Document:

Exhibit 10.49

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”)
is made and entered into as of the 1st  day of August, 2003 by and between Inamed Corporation, a Delaware
corporation (the “Corporation”), and Joseph A. Newcomb (the “Executive”)
(collectively, the “Parties”). 
The Parties, intending to be legally bound, agree as follows:

 

1.      DEFINITIONS.  In addition to certain terms defined
elsewhere in this Agreement, the following terms shall have the following
respective meanings:

 

1.1 “Affiliate” shall mean any Person controlling, controlled by or
under common control with, the Corporation.

 

1.2  “Base Salary” shall mean
the salary provided for in Section 2.4 of this Agreement.

 

1.3  “Board” shall mean the
Board of Directors of the Corporation.

 

1.4  “Cause” shall mean that the
Executive:

 

(a)                         has been convicted of any felony or any crime
involving fraud, theft, embezzlement, dishonesty or moral turpitude;

 

(b)                        has engaged in conduct which is materially
injurious to the Corporation or its Affiliates, or any of their respective
customer or supplier relationships, financially or otherwise;

 

(c)                         has substantially and repeatedly failed to
perform his duties as required under Section 2  after being provided with written notice of the manner in which
he has failed to perform his duties and after being provided thirty (30) days
opportunity to remedy such failure; or

 

(d)        in carrying out his duties under this
Agreement, has engaged in acts or omissions constituting gross negligence or
willful misconduct resulting, in either case, in material harm to the
Corporation.

 

1.5 
“Change in Control” shall be deemed to have occurred if:

 

(a)                         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 stockholders of the
Corporation in substantially the same proportions as their ownership of stock
of the Corporation), becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing fifty-one percent (51%) or more of the combined voting
power of the Corporation’s then outstanding securities; provided, however,
that a change in the proportion of 

 

 

Appaloosa Management, L.P.’s ownership of
stock of the Corporation shall not constitute a Change in Control under this Subsection
1.5(a);

 

(b)                        During any period of two (2) 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(s) designated by a person who has entered
into an agreement with the Corporation to effect a transaction described in
clause (a), (c) or (d) of this subsection) 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;

 

(c)                         The stockholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation, other
than

 

(i) 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 fifty
(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

 

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

 

(d)                        the stockholders of the Corporation approve
an agreement for the sale or disposition by the Corporation of all or
substantially all of the Corporation’s assets.

 

1.6 
“Corporation Property” shall mean all items and materials provided by
the Corporation to the Executive, or to which the Executive has access, in the
course of his employment, including, without limitation, all files, records,
documents, drawings, specifications, memoranda, notes, reports, manuals,
equipment, computer disks, videotapes, drawings, blueprints and other documents
and similar items relating to the Corporation, its Affiliates or their
respective customers, whether prepared by the Executive or others, and any and
all copies, abstracts and summaries thereof.

 

1.7 
“Competition” shall mean any direct or indirect research on, or
development, production, marketing, leasing or selling of, any product, process
or service which is the same as, similar to, or in competition with, any line
of business or research in which the Corporation or any Affiliate is now
engaged or hereinafter engages during Executive’s employment.

 

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1.8 
“Confidential Information” shall mean all nonpublic and/or proprietary
information and trade secrets respecting the business of the Corporation or any
Affiliate, including, without limitation, its products, programs, projects,
promotions, marketing plans and strategies, business plans or practices,
business operations, employees, research and development, intellectual
property, software, databases, trademarks, pricing information and accounting
and financing data.  Confidential
Information also includes information concerning the Corporation’s or any
Affiliate’s customers or clients, such as their identity, address or any other
information kept by the Corporation or any Affiliate concerning its customers
whether or not such information has been reduced to documentary form.  Confidential Information does not include
information that is, or becomes, available to the public unless such
availability occurs through an unauthorized act on the part of the Executive.  In the course of his employment hereunder,
the Executive shall not be provided with confidential information concerning
Appaloosa Management, L.P., and no such information shall be deemed to be
Confidential Information under this Agreement.

 

1.9 
“Disability” shall mean a physical or mental incapacity that  has prevented the Executive from performing
the essential functions of his position with the Corporation for a period of
one hundred eighty (180) days as determined (a) in accordance with any
long-term disability plan provided by the Corporation of which the Executive is
a participant, or (b) by the following procedure:  The Executive agrees to submit to medical examinations by a
licensed healthcare professional selected by the Corporation, in its sole
discretion, to determine whether a Disability exists.  In addition, the Executive may submit to the Corporation
documentation of a Disability, or lack thereof, from a licensed healthcare
professional of his choice.  Following a
determination of a Disability or lack of Disability by the Corporation’s or the
Executive’s licensed healthcare professional, the other Party may submit
subsequent documentation relating to the existence of a Disability from a
licensed healthcare professional selected by such other Party.  In the event that the medical opinions of
such licensed healthcare professionals conflict, such licensed healthcare
professionals shall appoint a third licensed healthcare professional to examine
the Executive, and the opinion of such third licensed healthcare professional
shall be dispositive.

 

1.10 
“Good Reason” shall mean and exist if, without the Executive’s prior
written consent, one or more of the following events occurs:

 

(a)                         the Executive is excluded from participation
in any employee benefit plan or program offered to other similarly ranked
executives of the Corporation or his benefits under such plans or programs are
materially reduced; or

 

(b)                        during the initial three-year term of this
Agreement only, the Executive is asked to relocate to a location other than one
in either Santa Barbara County, Ca., or Ventura County, Ca.; or

 

(c)                         within 12 months following a Change in
Control, the Executive is asked to relocate to a location other than one in
either Santa Barbara, County, Ca. or Ventura County, Ca.; or

 

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(d)                        the Corporation fails to reimburse the
Executive for business expenses in accordance with the Corporation’s policies,
procedures or practices; or

 

(e)                         there is a material diminution in the
Executive’s title, authority, duties, or responsibilities; provided, however,
that none of the foregoing shall constitute Good Reason if:

 

(i) the Executive gives the Corporation
timely notice of his intent to terminate for Good Reason and the Corporation
cures or remedies the reasons cited by the Executive in said notice within
thirty (30) days of receipt of said notice, or

 

(ii) sixty (60) days or more have passed
between the Executive learning of the event(s) constituting Good Reason and the
Executive’s giving notice that he is terminating his employment for Good
Reason.

 

1.11 
“Person” shall mean any individual, firm, partnership, association,
trust, company, corporation or other entity.

 

1.12 “Severance Period”  shall mean the period of time for which Base
Salary payments are made to the Executive following termination pursuant to
sections 6.3 and 7.2 of this Agreement.

