with the Company.
(2) Mr. Farney resigned as Chief Executive Officer and Secretary as of
March 31, 1997.
(3) Mr. McGhan served as Chief Operating Officer from January 22, 1998
through June 24, 1998 and served as President from March 31, 1997 to
January 22, 1998. Prior to his direct employment with the Company, he
served as a consultant to one of the Company's subsidiaries, McGhan
Medical Corporation. Consulting fees paid to Mr. McGhan in prior years
are listed in other annual compensation. Mr. McGhan's employment with
the Company ceased on June 24, 1998.
(4) Mr. Pilholski commenced employment with the Company on November 19,
1997 and departed on March 3, 1998.
(5) Mr. Barber has served as Executive Vice President since March 31, 1997.
(6) Fringe benefits including automobile allowance, relocation allowances
and group term insurance.
-9-
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
TABLE OF STOCK OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
No. of Securities Underlying
Unexercised Options at 12/31/97 Value of Unexercised In-the-Money Options
Name Exercisable/Unexercisable at 12/31/97 Exercisable/ Unexercisable
- - ----------------------- ---------------------------------------- ------------------------------------------
<S> <C> <C>
Jeffrey J. Barber 10,000/0 $30,000/$0
</TABLE>
STOCK OPTION PLANS
In 1984, McGhan Medical Corporation adopted an incentive stock option
plan (the "1984 Plan"). Under the terms of the 1984 Plan, 100,000 shares of its
Common Stock were reserved for issuance to key employees at prices not less than
the market value of the stock at the date the option is granted. In 1985, INAMED
Corporation agreed to substitute options to purchase its shares (on a
two-for-one basis) for those of McGhan Medical Corporation. No options were
granted under the 1984 Plan during 1997, 1996, 1995 or 1994.
In 1986, the Company adopted an incentive and nonstatutory stock option
plan (the "1986 Plan"). Under the terms of the 1986 Plan, 300,000 shares of
Common Stock have been reserved for issuance to key employees. No options were
granted under the 1986 Plan during 1997, 1995 or 1994.
In 1993, the Company adopted a Non-Employee Director Stock Option Plan
which authorized the Company to issue up to 150,000 shares of Common Stock to
directors who are not employees of or consultants to the Company and who are
thus not eligible to receive stock option grants under the Company's stock
option plans. Pursuant to this Plan, each non-employee director is automatically
granted an option to purchase 5,000 shares of Common Stock on the date of his or
her initial appointment or election as a director, and an option to anniversary
of his or her initial grant date providing he or she is still serving as a
director. The exercise price per share is the fair market value per share on the
date of grant. At December 31, 1997 30,000 options were granted under this plan.
The Company recorded stock compensation expense of $51,000 for the year ended
December 31, 1997.
In 1998, the Company adopted the Option Plan, subject to shareholder
approval. See description under Proposal 2. Under the terms of the Option Plan,
450,000 shares of Common Stock have been reserved for issuance to key employees.
No options have been granted under the Option Plan.
STOCK AWARD PLAN
In 1987, the Board of Directors adopted a stock award plan (the "1987
Plan") whereby 300,000 shares of the Company's Common Stock were reserved for
issuance to selected employees of the Company. The 1987 Plan was adopted to
further the Company's growth, development and financial success by providing
additional incentives to employees by rewarding them for their performance and
providing them the opportunity to become owners of Common Stock of the Company,
and thus to benefit directly from its growth, development and financial success.
Shares are awarded under the 1987 Plan to employees as selected by a committee
appointed by the Board of Directors to administer the plan. Stock awards
totaling 180,388 have been granted as of December 31, 1997. No stock awards were
granted under this plan during 1997.
-10-
<PAGE>
EMPLOYMENT, SEVERANCE, AND CHANGE OF CONTROL AGREEMENTS
On January 23, 1998, Donald K. McGhan resigned as Chief Executive
Officer of the Company. Subsequently, on February 11, 1998 Mr. McGhan resigned
as Chairman of the Board as well as a Director, positions he had held since
1985.
On January 23, 1998, the Company entered into an Employment Agreement
with Richard G. Babbitt (the "Babbitt Agreement"), whereby the Company engaged
Mr. Babbitt to act as President and Chief Executive Officer for a term of three
years. Under the terms of the Babbitt Agreement, Mr. Babbitt is to be paid
$400,000 per year. In addition, Mr. Babbitt received an Executive Officer
Warrant granting him the right to purchase 400,000 shares of the Company's
Common Stock at a price of $3.525 per share.
On January 22, 1998, the Company entered into an Employment Agreement
with Ilan K. Reich (the "Reich Agreement"), whereby the Company engaged Mr.
Reich to act as Executive Vice President for a term of three years. Under the
terms of the Reich Agreement, Mr. Reich is to be paid $400,000 per year. In
addition, Mr. Reich received an Executive Officer Warrant granting Mr. Reich the
right to purchase 400,000 shares of the Company's Common Stock at a price of
$3.95 per share.
Mr. Babbitt and Mr. Reich (each, a "Covered Employee") have each
entered into an Employee Severance Agreement (a "Severance Agreement") with the
Company. Under the terms of the Severance Agreement, and for a term of three
years, upon a change in control of the Company (as defined in the Severance
Agreement), and the subsequent termination of the Covered Employee, such Covered
Employee will be entitled to certain benefits, including, among other things, a
lump sum severance payment equal to 300% of annual base salary and a cash
payment in lieu of shares of Common Stock issuable to the Covered Employee upon
severance of certain outstanding options. The payments under the Severance
Agreement are subject to a "gross-up" provision whereby the Company will pay an
additional amount to the Covered Employee to counteract the effect of any excise
tax under Section 4999 of the Internal Revenue Code.
On April 1, 1998, the Company entered into an Employment Agreement with
Tom K. Larson, Jr. (the "Larson Agreement"), whereby the Company engaged Mr.
Larson to act as Chief Financial officer for a term of three years. Under the
terms of the Larson Agreement, Mr. Larson is to be paid $165,000 per year. In
addition, Mr. Larson received an option to acquire 20,000 shares of the
Company's Common Stock at a price of $1.45 under an existing employee stock
option plan. Mr. Larson also received an Executive Officer Warrant granting Mr.
Larson the right to purchase 25,000 shares of the Company's Common Stock at a
price of $5.51 per share.
On June 24, 1998, Jim J. McGhan's employment with the Company and its
subsidiaries was terminated. Jim J. McGhan was the Chief Operating Officer of
the Company, and he is Donald K. McGhan's son. Jim J. McGhan has declined to run
for re-election to the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS
The Compensation Committee consists of Harrison E. Bull, Esq., Richard
Wm. Talley and John E. Williams, M.D. None of such Directors was a party to any
transaction with the Company which requires disclosure under Item 402(j) of
Regulation S-K.
1998 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Company established a Compensation Committee of the Board of
Directors in March 1997 consisting of the three non-management directors:
Messrs. Bull and Talley and Dr. Williams. The Compensation Committee
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determines the cash and other incentive compensation, if any, to be paid to the
Company's executive officers and key employees.
The Company believes that executive compensation should be closely
related to the value delivered to shareholders. This belief has been adhered to
by developing incentive pay programs which provide competitive compensation and
reflect Company performance. Both short-term and long-term incentive
compensation are based on Company performance and the value received by
shareholders.
COMPENSATION MAKE-UP AND MEASUREMENT
The Company's executive compensation is based on three components, base
salary, short-term incentives and long-term incentives, each of which is
intended to serve the overall compensation philosophy.
BASE SALARY
The Company's salary levels are intended to be consistent with
competitive pay practices and level of responsibility, with salary increases
reflecting competitive trends, the overall financial performance of the Company,
general economic conditions as well as a number of factors relating to the
particular individual, including the performance of the individual executive,
level of experience, ability and knowledge of the job.
SHORT-TERM INCENTIVES
At the start of each fiscal year, target levels of pre-tax profits and
revenue growth are established by senior management of the Company during the
budgeting process and approved by the Board of Directors. An incentive aware
opportunity is established for each employee based on the employee's level of
responsibility, potential contribution, the success of the Company and
competitive conditions. Generally, approximately 25% of an executive's potential
bonus relates to his or her achievement of personal objectives and 75% relates
to the Company's achievement of its pre-tax profit and revenue goals.
The employee's actual award is determined at the end of the fiscal year
based on the Company's achievement of its pre-tax profit and revenue goals and
an assessment of the employee's individual performance, including achievement of
personal objectives. This ensures that individual awards reflect an individual's
specific contributions to the success of the Company.
LONG-TERM INCENTIVES
Stock options are granted from time to time to reward key employees for
their contributions. The grant of options is based primarily on the key
employee's potential contribution to the Company's growth and profitability.
Harrison E. Bull
Richard Wm. Talley
John E. Williams
OTHER MATTERS
The Company has been advised by the Securities and Exchange Commission
that it has begun a formal investigation of the matters disclosed in the Form
8-K dated March 6, 1998 (the "March Form 8-K") relating to the resignation of
Coopers & Lybrand LLP as the Company's independent accountant. The Company is
cooperating fully in this investigation. Furthermore, the Company believes that
all of the procedural and substantive issues raised in that filing have been
addressed through a variety of steps, including the appointment of a new senior
management team, the continual oversight by an audit committee, and the
conversion into equity of the $10.8 million of indebtedness (including accrued
interest) owed to an entity controlled by the former Chairman at a significant
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discount which more than adequately reflects the dollar value of any
questionable related party transactions. The Company does not believe that this
investigation will give rise to any material costs, and is seeking to pursue a
prompt resolution of this matter so that it can focus its efforts on returning
the Company to long-term profitability and resolving the breast implant
litigation. For a discussion of certain other matters relating to the Company
which occurred prior to the filing of the March Form 8-K, see Appendix F.
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COMMON STOCK PERFORMANCE
The following graph sets forth the Company's total shareholder return
as compared to the NASDAQ Market Index and the Standard & Poor's Medical
Products and Supplies Index over the period from December 31, 1993 until
December 31, 1997. The total shareholder return assumes $100 invested at
December 31, 1993 in the Company's Common Stock, the NASDAQ Market Index and the
Standard & Poor's Medical Products and Supplies Index. It is assumes
reinvestment of all dividends.
[GRAPH]
<TABLE>
<CAPTION>
======================================================================================================================
INDEXED RETURNS
- - ----------------------------------------------------------------------------------------------------------------------
12/1993 12/1994 12/1995 12/1996 12/1997
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INAMED Corporation 100 118 322 309 150
- - ----------------------------------------------------------------------------------------------------------------------
Nasdaq Stock Market 100 97 138 170 209
(U.S.)
- - ----------------------------------------------------------------------------------------------------------------------
S&P Health Care 100 118 201 230 288
(Medical Products &
Supplies)
======================================================================================================================
</TABLE>
There can be no assurance that the Company's stock performance will
continue with the same or similar trends depicted in the graph above.
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THE REINCORPORATION TRANSACTIONS
The Board of Directors of the Company has determined that it is in the
best interests of the Company to amend the Company's Articles of Incorporation
to increase its capitalization. The Company's current Articles of Incorporation
authorizes the issuance of up to 20,000,000 shares of Common Stock, 11,420,363
shares of which were outstanding as of October 9, 1998. However, the Company has
issued options and warrants to purchase, and has other securities outstanding
which are convertible into, 8,068,739 additional shares of Common Stock in the
aggregate, which leaves a low availability of Common Stock. Moreover, no shares
of preferred stock are authorized under the Company's Articles of Incorporation.
The Board of Directors of the Company believes that it is necessary for
the Company to increase the authorized amount of Common Stock and to permit
preferred stock to be issued by the Board of Directors of the Company in the
future, to the extent deemed advisable by the Board. To make these changes to
the Company's capitalization it is necessary to amend the Company's Articles of
Incorporation, which requires shareholder approval. Rather than simply amend the
Articles of Incorporation, the Board of Directors of the Company has proposed
that the state of incorporation of the Company, which is currently Florida, be
changed to Delaware. The Board of Directors of the Company believes that the
reincorporation of the Company in Delaware will be advantageous to the Company.
See Proposal 2, "Reasons For and Advantages of Reincorporation in Delaware."
Such changes are proposed to be effected by an Agreement and Plan of
Merger, a copy of which is attached to this Proxy Statement as Appendix A (the
"Agreement of Merger"). The Board of Directors has unanimously approved the
Agreement of Merger for submission to the Company's shareholders. The Agreement
of Merger provides for the merger (the "Reincorporation Merger," and together
with the approval of the Reincorporation Proposals and the transactions
contemplated thereby, the "Reincorporation") of the Company with and into INAMED
Corporation (Delaware), a Delaware corporation, which is a wholly-owned
subsidiary of the Company ("INAMED-Delaware"), with INAMED-Delaware being the
surviving corporation. This Reincorporation Merger will, in effect, cause the
Company to be reincorporated in Delaware. On the effective date of the
Reincorporation Merger, each issued and outstanding share of Common Stock will
be converted into one (1) share of common stock, $.01 par value per share of
INAMED-Delaware ("INAMED-Delaware Stock"). The following discussion summarizes
certain aspects of the Reincorporation Merger, but is qualified in its entirety
by reference to the Agreement of Merger and the exhibits thereto which are
attached hereto as "Appendix A."
On the effective date of the Reincorporation Merger, INAMED-Delaware
will succeed to all of the assets, liabilities and business of the Company and
will possess all of the rights and powers of the Company. In addition,
INAMED-Delaware will assume and continue all of the benefit and option plans of
the Company. The business of the Company will continue to operate under the
name, "INAMED Corporation." The officers and directors of INAMED-Delaware will
be the same as the officers and directors of the Company, except that Jim J.
McGhan will not be a director of INAMED-Delaware.
Except as described below, shareholders of INAMED-Delaware, as
shareholders of a Delaware corporation, will, in general, have the same rights
that they possess as shareholders of the Company, a Florida corporation,
although certain anti-takeover provisions are being incorporated into the
Certificate of Incorporation of the Company, in addition to other changes
inherent in being incorporated in Delaware rather than in Florida. A summary of
these changes, as they might affect the shareholders, are discussed in Proposal
2 in the section entitled "Summary of Significant Differences Between Delaware
and Florida Corporate Laws Which Would Affect INAMED-Delaware."
In addition, in connection with the Reincorporation Merger,
INAMED-Delaware will adopt the Restated Certificate of Incorporation and Bylaws,
attached as "Appendix B" and "Appendix C" to this Proxy Statement. The
Certificate of Incorporation and Bylaws of INAMED-Delaware differ from the
Company's Articles of Incorporation and Bylaws in certain respects, the most
important of which are described below.
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The proposed Certificate of Incorporation will increase the authorized
number of shares of Common Stock to 25,000,000 shares from 20,000,000 shares and
will further authorize the issuance of up to 1,000,000 shares of Preferred
Stock. Each share of INAMED-Delaware Stock will have the same par value as the
Common Stock. The current Articles of Incorporation do not include a provision
for the authorization of a class of Preferred Stock. The proposed Certificate of
Incorporation of INAMED-Delaware authorizes a class of Preferred Stock commonly
known as "blank check" preferred stock. The preferred stock may be issued from
time to time in one or more series, and the Board of Directors of
INAMED-Delaware, without further approval of its shareholders, is authorized to
fix the relative rights, preferences, privileges and restrictions applicable to
each series of preferred stock. Such shares of Preferred Stock, if and when
issued, may have rights, powers and preferences superior to those of the
Company's Common Stock. Florida law does not allow for the issuance of "blank
check" preferred stock, but requires the Company to amend the articles of
incorporation to authorize the issuance of each series of preferred stock. There
are no current plans, commitments or understandings, written or oral, to issue
any preferred stock, other than Preferred Stock relating to the Rights Plan. For
a further discussion of the Rights Plan, see "Summary of Significant Differences
Between Delaware and Florida Law Which Would Affect INAMED-Delaware -- Certain
Anti-Takeover Requirements." In the event of any issuances of Preferred Stock,
however, the holders of INAMED-Delaware Stock will not have any preemptive or
similar rights to acquire any Preferred Stock.
On the effective date of the Reincorporation Merger, each issued and
outstanding share of Common Stock will automatically be converted into one (1)
share of INAMED-Delaware Stock. Shareholders may, but are not required to,
surrender their present Common Stock certificates so that replacement
certificates representing shares of INAMED-Delaware Stock may be issued in
exchange therefor. Certificates representing Common Stock should not be
destroyed or returned to the Company. After the Reincorporation Merger,
certificates representing Common Stock will constitute "good delivery" in
connection with sales through a broker, or otherwise, of shares of
INAMED-Delaware Stock. U.S. Stock Transfer Company, the Company's transfer
agent, will act as transfer agent for INAMED-Delaware after the Reincorporation
Merger.
The Agreement of Merger provides that it may be amended at any time,
whether before or after approval by the shareholders of the Agreement of Merger,
by agreement of the Boards of Directors of the Company and INAMED-Delaware,
subject to any restrictions imposed by the laws of Florida and Delaware.
Delaware law will not permit an amendment to the Agreement of Merger, absent
shareholder approval, if such amendment would adversely affect the holders of
any class of stock of either the Company or INAMED-Delaware.
The Reincorporation will be effected by the approval of the
Reincorporation Proposals. If any of the Reincorporation Proposals are not
approved, then none of the Reincorporation Proposals will be enacted. Proposal 2
is to approve the Reincorporation Merger; Proposal 3 is to approve the increase
of the number of authorized shares of Common Stock from 20,000,000 to
25,000,000; Proposal 4 is to approve the authorization of the issuance of up to
1,000,000 shares of Preferred Stock; Proposal 5 is to approve the adoption of
the Bylaws; and Proposal 6 is to approve the provision to provide for advance
notice of shareholder proposals and nominations for the election of directors.
Reference is made hereby to the specific discussion included herein regarding
each of the Reincorporation Proposals.
PROPOSAL 2. THE PROPOSED MERGER AND REINCORPORATION IN DELAWARE
REASONS FOR AND ADVANTAGES OF REINCORPORATION IN DELAWARE
The proposal to reincorporate in Delaware is made for several reasons.
