<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
INAMED CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] 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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
<PAGE> 2
[INAMED LOGO]
INAMED CORPORATION
5540 EKWILL STREET, SUITE D
SANTA BARBARA, CALIFORNIA 93111
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, MAY 17, 2000
To the Stockholders of Inamed:
We invite you to attend our annual stockholders' meeting on Wednesday, May
17, 2000 at 460 Ward Drive, Santa Barbara, California 93111 at 10:30 a.m. At the
meeting, you will have a chance to hear an update on our operations, have a
chance to meet some of our directors and executives and act on the following
matters:
1) To elect seven (7) directors to a one year term;
2) To approve the amendment of the Company's Certificate of
Incorporation (in the form attached hereto as Appendix A) increasing the
number of authorized shares of Common Stock of the Company, par value $0.01
per share, from 25,000,000 to 50,000,000 shares.
3) To ratify the Company's 1999 Senior Officer Stock Option Program;
4) To approve the Company's 2000 Employee Stock Option Plan;
5) To approve the Company's 2000 Employee Stock Purchase Plan;
6) To approve the Company's 2000 Senior Management Bonus Plan;
7) To ratify the appointment of BDO Seidman, LLP as the Company's
independent accountants for fiscal 2000; and
8) Any other matters that properly come before the meeting.
This booklet includes a formal notice of the meeting and the proxy
statement. The proxy statement tells you more about the agenda and procedures
for the meeting. It also describes how our Board of Directors operates and gives
personal information about our director nominees.
Only stockholders of record at the close of business on April 3, 2000 will
be entitled to vote at the annual meeting. Even if you only own a few shares, we
want your shares to be represented at the annual meeting. I urge you to
complete, sign, date and return your proxy card promptly in the enclosed
envelope.
We have also provided you with the exact place and time of the meeting if
you wish to attend in person.
By Order of the Board of Directors
INAMED CORPORATION
DAVID E. BAMBERGER
Secretary
Dated: April 7, 2000
<PAGE> 3
INAMED CORPORATION
5540 EKWILL STREET, SUITE D
SANTA BARBARA, CALIFORNIA 93111
ANNUAL MEETING OF STOCKHOLDERS
2000 PROXY STATEMENT
This proxy statement contains information related to the annual meeting of
stockholders of Inamed Corporation to be held on Wednesday, May 17, 2000,
beginning at 10:30 a.m., at 460 Ward Drive, Santa Barbara, California 93111, and
at any postponements or adjournments thereof.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Company's annual meeting (the "Meeting"), stockholders will hear an
update on the Company's operations, have a chance to meet some of its directors
and executives and will act on the following matters:
1) To elect seven (7) directors to a one year term;
2) To approve the amendment of the Company's Certificate of
Incorporation (in the form attached hereto as Appendix A) increasing the
number of authorized shares of Common Stock of the Company, par value $0.01
per share (the "Common Stock"), from 25,000,000 to 50,000,000 shares;
3) To ratify the Company's 1999 Senior Officer Stock Option Program;
4) To approve the Company's 2000 Employee Stock Option Plan;
5) To approve the Company's 2000 Employee Stock Purchase Plan;
6) To approve the Company's 2000 Senior Management Bonus Plan;
7) To ratify the appointment of BDO Seidman, LLP as the Company's
independent accountants for fiscal 2000; and
8) Any other matters that properly come before the meeting.
WHO MAY VOTE
Stockholders of Inamed Corporation, as recorded in our stock register on
April 3, 2000 (the "Record Date"), may vote at the meeting. As of April 3, 2000,
we had 20,411,341 shares of Common Stock eligible to vote. We have only one
class of voting shares. All shares in this class have equal voting rights of one
vote per share.
HOW TO VOTE
You may vote in person at the meeting or by proxy. We recommend that you
vote by proxy even if you plan to attend the meeting. You can always change your
vote in the meeting.
HOW PROXIES WORK
Our Board of Directors is asking for your proxy. Giving us your proxy means
you authorize us to vote your shares at the meeting in the manner you direct.
You may vote for all, some, or none of our director nominees. You may also vote
for or against the other proposals or abstain from voting.
If you sign and return the enclosed proxy card but do not specify how to
vote, we will vote your shares in favor of all our director nominees; in favor
of the ratification of BDO Seidman, LLP to act as the Company's independent
accountants for fiscal 2000; in favor of the amendment of the Company's
Certificate of Incorporation increasing the number of authorized shares of
Common Stock of the Company from 25,000,000
<PAGE> 4
to 50,000,000 shares; in favor of the ratification of the 1999 Senior Officer
Stock Option Program; in favor of the 2000 Employee Stock Option Plan; in favor
of the 2000 Employee Stock Purchase Plan; and in favor of the 2000 Senior
Management Bonus Plan.
You may receive more than one proxy or voting card depending on how you
hold your shares. If you hold shares through someone else, such as a
stockbroker, you may get materials from them asking how you want to vote. The
latest proxy card we receive from you will determine how we will vote your
shares.
REVOKING A PROXY
There are three ways to revoke your proxy. First, you may submit a new
proxy with a later date up until the existing proxy is voted. Secondly, you may
vote in person at the meeting. Lastly, you may notify our corporate secretary in
writing at 5540 Ekwill Street, Suite D, Santa Barbara, California 93111, so long
as such revocation is received by the corporate secretary on or before April 16,
2000.
QUORUM
In order to carry on the business of the meeting, we must have a quorum.
This means at least a majority of the outstanding shares eligible to vote must
be represented at the meeting, either by proxy or in person. Shares that we own
are not voted and do not count for this purpose.
VOTES NEEDED
The director nominees receiving a plurality of the votes cast during the
meeting will be elected to fill the seats of our Board of Directors. The
amendment to the Company's Certificate of Incorporation must be adopted by the
favorable vote of a majority of the outstanding shares entitled to vote thereon.
In determining whether such proposal has received the requisite number of
favorable votes, abstentions and broker non-votes will have the same effect as a
vote against the proposal. For the other proposals to be approved, we require
the favorable vote of a majority of the votes cast. Only votes for or against a
proposal count. Votes which are withheld from voting on a proposal will be
excluded entirely and will have no effect in determining the quorum or the
majority of votes cast. Abstentions count for quorum purposes, but will have no
effect in determining the election of directors. Abstentions, however, will have
the effect of a vote against the other proposals. Broker non-votes count for
quorum purposes only and not for voting purposes. Broker non-votes occur when a
broker returns a proxy but does not have the authority to vote in a particular
proposal.
ATTENDING IN PERSON
Only stockholders, their proxy holders, and our invited guests may attend
the meeting. If you wish to attend the meeting in person but you hold your
shares through someone else, such as a stockbroker, you must bring proof of your
ownership to the meeting. For example, you could bring an account statement
showing that you owned Inamed Corporation shares as of April 3, 2000 as
acceptable proof of ownership.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the shares of Common Stock
owned as of April 3, 2000, by (i) each person known by the Company to be the
beneficial owner of more than five percent of the outstanding Common Stock of
the Company, (ii) every other person known by the Company to be the beneficial
owner of at least 1,000,000 shares of the Common Stock, (iii) each person who is
presently a director of the Company, (iv) each of the officers named in the
summary compensation table and (v) all the directors and officers of the Company
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.
2
<PAGE> 5
<TABLE>
<CAPTION>
PERCENT OF CLASS
BASED ON SHARES PERCENT OF CLASS BASED ON
NAME AND ADDRESS OF BENEFICIALLY SHARES ACTUALLY OWNED AND
BENEFICIAL OWNER NUMBER OF SHARES OWNED(1) CURRENTLY OUTSTANDING (2)
- - ------------------- ---------------- ---------------- -------------------------
<S> <C> <C> <C>
Entities affiliated with
Appaloosa Management L.P. ........... 6,410,052(3) 27.8% 26.8%
26 Main Street
Chatham, New Jersey 07928
Donald K. McGhan....................... 1,274,858(4) 5.5% 6.2%
3800 Howard Hughes Pkwy
Suite 1800
Las Vegas, Nevada 89109
Medical Device Alliance, Inc........... 1,120,000(5) 4.9% 4.2%
5851 West Charleston
Las Vegas, Nevada 89149
Chilton Investment Co., Inc............ 1,108,700(6) 4.8% 5.4%
65 Locust Avenue, 2nd Floor
New Canaan, Connecticut
06840
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF CLASS (BASED
PERCENT OF CLASS (BASED ON SHARES ACTUALLY
NUMBER OF SHARES ON SHARES BENEFICIALLY OWNED AND CURRENTLY
BENEFICIALLY OWNED OWNED(1)) OUTSTANDING(2))
------------------ ----------------------- -----------------------
<S> <C> <C> <C>
OFFICERS AND DIRECTORS(9)
Richard G. Babbitt(7).............. 496,667(9) 2.2% *
Ilan K. Reich(8)................... 580,167(10) 2.5% *
David E. Bamberger(8).............. 13,250(11) * *
Michael J. Doty(8)................. 12,500(12) * *
James E. Bolin(7).................. (13) -- --
Malcolm R. Currie, Ph.D.(7)........ 39,400(14) * *
John F. Doyle(7)................... 61,273(14) * *
Mitchell S. Rosenthal, M.D.(7)..... 5,000(15) * *
David A. Tepper(7)................. 6,410,052(16) 27.8% 26.8%
All officers and directors as a
group (13 persons)............... 7,618,309 33% 27.5%
</TABLE>
- - ---------------
* Less than 1%
(1) The percentages are calculated on the basis of the number of outstanding
shares of Common Stock as of April 3, 2000, which is 20,411,341, plus the
2,655,973 shares of Common Stock underlying all options and warrants that
are exercisable either currently or within 60 days hereof.
(2) The percentages are calculated on the basis of the number of outstanding
shares of common stock as of April 3, 2000, which is 20,411,341.
(3) Based on the Schedule 13D/A filed jointly in November 1999 by Appaloosa
Management L.P. and David A. Tepper. Mr. Tepper is the President of
Appaloosa Partners Inc., the general partner of Appaloosa Management L.P.
Includes (i) 362,286 shares of common stock issuable upon the exercise of
warrants to purchase shares of common stock at $7.50 per share and (ii)
579,510 shares of common stock issuable upon the exercise of warrants to
purchase shares of common stock at $6.50 per share.
(4) Based on a Schedule 13D filed jointly in March 1999 by Donald K. McGhan,
Shirley M. McGhan, McGhan Management Corp., McGhan Management Limited
Partnership, International Integrated Industries LLC and Medical Device
Alliance Inc., includes (i) 87,485 shares owned by McGhan Management
Corporation, a corporation for which Mr. McGhan is the chairman; (ii)
197,280 shares
3
<PAGE> 6
owned by McGhan Management Limited Partnership, a limited partnership of
which Mr. McGhan is the general partner and (iii) 354,489 shares owned by
International Integrated Industries L.L.C., a limited liability corporation
of which Mr. McGhan is the managing member. Does not include 207,310 shares
of common stock owned by Shirley M. McGhan, the wife of Donald K. McGhan,
to which Mr. McGhan disclaims beneficial ownership. By order dated June 29,
1999, a court-appointed receiver, George C. Swarts, replaced Donald K.
McGhan as the principal control person of Medical Device Alliance. In 1999,
Mr. McGhan filed a writ of prohibition against that order, in effect taking
an appeal from it. Does not include 660,000 shares of Common Stock and a
warrant to purchase 260,000 shares of Common Stock at $12.40 per share,
which the Company understands are beneficially owned by Medical Device
Alliance. Does not include 200,000 shares of Common Stock that, subject to
a Company lien, the Company understands are beneficially owned by Medical
Device Alliance. Pursuant to a letter agreement dated July 8, 1998 between
Donald K. McGhan, his affiliates and the Company, Mr. McGhan agreed for a
five-year period to comply with various traditional "standstill"
provisions, including, among others, to vote all Common Stock owned by him
or his affiliates, including International Integrated Industries, Inc. and
Medical Device Alliance, in proportion to the votes (or abstentions) of all
other stockholders on any matter submitted to a vote or consent of
stockholders, except for a vote on any proposed business combination,
recapitalization or other similar transaction and, except under limited
circumstances, not to transfer any shares of common stock in one or a
series of transactions in a manner that would result in the acquiror owning
five percent or more of the outstanding common stock of Inamed.