 

2.      SERVICES,
COMPENSATION, AND TERM

 

2.1  Title and Duties.  Corporation agrees to employ Executive as Senior Vice President
and General Counsel and Executive agrees to undertake the duties of  that position (hereinafter referred to as
“Services”).  Executive shall perform
the duties customarily performed by one holding such position in a similar
business.  Executive shall also render
such other duties as may be assigned to him from time to time consistent with
his title and duties as Senior Vice President and General Counsel. Executive
will report directly to the Chairman, Chief Executive Officer and President of
the Corporation.

 

2.2  Best Efforts.  Executive will serve
Corporation faithfully under the direction of its CEO/President and Board of
Directors.  Executive shall devote his
full time and best efforts to performing the Services.  Executive shall act at all times in
accordance with what he reasonably believes is in the best interest of  the Corporation to the best of his ability,
experience, and talents.  Executive
shall devote his time, energy, and skills solely to the business and interests
of Inamed Corporation.

 

2.3 Corporate Authority. 
Executive will comply with the Corporation’s corporate policies and
procedures.

 

2.4  Compensation.  As Executive’s compensation for
the Services, Corporation will pay Executive the amounts and provide the
benefits set forth in the offer letter dated 
July 22, 2002 (as amended July 26, 2002) and attached as Exhibit A
(“Offer Letter”).  The Parties
acknowledge that the Executive’s salary is currently $275,000 per annum.

 

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2.5  Stock Options.  The Corporation has granted to
the Executive options (the “Options”) to purchase 100,000 shares of the
Corporation’s common stock, subject to the terms and conditions of the
Corporation’s Option Agreement and the Offer Letter. In the event of any
conflict between this Agreement and the Option Agreement, the terms of this
Agreement shall prevail.

 

2.6  Lock-Up Agreements.  The
Executive will execute any other documents reasonably required by the
Corporation in connection with the Options, including, without limitation, any
reasonable lock-up or similar agreements required by the Corporation’s
underwriters in connection with any offering of the Corporation’s securities.

 

2.7  Term.  This agreement shall be
effective on August 1, 2003 (the “Effective Date”), and shall continue
for a period of three (3) years from the Effective Date; provided, however,
that this Agreement shall be extended automatically at the end of the initial
term for a one (1) year term and thereafter for successive one (1) year terms
if neither Party has advised the other in writing in accordance with Subsection
8.1 at least sixty (60) days prior to the end of the then current term that
such term will not be extended for an additional one (1) year term.  The initial three (3) year term and each
successive one (1) year term (if any) shall be referred to herein as the “Term
of Employment”.

 

3.      DUTY
OF LOYALTY.

 

3.1  Executive’s Position of Trust.  As
a result of the Executive’s employment, the Executive will have access to
Confidential Information.

 

3.2  Obligations During the Term.  The
Executive agrees that during the Term of Employment he shall diligently devote
his time and efforts to the duties and responsibilities assigned to his by the
Corporation, and without prior express written authorization of the Board, the
Executive shall not, directly or indirectly, either alone or in concert with
others, engage in any of the following activities:

 

(a)                                  Perform or render any services of a business,
professional or commercial nature, relating to services or products competitive
with the Corporation, to or for the benefit of himself or any other person or
entity, whether for compensation or otherwise, except for personal investments
and other activities approved by the Corporation; or

 

(b)                                 Engage in any activity directly or indirectly
in competition with or adverse to the Corporation; or

 

(c)                                  Engage in any activity for purpose of
influencing or attempting to influence the Corporation’s customers, either
directly or indirectly, to conduct business with any business enterprise in
competition with the Corporation; or

 

(d)                                 Undertake or participate in any planning for
or organization of any business activity that is or will be in competition with
the Corporation in

 

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any field(s) or area(s) in which the
Executive has worked or with which the Executive has come into contact, or of
which the Executive has gained knowledge during the Term of Employment.

 

3.3  Post-Employment Obligations.  As
a condition of the Executive’s having access to Confidential Information, and
in consideration of the payments and benefits provided hereunder, the Executive
agrees that for a period of twelve (12) months after termination of his
employment, or for the duration of a Severance Period, whichever is greater,
regardless of the reason, the Executive will not, directly or indirectly,
either for himself or for any other person or entity, whether as an agent,
consultant, employee, officer, director, investor, partner, shareholder,
proprietor or in any other individual or representative capacity (excluding the
holding for investment of less that five percent (5%) of the outstanding
securities of any corporation which are regularly traded on a recognized stock
exchange), do any of the following:

 

(a) 
the Executive will not undertake any employment or activity wherein the
loyal and complete fulfillment of the duties of that employment or activity
would call upon the Executive to make judgments on or otherwise to use any
Confidential Information that is covered by this Agreement or the Intellectual
Property and Confidentiality Agreement.

 

(b) 
Divert or take away (or attempt to divert or take away), any of the
Corporation’s present, former or prospective customers, including, but not
limited to, those upon whom he called, met with or became acquainted with while
engaged as an employee of the Corporation;

 

(c)  Interfere with the contractual or business
relationships of the Corporation;

 

(d) 
Solicit or attempt to solicit any employees or clients of the
Corporation; or

 

(e) 
Slander or disparage the Corporation, or undertake any activity which
adversely impacts, or is reasonably likely to impact, the goodwill of the
Corporation and its business opportunities.

 

The Parties agree that Article 5 of Exhibit B
hereto (as identified in Section 4 below) shall apply only during the
Term of Employment and for a period of twelve (12) months thereafter.

 

3.4  Corporation Property.  The
Executive agrees that upon termination of his employment by the Corporation for
any reason, or at such earlier time as the Corporation may request, the
Executive shall forthwith return to the Corporation all documents and other
property in his possession belonging to the Corporation or any of its
Affiliates.

 

3.5  Severability.  Each of the covenants of this
section shall be construed as separate covenant covering the subject matter in
each of the separate counties and states in the United States and governmental
subdivisions outside of the United States (collectively, the “Governmental
Units”).  To the extent that any
covenant is determined by a court of competent jurisdiction to be unenforceable
in any one or more of said Governmental

 

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Units, said covenant  shall not be affected with respect to any
other Governmental Unit, each covenant with respect to each Governmental Unit
being construed as severable and independent.

 

4.      INTELLECTUAL
PROPERTY AND CONFIDENTIALITY AGREEMENT.

 

The Executive has executed or will
concurrently herewith execute the Corporation’s Intellectual Property and
Confidentiality Agreement in the form that is attached hereto as Exhibit B,
the terms of which are incorporated herein by reference.  Nothing in Article 3 of Exhibit B shall
prohibit the Executive from removing any Corporation Property from the premises
of the Corporation to the extent necessary in the course of the Executive’s
performance of his duties hereunder and/or for other legitimate purposes of the
Corporation.  In addition, the Parties
agree that the definition of “Company” in Article 8 of Exhibit B shall not
include Appaloosa Management, L.P. or any interest it has in any entity outside
of the Corporation and its consolidated group.