For many years, Delaware has followed a policy of encouraging incorporation in
that state and, in furtherance of that policy, has adopted comprehensive, modern
and flexible corporate laws which are periodically updated and revised to meet
changing business needs. As a result, many major corporations have initially
chosen Delaware for their domicile or have subsequently reincorporated in
Delaware. The Delaware courts have developed considerable expertise in dealing
with corporate issues, and a substantial body of case law has developed
construing Delaware law and establishing public policies with respect to
Delaware corporations, thereby providing greater predictability with respect to
legal affairs.
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<PAGE>
The differences between the corporate law of Delaware and Florida allow
Delaware corporations greater latitude of corporate action. In the opinion of
management, such latitude affords Delaware corporations more opportunities to
raise capital. The procedures and degree of shareholder approval required for
Delaware corporations for the authorization of additional shares of stock, and
for approval of certain mergers and other transactions, present fewer practical
impediments to the capital raising process than those which apply to Florida
corporations. For example, a Delaware corporation has greater flexibility in
declaring dividends, which can aid a corporation in marketing various classes or
series of dividend paying securities. Under Delaware law, dividends may be paid
out of surplus, or if there is no surplus, out of net profits from the
corporation's previous fiscal year or the fiscal year in which the dividend is
declared, or both, so long as there remains in the stated capital account an
amount equal to the par value represented by all shares of the corporation's
stock, if any, having a preference upon the distribution of assets. Under
Florida law, dividends may be paid by the corporation unless after giving effect
to the distribution, the corporation would not be able to pay its debts as they
come due in the usual course of business, or the corporation's total assets
would be less than the sum of its total liabilities, plus (unless the
corporation's articles of incorporation permit otherwise) amounts payable in
dissolution to holders of shares carrying a liquidation preference over the
class of shares to which a dividend is declared. These and other differences
between Florida's and Delaware's corporate laws are more fully explained below
in the section entitled "Summary of Significant Differences between Delaware and
Florida Corporate Laws Which Would Affect INAMED-Delaware."
In management's opinion, underwriters and other members of the
financial services industry may be more willing and better able to assist in
capital raising programs for corporations having the greater flexibility
reflected in the examples mentioned.
In addition, Delaware law permits a corporation to adopt a number of
measures, through amendment of the corporation's certificate of incorporation or
bylaws or otherwise, designed to reduce a corporation's vulnerability to
unsolicited takeover attempts. There is substantial judicial precedent in the
Delaware courts as to the legal principles applicable to such defensive measures
with respect to the conduct of the Board of Directors under the business
judgment rule with respect to unsolicited takeover attempts. The Company's
current Articles of Incorporation do not include such "antitakeover" provisions.
The Board of Directors has no present intention following the Reincorporation to
amend the Certificate of Incorporation of INAMED-Delaware or the Bylaws of
INAMED-Delaware to include any additional provisions which might deter an
unsolicited takeover attempt. However, in the discharge of its fiduciary
obligations to the shareholders, the Board of Directors may consider in the
future certain antitakeover strategies which may enhance the Board of Directors'
ability to negotiate with an unsolicited bidder. Further, Section 203 of the
Delaware General Corporation Law provides certain protections not available
under Florida laws. See "Summary of Significant Differences Between the Delaware
and Florida Corporate Laws Which Would Affect INAMED-Delaware - Business
Combinations with Substantial Shareholders."
DISADVANTAGE OF REINCORPORATION IN DELAWARE
Despite the belief of the Board of Directors of the Company as to the
benefits or advantages of reincorporation in Delaware, some shareholders may
find the Reincorporation Merger disadvantageous for several reasons. As
discussed below, Delaware law, unlike Florida law, contains a statutory
provision intended to discourage certain takeover attempts of Delaware
corporations which are not approved by the Board of Directors. This
anti-takeover provision could have the effect of lessening the possibility that
shareholders of INAMED-Delaware would be able to receive a premium above market
value for their shares in the event of a takeover. This provision could also
have an adverse effect on the market value of the shares of INAMED-Delaware
Stock. To the extent that this provision may restrict or discourage takeover
attempts, it may render less likely a takeover opposed by the Company's Board of
Directors and may make removal of the Board of Directors or management less
likely as well.
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As discussed below, the Certificate of Incorporation of INAMED-Delaware will
contain a provision limiting director liability under certain circumstances and
the Bylaws of INAMED-Delaware will contain provisions relating to
indemnification of directors and officers. The inclusion of these provisions
could operate to the potential disadvantage of the shareholders of
INAMED-Delaware. For example, their inclusion may have the effect of reducing
the likelihood of INAMED-Delaware's recovering monetary damages from directors
as a result of derivative litigation against directors for breach of their duty
of care, even though such an action, if successful, might otherwise have
benefitted INAMED-Delaware and its shareholders. In addition, if the
Reincorporation Merger is effected and the limitation on liability provision is
part of the Certificate of Incorporation of INAMED-Delaware, the shareholders of
INAMED-Delaware will forego potential causes of action for breach of duty of
care involving grossly negligent business decisions, including those relating to
attempts to change control of INAMED-Delaware.
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN DELAWARE AND FLORIDA CORPORATE LAWS
WHICH WOULD AFFECT INAMED-DELAWARE
The following is a brief summary of certain material ways in which
Florida and Delaware corporate laws differ and does not purport to be a complete
statement of such laws.
BUSINESS COMBINATIONS WITH SUBSTANTIAL SHAREHOLDERS. Delaware law
contains a statutory provision which is intended to curb abusive takeovers of
Delaware corporations. Section 203 of the Delaware General Corporation Law
addresses the problem by preventing certain business combinations of the
corporation with interested shareholders within three years after such
shareholders become interested. Section 203 provides, with certain exceptions,
that a Delaware corporation may not engage in any of a broad range of business
combinations with a person or an affiliate, or associate of such person, who is
an "interested shareholder" for a period of three (3) years from the date that
such person became an interested shareholder unless: (i) the transaction
resulting in a person becoming an interested shareholder, or the business
combination, is approved by the Board of Directors of the corporation before the
person becomes an interested shareholder; (ii) the interested shareholder
acquired 85% or more of the outstanding voting stock of the corporation in the
same transaction that makes such person an interested shareholder (excluding
shares owned by persons who are both officers and directors of the corporation,
and shares held by certain employee stock ownership plans); or (iii) on or after
the date the person becomes an interested shareholder, the business combination
is approved by the corporation's board of directors and by the holders of at
least 66-2/3% of the corporation's outstanding voting stock at an annual or
special meeting, excluding shares owned by the interested shareholder. Under
Section 203, an "interested shareholder" is defined as any person who is: (i)
the owner of fifteen percent (15%) or more of the outstanding voting stock of
the corporation or (ii) an affiliate or associate of the corporation and who was
the owner of fifteen percent (15%) or more of the outstanding voting stock of
the corporation at any time within the three (3) year period immediately prior
to the date on which it is sought to be determined whether such person is an
interested shareholder.
Florida law provides for certain "antitakeover" protections against
persons who acquire or intend to acquire 20% or more of the voting power of
certain Florida corporations, defined by statute as "issuing public
corporations." However, in order to fall within the definition of an "issuing
public corporation," the Florida corporation must have:(i) its principal place
of business, principal office or substantial assets within the State of Florida,
and (ii) either more than 10% of its shareholders resident in the State of
Florida, more than 10% of its shares owned by Florida residents or at least
1,000 Florida resident shareholders (with shares held by banks, brokers or
nominees disregarded for the purpose of calculating such percentage). As the
Company's principal place of business and principal office are located outside
of the State of Florida and the Company does not have any significant assets in
the State of Florida, the Company does not fall within the definition of an
"issuing public corporation" for purposes of the Florida antitakeover statute,
and therefore, such antitakeover provisions do not apply to the Company.
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A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws by action of
its shareholders to exempt itself from coverage, provided that such bylaw or
certificate of incorporation amendment shall not become effective until twelve
(12) months after the date it is adopted. The Company has not adopted such a
provision to the Certificate of Incorporation. It is not anticipated that the
Board of Directors of INAMED-Delaware will seek shareholder approval to "opt
out" of the operation of this provision.
MERGER WITH SUBSIDIARY. Under Delaware law, a parent corporation may
merge into a subsidiary and a subsidiary may merge into its parent, without
shareholder approval, where such parent corporation owns at least 90% of the
outstanding shares of each class of capital stock of its subsidiary. Florida law
permits such a merger of a subsidiary without shareholder approval if 80% of
each class of capital stock of the subsidiary is owned by the parent
corporation.
DIVIDENDS. Delaware law provides that the corporation may pay dividends
out of surplus, out the corporation's net profits for the preceding fiscal year,
or both provided that there remains in the stated capital account an amount
equal to the par value represented by all shares of the corporation's stock
having a distribution preference. Florida law provides that dividends may be
paid, unless after giving effect to such distribution, the corporation would not
be able to pay its debts as they come due in the usual course of business, or
the corporation's total assets would be less than the sum of its total
liabilities, plus (unless the corporation's articles of incorporation permit
otherwise) the amount needed to satisfy preferential distributions.
PROXIES. Under Delaware law, a proxy executed by a shareholder will
remain valid for a period of three years unless the proxy provides for a longer
period. Under Florida law, a proxy is effective only for a period of 11 months
unless otherwise provided in the proxy.
CONSIDERATION FOR STOCK. Under Delaware law, a corporation may accept
as consideration for its stock a combination of cash, property or past services
in an amount not less than the par value of the shares being issued, and a
secured promissory note or other binding obligation executed by the subscriber
for any balance, the total of which must equal at least the par value of the
issued stock, as determined by the board of directors. Under Florida law, a
corporation may issue its capital stock only in return for certain tangible or
intangible property or benefit to the corporation, including cash, promissory
notes, services performed, promises to perform services evidenced by a written
contract, and other securities of the corporation. Shares may be issued for less
than par value.
LIABILITY OF DIRECTORS. Delaware law permits a Delaware corporation to
include in its certificate of incorporation a provision which eliminates or
limits the personal liability of a director to the corporation or its
shareholders for monetary damages for breach of fiduciary duties as a director.
However, no such provision may eliminate or limit the liability of a director:
(i) for any breach of the director's duty of loyalty to the corporation or its
shareholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) for declaration of
unlawful dividends or illegal redemptions or stock repurchases; or (iv) for any
transaction from which the director derived an improper personal benefit. The
proposed Certificate of Incorporation includes such a provision. Under Florida
law, a director is not personally liable for monetary damages to any person for
his actions as a director unless the director breached his duties by way of: (i)
a criminal violation, unless the director has reasonable cause to believe his
conduct was lawful or had no reasonable cause to believe his conduct was
unlawful; (ii) a transaction from which the director derived an improper
personal benefit; (iii) declaration of unlawful distributions; (iv) in a
derivative action, conscious disregard by the director for the best interests of
the corporation or willful misconduct by the director; or (v) in a third party
action, recklessness or actions or omissions committed in bad faith or with
malicious purpose or in a manner exhibiting wanton and willful disregard of
human rights, safety or property. The charter documents of each of
INAMED-Delaware and the Company provide that INAMED-Delaware and the Company
shall indemnify its directors and officers to the fullest extent permitted under
Delaware law and Florida law, respectively.
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SPECIAL MEETINGS OF SHAREHOLDERS. Under Delaware law, a special meeting
of shareholders may be called by the corporation's board of directors or by such
persons as may be authorized by the corporation's certificate of incorporation
or bylaws. The proposed Bylaws of INAMED-Delaware provide that a special meeting
may be called by the Chairman of the Board of Directors, the President, a
majority of the Board of Directors or 10% of the shareholders of record of all
shares entitled to vote.
Florida law provides that a special meeting of shareholders may be
called by: (i) a corporation's board of directors; (ii) the persons authorized
by the articles of incorporation or bylaws; or (iii) the holders of not less
than 10% of all votes entitled to be cast on any issue to be considered at the
proposed special meeting. A corporation's articles of incorporation may require
a higher percentage of votes, up to a maximum of 50% to call a special meeting
of shareholders. The Company's current Articles of Incorporation do not include
any such provision. The current Bylaws of the Company provide that a special
meeting of shareholders may be called by the Board of Directors, the President
or 10% of the shareholders of record of all shares entitled to vote.
COMMITTEES OF THE BOARD OF DIRECTORS. Florida and Delaware law both
provide that the board of directors may delegate certain of their duties to one
or more committees elected by a majority of the board. A Delaware corporation
can delegate to a committee of the board of directors, among other things, the
responsibility of nominating candidates for election to the office of director,
to fill vacancies on the board of directors, and to reduce earned or capital
surplus and authorize the acquisition of the corporation's own stock. Moreover,
if either the corporation's certificate of incorporation or bylaws, or the
resolution of the board of directors creating the committee so permits, a
committee of the board of directors may declare dividends and authorize the
issuance of stock. Florida law places more limitations on the types of
activities that can be delegated to committees of the board. Under Florida law,
a committee of the board of directors may not approve or recommend to
shareholders actions or proposals required to be approved by the shareholders,
fill a vacancy on the board, adopt, amend or repeal the bylaws, authorize the
issuance of stock, or authorize the reacquisition of the corporation's own
stock.
VOTE REQUIRED FOR MERGERS. Florida law provides that the sale, lease,
exchange or disposal of all, or substantially all, of the assets of a Florida
corporation, not in the ordinary course of business, as well as any merger,
consolidation or share exchange generally must be recommended by the Board of
Directors and approved by a vote of a majority of the shares of each class of
the stock of the corporation entitled to vote on such matters. Under Florida
law, the vote of the shareholders of a corporation surviving a merger is not
required if: (i) the articles of incorporation of the surviving corporation will
not substantially differ from its articles of incorporation before the merger;
and (ii) each shareholder of the surviving corporation before the effective date
will hold the same number of shares, with identical designations, preferences,
limitations and relative rights immediately after the merger. Delaware law has a
similar provision requiring shareholder approval in the case of the disposition
of assets or a merger or a share exchange. However, with respect to mergers
which do not require the vote of the corporation's shareholders, Delaware law,
unlike Florida law, also requires that either (i) no shares of common stock of
the surviving corporation and no shares, securities or obligations convertible
into such stock are to be issued or delivered under the plan of merger or (ii)
the authorized unissued shares or the treasury shares of common stock of the
surviving corporation to be issued or delivered under the plan of merger, plus
those initially issuable upon conversion of any other shares, securities or
obligations to be issued or delivered under such plan, do not exceed 20% of the
shares of common stock of such constituent corporation outstanding immediately
prior to the effective date of the merger.
DISSENTER'S RIGHTS. Delaware law provides that dissenting shareholders
who follow prescribed statutory procedures are entitled to appraisal rights in
the case of a merger of a corporation, except that such rights are not provided
when (i) no vote of the shareholders is required for the merger or (ii) shares
of the corporation are listed on a national securities exchange or held by more
than 2,000 shareholders and are to be exchanged solely for shares of stock of
another corporation which are listed on a national securities exchange or held
by more than 2,000 shareholders.
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Florida law provides appraisal rights in connection with (i) a merger,
except that such rights are not provided when (a) no vote of the shareholders is
required for the merger or (b) shares of the corporation are listed on a
national securities exchange, traded on the Nasdaq National Market System, or
held of record by fewer than 2,000 shareholders; (ii) a sale of substantially
all the assets of a corporation (with similar restrictions as provided under the
Delaware Law for mergers); and (iii) amendments to the articles of incorporation
that may adversely affect the rights or preferences of shareholders.
The shares of the Company are not presently listed on a national
securities exchange and, as of October 14, were held by approximately 807
shareholders of record.
CORPORATE ACTION WITHOUT A SHAREHOLDER MEETING. Delaware and Florida
law both permit corporate action without a meeting of shareholders upon the
written consent of the holders of that number of shares necessary to authorize
the proposed corporate action being taken, unless the certificate of
incorporation or articles of incorporation, respectively, expressly provide
otherwise. In the event such proposed corporate action is taken without a
meeting by less than the unanimous written consent of shareholders, Delaware law
requires that prompt notice of the taking of such action be sent to those
shareholders who have not consented in writing. Florida law provides that such
notice must be given within ten (10) days of the date such shareholder
authorization is granted. Neither the Company's current Articles of
Incorporation nor the proposed Certificate of Incorporation includes any such
contrary provision.
CERTAIN ANTI-TAKEOVER REQUIREMENTS. The Restated Certificate of
Incorporation adopts certain measures (the "Measures") which are intended to
protect the Company's shareholders by rendering it more difficult for a person
or persons to obtain control of the Company without cooperation of the Company's
management. Such Measures are often referred to as "anti-takeover" provisions.
The Company's current Articles of Incorporation and Bylaws do not include many
of such anti-takeover provisions. The anti-takeover provisions include an
advance notice requirement for any shareholder proposals or nominations for the
election of a director . See Proposal 6. The Restated Certificate of
Incorporation does not include provisions for a staggered board of Directors or
cumulative voting.
The proposed Certificate of Incorporation provides that any shareholder
proposals and nominations for the election of directors be delivered to the
Company no less than ninety (90) days nor more than one hundred twenty (120)
days in advance of the first anniversary of the Company's annual meeting held in
the prior year, provided, however, in the event the Company shall not have had
an annual meeting in the prior year, such notice shall be delivered no less than
ninety (90) days nor more than one hundred twenty (120) days in advance of May
15 of the current year. Such shareholder nominations must contain (a) as to each
person whom the shareholder proposed to nominate for election or re-election as
a director at the annual meeting: (w) the name, age, business address and
residence address of the proposed nominee, (x) the principal occupation or
employment of the proposed nominee, (y) the class and number of shares of
capital stock of the Company which are beneficially owned by the proposed
nominee, and (z) any other information relating to the proposed nominee that is
required to be disclosed in solicitations for proxies for election of directors
pursuant to Rule 14a under the 1934 Act; and (b) as to the shareholder giving
notice of nominees for election at the annual meeting, (x) the name and record
address of the shareholder, and (y) the class and number of shares of capital
stock of the Company which are beneficially owned by the shareholder.
The inclusion of such "anti-takeover" provisions in the Certificate of
Incorporation may delay, deter or prevent a takeover of the Company which the
shareholders may consider to be in their best interests, thereby possibly
depriving holders of the Company's securities of certain opportunities to sell
or otherwise dispose of their securities at above-market prices, or limit the
ability of shareholders to remove incumbent directors as readily as the
shareholders may consider to be in their best interests.