(5) Includes 660,000 shares, an additional 200,000 shares currently being held
in escrow by the Company and which are subject to a Company lien, and a
warrant to purchase 260,000 shares of Common Stock at $12.40 per share.
Because Medical Device Alliance was an affiliate of Mr. McGhan on July 8,
1998, all of the shares of Common Stock held by Medical Device Alliance are
subject to the "standstill" provisions of the July 8, 1998 letter agreement
referred to in note 4 above.
(6) Based on Amendment No. 2 to Schedule 13G, filed February 2000, by Chilton
Investment Company, Inc.
(7) The named person is an officer and/or director of Inamed and his address is
5540 Ekwill Street, Suite D, Santa Barbara, California 93111.
(8) The named person is an officer and/or director of Inamed and his address is
11 Penn Plaza, Suite 946, New York, New York 10001.
(9) Includes 466,667 shares of Common Stock issuable upon the exercise of
options and/or warrants either currently or within 60 days hereof, and
excludes 133,333 shares of Common Stock issuable upon exercise of certain
options which do not vest within 60 days.
(10) Includes 541,667 shares of Common Stock issuable upon the exercise of
options and/or warrants either currently or within 60 days hereof, and
excludes 133,333 shares of Common Stock issuable upon exercise of certain
options which do not vest within 60 days.
(11) Includes 11,250 shares of Common Stock issuable upon the exercise of
warrants within 60 days hereof, and excludes 78,752 shares of Common Stock
issuable upon exercise of certain options and/or warrants which do not vest
within 60 days.
(12) Consists of shares of Common Stock issuable upon the exercise of warrants
within 60 days hereof, and excludes 77,500 shares of Common Stock issuable
upon exercise of certain warrants and/or options which do not vest within
60 days.
(13) Mr. Bolin is the Vice President of Appaloosa Partners Inc., the general
partner of Appaloosa Management L.P. Mr. Bolin disclaims beneficial
ownership of all shares owned by Appaloosa Management L.P.
(14) Includes 5,000 shares of Common Stock currently issuable upon the exercise
of options.
(15) Consists of shares of Common Stock currently issuable upon the exercise of
options.
(16) Based on the Schedule 13D/A filed jointly in November 1999 by Appaloosa
Management L.P. and David A. Tepper. Mr. Tepper is the President of
Appaloosa Partners Inc., the general partner of
4
<PAGE> 7
Appaloosa Management L.P. Includes (i) 362,286 shares of Common Stock
issuable upon the exercise of warrants to purchase shares of Common Stock
at $7.50 per share and (ii) 579,510 shares of Common Stock issuable upon
the exercise of warrants to purchase shares of Common Stock at $6.50 per
share.
PROPOSAL NO. 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 stockholders 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.
The terms of the current directors expire at the next annual meeting of
stockholders and when their successors are duly elected and shall have
qualified. 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 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.
<TABLE>
<CAPTION>
NAME AGE POSITION
- - ---- --- --------
<S> <C> <C>
NOMINEES FOR DIRECTOR
Richard G. Babbitt................... 74 Chairman of the Board and Chief Executive Officer
James E. Bolin....................... 41 Director
Malcolm R. Currie, Ph.D. ............ 73 Director
John F. Doyle........................ 70 Director
Ilan K. Reich........................ 45 President and Co-Chief Executive Officer; Director
Mitchell S. Rosenthal, M.D. ......... 64 Director
David A. Tepper...................... 42 Director
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Michael J. Doty...................... 53 Senior Vice President and Chief Financial Officer
David E. Bamberger................... 43 Senior Vice President, General Counsel and Secretary
</TABLE>
RICHARD G. BABBITT
Mr. Babbitt has served as Chairman of Inamed since February 6, 1998 and as
Chief Executive Officer since January 22, 1998, and served as President between
January 22, 1998 and December 22, 1998. Prior to 1998, for more than five years,
he was associated with DNA Technologies, Inc., Ben Hogan Company, B.I.
Industries, American Safety Equipment Corporation, Welsh Manufacturing and
Medical Supply Company in C.E.O. and Board positions. Mr. Babbitt is a graduate
of Purdue University and holds Bachelor of Science and Bachelor of Naval Science
Tactics degrees. He also served as an officer in the United States Marine Corps.
JAMES E. BOLIN
Mr. Bolin has served as a director of Inamed since March 18, 1999. Mr.
Bolin has been a Vice President and Secretary of Appaloosa Partners Inc. since
1995. He was previously a Vice President and Director of Corporate Bond Research
at Goldman, Sachs & Co. He also worked at Smith Barney, Harris Upham in the
Fixed Income Research Department. Mr. Bolin holds a Bachelor of Arts degree from
Washington University in St. Louis and an M.B.A in accounting and finance from
the University of Missouri-St. Louis.
5
<PAGE> 8
MALCOLM R. CURRIE, PH.D.
Dr. Currie has served as a director of Inamed since June 3, 1999. Dr.
Currie has served as the President and CEO of Currie Technologies Incorporated,
an electric transportation company, since 1997. He has been the Chairman
Emeritus of Hughes Aircraft Company since his retirement in 1992 as Chairman and
CEO. He has had an extensive career in high technology research, engineering and
management. Dr. Currie currently serves on the Boards of Directors of the
following publicly traded companies: Investment Company of America, SM&A
Corporation, LSI Logic Corporation, Enova Systems and Regal One. Dr. Currie also
serves as the Chairman of the University of Southern California Board of
Trustees. He has previously served as President and CEO of Delco Electronics
Corporation and Chairman and CEO of GM Hughes Electronics Corporation. From June
1994 to August 1997, Dr. Curie was a manager of Electric Bicycle Co., LLC a
limited liability company that filed for Chapter 7 bankruptcy protection in
August 1997. Dr. Currie holds a Bachelor of Arts degree in Physics and a Ph.D.
in Engineering Physics from the University of California at Berkeley.
JOHN F. DOYLE
Mr. Doyle has served as a director of Inamed since March 18, 1999. Since
1994, he has performed marketing and management consulting, primarily for
start-up companies. Prior to 1994, Mr. Doyle worked with IBM and Craig
Corporation in executive and sales and marketing positions. He served as the
Chairman and Chief Executive Officer of Pioneer Electronics (USA) Inc. from 1971
to 1986. Mr. Doyle currently serves on the Board of Directors of the Pomona
Valley Hospital Foundation, and has served on the Boards of various consumer
groups as well as business and philanthropic organizations. Mr. Doyle holds a
Bachelor of Arts degree from Miami University of Ohio.
ILAN K. REICH
Mr. Reich has served as a director of Inamed since January 22, 1998, served
as Executive Vice President between January 22, 1998 and December 22, 1998, and
has served as President since December 22, 1998 and as Co-Chief Executive
Officer since March 8, 2000. Prior to 1998, he was a partner or counsel with the
New York law firm of Olshan Grundman Frome Rosenzweig & Wolosky 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.
From 1979 until July 1986, Mr. Reich was an associate and then partner at the
New York law firm of Wachtell, Lipton, Rosen & Katz, specializing in corporate
and securities laws. Mr. Reich holds a Bachelor of Arts degree from Columbia
College and a J.D. from Columbia Law School, and is a member of various bar
associations. Mr. Reich serves on the Board of Directors of the Correctional
Association of New York and the Osborne Association, which are non-profit
organizations focused on criminal justice issues and services.
During a four year period which ended nearly sixteen years ago, Mr. Reich
provided a third party with non-public information about merger and acquisition
transactions in which Mr. Reich's law firm was involved. Mr. Reich never
received any payment or profits from that information, and voluntarily
disengaged from that activity two years before any charges were brought. In
1986, Mr. Reich pleaded guilty to two federal counts of mail and securities
fraud (for which he served a prison term), consented with the Commission to
entry of an injunction against future violations of certain provisions of the
federal securities laws, paid a substantial fine and was also disbarred. In
1995, a panel of judges readmitted Mr. Reich to the practice of law. In order to
obtain readmission, Mr. Reich had to meet the burden of showing, by clear and
convincing evidence, that he is of high ethical character and unlikely to engage
in further violative conduct. The board of directors was aware of the foregoing
facts and took them into consideration in concluding that Mr. Reich was fit to
serve as an executive officer and director of the company.
6
<PAGE> 9
MITCHELL S. ROSENTHAL, M.D.
Dr. Rosenthal has served as a director of Inamed Corporation since June 3,
1999. Dr. Rosenthal is a psychiatrist and since 1970 has served as the president
of Phoenix House Foundation, which he founded over 30 years ago and which is the
nation's largest non-profit substance abuse services system, with nearly 70
programs in eight states, New York, California, Texas, Florida, Massachusetts,
New Hampshire, Rhode Island and Vermont. Dr. Rosenthal has been a White House
advisor on drug policy, a special consultant to the Office of National Drug
Control Policy and serves on the New York State Advisory Council on Alcoholism
and Substance Abuse Services, which he chaired from 1985 to 1997. Dr. Rosenthal
is a lecturer in psychiatry at Columbia University College of Physicians and
Surgeons and a former president of the American Association of Psychoanalytic
Physicians. He is a graduate of Lafayette College and earned his M.D. from the
Downstate Medical Center of State University of New York. Dr. Rosenthal is a
member of the Council on Foreign Relations and serves on the Board of the Pro
Musicis Foundation.
DAVID A. TEPPER
Mr. Tepper has served as a director of Inamed since March 18, 1999. Mr.
Tepper has been President of Appaloosa Partners Inc. since its formation in
1993. He was previously head trader in the High Yield Department of Goldman,
Sachs & Co. He also has been employed by Keystone Funds and Republic Steel. Mr.
Tepper holds a Bachelor of Arts degree with honors in Economics from the
University of Pittsburgh and an M.B.A. from Carnegie Mellon University.
MICHAEL J. DOTY
Mr. Doty has served as Senior Vice President and Chief Financial Officer of
Inamed since May 3, 1999. He is a certified public accountant with more than 25
years of experience in a wide range of financial, administrative and planning
positions at companies such as 3M, Honeywell, Inc. and Reckitt & Colman, PLC.
Prior to his employment with Inamed, Mr. Doty was the Vice President and Chief
Financial Officer of O-Cedar Brands, Inc., a private consumer product company
based in Cincinnati. From 1994 to 1997, Mr. Doty was the Vice President and
Chief Financial Officer of White Systems, Inc., a manufacturer and software
developer. Mr. Doty holds a Bachelor of Chemistry and Bachelor of Science in
Business Administration -- Accounting from the University of Minnesota and an
M.B.A. from the University of St. Thomas.
DAVID E. BAMBERGER
Mr. Bamberger has served as Senior Vice President and General Counsel of
Inamed since June 1, 1999, and Secretary since July 21, 1999. Prior to joining
Inamed, for approximately five years, Mr. Bamberger was a partner at Olshan
Grundman Frome Rosenzweig & Wolosky LLP in New York, specializing in corporate
and general litigation. Prior to 1994, he was vice president and general counsel
of TPI Enterprises, Inc., a publicly-traded company, and before that, Senior
Counsel with MacAndrews & Forbes Holdings, Inc. He was also an attorney at
Simpson Thacher & Bartlett and Skadden, Arps, Slate, Meagher & Flom. Mr.
Bamberger holds a Bachelor of Arts degree from Brandeis University and a J.D.
from Harvard Law School.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended, executive officers, directors and holders of more than 10% of Inamed's
common stock are required to file reports of their trading in Inamed equity
securities with the Securities and Exchange Commission.
Based solely on its review of the copies of such reports received by
Inamed, or written representations from certain reporting persons that no
reports on Form 5 were required for these persons, Inamed believes that during
the last fiscal year all Section 16 filing requirements applicable to its
reporting persons were complied with, except as set forth below.
7
<PAGE> 10
Director Currie failed to file on a timely basis one Form 4, relating to
one transaction in Inamed's common stock in July 1999. Such form was filed two
days late. Since that time, the Company has instituted a policy to ensure, to
the extent possible, full compliance with Section 16(a).
RECOMMENDATION OF THE BOARD OF DIRECTORS:
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, 1999, there were eight meetings of
the Board of Directors. All of the directors attended at least 75% of the
meetings. From time to time, the members of the Board of Directors act by
unanimous written consent pursuant to the laws of the State of Delaware.