 

5.      TERMINATION.

 

5.1  Grounds.  This Agreement, and the
Executive’s employment hereunder, shall terminate upon the occurrence of any of
the following events:

 

(a)                                  Termination by the Corporation for Cause.  By
the Corporation immediately for Cause;

 

(b)                                 Termination by the Corporation without Cause
or by the Executive with Good Reason and no Change in Control.  By
the Corporation without Cause, upon thirty (30) days’ prior written notice to
the Executive;

 

(c)                                  Disability.  In the event of the Executive’s
Disability;

 

(d)                                 Death.  Upon the death of the
Executive;

 

(e)                                  Termination by the Corporation Without Cause
or by the Executive with Good Reason After a Change in Control.  By
the Corporation without cause or by the Executive for Good Reason within twelve
(12) months following a Change in Control.

 

(f)                                    Expiration of the Term of this Agreement
following the Corporation’s election not to extend pursuant to Section 2.7.

 

6.      TERMINATION
PAYMENTS.

 

6.1  Termination Due to Death or Disability.  In
the event of a termination due to the Executive’s Death or Disability, the
Executive or his estate, as the case may be, shall be entitled, in lieu of any
other compensation whatsoever, to:

 

(a) 
payment of his Base Salary at the rate in effect at the time of his
termination until the date of Death or Disability;

 

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(b) 
any annual bonus awarded but not yet paid;

 

(c) 
any annual bonus that would have been payable with respect to the year
of termination in the absence of the Executive’s Death or Disability, pro-rated
for the period the Executive worked prior to his Death or Disability, provided
that the Executive worked at least six (6) months in the year for which the
annual bonus is payable;

 

(d) 
any deferred compensation or bonuses, including interest or other
credits on the deferred amounts, to the extent provided in the plans or programs
providing for deferral;

 

(e) 
reimbursement of expenses incurred but not paid prior to such
termination of employment; and

 

(f) 
such rights to other benefits as may be provided in applicable plans and
programs of the Corporation, including, without limitation, applicable employee
benefit plans and programs, according to the terms and provisions of such plans
and programs.

 

6. 2  Termination for Cause.  In
the event that the Corporation terminates the Executive’s employment for Cause,
the Executive shall be entitled, in lieu of any other compensation and benefits
whatsoever, to:

 

(a) 
payment of his Base Salary at the rate in effect at the time of his
termination through the date of termination of employment;

 

(b) 
any deferred compensation or bonuses, including interest or other credit
on the deferred amounts, to the extent provided in the plans or programs
providing for deferral; and

 

(c) 
such rights to other benefits as may be provided in applicable plans and
programs of the Corporation, including, without limitation, applicable employee
benefit plans and programs, according to the terms and conditions of such plans
and programs.

 

6.3  Termination Without Cause, by Executive with Good Reason, or
Following Election by the Corporation not to Extend Term.  In
the event that (1) the Corporation terminates the Executive’s employment
hereunder without Cause, (2) the Executive terminates his employment for Good
Reason (in the absence of a Change in Control); or (3) this Agreement expires
following the Corporation’s election not to extend pursuant to Section 2.7, the
Executive shall be entitled to the following payments and benefits:

 

(a) 
payment of his Base Salary in effect at the time of termination for a
period of twenty four (24) months if terminated during the initial three-year
term of this Agreement, and twelve (12) months if terminated thereafter, which
shall be paid out in equal bi-weekly installments through the Corporation’s
regular payroll practices;

 

8

 

(b) 
any annual bonus awarded but not yet paid;

 

(c) 
any annual bonus that would have been payable with respect to the year
of termination, pro-rated for the period the Executive worked prior to such
termination, provided that the Executive worked at least six (6) months in the
year for which the annual bonus is payable;

 

(d) 
any deferred compensation or bonuses, including interest or other
credits on the deferred amounts, to the extent provided in the plans or
programs providing for deferral;

 

(e) 
reimbursement of expenses incurred but not paid prior to such
termination of employment; and

 

(f) 
continuation of participation in the Corporation’s group medical, dental
and life insurance plans according to the terms and provisions of such plans
and programs during the Post-Employment Period for up to twelve (12) months or
until the date on which the Executive first becomes eligible for substantially
equivalent insurance coverage provided by any other entity following
termination of employment by the Corporation, whichever occurs first.

 

6.4  Termination by Executive Without Good Reason.  In
the event that the Executive terminates his employment without good reason, the
Executive shall be entitled, in lieu of any other compensation and benefits
whatsoever, to:

 

(a) 
payment of his Base Salary at the rate in effect at the time of his
termination through the date of termination of employment;

 

(b) 
any deferred compensation or bonuses, including interest or other credit
on the deferred amounts, to the extent provided in the plans or programs
providing for deferral; and

 

(c) 
such rights to other benefits as may be provided in applicable plans and
programs of the Corporation, including, without limitation, applicable employee
benefit plans and programs, according to the terms and conditions of such plans
and programs.

 

6.5  Non-Duplication of Benefit. 
Notwithstanding the foregoing, nothing in this Agreement shall result in
a duplication of payments or benefits provided under this Section 6,
nor shall anything in this Agreement require the Corporation to make any
payment or to provide any benefit to the Executive that the Corporation is
otherwise required to provide under any other contract, agreement or
arrangement.

 

6.6  General Release.  No payments or benefits payable
to the Executive upon the termination of his employment pursuant to this Section
6 shall be made to the Executive unless and until he executes a general
release in a form satisfactory to the Corporation and such general release
becomes effective pursuant to its terms.

 

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7.      CHANGE
IN CONTROL.

 

7.1  Vesting of Stock Options, Shares of Restricted Stock and
Corporation’s 401(k) Plan Contributions.  In
the event of a Change in Control, all stock options and shares of restricted
stock granted by the Corporation to the Executive and all  401(k) Plan Contributions made by the
Corpoation on Executive’s behalf shall immediately vest.

 

7.2  Termination by the Corporation Without Cause or by the Executive
for Good Reason After a Change in Control.  If
within twelve (12) months following a Change in Control, the Executive’s
employment is terminated by the Corporation without Cause or by the Executive
for Good Reason, the Executive shall be entitled, in lieu of any other
compensation and benefits whatsoever under Section 6 or otherwise, to:

 

(a) 
payment of his Base Salary at the rate in effect at the time of his
termination through the date of termination of employment;

 

(b) 
an amount equal to the greater of (i) two (2) times his annual Base
Salary at the time of the Change in Control or (ii) two (2) times his
annual Base Salary at the time of the termination of his employment, which
shall be paid out in equal bi-weekly installments through the Corporation’s
regular payroll practices;

 

(c) 
any annual bonus awarded but not yet paid or any other incentive
compensation plan;

 

(d) 
reimbursement of expenses incurred but not paid prior to such
termination of employment; and

 

(e) 
continuation of participation in the Corporation’s group medical, dental
and life insurance plans according to the terms and provisions of such plans
and programs during the Post-Employment Period for up to eighteen (18) months
or until the date on which the Executive first becomes eligible for substantially
equivalent insurance coverage provided by any other entity following
termination of employment by the Corporation.