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The Company currently has in place a Shareholder Rights Plan (the
"Plan") and has declared a dividend granting to its shareholders the right to
purchase for each share of the Company's Common Stock, one share of Common Stock
at an initial price of $80. The Plan was designed to protect shareholders from
various abusive takeover tactics, including attempts to acquire control of the
Company at an inadequate price which would deny shareholders the full value of
their investments. The Plan was designed to assure that any acquisition of the
Company and/or any acquisition of control of the Company would take place under
circumstances in which the Board of Directors can secure the best available
transaction for all of the Company's shareholders. The Plan will encourage a
potential buyer to negotiate appropriately with the Board prior to attempting a
takeover and will have no effect on lawful proxy solicitation activity. The
Rights become detached from the Common Shares and became immediately exercisable
after any person or group becomes the beneficial owner of 15% or more of the
Common Shares or 10 days after any person or group of persons publicly announces
a tender or exchange offer that would result in that same beneficial ownership
level. If a buyer becomes a 15% owner in the Company, all Rights holders except
such "Acquiring Person" (as defined in the Plan) will be entitled to purchase
the Company's stock at a price discounted from the then market price; PROVIDED,
HOWEVER, that the Plan provides that under certain circumstances Appaloosa
Management L.P., and its affiliated entities, shall not be deemed to be an
Acquiring Person to the extent it becomes the beneficial owner of in excess of
15% of the outstanding shares of Common Stock of the Company; PROVIDED, FURTHER,
that the Plan provides that under certain circumstances Donald M. McGhan shall
not be deemed to be an Acquiring Person to the extent he becomes the beneficial
owner of in excess of 15%, but less than 20%, of the outstanding shares of
Common Stock of the Company.
The Company currently has in place a Shareholder Rights Plan (the
"Plan") and has declared a dividend granting to its shareholders the right to
purchase for each share of the Company's Common Stock, one share of Common Stock
at an initial price of $80. The Plan was designed to protect shareholders from
various abusive takeover tactics, including attempts to acquire control of the
Company at an inadequate price which would deny shareholders the full value of
their investments. The Plan was designed to assure that any acquisition of the
Company and/or any acquisition of control of the Company would take place under
circumstances in which the Board of Directors can secure the best available
transaction for all of the Company's shareholders. The Plan will encourage a
potential buyer to negotiate appropriately with the Board prior to attempting a
takeover and will have no effect on lawful proxy solicitation activity. The
Rights become detached from the Common Shares and became immediately exercisable
after any person or group becomes the beneficial owner of 15% or more of the
Common Shares or 10 days after any person or group of persons publicly announces
a tender or exchange offer that would result in that same beneficial ownership
level. If a buyer becomes a 15% owner in the Company, all Rights holders except
such "Acquiring Person" (as defined in the Plan) will be entitled to purchase
the Company's stock at a price
The Company plans to approve and adopt a shareholder rights plan for
INAMED-Delaware with substantially the same terms and provisions of the Plan.
However, the Company expects that the shareholder rights plan of INAMED-Delaware
would grant a right to purchase one share of Common Stock of the Company for
each share of a series of Preferred Stock to be designated by the Board of
Directors for such purpose.
The proposed Certificate of Incorporation authorizes the issuance of up
to 1,000,000 shares of Preferred Stock by the Board of Directors, without any
further vote or action by the Company's shareholders, in one or more series and
authorizes the Board of Directors to determine the designations, powers,
preferences and relative, participating, optional or other rights thereof,
including without limitation, the dividend rate (and whether dividends are
cumulative), conversion rights, voting rights, rights and terms of redemption,
redemption price and liquidation preference. See Proposal 4. Although the
Company has no current plans to issue any Preferred Stock, the rights of the
holders of shares of Common Stock would be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be issued
in the future. Issuance of Preferred Stock could have the effect of delaying,
deterring or preventing a change in control of the Company, including the
imposition of various ect procedural and other requirements that could make it
more difficult for holders of Common Stock to effect certain ect corporate
actions, including the ability to replace incumbent directors and to accomplish
transactions opposed by the incumbent Board of Directors.
The Measures are not being proposed in response to any present attempt,
known by the Board of Directors of the Company to acquire control of the
Company, to obtain representation on the Company's Board of Directors or to take
significant corporate action, including the proposed Agreement of Merger.
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Rather, management believes that in connection with the approval of the
transactions contemplated by the Agreement of Merger, the Measures are prudent
and in the best interests of the Company and its shareholders and should be
adopted for their protection. The Board of Directors further believes that the
present is an appropriate time to adopt the proposed Measures, since they would
lessen the likelihood that the Company would be required to incur significant
expense and might be subject to substantial disruption in connection with such
an attempt.
The Board of Directors does not have any current plans to seek
shareholder approval of any amendments to, or make changes in, the Company's
charter documents that may be deemed to have "anti-takeover" implications,
except as described in this Proxy Statement or as set forth in the Certificate
of Incorporation and revised Bylaws.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based
on the Internal Revenue Code of 1986, as amended (the "Code"), and applicable
Treasury regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this Proxy
Statement. This discussion should not be considered tax or investment advice,
and the tax consequences of the reverse stock split may not be the same for all
shareholders. In particular, this discussion does not address the tax treatment
of special classes of shareholders, such as banks, insurance companies,
tax-exempt entities and foreign persons. Shareholders desiring to know their
individual federal, state, local and foreign tax consequences should consult
their own tax advisors.
The Reincorporation Merger is intended to qualify as a tax-free
reorganization under Section 368(a)(1)(F) or 368(a)(1)(A) of the Code. Assuming
such tax treatment, no taxable income, gain, or loss will be recognized by
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the Company or the shareholders as a result of the exchange of shares of Common
Stock for shares of INAMED-Delaware Stock upon consummation of the transaction.
The combination and change of each share of the Company's Common Stock
into one share of INAMED-Delaware Stock will be a tax-free transaction, and the
holding period and tax basis of Common Stock will be carried over to a portion
of INAMED-Delaware Stock received in exchange therefor.
SECURITIES ACT CONSEQUENCES
The shares of INAMED-Delaware Stock to be issued in exchange for shares
of Common Stock are not being registered under the Securities Act of 1933, as
amended (the "1933 Act"). In that regard, INAMED-Delaware is relying on Rule
145(a)(2) under the 1933 Act, which provides that a merger which has "as its
sole purpose" a change in the domicile of a corporation does not involve the
sale of securities for purposes of the 1933 Act, and on interpretations of the
Rule by the Securities and Exchange Commission (the "Commission") which indicate
that the making of certain changes in the surviving corporation's charter
documents which could otherwise be made only with the approval of the
shareholders of either corporation does not render Rule 145(a)(2) inapplicable.
After the Reincorporation Merger, INAMED-Delaware will be a
publicly-held company, INAMED-Delaware Stock will be listed for trading in the
over-the-counter Bulletin Board market, and INAMED-Delaware will file periodic
reports and other documents with the Commission and provide to its shareholders
the same types of information that the Company has previously filed and
provided. Shareholders whose Common Stock is freely tradeable before the
Reincorporation Merger will have freely tradeable shares of INAMED-Delaware
Stock. Shareholders holding restricted shares of Common Stock will have shares
of INAMED-Delaware Stock which are subject to the same restrictions on transfer
as those to which their present shares of Common Stock are subject, and their
stock certificates, if surrendered for replacement certificates representing
shares of INAMED-Delaware Stock, will bear the same restrictive legend as
appears on their present stock certificates. For purposes of computing
compliance with the holding period requirement of Rule 144 under the 1933 Act,
shareholders will be deemed to have acquired their shares of INAMED-Delaware
Stock on the date they acquired their shares of Common Stock. In summary,
INAMED-Delaware and its shareholders will be in the same respective positions
under the federal securities laws after the Reincorporation Merger as were the
Company and the shareholders prior to the Reincorporation Merger.
DISSENTERS' RIGHTS OF APPRAISAL
The shareholders of INAMED are entitled to exercise dissenters' rights
of appraisal under Sections 607.1301, 607.1302 and 607.1320 of the Florida
Business Corporation Act (the "Dissenters' Statute"). The dissenters' rights
available are summarized below. The following summary is not intended to be a
complete statement of such rights. The preservation and exercise of dissenters'
rights are conditioned on strict adherence to the applicable provisions of the
FBCA and shareholders of INAMED who desire to exercise dissenters' rights should
consult and study carefully the provisions contained in the Dissenters' Statute
and seek the advice of legal counsel in connection with any decision with
respect to the exercise of dissenters' rights.
Under the Dissenters' Statute, shareholders have the right to dissent
from adoption of the Reincorporation Merger and demand payment of the fair value
of their shares. In order to properly exercise this right, each dissenting
INAMED shareholder (i) must give INAMED a written notice of his or her intent to
dissent from the proposal to approve the Reincorporation Merger and demand
payment for his or her shares if the Merger is effectuated BEFORE THE VOTE ON
THE REINCORPORATION MERGER AGREEMENT IS TAKEN AT THE SPECIAL MEETING and (ii)
MUST NOT VOTE IN FAVOR OF THE MERGER AGREEMENT. Merely voting against the
Reincorporation Merger or abstaining from voting on the Reincorporation Merger
will not satisfy the foregoing requirements. Any dissenting shareholder who
fails to satisfy the foregoing requirements as they apply to his or her shares
will not be entitled to payment for his or her shares and will be bound by the
terms of the Reincorporation Merger.
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The Company shall deliver a copy of the Dissenters' Statute to each
shareholder simultaneously with a request for his written consent to approve the
Reincorporation Merger or, if such request is not made, within 10 days after
INAMED has received written consents without a meeting from the requisite number
of shareholders necessary to authorize the action.
If the proposed action is approved by the required vote of the
shareholders, the Company will mail a further notice of such approval to all
shareholders who delivered a notice of intent to demand payment and refrained
from voting in favor of the proposed action. Within 20 days after the Company
delivers the written notice of the approval to shareholders, any shareholder who
elects to dissent shall file with the Company a notice of such election, stating
his name and address, the number of shares as to which he dissents and a demand
for payment of the fair value of his shares, and such shareholder shall file an
election to dissent and deposit his certificates with the Company simultaneously
with the filing of the election to dissent. A shareholder who fails to file his
notice of election to dissent within the 20-day period will forfeit his
dissenters' rights.
Within 10 days after the later to occur of (i) the expiration of the
20-day period in which shareholders may file their notices of election to
dissent, or (ii) the consummation of the Merger, but in no event later than 90
days from the date the shareholders approve the transaction, the Company must
make a written offer to each dissenting shareholder, who has filed his notice of
election to dissent within the 20-day period, to pay an amount the Company
estimates to be the fair value for such shares. The Company's written offer must
be accompanied by its most recent balance sheet (the date of which must be
within 12 months of the date of the offer) and a profit and loss statement for
the 12-month period ended on the date of the balance sheet. The dissenting
shareholder shall have 30 days following the Company's offer to accept the
offer. If the offer is accepted, the Company shall pay the agreed to value for
the shares within 90 days of its making the offer, following which the
dissenting shareholder shall cease to have an interest in the shares.
If the Company fails to make its offer within the prescribed period, or
if it makes an offer and the dissenting shareholder fails to accept the same
within the 30 day acceptance period, then the Company, within 30 days after
receipt of a written demand from any dissenting shareholder which is given
within 60 days after the date of the consummation of the Reincorporation Merger,
will have the option to file (within such 60 day period) an action in the
appropriate court in the county where the registered office of the Company is
located requesting that the court determine the fair value of the shares. If the
Company fails to institute the court proceeding, any dissenting shareholder may
do so in the name of the Company. The judgment of the court will be plenary and
exclusive and all dissenters who are made parties will be entitled, after a
hearing without a jury, to judgment for the amount the court determines is the
fair value of the shares which, at the discretion of the court, may include
interest.
While costs and expenses of an appraisal proceeding will generally be
borne by the Company, the court has equitable powers to assess any part of the
costs against all or some of the dissenters who are parties whose action in
failing to accept the Company's offer the court finds to be arbitrary, vexatious
or not in good faith. The court has similar equitable powers to allocate among
the parties the fees and expenses of appraisers appointed by the court, but not
the fees and expenses of counsel or experts employed by any party.
THE PROVISIONS OF FLORIDA LAW REGARDING DISSENTERS' RIGHTS ARE
TECHNICAL AND COMPLEX AND ANY INAMED SHAREHOLDER CONTEMPLATING THE EXERCISE OF
SUCH RIGHTS IS URGED TO CONSULT WITH HIS OR HER LEGAL COUNSEL. A COPY OF THE
DISSENTERS' STATUTE IS ATTACHED HERETO AS APPENDIX E.
APPROVAL BY SHAREHOLDERS OF THE REINCORPORATION MERGER WILL CONSTITUTE
APPROVAL OF THE AGREEMENT OF MERGER AND THE CERTIFICATE OF INCORPORATION OF
INAMED-DELAWARE (OTHER THAN AS PROVIDED IN PROPOSALS 3, 4 AND 6).
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VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
Under the Company's Articles of Incorporation and Florida law, the
Agreement of Merger must be approved by the affirmative vote of the holders of a
majority of the issued and outstanding shares of the Company's Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL; IF ANY OF
THE REINCORPORATION PROPOSALS ARE NOT APPROVED, THEN NONE OF THE REINCORPORATION
PROPOSALS WILL BE ENACTED
PROPOSAL 3. INCREASING AUTHORIZED COMMON SHARES
The proposed Certificate of Incorporation provides that the number of
authorized shares of Common Stock would be 25,000,000 shares, an increase from
the 20,000,000 shares presently authorized by the Company's Articles of
Incorporation. As of October 9, 1998, 11,420,363 shares of Common Stock were
outstanding. Moreover, the Company has issued options and warrants to purchase,
and has other securities outstanding which are convertible into 8,068,739
additional shares of Common Stock in the aggregate, which leaves a low
availability of Common Stock. At the Meeting, the shareholders will be asked to
approve the portion of Article FOURTH of the proposed Certificate of
Incorporation which provides for the authorized Common Stock of the Company to
be 25,000,000 shares. The full text of the Certificate of Incorporation is set
forth in Appendix B attached hereto.
The increase in the number of authorized shares of Common Stock is
believed by the Board of Directors to be desirable in order to assure that there
will be sufficient authorized shares for a variety of corporate purposes,
including without limitation, in connection with financing and acquisition
transactions, programs to facilitate the growth and expansion of the Company,
for stock splits and dividends, and for stock options and other employee benefit
plans. No plans are currently contemplated for the use of any of additional
authorized shares in the immediate future.
The additional authorized shares of Common Stock are desirable and in
the best interests of the Company in order to assure the Company's flexibility
of action in the future. The additional shares of Common Stock, together with
any currently authorized but unissued and unreserved shares of Common Stock, may
be issued at such times, to such persons and for such consideration as the Board
may determine to be in the Company's best interests without further shareholder
approval, except as otherwise required by statute, stock exchange rules or the
Company's loan documents. Depending on the circumstances, issuance of additional
shares of Common Stock could affect the existing holders of shares by diluting
the voting power of the outstanding shares. The shareholders will not have
preemptive rights under the Certificate of Incorporation and will not have such
rights with respect to the additional authorized shares of Common Stock. See
"The Reincorporation Transactions" for an in-depth discussion of the entire
transaction. The affirmative vote of the holders of record of a majority of the
shares of Common Stock present in person or by proxy at the Meeting is required
for approval of this Proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL; IF ANY OF
THE REINCORPORATION PROPOSALS ARE NOT APPROVED, THEN NONE OF THE REINCORPORATION
PROPOSALS WILL BE ENACTED
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PROPOSAL 4. AUTHORIZING PREFERRED STOCK.
The proposed Certificate of Incorporation contains provisions which
permit the Board to designate one or more series of Preferred Stock. Currently,
no shares of preferred stock are authorized under the Company's Articles of
Incorporation. At the Meeting, the shareholders will be asked to approve the
portion of Article FOURTH of the proposed Certificate of Incorporation which
authorizes the issuance of up to 1,000,000 shares of Preferred Stock. The full
text of the Certificate of Incorporation is set forth in Appendix B attached
hereto. Such provisions are often referred to as "blank check" provisions, as
they give the Board of Directors the flexibility, at any time or from time to
time, without further shareholder approval, to create one or more series of
Preferred Stock and to determine the designations, preferences and limitations
of each such series, including but not limited to (i) the number of shares, (ii)
dividend rights, (iii) voting rights, (iv) conversion privileges, (v) redemption
provisions, (vi) sinking fund provisions, (vii) rights upon liquidation,
dissolution or winding up of the Company and (viii) other relative rights,
preferences and limitations of such series.
The Board of Directors believes that permitting the Board to authorize
the issuance of up to 1,000,000 shares of "blank check" Preferred Stock provides
the Company with the flexibility to address potential future financing needs by
creating a series of Preferred Stock customized to meet the needs of any
particular transaction and to market conditions. The Company also could issue
Preferred Stock for other corporate purposes, such as to implement joint
ventures or to make acquisitions. Although the Company is not currently
considering the issuance of Preferred Stock for such financing or transactional
purposes and has no present intention to issue any series of Preferred Stock,
the Board and management believe that the Company should have the flexibility to
issue Preferred Stock, along with its ability to issue debt and/or additional
shares of Common Stock. The Preferred Stock may be issued at such times, to such
persons and for such consideration as the Board may determine to be in the
Company's best interests without further shareholder approval, except as
otherwise required by statute, stock exchange rules or the Company's loan
documents.
If any series of Preferred Stock authorized by the Board provides for
dividends, such dividends, when and as declared by the Board of Directors out of
any funds legally available therefor, may be cumulative and may have a
preference over the Common Stock as to the payment of such dividends. In
addition, if any series of Preferred Stock authorized by the Board so provides,
in the event of any dissolution, liquidation or winding up of the Company,
whether voluntary or involuntary, the holders of each such series of the then
outstanding Preferred Stock may be entitled to receive, prior to the
distribution of any assets or funds to the holders of Common Stock, a
liquidation preference established by the Board of Directors, together with all
accumulated and unpaid dividends. Depending upon the consideration paid for
Preferred Stock, the liquidation preference of Preferred Stock and other
matters, the issuance of Preferred Stock could therefore result in a reduction
in the assets available for distribution to the holders of Common Stock in the
event of liquidation of the Company. Holders of Common Stock do not have any
preemptive rights to acquire Preferred Stock or any other securities of the
Company.