The Board of Directors has created an Audit Committee, a Compensation
Committee, an Executive Committee and a Nominating Committee. The members of the
Audit Committee are Mr. Bolin and Dr. Currie. The Audit Committee 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 Audit Committee met four times in 1999. The members of
the Compensation Committee are Messrs. Bolin and Doyle and Dr. Rosenthal. The
Compensation Committee recommends to the Board of Directors compensation for
certain of the Company's key employees and administers the Company's employee
stock option and stock purchase plans and the Company's senior management bonus
plan. The Compensation Committee met three times in 1999. The members of the
Executive Committee are Messrs. Babbitt and Bolin and Dr. Currie. The Executive
Committee considers issues and makes recommendations on various matters to the
full Board of Directors as required. The members of the Nominating Committee are
Messrs. Tepper and Reich. The Nominating Committee recommends nominees to the
Board of Directors of the Company. The Nominating Committee will consider, as
potential nominees, persons recommended by stockholders in accordance with the
procedures set forth in the Company's By-laws. The Company's By-laws provide
that a stockholder nominating persons for election to the Board of Directors, in
general, must give notice thereof in writing to the secretary of the Company not
less than 90 nor more than 120 days prior to the anniversary date of the
immediately preceding annual meeting if the annual meeting is called for a date
that is within 30 days of the anniversary date.
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. In addition, upon their initial election,
Directors receive an option to purchase 5,000 shares of Common Stock, and
thereafter receive an option to purchase 5,000 shares of Common Stock on each
subsequent anniversary of their election to the Board of Directors for so long
as they remain Directors. Directors who are employees are not entitled to any
compensation for their service as a director. Pursuant to a plan adopted in
1999, directors may elect to receive their compensation in Common Stock in lieu
of cash. Two directors have elected this option.
8
<PAGE> 11
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth, for the fiscal
years indicated, all compensation awarded to, paid to or earned by the following
type of executive officers for the fiscal years ended 1997, 1998 and 1999: (i)
individuals who served as, or acted in the capacity of, the Company's Chief
Executive Officer for the fiscal year ended December 31, 1999; (ii) the
Company's other most highly compensated executive officers, whose salary and
bonus exceeded $100,000 with respect to the fiscal year ended December 31, 1999
and who were employed at the end of fiscal year 1999; and (iii) individuals for
whom disclosure would have been provided but for the fact that the individual
was not serving as an executive officer of the Company at the end of fiscal year
1999.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- -----------------------------
OTHER STOCK
ANNUAL OPTIONS ALL OTHER
SALARY BONUS COMPENSATION GRANTED COMPENSATION
NAME AND PRINCIPAL POSITIONS YEAR $ $ $ (IN SHARES)(#) ($)(1)
- - ---------------------------- ---- ------- ------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT OFFICERS
Richard G. Babbitt(2).............. 1999 400,000 225,000 16,079(3) 200,000 6,205(4)
Chairman and Chief Executive 1998 356,923 100,000 15,837(3) 400,000 141,163(5)
Officer
Ilan K. Reich(6)................... 1999 400,000 225,000 4,431(3) 200,000 63
President and Co-Chief Executive 1998 363,077 100,000 400,000 714
Officer
Michael J. Doty(7)................. 1999 126,923 100,000 4,000(3) 90,000 28,884(8)
Senior Vice President and Chief
Financial Officer
David E. Bamberger(9).............. 1999 96,923 100,000 4,000(3) 90,002 25
Senior Vice President, General
Counsel and Secretary
PERSON NO LONGER AFFILIATED WITH
THE COMPANY
Jeffrey J. Barber(10).............. 1999 127,692 20,000 -- -- 102,415(11)
Former Executive Vice President 1998 208,377 500 -- -- 462
1997 120,462 9,162 -- -- 5,536
</TABLE>
- - ---------------
(1) Amounts shown, unless otherwise noted, reflect employer contributions to
group term life insurance premiums.
(2) Mr. Babbitt has served as Chief Executive Officer of the Company since
January 22, 1998 and as Chairman since February 6, 1998, and served as
President between January 22, 1998 and December 22, 1998.
(3) Consists of an automobile allowance.
(4) Consists of moving expenses.
(5) Includes a relocation allowance of $100,000 and temporary living expenses
of $32,344.
(6) Mr. Reich has served as a director of Inamed since January 22, 1998, served
as Executive Vice President between January 22, 1998 and December 22, 1998,
and has served as President since December 22, 1998 and as Co-Chief
Executive Officer since March 8, 2000.
(7) Mr. Doty has served as Senior Vice President and Chief Financial Officer of
the Company since May 3, 1999.
(8) Includes a relocation allowance of $19,320 and temporary living expenses of
$9,000.
(9) Mr. Bamberger has served as Senior Vice President and General Counsel of
the Company since June 1, 1999 and Secretary since July 21, 1999.
(10) Mr. Barber resigned from all positions with the Company effective August
11, 1999.
9
<PAGE> 12
(11) Consists of $82,051 in severance compensation and $20,364 in vacation
payout that was owed pursuant to established policies of the Company.
The following table sets forth certain information regarding grants of
stock options or warrants made to each of the executive officers named in the
Summary Compensation Table during the fiscal year ended December 31, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
NUMBER OF SECURITIES OPTIONS RATES OF STOCK PRICE
UNDERLYING OPTIONS GRANTED TO EXERCISE APPRECIATION FOR OPTION TERM
GRANTED(#) EMPLOYEES IN PRICE EXPIRATION -----------------------------
NAME (1) FISCAL YEAR ($/SH) DATE 0%($) 5%($) 10%($)
- - ---- -------------------- ------------ -------- ---------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT OFFICERS
Richard G. Babbitt........ 145,000 15.3 15.50 4/30/09 -- 754,386 2,391,432
55,000 5.8 20.00 4/30/09 -- 38,646 659,595
Ilan K. Reich............. 145,000 15.3 15.50 4/30/09 -- 754,386 2,391,432
55,000 5.8 20.00 4/30/09 -- 38,646 659,595
Michael J. Doty........... 25,000 2.6 13.00 5/3/09 -- 207,354 497,668
14,000 1.5 15.50 9/13/09 129,500 338,717 656,113
30,000 3.2 20.00 9/13/09 142,500 590,821 1,270,956
21,000 2.2 24.75 9/13/09 -- 313,825 789,919
David E. Bamberger........ 22,500 2.4 12.50 6/01/09 -- 164,227 410,019
10,834 1.1 15.50 9/13/09 100,215 262,118 507,738
30,834 3.3 20.00 9/13/09 146,462 607,246 1,306,289
25,834 2.7 24.75 9/13/09 -- 387,356 973,043
PERSON NO LONGER
AFFILIATED WITH
THE COMPANY
Jeffrey J. Barber......... 0 -- -- -- -- -- --
</TABLE>
- - ---------------
(1) Unless otherwise noted, amounts represent shares of Common Stock underlying
warrants and/or options to purchase shares of Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning unexercised
stock options and warrants held by the executive officers named in the Summary
Compensation Table as of December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING UN- VALUE OF UNEXERCISED IN-THE-MONEY
EXERCISED OPTIONS AT 1999 FISCAL YEAR- OPTIONS AT 1999 FISCAL YEAR-END
END (#) ($)(1)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- - ---- -------------------------------------- ---------------------------------
<S> <C> <C>
CURRENT OFFICERS
Richard G. Babbitt................ 200,000/400,000 8,070,000/13,497,500
Ilan K. Reich..................... 275,000/400,000 10,862,375/13,412,500
Michael J. Doty................... 0/ 90,000 0/ 2,287,000
David E. Bamberger................ 0/ 90,002 0/ 2,243,590
PERSON NO LONGER AFFILIATED WITH
THE COMPANY
Jeffrey J. Barber................. 0/0 0/0
</TABLE>
- - ---------------
(1) On December 31, 1999, the last reported sales price of the Common Stock as
reported on the NASDAQ National Market was $43.875.
10
<PAGE> 13
STOCK OPTION EXERCISES IN 1999
None of the executive officers named in the Summary Compensation Table
herein exercised any options to purchase Common Stock during 1999.
STOCK OPTION PLANS
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 purchase an
additional 5,000 shares of Common Stock on each 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. In 1999 options to purchase 30,000 shares were granted under this plan.
In 1998, the Company adopted a stock option plan (the "1998 Plan"). Under
the terms of the 1998 Plan, 450,000 shares of Common Stock were reserved for
issuance to key employees. In 1998, options to purchase 440,000 shares were
granted to approximately 70 employees under the 1998 Plan at $6.50 per share.
The market price of the Common Stock at the time of grant was $5.8125. The
options are exercisable for ten years after the option grant date and vest
ratably over three years. No options were granted in 1999 under the 1998 Plan.
At December 31, 1999, there were options on 29,166 shares available for future
grant under the 1998 Plan.
EMPLOYMENT, SEVERANCE, AND CHANGE OF CONTROL AGREEMENTS
On January 22, 1998, the Company entered into an Employment Agreement with
Richard G. Babbitt (the "Babbitt Agreement"), whereby the Company engaged Mr.
Babbitt to act as Chief Executive Officer and President for a term of three
years (subject to an automatic extension of one month for each month served).
Under the terms of the Babbitt Agreement, Mr. Babbitt is to be paid $400,000 per
year and is eligible for a bonus. 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 an exercise price of $3.525 per share. In 1999, the
Company issued Mr. Babbitt a further option to purchase 200,000 shares of the
Company's Common Stock, at exercise prices of $15.50 and $20.00 per share. Both
the 1998 warrant and the 1999 options are subject to certain anti-dilution
protections.
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 (subject to an
automatic extension of one month for each month served). Under the terms of the
Reich Agreement, Mr. Reich is to be paid $400,000 per year and is eligible for a
bonus. In addition, Mr. Reich received an Executive Officer Warrant granting him
the right to purchase 400,000 shares of the Company's Common Stock at an
exercise price of $3.95 per share. In 1999, the Company issued Mr. Reich a
further option to purchase 200,000 shares of the Company's Common Stock, at
exercise prices of $15.50 and $20.00 per share. Both 1998 warrant and the 1999
options are subject to certain anti-dilution protections. On December 22, 1998,
Mr. Reich was elected President and, on March 8, 2000, Co-Chief Executive
Officer of the Company by the Board of Directors.
On May 3, 1999, the Company entered into an Employment Agreement with
Michael J. Doty (the "Doty Agreement"), whereby the Company engaged Mr. Doty to
act as Senior Vice President and Chief Financial Officer for a term of three
years (subject to an automatic extension of one month for each month served).
Under the terms of the Doty Agreement, Mr. Doty is to be paid $200,000 per year,
subject to annual review, and is eligible for a bonus. In addition, Mr. Doty has
received options or warrants to purchase 90,000 shares of the Company's common
stock, exercisable at the following prices: $13.00 (25,000 shares), $15.50
(14,000 shares), $20.00 (30,000 shares) and $24.75 (21,000 shares).
11
<PAGE> 14
On June 1, 1999, the Company entered into an Employment Agreement with
David E. Bamberger (the "Bamberger Agreement"), whereby the Company engaged Mr.
Bamberger to act as Senior Vice President and General Counsel for a term of
three years (subject to an automatic extension of one month for each month
served). Under the terms of the Bamberger Agreement, Mr. Bamberger is to be paid
$175,000 per year, subject to annual review, and is eligible for a bonus. In
addition, Mr. Bamberger has received options or warrants to purchase 90,002
shares of the Company's common stock, exercisable at the following prices:
$12.50 (22,500 shares), $15.50 (10,834 shares), $20.00 (30,834 shares) and
$24.75 (25,834 shares).
Mr. Babbitt, Mr. Reich, Mr. Doty and Mr. Bamberger (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.
COMPENSATION COMMITTEE INTERLOCKS
The Compensation Committee consists of Messrs. Doyle and Bolin and Dr.
Rosenthal. None of such directors was a party to any transaction with the
Company which requires disclosure under Item 402(j) of Regulation S-K.
1999 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General
The Company established a Compensation Committee of the Board of Directors
in March 1997. The Compensation Committee determines the cash, stock options 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 stockholders. 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
stockholders.