 

7.4  Adjustment to Total Payments.  If
any payment or right accruing to the Executive under this Agreement (without
application of this section), either alone or together with other payments or
rights accruing to the Executive from the Corporation or an Affiliate (“Total
Payments”) would constitute a “parachute payment,” as defined in Section
280G of the Code and regulations thereunder, such payment or right shall be
reduced to the largest amount or greatest right that will result in no portion
of the amount payable or right accruing under this Agreement being subject to
an excise tax under Section 4999 of the Code or being disallowed as a deduction
under Section 280G of the Code.  The
Executive shall cooperate in good faith with the Corporation in providing the
necessary information for making a determination of the applicability of
Section 280G.  The foregoing provisions
of this section shall apply only if after reduction for any applicable federal
excise tax imposed by Section 4999 of the Code and federal income tax imposed
by the Code, the Total Payments accruing to the Executive would be less than
the amount

 

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of the Total Payments as reduced, if
applicable, and after reduction for only federal income taxes.

 

8.      MISCELLANEOUS.

 

8.1  Notices.  Any written notice required or
permitted to be given shall be deemed delivered either when personally
delivered or when mailed, registered or certified, postage prepaid with return
receipt requested, if to the Executive, addressed to the last residence address
of the Executive as shown in the records of the Corporation, and if to the Corporation,
addressed to the Chairman of the Board at its principal office in Santa
Barbara, California.  Mailed notices
shall be deemed received two (2) business days after the date of deposit in the
mail.

 

8.2  Remedies.

 

8.2.1  Equitable Remedies.  The
Executive acknowledges and agrees any breach, violation or evasion of the
terms, conditions and provisions of Sections 3 and 4 above, will result in
immediate and irreparable injury and harm to the Corporation and shall entitle
the Corporation to injunctive relief, as well as to all other legal or
equitable remedies to which the Corporation may be entitled.

 

8.2.2  Cessation/Reimbursement of Payments.  If
the Executive violates any provision of Sections 3 or 4, the Corporation may,
upon giving written notice to the Executive, immediately cease all payments and
benefits that it may be providing to the Executive pursuant to this Agreement,
and the Executive may be required to reimburse the Corporation for any payments
received from, and the cash value of any benefits provided by, the Corporation
between the first day of the violation and the date such notice is given; provided,
however, that the foregoing shall be in addition to such other remedies
as may be available to the Corporation and shall not be deemed to permit the
Executive to forego or waive such payments in order to avoid his obligations
under Sections 3 or 4.

 

8.3  Partial Invalidity.  If
any term or provision of this Agreement or the application thereof to any
person or circumstance shall be held to be invalid or unenforceable to any
extent, the remainder of this Agreement or application of such term or
provision to persons or circumstances other than those to which it is held
invalid or unenforceable shall not be affected thereby, and each term and provision
of the Agreement shall be valid and be enforced to the fullest extent permitted
by law.

 

8.5  Waiver.  No waiver of any right
hereunder shall be effective for any purpose unless in writing, signed by the
Party hereto possessing said right, nor shall any waiver be construed to be a
waiver of any subsequent right, term or provision of this Agreement.

 

8.6  Assignment; Effect on Agreement.  It
is hereby acknowledged and agreed that the Executive’s rights and obligations
under this Agreement are personal in nature and shall not be assigned or
delegated.  This Agreement shall be
binding on and inure to the benefit of the heirs, personal representatives,
successors and assigns of the Parties, subject, however, to the restrictions on
assignment and delegation contained herein.

 

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8.7  Disputes Resolution and Arbitration.

 

8.7.1 
Any dispute arising in connection with the interpretation or enforcement
of the provisions of this Agreement, or its application or validity, will be
submitted to arbitration.  Such
arbitration proceedings shall be instituted in Santa Barbara, California, in
accordance with the rules then existing of the American Arbitration
Association.  This agreement to
arbitrate is specifically enforceable.

 

8.7.2 
Any award rendered in any such arbitration proceeding will be final and
binding on each of the Parties, and judgment may be entered thereon in any
court of competent jurisdiction.  The
arbitrator shall have the authority to compel the Party that does not
substantially prevail in such proceeding to pay the reasonable costs and fees
of the prevailing Party (including reasonable and customary legal fees and
expenses) to the extent that the arbitrator deems appropriate.

 

8.8  Exhibits.  The terms and conditions of
this Agreement shall prevail in the case of any discrepancy or conflict between
such terms and conditions and the terms and conditions of any exhibit hereto.

 

8.9  Governing Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of
California.

 

8.10  Entire Agreement; Comparability.  (a)
Unless expressly provided to the contrary herein, this Agreement, the exhibits
attached hereto, and the documents incorporated by reference herein or which
describe, from time to time, the Corporation’s benefit plans constitute the
entire agreement and understanding between the Parties and supersedes all prior
agreements and understandings, oral or written.  Except for paragraph (b) below, no modification or termination
shall be valid unless in writing and signed by both Parties.

 

(b) If, from time to time after the Effective
Date hereof, the Corporation grants to any executive or senior officer benefits
or perquisites not granted to Executive hereunder, the Executive will be given
due consideration for participation in such benefits or perquisites; however,
the Corporation does not guarantee that such benefits or perquisites will be
granted to Executive.

 

9.      ACKNOWLEDGEMENT.  The Executive represents and acknowledges the
following:

 

(a)                                  he has carefully read this Agreement in its
entirety;

 

(b)                                 he understands the terms and conditions
contained herein;

 

(c)                                  he has had the opportunity to review this
Agreement, at his discretion, with legal counsel of his own choosing and has
not relied on any statement made by the Corporation or its legal counsel as to
the meaning of any term

 

12

 

or condition contained herein or in deciding
whether to enter into this  Agreement;
and

 

(d)                                 he is entering into this Agreement knowingly
and voluntarily.

 

IN WITNESS WHEREOF, the Parties hereto have
executed this Agreement as of the 1st 
day of August, 2003.