The proposal to authorize "blank check" Preferred Stock is not designed
to deter or to prevent a change in control; however, under certain
circumstances, the Company could use the additional shares of Preferred Stock to
create voting impediments or to frustrate persons seeking to effect a takeover
or otherwise gain control of the Company and thereby to protect the continuity
of the Company's management. The Company could also privately place such shares
with purchasers who might favor the Board of Directors in opposing a hostile
takeover bid, although the Company has no present intention to do so. See
Proposal 2, "Summary of Significant Differences between Delaware and Florida
Corporate Laws which would affect INAMED-Delaware - Certain Anti-Takeover
Requirements" and "The Reincorporation Transactions." The affirmative vote of
the holders of record of a majority of the shares of Common Stock present in
person or by proxy at the Meeting is required for approval of this Proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL; IF ANY OF
THE REINCORPORATION PROPOSALS ARE NOT APPROVED, THEN NONE OF THE REINCORPORATION
PROPOSALS WILL BE ENACTED
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PROPOSAL 5. ADOPTION OF REVISED BY-LAWS
The Board of Directors has recommended the adoption by INAMED-Delaware
of the Bylaws in the event the Reincorporation Proposals are adopted. The Bylaws
differ in substance from the Company's existing bylaws primarily to comply with
current Delaware law and to conform to the proposed changes between the
Company's Articles of Incorporation and the Certificate of Incorporation. Some
of the differences, however, may affect the rights of shareholders under certain
circumstances. Notably, the proposed Bylaws of INAMED-Delaware will contain
provisions relating to indemnification of directors and officers. The inclusion
of these provisions could operate to the potential disadvantage of the
shareholders of INAMED-Delaware. See Proposal 2, "Disadvantage of
Reincorporation in Delaware." For example, their inclusion may have the effect
of reducing the likelihood of INAMED-Delaware's recovering monetary damages from
directors as a result of derivative litigation against directors for breach of
their duty of care, even though such an action, if successful, might otherwise
have benefitted INAMED-Delaware and its shareholders. In addition, if the
Reincorporation Merger is effected and the limitation on liability provision is
part of the By-laws of INAMED-Delaware, the shareholders of INAMED-Delaware will
forego potential causes of action for breach of duty of care involving grossly
negligent business decisions, including those relating to attempts to change
control of INAMED-Delaware. Also see Proposal 6. The above discussion is
qualified in its entirety by reference to the text of the Bylaws set forth in
Appendix C hereto. The affirmative vote of the holders of record of a majority
of the shares of Common Stock present in person or by proxy at the Meeting is
required for approval of this Proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL; IF ANY OF
THE REINCORPORATION PROPOSALS ARE NOT APPROVED, THEN NONE OF THE REINCORPORATION
PROPOSALS WILL BE ENACTED
PROPOSAL 6. REQUIRE ADVANCE NOTICE OF SHAREHOLDER
PROPOSALS AND NOMINATIONS FOR THE SELECTION OF DIRECTORS
The Certificate of Incorporation and Bylaws provide that a shareholder
intending to make a proposal or nominate a director for election at an annual
shareholder meeting must give written notice of such intention to the Company
not less than ninety (90) days nor more than one hundred twenty (120) days prior
to the first anniversary of the preceding year's annual meeting (or, if the
Company failed to have a meeting in the prior year, such notice shall be
delivered no less than ninety (90) days nor more than one hundred twenty (120)
days in advance of May 15 of the current year). See Proposal 2, "Summary of
Significant Differences Between Delaware and Florida Corporate Laws Which Would
Affect INAMED-Delaware." The Certificate of Incorporation and Bylaws require
that any notice of intention to make a proposal or nominate a director must
contain certain information about the proposed nominee and about the shareholder
intending to make the nomination. At the Meeting, the shareholders will be asked
to approve Article EIGHTH of the proposed Certificate of Incorporation and
Section 2.13 of the proposed Bylaws relating to the notice provisions described
herein. The full text of the Certificate of Incorporation and Bylaws are
attached hereto as Appendix B and Appendix C, respectively.
The purpose of this provision, by requiring advanced notice of a
proposal or nomination by a shareholder, is to afford the Board of Directors a
meaningful opportunity to consider the merits and/or qualifications of any
proposal or proposed nominee and, to the extent deemed necessary or desirable by
the Board, inform shareholders about such qualifications. This provision, it is
believed, will further the objective of the Board to identify business proposals
which may advance the interests of the Company, or to identify candidates who
have the character, experience and proven accomplishments which give promise of
significant contribution to the Company's business. This provision has not been
included as a result of any specific efforts of which the Company is aware to
nominate or elect any director, to accumulate shares, or to obtain control of
the Company by means of a merger, tender offer, solicitation in opposition to
management, or otherwise.
While such notice provision does not give the Board of Directors any
power to approve or disapprove of a shareholder nomination, it will preclude a
shareholder nomination from the floor or by other means if the proper procedures
are not followed. Although the Board of Directors does not believe that such
notice provision will have a significant impact on any attempt by a third party
from conducting a solicitation of proxies to elect its own slate
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of directors or otherwise attempt to obtain control of the Company, it is
possible that this notice provision may deter a third party from conducting a
solicitation of proxies to elect its own slate of directors or otherwise attempt
to obtain control of the Company or effect a change in management, irrespective
of whether such action would be beneficial to shareholders generally. The
affirmative vote of the holders of record of a majority of the shares of Common
Stock present in person or by proxy at the Meeting is required for approval of
this Proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL; IF ANY OF
THE REINCORPORATION PROPOSALS ARE NOT APPROVED, THEN NONE OF THE REINCORPORATION
PROPOSALS WILL BE ENACTED
PROPOSAL 7. APPROVAL OF STOCK OPTION PLAN
On October 4, 1998 the Board of Directors of the Company adopted the
Option Plan, which is set forth in Appendix D to this Proxy Statement. The
Option Plan will not become effective unless it is approved by the holders of
record of a majority of the shares of Common Stock present in person or
represented by proxy at the Meeting.
The Option Plan is intended to assist the Company in securing and
retaining key employees by allowing them to participate in the ownership and
growth of the Company through the grant of stock options ("Options"). The
granting of such Options serves as partial consideration and gives key employees
an additional inducement to remain in the service of the Company and its
subsidiaries and provides them with an increased incentive to work toward the
Company's success.
The following discussion of the principal features and effects of the
Option Plan is qualified in its entirety by reference to the text of the Option
Plan set forth in Appendix D hereto.
The Board of Directors believes it is in the Company's and its
shareholders' best interests to approve the Option Plan because it would (i)
allow the Company to grant Options which facilitates the benefits of the
additional incentive inherent in the ownership of Common Stock by key employees
and (ii) help the Company retain the services of key employees.
The Option Plan currently authorizes the issuance of a maximum of
450,000 shares of Company Common Stock pursuant to the exercise of Options
granted thereunder. As of the date hereof, 409,500 Options to purchase Common
Stock have been granted to 77 employees under the Option Plan, subject to
shareholder approval. No executive officer of the Company has been granted
Options under the Option Plan, although they may be in the future.
ADMINISTRATION
The Option Plan is administered by a Compensation Committee (the
"Committee"), consisting of not less than three members of the Board of
Directors appointed by the Board of Directors. The Committee will select the key
employees who will be granted Options to purchase shares of Common Stock under
the Option Plan and, subject to the provisions of the Option Plan, will
determine the terms and conditions and number of shares of Common Stock subject
to each such Option. The Committee will also make any other determinations
necessary or advisable for the administration of the Option Plan. The
determinations by the Committee will be final and conclusive; however, the grant
of Options to purchase shares of the Common Stock to a full-time employee who is
an executive officer of the Company, as well as the terms and provisions of such
Option, requires the prior approval of a majority of the members of the Board of
Directors who are "disinterested persons." Generally, Options granted under the
Option Plan vest and become exercisable in one-third increments on the first,
second and third anniversary of the date of grant, respectively. The Option Plan
will terminate on October 4, 2008 but may be terminated by the Board of
Directors at any time before that date.
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OPTIONS
Upon the grant of an Option to purchase shares of Common Stock to a key
employee, the Option Committee will fix the number of shares of the Company's
Common Stock that the optionee may purchase upon exercise of such Option and the
price at which the shares may be purchased. The option price for Options shall
not be less than 100% of the "fair market value" of the shares of Common Stock
at the time such option is granted. "Fair market value" is deemed to be the
closing price of shares of Common Stock on such date, on the OTC Bulletin Board,
or if the shares of Common Stock are not listed on the OTC Bulletin Board, in
the principal market in which such shares of Common Stock are traded. Payment of
the exercise price for shares of Common Stock subject to Options may be made
with cash, check or such other instrument as may be acceptable to the Company,
including receipt of a reduced number of shares of Common Stock in lieu of cash.
Full payment for shares of Common Stock exercised must be made at the time of
exercise.
FEDERAL INCOME TAX CONSEQUENCES
Upon exercise of a non-qualified stock option granted under the Option
Plan, the grantee will recognize ordinary income in an amount equal to the
excess of the fair market value of the shares received over the exercise price
of such shares. That amount increases the grantee's basis in the stock acquired
pursuant to the exercise of the non-qualified option. Upon a subsequent sale of
the stock, the grantee will incur short-term or long-term gain or loss depending
upon his holding period for the shares and upon the shares' subsequent
appreciation or depreciation in the value. The Company will be allowed a federal
income tax deduction for the amount recognized as ordinary income by the grantee
upon the grantee's exercise of the option.
The foregoing outline is no more than a summary of the federal income
tax provisions relating to the grant and exercise of options and stock
appreciation rights under the Option Plan and the sale of shares acquired under
the Option Plan. Individual circumstances may vary these results. The federal
income tax laws and regulations are constantly being amended, and each
participant should rely upon his own tax counsel for advice concerning the
federal income tax provisions applicable to the Option Plan.
The Board of Directors believes it is in the Company's best interests
to approve the Option Plan which would allow the Company to grant options under
the Option Plan to secure for the Company the benefits of the additional
incentive inherent in the ownership of shares of the Company's Common Stock by
key employees and to help the Company secure and retain the services of key
employees and to enable compensation under the Option Plan to qualify as
"performance-based" for purposes of Section 162(m) of the Code. The affirmative
vote of the holders of record of a majority of the shares of Common Stock
present in person or by proxy at the Meeting is required for approval of the
Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE STOCK OPTION PLAN.
SOLICITATION STATEMENT
All expenses in connection with the solicitation of proxies will be
borne by the Company. In addition to the use of the mails, solicitations may be
made by regular employees of the Company, by telephone, telegraph or personal
contact, without additional compensation.
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SHAREHOLDER PROPOSALS
The Company anticipates holding an annual meeting in May 1999. In order
to be considered for inclusion in the proxy materials to be distributed in
connection with the next annual meeting of shareholders of the Company, under
Rule 14a-8, shareholder proposals for such meeting must be submitted to the
Company no later than December 31, 1998.
OTHER MATTERS
So far as now known, there is no business other than that described
above to be presented for action by the shareholders at the Meeting, but it is
intended that the proxies will be voted upon any other matters and proposals
that may legally come before the Meeting or any adjournment thereof, in
accordance with the discretion of the persons named therein.
ANNUAL REPORT
All shareholders of record as of ______________________ are
concurrently herewith being sent a copy of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997 and a copy of the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended ___________, 1998.
Such report contains certified consolidated financial statements of the Company
and its subsidiaries for the fiscal year ended December 31, 1997.
By Order of the Board of Directors of
INAMED CORPORATION
By:__________________________________
Carol Brennan
Secretary
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT OF MERGER (the "Agreement"), dated as of ___________,
1998, is entered into by and between INAMED Corporation, a Florida corporation
("INAMED Florida") and INAMED Corporation (Delaware), a Delaware corporation
("INAMED Delaware").
WITNESSETH:
WHEREAS, INAMED Florida is a corporation duly organized and existing
under the laws of the State of Florida;
WHEREAS, the respective Boards of Directors of INAMED Florida and
INAMED Delaware have determined that it is advisable and in the best interests
of each of such corporations that INAMED Florida merge with and into INAMED
Delaware (the "Merger") upon the terms and subject to the conditions set forth
in this Agreement for the purpose of effecting the change of the state of
incorporation of INAMED Florida from Florida to Delaware;
WHEREAS, the respective Boards of Directors of INAMED Florida and
INAMED Delaware have, by resolutions duly adopted, approved this Agreement,
subject to the approval of the shareholders of each of INAMED Delaware and
INAMED Florida; and
WHEREAS, this Agreement is intended as a tax free plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, INAMED Florida and INAMED Delaware hereby agree as follows:
1. MERGER. INAMED Florida shall be merged with and into INAMED Delaware
and INAMED Delaware shall be the surviving corporation (hereinafter sometimes
referred to as the "Surviving Corporation"). The Merger shall become effective
upon the date and time when this Agreement is made effective in accordance with
applicable law (the "Effective Time").
2. GOVERNING DOCUMENTS; EXECUTIVE OFFICERS AND DIRECTORS. The
Certificate of Incorporation of INAMED Delaware, from and after the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
without change or amendment until thereafter amended in accordance with the
provisions thereof and applicable laws. The Bylaws of INAMED Delaware from and
after the Effective Time, shall be the Bylaws of the Surviving Corporation
without change or amendment until thereafter amended in accordance with the
provisions thereof, or the Certificate of Incorporation of the Surviving
Corporation and applicable laws. The executive officers, directors and members
of committees of the Board of Directors of INAMED Delaware, as of the Effective
Time, shall become the executive officers, directors and members of committees
of the Board of Directors of the Surviving Corporation, from and after the
Effective Time, until their respective successors have been duly elected and
qualify, unless they earlier die, resign or are removed.
3. SUCCESSION. At the Effective Time, the separate corporate existence
of INAMED Florida shall cease, and INAMED Delaware shall possess all the rights,
privileges, powers and franchises of a public and private nature of INAMED
Florida; and all property, real, personal and mixed, and all debts due to INAMED
on whatever account, as well as for share subscriptions as all other things in
action belonging to INAMED Florida, shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and franchises, and
all and every interest shall be thereafter as effectually the property of the
Surviving Corporation as they were of INAMED Florida, and the title to any real
estate vested by deed or otherwise in INAMED Florida shall not revert or be in
any way impaired by reason of the Merger; but all rights of creditors and all
liens upon any property of INAMED Florida shall be preserved unimpaired, and all
debts, liabilities and duties of INAMED Florida shall thenceforth attach to the
Surviving Corporation and may be enforced against it to the same extent as if
such debts, liabilities and duties
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had been incurred or contracted by it. All corporate acts, plans, policies,
agreements, arrangements, approvals and authorizations of INAMED Florida its
shareholders, Board of Directors and committees thereof, officers and agents
which were valid and effective immediately prior to the Effective Time, shall be
taken for all purposes as the acts, plans, policies, agreements, approvals and
authorizations of the Surviving Corporation and shall be as effective and
binding thereon as the same were with respect to INAMED Florida. The employees
and agents of INAMED Florida shall become the employees and agents of the
Surviving Corporation and continue to be entitled to the same rights and
benefits which they enjoyed as employees and agents of INAMED Florida. The
requirements of any plans or agreements of INAMED Florida involving the issuance
or purchase by INAMED Florida of certain shares of its capital stock shall be
satisfied by the issuance or purchase of a like number of shares of the
Surviving Corporation.
4. FURTHER ASSURANCES. From time to time, as and when required by the
Surviving Corporation or by its successors or assigns, there shall be executed
and delivered on behalf of INAMED Florida such deeds and other instruments, and
there shall be taken or caused to be taken by it all such further and other
action, as shall be appropriate, advisable or necessary in order to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation the
title to and possession of all property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of INAMED Florida, and otherwise to
carry out the purposes of this Agreement, and the officers and directors of the
Surviving Corporation are fully authorized in the name and on behalf of INAMED
Florida or otherwise, to take any and all such action and to execute and deliver
any and all such deeds and other instruments.
5. CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder thereof:
(a) each share of the common stock, par value $.01 per share
(the "INAMED Florida Common Stock") of INAMED Florida outstanding immediately
prior to the Effective Time shall be changed and converted into and shall be one
fully paid and nonassessable share of common stock, par value $.01 per share
(the "INAMED Delaware Common Stock") of INAMED Delaware and no fractional shares
shall be issued and fractions of half or more shall be rounded to a whole share
and fractions of less than half shall be disregarded, such that the issued and
outstanding capital stock of INAMED Delaware resulting from the conversion of
the capital stock of INAMED Florida upon the Effective Time shall be equal to
the number of shares of Common Stock at that time; and
(b) As of the Effective Time, INAMED Delaware hereby assumes
all obligations under any and all employee benefit plans of INAMED Florida in
effect as of the Effective Time or with respect to which employee rights or
accrued benefits are outstanding as of the Effective Time and shall continue the
stock option plans of INAMED Florida. Each outstanding and unexercised option,
warrant or other right to purchase, or security convertible into INAMED Florida
Common Stock shall become an option, warrant or right to purchase, or a security
convertible into the Surviving Corporation's Common Stock on the basis of one
share of the Surviving Corporation's Common Stock for each share of INAMED
Florida Common Stock issuable pursuant to any such option, warrant or stock
purchase right or convertible security, on the same terms and conditions and at
an exercise or conversion price per share equal to the exercise or conversion
price per share applicable to any such INAMED Florida option, warrant, stock
purchase right or other convertible security at the Effective Time.
A number of shares of the Surviving Corporation's Common Stock
shall be reserved for issuance upon the exercise of options, warrants, stock
purchase rights and convertible securities equal to the number of shares of
INAMED Florida Common Stock so reserved immediately prior to the Effective Time.
(c) the shares of INAMED Delaware Common Stock presently
issued and outstanding in the name of INAMED Florida shall be canceled and
retired and resume the status of authorized and unissued shares of INAMED
Delaware Common Stock, and no shares of INAMED Delaware Common Stock or other
securities of INAMED Florida shall be issued in respect thereof.