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
In 1999, senior management of the Company, with the assistance of the
Compensation Committee, established certain procedures for the determination of
short-term incentives. Each year, if warranted, management will make a proposal
on this subject during the year-end budgeting process and such proposal will be
reviewed by the Board of Directors. An incentive award opportunity will be
established for each employee based on the employee's level of responsibility,
potential contribution, the success of the Company
12
<PAGE> 15
and competitive conditions. Under the current framework, 25% of an executive's
potential bonus will relate to his or her achievement of personal objectives and
75% will relate to the achievement by the Company and its business units of the
pre-established financial performance goals in the following year.
For 1999, the employee's actual award was determined after the end of the
fiscal year based on an assessment of the employee's individual performance,
including achievement of personal objectives and the Company's achievement of
its pre-tax profit and working capital goals. This ensured that individual
awards would reflect an individual's specific contributions to the success of
the Company. In 1999, all goals of the short-term incentive plan were met;
accordingly, approximately 30 key employees shared in a bonus pool of
approximately $2.3 million.
For 2000, the Compensation Committee has approved a short-term incentive
plan modelled on the 1999 plan; the specifics of the plan are described in
Proposal No. 6 below.
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.
Compensation of Executive Officers
In January, 1998, a new senior management team, led by Richard G. Babbitt
and Ilan K. Reich, was installed by the Board of Directors. This management team
replaced the former Chief Executive Officer, Donald K. McGhan, and his son, Jim
J. McGhan, whose employment was terminated later in the year. In January, 1998,
the Company entered into Employment Agreements, described above, designed to
ensure that these managers would serve the Company throughout the period of its
transaction. The base compensation level in these employment agreements, and
other terms, were determined based upon the anticipated responsibilities to be
performed by these officers, their expected performance in managing and
directing the Company's operations, and their efforts in assisting the Company
to improve its capital base. Based on the significant turnaround of the
Company's financial performance, the Company paid each of Messrs. Babbitt and
Reich a cash bonus of $100,000 for 1998. For 1999, each of Messrs. Babbitt and
Reich received a bonus of $225,000 based on 100% attainment of their goals under
the senior executive short-term incentive plan described above.
In 1999, the management team was strengthened by the addition of Messrs.
Doty and Bamberger. In May and June, 1999, the Company entered into Employment
Agreements, described above, designed to ensure that these managers would serve
the Company as the restructuring continued. The criteria used were similar to
those applied for Messrs. Babbitt and Reich. In the Summer of 1999, the
Compensation Committee retained the services of an outside consultant to assist
it on several compensation-related issues. Following review by the outside
consultants, the Compensation Committee found the compensation structure for all
executive officers to be fair and reasonable, based largely on the outstanding
performance of the Company since January 1998 and particularly since the fourth
quarter of 1998.
COMPENSATION COMMITTEE: John F. Doyle, James E. Bolin and Mitchell S.
Rosenthal, M.D.
13
<PAGE> 16
COMMON STOCK PERFORMANCE
The following graph sets forth the Company's total stockholder 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,
1999. The total stockholder 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 assumes reinvestment of all dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG INAMED CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) INDEX
PERFORMANCE GRAPH
* NASDAQ STOCK MARKET (U.S.)
** S&P HEALTH CARE (Medical Products & Supplies)
There can be no assurance that the Company's stock performance will
continue with the same or similar trends depicted in the graph above.
INDEXED RETURNS
<TABLE>
<CAPTION>
12/1994 12/1995 12/1996 12/1997 12/1998 12/1999
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Inamed Corporation.................. 100 273 262 127 313 1,350
NASDAQ Stock Market (U.S.).......... 100 141 174 213 300 542
S&P Health Care (Medical Products &
Supplies)......................... 100 169 194 242 349 323
</TABLE>
14
<PAGE> 17
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Company's Certificate of Incorporation, as currently in effect (the
"Certificate"), provides that the Company is authorized to issue 25,000,000
shares of Common Stock, par value $.01 per share (the "Common Stock"), and
1,000,000 shares of Preferred Stock, par value $.01 per share (the "Preferred
Stock"). In March 2000, the Board of Directors authorized an amendment to the
Certificate to increase the authorized number of shares of Common Stock to
50,000,000 shares. Such amendment left unchanged the total number of authorized
shares of Preferred Stock. At the Meeting, the stockholders will be asked to
approve the amendment to the Certificate. Under the proposed amendment, the
first paragraph of Article FOURTH of the Certificate would be amended to change
the total number of shares of stock which the Company has authority to issue to
51,000,000 shares, consisting of 50,000,000 shares of Common Stock and 1,000,000
shares of Preferred Stock.
The Company currently has 25,000,000 shares of Common Stock. Of this
authorized number, 20,411,341 shares of Common Stock were issued and outstanding
as of the Record Date. In addition, as of April 3, 2000, the Company has
reserved for issuance 4,553,889 additional shares of Common Stock underlying
options and warrants to purchase in the aggregate, such numbers of reserved
shares of Common Stock.
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.
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 stockholder
approval, except as otherwise required by statute, stock exchange rules or the
Company's loan documents.
To the extent that additional authorized shares are issued in the future,
they may decrease the existing stockholders' percentage equity ownership and,
depending on the circumstances and the price at which they are issued, could be
dilutive of the voting power of the outstanding shares. The stockholders do not
have preemptive rights under the Certificate, as currently in effect, and will
not have such rights with respect to the additional authorized shares of Common
Stock.
RECOMMENDATION OF THE BOARD OF DIRECTORS:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE INCREASE OF AUTHORIZED
SHARES OF STOCK OF THE COMPANY.
PROPOSAL NO. 3
RATIFICATION OF THE 1999 SENIOR OFFICER STOCK OPTION PROGRAM
In 1999, the Board of Directors of the Company adopted the 1999 Senior
Officer Stock Option Program (the "1999 Option Program"). The 1999 Option
Program 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 1999 Option Program 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
15
<PAGE> 18
("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 Board of Directors believes it is in the Company's and its
stockholders' best interests to approve the 1999 Option Program because it would
(i) allow the Company to grant Options which facilitate 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 1999 Option Program authorized the issuance of a maximum of 900,000
shares of the Company's Common Stock pursuant to the exercise of Options granted
thereunder. As of the date hereof, all such Options to purchase Common Stock
pursuant to this Program have been granted to 21 executive and senior officers
of the Company and its subsidiaries, subject to stockholder approval. The
options issued pursuant to the Program in 1999 provide for the following
exercise prices: $15.50 (382,832 shares), $20.00 (283,334 shares) and $24.75
(233,834 shares).
ADMINISTRATION
The 1999 Option Program 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 would select any
other key employees who would be granted Options to purchase shares of Common
Stock under the 1999 Option Program and, subject to the provisions of the 1999
Option Program, will determine the terms and conditions and number of shares of
Common Stock subject to each such Option. (Because all options authorized under
this Program have already been granted, additional grants will be made under it
only in the event options are returned to the Program owing to resignations of
employment prior to vesting and other, similar circumstances.) The Committee
will also make any other determinations necessary or advisable for the
administration of the 1999 Option Program. 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 Options, requires the prior
approval of a majority of the members of the Board of Directors who are
"disinterested persons." Generally, Options granted under the 1999 Option
Program vest and become exercisable in increments of one-third of the amount
issued per year, over the period of three years following issuance. The 1999
Option Program will terminate in 2009 but may be terminated by the Board of
Directors at any time before that date.
OPTIONS
In the event of further grants of Options under this Program, upon the
grant of an Option to purchase shares of Common Stock to a key employee, the
Compensation 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 any future 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 NASDAQ National
Market System or otherwise in the principal market in which such shares of
Common Stock are traded. (A portion of the options granted under this Program in
1999 were priced below "fair market value" at the time of grant; the Company
took an appropriate charge to reflect this fact.) 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 1999 Option
Program, 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
16
<PAGE> 19
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 1999 Option Program and the sale of shares acquired under the
1999 Option Program. 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 1999 Option Program.
The Board of Directors believes it is in the Company's best interests to
ratify the 1999 Option Program which would allow the Company to grant options
under the 1999 Option Program 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 1999 Option Program 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
this Proposal.
RECOMMENDATION OF THE BOARD OF DIRECTORS:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE 1999 SENIOR OFFICER
STOCK OPTION PROGRAM.
PROPOSAL NO. 4
APPROVAL OF THE 2000 EMPLOYEE STOCK OPTION PLAN
In January 2000, the Board of Directors of the Company adopted the 2000
Employee Stock Option Plan (the "2000 Option Plan"), which is set forth in
Appendix B to this Proxy Statement. The Option Program 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 2000 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 Board of Directors believes it is in the Company's and its
stockholders' best interests to approve the 2000 Option Plan because it would
(i) allow the Company to grant Options which facilitate 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 2000 Option Plan currently authorizes the issuance of a maximum of
550,000 shares of the Company's Common Stock pursuant to the exercise of Options
granted thereunder. As of the date hereof, pursuant to this Plan, 517,000
Options to purchase Common Stock have been granted to 103 employees, subject to
stockholder approval. All options issued under the 2000 Option Plan vest
ratably, one-third per year on the first, second and third anniversaries of
their issuance. In 2000, all 517,000 Options issued under this Plan are
exercisable at $40.94 per share, the closing price of the Common Stock as quoted
on the NASDAQ National Market on January 3, 2000, the date on which all such
Options were issued. None of the seven most highly compensated participants in
the Company's 1999 Option Program is a current participant in the 2000 Option
Plan.
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ADMINISTRATION
The 2000 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 Plan and, subject to the provisions of the 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 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 Options, requires the prior approval
of a majority of the members of the Board of Directors who are "disinterested
persons." Generally, Options granted under the Plan vest and become exercisable
ratably over three years, starting in January, 2001. The 2000 Option Plan will
terminate in January, 2010, but may be terminated by the Board of Directors at
any time before that date.
OPTIONS
Upon the grant of an Option to purchase shares of Common Stock to a key
employee, the Compensation 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 NASDAQ
National Market System or otherwise 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 2000 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. The 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 2000 Option Plan and the sale of shares acquired under the 2000
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 2000 Option Plan.
The Board of Directors believes it is in the Company's best interests to
approve the 2000 Option Plan which would allow the Company to grant options
under the 2000 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
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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 this Proposal.
RECOMMENDATION OF THE BOARD OF DIRECTORS:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE 2000 EMPLOYEE STOCK
OPTION PLAN.
PROPOSAL NO. 5
APPROVAL OF THE 2000 EMPLOYEE STOCK PURCHASE PLAN
In January 2000, the Board of Directors of the Company adopted the 2000
Employee Stock Purchase Plan (the "2000 Stock Purchase Plan"), which is set
forth in Appendix C to this Proxy Statement. The 2000 Stock Purchase 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 2000 Stock Purchase 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 certain rights to purchase shares of
the Company's Common Stock at a discount of 15% from the fair market value of
the shares. The granting of such rights 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 2000
Stock Purchase Plan is qualified in its entirety by reference to the text of the
2000 Stock Purchase Plan set forth in Appendix C hereto.
GENERAL. The employee stock purchase plan is intended to comply with the
requirements of Section 423 of the Internal Revenue Code, and to assure the
participants of the tax advantages provided thereby. The plan is administered by
a committee appointed by the board of directors. The committee may make such
rules and regulations as it deems necessary for the proper administration of the
plan, and to take all action in connection with such administration as it deems
necessary or advisable.
SHARES AVAILABLE. A maximum of 200,000 shares of common stock are reserved
for issuance under the plan, in any case, subject to adjustment in the event of
a reclassification, merger, consolidation, reorganization, issuance of warrants
or rights, stock dividend, stock split or reverse stock split, combination or
exchange of shares, repurchase of shares, change in corporate structure or
otherwise.
ELIGIBILITY. Subject to certain procedural requirements, all employees of
the Company who have at least one year of service, work more than 30 hours per
week and who are not "highly compensated employees" within the meaning of
Section 414(q) of the Internal Revenue Code will be eligible to participate in
the Plan.
STOCK PURCHASES. Under the Plan, each eligible employee will be permitted
to purchase shares of the common stock through regular payroll deductions and/or
cash payments in an amount equal to 1% to 15% of the employee's compensation for
each payroll period. The fair market value of the shares of common stock which
may be purchased by any employee under this or any other Inamed Corporation plan
that is intended to comply with Section 423 of the Internal Revenue Code during
any calendar year may not exceed $25,000.