 

	
  Inamed Corporation

  	
  Executive

  
	
   

  
	
  By:

  	
  /s/ Nicholas L. Teti

  	
   

  	
  /s/ Joseph A. Newcomb

  	
   

  
	
   

  
	
  Name:

  	
  Nicholas L. Teti

  	
   

  	
  Name:

  	
  Joseph A. Newcomb

  
	
   

  
	
  Title:

  	
  Chairman, President and 

  	
   

  	
  Address:

  	
   

  
	
   

  	
  Chief Executive Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
								

 

13Exhibit
4.1

 

FOR
ACCREDITED INVESTORS ONLY

 

INTERNATIONAL
INTEGRATED INCORPORATED

FORM OF CONVERTIBLE DEBENTURE LOAN AGREEMENT

 

THIS LOAN AGREEMENT (the
“Agreement”)
is by and between
                                            
(the “Holder”)
and INTERNATIONAL INTEGRATED INCORPORATED, a British
Virgin Islands corporation with its registered office at Craigmuir Chambers,
P.O. Box 71, Road Town, Tortola, British Virgin Islands  (the “Company”).

 

RECITALS:

 

WHEREAS:

 

A.                                    The
Holder agrees to lend the Company the principal amount as defined below and
receive one year’s worth of prepaid interest thereon; and

 

B.                                    The Holder agrees
to make such loan to the Company in the form of  a Convertible Debenture, convertible in the Holder’s sole
discretion, into the Company’s Common Stock, $.01 par value per share (the “Common
Stock”) on the terms set forth below which is limited to Accredited
Holders only; and

 

C.                                    The
Company and the Holder wish to enter into this Agreement to reflect the other
terms of the investment.

 

AGREEMENT

 

NOW, THEREFORE, intending
to be legally bound, the parties hereto agree as follows:

 

1.                                      LOAN.         The
Holder hereby agrees to lend to the Company
                                                           
($              )
payable in cash, or good funds (the “Loan Amount”).  The Company hereby agrees to pay to the Holder on the date which
is twelve (12) months from the date hereof (the “Maturity Date”), at the
Holder’s sole discretion as indicated to III in writing, either: (a.)
the Loan Amount; or (b) shares of III common stock (the “Debenture
Shares”) equal to the Principal Amount divided by FIVE DOLLARS
($5.00) per share (the “Conversion Price”). The Company agrees to
pay the Holder prepaid interest in the amount of
                                                           
THOUSAND DOLLARS
($                    )
within Ten (10) business days of bank clearance of the Holder’s Loan Amount.

 

1

 

2.                                      COMPANY’S
REPRESENTATIONS AND WARRANTIES.  The
Company represents and warrants to Holder that on the date hereof:

 

2.1                               The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the British Virgin Islands and is duly qualified as a foreign
corporation in each jurisdiction in which the character of the properties owned
or held under lease by it or the nature of the business transacted by it
requires such qualification.  The
Company has all requisite power to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement and all other
documents and agreements contemplated hereby and thereby, and to perform the
provisions hereof and thereof and to consummate the transactions contemplated
hereby and thereby.

 

2.2                               The execution, delivery
and performance of this Agreement and all other documents and agreements
contemplated hereby to be executed, delivered and performed by the Company, and
the consummation of the transactions contemplated hereby or thereby, have been
duly authorized and approved by the Company. 
This Agreement and all other documents and agreements contemplated
hereby to be executed and delivered by the Company have each been duly
authorized, executed and delivered by, and each is the valid and binding
obligation of, the Company, enforceable against it in accordance with its
terms, except as may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws or by legal or equitable
principles relating to or limiting creditors’ rights generally.

 

2.3                               The authorized capital
stock of the Company consists of the following: 50,000,000 authorized shares of
common stock, par value $0.01; and 20,000,000 authorized shares of Preferred
stock, par value $0.01.  The Shares
will, when issued, be duly and validly issued, fully paid and nonassessable.

 

2.4                               The consummation of the
transactions contemplated by this Agreement and the performance of the terms
and provisions of this Agreement and any other documents or agreements
contemplated hereby will not (i) contravene, result in any breach of, or
constitute a default under any indenture, mortgage, deed of trust, bank loan or
credit agreement, corporate charter, by-laws or other material agreement or
instrument to which the Company is a party or by which the Company or any of
its properties is bound, (ii) conflict with or result in a breach of any of the
terms, conditions or provisions of any order of any court, arbitrator or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign (collectively, “Governmental
Person”) applicable to the Company or (iii) violate any material
provision of any statute or other rule or regulation of any Governmental Person
applicable to the Company.

 

2.5                               No consent, approval or
authorization of, or registration, filing or declaration with, any person or
entity is required for the transfer of the Convertible Debenture or the
Debenture Shares or the valid delivery of the Convertible Debenture or the
Debenture Shares or for the performance by the Company of this Agreement or any
other documents or agreements contemplated hereby, other than the filings,
registrations or qualifications under securities laws or that may be required
to be made or obtained in connection with the offers transfer, sale or delivery
of the Convertible Debenture or the Debenture Shares or any interest therein.

 

2.6                               Upon issuance (including
payment of the purchase or exercise price there for), Holder shall acquire good
and marketable title to the Convertible Debenture free and clear of all
covenants, conditions, restrictions, liens, pledges, charges, encumbrances,
options and adverse claims or rights of any kind whatsoever.

 

2

 

3.                                      COVENANTS
OF THE COMPANY.  The Company
hereby makes the following covenants and agrees that:

 

3.1                               The
Company will do or cause to be done all things necessary to preserve and keep
in full force and effect the Company’s corporate existence in accordance with
the rights (charter and statutory), licenses and franchises of the Company; provided,
however, that the foregoing shall not restrict any merger,
acquisition of, consolidation with or other such transaction involving the
Company, whether or not it is the surviving corporation.

 

3.2                               The
Company shall pay prior to delinquency all taxes, assessments and governmental
levies that may be imposed upon the Company, except as contested in good faith
and by appropriate proceedings.

 

3.3                               The
Company shall comply in all respects with all applicable laws, statutes and
regulations of any Governmental Person, a violation of which would have a
material adverse effect on the financial condition, operations, business,
profits, prospects or properties of the Company or the validity or enforceability
of this Agreement or any other documents or agreements contemplated hereby or
thereby or any of the transactions contemplated hereby or thereby.

 

3.4                               The
Company shall refuse to register any transfer of any of the Debenture Shares
not made in accordance with the provisions of Regulation D, pursuant to
registration under the Securities Act, or pursuant to an available exemption
from registration.

 

4.                                      HOLDER’S
REPRESENTATIONS.  The Holder
hereby makes the following representations to the Company which shall also be
true and correct at the Closing and which shall survive the Closing:

 

4.1                               The
Holder represents and warrants that the Holder is an “Accredited Holder” within
the meaning of Regulation D promulgated under the Act, and as more specifically
described in Exhibit A hereto.

