EXHIBIT 10.5

 

Warrant No. 112

INAMED CORPORATION

 

EXECUTIVE OFFICER WARRANT

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT OR DOCUMENT HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT UPON DELIVERY TO THE
COMPANY OF AN OPTION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS
NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE COMPANY TO THE EFFECT
THAT ANY SUCH TRANSFER WILL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION
PROMULGATED THEREUNDER.

 

                This Warrant (the “Warrant”) is made and entered into at Las
Vegas, Nevada on the date hereinafter set forth by and between INAMED
CORPORATION, a Florida corporation (hereinafter called the “Company”), and
RICHARD G. BABBITT (hereinafter called the “Holder”).

 

WHEREAS:

 

A.            The Holder has concurrently herewith signed an Employment
Agreement for the position of President and Chief Executive Officer of the
Company; and

 

B.            The Company wishes to grant the Holder the Warrant which gives the
Holder the right, but not the obligation, to purchase stock in the Company as
recognition of the Holder’s valuable services as President and Chief Executive
Officer of the Company, and the Holder will, in consideration of the receipt of
said Warrant, agree to the terms, conditions and provisions set forth herein.

 

NOW, THEREFORE, in consideration of the premises, it is agreed as follows:

 

1.             WARRANT.  Subject to the conditions set forth herein, the Company
hereby grants to the Holder the right, privilege and option to purchase Four
Hundred Thousand (400,000) shares on the Company’s Common Stock (the “Warrant
Shares”) at a price per share (the “Strike Price”) of Three and 525/1000 Dollars
($3.525) in the manner hereinafter provided, effective as of February 1, 1998
(the “Grant Date”) to be vested as follows:

 

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                (a)           Fifty percent (50%) on the first anniversary of
the commencement of the Term of Employment as defined in the Employment
Agreement; and

 

                (b)           Fifty percent (50%) on the second anniversary of
the commencement of the Term of Employment as defined in the Employment
Agreement;

 

unless the Warrant has been terminated pursuant to the Section 3 hereof and
provided, however, that the Warrant, unless it has expired or been earlier
terminated, shall vest as to all Warrant Shares (notwithstanding the price of
the common stock) upon a change of control of the Company.  For purposes of this
Warrant, a “change of control” shall be deemed to have occurred if:

 

                                (i)            Any “person” as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) (other than the Corporation, any trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation, or any
corporation owned, directly or indirectly, by the stockholder of the Corporation
in substantially the same proportions as their ownership of stock of the
Corporation). is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power of the
Corporation’s then outstanding securities;

 

                                (ii)           During any period of two
consecutive years (not including any period prior to the execution of this
Agreement), 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 Corporation to effect a transaction
described in clause (i), (iii) or (iv) of this Section) whose election by the
Board or nomination for election by the Corporation’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
Corporation approve a merger or consolidation of the Corporation with any other
corporation, and than (a) a merger or consolidation which would result in the
voting securities of the Corporation 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 Corporation or such surviving
entity outstanding immediately after such merger or consolidation or (b) a

 

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merger or consolidation effected to implement a recapitalization of the
Corporation (or similar transaction) in which no “person” (as hereinabove
defined) acquires more than 20% of the combined voting power of the
Corporation’s then outstanding securities; or

 

                                (iv)          the stockholders of the
Corporation approve a plan of complete liquidation of the Corporation or an
agreement for the sale or disposition by the Corporation of all or substantially
all of the Corporation’s assets.

 

In the event of any split, combination, reclassification, or any other
extraordinary corporate transaction (including the issuance of other warrants,
options, or convertible securities in one or more transactions during the term
of this Warrant which would have the effect of increasing the number of shares
of Common Stock outstanding after January 30, 1998 by more than 10%), the Strike
Price and the number of Warrant Shares shall be appropriately adjusted.

 

                2.                             METHOD OF EXERCISE.  Warrant
Shares purchased under this Warrant shall, at the time of purchase, be paid for
in full, either in cash or through a “cashless” exercise, whereby in lieu of
paying the exercise price in cash, the Holder may elect to receive a number of
shares of Common Stock equal to the number of such shares originally issuable
upon exercise less such number of shares as have a then current trading price
equal to in the aggregate to the exercise price of the Warrant Shares (based on
the average closing bid price of the Common Stock for the five trading day
period immediately prior to the date of exercise).  To the extent that the right
to purchase Warrant Shares has accrued hereunder, this Warrant may be exercised,
from time to time, by written notice to the Company stating the number of
Warrant Shares with respect to which this Warrant is being exercised and the
time of delivery thereof, which shall be at least fifteen (15) days after the
giving of such notice, unless an earlier date shall have been mutually agreed
upon.  If requested by the Company, Holder shall provide the Company with an
opinion of counsel satisfactory to the Company that the exercise of the Warrant
and the issuance of the Warrant Shares do not require registration under, and
that any such exercise and issuance will not be in violation of, the Securities
Act of 1933, as amended (“the Act”) or applicable state securities laws or any
rule or regulations promulgated thereunder.

 

                                At the time specified in such notice, the
Company shall, without transfers or issue tax to the Holder, deliver to him by
certified mail, a certificate or certificates for such Warrant shares, against
the payment by the Holder of the Strike Price, in full, for the number of
Warrants Shares to be delivered, by certified or bank cashier’s check, or the
equivalent thereof acceptable to the Company or through a “cashless” exercise in
accordance with the procedures in the proceeding paragraph; provided, however,
that the time of such delivery may be postponed by the company for such period
as may be required for it, with reasonable diligence, to comply with any
requirements of any state or federal

 

 

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agency or any securities exchange.  If the Holder fails to accept delivery of
and pay for all or part of the number of Warrant Shares specified in the notice
given by the Holder, upon tender and delivery of said shares shall be
terminated.