6. STOCK CERTIFICATES. As of and after the Effective Time, all of the
outstanding certificates which, immediately prior to the Effective Time,
represented shares of INAMED Florida Common Stock shall be deemed for all
purposes to evidence ownership of, and to represent, shares of INAMED Delaware
Common Stock into which the shares of INAMED Florida Common Stock formerly
represented by such certificates, have been converted as
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herein provided. The registered owner on the books and records of the Surviving
Corporation or its transfer agents of any such outstanding stock certificate
shall, until such certificate shall have been surrendered for transfer or
otherwise accounted for to the Surviving Corporation or its transfer agents,
have and be entitled to exercise any voting and other rights with respect to,
and to receive any dividends and other distributions upon, the shares of INAMED
Delaware Common Stock evidenced by such outstanding certificate as above
provided.
7. SHAREHOLDER APPROVAL. This Agreement has been approved by INAMED
Florida under Section 607.1103 of the Florida Business Corporation Act by the
shareholders representing in excess of 50% of the issued and outstanding voting
securities of INAMED Florida. This Agreement has been approved by INAMED
Delaware under Section 253 of the General Corporation Law of the State of
Delaware. The signature of INAMED Florida on this Agreement shall constitute its
written consent as sole shareholder of INAMED Delaware, to this Agreement and
the Merger.
8. OTHER EMPLOYEE BENEFIT PLANS.
9. AMENDMENT. To the full extent permitted by applicable law, this
Agreement may be amended, modified or supplemented by written agreement of the
parties hereto, either before or after approval of the shareholders of the
constituent corporations and at any time prior to the Effective Time with
respect to any of the terms contained herein.
10. ABANDONMENT. At any time prior to the Effective Time, this
Agreement may be terminated and the Merger may be abandoned by the Boards of
Directors of INAMED Florida or INAMED Delaware, notwithstanding approval of this
Agreement by the shareholders of INAMED Delaware or by the shareholders of
INAMED Florida, or both, if, in the opinion of either of the Boards of Directors
of INAMED Florida or INAMED Delaware, circumstances arise which in the opinion
of such Boards of Directors, make the Merger for any reason inadvisable.
11. COUNTERPARTS. In order to facilitate the filing and recording of
this Agreement, the same may be executed in two or more counterparts, each of
which shall be deemed to be an original and the same agreement.
12. FLORIDA APPOINTMENT. INAMED Delaware hereby agrees that it may be
served with process in the State of Florida in any action or special proceeding
for enforcement of any liability or obligation of INAMED Florida or INAMED
Delaware arising from the Merger. INAMED Delaware appoints the Secretary of
State of the State of Florida as its agent to accept service of process in any
such suit or other proceeding and a copy of such process shall be mailed by the
Secretary of State of Florida to INAMED Delaware at __________________________
_________________________________________________________________________.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, INAMED Florida and INAMED Delaware have caused this
Agreement to be executed and delivered at ___________________ by their
respective duly authorized officers as of the date first above written.
INAMED CORPORATION
a Florida corporation
By:________________________________________
Richard G. Babbitt
Chairman, President and Chief Executive
Officer
INAMED CORPORATION (Delaware)
a Delaware corporation
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By:_________________________________________
Richard G. Babbitt
Chairman, President and Chief Executive
Officer
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APPENDIX B
RESTATED CERTIFICATE OF INCORPORATION
OF
INAMED CORPORATION
This Restated Certificate of Incorporation (the "Certificate") of
INAMED CORPORATION (Delaware) (the "Corporation"), was duly adopted by the Board
of Directors of the Corporation on ____ __, 1998 and the stockholders of the
Corporation on ___________, 1998, as set forth below, in accordance with
Sections 228, 242 and 245 of the General Corporation Law of the State of
Delaware. The original Certificate of Incorporation was filed on ________
_______.
The following Restated Certificate of Incorporation was adopted on
_________________, 1998 by the vote of the stockholders of the Corporation. The
vote of stockholders of the Corporation by which the foregoing Restated
Certificate of Incorporation was adopted was _______ shares in favor,
___________ shares opposed and _________ shares not voting, out of the
Corporation's total of _________ shares issued and outstanding. The number of
shares voted for the Restated Certificate of Incorporation was sufficient for
approval.
The text of the Certificate of Incorporation as amended or supplemented
heretofore is hereby restated and further amended to read in its entirety as
follows:
FIRST: The name of the corporation is INAMED Corporation.
SECOND: The address of the registered office of the Corporation in the
State of Delaware shall be at Corporation Trust Center, 1209 Orange Street, City
of Wilmington, County of New Castle, Delaware 19801. The name and address of the
Corporation's registered agent in the State of Delaware is The Corporation Trust
Company, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware
19801.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may now or hereafter be organized under the
General Corporation Law of the State of Delaware.
FOURTH: 1. The total number of shares of stock which the Corporation
shall have authority to issue is Twenty-Six Million (26,000,000) shares,
consisting of Twenty-Five Million (25,000,000) shares of Common Stock, par value
$.01 per share (the "Common Stock"), and One Million (1,000,000) shares of
Preferred Stock, par value $.01 per share (the "Preferred Stock").
2. Shares of Preferred Stock may be issued from time to time
in one or more series as may be established from time to time by resolution of
the Board of Directors of the Corporation (the "Board of Directors"), each of
which series shall consist of such number of shares and have such distinctive
designation or title as shall be fixed by resolution of the Board of Directors
prior to the issuance of any shares of such series. Each such class or series of
Preferred Stock shall have such voting powers, full or limited, or no voting
powers, and such preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions thereof, as
shall be stated in such resolution of the Board of Directors providing for the
issuance of such series of Preferred Stock. The Board of Directors is further
authorized to increase or decrease (but not below the number of shares of such
class or series then outstanding) the number of shares of any series subsequent
to the issuance of shares of that series.
FIFTH: In furtherance and not in limitation of the powers conferred by
statute and subject to Article Sixth hereof, the Board of Directors is expressly
authorized to adopt, repeal, rescind, alter or amend in any respect the Bylaws
of the Corporation (the "Bylaws").
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SIXTH: Notwithstanding Article Fifth hereof, the Bylaws may be adopted,
rescinded, altered or amended in any respect by the stockholders of the
Corporation, but only by the affirmative vote of the holders of not less than a
majority of the voting power of all outstanding shares of voting stock
regardless of class and voting together as a single voting class.
SEVENTH: The business and affairs of the Corporation shall be managed
by and under the direction of the Board of Directors. Except as may otherwise be
provided pursuant to Section 2 of Article Fourth hereof in connection with
rights to elect additional directors under specified circumstances which may be
granted to the holders of any series of Preferred Stock, the exact number of
directors of the Corporation shall be determined from time to time by a Bylaw or
Amendment thereto provided that the number of directors shall not be reduced to
less than three (3), except that there need be only as many directors as there
are stockholders in the event that the outstanding shares are held of record by
fewer than three (3) stockholders. Elections of directors need not be by written
ballot unless the Bylaws of the Corporation shall so provide.
EIGHTH: Each director shall serve until his successor is elected and
qualified or until his death, resignation or removal; no decrease in the
authorized number of directors shall shorten the term of any incumbent director;
and additional directors, elected pursuant to Section 2 of Article Fourth hereof
in connection with rights to elect such additional directors under specified
circumstances which may be granted to the holders of any series of Preferred
Stock, shall not be included in any class, but shall serve for such term or
terms and pursuant to such other provisions as are specified in the resolution
of the Board of Directors establishing such series. Any stockholder proposals
and nominations for the election of a director by a stockholder shall be
delivered to the Corporate Secretary of the Corporation no less than ninety (90)
days nor more than one hundred twenty (120) days in advance of the first
anniversary of the Company's annual meeting held in the prior year, provided,
however, in the event the Company shall not have had an annual meeting in the
prior year, such notice shall be delivered no less than ninety (90) days nor
more than one hundred twenty (120) days in advance of May 15 of the current
year. Such stockholder nominations must contain (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director at
the annual meeting: (w) the name, age, business address and residence address of
the proposed nominee, (x) the principal occupation or employment or the proposed
nominee, (y) the class and number of shares of capital stock of the Corporation
which are beneficially owned by the proposed nominee, and (z) any other
information relating to the proposed nominee that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Rule 14a under
the Securities Exchange Act of 1934, as amended; and (b) as to the stockholder
giving notice of nominees for election at the annual meeting, (x) the name and
record address of the stockholder, and (y) the class and number of shares of
capital stock of the Corporation which are beneficially owned by the
stockholder.
NINTH: Except as may otherwise be provided pursuant to Section 2 of
Article Fourth hereof in connection with rights to elect additional directors
under specified circumstances which may be granted to the holders of any series
of Preferred Stock, newly created directorships resulting from any increase in
the number of directors, or any vacancies on the Board of Directors resulting
from death, resignation, removal or other causes, shall be filled solely by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified or until such director's death, resignation or
removal, whichever first occurs.
TENTH: Except for such additional directors as may be elected by the
holders of any series of Preferred Stock pursuant to the terms thereof
established by a resolution of the Board of Directors pursuant to Article Fourth
hereof, any director may be removed from office with or without cause and only
by the affirmative vote of the holders of not less than 50% of the voting power
of all outstanding shares of voting stock entitled to vote in connection with
the election of such director regardless of class and voting together as a
single voting class.
ELEVENTH: Meetings of stockholders of the Corporation may be held
within or without the State of Delaware, as the Bylaws may provide. The books of
the Corporation may be kept (subject to any provision of applicable law) outside
the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the Bylaws.
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TWELFTH: For the purposes of this Restated Certificate of
Incorporation, the terms "affiliate," "associate," "control," "interested
stockholder," "owner," "person" and "voting stock" shall have the meanings set
forth in Section 203(c) of the Delaware General Corporation Law.
THIRTEENTH: The provisions set forth in this Article Thirteenth and in
Articles Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth and Eleventh hereof
may not be repealed, rescinded, altered or amended in any respect, and no other
provision or provisions may be adopted which impair(s) in any respect the
operation or effect of any such provision, except by the affirmative vote of the
holders of a majority of the voting power of all outstanding shares of voting
stock regardless of class and voting together as a single voting class, and,
where such action is proposed by an interested stockholder or by any associate
or affiliate of an interested stockholder, the affirmative vote of the holders
of a majority of the voting power of all outstanding shares of voting stock,
regardless of class and voting together as a single class, other than shares
held by the interested stockholder which proposed (or the affiliate or associate
of which proposed) such action, or any affiliate or associate of such interested
stockholder.
FOURTEENTH: The Corporation reserves the right to adopt, repeal,
rescind, alter or amend in any respect any provision contained in this
Certificate in the manner now or hereafter prescribed by applicable law, and all
rights conferred on stockholders herein are granted subject to this reservation.
Notwithstanding the preceding sentence, the provisions set forth in Articles
Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh and Fourteenth may
not be repealed, rescinded, altered or amended in any respect, and no other
provision or provisions may be adopted which impair(s) in any respect the
operation or effect of any such provision, unless such action is approved as
specified in Article Fourteenth hereof.
FIFTEENTH: No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (a) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (b) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) under Section 174 of the Delaware General Corporation Law,
or (d) for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law hereafter is amended to
authorize the further elimination or limitation of the liability of directors,
then the liability of a director of the Corporation, in addition to the
limitation on personal liability provided herein, shall be limited to the
fullest extent permitted by the amended Delaware General Corporation Law. Any
repeal or modification of this Section by the stockholders of the Corporation
shall be prospective only and shall not adversely affect any limitation on the
personal liability of a director of the Corporation existing at the time of such
repeal or modification.
SIXTEENTH: No contract or other transaction of the Corporation with any
other person, firm or corporation, or in which this corporation is interested,
shall be affected or invalidated by: (a) the fact that any one or more of the
directors or officers of the Corporation is interested in or is a director or
officer of such other firm or corporation; or, (b) the fact that any director or
officer of the Corporation, individually or jointly with others, may be a party
to or may be interested in any such contract or transaction, so long as the
contract or transaction is authorized, approved or ratified at a meeting of the
Board of Directors by sufficient vote thereon by directors not interested
therein, to which such fact of relationship or interest has been disclosed, or
the contract or transaction has been approved or ratified by vote or written
consent of the stockholders entitled to vote, to whom such fact of relationship
or interest has been disclosed, or so long as the contract or transaction is
fair and reasonable to the Corporation. Each person who may become a director or
officer of the Corporation is hereby relieved from any liability that might
otherwise arise by reason of his contracting with the Corporation for the
benefit of himself or any firm or corporation in which he may in any way be
interested.
IN WITNESS WHEREOF INAMED CORPORATION has caused this Restated
Certificate of Incorporation to be executed by its President and to be attested
to by its Secretary as of the ____ day of ________, 199____.
INAMED CORPORATION
By:_____________________________________
Richard G. Babbitt
Chairman, President and Chief
Executive Officer
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By:_____________________________________
Carol Brennan
Secretary
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APPENDIX C
BYLAWS
OF
INAMED CORPORATION
(A DELAWARE CORPORATION)
The following are the Bylaws of INAMED CORPORATION (Delaware), a
Delaware corporation (the "Corporation"), effective as of _______, 1998, after
approval by the Corporation's Board of Directors and stockholders:
ARTICLE I
OFFICES
Section 1.01. PRINCIPAL EXECUTIVE OFFICE. The principal executive
office of the Corporation shall be located at 3800 Howard Hughes Boulevard,
Suite 900, Las Vegas, Nevada 89109. The Board of Directors of the Corporation
(the "Board of Directors") may change the location of said principal executive
office.
Section 1.02. OTHER OFFICES. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board of Directors may from time to time determine or as the
business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.01. ANNUAL MEETINGS. The annual meeting of stockholders of
the Corporation shall be held at a date and at such time as the Board of
Directors shall determine. At each annual meeting of stockholders, directors
shall be elected in accordance with the provisions of Section 3.03 hereof and
any other proper business may be transacted.
Section 2.02. SPECIAL MEETINGS. Special meetings of stockholders for
any purpose or purposes may be called at any time by a majority of the Board of
Directors, by the Chairman of the Board, the President or by holders of not less
than ten percent (10%) of the voting power of all outstanding shares of voting
stock regardless of class and voting together as a single voting class. The term
"voting stock" as used in these Bylaws shall have the meaning set forth in
Section 203(c) of the Delaware General Corporation Law. Special meetings may not
be called by any other person or persons. Each special meeting shall be held at
such date and time as is requested by the person or persons calling the meeting,
within the limits fixed by law.
Section 2.03. PLACE OF MEETINGS. Each annual or special meeting of
stockholders shall be held at such location as may be determined by the Board of
Directors or, if no such determination is made, at such place as may be
determined by the Chairman of the Board. If no location is so determined, any
annual or special meeting shall be held at the principal executive office of the
Corporation.
Section 2.04. NOTICE OF MEETINGS. Written notice of each annual or
special meeting of stockholders stating the date and time when, and the place
where, it is to be held shall be delivered either personally or by mail to
stockholders entitled to vote at such meeting not less than ten (10) nor more
than sixty (60) days before the date of the meeting. The purpose or purposes for
which the meeting is called may, in the case of an annual meeting, and shall, in
the case of a special meeting, also be stated. If mailed, such notice shall be
directed to a stockholder at his address as it shall appear on the stock books
of the Corporation, unless he shall have filed with the Secretary of the
Corporation a written request that notices intended for him be mailed to some
other address, in which case such notice shall be mailed to the address
designated in such request.
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Section 2.05. CONDUCT OF MEETINGS. All annual and special meetings of
stockholders shall be conducted in accordance with such rules and procedures as
the Board of Directors may determine subject to the requirements of applicable
law and, as to matters not governed by such rules and procedures, as the
chairman of such meeting shall determine. The chairman of any annual or special
meeting of stockholders shall be the Chairman of the Board. The Secretary, or in
the absence of the Secretary, a person designated by the Chairman of the Board,
shall act as secretary of the meeting.
Section 2.06. QUORUM. At any meeting of stockholders of the
Corporation, the presence, in person or by proxy, of the holders of record of a
majority of the shares then issued and outstanding and entitled to vote at the
meeting shall constitute a quorum for the transaction of business; PROVIDED,
HOWEVER, that this Section 2.06 shall not affect any different requirement which
may exist under statute, pursuant to the rights of any authorized class or
series of stock, or under the Certificate of Incorporation of the Corporation,
as amended or restated from time to time (the "Certificate"), for the vote
necessary for the adoption of any measure governed thereby.
In the absence of a quorum, the stockholders present in person or by
proxy, by majority vote and without further notice, may adjourn the meeting from
time to time until a quorum is attained. At any reconvened meeting following
such adjournment at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 2.07. VOTES REQUIRED. The affirmative vote of a majority of the
shares present in person or represented by proxy at a duly called meeting of
stockholders of the Corporation, at which a quorum is present and entitled to
vote on the subject matter, shall be sufficient to take or authorize action upon
any matter which may properly come before the meeting, except that the election
of directors shall be by plurality vote, unless the vote of a greater or
different number thereof is required by statute, by the rights of any authorized
class of stock or by the Certificate.
Unless the Certificate or a resolution of the Board of Directors
adopted in connection with the issuance of shares of any class or series of
stock provides for a greater or lesser number of votes per share, or limits or
denies voting rights, each outstanding share of stock, regardless of class or
series, shall be entitled to one (l) vote on each matter submitted to a vote at
a meeting of stockholders.
Section 2.08. PROXIES. A stockholder may vote the shares owned of
record by him either in person or by proxy executed in writing (which shall
include writings sent by telex, telegraph, cable or facsimile transmission) by
the stockholder himself or by his duly authorized attorney-in-fact. No proxy
shall be valid after three (3) years from its date, unless the proxy provides
for a longer period. Each proxy shall be in writing, subscribed by the
stockholder or his duly authorized attorney-in-fact, and dated, but it need not
be sealed, witnessed or acknowledged.
Section 2.09. ACTION BY WRITTEN CONSENT. Any action that may be taken
at any annual or special meeting of stockholders may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Notice of the taking of such action shall be given
promptly to each stockholder that would have been entitled to vote thereon at a
meeting of stockholders and that did not consent thereto in writing.
Section 2.10. LIST OF STOCKHOLDERS. The Secretary of the Corporation
shall prepare and make (or cause to be prepared and made), at least ten (10)
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order and showing the
address of, and the number of shares registered in the name of, each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten (10) days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the duration thereof, and may be inspected by any stockholder
who is present.
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Section 2.11. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the Board of Directors may appoint Inspectors of Election to act
at such meeting or at any adjournment or adjournments thereof. If such
Inspectors are not so appointed or fail or refuse to act, the chairman of any
such meeting may (and, upon the demand of any stockholder or stockholder's
proxy, shall) make such an appointment.