 

4.2                               The
Holder is, by reason of the Holder’s business or financial experience, or by
reason of the business or financial experience of the Holder’s professional
adviser, who is not affiliated with and is not compensated directly or
indirectly by the Company, or any affiliate or selling agent of the Company, is
capable of evaluating the merits and risks of the purchase of the Shares and of
protecting the Holder’s own interests in connection with the investment
contemplated herein.

 

4.3                               The
Holder acknowledges that it has received and carefully reviewed a copy of the
form of Convertible Debenture attached hereto as Exhibit “B”.  The form of Convertible Debenture and this
Agreement are hereinafter collectively referred to as the “Materials,” and the Holder
further acknowledges that it has read all of the disclosures set forth in the
Materials.  The Holder has had the
opportunity to ask questions and receive answers from the Company concerning
the terms and conditions of the offering described in the Materials and by the
Company.  The Holder recognizes that the
Company has a limited operating history and is a speculative venture, and that
if the Holder invests therein, the Holder may lose the entire amount of its
investment.  The Holder acknowledges
that its representatives and the Holder have been provided with the opportunity
to obtain any additional information necessary to verify the accuracy of all
information provided to the Holder in the Materials.

 

4.4                               In
deciding whether to acquire the Convertible Debenture, the Holder has relied
exclusively upon consultations with its legal, financial and tax advisers with
respect to the nature of the investment and the information provided by the
Company in the Materials and this Agreement. 
None of the Holder’s advisors are affiliated with, or compensated
directly or indirectly by, the Company or any affiliate or selling agent of the
Company.

 

3

 

4.5                               The
Holder understands that neither the SEC, nor any other governmental agency
having jurisdiction over the sale and issuance of the Convertible Debenture
will make any finding or determination relating to the appropriateness for
investment of the Convertible Debenture offered by the Company and that none of
them has or will recommend or endorse the Convertible Debenture.

 

4.6                               The
Holder represents that the Convertible Debenture is purchased for his own
account for investment and is not being purchased with a view to the resale or
distribution thereof, and that the Holder has no present intention of
distributing or reselling any portion of the Convertible Debenture.  The Holder acknowledges that it has been
informed by the Company that the Convertible Debenture, and the Debenture
Shares, to be issued and delivered have not been registered under the Act and
that the Convertible Debenture and Debenture Shares must be held indefinitely
unless subsequently registered under the Act or an exemption for such
registration is available.  The Holder
acknowledges that, other than as may be set forth in the Materials, the Company
has no obligation to register the Convertible Debenture or the Debenture Shares
under the Act.  The Holder also
acknowledges that it is fully aware of the restrictions on disposing of the
Convertible Debenture and the Debenture Shares resulting from the provisions of
the Act and the General Rules and Regulations of the SEC thereunder.

 

4.7                               The
Holder understands that the Convertible Debenture will not be freely
transferable and the ability to transfer the Debenture Shares is also
restricted.

 

4.8                               The
Holder recognizes that there is not a public market for the Convertible
Debenture and that there is no assurance that there will be such a market for
these securities.  The Holder
understands that it may have to hold the Debenture Shares indefinitely due to
the lack of such a market.

 

4.9                               The
Holder represents that he possesses such knowledge and experience in business
and financial matters that he is capable of evaluating the merits and risks of
his investment in the Convertible Debenture. 
The Holder also has the degree of sophistication in these matters
necessary to understand (1) the financial and operational information provided
to it relating to the Company, and (2) the potential risk of losing all or a
portion of his investment in the Convertible Debenture.  The Holder represents that he is able to
bear the economic risk of a loss of its investment in the securities, that he
has funds adequate to meet personal needs and contingencies and that he has no
need for liquidity of the investment in the Convertible Debentures.

 

4.10                        The
Holder recognizes that “stop transfer” instructions will be issued against his
Debenture Shares and that the following legend will be placed on the Debenture
Shares issued:

THE SHARES REPRESENTED BY
THIS CERTIFICATE HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. 
THE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.

 

5.                                      REGISTRATION
RIGHTS.

 

5.1                               For the period
commencing with the issuance of the Convertible Debenture and terminating one
year after the Effective Date as defined below, if at any time the Company
shall propose to register any of its shares for sale or disposition for its own
account for cash under the Act in a public offering, including an initial
public offering (the “IPO”) under an S-1 registration statement other than a
registration relating to its employee benefit plans, the Company shall:

 

4

 

(a)                                  Promptly give to the
Holder at least thirty (30) days’ written notice prior to the filing thereof
(which shall include, if then determined, the proposed date on which the
registration statement is to be filed, the proposed price and registration
price per share, the number of shares proposed to be included in such
registration, the identity of any proposed selling stockholders and a list of
the jurisdictions in which the Company intends to attempt to qualify such
securities under the applicable blue sky or other state securities laws); and

 

(b)                                  Subject to
Section 5.2 below, include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, a portion of the Holder’s Shares (as hereinafter defined)
which are specified in a written request, or requests, made by the Holder
within ten (10) days after receipt of such written notice from the Company by
the Holder.

 

The rights of the Holder
to registration pursuant to this Section 5.1 shall be conditioned upon the
Holder’s participation in any underwriting relating to the Company’s registered
public offering.  The Holder shall (together
with the Company) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected by the Company.  The Company will use its best efforts to
include the Holder’s Shares in such registration statement.  Notwithstanding any provision of this
Section 5.1, if the underwriter, in its sole discretion, determines that
marketing factors require a limitation of the number of securities to be
underwritten, or that the registration statement be limited to shares offered
by the Company only, the underwriter may exclude some or all of the Holder’s
Shares for which the Holder seeks registration from inclusion in the
registration and underwriting, which reduction shall be pro rata among the
Holder, the Company, and any other shareholder whose shares are sought to be
included in the registration.  The
Company will bear the expenses of such registration, except for an underwriting
commission or discount and the expenses of special counsel for the Holder.

 

5.2                               In addition, from time
to time, the Company will register the Holder’s Shares, at its expense, on
registration statements or Form S-3 after the date upon which the Company meets
the requirements to register Holder’s Shares on a Form S-3.

 

5.3                               Definitions.  For purposes of this Section 5:

 

5.3.1                     The terms “register”, “registered” and
“registration”
refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or
document; and

 

5.3.2                     The term “Holder’s Shares” means any
Common Stock issued upon conversion of the Convertible Debenture held by the
Holder; and

 

5.3.3                     The term “Effective Date” shall mean
the date the effectiveness of the Company’s registration on Form S-1, or
equivalent registration, for an initial public offering (IPO) is declared
effective by the SEC.