 

                3.                             TERMINATION OF WARRANT.  Except
as herein otherwise stated, this Warrant, to the extent not theretofore
exercised, shall expire at 5:00 p.m. Las Vegas, Nevada time on January 31, 2008.

 

                4.                             REPRESENTATIONS AND WARRANTIES OF
THE HOLDER.  The Holder hereby warrants and represents to the Company, as of the
date, hereof and as of the date or dates on which any Warrant Shares are
purchased hereunder, as follows:

 

                                                (a)           Holder is an
Accredited Investor as defined in Regulation D promulgated by the Securities and
Exchange Commission under the Act.

 

                                                (b)           Holder is, by
reason of Holder’s business of financial experience, capable of evaluating the
merits and risks of this investment and of protecting the Holder’s own interests
in connection with the Warrant.

 

                                                (c)           In deciding
whether to acquire the Warrant Shares, the Holder has relied, and will rely,
exclusively upon consultations with his legal, financial and tax advisors with
respect to the nature of the Warrant.

 

                                                (d)           Holder understands
that neither the Department of Corporations of the State of Nevada, one the
Securities and Exchange Commission, nor any other governmental agency having
jurisdiction over the sale and issuance of the Warrant Shares, will make any
finding or determination relating to the appropriateness for investment of the
Warrant Shares, and that none of them has or will recommend or endorse the
Warrant Shares.

 

                                                (e)           The Holder
represents that the Warrant Shares will be purchased for Holder’s own account
for investment and will not be purchased with a view to the sale or distribution
thereof, and that the Holder has no intention of disturbing or reselling any
portion of the Warrant or the Warrant Shares which Holder is receiving or may
purchase.  Holder acknowledges that the Warrant and the Warrant Shares have not
been registered under the Act, and must be held indefinitely unless subsequently
registered under the Act or an exemption for such registration is available. 
The Holder also acknowledges that Holder is fully aware of the restrictions on
disposing of the Warrant Shares resulting from the provisions of the Act and the
General Rules and Regulations of the Securities and Exchange Commission
thereunder.  Holder further understands that the Warrant Shares have not been,
and will not be, qualified under applicable state securities laws.

 

 

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                                                (f)            Holder, if
requested by the Company’s underwriters from time to time, will execute
“lock-up” agreements as requested, relating to the Warrant and the Warrant
Shares.

 

                                                (g)           Holder recognizes
that “stop transfer” instructions will be issued against any stock certificates
under this Warrant and that a restrictive legend that addresses acquisition for
investment, subject to Rule 144, will be placed on the stock certificate for the
securities.

 

                5.             RESTRICTIONS ON ISSUANCE OF SHARES.  The Company
shall not be obligated to sell and issue any shares pursuant to this Warrant,
unless permission to issue said shares has first been obtained from the
Commissioner of Corporations of the State of Nevada, if required, and further,
unless the shares with respect to which this Warrant is exercised are, at the
time, effectively registered, or exempt from registration, under the Securities
Act of 1933, as amended.  The Company may require an opinion of counsel
acceptable to the Company to the effect of any exemption.

 

                6.             TRANSFERABILITY OF WARRANT; RIGHTS PRIOR TO
EXERCISE.

During the Holder’s lifetime, the Warrant hereunder shall be exercisable only by
the Holder, or any guardian or legal representative of the Holder in accordance
with the Employment Agreement.  In the event of (a) any attempt by the Holder to
alienate, assign, pledge, hypothecate or otherwise dispose of the Warrant,
except as provided for herein, or (b) the levy of any attachment, execution or
similar process upon the rights or interest hereby conferred, the Company may
terminate the Warrant by notice to the Holder and it shall thereupon become null
and void.

 

Holder shall have no rights as a shareholder of shares subject to this Warrant
until payment of the Strike Price pursuant to Section 2 and the delivery of such
shares herein provided.

 

                7.             REGISTRATION RIGHTS.  The Holder shall have the
same registration rights under Form S-8 or otherwise as may be generally made
available from time to time to officers and employees of the Company.

 

                8.             SERVICE NOT AFFECTED.  The granting of the
Warrant or its exercise shall not be constructed as granting to the Holder any
right with respect to the continuance of the Employment Period with the
Company.  Except as may otherwise be limited by a written agreement between the
Company and the Holder, the right of the company to terminate as defined in the
Employment Agreement is specifically reserved by the company, as the Company or
on behalf of the Company (whichever the case may be), and acknowledged by the
Holder.

 

                9.             BINDING EFFECT.  This Warrant shall be binding
upon the heirs, executors, administrators and successors of the parties hereto.

 

 

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                                IN WITNESS WHEREOF, the parties have caused this
Warrant Agreement to be executed on this           day of                , 1998

 

 

“COMPANY”

 

“HOLDER”

 

 

 

INAMED CORPORATION

 

RICHARD G. BABBITT

 

 

 

 

 

 

 

 

 

By:

 

 

Carol A. Brennan

 

Signature

Corporate Secretary

 

 

 

 

Social Security Number

 

NUMBER OF WARRANTS:  Four Hundred Thousand (400,000) EXACTLY

 

STRIKE PRICE:  Three and 525/1000 Dollars ($3.525) PER SHARE

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