The number of Inspectors of Election shall be one (1) or three (3). If
there are three (3) Inspectors of Election, the decision, act or certificate of
a majority shall be effective and shall represent the decision, act or
certificate of all. No such Inspector need be a stockholder of the Corporation.
Subject to any provisions of the Certificate of Incorporation, the
Inspectors of Election shall determine the number of shares outstanding, the
voting power of each, the shares represented at the meeting, the existence of a
quorum and the authenticity, validity and effect of proxies; they shall receive
votes, ballots or consents, hear and determine all challenges and questions in
any way arising in connection with the right to vote, count and tabulate all
votes or consents, determine when the polls shall close and determine the
result; and finally, they shall do such acts as may be proper to conduct the
election or vote with fairness to all stockholders. On request, the Inspectors
shall make a report in writing to the secretary of the meeting concerning any
challenge, question or other matter as may have been determined by them and
shall execute and deliver to such secretary a certificate of any fact found by
them.
Section 2.13 NOTICE OF STOCKHOLDER ACTION.Any stockholder proposal or
nomination for the election of a director by a stockholder shall be delivered to
the Corporate Secretary of the Corporation no less than ninety (90) days nor
more than one hundred twenty (120) days in advance of the first anniversary of
the Company's annual meeting held in the prior year, provided, however, in the
event the Company shall not have had an annual meeting in the prior year, such
notice shall be delivered no less than ninety (90) days nor more than one
hundred twenty (120) days in advance of May 15 of the current year. Such
stockholder nominations must contain (a) as to each person whom the stockholder
proposes to nominate for election or re-election as a director at the annual
meeting: (w) the name, age, business address and residence address of the
proposed nominee, (x) the principal occupation or employment or the proposed
nominee, (y) the class and number of shares of capital stock of the Corporation
which are beneficially owned by the proposed nominee, and (z) any other
information relating to the proposed nominee that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Rule 14a under
the Securities Exchange Act of 1934, as amended; and (b) as to the stockholder
giving notice of nominees for election at the annual meeting, (x) the name and
record address of the stockholder, and (y) the class and number of shares of
capital stock of the Corporation which are beneficially owned by the
stockholder.
ARTICLE III
DIRECTORS
Section 3.01. POWERS. The business and affairs of the Corporation shall
be managed by and be under the direction of the Board of Directors. The Board of
Directors shall exercise all the powers of the Corporation, except those that
are conferred upon or reserved to the stockholders by statute, the Certificate
or these Bylaws.
Section 3.02. NUMBER. The number of directors shall be fixed from time
to time by resolution of the Board of Directors but shall not be less than three
(3) nor more than nine (9).
Section 3.03. ELECTION AND TERM OF OFFICE. Each director shall serve
until his successor is elected and qualified or until his death, resignation or
removal, no decrease in the authorized number of directors shall shorten the
term of any incumbent director, and additional directors elected in connection
with rights to elect such additional directors under specified circumstances
which may be granted to the holders of any series of Preferred Stock shall not
be included in any class, but shall serve for such term or terms and pursuant to
such other provisions as are specified in the resolution of the Board of
Directors establishing such series.
Section 3.04. ELECTION OF CHAIRMAN OF THE BOARD. At the organizational
meeting immediately following the annual meeting of stockholders, the directors
shall elect a Chairman of the Board from among the directors who
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shall hold office until the corresponding meeting of the Board of Directors in
the next year and until his successor shall have been elected or until his
earlier resignation or removal. Any vacancy in such office may be filled for the
unexpired portion of the term in the same manner by the Board of Directors at
any regular or special meeting.
Section 3.05. REMOVAL. Any director may be removed from office only as
provided in the Certificate of Incorporation.
Section 3.06. VACANCIES AND ADDITIONAL DIRECTORSHIPS. Newly created
directorships resulting from death, resignation, disqualification, removal or
other cause shall be filled solely by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the Board
of Directors. Any director elected in accordance with the preceding sentence
shall hold office for the remainder of the full term of the class of directors
in which the new directorship was created or the vacancy occurred and until such
director's successor shall have been elected and qualified. No decrease in the
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director.
Section 3.07. REGULAR AND SPECIAL MEETINGS. Regular meetings of the
Board of Directors shall be held immediately following the annual meeting of the
stockholders; without call at such time as shall from time to time be fixed by
the Board of Directors; and as called by the Chairman of the Board in accordance
with applicable law.
Special meetings of the Board of Directors shall be held upon
call by or at the direction of the Chairman of the Board, the President or any
two (2) directors, except that when the Board of Directors consists of one (1)
director, then the one director may call a special meeting. Except as otherwise
required by law, notice of each special meeting shall be mailed to each
director, addressed to him at his residence or usual place of business, at least
three days before the day on which the meeting is to be held, or shall be sent
to him at such place by telex, telegram, cable, facsimile transmission or
telephoned or delivered to him personally, not later than the day before the day
on which the meeting is to be held. Such notice shall state the time and place
of such meeting, but need not state the purpose or purposes thereof, unless
otherwise required by law, the Certificate of Incorporation or these Bylaws
("Bylaws").
Notice of any meeting need not be given to any director who shall
attend such meeting in person (except when the person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened) or who shall waive notice thereof, before or after such meeting, in a
signed writing.
Section 3.08. QUORUM. At all meetings of the Board of Directors, a
majority of the fixed number of directors shall constitute a quorum for the
transaction of business, except that when the Board of Directors consists of one
(1) director, then the one director shall constitute a quorum.
In the absence of a quorum, the directors present, by majority
vote and without notice other than by announcement, may adjourn the meeting from
time to time until a quorum shall be present. At any reconvened meeting
following such an adjournment at which a quorum shall be present, any business
may be transacted which might have been transacted at the meeting as originally
notified.
Section 3.09. VOTES REQUIRED. Except as otherwise provided by
applicable law or by the Certificate of Incorporation, the vote of a majority of
the directors present at a meeting duly held at which a quorum is present shall
be sufficient to pass any measure.
Section 3.10. PLACE AND CONDUCT OF MEETINGS. Each regular meeting and
special meeting of the Board of Directors shall be held at a location determined
as follows: The Board of Directors may designate any place, within or without
the State of Delaware, for the holding of any meeting. If no such designation is
made: (a) any meeting called by a majority of the directors shall be held at
such location, within the county of the Corporation's principal executive
office, as the directors calling the meeting shall designate; and (b) any other
meeting shall be held at such location, within the county of the Corporation's
principal executive office, as the Chairman of the Board may designate or, in
the absence of such designation, at the Corporation's principal executive
office. Subject to the requirements of applicable law, all regular and special
meetings of the Board of Directors shall be conducted in
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accordance with such rules and procedures as the Board of Directors may approve
and, as to matters not governed by such rules and procedures, as the chairman of
such meeting shall determine. The chairman of any regular or special meeting
shall be the Chairman of the Board, or, in his absence, a person designated by
the Board of Directors. The Secretary, or, in the absence of the Secretary, a
person designated by the chairman of the meeting, shall act as secretary of the
meeting.
Section 3.11. FEES AND COMPENSATION. Directors shall be paid such
compensation as may be fixed from time to time by resolution of the Board of
Directors: (a) for their usual and contemplated services as directors; (b) for
their services as members of committees appointed by the Board of Directors,
including attendance at committee meetings as well as services which may be
required when committee members must consult with management staff; and (c) for
extraordinary services as directors or as members of committees appointed by the
Board of Directors, over and above those services for which compensation is
fixed pursuant to items (a) and (b) in this Section 3.11. Compensation may be in
the form of an annual retainer fee or a fee for attendance at meetings, or both,
or in such other form or on such basis as the resolutions of the Board of
Directors shall fix. Directors shall be reimbursed for all reasonable expenses
incurred by them in attending meetings of the Board of Directors and committees
appointed by the Board of Directors and in performing compensable extraordinary
services. Nothing contained herein shall be construed to preclude any director
from serving the Corporation in any other capacity, such as an officer, agent,
employee, consultant or otherwise, and receiving compensation therefor.
Section 3.12. COMMITTEES OF THE BOARD OF DIRECTORS. To the full extent
permitted by applicable law, the Board of Directors may from time to time
establish committees, including, but not limited to, standing or special
committees and an executive committee with authority and responsibility for
bookkeeping, with authority to act as signatories on Corporation bank or similar
accounts and with authority to choose attorneys for the Corporation and direct
litigation strategy, which shall have such duties and powers as are authorized
by these Bylaws or by the Board of Directors. Committee members, and the
chairman of each committee, shall be appointed by the Board of Directors. The
Chairman of the Board, in conjunction with the several committee chairmen, shall
make recommendations to the Board of Directors for its final action concerning
members to be appointed to the several committees of the Board of Directors. Any
member of any committee may be removed at any time with or without cause by the
Board of Directors. Vacancies which occur on any committee shall be filled by a
resolution of the Board of Directors. If any vacancy shall occur in any
committee by reason of death, resignation, disqualification, removal or
otherwise, the remaining members of such committee, so long as a quorum is
present, may continue to act until such vacancy is filled by the Board of
Directors. The Board of Directors may, by resolution, at any time deemed
desirable, discontinue any standing or special committee. Members of standing
committees, and their chairmen, shall be elected yearly at the regular meeting
of the Board of Directors which is held immediately following the annual meeting
of stockholders. The provisions of Sections 3.07, 3.08, 3.09 and 3.10 of these
Bylaws shall apply, MUTATIS MUTANDIS, to any such Committee of the Board of
Directors.
ARTICLE IV
OFFICERS
Section 4.01. DESIGNATION, ELECTION AND TERM OF OFFICE. The Corporation
shall have a Chairman of the Board, a President, Treasurer, such senior vice
presidents and vice presidents as the Board of Directors deems appropriate, a
Secretary and such other officers as the Board of Directors may deem
appropriate. These officers shall be elected annually by the Board of Directors
at the organizational meeting immediately following the annual meeting of
stockholders, and each such officer shall hold office until the corresponding
meeting of the Board of Directors in the next year and until his successor shall
have been elected and qualified or until his earlier resignation, death or
removal. Any vacancy in any of the above offices may be filled for the unexpired
portion of the term by the Board of Directors at any regular or special meeting.
Section 4.02. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Directors shall preside at all meetings of the directors and shall have such
other powers and duties as may from time to time be assigned to him by the Board
of Directors.
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Section 4.03. PRESIDENT. The President shall be the chief executive
officer of the Corporation and shall, subject to the power of the Board of
Directors, have general supervision, direction and control of the business and
affairs of the Corporation. He shall preside at all meetings of the stockholders
and, in the absence of the Chairman of the Board, at all meetings of the
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation, and shall have such other
duties as may be assigned to him from time to time by the Board of Directors.
Section 4.04. TREASURER. The Treasurer shall keep and maintain, or
cause to be kept and maintained, adequate and correct books and records of
account of the properties and business transactions of the Corporation,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, retained earnings and shares. The books of account shall at all
reasonable times be open to inspection by the directors.
The Treasurer shall deposit all moneys and other valuables in the name
and to the credit of the Corporation with such depositaries as may be designated
by the Board of Directors. He shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, shall render to the President and
directors, whenever they request it, an account of all of his transactions as
the Treasurer and of the financial condition of the Corporation, and shall have
such other powers and perform such other duties as may be prescribed by the
Board of Directors or the Bylaws.
Section 4.05. SECRETARY. The Secretary shall keep the minutes of the
meetings of the stockholders, the Board of Directors and all committees. He
shall be the custodian of the corporate seal and shall affix it to all documents
which he is authorized by law or the Board of Directors to sign and seal. He
also shall perform such other duties as may be assigned to him from time to time
by the Board of Directors or the Chairman of the Board or President.
Section 4.06. ASSISTANT OFFICERS. The President may appoint one or more
assistant secretaries and such other assistant officers as the business of the
Corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as may be specified from time to time by
the President.
Section 4.07. WHEN DUTIES OF AN OFFICER MAY BE DELEGATED. In the case
of absence or disability of an officer of the Corporation or for any other
reason that may seem sufficient to the Board of Directors, the Board of
Directors or any officer designated by it, or the President, may, for the time
of the absence or disability, delegate such officer's duties and powers to any
other officer of the Corporation.
Section 4.08. OFFICERS HOLDING TWO OR MORE OFFICES. The same person may
hold any two (2) or more of the above-mentioned offices.
Section 4.09. COMPENSATION. The Board of Directors shall have the power
to fix the compensation of all officers and employees of the Corporation.
Section 4.10. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Board of Directors, to the President, or to the
Secretary of the Corporation. Any such resignation shall take effect at the time
specified therein unless otherwise determined by the Board of Directors. The
acceptance of a resignation by the Corporation shall not be necessary to make it
effective.
Section 4.11. REMOVAL. Any officer of the Corporation may be removed,
with or without cause, by the affirmative vote of a majority of the entire Board
of Directors. Any assistant officer of the Corporation may be removed, with or
without cause, by the President or by the Board of Directors.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS
EMPLOYEES END OTHER CORPORATE AGENTS
Section 5.01. ACTION, ETC. OTHER THAN BY OR IN THE RIGHT OF THE
CORPORATION. The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or
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completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise (all such persons being
referred to hereinafter as an "Agent"), against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, that he had reasonable cause to believe that his conduct was
unlawful.
Section 5.02. ACTION, ETC., BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was an Agent against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation by a court of competent jurisdiction, after exhaustion
of all appeals therefrom, unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such court shall deem proper.
Section 5.03. DETERMINATION OF RIGHT OF INDEMNIFICATION. Any
indemnification under Sections 5.01 or 5.02 (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the Agent is proper in the circumstances
because the Agent has met the applicable standard of conduct set forth in
Sections 5.01 and 5.02 hereof, which determination is made (a) by the Board of
Directors, by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
stockholders.
Section 5.04. INDEMNIFICATION AGAINST EXPENSES OF SUCCESSFUL PARTY.
Notwithstanding the other provisions of this Article V, to the extent that an
Agent has been successful on the merits or otherwise, including the dismissal of
an action without prejudice or the settlement of an action without admission of
liability, in defense of any action, suit or proceeding referred to in Sections
5.01 or 5.02 hereof, or in defense of any claim, issue or matter therein, such
Agent shall be indemnified against expenses, including attorneys' fees actually
and reasonably incurred by such Agent in connection therewith.
Section 5.05. ADVANCES OF EXPENSES. Except as limited by Section 5.06
of this Article V, expenses incurred by an Agent in defending any civil or
criminal action, suit, or proceeding shall be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding, if the Agent shall
undertake to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified as authorized in this Article V.
Notwithstanding the foregoing, no advance shall be made by the Corporation if a
determination is reasonably and promptly made by the Board of Directors by a
majority vote of a quorum of disinterested directors, or (if such a quorum is
not obtainable or, even if obtainable, a quorum of disinterested directors so
directs) by independent legal counsel in a written opinion, that, based upon the
facts known to the Board of Directors or counsel at the time such determination
is made, such person acted in bad faith and in a manner that such person did not
believe to be in or not opposed to the best interest of the Corporation, or,
with respect to any criminal proceeding, that such person believed or had
reasonable cause to believe his conduct was unlawful.
Section 5.06. RIGHT OF AGENT TO INDEMNIFICATION UPON APPLICATION;
PROCEDURE UPON APPLICATION. Any indemnification or advance under this Article V
shall be made promptly, and in any event within ninety days, upon the written
request of the Agent, unless a determination shall be made in the manner set
forth in the second sentence
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of Subsection 5.05 hereof that such Agent acted in a manner set forth therein so
as to justify the Corporation's not indemnifying or making an advance to the
Agent. The right to indemnification or advances as granted by this Article V
shall be enforceable by the Agent in any court of competent jurisdiction, if the
Board of Directors or independent legal counsel denies the claim, in whole or in
part, or if no disposition of such claim is made within ninety (90) days. The
Agent's expenses incurred in connection with successfully establishing his right
to indemnification, in whole or in part, in any such proceeding shall also be
indemnified by the Corporation.
Section 5.07. OTHER RIGHTS AND REMEDIES. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article V
shall not be deemed exclusive of any other rights to which an Agent seeking
indemnification or advancement of expenses may be entitled under any Bylaw,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office, and shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be an Agent and shall inure
to the benefit of the heirs, executors and administrators of such a person. All
rights to indemnification under this Article V shall be deemed to be provided by
a contract between the Corporation and the Agent who serves in such capacity at
any time while these Bylaws and other relevant provisions of the Delaware
General Corporation Law and other applicable law, if any, are in effect. Any
repeal or modification thereof shall not affect any rights or obligations then
existing.
Section 5.08. INSURANCE. Upon resolution passed by the Board of
Directors, the Corporation may purchase and maintain insurance on behalf of any
person who is or was an Agent against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article V.
Section 5.09. CONSTITUENT CORPORATIONS. For the purposes of this
Article V, references to "the Corporation" shall include, in addition to the
resulting corporation, all constituent corporations (including all constituents
of constituents) absorbed in a consolidation or merger as well as the resulting
or surviving corporation, which, if the separate existence of such constituent
corporation had continued, would have had power and authority to indemnify its
Agents, so that any Agent of such constituent corporation shall stand in the
same position under the provisions of the Article V with respect to the
resulting or surviving corporation as that Agent would have with respect to such
constituent corporation if its separate existence had continued.
Section 5.10. OTHER ENTERPRISES, FINES, AND SERVING AT CORPORATION'S
REQUEST. For purposes of this Article V, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to any employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this Article
V.
Section 5.11. SAVINGS CLAUSE. If this Article V or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each Agent as to expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative, and whether internal or external, including a
grand jury proceeding and an action or suit brought by or in the right of the
Corporation, to the full extent permitted by any applicable portion of this
Article V that shall not have been invalidated, or by any other applicable law.
