Current Report on Form 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 2, 1999
INAMED CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 1-9741 59-0920629
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
700 Ward Drive
Santa Barbara, California 93111
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Address of principal executive offices
Registrant's telephone number, including area code: 805/692-5400
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(Former name or former address, if changed since last report.)
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Item 5. OTHER EVENTS.
On April 2, 1999 INAMED Corporation (the "Company") issued the notices
necessary to obtain all of the monies required to fund the Settlement Agreement
in accordance with the terms of the final order which was recently issued by
Judge Pointer approving the mandatory class settlement of the breast implant
litigation.
Under the terms of the final order and the Settlement Agreement, by
June 2, 1999 the Company is obligated to pay $30 million to the court-appointed
escrow agent, as follows: (a) $25.5 million to retire the subordinated note
issued to the escrow agent in June 1998, at the time the court granted
preliminary approval of the Settlement Agreement; (b) approximately $1.5 million
of accrued interest on that subordinated note; and (c) $3 million to repurchase
the 426,323 shares of common stock deposited with the escrow agent in June 1998.
The Company will obtain a total of $34.4 million from the following
sources: (a) approximately $13.8 million from the holders of warrants to
purchase common stock at $7.50 per share; (b) approximately $17.6 million of net
proceeds from the holders of warrants to purchase common stock at $5.50 per
share; and (c) $3 million from the holders of the Company's 11% junior secured
notes.
The $7.50 warrants were originally issued in July 1997 in contemplation
of the final approval of the Settlement Agreement; based on the notice issued by
the Company on April 2, 1999, those warrants have now been called by the Company
and will be redeemable for nominal value if not exercised prior to May 3, 1999.
Since the current market price of the Company's common stock greatly exceeds the
exercise price of those warrants, the Company expects all of those warrants to
be exercised prior to the redemption date.
The $5.50 warrants were issued in October 1998 in replacement of the
conversion feature (at the same price) of the Company's 11% notes, which were
originally issued in January 1996. By their terms those warrants cannot be
called by the Company until September 2000. In order to induce the holder of
these warrants to exercise early, until April 30, 1999 the Company is offering
to pay a cash exercise fee $0.70 per warrant. Since the current market price of
the Company's common stock greatly exceeds the exercise price of those warrants,
and based on discussions with two of the largest holders of these warrants and
their interest in receiving the exercise fee, by that date the Company expects
to receive $7 million of cash and approximately $10 million of its 11% junior
secured notes.
The right to provide the $3 million of proceeds needed to repurchase
the 426,323 shares of common stock was assigned to the holders of the Company's
11% notes in April 1998 in conjunction with a waiver from those noteholders
which was necessary to enter into the Settlement Agreement. Since the current
market price of the Company's common stock greatly
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exceeds the approximately $7.00 per share repurchase price for those shares, the
Company expects all of those noteholders to exercise their pro-rata right to
purchase those 426,323 shares.
The Company anticipates utilizing approximately $7 million of its own
cash to provide the monies needed to fund the Settlement Agreement.
Based on all of these transactions, by the end of the second quarter of
1999 the Company anticipates having the following capitalization: (a) 17 million
shares of common stock outstanding (as compared to 11.4 million shares
currently); (b) 20 million shares of common stock on a fully-diluted basis
(unchanged from the current number); (c) approximately $17 million of debt (as
compared to $27.6 million currently); and (d) zero litigation liability (as
compared to $34 million as of the end of 1998).
Also on April 2, 1999 the Company amended the Rights Agreement between
the Company and U.S. Stock Transfer Company, dated as of June 2, 1997 (as
amended, the "Rights Agreement"), to clarify the pre-existing "grandfather"
clause which exempts Appaloosa Management L.P. and its affiliates from certain
aspects of the definition of "beneficial ownership". A copy of Amendment No. 4
to the Rights Agreement is attached hereto as Exhibit 99.1 and incorporated
herein by reference.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(c) EXHIBITS
99.1 Amendment No. 4 to Rights Agreement
dated as of April 2, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INAMED CORPORATION
Dated: April 9, 1999
By:/s/ Richard G. Babbitt
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Name: Richard G. Babbitt
Title: Chairman and CEO
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EXHIBIT INDEX
99.1 Amendment No. 4 to Rights
Agreement dated as of April 2, 1999.