 

5.4                               Indemnification.  In the event any Holder’s Shares are
included in a registration statement under this Section 5:

 

5.4.1                     To the extent permitted by law,
the Company will indemnify and hold harmless the Holder, and its partners,
against any losses, claims, damages or liabilities (joint or several) to which
it may become subject under the Act, the 1934 Act, or other federal or state
law, insofar as such losses, claims, damages or liabilities (or action in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively, a “Violation”):  (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or

 

5

 

supplements thereto, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading, or (iii) any violation or alleged violation
by the Company of the Act, the 1934 Act, any state securities law or any rule
or regulation promulgated under the Act, the 1934 Act or any state securities
law.  The Company will reimburse the
Holder, and its partners, for any legal or other expense actually incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action. 
Notwithstanding the preceding, the indemnity agreement contained in this
Section 6.4.1 shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based
upon a Violation which occurs solely in reliance upon or in conformity with
written information furnished expressly for use in connection with such
registration by the Holder.

 

5.4.2                     To the extent permitted by law,
the Holder will indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement, each person, if
any, who controls the Company within the meaning of the Act, and any
underwriter, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling
person, or underwriter may become subject, under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such Violation occurs
solely in reliance upon written information furnished by the Holder and
expressly for use in connection with such registration.  The Holder will reimburse any legal or other
expense reasonably incurred by the Company or any such director, officer,
controlling person or underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action.  Notwithstanding the preceding, the indemnity agreement contained
in this Section 6.4.2 shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably withheld.

 

5.4.3                     Promptly after receipt by an
indemnified party under this Section 6.4 of notice of the commencement of
any action (including any governmental action), such indemnified party will, if
a claim in respect thereof is to be made against any indemnifying party under
this Section 6.4, deliver to the indemnifying party a written notice of
the commencement thereof.  Following
receipt of such notice, the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if representation
of such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing interests between
such indemnified party and any other party represented by such counsel in such
proceeding.  The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 5.4. 
However, the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 5.4.

 

5.4.4                     The obligations of the Company
under this Section 5.4 shall survive the completing of any offering of the
Holder’s Shares in a registration statement under this Section 5.

 

6

 

5.5                               Delay.  The Holder shall have no right to take any
action to restrain, enjoin or otherwise delay any registration as a result of
any controversy that may arise with respect to the interpretation or
implementation of this undertaking.

 

5.6                               Transfer of Registration Rights.  The rights granted to the Holder
hereunder to cause the Company to register securities pursuant to the terms
hereof may be assigned to a transferee or assignee in connection with any
permitted transfer or assignment of any of the Holder’s Shares (including,
without limitation, any transfers or assignments effected by operation of law),
but excluding any transferee who purchases the Company’s Common Shares which
have been otherwise registered.

 

6.                                      TRANSFER
OF CONVERTIBLE DEBENTURE.

 

With respect to any
offer, sale or other disposition of the Convertible Debenture (or of any
securities issued upon conversion of this Debenture other than pursuant to
Section 5 above), the Holder will give written notice to the Company prior
thereto, describing briefly the manner thereof, together with a written opinion
of such Holder’s counsel, to the effect that such offer, sale or other
distribution may be effected without registration or qualification (under any
federal or state law then in effect). 
Promptly upon receiving such written notice, the Company shall notify
such Holder whether such Holder may sell or otherwise dispose of the
Convertible Debentures, all in accordance with the terms of the notice delivered
to the Company.  Notwithstanding the
above, Holder agrees not to sell, assign or otherwise dispose of the
Convertible Debenture or the Debenture Shares to any competitor of III,
including but not limited to Inamed Corporation or Mentor Corporation, or to
any executive officer of any competitor of III, including but not limited to
any executive officer of Inamed Corporation or Mentor Corporation.

 

7.                                      GENERAL
PROVISIONS.

 

7.1                               All
representations, warranties, covenants and agreements of the Company herein
shall be deemed to be material and to have been relied upon by Purchaser and
shall survive the execution and delivery of this Agreement and of the
Securities.

 

7.2                               This
Agreement shall bind and inure to the benefit of and be enforceable by the
Company, Purchaser and each of their respective successors and assigns.  Purchaser shall be permitted to transfer the
Shares in accordance with their terms and the terms of this Agreement and in
accordance with applicable restrictions under applicable federal and state
securities laws.

 

7.3                               All
notices and other communications provided for in this Agreement shall be in
writing and delivered by registered or certified mail, postage prepaid, or
delivered by overnight courier (for next business day delivery) or telecopied,
addressed as set forth on the signature page hereof, or at such other address
as any of the parties hereto may hereafter designate by notice to the other
parties given in accordance with this Section. 
Any such notice or communication shall be deemed to have been duly given
on the fifth day after being so mailed, the next business day after delivery by
overnight courier, when received when transmitted by telecopy with confirmation
of transmission or upon receipt when delivered personally.

 

7.4                               This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.  Signatures may be exchanged
by telecopy, with original signatures to follow.  Each of the parties hereto agrees that it will be bound by its
own telecopied signature and that it accepts the telecopied signatures of the
other parties to this Agreement.  The
original signature pages shall be forwarded to the Company or its counsel and
the Company or its counsel will provide all of the parties hereto with a

 

7

 

copy of the entire Agreement. 
Notwithstanding the above, this Agreement shall not be effective until
accepted by the Company.

 

7.5                               This
Agreement may only be amended by a writing duly executed by the parties hereto.

 

7.6                               If
any term or provision of this Agreement or any other document executed in
connection herewith shall be determined to be illegal or unenforceable, all
other terms and provisions hereof and thereof shall nevertheless remain
effective and shall be enforced to the fullest extent permitted by applicable
law.

 

7.7                               EXCEPT
TO THE EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY SELECTED
HEREIN, THIS AGREEMENT AND ALL AMENDMENTS, SUPPLEMENTS, WAIVERS AND CONSENTS
RELATING HERETO OR THERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE BRITISH VIRGIN ISLANDS WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.  EACH PARTY HEREBY
IRREVOCABLY SUBMITS ITSELF TO THE JURISDICTION OF THE COURTS SITTING IN THE
BRITISH VIRGIN ISLANDS AND AGREES AND CONSENTS THAT SERVICE OF PROCESS
MAY BE MADE UPON IT IN ANY LEGAL PROCEEDINGS RELATING HERETO BY ANY MEANS
ALLOWED UNDER BRITISH VIRGIN ISLANDS LAW.

 

7.8                               Any
dispute arising in connection with the interpretation or enforcement of the
provisions of this Agreement, or its application or validity, will be submitted
to arbitration.  Such arbitration
proceedings will be held in the British Virgin Islands.  This agreement to arbitrate is specifically
enforceable.  Any award rendered in any
such arbitration proceeding will be final and binding on each of the parties,
and judgment may be entered thereon in any court of competent
jurisdiction.  The costs and fees of any
such arbitration proceeding will be borne by the respective parties.  The arbitrators may in their discretion
award costs and reasonable attorneys’ fees to the prevailing party.