The 2000 Stock Purchase Plan provides for a series of consecutive offering
periods that generally will be six months long. Offering periods generally will
commence on January 1 and July 1 of each year during the term of the Plan.
During each offering period, participating employees will be able to purchase
shares of common stock with payroll deductions at a purchase price equal to 85%
of the fair market value of the common stock at either the beginning of each
offering period or the end of each offering period, whichever price is lower.
The options granted to a participant under the plan are not transferable
otherwise than by will or the laws of descent and distribution, and are
exercisable, during the participant's lifetime, only by the participant.
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CHANGE IN CONTROL. In the event of a change in control of the Company, the
then-running offering period will terminate on the date of such change in
control, unless otherwise provided by the committee.
AMENDMENT, TERMINATION OF PLAN. The Plan will automatically terminate on
the tenth anniversary of the effective date of the Plan. The board of directors
may from time to time amend or terminate the Plan; provided, that no such
amendment or termination may adversely affect the rights of any participant
without the consent of such participant and, to the extent required by Section
423 of the Internal Revenue Code or any other law, regulation or stock exchange
rule, no such amendment will be effective without the approval of stockholders
entitled to vote thereon.
Since the amount of benefits to be received by each participant in the Plan
is determined by his or her elections, the amount of future benefits to be
allocated to any individual or group of individuals under the Plan in any
particular year is not determinable.
ADMINISTRATION. The 2000 Stock Purchase Plan will be 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 make all determinations necessary or advisable for the
administration of the Plan and such determinations by the Committee will be
final and conclusive.
As of the date hereof, 302 employees of the Company and its subsidiaries
have chosen to participate in the 2000 Stock Purchase Plan.
The Board of Directors believes it is in the Company's and its
stockholders' best interests to approve the 2000 Stock Purchase Plan because it
would (i) allow the Company to grant rights which facilitate the benefits of the
additional incentive inherent in the ownership of Common Stock by its employees
and (ii) help the Company retain the services of its employees.
RECOMMENDATION OF THE BOARD OF DIRECTORS:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE 2000 EMPLOYEE STOCK
PURCHASE PLAN.
PROPOSAL NO. 6
APPROVAL OF THE 2000 SENIOR MANAGEMENT BONUS PLAN
In March 2000, the Board of Directors of the Company adopted the 2000
Senior Management Bonus Plan (the "2000 Bonus Plan"). The 2000 Bonus 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 2000 Bonus Plan is intended to assist the Company in securing and
retaining key management personnel by providing them with cash bonuses
("Bonuses"). The granting of such Bonuses 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 summarizes the principal features and effects of the 2000
Bonus Plan:
1. PURPOSE. To create an annual cash bonus system for rewarding the senior
managers of the Company and its business units for attaining financial goals
tied to profit before interest and taxes ("PBIT") and improvements in
manufacturing cycle times.
Each participant's share of the total cash bonus pool will be determined
based on the annual results for 2000. This determination will be in lieu of any
annual salary review or increase, except for unusual cases arising due to a
promotion, or a change in responsibilities, or an inequality in the marketplace
(based on total compensation).
2. PARTICIPANTS. No later than April 1 of each year, the participants in
the bonus plan will be chosen and their shares allocated. Each business unit
president will propose a list of their management team
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(intended to generally encompass their direct reports and key supervisory
personnel), to be reviewed and approved by the Chairman and President of Inamed.
The Chairman and President of Inamed will also select the key corporate
employees for bonus plan participation.
3. BONUS POOL. The maximum size of the bonus pool will be the sum of the
bonus pool shares allocated to all participants, multiplied by the cash per
share value for that bonus year. Each participant will be awarded bonus pool
shares in the discretion of the Chairman and President (subject to approval by
the compensation committee of the Board of Directors), and for 2000 each share
will be worth up to $7,500, depending on the vesting of each participant's
shares in accordance with Section 4 below, and Inamed's earnings per share, as
set forth in Section 5 below.
4. FINANCIAL GOALS. No later than April 1 of each year, the Chairman and
President of Inamed will establish the financial goals for each business unit
and the overall corporate goal. The vesting of each participant's shares in the
bonus pool will be determined by March 1 of the following year, based on the
following schedule:
A. For all participants: No vesting of any shares would occur unless
the company achieves its minimum EPS goal. That goal is above the current
analysts' consensus EPS estimate for 2000. The EPS value shall include
charges for goodwill and this bonus plan, but shall exclude appropriate
proforma adjustments (such as non-recurring financing fees).
B. For business unit participants: 50% of their shares would vest
based on attainment of both the PBIT and improvement in manufacturing cycle
time goals for their business unit.
C. For business unit participants: 25% of their shares would vest
based on attainment by both of the sister business units of their goals. No
pro-rata vesting would occur if only one of the other business units
attains its goals.
D. For corporate participants: 75% of their shares would vest based on
the attainment of goals by the business units, as follows: 45% for U.S.
Plastic Surgery and Aesthetic Medicine; 20% for International; and 10% for
BioEnterics. No pro-rata vesting would occur based on partial attainment by
a business unit of its goals.
E. For all participants: The final 25% of their shares would vest
based on attainment of objective and subjective personal factors to be
determined by the president of their business unit or the Chairman and
President (as the case may be). The decisions under this sub-category for
all participants (other than the Chairman and President) will be reviewed
by the Chairman and President; the decision under this sub-category with
respect to the Chairman and President would be made by the compensation
committee of the Board of Directors. Vesting in this category can occur in
1% increments, from zero to 25%.
5. BONUS POOL SCHEDULE. The overall size of the bonus pool will be based
on the excess of Company's actual EPS attainment over the projected 2000 EPS
goal. EPS shall be computed net of the costs of this bonus plan. Unvested shares
for any given participants cannot be reallocated to other bonus pool
participants. The minimum EPS attainment before any bonus can be paid is $1.70
per fully diluted share; in the event the Company earns $2.10 per fully diluted
share, 100% of the bonus pool will vest.
6. TERMINATED EMPLOYEES. In order to be eligible to participate in the
bonus plan, a participant must be employed by the Company or any of its business
units through the end of the plan year, as well as through the date on which the
bonus pool is finally calculated and paid out. A new employee who is made a
participant in the bonus plan would be prorated at the discretion of the
Chairman and President.
A person who voluntarily resigns from the Company prior to the calculation
of the bonus pool after year-end will forfeit all of their bonus shares.
Similarly, a person who is terminated for cause will forfeit all of their bonus
shares. Cause for this purpose means fraud, dishonesty, sexual harassment or
material violation of a written company policy or directive.
A person whose employment is terminated for any other reason (e.g.,
dismissal, death or disability) will retain their bonus shares, except that the
vested shares will be pro-rated to reflect the number of days during
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the plan year that the participant was an employee; except that a person who
becomes disabled or dies will automatically receive at least one-half of their
bonus shares even if that event occurs in the first six months of the year.
The 2000 Bonus Plan currently authorizes the payment of up to an aggregate
of approximately $3.6 million to approximately 30 senior officers and other key
employees of the Company. As of April 7, 2000, no management personnel of the
Company has been paid under the 2000 Bonus Plan, and none will unless the
criteria set forth in the 2000 Bonus Plan are met and the Plan is approved by
the shareholders of the Company as described above.
ADMINISTRATION
The 2000 Bonus 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 ratify the
personnel who will be paid bonuses under the 2000 Bonus Plan and, subject to the
provisions of the 2000 Bonus Plan, will determine the terms and conditions and
amount of any Bonus. The Committee will also make any other determinations
necessary or advisable for the administration of the 2000 Bonus Plan. The
determinations by the Committee will be final and conclusive. The 2000 Bonus
Plan will terminate on December 31, 2000 but may be terminated by the Board of
Directors at any time before that date.
The Board of Directors believes it is in the Company's best interests to
approve the 2000 Bonus Plan which would allow the Company to pay bonuses under
the 2000 Bonus Plan to help the Company secure and retain the services of key
employees and to enable compensation under the 2000 Bonus 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 this
Proposal.
RECOMMENDATION OF THE BOARD OF DIRECTORS:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE 2000 MANAGEMENT BONUS
PLAN.
PROPOSAL NO. 7
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of BDO Seidman, LLP has been selected as the
independent public accountants for the Company for the fiscal year ending
December 31, 2000. Although the selection of accountants does not require
ratification, the Board of Directors has directed that the appointment of BDO
Seidman, LLP be submitted to the stockholders for ratification due to the
significance of their appointment by the Company. If the stockholders do not
ratify the appointment of BDO Seidman, LLP, the Board of Directors will consider
the appointment of other certified public accountants. A representative of that
firm, which served as the Company's independent public accountants for the
fiscal year ended December 31, 1999, is expected to be present at the Meeting
and, if he so desires, will have the opportunity to make a statement, and in any
event will be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF BDO
SEIDMAN AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR 2000.
SOLICITATION STATEMENT
The Company will bear all expenses in connection with the solicitation of
proxies. In addition to the use of the mails, solicitations may be made by the
Company's regular employees, by telephone, facsimile or personal contact,
without additional compensation. The Company has retained Innisfree M&A,
Incorporated
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to assist the Company in the solicitation of proxies for a fee of $5,000 plus
expenses. The Company will, upon their request, reimburse brokerage houses and
persons holding shares of Common Stock in the names of the Company's nominees
for their reasonable expenses in sending solicited material to their principals.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the proxy materials to be
distributed in connection with the next annual meeting of stockholders of the
Company, stockholder proposals for such meeting must be submitted to the Company
no later than December 20, 2000.
OTHER MATTERS
In 1998, the Securities and Exchange Commission began a formal
investigation of the matters disclosed in the Company's Form 8-K dated March 6,
1998 (the "March Form 8-K") relating to the March, 1998 resignation of Coopers &
Lybrand LLP as the Company's independent accountant. The Company cooperated
fully in this investigation. On August 17, 1999, the issues raised in the
investigation were resolved through an administrative settlement. As part of the
settlement, the SEC filed an administrative proceeding in which the Company
neither admitted nor denied the findings and consented to entry of a cease and
desist order. According to the SEC's Order, the events which gave rise to the
alleged violations occurred before the Company replaced senior management in the
first quarter of 1998. The SEC's Order imposed no monetary penalties against the
Company. Reference is made to the March 1998 and the August 1999 Forms 8-K for
additional information. For a discussion of certain related matters see footnote
11 to the Company's consolidated financial statements for the fiscal years ended
December 31, 1999 and 1998.
So far as now known, there is no business other than that described above
to be presented for action by the stockholders 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
The Company has sent, or is concurrently sending, all of its stockholders
of record as of April 3, 2000 a copy of its Annual Report for the fiscal year
ended December 31, 1999. Such report contains the Company's certified
consolidated financial statements for the fiscal years ended December 31, 1999
and 1998.
By Order of the Company,
/s/ DAVID E. BAMBERGER
--------------------------------------
Secretary
Dated: April 7, 2000
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APPENDIX A
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
INAMED CORPORATION
------------------------
PURSUANT TO SECTION 242 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
------------------------
Inamed Corporation, a Delaware corporation (the "Corporation"), does hereby
certify as follows:
FIRST: Section 1 of ARTICLE FOURTH of the Corporation's Certificate of
Incorporation is hereby amended to read in its entirety as set forth below:
1. The total number of shares of stock which the Corporation shall
have authority to issue is Fifty-One Million (51,000,000) shares,
consisting of Fifty Million (50,000,000) 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").
SECOND: The foregoing amendment was duly adopted in accordance with
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Inamed Corporation has caused this Certificate to be
duly executed in its corporate name as of this 17th day of May, 2000.
INAMED CORPORATION
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
<PAGE> 27
APPENDIX B
INAMED CORPORATION
2000 STOCK OPTION PLAN
1. Purpose. The purpose of the Plan is to provide additional incentive to
those officers, key employees, nonemployee directors and consultants of the
Company and its Subsidiaries whose substantial contributions are essential to
the continued growth and success of the Company's business in order to
strengthen their commitment to the Company and its Subsidiaries, to motivate
such officers and employees to faithfully and diligently perform their assigned
responsibilities and to attract and retain competent and dedicated individuals
whose efforts will result in the long-term growth and profitability of the
Company. To accomplish such purposes, the Plan provides that the Company may
grant Nonqualified Stock Options. The Plan is intended, to the extent
applicable, to satisfy the requirements of Section 162(m) of the Code and shall
be interpreted in a manner consistent with the requirements thereof.