ARTICLE VI
STOCK
Section 6.01. CERTIFICATES. Except as otherwise provided by law, each
stockholder shall be entitled to a certificate or certificates which shall
represent and certify the number and class (and series, if appropriate) of
shares of stock owned by him in the Corporation. Each certificate shall be
signed in the name of the Corporation by the Chairman of the Board or a
Vice-Chairman of the Board or the President or a Vice President, together with
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary. Any or all of the signatures on any
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certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
Section 6.02. TRANSFER OF SHARES. Shares of stock shall be transferable
on the books of the Corporation only by the holder thereof, in person or by his
duly authorized attorney, upon the surrender of the certificate representing the
shares to be transferred, properly endorsed, to the Corporation's transfer
agent, if the Corporation has a transfer agent, or to the Corporation's
registrar, if the Corporation has a registrar, or to the Secretary, if the
Corporation has neither a transfer agent nor a registrar. The Board of Directors
shall have power and authority to make such other rules and regulations
concerning the issue, transfer and registration of certificates of the
Corporation's stock as it may deem expedient.
Section 6.03. TRANSFER AGENTS AND REGISTRARS. The Corporation may have
one or more transfer agents and one or more registrars of its stock whose
respective duties the Board of Directors or the Secretary may, from time to
time, define. No certificate of stock shall be valid until countersigned by a
transfer agent, if the Corporation has a transfer agent, or until registered by
a registrar, if the Corporation has a registrar. The duties of transfer agent
and registrar may be combined.
Section 6.04. STOCK LEDGERS. Original or duplicate stock ledgers,
containing the names and addresses of the stockholders of the Corporation and
the number of shares of each class of stock held by them, shall be kept at the
principal executive office of the Corporation or at the office of its transfer
agent or registrar.
Section 6.05. RECORD DATES. The Board of Directors may fix, in advance,
a date as the record date for the purpose of determining stockholders entitled
to notice of, or to vote at, any meeting of stockholders or any adjournment
thereof, or stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or in order to make a
determination of stockholders for any other proper purpose. Such date in any
case shall be not more than sixty (60) days, and in case of a meeting of
stockholders, not less than ten (10) days, prior to the date on which the
particular action requiring such determination of stockholders is to be taken.
Only those stockholders of record on the date so fixed shall be entitled to any
of the foregoing rights, notwithstanding the transfer of any such stock on the
books of the Corporation after any such record date fixed by the Board of
Directors.
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APPENDIX D
INAMED CORPORATION
1998 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
This 1998 Stock Option Plan (the "Plan") is intended as an
incentive, to retain in the employ of INAMED CORPORATION (the "Company") and any
Subsidiary of the Company, within the meaning of Section 424(f) of the United
States Internal Revenue Code of 1986, as amended (the "Code"), persons of
training, experience and ability, to attract new employees, consultants,
officers and directors, whose services are considered valuable, to encourage the
sense of proprietorship and to stimulate the active interest of such persons in
the development and financial success of the Company and its Subsidiaries.
It is further intended that options (the "Options") granted
pursuant to the Plan shall be Options not intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
The Company intends that the Plan meet the requirements of
Rule 16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and that transactions of the type specified in
subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of
the Company pursuant to the Plan will be exempt from the operation of Section
16(b) of the Exchange Act. In all cases, the terms, provisions, conditions and
limitations of the Plan shall be construed and interpreted consistent with the
Company's intent as stated in this Section 1.
2. ADMINISTRATION OF THE PLAN.
The Board of Directors of the Company (the "Board") shall
administer the Plan unless and until the Board delegates administration to a
Committee. The Board may delegate administration of the Plan to a Committee or
Committees of one or more members of the Board. In the discretion of the Board,
a Committee may consist solely of two or more Outside Directors (as such term is
defined in Section 162(m) of the Code), or solely of two or more Non-Employee
Directors (as such term is defined in Rule 16b-3). If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board (and
references in this Plan to the Board shall thereafter be to the Committee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan.
Subject to the provisions of the Plan, the Board shall have
the authority, in its discretion: (1) to grant Options; (2) to determine, upon
review of relevant information and in accordance with Section 5 of the Plan, the
Fair Market Value of the Common Stock of the Company, $.01 par value per share
("Common Stock"); (3) to determine the exercise price per share of Options to be
granted, which exercise price shall be determined in accordance with Section 5
of the Plan; (4) to determine the recipients to whom, and the time or times at
which, Options shall be granted and the number of shares to be represented by
each Option; (5) to interpret the provisions and supervise the administration of
the Plan; (6) to prescribe, amend and rescind rules and regulations relating to
the Plan; (7) to determine the terms and provisions of each Option granted
(which need not be identical) and, with the consent of the holder thereof,
modify or amend each Option; (8) to accelerate or defer (with the consent of the
recipient of the Option (the "Optionee")) the exercise date of any Option,
consistent with the provisions of Section 5 of the Plan; (9) to authorize any
person to execute on behalf of the Company any instrument required to effectuate
the grant of an Option previously granted by the Board; and (10) to make all
other determinations deemed necessary or advisable for the administration of the
Plan.
All decisions, determinations and interpretations of the Board
shall be final and binding on all Optionees and any other holders of any Options
granted under the Plan.
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In the event that for any reason the Board is unable to act or
if the Board at the time of any grant, award or other acquisition under the Plan
of Options or Common Stock does not consist of two or more Non- Employee
Directors, then any such grant, award or other acquisition may be approved or
ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3.
3. DESIGNATION OF OPTIONEES.
The persons eligible for participation in the Plan as
recipients of Options (the "Optionees") shall include employees, consultants and
directors of the Company or any Subsidiary. In selecting Optionees, and in
determining the number of shares to be covered by each Option granted to
Optionees, the Board may consider the office or position held by the Optionee or
the Optionee's relationship to the Company, the Optionee's degree of
responsibility for and contribution to the growth and success of the Company or
any Subsidiary, the Optionee's length of service, age, promotions, potential and
any other factors that the Board may consider relevant. An Optionee who has been
granted an Option hereunder may be granted an additional Option or Options, if
the Board shall so determine.
4. COMMON STOCK RESERVED FOR THE PLAN.
Subject to adjustment as provided in Section 7 hereof, a total
of 450,000 shares of the Common Stock shall be subject to the Plan. The shares
of Common Stock subject to the Plan shall consist of unissued shares or
previously issued shares held by any Subsidiary of the Company, and such amount
of shares of Common Stock shall be and is hereby reserved for such purpose. Any
of such shares of Common Stock that may remain unsold and that are not subject
to outstanding Options at the termination of the Plan shall cease to be reserved
for the purposes of the Plan, but until termination of the Plan the Company
shall at all times reserve a sufficient number of shares of Common Stock to meet
the requirements of the Plan. Should any Option expire or be cancelled prior to
its exercise in full or should the number of shares of Common Stock to be
delivered upon the exercise in full of an Option be reduced for any reason, the
shares of Common Stock theretofore subject to such Option may be subject to
future Options under the Plan.
5. TERMS AND CONDITIONS OF OPTIONS.
Options granted under the Plan shall be subject to the
following conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Board shall deem desirable:
(a) OPTION PRICE. The purchase price of each share of
Common Stock purchasable under an Option shall be determined by the Board at the
time of grant, but shall not be less than 85% of the Fair Market Value (as
defined below) of such share of Common Stock on the date the Option is granted;
PROVIDED, HOWEVER, that if an option granted to the Company's Chief Executive
Officer or to any of the Company's other four most highly compensated officers
is intended to qualify as performance-based compensation under Section 162(m) of
the Code, the exercise price of such Option shall not be less than 100% of the
Fair Market Value of such share of Common Stock on the date the Option is
granted. The exercise price for each Option shall be subject to adjustment as
provided in Section 7 below. Fair Market Value means the closing price of
publicly traded shares of Common Stock on a national securities exchange or the
over-the-counter Bulletin Board market ("OTC Bulletin Board"), or, if not so
listed or regularly quoted, the mean between the closing bid and asked prices of
publicly traded shares of Common Stock in the over-the-counter market, or, if
such bid and asked prices shall not be available, as reported by any nationally
recognized quotation service selected by the Company, or as determined by the
Board in a manner consistent with the provisions of the Code. Anything in this
Section 5(a) to the contrary notwithstanding, in no event shall the purchase
price of a share of Common Stock be less than the minimum price permitted under
rules and policies of any national securities exchange or the OTC Bulletin Board
if and so long as the Common Stock is listed on any such exchange or the OTC
Bulletin Board.
(b) OPTION TERM. The term of each Option shall be
fixed by the Board, but no Option shall be exercisable more than 10 years after
the date such Option is granted.
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(c) EXERCISABILITY. Options shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Board at the time of grant. Unless the Board shall decide
otherwise, Options shall vest ratably over three (3) years.
(d) METHOD OF EXERCISE. Options to the extent then
exercisable may be exercised in whole or in part at any time during the option
period, by giving written notice to the Company specifying the number of shares
of Common Stock to be purchased, accompanied by payment in full of the purchase
price, in cash, by check or such other instrument as may be acceptable to the
Board. Payment in full or in part may also be made by (i) exchanging Common
Stock owned by the Optionee which is not the subject of any pledge or security
interest, (ii) the Optionee's written selection to have shares of Common Stock
withheld by the Company from the shares of Common Stock otherwise to be received
with such withheld shares of Common Stock having a Fair Market Value on the date
of exercise equal to the exercise price of the Option, or (iii) by a combination
of the forgoing, provided that the combined value of all cash and cash
equivalents and the Fair Market Value of any shares surrendered to the Company
is at least equal to such exercise price. An Optionee shall have the right to
dividends and other rights of a stockholder with respect to shares of Common
Stock purchased upon exercise of an Option after (i) the Optionee has given
written notice of exercise and has paid in full for such shares and (ii) becomes
a stockholder of record with respect thereto. The provisions of this subsection
5(d) are subject to any Option provisions governing the minimum number of shares
as to which an Option may be exercised.
Neither the recipient of an Option nor any person to whom an
Option is transferred in accordance with the Plan shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
subject to such Option unless and until such person has satisfied all
requirements for exercise of the Option pursuant to its terms.
(e) NON-TRANSFERABILITY OF OPTIONS. Options may be
transferred to the extent provided in the Option Agreement; provided that if the
Option Agreement does not expressly permit the transfer of an Option, the Option
shall not be transferable except by will, by the laws of descent and
distribution or pursuant to a domestic relations order satisfying the
requirements of Rule 16 of the Exchange Act and shall be exercisable during the
lifetime of the person to whom the Option is granted only by such person or any
transferee pursuant to a domestic relations order. Notwithstanding the
foregoing, the person to whom the Option is granted may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionee, shall thereafter be
entitled to exercise the Option. Any attempt to transfer, assign, pledge or
otherwise dispose of, or to subject to execution, attachment or similar process,
any Option contrary to the provisions hereof shall be void and ineffective and
shall give no right to the purported transferee.
(f) TERMINATION BY DEATH. Unless otherwise determined
by the Board at grant, if any Optionee's employment with or service to the
Company or any Subsidiary terminates by reason of death, the Option may
thereafter be exercised, to the extent then exercisable (or on such accelerated
basis as the Board shall determine at or after grant), by the legal
representative of the estate or by the legatee of the Optionee under the will of
the Optionee, for a period of one year after the date of such death or until the
expiration of the stated term of such Option as provided under the Plan,
whichever period is shorter.
(g) TERMINATION BY REASON OF DISABILITY. Unless
otherwise determined by the Board at grant, if any Optionee's employment with or
service to the Company or any Subsidiary terminates by reason of total and
permanent disability (as defined in Section 22(e)(3) of the Code, "Disability"),
any Option held by such Optionee may thereafter be exercised, to the extent it
was exercisable at the time of termination due to Disability (or on such
accelerated basis as the Board shall determine at or after grant), but may not
be exercised after 30 days after the date of such termination of employment or
service or the expiration of the stated term of such Option, whichever period is
shorter; provided, however, that, if the Optionee dies within such 30 day
period, any unexercised Option held by such Optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death for a
period of one year after the date of such death or for the stated term of such
Option, whichever period is shorter.
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(h) OTHER TERMINATION. Unless otherwise determined by
the Board at grant, if any Optionee's employment with or service to the Company
or any Subsidiary terminates for any reason other than death or Disability, the
Option shall thereupon terminate, except that the portion of any Option that was
exercisable on the date of such termination of employment may be exercised for
the lesser of 30 days after the date of termination or the balance of such
Option's term if the Optionee's employment or service with the Company or any
Subsidiary is terminated by the Company or such Subsidiary without cause (the
determination as to whether termination was for cause to be made by the Board).
The transfer of an Optionee from the employ of the Company to a Subsidiary, or
vice versa, or from one Subsidiary to another, shall not be deemed to constitute
a termination of employment for purposes of the Plan.
6. EFFECTIVE DATE OF PLAN AND TERM OF PLAN
The Plan shall be effective on _______________, 1998 (the
"Effective Date"), provided however that the Plan shall subsequently be approved
by majority vote of the Company's stockholders not later than _________________,
1999. The Plan shall continue until such time as it may be terminated by action
of the Board; PROVIDED, HOWEVER, that no Options may be granted under this Plan
on or after the tenth anniversary of the Effective Date, but Options theretofore
granted may extend beyond that date.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) Subject to any required action by the stockholders of the
Company, the number of shares of Common Stock covered by each outstanding
Option, and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock of the Company or the payment of a stock dividend with respect
to the Common Stock or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of Common Stock of any class, or securities
convertible into shares of Common Stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
(b) Unless otherwise provided by the Board at the time of
grant, in the event of: (i) a dissolution, liquidation or sale of substantially
all of the assets of the Company; (ii) a merger or consolidation in which the
Company is not the surviving corporation; (iii) a reverse merger in which the
Company is the surviving corporation but the shares of Common Stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise; or (iv)
the acquisition by any person, entity or group within the meaning of Section
13(d) or 14(d) of the Exchange Act, or any comparable successor provisions
(excluding any employee benefit plan or related trust sponsored or maintained by
the Company or any affiliate of the Company), of the beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act, or
comparable successor rule) of securities of the Company representing at least
fifty percent (50%) of the combined voting power entitled to vote in the
election of directors, then, with respect to Options held by Optionees, the
vesting of such Options (and, if applicable, the time during which such Options
may be exercised) shall be accelerated immediately prior to such event and the
Options shall terminate if not exercised (if applicable) twenty days following
such acceleration.
8. PURCHASE FOR INVESTMENT.
Unless the Options and shares covered by the Plan have been
registered under the United States Securities Act of 1933, as amended (the
"Securities Act"), or the Company has determined that such registration is
unnecessary, each person exercising an Option under the Plan may be required by
the Company to give a
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representation in writing that he is acquiring the shares for his own account
for investment and not with a view to, or for sale in connection with, the
distribution of any part thereof.
9. TAXES.
The Company may make such provisions as it may deem
appropriate, consistent with applicable law, in connection with any Options
granted under the Plan with respect to the withholding of taxes or any other tax
matters.
10. AMENDMENT AND TERMINATION.
The Board may amend, suspend, or terminate the Plan, except
that no amendment shall be made that would impair the rights of any Optionee
under any Option theretofore granted without his consent, and except that no
amendment shall be made which, without the approval of the stockholders of the
Company would:
(a) materially increase the number of shares that may
be issued under the Plan, except as provided in Section 7;
(b) materially increase the benefits accruing to the
Optionees under the Plan;
(c) materially modify the requirements as to
eligibility for participation in the Plan; or
(d) extend the term of any Option beyond that
provided for in Section 5(b).
The Board may amend the terms of any Option theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any Optionee without his consent. The Board may also substitute new
Options for previously granted Options, including options granted under other
plans applicable to the participant and previously granted Options having higher
option prices, upon such terms as the Board may deem appropriate.
11. GOVERNMENT REGULATIONS.
The Plan, and the grant and exercise of Options hereunder, and
the obligation of the Company to sell and deliver shares under such Options,
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies, or by national securities exchanges or
the OTC Bulletin Board if and so long as the Common Stock is listed on any such
exchange or the OTC Bulletin Board, as may be required.
12. GENERAL PROVISIONS.
(a) CERTIFICATES. All certificates for shares of
Common Stock delivered under the Plan shall be subject to such stop transfer
orders and other restrictions as the Board may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission, or
other securities commission having jurisdiction, any applicable Federal,
provincial or state securities law, any stock exchange upon which the Common
Stock is then listed and the Board may cause a legend or legends to be placed on
any such certificates to make appropriate reference to such restrictions.
(b) EMPLOYMENT MATTERS. The adoption of the Plan
shall not confer upon any Optionee of the Company or any Subsidiary any right to
continued employment or, in the case of an Optionee who is a director, continued
service as a director, with the Company or a Subsidiary, as the case may be, nor
shall it interfere in any way with the right of the Company or any Subsidiary to
terminate the employment of any of its employees, the service of any of its
directors or the retention of any of its consultants or advisors at any time.
(c) LIMITATION OF LIABILITY. No member of the Board
or the Committee, or any officer or employee of the Company acting on behalf of
the Board or the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the
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Board or the Committee and each and any officer or employee of the Company
acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such action,
determination or interpretation.
(d) REGISTRATION OF COMMON STOCK. Notwithstanding any
other provision in the Plan, no Option may be exercised unless and until the
Common Stock to be issued upon the exercise thereof has been registered under
the Securities Act and applicable state securities laws, or is, in the opinion
of counsel to the Company, exempt from such registration in the United States or
exempt from the prospectus and registration requirements under applicable
provincial legislation. The Company shall not be under any obligation to
register under applicable federal or state securities laws any Common Stock to
be issued upon the exercise of an Option granted hereunder, or to comply with an
appropriate exemption from registration under such laws or the laws of any
province in order to permit the exercise of an Option and the issuance and sale
of the Common Stock subject to such Option. However, the Company may in its sole
discretion register such Common Stock at such time as the Company shall
determine. If the Company chooses to comply with such an exemption from
registration, the Common Stock issued under the Plan may, at the direction of
the Board, bear an appropriate restrictive legend restricting the transfer or
pledge of the Common Stock represented thereby, and the Committee may also give
appropriate stop transfer instructions to the Company's transfer agents.
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APPENDIX E
FLORIDA BUSINESS CORPORATION ACT
DISSENTERS' RIGHTS
607.1301 DISSENTER'S RIGHT; DEFINITIONS. The following
definitions apply to sec 607.1302 and sec 607.1320:
(1) "Corporation" means the issuer of the shares held by a
dissenting stockholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair Value," with respect to a dissenter's shares, means
the value of the shares as of the close of business on the day prior to the
shareholders' authorization date, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(3) "Shareholders' authorization date" means the date on which
the shareholders' vote authorizing the proposed action was taken, the date on
which the corporation received written consents without a meeting from the
requisite number of shareholders in order to authorize the action, or, in the
case of a merger pursuant to sec 607.1104, the day prior to the date on which a
copy of the plan of merger was mailed to each shareholder of record of the
subsidiary corporation.