 

7.9                               This
Agreement contains the entire Agreement of the parties hereto with respect to
the transactions contemplated hereby and supersedes all previous oral and
written, and all previous contemporaneous oral negotiations, commitments and
understandings.

 

7.10                        Each
party agrees promptly to execute and deliver such documents and to take such
other acts as are reasonably necessary to effectuate the purposes of this
Agreement.

 

7.11                        The
headings contained herein are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.

 

7.12                        This
Agreement contains the entire agreement between the Holder and the Company in
regards to the Convertible Debenture, and all prior negotiations,
understandings and agreements with regards to the Convertible Debenture are
superseded by this Agreement.  No
amendment, modification, supplement, termination or waiver of any provision of
this Agreement, and no consent to any departure by the Company therefrom, shall
be effective unless in writing and signed by the Holder, and then only in the
specific instance and for the specific purpose given.  “Including” as used herein means “including, but not limited to.”

 

7.13                        The
Holder acknowledges and agrees that the non-public information it has received
and will receive about the Company and the Company’s financial performance is
confidential, and agrees to use all reasonable efforts to maintain the
confidentiality thereof.  Any
Confidentiality Agreement between the Holder and the Company, including the
foregoing, is hereby modified, only to the extent necessary, to permit the Holder
to exercise and protect its rights under this Agreement, or as a shareholder of
the Company.

 

8

 

IN WITNESS WHEREOF,
the parties have signed this Agreement as of
                             ,
2002.

 

	
   

  	
  “HOLDER”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signed

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Phone:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FAX:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Email:

  	
   

  	
   

  
	
   

  	
   Tax I.D. or Social Security Number:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
							

 

THIS
SUBSCRIPTION IS NOT ACCEPTED AND THIS AGREEMENT IS NOT EFFECTIVE UNTIL AFTER
THE RECEIPT AND VERIFICATION OF GOOD FUNDS FROM THE HOLDER TO THE BANK ACCOUNT
LISTED BELOW AND ACCEPTANCE BY THE COMPANY AS WITNESSED BY THE SIGNATURE ON THE
NEXT PAGE

 

Wire Transfer Instructions for
International Integrated Incorporated:

Barclays Bank, PLC

222 Broadway, 11th
Floor

New York, NY.
10038 USA

ABA #026002574

Swift ID: BARCUS33

For credit to the
account of:

International
Integrated Incorporated

Acct. #050-79555-4

 

(continued on next
page)

 

9

 

Checks should be made payable to
International Integrated Incorporated

and sent, via Federal Express, to:

International
Integrated Incorporated

3800 Howard Hughes
Parkway

18th
Floor

Las Vegas,
NV.  89109

Phone:
702/731-2519

FAX: 702/791-5365

 

	
  THE COMPANY:

  	
   

  
	
   

  	
   

  
	
  International Integrated Incorporated

  	
   

  	
  The Effective Date:

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
                                     ,
  2002

  
	
   

  	
   

  
	
  Its: 

  	
   

  	
   

  
	
   

  	
   

  
	
   

  
	
  Registered Office
  Address:

  	
  Management Office
  Address and Address for Notices:

  
	
  International
  Integrated Incorporated

  	
  International
  Integrated Incorporated

  
	
  Craigmuir Chambers

  	
  3800 Howard Hughes
  Parkway

  
	
  P.O. Box 71

  	
  18th Floor

  
	
  Road Town, Tortola

  	
  Las Vegas, NV.  89109

  
	
  British Virgin Islands

  	
  Phone: 702/731-2519

  
	
   

  	
  FAX: 702/791-5365

  
	
   

  	
   

  
	
  Additional Guarantor:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Donald K. McGhan

  
						

 

10

 

LIST OF EXHIBITS

TO

INVESTMENT AGREEMENT

 

 

	
  EXHIBIT
  A

  	
   

  	
  -

  	
   

  	
  DEFINITION
  OF AN “ACCREDITED HOLDER”

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT
  B

  	
   

  	
  -

  	
   

  	
  FORM OF
  CONVERTIBLE DEBENTURE

  

 

11

 

EXHIBIT
A TO INVESTMENT AGREEMENT

 

DEFINITION OF ACCREDITED HOLDER

REGULATION D

 

To be eligible to
purchase the Convertible Debentures, prospective investors must meet the
Accredited Investor requirements described below.

 

Under Regulation D an
“Accredited Investor” shall mean any person who comes within any of the
following categories, or who the issuer reasonably believes comes within any of
the following categories at the time of the sale of the securities to that
person:

 

(1)               any bank as defined
in section 3(a)(2) of the Act, or any savings and loan association or
other institution as defined in section 3(a)(5)(A) of the Securities Act
of 1991 whether acting in its individual or fiduciary capacity; any broker or
dealer registered pursuant to section 15 of the Securities Exchange Act of
1934; any insurance company as defined in section 2(13) of the Act; any
investment company registered under the Investment Company Act of 1940 or a
business development company as defined in section 2(a)(48) of that Act;
Small Business Investment Company licensed by the U.S. Small Business
Administration under section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such Act, which
is either a bank, savings and loan association, insurance company, or
registered investment adviser, or if the employee benefit plan has total assets
in excess of $5,000,000 or, if a self-directed plan, with investment decisions
made solely by persons that are accredited Holders;

 

(2)               any private
business development company as defined in section 202(a)(22) of the
Investment Advisors Act of 1940;

 

(3)               any organization
described in Section 501(c)(3) of the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or partnership not formed for the
specific purpose of acquiring the securities offered, with total assets in
excess of $5,000,000;

 

(4)               any director,
executive officer or general partner of the issuer of the securities being
offered or sold, or any director, executive officer, or general partner of that
issuer;

 

(5)               any natural person
whose individual net worth, or joint net worth with that person’s spouse, at
the time of his purchase exceeds $1,000,000;

 

(6)               any natural person
who had an individual income in excess of $200,000 in each of the two most
recent years or joint income with that person’s spouse in excess of $300,000 in
each of those years and has a reasonable expectation of reaching the same
income level in the current year;

 

(7)               any trust with
total assets in excess of $5,000,000 not formed for the specific purpose of
acquiring the securities offered, whose purchase is directed by a sophisticated
person as described in Section 230.506(b)(2)(ii);

 

(8)               any entity in which
all of the equity owners are accredited Investors.

 

12

 

EXHIBIT
B

TO INVESTMENT AGREEMENT

 

 

FORM OF CONVERTIBLE DEBENTURE

 

 

CONFIDENTIAL

 

13

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