2. Definitions. For purposes of the Plan:
(a) "Affiliates" shall have the meaning set forth in Rule 12b-2 under
the Exchange Act.
(b) "Agreement" shall mean the written agreement evidencing the grant
of an Option, and setting forth the terms and conditions thereof. Each
Agreement shall be approved by the Board or the Committee.
(c) "Associates" shall have the meaning set forth in Rule 12b-2 under
the Exchange Act.
(d) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
(e) "Board" shall mean the Board of Directors of the Company.
(f) "Change in Capitalization" shall mean any increase, reduction, or
change or exchange of Shares for a different number or kind of shares or
other securities of the Company by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, issuance of
warrants or rights, stock dividend, stock split or reverse stock split,
combination or exchange of shares, repurchase of shares, change in
corporate structure or otherwise.
(g) "Change of Control" of the Company shall be deemed to occur on the
first to occur of the following: (i) any Person (other than the Company,
any trustee or other fiduciary holding securities under an employee benefit
plan of the Company, or any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company)), is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
securities; (ii) during any period of two consecutive years (not including
any period prior to the adoption of the Plan), individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (i), (iii) or
(iv) of this definition) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute
at least a majority thereof; (iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation, other
than (a) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or (b) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person acquires more than 50%
of the combined voting power of the Company's then outstanding securities;
or (iv) the
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stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(i) "Committee" shall mean a committee appointed by the Board to
administer the Plan and to perform the functions set forth herein. The
composition of the Committee shall at all times consist solely of persons
who are (i) "Nonemployee Directors" as defined in Rule 16b-3 issued under
the Exchange Act, and (ii) "outside directors" as defined in Section 162(m)
of the Code.
(j) "Company" shall mean Inamed Corporation, a Delaware corporation.
(k) "Eligible Employee" shall mean any officer or other key employee
of the Company or a Subsidiary designated by the Board or Committee as
eligible to receive Options subject to the conditions set forth herein.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" shall mean the fair market value of the Shares
as determined by the Committee in its sole discretion; provided, however,
that (A) if the Shares are admitted to trading on a national securities
exchange, Fair Market Value on any date shall be the last sale price
reported for the Shares on such exchange on such date or on the last date
preceding such date on which a sale was reported, (B) if the Shares are
admitted to quotation on the NASDAQ stock market ("NASDAQ") or other
comparable quotation system and have been designated as a National Market
System ("NMS") security, Fair Market Value on any date shall be the last
sale price reported for the Shares on such system on such date or on the
last day preceding such date on which a sale was reported, or (C) if the
Shares are admitted to quotation on NASDAQ and have not been designated a
NMS security, Fair Market Value on any date shall be the average of the
highest bid and lowest asked prices of the Shares on such system on such
date.
(n) "Incentive Stock Option" shall mean an "Incentive Stock Option"
within the meaning of Section 422 of the Code.
(o) "Nonqualified Stock Option" shall mean an option that is not an
Incentive Stock Option.
(p) "Option" shall mean a Nonqualified Stock Option.
(q) "Optionee" shall mean an Eligible Employee, nonemployee director
or consultant of the Company or a Subsidiary who has been granted an Option
under the Plan.
(r) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof.
(s) "Plan" shall mean the Inamed Corporation 2000 Stock Option Plan,
as amended from time to time.
(t) "Shares" shall mean shares of the common stock, $.01 par value, of
the Company (including any new, additional or different stock or securities
resulting from a Change in Capitalization).
(u) "Subsidiary" shall mean any corporation in an unbroken chain of
corporations, beginning with the Company, if each of the corporations other
than the last corporation in the unbroken chain owns stock possessing 50%
or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.
3. Administration.
(a) The Plan shall be administered by the Committee, which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. The Committee shall keep minutes of its meetings. A majority of the
Committee shall constitute a quorum and a majority of a quorum may authorize any
action. Any decision reduced to writing and signed by a majority of the members
of the Committee shall be fully effective as if it had been made at a meeting
duly held. No member of the Committee shall be personally
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liable for any action, determination or interpretation made in good faith with
respect to the Plan and all members of the Committee shall be fully indemnified
by the Company with respect to any such action, determination or interpretation.
The Company shall pay all expenses incurred in the administration of the Plan.
(b) Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time:
(i) to determine those Eligible Employees, nonemployee directors and
consultants to whom Options shall be granted under the Plan and the number
of Options, to be granted to each Eligible Employee, nonemployee directors
or consultants and to prescribe the terms and conditions (which need not be
identical) of each Option, including the purchase price per Share of each
Option;
(ii) to construe and interpret the Plan and the Options granted
hereunder and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any
defect or supplying any omission, or reconciling any inconsistency in the
Plan or in any Agreement, in the manner and to the extent it shall deem
necessary or advisable to make the Plan fully effective, and all decisions
and determinations by the Committee in the exercise of this power shall be
final and binding upon the Company or a Subsidiary, and the Optionees, as
the case may be;
(iii) generally, to exercise such powers and to perform such acts as
are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
4. Shares Subject to Plan; Limitation on Grants.
(a) The maximum number of Shares that may be issued pursuant to Options
shall be 550,000 Shares (or the number and kind of shares of stock or other
securities that are substituted for those Shares or to which those Shares are
adjusted upon a Change in Capitalization), and the Company shall reserve for the
purposes of the Plan, out of its authorized but unissued Shares or out of Shares
held in the Company's treasury, or partly out of each, such number of Shares.
(b) Whenever any outstanding Option or portion thereof expires, is
cancelled or is otherwise terminated (other than by exercise of an Option), the
Shares allocable to the unexercised portion of such Option may again be the
subject of grants of Options hereunder.
(c) The aggregate number of Shares with respect to which an Option or
Options may be granted to any individual Optionee during any fiscal year shall
not exceed 18,000.
5. Eligibility. Subject to the provisions of the Plan, the Committee shall
have full and final authority to select those Eligible Employees, nonemployee
directors and consultants who will receive Options hereunder.
6. Options. The Committee may grant Options in accordance with the Plan,
the terms and conditions of which shall be set forth in an Agreement. Each
Option and Agreement shall be subject to the following conditions:
(a) Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Option shall be
set forth in the Agreement; provided, however, that the Board may, in its
sole discretion, at any time prior to the expiration of an Option, provide
that the purchase price per Share of an Option may be lowered if the Board
determines that such an adjustment is necessary to preserve the incentive
purpose of such Option.
(b) Duration. Options granted hereunder shall be for such term as the
Committee shall determine, provided that no Option shall be exercisable
after the expiration of ten (10) years from the date it is granted. The
Committee may, subsequent to the granting of any Option, extend the term
thereof but in no event shall the term as so extended exceed the maximum
term provided for in the preceding sentence.
(c) Nontransferability. Unless otherwise set forth in the Agreement,
no Option granted hereunder shall be transferable by an Optionee otherwise
than by will or the laws of descent and distribution, and an Option may be
exercised during the lifetime of such Optionee only by the Optionee or such
Optionee's
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guardian or legal representative. The terms of such Option shall be binding
upon the beneficiaries, executors, administrators, heirs and successors of
the Optionee.
(d) Vesting. Each Option shall become exercisable as determined by
the Board or Committee as set forth in the Agreement.
(e) Termination of Employment or Service. Unless otherwise set forth
in the Agreement, any outstanding Options held by an Optionee on the date
that an Optionee ceases to be employed by the Company or any Subsidiary (or
ceases to serve as a nonemployee director of, or a consultant to the
Company or any Subsidiary) shall terminate as of such date. Notwithstanding
the foregoing, the Committee may provide, either at the time an Option is
granted or thereafter, that the Option may be exercised beyond such date,
but in no event beyond the term of the Option. Without limiting the
generality of the foregoing, unless determined otherwise by the Committee
and reflected in the applicable Agreement, service by an Optionee as a
consultant to the Company which commences immediately upon the termination
of such Optionee's employment by the Company (or, if applicable,
termination of such Optionee's service as a nonemployee director) shall be
treated as continuous service by such Optionee with the Company for
purposes of this Plan, and Options held by such Optionee shall remain
outstanding during such service as a consultant, subject to the terms of
the Agreement and the Plan.
(f) Method of Exercise. The exercise of an Option shall be made only
by a written notice delivered to the Secretary of the Company at the
Company's principal executive office, specifying the number of Shares to be
purchased and accompanied by payment therefor and otherwise in accordance
with the Agreement pursuant to which the Option was granted. The purchase
price for any Shares purchased pursuant to the exercise of an Option shall
be paid in full upon such exercise either (i) in cash, by certified check
or by cashier's check or (ii) through the delivery of Shares owned by the
Optionee for at least six months prior to the date of exercise having a
Fair Market Value equal to the Option purchase price. If requested by the
Committee, the Optionee shall deliver the Agreement evidencing the Option
to the Secretary of the Company who shall endorse thereon a notation of
such exercise and return such Agreement to the Optionee. Not less than 50
Shares may be purchased at any time upon the exercise of an Option unless
the number of Shares so purchased constitutes the total number of Shares
then purchasable under the Option.
(i) Rights of Optionees. No Optionee shall be deemed for any purpose
to be the owner of any Shares subject to any Option unless and until (i)
the Option shall have been exercised pursuant to the terms thereof, (ii)
the Company shall have issued and delivered the Shares to the Optionee, and
(iii) the Optionee's name shall have been entered as a stockholder of
record on the books of the Company. Thereupon, the Optionee shall have full
voting, dividend and other ownership rights with respect to such Shares.
7. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to the maximum
number and class of shares of stock with respect to which Options may be granted
under the Plan, the number and class of shares of stock as to which Options have
been granted under the Plan, and the purchase price therefor, if applicable.
(b) In the event the outstanding Shares shall be changed into or exchanged
for any other class or series of capital stock or cash, securities or other
property pursuant to a recapitalization, reclassification, merger,
consolidation, combination or similar transaction, then each Option shall
thereafter become exercisable for the number and/or kind of capital stock,
and/or the amount of cash, securities or other property so distributed, into
which the Shares subject to the Option would have been changed or exchanged had
the Option been exercised in full prior to such transaction, provided that, if
the kind or amount of capital stock or cash, securities or other property
received in such transaction is not the same for each outstanding Share, then
the kind or amount of capital stock or cash, securities or other property for
which the Option shall thereafter become exercisable shall be the kind and
amount so receivable per Share by a plurality of the Shares, and provided
further that, if necessary, the provisions of the Option shall be appropriately
adjusted so as to be
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applicable, as nearly as may reasonably be, to any shares of capital stock,
cash, securities or other property thereafter issuable or deliverable upon
exercise of the Option.
8. Termination and Amendment of the Plan. The Plan shall terminate on the
day preceding the tenth anniversary of its effective date, except with respect
to Options outstanding on such date, and no Options may be granted thereafter,
but then-outstanding Options shall be unaffected. The Board may sooner terminate
or amend the Plan at any time, and from time to time; provided, however, that,
except as provided in Section 7 hereof, no amendment shall be effective unless
approved by the stockholders of the Company if and to the extent that the Board
determines such approval is appropriate for purposes of satisfying Section
162(m) of the Code or any other law, regulation or stock exchange rule. Except
as provided in Section 7 hereof, rights and obligations under any Option granted
before any amendment of the Plan shall not be adversely altered or impaired by
such amendment, except with the consent of the Optionee.
9. Nonexclusivity of the Plan. The adoption of the Plan by the Board shall
not be construed as amending, modifying or rescinding any previously approved
incentive arrangement or as creating any limitations on the power of the Board
to adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the Plan,
and such arrangements may be either applicable generally or only in specific
cases.
10. Limitation of Liability. As illustrative of the limitations of
liability of the Company, but not intended to be exhaustive thereof, nothing in
the Plan shall be construed to:
(a) give any person any right to be granted an Option other than at
the sole discretion of the Board or the Committee;
(b) give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;
(c) limit in any way the right of the Company or its Subsidiaries to
terminate the employment of any person at any time; or
(d) be evidence of any agreement or understanding, expressed or
implied, that the Company or its Subsidiaries will employ any person in any
particular position, at any particular rate of compensation or for any
particular period of time.
