INAMED CORPORATION
0000 XXXXXX XXXXXX XXXXXXX
XXXXX 0000
XXX XXXXX, XXXXXX 00000
July 2, 1997
Xx. Xxxxx X. Xxxxxx
President
Appaloosa Management L.P.
00 Xxxx X. Xxxxxxx Xxxxxxx
Xxxxx Xxxxx, Xxx Xxxxxx 00000
Dear Xx. Xxxxxx:
This letter agreement will confirm the understandings between
Appaloosa Management L.P. and its affiliates and associates (collectively,
"Appaloosa"), Xxxxxx X. XxXxxx and his affiliates (collectively, "XxXxxx"), and
INAMED Corporation (the "Company") concerning certain standstill and voting
arrangements relating to securities of the Company. This letter agreement is
being entered into concurrently with the execution and delivery of (i)
documentation by the Company, Appaloosa and other securitiesholders pertaining
to certain amendments to the indenture (the "Indenture") for the Company's 11%
Secured Convertible Notes due 1999 (as amended, the "Notes"), and the issuance
of certain warrants (the "Warrants") to purchase shares of the Company's Common
Stock, and (ii) Amendment No. 2 to the Rights Agreement dated as of July 2, 1997
between the Company and U.S. Stock Transfer Corporation, as Rights Agent.
1. STANDSTILL. During the Term (as defined in Section 4
below), Appaloosa will not alone or in concert with others:
(i) by purchase, conversion of a derivative security, or
otherwise, acquire, or agree to acquire, ownership (including, but not limited
to, beneficial ownership) of any shares of Common Stock of the Company, or any
notes, debentures or other securities which may be convertible or exchangeable
into Common Stock of the Company, provided, however, that Appaloosa may convert
any Notes and Warrants which it currently holds and may exercise any of its
preemptive rights under Section 8.12 of the Indenture governing any Notes which
it currently holds;
(ii) make any public announcement with respect to (i) any
proceeding under the bankruptcy laws (whether or not consensual), or (ii) the
acquisition of beneficial ownership of
Common Stock, or (iii) any extraordinary transaction or merger consolidation,
sale of substantial assets or business combination involving the Company or any
of its affiliates;
(iii) make, or in any way participate in, any
"solicitation" of "proxies" (as such terms are defined or used in Regulation 14A
under the Securities Exchange Act of 1934 (the "Exchange Act")), or become a
"participant" in any "election contest" (as such terms are defined or used in
Rule 14a-11 under the Exchange Act) to vote, or seek to advise or influence any
person or entity with respect to the voting of, any voting securities of the
Company or any of its affiliates;
(iv) form, join or in any way participate in a "group" (as
such term is used in Section 13d(3) of the Exchange Act) to take any action
otherwise prohibited under this letter agreement;
(v) publicly initiate or propose any shareholder proposals
for submission to a vote of shareholders, whether by action at a shareholder
meeting or by written consent, with respect to the Company or any of its
affiliates or propose the removal of any member of the Board of Directors; or
(vi) publicly request the Company (or its directors,
officers, employees or agents) to amend or waive any provision of this letter
agreement or otherwise seek any modification to or waiver of any of the
agreements or obligations hereunder.
2. VOTING. During the Term, with respect to each matter
submitted to the shareholders of the Company for a vote, whether at a meeting or
pursuant to any consent of shareholders, Appaloosa and XxXxxx agree to vote
(whether by proxy or otherwise) all shares of Common Stock owned by each of them
in proportion to the vote of all other shareholders of the Company's Common
Stock.
3. ADDITIONAL COVENANT OF XXXXXX. During the Term, XxXxxx
shall not by purchase, conversion of a derivative security, or otherwise,
acquire, or agree to acquire, ownership (including, but not limited to,
beneficial ownership) of any shares of Common Stock of the Company, or any
notes, debentures or other securities which may be convertible or exchangeable
into Common Stock of the Company; provided, however, that XxXxxx may convert any
Notes, Warrants or options which he holds as of June 30, 1997. In addition,
notwithstanding the foregoing, following the Company's public disclosure of the
hiring of a new Chief Financial Officer, XxXxxx may become the "Beneficial
Owner" of up to, but not exceeding, 19.9% of the outstanding shares of the
Company's Common Stock.
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4. THE TERM. The term of this letter agreement (the "Term")
shall be from the date hereof until the earliest to occur of: (i) September 30,
1997, (ii) the occurrence and continuance of an Event of Default under the
Indenture, (iii) a determination that defaults existed under the Indenture for
the year ended December 31, 1996 and the quarter ended March 31, 1997, but were
not disclosed to Appaloosa in connection herewith, (iv) the failure of the
Company at any time to properly disclose material events in its filings with the
Securities and Exchange Commission, (v) a breach by the Company of any covenants
set forth in this letter agreement or in any other agreement entered into with
Appaloosa in connection herewith, or (vi) the date on which Appaloosa makes a
reasonable and good faith determination that the Company's maximum exposure in
the breast implant litigation is materially greater than the amount previously
disclosed to Appaloosa in connection with this letter agreement.
5. MISCELLANEOUS. This letter agreement shall be subject to
New York law and shall be enforceable in any federal or state court in
Manhattan; and all of the parties hereto consent to personal jurisdiction. In
the event of a breach, the offended party can seek injunctive relief as well as
monetary damages; and the prevailing party shall be entitled to recover its
legal costs to enforce this letter agreement. This letter agreement cannot be
modified or amended except in a writing signed by all parties; can be signed in
counterparts (including by fax).
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If this letter agreement correctly sets forth the
understanding between us, please so indicate by signing and returning to the
undersigned copy.
Very truly,
INAMED CORPORATION
By:/s/ Xxxxxx X. XxXxxx
------------------------------
Xxxxxx X. XxXxxx
Chairman and President
Accepted and agreed as of
the date first written above
/s/ Xxxxxx X. XxXxxx
--------------------------------
XXXXXX X. XXXXXX
APPALOOSA MANAGEMENT L.P.
By: APPALOOSA PARTNERS INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
President
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