607.1302 RIGHT OF SHAREHOLDER TO DISSENT. (1) Any shareholder
of a corporation has the right to dissent from, and obtain payment of the fair
value of his shares in the event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation
is a party:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its
parent under sec 607.1104, and the shareholders would have been entitled to vote
on action taken, except for the applicability of sec 607.1104;
(b) Consummation of a sale or exchange of all, or
substantially all, of the property of the corporation, other than in the usual
and regular course of business, if the shareholder is entitled to vote on the
sale or exchange pursuant to sec 607.1202, including, a sale in dissolution but
not including a sale pursuant to court order or a sale for cash pursuant to a
plan by which all or substantially all of the net proceeds of the sale will be
distributed to the shareholders within 1 year after the date of sale;
(c) As provided in sec 607.0902(11), the approval of a control
share acquisition;
(d) Consummation of a plan of share exchange to which the
corporation is a party as the corporation the shares of which will be acquired,
if the shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the
shareholder is entitled to vote on the amendment and if such amendment would
adversely affect such shareholder by:
1. Altering or abolishing any preemptive rights attached to
any of his shares;
2. Altering or abolishing the voting rights pertaining to any
of his shares, except as such rights may be affected by the voting rights of new
shares then being authorized of any existing or new class or series of shares;
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3. Effecting an exchange, cancellation, or reclassification of
any of his shares, when such exchange, cancellation, or reclassification would
alter or abolish his voting rights or alter his percentage of equity in the
corporation, or effecting a reduction or cancellation of accrued dividends or
other arrearages in respect to such shares;
4. Reducing the stated redemption price of any of his
redeemable shares, altering or abolishing any provision relating to any sinking
fund for the redemption or purchase of any of his shares, or making any of his
shares subject to redemption when they are not otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of any
of his preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of its
preferred shares; or
7. Reducing any stated preferential amount payable on any of
his preferred shares upon voluntary or involuntary liquidation; or
(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his shares.
(2) A shareholder dissenting from any amendment specified in
paragraph (1)(e) has the right to dissent only as to those of his shares which
are adversely affected by the amendment.
(3) A shareholder may dissent as to less than all the shares
registered in his name. In that event, his rights shall be determined as if the
shares as to which he has dissented and his other shares were registered in the
names of different shareholders.
(4) Unless the articles of incorporation otherwise provide,
this section does not apply with respect to a plan of merger or share exchange
or a proposed sale or exchange of property, to the holders of shares of any
class or series which, on the record date fixed to determine the shareholders
entitled to vote at the meeting of shareholders at which such action is to be
acted upon or to consent to any such action without a meeting, were either
registered on a national securities exchange or designated as a national market
systems security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by not fewer than 2,000
shareholders.
(5) A shareholder entitled to dissent and obtain payment for
his shares under this section may not challenge the corporate action creating
his entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS. -
(1)(a) If a proposed corporate action creating dissenters' rights under sec
607.1302 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders are or may be entitled to assert dissenters'
rights and be accompanied by a copy of sec 607.1301, sec 607.1302, and sec
607.1320. A shareholder who wishes to assert dissenters' rights shall:
1. Deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed action is
effectuated, and
2. Not vote his shares in favor of the proposed action. A
proxy or vote against the proposed action does not constitute such a notice of
intent to demand payment.
(b) If proposed corporation action creating dissenters' rights
under sec 607.1302 is effectuated by written consent without a meeting, the
corporation shall deliver a copy of sec 607.1301, sec 607.1302, and sec 607.1320
to each shareholder simultaneously with any request for his written consent or,
if such a request is not
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made, within 10 days after the date the corporation received written consents
without a meeting from the requisite number of shareholders necessary to
authorize the action.
(2) Within 10 days after the shareholders' authorization date,
the corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his shares pursuant to paragraph
(1)(a) or, in the case of action authorized by written consent to each
shareholder, excepting any who voted for, or consented in writing to, the
proposed action.
(3) Within 20 days after the giving of notice to him, any
shareholder who elects to dissent shall file with the corporation a notice of
such election, stating his name and address, the number, classes, and series of
shares as to which he dissents, and a demand for payment of the fair value of
his shares. Any shareholder failing to file such election to dissent within the
period set forth shall be bound by the terms of the proposed corporate action.
Any shareholder filing an election to dissent shall deposit his certificates for
certificated shares with the corporation simultaneously with the filing of the
election to dissent. The corporation may restrict the transfer of uncertificated
shares from the date the shareholder's election to dissent is filed with the
corporation.
(4) Upon filing a notice of election to dissent, the
shareholder shall thereafter be entitled only to payment as provided in this
section and shall not be entitled to vote or to exercise any other rights of a
shareholder. A notice of election may be withdrawn in writing by the shareholder
at any time before an offer is made by the corporation, as provided in
subsection (5), to pay for his shares. After such offer, no such notice of
election may be withdrawn unless the corporation consents thereto. However, the
right of such shareholder to be paid the fair value of his shares shall cease,
and he shall be reinstated to have all his rights as a shareholder as of the
filing of his notice of election, including any intervening preemptive rights
and the right to payment of any intervening dividend or other distribution or,
if any such rights have expired or any such dividend or distribution other than
in cash has been completed, in lieu thereof, at the election of the corporation,
the fair value thereof in cash as determined by the board as of the time of such
expiration or completion, but without prejudice otherwise to any corporate
proceedings that may have been taken in the interim, if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or
the shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value
by a court has been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such
shareholder is not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which
shareholders may file their notices of election to dissent, or within 10 days
after such corporate action is effected, whichever is later (but in no case
later than 90 days from the shareholders' authorization date), the corporation
shall make a written offer to each dissenting shareholder who has made demand as
provided in this section to pay an amount the corporation estimates to be the
fair value for such shares. If the corporate action has not been consummated
before the expiration of the 90-day period after the shareholders' authorization
date, the offer may be made conditional upon the consummation of such action.
Such notice and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which
the dissenting shareholder holds, as of the latest available date and not more
than 12 months prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the
12-month period ended on the date of such balance sheet or, if the corporation
was not in existence throughout such 12-month period, for the portion thereof
during which it was in existence.
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(6) If within 30 days after the making of such offer any
shareholder accepts the same, payment for his share shall be made within 90 days
after the making of such offer or the consummation of the proposed action,
whichever is later. Upon payment of the agreed value, the dissenting shareholder
shall cease to have any interest in such shares.
(7) If the corporation fails to make such offer within the
period specified therefor in subsection (5) or if it makes the offer and any
dissenting shareholder or shareholders fail to accept the same within the period
of 30 days thereafter, then the corporation, within 30 days after receipt of
written demand from any dissenting shareholder given within 60 days after the
date on which such corporate action was effected, shall, or at its election at
any time within such period of 60 days may, file an action in any court of
competent jurisdiction in the county in this state where the registered office
of the corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting shareholder,
as to whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation fails to
institute the proceeding as herein provided, any dissenting shareholder may do
so in the name of the corporation. All dissenting shareholders (whether or not
residents of this state), other than shareholders who have agreed with the
corporation as to the value of their shares, shall be made parties to the
proceeding as an action against their shares. The corporation shall serve a copy
of the initial pleading in such proceeding upon each dissenting shareholder who
is a resident of this state in the manner provided by law for the service of a
summons and complaint and upon each nonresident dissenting shareholder either by
registered or certified mail and publication or in such other manner as is
permitted by law. The jurisdiction of the court is plenary and exclusive. All
shareholders who are proper parties to the proceeding are entitled to judgment
against the corporation for the amount of the fair value of their shares. The
court may, if it so elects, appoint one or more persons as appraisers to receive
evidence and recommend a decision on the question of fair value. The appraisers
shall have such power and authority as is specified in the order of their
appointment or an amendment thereof. The corporation shall pay each dissenting
shareholder the amount found to be due him within 10 days after final
determination of the proceeding. Upon payment of the judgment, the dissenting
shareholder shall cease to have any interest in such shares.
(8) The judgment may at the discretion of the court, include a
fair rate of interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be
determined by the court and shall be assessed against the corporation, but all
or any part of such costs and expenses may be apportioned and assessed as the
court deems equitable against any or all of the dissenting shareholders who are
parties to the proceeding to whom the corporation has made an offer to pay for
the shares, if the court finds that the action of such shareholders in failing
to accept such offer was arbitrary, vexatious, or not in good faith. Such
expenses shall include reasonable compensation for, and reasonable expenses of,
the appraisers, but shall exclude the fees and expenses of counsel for, and
experts employed by, any party. If the fair value of the shares, as determined,
materially exceeds the amount which the corporation offered to pay therefor or
if no offer was made, the court in its discretion may award to any shareholder
who is a party to the proceeding such sum as the court determines to be
reasonable compensation to any attorney or expert employed by the shareholder in
the proceeding.
(10) Shares acquired by a corporation pursuant to payment of
the agreed value thereof or pursuant to payment of the judgment entered
therefor, as provided in this section, may be held and disposed of by such
corporation as authorized but unissued shares of the corporation, except that,
in the case of a merger, they may be held and disposed of as the plan of merger
otherwise provides. The shares of the surviving corporation into which the
shares of such dissenting shareholders would have been converted had they
assented to the merger shall have the status of authorized but unissued shares
of the surviving corporation. (Last amended by Ch. 93-281, L. '93, eff.
5-15-93).
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APPENDIX F
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From April 1997 until January 1998, International Integrated
Industries, LLC ("Industries"), an entity affiliated with Mr. Donald K. McGhan,
the Company's former Chairman, Chief Executive Officer and President and 13%
shareholder, lent the Company an aggregate of $9.9 million, of which $8.8
million is included in liabilities at December 31, 1997. That indebtedness is
denoted as the Company's 10.5% subordinated notes. By the terms of the 11%
senior secured convertible notes, the 10.5% subordinated notes are junior in
right of payment and liquidation and, accordingly, no interest or principal
payments can be made with respect thereto without the consent of the senior
Noteholders. Interest expense of $386,000 was accrued in the 1997 income
statement with respect to those notes but has not been paid to date.
After Industries began to lend those monies to the Company, Mr. McGhan
represented to the Board of Directors that those funds were derived from
personal financial resources. Recently, however, in connection with Mr. McGhan's
unsuccessful efforts to negotiate a payment schedule for the interest and
principal of that loan, the Company learned that approximately two-thirds of the
monies lent by Industries to the Company were in fact derived from loans made to
Industries by Medical Device Alliance, Inc. ("MDA"). MDA is a private company
formed by Mr. McGhan in 1995 to develop and market various products for use in
ultrasonic liposuction; the Company believes that approximately $20 million has
been raised to date by MDA from various outside investors through private
placement transactions. The Company does not believe those outside investors
were apprised of the loans from MDA to Industries; importantly, however, the
investment of those funds in a medical device company such as INAMED was
apparently within the permitted scope of the proposed use of funds which existed
when those investors made their investment. The Company's Board of Directors has
been advised by legal counsel: (a) that the Company has no responsibility
whatsoever to the outside investors in MDA for the monies which Mr. McGhan
arranged to loan to Industries, which in turn were loaned by Industries to the
Company, and (b) that Mr. McGhan, as the controlling person of both MDA and
Industries at the times those loans were made, is solely responsible to the
outside investors in MDA for his actions with respect to those monies.
On July 8, 1998, the Company converted its 10.5% subordinated notes
into 860,000 shares of Common Stock. In addition, the Company issued Mr. McGhan
a four-year warrant to purchase 260,000 shares at $12.40 per share. Such 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 the time of exercise. The conversion of this debt
obligation resolved all outstanding issues between the various McGhan entities
and the Company.
In 1997, the Company entered into an agreement with Medical Device
Alliance, Inc. ("MDA") to sell furniture, artwork and equipment which the
Company was acquiring through a capital sublease with Wells Fargo Bank for a
total purchase price of $300,001. The Company recorded a gain on sale of assets
of approximately $9,000 in 1997 in respect to this transaction. In 1997, the
Company also entered into an agreement to sublease from MDA on a month-to-month
basis approximately 5,000 square feet of office space in Las Vegas for $10,000
per month. Donald K. McGhan is the Chairman of MDA.
In 1996 and 1997, the Company performed administrative services for MDA
and other related parties. The Company believes the value of these services is
approximately $150,000 and will invoice MDA when it finishes assessing the
extent of those services.
In 1997, the Company signed a distribution agreement with LySonix Inc.,
a subsidiary of MDA, to sell ultrasonic surgery equipment in the European and
Latin American regions. Special incentive discounts were offered to the Company
for the introduction of the product in 1997. Net sales in 1997 were
approximately $300,000. In 1998, the terms of the original agreement were
revised so that the Company would obtain the goods on a consignment basis and
not have an obligation with LySonix until the products were sold. This agreement
and its revision have been reviewed and approved by the Company's current
management.
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Included in general and administrative expense on the income statement
in 1997 and 1996 is $1.6 million and $1.5 million in aircraft rental expenses
paid to Executive Flite Management, Inc., a company that is controlled by the
family of Mr. Donald K. McGhan. No signed contract exists and the Company was
billed based on its usage. The Company believes that such rental expenses are on
substantially equivalent terms to that which the Company could obtain from an
unaffiliated third party. In 1998, the Company discontinued the use of such
corporate aircraft.
Included in related party notes receivable in 1996 is a 10.5% note with
McGhan Management Corporation, in the amount of $202,510. Mr. Donald K. McGhan
and his wife are the majority shareholders of McGhan Management Corporation.
This note has since been paid in its entirety. During 1996, the Company incurred
$253,000 for flight related services with McGhan Management Corporation. During
1997, the Company incurred $140,000 for flight related services.
Included in assets in 1995 is an unsecured note receivable from Michael
D. Farney, former Chief Executive Officer and Chief Financial Officer of the
Company. This receivable approximated $386,000 as of December 31, 1995. The note
bears interest at 9.5% per annum and was due in June 1996. On March 4, 1996, the
balance of the note was paid in full.
Included in liabilities in 1995 are notes payable to McGhan Management
Corporation, and Donald K. McGhan. These payables approximated $1,209,000 as of
December 31, 1995. The notes bear interest at prime plus 2% per annum (10.5% per
annum at December 31, 1995) and were due June 30, 1996, or on demand. The
Company paid the balance of these notes in full on January 25, 1996. Also
included in liabilities in 1995 is a note payable of approximately $550,000 to
Pedro Ramirez, a former officer of INAMED, S.A., in connection with the
Company's acquisition of this subsidiary. Final payment on this note was made on
February 6, 1996.
During 1992, the Company entered into a rental arrangement with Star
America Corporation for rental of an aircraft to provide air transportation for
corporate purposes. Michael D. Farney is the only director and officer of Star
America Corporation. Rental expense for 1995 and 1994 was $900,000 and $888,000,
respectively. In February 1995, the Company received a credit voucher from Star
America Corporation for $800,000. This amount represented payments made during
1994 in excess of the actual rental arrangement. At December 31, 1995, the
credit voucher had an outstanding balance of $107,670. This balance was paid to
the Company on March 11, 1996. The rental arrangement with Star America
Corporation was terminated effective December 31, 1995.
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P R O X Y
INAMED CORPORATION
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON __________________
The undersigned shareholder appoints Richard G. Babbitt and Ilan K.
Reich, or either of them, as proxy with full power of substitution, to vote the
shares of voting securities of INAMED Corporation (the "Company") which the
undersigned is entitled to vote at a Special Meeting of Shareholders to be held
at , on , at _________, local time, and at any adjournments thereof, upon
matters properly coming before the meeting, as set forth in the Notice of
Special Meeting and Proxy Statement, both of tters which have been received by
the undersigned. Without otherwise limiting the general authorization given
hereby, such proxy is instructed to vote as follows:
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE PROPOSALS INDICATED ON THIS CARD AND AS SUCH
PROXIES DEEM ADVISABLE WITH DISCRETIONARY AUTHORITY ON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR ADJOURNMENTS
THEREOF. NOTE THAT IF ANY OF PROPOSALS 2-6 ARE NOT APPROVED, THEN NONE OF SUCH
PROPOSALS WILL BE ENACTED.
(1) To elect to the Board of Directors the following five (5)
directors, to serve until the next Annual Meeting of Shareholders of the Company
and until their successors have been duly elected and shall have qualified;
Richard J. Babbitt
Ilan K. Reich
Harrison E. Bull, Esq.
Richard Wm. Talley
John E. Williams, M.D.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominees name in the space provided below.
I withhold authority to vote for the following nominee(s):
(2) To approve a change in the Company's state of incorporation from
Florida to Delaware by means of a merger of the Company with and into a
wholly-owned subsidiary;;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To provide in the Company's Certificate of Incorporation to be
filed in Delaware in connection with the Reincorporation for the number of
authorized shares of common stock of the Company, $.01 par value, to be
increased from 20,000,000 to 25,000,000;;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) To provide in the Company's Certificate of Incorporation to be
filed in Delaware in connection with the Reincorporation for the authorization
of the issuance of up to 1,000,000 shares of preferred stock, par value $.01 per
share;
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<PAGE>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) To adopt Bylaws in connection with the Reincorporation;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) To provide in the Company's Certificate of Incorporation to be
filed in Delaware in connection with the Reincorporation and Bylaws to be
adopted in connection with the Reincorporation, for advance notice of
shareholder proposals and nominations for the election of directors;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) To approve the Company's 1998 Stock Option Plan;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
DATED:______________________
__________________________________
Signature
__________________________________
Signature (if held jointly)
__________________________________
Print Names
(Please sign exactly as your name
appears hereon. When signing as
attorney, executor, administrator,
trustee or guardian, please give
your full title. If shares are
jointly held, each holder must
sign. If a corporation, please sign
in full corporate name by President
or other authorized officer. If a
partnership, please sign in
partnership name by authorized
person).
PLEASE CHECK THE BOXES ABOVE, SIGN, DATE AND RETURN THIS PROXY TO U.S.
STOCK TRANSFER CO., ATTN: PROXY SERVICES, IN THE SELF-ADDRESSED ENVELOPE
PROVIDED.
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