Exhibit 99.1
AMENDMENT NO. 4 TO RIGHTS AGREEMENT
This fourth amendment, dated as of April 2, 1999, amends the Rights
Agreement dated as of June 2, 1997, as amended by Amendment No. 1 dated as of
June 13, 1997, Amendment No. 2 dated as of July 2, 1997 and Amendment No. 3
dated as of September 30, 1998 (the "Rights Agreement") between Inamed
Corporation (the "Company") and U.S. Stock Transfer Corporation, as Rights Agent
(the "Rights Agent"). Terms defined in the Rights Agreement and not otherwise
defined herein are used herein as so defined.
W I T N E S S E T H
WHEREAS, on May 23, 1997, the Board of Directors of the Company
authorized the issuance of Rights to purchase, on the terms and subject to the
provisions of the Rights Agreement, one share of the Company's Common Stock;
WHEREAS, the Board of Directors of the Company authorized and declared
a dividend distribution of one Right for every share of Common Stock of the
Company outstanding on June 13, 1997 and authorized the issuance of one Right
(subject to certain adjustments) for each share of Common Stock of the Company
issued between the Record Date and the Distribution Date; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Board of
Directors now unanimously desire to amend certain provisions of the Rights
Agreement in order to supplement certain provisions therein.
NOW, THEREFORE, the Rights Agreement is hereby amended as follows:
1. Section 1(a) is hereby amended by deleting Section 1(a) in its
entirety and substituting the following therefor:
"(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter
defined) of such Person, after the date hereof, shall
become the Beneficial Owner (as such term is hereinafter
defined) of 15% or more of the Common Shares then
outstanding, but shall not include the Company, any
Subsidiary (as such term is hereinafter defined) of the
Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any such
plan.
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Notwithstanding anything in this Agreement that might
otherwise be deemed to the contrary; (i) no person shall
become an "Acquiring Person" as the result of an
acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such
Person to 15% or more of the Common Shares then
outstanding; provided, however, that if a Person shall
become the Beneficial Owner of 15% or more of the Common
Shares then outstanding by reason of share purchases by
the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional
Common Shares, then such Person shall be deemed to be an
"Acquiring Person"; (ii) if the Board of Directors of the
Company determines in good faith that a Person who would
otherwise be an "Acquiring Person" has become such
inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person," then
such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement; (iii) no
officer or director of the Company who or which, together
with all Affiliates of such Person, is the Beneficial
Owner of 15% or more of the outstanding shares of Common
Stock of the Company as of the Record Date shall be deemed
an "Acquiring Person" for any purpose of this Agreement,
provided, that such officer or director together with his
Affiliates does not become the Beneficial Owner of 20% or
more of the outstanding shares of Common Stock of the
Company, and provided further that such officer or
director need not continue in such capacity after the
Record Date; and (iv) Appaloosa Management L.P., together
with its Affiliates and Associates (collectively,
"Appaloosa"), shall not be deemed an "Acquiring Person"
for any purpose of this Agreement with respect to
Beneficial Ownership of 15% or more of the outstanding
shares of the Company's Common Stock so long as Appaloosa
does not become the Beneficial Owner of Common Shares in
an amount in excess of the Appaloosa Threshold. For
purposes of this Agreement, the Appaloosa Threshold as at
any date shall mean an amount equal to the sum of (A) all
Common Shares beneficially owned by Appaloosa as of March
1, 1999 (the "Grandfather Date"), including any Common
Shares which may be deemed to be beneficially owned by
Appaloosa through Warrants or other similar rights held by
Appaloosa as of the
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Grandfather Date, plus (B) an additional 875,000 Common
Shares (adjusted for stock splits, stock dividends and
other similar transactions) of which Appaloosa may acquire
Beneficial Ownership after the Grandfather Date, plus (C)
all Common Shares in which Appaloosa may acquire
Beneficial Ownership after the Grandfather Date through
the exercise of any preemptive or similar rights held by
Appaloosa. The provisions of clause (iv) above shall not
apply to (x) any third party transferees not Affiliated
with Appaloosa who may acquire any securities from
Appaloosa, or (y) any Common Shares in which Appaloosa may
acquire Beneficial Ownership after the Grandfather Date
other than as described under (B) and (C) of clause (iv).
2. This Amendment may be executed in any number of counterparts,
and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together
constitute but one and the same instrument.
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IN WITNESS WHEREOF, this Amendment No. 4 has been signed to be
effective as of the close of business on this 2nd day of April, 1999 by
authorized representatives of each of the Company and the Rights Agent.
INAMED CORPORATION
By: /S/ ILAN K. REICH
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Ilan K. Reich
President
U.S. STOCK TRANSFER CORPORATION
By: /S/ RICHARD C. BROWN
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Richard C. Brown
Vice President