11. Regulations and Other Approvals; Governing Law.
(a) The Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of Delaware
without giving effect to the choice of law principles thereof.
(b) The obligation of the Company to sell or deliver Shares with respect to
Options granted under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.
(c) Except as otherwise provided in Section 8, the Board may make such
changes as may be necessary or appropriate to comply with the rules and
regulations of any government authority.
(d) Each Option is subject to the requirement that, if at any time the
Committee determines, in its absolute discretion, that the listing, registration
or qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option, or the issuance of
Shares, no Options, shall be granted or payment made or Shares issued, in whole
or in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions as acceptable to the Committee.
12. Multiple Agreements. The terms of each Option may differ from other
Options granted under the Plan at the same time, or at any other time. The
Committee may also grant more than one Option, to a given Optionee during the
term of the Plan, either in addition to, or in substitution for, one or more
Options
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previously granted to that Optionee. The grant of multiple Options may be
evidenced by a single Agreement or multiple Agreements, as determined by the
Committee.
13. Withholding of Taxes. Whenever Shares are to be delivered pursuant to
an Option, the Company shall have the right to require the Optionee to remit to
the Company in cash an amount equal to the amount of any federal, state and
local tax required to be withheld. With the approval of the Committee, an
Optionee may satisfy the foregoing requirement by electing to have the Company
withhold from delivery Shares having a value equal to the amount of tax required
to be withheld. Such Shares shall be valued at their Fair Market Value on the
date of which the amount of tax required to be withheld is determined (the "Tax
Date"). Fractional share amounts shall be settled in cash. Such a withholding
election may be made with respect to all or any portion of the shares to be
delivered pursuant to an Option.
14. Notification of Election Under Section 83(b) of the Code. If any
Optionee shall, in connection with the acquisition of Shares under the Plan,
make the election permitted under Section 83(b) of the Code, such Optionee shall
notify the Company of such election within 10 days of filing notice of the
election with the Internal Revenue Service.
15. No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan. The Board shall determine whether cash, other
Options, or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
16. Beneficiary. An Optionee may file with the Committee a written
designation of a beneficiary on such form as may be prescribed by the Committee
and may, from time to time, amend or revoke such designation. If no designated
beneficiary survives the Optionee, the executor or administrator of the
Optionee's estate shall be deemed to be the Optionee's beneficiary.
17. Effective Date. The effective date of the Plan is January 4, 2000 (the
date on which the Board adopted the Plan), subject to the approval of the
Company's shareholders, which must occur within twelve months of the date the
Plan is adopted by the Board.
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APPENDIX C
INAMED CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The Inamed Corporation 2000 Employee Stock Purchase Plan is
hereby established for the benefit of Employees of the Company, its wholly owned
Subsidiaries and any subsequently Designated Subsidiaries of the Company. The
Plan is intended to provide the Employees of the Employer with an opportunity to
purchase Shares through accumulated payroll deductions and/or the Employee's
cash payments made pursuant to the Plan. It is the intention of the Company that
the Plan qualify as an "employee stock purchase plan" within the meaning of
Section 423 of the Code, and the provisions of the Plan shall be construed in a
manner consistent with the requirements of such section of the Code.
2. Definitions. For purposes of the Plan:
(a) "Affiliates" shall have the meaning set forth in Rule 12b-2 under
the Exchange Act.
(b) "Associates" shall have the meaning set forth in Rule 12b-2 under
the Exchange Act.
(c) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Change in Capitalization" shall mean any increase, reduction, or
change or exchange of Shares for a different number or kind of shares or
other securities of the Company by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, issuance of
warrants or rights, stock dividend, stock split or reverse stock split,
combination or exchange of shares, repurchase of shares, change in
corporate structure or otherwise.
(f) "Change of Control" of the Company shall be deemed to occur on the
first to occur of the following: (i) any Person (other than the Company,
any trustee or other fiduciary holding securities under an employee benefit
plan of the Company, or any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company), is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
securities; (ii) during any period of two consecutive years (not including
any period prior to the adoption of the Plan), individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (i), (iii) or
(iv) of this definition) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds ( 2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute
at least a majority thereof; (iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation, other
than (a) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or (b) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person acquires more than 50%
of the combined voting power of the Company's then outstanding securities;
or (iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(h) "Committee" means a committee appointed by the Board to administer
the Plan and to perform the functions set forth herein.
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(i) "Company" shall mean Inamed Corporation, a Delaware corporation.
(j) "Compensation" shall mean the fixed salary, wages, commissions,
overtime pay and bonuses paid by an Employer to an Employee as reported by
the Employer to the United States government for Federal income tax
purposes, including an Employee's portion of deferral contributions
pursuant to Section 401(k) of the Code, any amount excludable pursuant to
Section 125 of the Code and/or any non-qualified compensation deferral, but
excluding any foreign service allowance, severance pay, expenses or other
special emolument or any credit or benefit under any employee plan
maintained by the Employer.
(k) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as
an Employee shall not be considered interrupted in the case of a leave of
absence agreed to in writing by the Employee's Employer, if such leave is
for a continuous period of not more than one year or reemployment upon the
expiration of such leave is guaranteed by contract or statute.
(l) "Designated Subsidiaries" shall mean the Subsidiaries of the
Company which have been designated by the Board from time to time in its
sole discretion as eligible to participate in the Plan, which may include
corporations which become Subsidiaries of the Company after the adoption of
the Plan.
(m) "Effective Date" shall mean January 1, 2000, subject to the
approval of the Company's shareholders, which must occur within twelve
months of the date the Plan is adopted by the Board.
(n) "Employee" shall mean any person, including an officer, who as of
an Offering Date is regularly employed 30 hours or more per week by the
Company, a wholly owned Subsidiary of the Company or a Designated
Subsidiary of the Company and who has completed a Year of Service, except
any person who is "highly compensated" within the meaning of Section 414(q)
of the Code.
(o) "Employer" shall mean, as to any particular Employee, the
corporation which employs such Employee, whether it is the Company, a
wholly owned Subsidiary of the Company or a Designated Subsidiary of the
Company.
(p) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(q) "Exercise Date" shall mean the last business day of each Offering
Period, except as the Committee may otherwise provide.
(r) "Fair Market Value" shall mean the fair market value of the Shares
as determined by the Committee in its sole discretion; provided, however,
that (A) if the Shares are admitted to trading on a national securities
exchange, Fair Market Value on any date shall be the last sale price
reported for the Shares on such exchange on such date or on the last date
preceding such date on which a sale was reported, (B) if the Shares are
admitted to quotation on the NASDAQ stock Market ("NASDAQ") or other
comparable quotation system and have been designated as a National Market
System ("NMS") security, Fair Market Value on any date shall be the last
sale price reported for the Shares on such system on such date or on the
last day preceding such date on which a sale was reported, or (C) if the
Shares are admitted to quotation on NASDAQ and have not been designated a
NMS security, Fair Market Value on any date shall be the average of the
highest bid and lowest asked prices of the Shares on such system on such
date.
(s) "Offering Date" shall mean January 1st or July 1st of each Plan
Year. The Offering Date of an Offering Period is the grant date for the
options offered in such Offering Period.
(t) "Offering Period" shall mean any six-month period beginning with
an Offering Date prior to the end of the Term of the Plan, except that the
first Offering Period under the Plan shall begin with the Effective Date
and shall end on June 30, 2000, and except that the Committee shall have
the power to change the duration of other Offering Periods; provided,
however, that no option granted under the Plan shall be exercisable more
than twenty-seven (27) months from its grant date.
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(u) "Parent" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if, at the time of
granting an option, each of the corporations other than the Company owns
shares possessing fifty percent (50%) or more of the total combined voting
power of all classes of shares in one of the other corporation in such
chain.
(v) "Participant" shall mean an Employee who participates in the Plan.
(w) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof.
(x) "Plan" shall mean this Inamed Corporation Employee Stock Purchase
Plan, as amended from time to time.
(y) "Plan Year" shall mean the calendar year, except that the first
Plan Year shall begin on the Effective Date and shall end on the next
December 31st.
(z) "Shares" shall mean shares of the common stock, $.01 par value, of
the Company (including any new, additional or different stock or securities
resulting from a Change of Capitalization.
(aa) "Subsidiary" shall mean any corporation in an unbroken chain of
corporations, beginning with the Company, if each of the corporations other
than the last corporation in the unbroken chain owns stock possession fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
(bb) "Year of Service" shall mean each successive period of twelve
(12) consecutive months (from an Employee's original employment date)
during which the Employee's hours of employment are 1,000 hours or more.
3. Eligibility.
(a) Subject to the requirements of Section 4(b) hereof, any person who is a
regular Employee as of an Offering Date shall be eligible to participate in the
Plan and be granted an option for the Offering Period commencing on such
Offering Date.
(b) Notwithstanding any provisions of the Plan to the contrary, no Employee
shall be granted an option under the Plan (i) if, immediately after the grant,
such Employee (or any other person whose shares would be attributed to such
Employee pursuant to Section 424(d) of the Code) would own shares and/or hold
outstanding options to purchase shares possession five percent (5%) or more of
the total combined voting power or value of all classes of shares of the Company
or of any Subsidiary or Parent of the Company, or (ii) which permits such
Employee's right to purchase shares under all employee stock purchase plans (as
described in Section 423 of the Code, of the Company and any Subsidiary or
Parent of the Company to accrue at a rate which exceeds twenty-five thousand
dollars ($25,000) of the Fair Market Value of such shares (determined at the
time such option is granted) for any calendar year in which such option would be
outstanding at any time.
4. Grant of Option; Participation; Price.
(a) On each Offering Date, the Company shall commence an offering by
granting each eligible Employee an option to purchase Shares, subject to the
limitations set forth in Section 3(b) and 10 hereof.
(b) Each eligible Employee may elect to become a Participant in the Plan
with respect to an Offering Period, by filing an agreement with his or her
Employer authorizing payroll deductions in accordance with Section 5 hereof.
Such authorization will remain in effect for subsequent Offering Periods, until
modified or terminated by the Participant by giving written notice to his or her
Employer prior to the next occurring Exercise Date. Additionally, a Participant
may participate to a greater extent by making cash payments in accordance with
Section 5 hereof.
(c) The option price per Share subject to an offering shall be the lesser
of eighty-five percent (85%) of the Fair Market Value of a Share on the Offering
Date and eighty-five percent (85%) of the Fair Market Value of a Share on the
Exercise Date.
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5. Payroll Deductions and Cash Payments. Subject to Section 4(b) hereof, a
Participant may, in accordance with rules and procedures adopted by the
Committee, authorize a payroll deduction of any whole percentage from 1 percent
to 15 percent of such Participant's Compensation each pay period (the
permissible range within such percentages to be determined by the Committee from
time to time). A Participant may increase or decrease such payroll deduction
(including a cessation of payroll deductions) at any time but not more
frequently than once each Offering Period, by filing a new authorization from
with his or her Employer. All payroll deductions made by a Participant shall be
credited to such Participant's account under the Plan.
6. Exercise of Option.
(a) Unless a Participant withdraws from the Plan as provided in Section 8
hereof, or unless the Committee otherwise provides, such Participant's election
to purchase Shares shall be exercised automatically on the Exercise Date, and
the maximum number of Shares subject to such option will be purchased for such
Participant at the applicable option price with accumulated payroll deductions
and any additional cash payments made by the Participant in accordance with
Section 5 hereof.
(b) Any cash balance remaining in a Participant's account after the
termination of an Offering Period will be carried forward to the Participant's
account for the purchase of Shares during the next Offering Period if the
Participant has elected to continue to participate in the Plan. Otherwise, the
Participant will receive a cash payment equal to the cash balance of his or her
account.
(c) The Shares purchased upon exercise of an option hereunder shall be
credited to the Participant's account under the Plan as of the Exercise Date and
shall be deemed to be transferred to the Participant on such date. Except as
otherwise provided herein, the Participant shall have all rights of a
shareholder with respect to such Shares upon their being credited to the
Participant's account.
7. Delivery of Shares.
(a) As promptly as practicable after receipt by the Company of a written
request for Shares from any Participant, the Company shall arrange the delivery
to such Participant of a share certificate representing the Shares to which the
Participant is entitled and which the Participant requests (any fractional Share
being paid in cash). Subject to Section 7(b) hereof, requests for Shares may be
made no more frequently than once each Offering Period. Shares received upon
share dividends or share splits shall be treated as having been purchased on the
Exercise Date of the Shares to which they relate.
(b) Notwithstanding anything in Section 7(a) hereof to the contrary, Shares
may be requested by a Participant more than once during an Offering Period upon
the prior approval of the Committee, in its sole discretion.
8. Withdrawal, Termination of Employment.
(a) A Participant may request at any time all, but not less than all, cash
amounts withheld under the Plan that have not been used to purchase Shares
(including, without limitation, the payroll deductions and cash payments made by
such Participant pursuant to this Plan) by giving written notice to the Company
prior to the next occurring Exercise Date. All such payroll deductions and cash
payments made by a Participant pursuant to this Plan shall be paid to such
Participant promptly after receipt of such Participant's request, and such
Participant's option for the Offering Period in which the request occurs shall
be automatically terminated. No further payroll deductions for the purchase of
Shares will be made for such Participant during such Offering Period.
(b) Upon termination of a Participant's continuous Status as an Employee
during the Offering Period for any reason, including voluntary termination,
retirement or death, the payroll deductions and cash payments made by a
Participant pursuant to this Plan that have not been used to purchase Shares
shall be returned to such Participant or, in the case of such Participant's
death, to the person or persons entitled thereto under Section 12 hereof, and
such Participant's option will be automatically terminated.
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(c) A Participant's withdrawal from an offering will not have any effect
upon such Participant's eligibility to participate in a succeeding offering or
in any similar plan which may hereafter be adopted by the Company.
9. Dividends and Interest.
(a) Cash dividends paid on Shares purchased pursuant to this Plan shall be
promptly paid to such Participant in cash. Dividends paid in property other than
cash, in Shares or in share splits of the Shares shall be distributed to
Participants as soon as practicable.
(b) No interest shall accrue on or be payable with respect to the payroll
deductions or cash payments made by a Participant pursuant to this Plan.
10. Shares.
(a) The maximum number of Shares which shall be reserved for sale under the
Plan shall be 200,000 Shares, which number shall be subject to adjustment upon
Changes in Capitalization of the Company as provided in Section 16 hereof. Such
Shares shall be either authorized and unissued Shares or Shares which have been
reacquired by the Company. If the total number of Shares which would otherwise
be subject to options granted pursuant to Section 4(a) hereof on an Offering
Date exceeds the number of Shares then available under the Plan (after deduction
of all Shares for which options have been exercised or are then outstanding),
the Committee shall make a pro rata allocation of the Shares remaining available
for option grant in as uniform a manner as shall be practicable and as it shall
determine to be equitable. In such event, the Committee shall give written
notice to each Participant of such reduction of the number of option Shares
affected thereby and shall similarly reduce the rate of payroll deductions, if
necessary.
(b) Shares to be delivered to a Participant under the Plan will be
registered in the name of the Participant or, at the election of the
Participant, in the name of the Participant and another person as joint tenants
with rights of survivorship.
11. Administration. The Plan shall be administered by the Committee and
the Committee may select administrator(s) to whom its duties and
responsibilities hereunder may be delegated. The Committee shall have full power
and authority, subject to the provisions of the Plan, to promulgate such rules
and regulations as it deems necessary for the proper administration of the Plan,
to interpret the provisions and supervise the administration of the Plan, and to
take all action in connection therewith or in relation thereto as it deems
necessary or advisable. Any decision reduced to writing and signed by a majority
of the members of the Committee shall be fully effective as if it had been made
at a meeting duly held. Except as otherwise provided by the Committee, each
Employer shall be charged with all expenses incurred in the administration of
the Plan with respect to such Employer's Employees. No member of the committee
shall be personally liable for any action, determination, or interpretation made
in good faith with respect to the Plan, and all members of the Committee shall
be fully indemnified by the Company with respect to any such action,
determination or interpretation. All decisions, determinations and
interpretations of the Committee shall be final and binding on all persons,
including the Company, the Participant (or any person claiming any rights under
the Plan from or through any Participant) and any shareholder.
12. Designation of Beneficiary.
(a) A Participant may file with the Company, on forms supplied by the
Company, a written designation of a beneficiary who is to receive any Shares and
cash to which the Participant is entitled under the Plan in the event of the
Participant's death.
(b) Such designation of beneficiary may be changed by the Participant at
any time by written notice to the Company, on forms supplied by the Company. In
the event of the death of a Participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
Participant's death, the Company shall deliver such Shares and/or cash to the
executor or administrator of the estate of the Participant or, if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such Shares and/or cash to the
spouse or to any one or more dependents or relatives of the Participant in
accordance with the applicable laws of descent and distribution, or
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<PAGE> 38
if no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.
13. Transferability. Neither payroll deductions nor cash payments made by
a Participant pursuant to this Plan nor any rights with regard to the exercise
of an option or to receive Shares under the Plan may be assigned, transferred,
pledged or otherwise disposed of in any way by the Participant (other than by
will, the laws of descent and distribution or as provided in Section 12 hereof).
Any such attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
request funds in accordance with Section 8 hereof.
14. Use of Funds. All payroll deductions and additional cash payments
received or held by the Company under the Plan may be used by the Company for
any corporate purpose, and the Company shall not be obligated to segregate such
funds.
15. Reports. Individual reports will be generated for each Participant in
the Plan. Such reports will be given to Participants as soon as practicable
following each Offering Period, which reports will set forth the amounts of
payroll deductions, additional cash payments, the per Share purchase price, the
number of Shares purchased, the aggregate Shares in the Participant's account
and the remaining cash balance, if any.
16. Effect of Certain Changes. In the event of a Change in Capitalization
or the distribution of an extraordinary dividend, the Committee shall
conclusively determine the appropriate equitable adjustments, if any, to be made
under the Plan, including without limitation, adjustments to the number of
Shares which have been authorized for issuance under the Plan but have not yet
been placed under option, as well as the price per Share covered by each option
under the Plan which has not yet been exercised. In the event of a Change of
Control of the Company, the Offering Period shall terminate, unless otherwise
provided by the Committee.
17. Term of Plan. Subject to the Board's right to discontinue the Plan
(and thereby end its Term) pursuant to Section 18 hereof, the Term of the Plan
(and its last Offering Period) shall end on January 1, 2010. Upon any
discontinuance of the Plan, unless the Committee shall determine otherwise, any
assets remaining in the Participants' accounts under the Plan shall be delivered
to the respective Participant (or the Participant's legal representative) as
soon as practicable.
18. Amendment to and Discontinuance of Plan. The Board may at any time
amend, suspend or discontinue the Plan. Except as provided in Section 16 hereof,
no such suspension or discontinuance may adversely affect options previously
granted and no amendment may make any change in any option theretofore granted
which adversely affects the rights of any Participant which accrued prior to the
date of effectiveness of such amendment without the consent of such Participant.
No amendment shall be effective unless it receives the requisite approval of the
shareholders of the Company if such shareholder approval of such amendment is
required to comply with Rule 16b-3 under the Exchange Act, Section 423 of the
Code or to comply with any other applicable law, regulation or stock exchange
rule.
19. Notices. All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
20. Regulations and Other Approvals; Governing Law.
(a) This Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of Delaware
without giving effect to the choice of law principles thereof, except to the
extend that such law is preempted by federal law.
(b) The obligation of the Company to sell or deliver Shares with respect to
options granted under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.
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<PAGE> 39
(c) To the extent applicable hereto, the Plan is intended to comply with
Rule 16b-3 under the Exchange Act, and the Committee shall interpret and
administer the Plan in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.
21. Withholding of Taxes. If the Participant makes a disposition, within
the meaning of Section 424(c) of the Code and regulations promulgated
thereunder, of any Share or Shares issued to such Participant pursuant to such
Participant's exercise of an option, and such disposition occurs within the
two-year period commencing on the day after the Offering Date or within the
one-year period commencing on the day after the Exercise Date, such Participant
shall, within ten (10) days of such disposition, notify the Company thereof and
thereafter immediately deliver to the Company any amount of Federal, state or
local income taxes and other amounts which the Company informs the Participant
the Company is required to withhold.
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<PAGE> 40
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF INAMED
CORPORATION
PROXY -- ANNUAL MEETING OF STOCKHOLDERS MAY 17, 2000
The undersigned, a stockholder of Inamed Corporation, a Delaware corporation
(the "Company"), does hereby appoint Richard G. Babbitt and Ilan K. Reich, and
each of them, the true and lawful attorneys and proxies with full power of
substitution, for and in the name, place and stead of the undersigned, to vote
all of the shares of Common Stock of the Company which the undersigned would be
entitled to vote if personally present at the 2000 Annual Meeting of
Stockholders of the Company to be held at 460 Ward Drive, Santa Barbara,
California 93111, on May 17, 2000, at 10:30 a.m., local time, or at any
adjournment or adjournments thereof.
The undersigned hereby revokes any proxy or proxies heretofore given and
acknowledges receipt of a copy of the Notice of Annual Meeting and Proxy
Statement, both dated APRIL 7, 2000, and a copy of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1999.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREIN GIVEN.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED TO ELECT THE DIRECTORS; IN
FAVOR OF THE AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION INCREASING
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 25,000,000 TO 50,000,000
SHARES; IN FAVOR OF THE RATIFICATION OF THE 1999 SENIOR OFFICER STOCK OPTION
PROGRAM; IN FAVOR OF THE 2000 EMPLOYEE STOCK OPTION PLAN; IN FAVOR OF THE 2000
EMPLOYEE STOCK PURCHASE PLAN; IN FAVOR OF THE 2000 SENIOR MANAGEMENT BONUS PLAN;
AND IN FAVOR OF THE RATIFICATION OF THE APPOINTMENT OF BDO SEIDMAN, LLP AS THE
COMPANY'S INDEPENDENT ACCOUNTANTS FOR FISCAL 2000.
1. To elect the following directors to serve as directors until the 2001 annual
meeting of stockholders of the Company and in each case until their
successors have been duly elected and qualified:
Richard G. Babbitt, James E. Bolin, Malcolm R. Currie, John F. Doyle, Ilan K.
Reich, Mitchell S. Rosenthal and David A. Tepper.
[ ] FOR ALL NOMINEES [ ] WITHHELD FROM ALL NOMINEES
[ ] WITHHELD
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TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), PRINT NAME(S) ABOVE
2. To approve the amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock of the Company, par
value $.01 per share, from 25,000,000 to 50,000,000 shares.
[ ] FOR[ ] AGAINST[ ] ABSTAIN
(continued, and to be signed, on other side)
<PAGE> 41
3. To ratify the Company's 1999 Senior Officer Stock Option Program.
[ ] FOR[ ] AGAINST[ ] ABSTAIN
4. To approve the Company's 2000 Employee Stock Option Plan.
[ ] FOR[ ] AGAINST[ ] ABSTAIN
5. To approve the Company's 2000 Employee Stock Purchase Plan.
[ ] FOR[ ] AGAINST[ ] ABSTAIN
6. To approve the Company's 2000 Senior Management Bonus Plan.
[ ] FOR[ ] AGAINST[ ] ABSTAIN
7. To ratify the appointment of BDO Seidman, LLP as the Company's independent
accountants for fiscal 2000.
[ ] FOR[ ] AGAINST[ ] ABSTAIN
8. DISCRETIONARY AUTHORITY: To vote with discretionary authority with respect to
all other matters which may come before the Meeting.
NOTE: Your signature should appear the same as your name appears hereon. In
signing as attorney, executor, administrator, trustee or guardian, please
indicate the capacity in which signing. When signing as joint tenants, all
parties in the joint tenancy must sign. When a proxy is given by a corporation,
it should be signed by an authorized officer and the corporate seal affixed. No
postage is required if mailed in the United States.
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<S> <C> <C> <C>
Signature: ------------------------------------------------------------ -----------------------------------
Date:
Signature: ------------------------------------------------------------ -----------------------------------
Date:
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[ ] MARK HERE FOR ADDRESS CHANGE AND NOTE NEW ADDRESS BELOW:
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